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Regional Political and Economic Environment With 33 countries—ranging 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—the Latin American and Caribbean region has made significant advances over the past three decades in terms of both political and economic development. (See Figure 1 for a map of the region and Table 1 for basic facts on the region's countries.) In the early 1980s, 16 Latin American and Caribbean countries were governed by authoritarian regimes, both on the left and the right. Today, most governments are elected democracies, at least formally. The threat to elected governments from their own militaries has dissipated in most countries. Free and fair elections have become the norm in most countries in the region, although elections in several countries have been controversial and contested. In 2017, the Bahamas, Ecuador, and Chile held successful elections for heads of government. Elections in Honduras in November 2017, however, were characterized by significant irregularities, with the Secretary General of the Organization of American States (OAS) calling for new elections to be held. Despite a series of mass civil protests, incumbent President Juan Orlando Hernández was certified as the winner in December 2017. In 2018, nine countries in the region—Antigua and Barbuda, Barbados, Brazil, Costa Rica, Colombia, Grenada, Mexico, Paraguay, and Venezuela—held elections for head of government. With the exception of Venezuela, all of these elections were free and fair. The Venezuelan election, boycotted by most opposition parties, was significantly flawed. In addition, Cuba underwent a political transition in April, when Raúl Castro stepped down from power and Cuba's legislature selected a new president. (See Table 1 for a listing of leaders and elections.) Challenges to Democracy Despite significant improvements in political rights and civil liberties, 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 also are numerous examples of elected presidents over the past three decades who left office early amid severe social turmoil and economic crises, the presidents' own autocratic actions contributing to their ouster, or high-profile corruption. Corruption scandals led to the 2015 resignation of Guatemala's president and contributed to the impeachment and removal from office of Brazil's president in 2016. In recent years, the quality of democracy has eroded in several countries in the region. One factor contributing to this democratic erosion is increased organized crime. Organized crime has particularly affected Mexico and several Central American countries because of the increased use of the region as a drug transit zone and the associated rise in corruption, crime, and violence. A second factor negatively affecting democracy in several countries has been the executive's abuse of power. Elected leaders have sought to consolidate power at the expense of minority rights, leading to a setback in liberal democratic practices. Venezuela stands out in this regard, with the government of President Nicolás Maduro repressing the opposition with force and manipulating state institutions to retain power. Media freedom deteriorated in several countries in recent years, precipitated by the increase in organized crime-related violence and by politically driven attempts to curb critical or independent media. In 2018, several countries experienced significant political challenges. Peru's president resigned in March just ahead of a vote on impeachment on corruption charges. In Nicaragua, widespread protests against the government of President Daniel Ortega were suppressed violently, with over 300 people killed. In Brazil, far-right populist Jair Bolsonaro won the presidential race in October; given Bolosonaro's coarse campaign rhetoric, which included a vow to purge Brazil of leftist political opponents, many observers have concerns that his election could pose a threat to democracy and human rights. In Guatemala, efforts by President Jimmy Morales to undermine and expel the U.N.-backed International Commission against Impunity in Guatemala (CICIG) prompted widespread protests and expressions of international concern. Since 1973, the human rights group Freedom House has compiled an annual evaluation of political rights and civil liberties in which it categorizes countries worldwide as free , partly free , and not free . In its 2018 report (covering 2017), the group ranked two countries in the Latin American and Caribbean region as not free: Cuba and Venezuela. It ranked 10 countries as partly free—Bolivia, Colombia, the Dominican Republic, Ecuador, Guatemala, Haiti, Honduras, Mexico, Nicaragua, and Paraguay—and the remaining 21 countries of the region as free. The report pointed to positive developments in Ecuador and Colombia. Freedom House lauded Ecuador's President Lenín Moreno for moving away from the "often repressive rule" of his predecessor, Rafael Correa; for easing pressure on the media; and for proposing the restoration of term limits. A referendum on term limits and other reform measures was approved by a substantial margin in early February 2018. The Freedom House report also praised reform measures in Colombia to limit pretrial detention and for the continued expansion of state control in areas formerly controlled by left-wing rebels pursuant to the government's 2016 peace accord with the Revolutionary Armed Forces of Colombia (FARC). On the negative side, Freedom House pointed to concerning developments in Venezuela, Bolivia, Honduras, Nicaragua, and Mexico in 2017. Freedom House described Venezuela as continuing its "descent into dictatorship and humanitarian crisis." In Bolivia, it expressed concern about actions by the country's constitutional court, which overturned presidential term limits that were supported by a 2016 referendum; the term limits would have prevented current President Evo Morales from seeking a fourth term. Freedom House criticized Honduras for flawed November 2017 presidential elections in which belatedly updated vote totals reversed an early vote count and handed victory to the incumbent, and it criticized Nicaragua for holding flawed municipal elections in 2017 favoring the party of President Daniel Ortega. (As discussed below, the situation in Nicaragua has deteriorated in 2018. Since April, there has been growing opposition to Ortega's rule; the government and its supporters have violently repressed this opposition.) In Mexico, Freedom House cited revelations of extensive state surveillance against journalists and civil society activists threatening to expose public corruption. Since 2006, the Economist Intelligence Unit (EIU) has produced an annual democracy index examining the state of democracy worldwide. The index classifies countries as full democracies , flawed democracies , hybrid regimes , and authoritarian regimes based on ratings for 60 indicators covering electoral process and pluralism, civil liberties, the functioning of government, political participation, and political culture. In its democracy index, the EIU examines 24 countries in Latin America and the Caribbean, not including 9 small English-speaking Caribbean countries. In its 2017 index, the EIU classified both Cuba and Venezuela as authoritarian regimes. Venezuela was downgraded to authoritarian for the first time because of the "continued slide toward dictatorship" and because of the government's violent suppression of opposition protests, jailing and disenfranchisement of opposition leaders, and sidelining of the opposition-dominated legislature. In its 2018 democracy index, the EIU added Nicaragua to its list of authoritarian countries, noting the "aggressive repression strategy" adopted by progovernment forces that led to numerous human rights violations and the deaths of over 300 people. The 2018 EIU index classified five countries in the region—Bolivia, El Salvador, Guatemala, Haiti, and Honduras—as hybrid regimes, or countries characterized by weak rule of law, weak civil society, and, often, widespread corruption. The 2018 index also classified two countries in the region, Costa Rica and Uruguay, as full democracies and 14 countries as flawed democracies, or countries that have free and fair elections and respect basic civil liberties but exhibit weaknesses in other aspects of democracy. The report noted that governments in the region remain beset by corruption and the effects of transnational organized crime and that "persistent deficiencies in governance and the practice of democracy have given way to a declining confidence in government, in formal political institutions, and in democracy itself." It also noted the return of populism to both Mexico and Brazil as disillusioned voters in both countries turned to populist candidates to "stop the rot." Economic Outlook Whereas the 1980s were commonly referred to as the lost decade of development because many countries were bogged down with unsustainable public debt, the 1990s brought about a shift from a strategy of import-substituting industrialization to one focused on export promotion, attraction of foreign capital, and privatization of state enterprises. Latin America experienced an economic downturn in 2002 (brought about in part because of an economic downturn in the United States), but it recovered with strong growth rates until 2009, when a global economic crisis again affected the region with an economic contraction of almost 2%, according to International Monetary Fund (IMF) statistics. Some countries in the region experienced deeper recessions than others in 2009. Those more closely integrated with the U.S. economy, such as Mexico, were hit hardest; other countries with more diversified trade and investment partners experienced lesser downturns. The region rebounded in 2010 and 2011, with economic growth rates of 6.1% and 4.6%, respectively, but growth began to decline annually after that, registering 1.3% in 2014 and 0.3% in 2015. The global decline in commodity prices significantly affected the region, as did China's economic slowdown and reduced appetite for imports. The region experienced an economic contraction of 0.6% in 2016, dragged down by recessions in Argentina and Brazil and by Venezuela's severe economic deterioration, in which the economy contracted 16.5%. In 2017, however, economic growth returned to the region, with 1.3% growth. In January 2019, the IMF estimated that economic growth in Latin America and the Caribbean declined slightly to 1.1% in 2018 and was projected to increase to 2% in 2019 and 2.5% in 2020 (see Table 2 ). Early in 2018, the IMF had forecast 1.9% regional growth for the year. However, Venezuela's continued economic decline and persistent economic challenges in several countries lowered growth. Latin America made significant progress in combating poverty and inequality from 2002 through 2014. In 2002, almost 45% of the region's population lived in poverty, but by 2014 that figure had dropped to 27.8%, representing 164 million people. Extreme poverty (currently defined by the World Bank as living on less than $1.90 per day) also declined over this period, from 11.2% in 2002, representing 57 million people, to 7.8% in 2014, or 46 million people. Two key factors accounting for this decline were increasing per capita income levels and targeted public expenditures, known as conditional cash transfer programs, for vulnerable sectors. Since 2015, the poverty rate for Latin America increased to 30.2% of the region's population in 2017 or 184 million people. Likewise, extreme poverty in Latin America increased to 10.2% in 2017, representing 62 million people. The reversal in poverty reduction largely can be attributed to economic setbacks in Brazil and Venezuela, both of which experienced significant declines in per capita income levels, according to the U.N. Economic Commission for Latin America and the Caribbean. In contrast, poverty reduction has continued since 2015 in a number of countries in the region, including five countries that saw a percentage-point drop in poverty between 2016 and 2017: Argentina, Colombia, Costa Rica, El Salvador, and Paraguay. U.S. Policy Toward Latin America and the Caribbean 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 the major trading partner and largest 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. Latin American nations, led by Venezuela, Mexico, and Colombia, supplied the United States with almost 28% of its imported crude oil in 2016. 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 three decades. Over the past decade, the United States has engaged in close security cooperation with Mexico, Central America, and the Caribbean to combat drug trafficking and related violence. As described above, although most countries in the region have made enormous strides in terms of democratic political development since the 1980s, communist Cuba has remained under authoritarian rule since the 1959 Cuban revolution and undemocratic practices have risen in several countries, particularly in Venezuela, which many observers characterize as a dictatorship, and Nicaragua, which has grown increasingly authoritarian. Obama Administration Policy In its policy toward the region, the Obama Administration set forth a broad framework centered on four priorities: promoting economic and social opportunity, ensuring citizen security, strengthening effective democratic governance, and securing a clean energy future. In many respects, there was significant continuity in U.S. policy toward the region under President Obama; his Administration had many of the same policy approaches as the George W. Bush Administration. In addition, the Obama Administration emphasized partnership and shared responsibility, with policy conducted on the basis of mutual respect through engagement and dialogue. Under the Obama Administration, the United States provided significant support to the region to combat drug trafficking and organized crime and to advance citizen security. Efforts included a continuation of Plan Colombia and its successor programs as well as the creation of the Mérida 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. In 2015, spurred by a surge of unaccompanied children and other migrants from Central America seeking to enter the United States, the Obama Administration developed a broader approach known as the U.S. Strategy for Engagement in Central America aimed at improving security, strengthening governance, and promoting prosperity. On trade matters, the Obama Administration resolved outstanding congressional concerns related to FTAs with Colombia and Panama that were negotiated under the Bush Administration; this resolution led to congressional enactment of implementing legislation for the two FTAs in 2011. The Administration also concluded negotiations in 2015 for the proposed Trans-Pacific Partnership (TPP) trade agreement, which included Mexico, Chile, and Peru, among other nations. In the absence of congressional action on comprehensive immigration reform, President Obama turned to executive action in 2012 with a program known as Deferred Action for Childhood Arrivals (DACA), which provided relief from deportation for certain immigrants who arrived as children. The Obama Administration also granted Temporary Protected Status (TPS) to Haitians in the United States after the country's massive earthquake in 2010. In other policy changes, the Obama Administration announced a major policy shift toward Cuba, moving away from the long-standing sanctions-based approach toward a policy of engagement. With regard to the deteriorating political and economic situation in Venezuela, the Obama Administration pressed for dialogue to resolve the conflict. Then, prompted by Congress through passage of the Venezuela Defense of Human Rights and Civil Society Act of 2014 ( P.L. 113-278 ), the Administration imposed targeted sanctions in 2015 on Venezuelan officials involved in human rights abuses. Trump Administration Policy The Trump Administration has taken actions that have changed the dynamics and outlook for U.S. relations with Latin America and the Caribbean. As discussed below, the State Department set forth a framework for U.S. policy toward the region in February 2018 that reflects continuity with long-standing U.S. objectives in the region. The framework, however, appears to be at odds with some of the Administration's actions, sometimes accompanied by tough rhetoric, on immigration, trade, and foreign aid. Although President Trump's cancellation of his planned attendance at the April 2018 Summit of the Americas in Peru was a lost opportunity to engage with hemispheric leaders, Vice President Mike Pence represented the United States at the summit. The Trump Administration proposed deep cuts in assistance to Latin America and the Caribbean, a significant departure from past Administrations. The approximately $1.1 billion requested for the region for each of FY2018 and FY2019 would have reflected a decrease of 36% and 35%, respectively, from the $1.7 billion in assistance provided to the region in FY2017. (As noted below, Congress rejected the Administration's FY2018 request and funded foreign aid to the region at levels approaching assistance in FY2017; for FY2019, the 115 th Congress did not complete action on foreign aid appropriations, but bills in both houses would have continued to fund key U.S. initiatives in Colombia, Mexico, and Central America at levels approaching FY2017 levels. See " Congress and Policy Toward the Region " and " U.S. Foreign Aid ," below.) On trade issues, President Trump shifted the long-standing policy of past Administrations that focused on increasing economic linkages with Latin America through reciprocal free trade agreements. He described past free trade agreements as detrimental to U.S. workers and industries and vowed to renegotiate new "fair and reciprocal" agreements. President Trump ordered U.S. withdrawal from the proposed Trans-Pacific Partnership (TPP) trade agreement in January 2017; the accord would have increased U.S. economic linkages with Mexico, Chile, and Peru. Similarly, the President strongly criticized NAFTA and warned repeatedly that the United States might withdraw from the agreement with Mexico and Canada. By the end of September 2018, all three countries had reached agreement on a proposed new United States-Mexico-Canada Agreement (USMCA), which would leave NAFTA largely intact but includes some changes, such as provisions regarding the dairy and auto industries. The Administration's imposition of duties on steel and aluminum imports in 2018 added new challenges to U.S. trade relations with several countries in the region. (See " Trade Policy ," below.) Beyond trade, bilateral relations with Mexico have been tested because of inflammatory anti-immigrant rhetoric, President Trump's repeated calls for Mexico to pay for a border wall, and the Administration's September 2017 decision to end DACA (potentially affecting several hundred thousand Mexicans and more than 100,000 migrants from elsewhere in the hemisphere). Despite tensions, overall U.S.-Mexican relations remain cooperative, including security cooperation related to drug interdiction and efforts to bolster economic ties, particularly energy cooperation. (See " Mexico ," below.) Other Trump Administration actions on immigration have caused concerns in the region. The Administration announced the termination of TPS for up to 5,300 Nicaraguans in January 2019; up to 58,000 Haitians in July 2019; up to 263,000 Salvadorans in September 2019; and up to 86,000 Hondurans in January 2020. The countries expressed concerns about whether they have the capacity to receive so many people and about the effects of potential deportations on their economies. The Administration's actions prompted court challenges; in October 2018, a federal court issued a preliminary injunction preventing the termination of TPS designations for Nicaragua, Haiti, and El Salvador, pending the outcome of the litigation. Other immigration actions, such as the implementation of a "zero tolerance" policy toward illegal border crossings and an Attorney General decision in June 2018 that migrants' claims pertaining to gang violence or domestic abuse generally will not qualify them for asylum, could restrict the ability of many Central American migrants to receive asylum. (See " Migration Issues ," below.) With regard to Cuba, President Trump unveiled a new policy in June 2017 that partially rolled back some of the Obama Administration's efforts to normalize relations. The most significant changes included restrictions on financial transactions with companies controlled by the Cuban military and the elimination of individual people-to-people travel. In another action affecting bilateral relations, the State Department downsized the staff at embassies in both capitals in September 2017 in response to unexplained injuries of U.S. personnel at the U.S. Embassy in Havana. (See " Cuba " below.) With regard to the Caribbean region, the State Department issued a multiyear strategy on U.S. policy toward the region as required by the United States-Caribbean Strategic Engagement Act of 2016 ( P.L. 114-291 ). The strategy established a framework for enhanced relations in six priority areas—security, diplomacy, prosperity, energy, education, and health. In the aftermath of Hurricanes Irma and Maria, the United States provided some $23 million in humanitarian relief assistance to several Caribbean countries and foreign territories. (See " Caribbean Region " below.) As the political and economic situation in Venezuela has continued to deteriorate, the Trump Administration has spoken out against the actions of the Maduro government and supported regional efforts to help resolve the situation. It also has imposed a variety of economic sanctions (both targeted and broader economic sanctions) and provided humanitarian assistance for Venezuelans who have fled to other countries. The Administration reportedly has considered additional sanctions aimed at limiting or prohibiting trade with Venezuela, although there are concerns that such sanctions could exacerbate the humanitarian situation without necessarily influencing the behavior of the Maduro government. (See " Venezuela ," below.) In Nicaragua, as political unrest against the increasingly authoritarian rule of President Daniel Ortega began to grow in 2018, the Trump Administration spoke out strongly about against the Ortega government's use of violence and supported an OAS resolution condemning the violence. The Administration also has employed targeted sanctions (visa restrictions and asset freezing) against several individuals responsible for human rights abuses or significant corruption. In Guatemala, the Administration strongly supported the role of the U.N.'s International Commission against Impunity in Guatemala (CICIG) in 2017, when it was under siege by the government of President Jimmy Morales. In 2018, however, some observers contend that the Administration has not spoken out strongly enough as the Morales government continues efforts to weaken CICIG. Although a State Department official testified to Congress in July 2018 about CICIG's important role in strengthening the rule of law, fighting impunity, and combatting corruption in Guatemala, a State Department readout of Secretary of State Mike Pompeo's September 2018 telephone call with President Morales raised questions about U.S. support for CICIG. The statement said that Pompeo and Morales discussed the importance of the Guatemalan government working with CICIG but also that the Secretary expressed continued U.S. support for "a reformed CICIG" and committed to working with Guatemala on implementing such reforms in the coming year. After President Morales announced in early January 2019 that he was going to expel CICIG, the U.S. Embassy in Guatemala issued a statement expressing concern about the future of anticorruption efforts in the country but did not specifically mention the president's actions against CICIG. The Trump Administration also warned about the activities of China and Russia in the region. The Administration's 2017 National Security Strategy contends that China "seeks to pull the region into its orbit through state-led investments and loans," and that Russia is continuing "its failed politics of the Cold War by bolstering its radical Cuban allies as Cuba continues to repress its citizens." The strategy asserts that "both China and Russia support the dictatorship in Venezuela" and "are seeking to expand military linkages and arms sales across the region." In February 2018, then-Secretary of State Rex Tillerson warned "against potential actors that are now showing up in our hemisphere," specifically referring to China and Russia. Tillerson spoke out against China's "foothold in Latin America" and asserted, "Russia's growing presence in the region is alarming," noting its sales of arms and military equipment "to unfriendly regimes who do not share or respect democratic values." Following El Salvador's decision to switch diplomatic relations from Taiwan to China in August 2018, the White House issued a statement that it would reevaluate U.S. relations with the Salvadoran government. In September 2018, the State Department recalled for consultations the U.S. chiefs of mission from the Dominican Republic, El Salvador, and Panama related to those countries' decisions to switch diplomatic recognition from Taiwan to China. The Trump Administration's policy approach toward China's activities in the region is a departure from that of previous Administrations, which, while raising concerns about China's influence, emphasized engagement and consultations with China on Latin America. U.S. warnings about China have been met with skepticism in the region, with some countries calling on the United States to respect their sovereign decisions. (For additional information, see CRS In Focus IF10982, China's Engagement with Latin America and the Caribbean , by Mark P. Sullivan and Thomas Lum.) Trump Administration Policy Framework. Vice President Mike Pence spoke on the Administration's policy toward the region in several speeches during, and just after, an August 2017 trip visiting Argentina, Chile, Colombia, and Panama. Similar to other U.S. officials speaking about U.S. policy in other parts of the world, the Vice President maintained that "America First" does not mean America alone. He acknowledged that prosperity and security for Latin America and the United States are inextricably linked. He maintained that transnational crime sustained by drug trafficking is the most immediate threat to security in the region, and he pledged continued U.S. support to combat it. In the Trump Administration's second year, officials fleshed out its framework for U.S. policy in Latin America and the Caribbean. In February 2018, then-Secretary of State Tillerson set forth a framework focused on three pillars for U.S. engagement in the region—economic growth and prosperity, security, and democratic governance. These three pillars have been long-standing U.S. policy objectives in Latin America and the Caribbean, and they match up with three of the Obama Administration's four policy priorities for the region (with the exception of securing a clean energy future). At the April 2018 Summit of the Americas in Peru, Vice President Pence emphasized that the Western Hemisphere nations are bound together by geography, history, and "an enduring aspiration for freedom." U.S. Agency for International Development (USAID) Director Mark Green also advanced this theme of a "hemisphere of freedom" in an August 2018 speech that discussed the work of his agency largely within the same policy framework set forth by the State Department. In some respects, the objectives and activities advanced by the State Department's framework for U.S. policy toward the region appear to contradict some of the political rhetoric by President Trump and the Administration's efforts to reduce U.S. foreign assistance to the region significantly. Moreover, as noted above, positive views in the region of U.S. leadership dropped in 2017 and 2018, influenced by disparaging political rhetoric and certain actions on immigration and trade. Such views could affect the willingness of countries in the region to cooperate with the United States on regional and global challenges, making it more difficult for the United States to engender support from individual countries when needed. On November 1, 2018, 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 previewed in the speech, the Administration subsequently increased economic sanctions on all three countries. Congress and Policy Toward the Region 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 115 th Congress rejected many of the Trump Administration's proposed cuts in foreign assistance to Latin America and the Caribbean for FY2018 in the Consolidated Appropriations Act, 2018 ( P.L. 115-141 ), enacted in March 2018. Congress provided an estimated $1.7 billion in foreign aid to the region, about 55% more than the Administration had requested for FY2018. Likewise, for FY2019, both the House and Senate Appropriations Committees reported out bills ( H.R. 6385 and S. 3108 , respectively) that would have funded key countries and initiatives at levels approaching FY2017 levels. The 115 th Congress approved two short-term continuing resolutions, P.L. 115-245 and P.L. 115-298 , providing FY2019 foreign aid appropriations at FY2018 levels through December 21, 2018, but did not complete full-year FY2019 funding, leaving it for the 116 th Congress. Two additional FY2019 House Appropriations Committee bills, H.R. 5952 (Commerce) and H.R. 6258 / H.R. 6147 (Financial Services), had provisions that would have tightened economic sanctions on Cuba, but the Senate Appropriations Committee's versions did not did not have similar provisions and the 115 th Congress did not complete action on these appropriations measures. The John S. McCain National Defense Authorization Act for FY2019, P.L. 115-232 ( H.R. 5515 ), signed into law in August 2018, has several Latin America provisions. Section 1032 extended a prohibition on the use of funds in FY2019 to close or relinquish control of the U.S. Naval Station at Guantanamo Bay, Cuba (similar provisions were included in P.L. 115-244 , FY2019 military construction appropriations, and P.L. 115-245 , FY2019 Department of Defense appropriations). Section 1287 required a report from the Secretary of State, in coordination with the Secretary of Defense and other appropriate agencies, regarding narcotics trafficking corruption and illicit campaign finance in Honduras, Guatemala, and El Salvador, including the naming of officials involved in such activities. The conference report to the bill, H.Rept. 115-874 , also directed the Defense Intelligence Agency to submit a report on security cooperation between Russia and Cuba, Nicaragua, and Venezuela. In December 2018, the 115 th Congress enacted the Nicaragua Human Rights and Anticorruption Act of 2018 ( P.L. 115-335 , H.R. 1918 ). As approved, the measure requires the United States to vote against any loan from the international financial institutions to Nicaragua, except to address basic human needs or promote democracy. The law also authorizes the President to impose sanctions (visa restrictions and assets blocking) on persons responsible for human rights violations or acts of corruption. In other action, the House approved H.R. 2658 in December 2017. Among its provisions, the bill would have authorized humanitarian assistance for Venezuela. Similar bills were introduced in the Senate— S. 1018 in May 2017 and a newer version, S. 3486 , in September 2018, but action was not completed on these initiatives. Both houses approved several resolutions on U.S. policy toward the region over the course of the 115 th Congress. On Venezuela, the Senate passed S.Res. 35 in February 2017, which called for the release of political prisoners and support for dialogue and efforts at the OAS; the House passed H.Res. 259 in December, which urged Venezuela to hold free, fair, and open elections, release all political prisoners, and open a channel for international humanitarian assistance. On September 27, the House Committee on Foreign Affairs approved H.Res. 1006 , amended, which condemns the deteriorating situation in Venezuela and the regional humanitarian crisis it has caused; the committee agreed to seek House consideration of the bill under suspension of the rules. On Mexico, the Senate passed S.Res. 83 in March 2017, which called for the United States to support efforts by Mexico and China to stop the production and trafficking of illicit fentanyl into the United States; the House approved H.Res. 336 in December 2017, reaffirming its strong commitment to a bilateral partnership based on mutual respect. On Argentina, the House passed H.Res. 54 in April 2017, which expressed commitment to the bilateral partnership and commended Argentina for making far-reaching economic reforms; the Senate Foreign Relations Committee reported a similar resolution, S.Res. 18 , in June 2017. On Central America, the House passed H.Res. 145 in May 2017, which reaffirmed that combating corruption in El Salvador, Guatemala, and Honduras is an important U.S. policy interest. On Cuba, the Senate passed S.Res. 224 in April 2018, commemorating the legacy of Cuban democracy activist Oswaldo Payá. On Nicaragua, the House passed H.Res. 981 in July 2018, "condemning the violence, persecution, intimidation, and murders committed by the Government of Nicaragua against its citizens." For a discussion of potential issues for consideration in the 116 th Congress, see " Outlook for the 116th Congress ," below. Regional Issues U.S. Foreign Aid The United States provides foreign assistance to the nations of Latin America and the Caribbean 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 since the 1990s. Over the past two 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 also has proposed significant cuts to U.S. assistance to Latin America and the Caribbean (see Table 3 ). In each of its annual budget proposals, the Administration has requested approximately $1.1 billion to be provided to the region through foreign assistance accounts managed by the State Department and the U.S. Agency for International Development (USAID). The FY2019 request would cut funding for nearly every type of assistance and would reduce aid for every Latin American and Caribbean nation. If enacted, U.S. assistance to the region would decline by $590 million (35%) compared to the FY2018 estimate. The Administration's FY2019 budget proposal also would eliminate the Inter-American Foundation, a small, independent U.S. foreign assistance agency that promotes grassroots development in the region. Congressional Action: After a series of five short-term continuing resolutions that funded most foreign aid programs at slightly below the FY2017 level, Congress passed the Consolidated Appropriations Act, 2018 ( P.L. 115-141 ), in March 2018. The act provided an estimated $1.7 billion of foreign assistance for Latin America and the Caribbean. The enacted amount is $607 million (55%) more than the Administration had requested for FY2018 but slightly less than Congress appropriated for the region in FY2017. The 115 th Congress did not complete action on foreign aid appropriations for FY2019. The House and Senate Appropriations Committees approved their respective FY2019 Department of State, Foreign Operations, and Related Programs appropriations measures, H.R. 6385 and S. 3108 , in June 2018. Although the bills and their accompanying reports ( H.Rept. 115-829 and S.Rept. 115-282 ) did not specify appropriations levels for every Latin American and Caribbean nation, the amounts the measures would have designated for key U.S. initiatives in Colombia, Mexico, and Central America would have exceeded the Administration's request significantly. Both measures also would have continued funding the Inter-American Foundation. Neither bill received floor consideration, however, and two continuing resolutions ( P.L. 115-245 and P.L. 115-298 ), that had funded foreign aid programs in the region at the FY2018 level expired on December 21, 2018. For additional information, see CRS Report R45089, U.S. Foreign Assistance to Latin America and the Caribbean: FY2018 Appropriations , by Peter J. Meyer. Drug Trafficking and Gangs 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—cocaine, marijuana, methamphetamine, and plant-based and synthetic opiates. Heroin abuse and opioid-related deaths in the United States have reached epidemic levels, raising questions about how to address foreign sources of opioids—particularly Mexico, which has experienced a sharp uptick in opium poppy cultivation and the production of heroin and fentanyl (a synthetic opioid). Policymakers also are concerned that cocaine overdoses in the United States are on an upward trajectory. Rising cocaine usage is occurring as coca cultivation and cocaine production in Colombia, which supplies roughly 90% of cocaine in the United States, reached record levels in 2017. 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 homicides. Despite efforts to combat the drug trade, many governments in Latin America, particularly in the Central American transit zone through which 90% of U.S.-bound cocaine passes, continue to suffer from overstrained criminal justice systems and overwhelmed law enforcement and border control agencies. Moreover, government corruption, including high-level cooperation with criminal organizations, frustrates efforts to interdict drugs, investigate and prosecute traffickers, and recover illicit proceeds. There is a widespread perception, particularly among many Latin American observers, that the continuing U.S. demand for illicit drugs is largely to blame for the Western Hemisphere'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. Gang-related violence has fueled unauthorized migration to the United States. U.S. Policy. U.S. support to counter drug trafficking and reduce production in Latin America and the Caribbean has been a key focus of U.S. policy toward the region for more than 40 years. The most significant U.S. support program was Plan Colombia, begun in FY2000, which provided more than $10 billion to help Colombia combat both drug trafficking and rebel groups financed by the drug trade. After Colombia signed a historic peace accord with the country's largest leftist guerrilla group, the United States provided assistance to help implement the agreement under a new strategy called Peace Colombia. Colombia's decisions to end aerial fumigation and minimize forced eradication caused some tensions with U.S. officials concerned about rising cocaine production. Colombian President Ivan Duque has vowed to resume aerial fumigation. (Also see " Colombia " section below.) U.S. support to combat drug trafficking and reduce crime also has included a series of partnerships with other countries in the region: the Mérida 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). Under 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 did policies under President Obama. The Trump Administration has also sought to reduce funding for each of the U.S. security assistance programs. 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. law enforcement 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. Congressional Action: The 115 th Congress held hearings on opioids, which included consideration of heroin and fentanyl production in Mexico, Colombia's peace process and how it relates to drug policy, criminal groups in the Western Hemisphere, and Mexican transnational criminal organizations and border security. In March 2017, the Senate passed S.Res. 83 , which called for increased U.S. support for Mexico's efforts to combat fentanyl. The Consolidated Appropriations Act, 2018 ( P.L. 115-141 ), provided increased FY2018 resources for Colombia and Mexico, slightly less funding for CARSI, and a stable level of funding for CBSI compared to FY2017. The legislation required a plan on how the State Department is addressing illicit opioid flows. Both the House and the Senate Appropriations Committees' versions of the FY2019 foreign aid appropriations bills ( H.R. 6385 and S. 3108 , respectively) largely would have maintained funding for the aforementioned security partnerships and continued to address the underlying conditions that contribute to crime and violence in addition to antidrug efforts. Congress likely will continue to fund and oversee counternarcotics and antigang programs and to consider the proper distribution of domestic and international drug control funding and the relative balance of civilian, law enforcement, and military roles in regional antidrug and antigang efforts. For additional information, see CRS In Focus IF10578, Mexico: Evolution of the Mérida Initiative, 2007-2019 , by Clare Ribando Seelke; CRS Report R41349, U.S.-Mexican Security Cooperation: The Mérida Initiative and Beyond , by Clare Ribando Seelke and Kristin Finklea; CRS Report R41576, Mexico: Organized Crime and Drug Trafficking Organizations , by June S. Beittel; 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 R44779, Colombia's Changing Approach to Drug Policy , by June S. Beittel and Liana W. Rosen; 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. Trade Policy 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 the renegotiation of NAFTA and President Trump's repeated threats to withdraw from the agreement, and 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 46% of its merchandise exports. Most of this trade is with Mexico, which accounted for 73% of U.S. imports from the region and 62% of U.S. exports to the region in 2017. In 2017, total U.S. merchandise exports to Latin America and the Caribbean were valued at $393.2 billion and U.S. merchandise imports were valued at $430.0 billion (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, 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 is significant because of the market-opening provisions but more importantly because it established new rules and disciplines that influenced future trade agreements on issues important to the United States, such as intellectual property rights 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 trade preference programs such as the Caribbean Basin Trade Partnership Act and the Generalized System of Preferences (GSP), which expired on December 31, 2017. GSP was reauthorized in March 2018 until the end of 2020, under Division M, Title V of the Consolidated Appropriations Act, 2018 ( P.L. 115-141 ). Most countries in the region also belong to the World Trade Organization (WTO) and are engaged in WTO multilateral trade negotiations. 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. As a result, there are numerous other bilateral and plurilateral trade agreements throughout the Western Hemisphere that do not include the United States. For example, the Pacific Alliance, a trade arrangement comprised of Mexico, Peru, Colombia, and Chile, is reportedly moving forward on a possible trade arrangement with Mercosur, composed of Brazil, Argentina, Uruguay, and Paraguay. In a shift in U.S. trade policy toward the region and other parts of the world, President Trump views FTAs as detrimental for U.S. workers and industries. He has made NAFTA renegotiation and modernization a priority of his Administration's trade policy, stating that the agreement is "the worst trade deal" and repeatedly warning that the United States may withdraw from the agreement. After a year of NAFTA renegotiation talks, the United States and Mexico reached a preliminary bilateral agreement in August 2018, and the three countries reached an agreement on September 30, 2018, leading to the announcement of the United States-Mexico-Canada Agreement (USMCA). On November 30, 2018, the leaders of all three countries signed the USMCA; the agreement must be approved by Congress and ratified by the governments of Canada and Mexico before it can enter into force. The new agreement leaves NAFTA largely intact but includes some changes, such as provisions regarding the dairy and auto industries. The agreement has updated and modernized provisions on intellectual property rights protection, enforceable labor and environmental provisions, and digital trade provisions, as well as new provisions on corruption and state-owned enterprises. U.S. trade actions in 2018 under Section 232 of the Trade Expansion Action Act of 1962 on aluminum and steel imports added new challenges to U.S. trade relations with the region. In 2018, President Trump issued two proclamations imposing tariffs on U.S. imports of certain steel and aluminum products using presidential powers granted by Section 232. 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. Argentina is exempted permanently from both steel and aluminum tariffs, and Brazil is exempted permanently from steel tariffs. Products from all other countries in Latin America and the Caribbean are subject to the tariffs. In response to U.S. action, Mexico began to impose retaliatory tariffs on 71 U.S. products, covering an estimated $3.7 billion worth of trade. The conclusion of the proposed USMCA did not resolve or address the Section 232 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, the other TPP parties, including Mexico, Peru, and Chile, signed the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which essentially will bring a modified TPP into effect. On December 30, 2018, the CPTPP entered into force among the first six countries to ratify the agreement—Canada, Australia, Japan, Mexico, New Zealand, and Singapore. Chile, Peru, and the remaining three countries are expected to ratify the agreement eventually. Colombia has expressed plans to request entry into the CPTPP after the agreement enters into force among all partners. Some observers contend that U.S. withdrawal from 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 115 th Congress, in both its legislative and its oversight capacities, faced numerous trade policy issues related to the renegotiation and modernization of NAFTA. Now that renegotiation has concluded, the proposed USMCA will face congressional examination. Congress must approve the proposed USMCA before it can enter into force; the agreement likely will be considered by the 116 th Congress. Lawmakers may take an interest as to whether U.S. negotiating objectives were followed, as required by Trade Promotion Authority. They also may consider how the proposed USMCA may affect U.S. industries, especially the auto industry, the U.S. and Mexican economies, North American supply chains, and overall trade relations with the LAC region. The recent Section 232 investigations on aluminum and steel imports raise a number of issues for Congress, including the potential impact of tariffs and retaliatory tariffs from Mexico on U.S. producers, domestic U.S. industries, and consumers. Energy reform in Mexico and the implications for U.S. trade and investment in energy also may 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 countries such as Mexico, Chile, Colombia, and Peru continue trade and investment liberalization efforts with other countries without the United States, it may open the door to more intra-trade and investment among Argentina, Brazil, or possibly China and other Asian countries, which may affect U.S. exports. For additional information, see CRS In Focus IF10997, Proposed U.S.-Mexico-Canada (USMCA) Trade Agreement , by Ian F. Fergusson and M. Angeles Villarreal; CRS In Focus IF10047, North American Free Trade Agreement (NAFTA) , by M. Angeles Villarreal; CRS Report R44981, NAFTA Renegotiation and Modernization , 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. Migration Issues 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 Temporary Protected Status (TPS) program or the Deferred Action for Childhood Arrivals (DACA) initiative. As a result, several Trump Administration U.S. immigration policy changes have concerned countries in the region. These include the Administration's actions to increase immigration enforcement; end TPS designations for Haiti, El Salvador, Nicaragua, and Honduras; rescind DACA; criminally prosecute migrants who unlawfully enter the United States; and alter U.S. asylum policy. The factors that have driven legal and unauthorized U.S.-bound migration from Latin America are multifaceted and have changed over time. They include familial ties, poverty and unemployment, demography, political and economic instability, natural disasters, proximity, economic conditions in the United States, and crime and violence. As an example, Venezuela, a historically stable country with limited emigration to the United States, has recently become a top country of origin among U.S. asylum seekers due to the crisis it has been undergoing (see " Venezuela " section below). Apprehensions of, and encounters with, unauthorized migrants at the southwestern U.S. border declined during President Trump's first year in office compared to the same period in 2016, but began to rise in August 2017 and to follow seasonal patterns similar to the last few years. Many analysts attributed that initial decline, in part, to President Trump's tough campaign positions against unauthorized migration, executive action on border security and immigration enforcement (E.O. 13767), and efforts to fund the construction of a border wall. The executive order broadened the focus of interior enforcement to include unauthorized individuals who lack a criminal record. President Trump's assertions that Mexico will pay for a border wall have periodically strained bilateral relations. The Administration's policies have also tested U.S. relations with other countries in the region. Mexico and Central America's northern triangle countries, which received approximately 90% of the 226,119 individuals removed in FY2017, have expressed concerns that potential large-scale removals could overwhelm their capacity to receive and reintegrate migrants. Central American countries also are concerned about the potential for increased removals of gang suspects with criminal records exacerbating security problems in their countries that they have been trying to address with U.S. foreign assistance. Mexico and the northern triangle countries have stepped up services at their U.S. consulates to provide legal and other services to those affected by changes in U.S. immigration policies. Termination of TPS . Since September 2017, the Department of Homeland Security (DHS) has announced plans to terminate TPS designations for six countries, four of which are located in Latin America (El Salvador, Haiti, Nicaragua, and Honduras). The large number (between 250,000-350,000) of Central Americans with TPS relief, along with their length of U.S. residence and resulting economic and family ties, have led some to support extending TPS for Central Americans. Continued recovery difficulties from natural disasters have led others to support continuing TPS for Haitians (up to 59,000). The Trump Administration maintains that ending TPS is a move toward interpreting the original intent of the program—to provide temporary safe haven. In October 2018, a federal court issued a preliminary injunction preventing DHS from terminating the TPS designations for Nicaragua, Haiti, and El Salvador pending the outcome of litigation challenging DHS's termination decisions. Critics of the Administration's decisions to terminate TPS designations for these four countries predict that it is likely to have negative effects on mixed-status families (where adults with TPS have U.S. citizen children), hurt foreign relations, and diminish the flow of remittances on which many families in the region depend. Affected governments have expressed hope that the U.S. Congress will enact legislation to protect their constituents whose TPS protections may be ending. They are nevertheless working with USAID, other donors, and the private sector to prepare reintegration assistance and job opportunities for former TPS beneficiaries who may return to their countries of origin. Rescission of DACA. On September 5, 2017, DHS announced its decision to rescind the DACA initiative. The future of the DACA initiative remains uncertain, as dueling lawsuits are underway in several federal courts to preserve DACA and to force its termination. According to data from U.S. Citizenship and Immigration Services, more than 95% of active DACA recipients were born in Latin America (80% were born in Mexico). The Mexican government has expressed hope that the U.S. Congress will enact legislation to protect individuals who have benefited from the DACA initiative, but also has said that it would welcome and support any DACA enrollees who may be deported. If DACA ends and its beneficiaries must return to their countries of origin, they could have difficulty continuing their education or working in countries struggling with youth unemployment. "Zero Tolerance" Immigration Enforcement and Restrictions on Access to Asylum. For the last several years, Central American migrant families have arrived at the U.S.-Mexico border in relatively large numbers, many seeking asylum. In May 2018, DOJ implemented a zero tolerance policy toward illegal border crossing. Under the policy, DOJ prosecuted all adults apprehended while crossing the border illegally, with no exception for asylum seekers or those with minor children. This policy resulted in up to 3,000 children being separated from their parents. After a federal judge mandated that all separated children be reunited with their families in late June 2018, DHS reverted to some prior immigration enforcement policies. Some families have yet to be reunited. On June 11, 2018, then-Attorney General Sessions issued a decision maintaining that victims of gang violence or domestic abuse perpetrated by nongovernmental actors generally do not meet the standards required for receiving asylum in the United States. This decision could restrict the ability of many Central American migrants to quality for asylum. Restricting the availability of asylum in the United States to Central Americans, who face high rates of femicide and gang-related violence, could cause more emigration to Mexico and other countries less equipped to assist them. As increasing numbers of Central American migrants have sought asylum in Mexico, the Mexican government has bolstered its weak humanitarian protection system even as it deported more than 520,000 Central American migrants from 2015-November 2018. Mexico has resisted signing a "safe third country agreement" with the Administration, which could require asylum seekers who transit through Mexico to seek asylum there rather than in the United States. It has provided humanitarian visas and work permits, as well as access to asylum in Mexico, to Central American migrants who have transited the country in "caravans" and to those affected by a new DHS policy announced on December 20, 2018—according to a DHS press release, the agency plans to return some non-Mexican asylum seekers (excluding unaccompanied minors) to Mexico to await their immigration court decisions. Congressional Action: The 115 th Congress provided foreign assistance to help address some of the factors fueling migration from Central America and to support Mexico's migration management efforts ( P.L. 115-141 ). The Senate Appropriations Committee's version of the FY2019 foreign aid appropriation measure, S. 3108 , would have required that $18 million of the Economic Support Funds provided to Mexico be "transferred to, and merged with" funds appropriated under the Migration and Refugee Assistance account to help process the asylum applications of Central Americans in Mexico. It is possible that the 116 th Congress could include a similar provision in legislation to fund foreign aid programs for the remainder of FY2019. The 115 th Congress also did not determine the amount and type of funding to provide for border infrastructure for FY2019. Members of Congress introduced a range of proposals related to TPS and DACA during the 115 th Congress, but none was enacted. For more information, see CRS In Focus IF10215, Mexico's Immigration Control Efforts , by Clare Ribando Seelke; CRS Report R44812, U.S. Strategy for Engagement in Central America: Policy Issues for Congress , by Peter J. Meyer; CRS Report R45266, The Trump Administration's "Zero Tolerance" Immigration Enforcement Policy , by William A. Kandel; CRS Report R44764, Deferred Action for Childhood Arrivals (DACA): Frequently Asked Questions , by Andorra Bruno; CRS Report R45158, An Overview of Discretionary Reprieves from Removal: Deferred Action, DACA, TPS, and Others , by Ben Harrington; and CRS Report RS20844, Temporary Protected Status: Overview and Current Issues , by Jill H. Wilson. Corruption Corruption has become a serious political concern for many countries in the region. Transparency International's Corruption Perceptions Index (CPI) for 2016 and 2017 found that respondents in most Latin American nations believed corruption was increasing. This perception is fueling civil society efforts to combat corrupt behavior and demand government accountability. Corruption continued to be a central theme in elections across the region in 2018, including pivotal, large countries, such as Colombia, Mexico, and Brazil. Perceptions of growing corruption may reflect a greater awareness of corrupt behavior rather than an increase in actual corruption. This heightened awareness may be due to the growing use of social media to report violations and inform the citizenry, as well as to greater scrutiny by domestic media and investigative reporters, international investors, and, in some cases, congressional bodies or justice sector officials. Moreover, the region's growing middle class, with its rising expectations, seeks more from its politicians. The Transparency International surveys found that in the 20 Latin American nations polled, respondents viewed politicians, political parties, and police as among the most corrupt. Citizens reported being most concerned about the use of public office for private gain—graft, influence peddling, extortion, bribe solicitation, money laundering, and political finance violations were the most frequently cited. Corruption in the Region. Venezuela scored lowest (most corrupt by perceptions of its citizenry) among the 20 countries surveyed in the region in the 2016 and 2017 CPI assessments. Public corruption has been a major drain on the economy, particularly in the country's foreign exchange regime. In Brazil, a sprawling corruption investigation under way since 2014 has implicated much of the political class. Brazilian construction firm Odebrecht, in a landmark plea deal, admitted to paying some $735 million in bribes to politicians and office holders throughout Latin America to secure public contracts, producing fallout in several countries, including Colombia, the Dominican Republic, Ecuador, Panama, and Peru. In Mexico, the costs of corruption reportedly reach as much as 5% of gross domestic product each year. Mexico's long-dominant Institutional Revolutionary Party, dogged by the issue in the July 2018 national elections, performed poorly in the final congressional and presidential vote. In Peru, President Pedro Pablo Kuczynski, accused of taking Odebrecht bribes, stepped down in March 2018 to avoid impeachment. His successor, Martin Vizcarra, hosted the Summit of the Americas in April 2018 with a theme of fighting corruption. In the wake of a judicial corruption scandal concerning bribery in Peru's high court, Vizcarra unveiled a series of political and judicial reforms, including anticorruption measures, in August 2018. He then successfully challenged Peru's congress in September 2018 to a vote of confidence in his government with the goal of getting congress to approve the reforms, which include a significant revision of campaign finance rules among other measures. Those reforms were put before voters in a public referendum held in December 2018; three of the four measures on the ballot passed with more than 85% of the vote, including reforms to the magistracy council, finance regulations for politicians and their parties, and a prohibition on the immediate reelection of lawmakers. The only measure that did not pass was a controversial proposal to create a bicameral congress. In Central America, international entities have worked with the governments of Guatemala and Honduras to combat corruption. The U.N.'s International Commission against Impunity in Guatemala, established in 2006, assisted in corruption cases against Guatemala's former President Otto Perez-Molina and his vice president, who were jailed in 2015 after being forced from office. In 2016, the OAS worked with the Honduran government to establish a similar organization, the Mission to Support the Fight against Corruption and Impunity in Honduras (MACCIH). In 2018, as CICIG investigations have focused more closely on relatives of Guatemala's President Jimmy Morales, the government became openly more hostile to extending CICIG's mandate when it expires in September 2019. In September 2018, Morales barred CICIG's commissioner, former Colombian judge Iván Velásquez, from reentering the country, an action opposed by Guatemala's constitutional court. In early January 2019, President Morales appeared to foment a constitutional crisis by ending CICIG's mandate prematurely, not permitting the commissioners to remain in the country through September 2019 in direct disobedience of the nation's top court. The Honduran government also has sought to undermine MACCIH over the past year. U.S. Policy. The 2017 U.S. National Security Strategy states that U.S. strategic interests related to corruption derive from the concern that criminals and terrorists can thrive in governments where corruption is rampant. Many studies indicate that corruption affects productivity and mars competitiveness in developing economies; it can spur migration and reduce GDP measurably when it is systematic. U.S. assistance has supported anticorruption efforts in Central America. Since FY2016, some U.S. aid to the region has been subject to several conditions, including anticorruption measures by recipient governments. U.S. assistance has also supported multilateral efforts to address corruption in Guatemala and Honduras. Both CICIG and MACCIH also receive U.S. support. CICIG received some $50.5 million between FY2008 and FY2017 in U.S. funding. The United States has also imposed targeted economic sanctions on individuals involved in significant acts of corruption. This has included Venezuelan officials involved in corruption pursuant to Executive Order 13692 and individuals from other countries such as the Dominican Republic and Nicaragua targeted pursuant to Executive Order 13818. Congressional Action : Some analysts maintain that U.S. funding for anticorruption programming has been limited, noting worldwide spending in recent years has not exceeded $115 million annually depending on how anticorruption is defined. Nevertheless, Congress has taken steps to condition U.S. assistance, support anticorruption efforts and training for police and justice personnel, and backed the Trump Administration's use of targeted sanctions. Congress could in coming months oversee changes to NAFTA related to corruption in the proposed USMCA, which includes a separate chapter with anticorruption provisions. In May 2017, the House passed H.Res. 145 , reaffirming that combatting corruption is an important U.S. policy interest in the northern triangle countries of Central America, acknowledging the important work of CICIG and MACCIH, and encouraging anticorruption efforts in the northern triangle countries. In July 2017, the Senate Foreign Relations Committee reported S. 1631 , a foreign relations authorization bill with a title focused on combating public corruption worldwide. The FY2019 John S. McCain National Defense Authorization Act (NDAA), P.L. 115-232 , signed into law in August 2018, contains a provision in Section 1287 requiring a report on drug trafficking and corruption in Central America's northern triangle countries, including identifying government officials and other individuals involved in such activities. As noted in the section on " Central America's Northern Triangle " below, Congress has continued to support funding for CICIG and MACCIH in FY2018 and FY2019. For additional information, see CRS In Focus IF10802, Spotlight on Public Corruption in Latin America , by June S. Beittel. Selected Country and Subregional Issues Argentina Current President Mauricio Macri—leader of the center-right Republican Proposal and the Cambiemos (Let's Change) coalition representing center-right and center-left parties—won the 2015 presidential election in a close race. Macri's election ended 12 years of rule by the Kirchners (Néstor Kirchner, 2003-2007, and Cristina Fernández de Kirchner, 2007-2015) from the leftist faction of the Peronist party. The Kirchners' rule helped Argentina emerge from a severe economic crisis in 2001-2002 but was characterized by protectionist and unorthodox economic policies and increasing corruption—former President Fernández is now facing multiple investigations for corruption. President Macri moved swiftly to usher in a series of market-oriented economic policy changes. His government also reached a deal with remaining private creditors in 2016 that ended the country's 15-year default, an action that allowed the government to repair its "rogue" debtor status and resume borrowing in international capital markets. Although adjustment measures contributed to a 1.8% economic contraction in 2016, the economy grew by 2.9% in 2017, according to the International Monetary Fund (IMF). In early 2018, the IMF was forecasting almost 2% growth for the year, but Argentina's economic difficulties, including a severe drought affecting agricultural exports, thwarted those expectations; the IMF is now forecasting an economic contraction of 2.6%. Inflation, which was almost 25% at the end of 2017, is forecast to rise to 40% by the end of 2018. As pressure on the peso increased in April, the government turned to the IMF for support. The IMF approved a three-year, $50 billion program in June, with almost $15 billion made available immediately for budget support. As the economy continued to decline, the government reached a revised agreement with the IMF in September to increase its total support to about $57 billion through 2021. After an October 2018 IMF review, Argentina received an additional $5.7 billion, bringing total IMF disbursements to about $20.4 billon. Despite wide-scale protests over austerity measures, the Macri government secured legislative approval in November 2018 for spending cuts and tax increases required under the IMF program. Argentina's economic turbulence has taken a toll on President Macri's popularity, which could threaten his political coalition and make a reelection bid in October 2019 more difficult. Although the Peronist party remains divided, a candidate from its moderate faction could pose a strong bid for the presidency. In the foreign policy arena, the Macri government improved relations with neighboring Brazil and Uruguay and other promarket countries in the region. It has been deeply critical of the antidemocratic actions of the Maduro government in Venezuela. U.S.-Argentine relations generally have been characterized by robust commercial relations and cooperation on such issues as nonproliferation, human rights, education, and science and technology. Under the Kirchner governments, there were periodic tensions in relations. The Obama Administration moved swiftly to engage the Macri government on a range of bilateral, regional, and global issues. Strong bilateral relations are continuing under the Trump Administration. President Macri visited the White House in April 2017, and the two leaders underscored their commitment to expand trade and investment and pledged strengthened partnership to combat narcotics trafficking, money laundering, terrorist financing, corruption, and other illicit finance activities. They also agreed to establish a working group for engagement on cyber issues. In September 2018, amid Argentina's economic difficulties, President Trump reaffirmed strong U.S. support for Argentina and Macri's engagement with the IMF. President Trump held a bilateral meeting with President Macri in Argentina on November 30, 2018, on the sidelines of the Group of 20 (G-20) summit hosted by Argentina. The two countries reached bilateral agreements on educational exchange programs, national park conservation efforts, health cooperation, aviation safety, and energy sector cooperation. Congressional Action : Congress has expressed support for close relations with Argentina. In the 115 th Congress, the House passed H.Res. 54 in April 2017, which expressed commitment to the bilateral partnership and commended Argentina for its economic reforms. In June 2017, the Senate Committee on Foreign Relations reported a similar resolution, S.Res. 18 . Congress provided $2.5 million in FY2018 foreign assistance ( P.L. 115-141 ) to support Argentina's counterterrorism, counternarcotics, and law enforcement capabilities. Over the years, Congress has expressed concern about Argentina's progress in investigating two terrorist bombings in Buenos Aires—the 1992 bombing of the Israeli embassy that killed 29 people and the 1994 bombing of the Argentine-Israeli Mutual Association (AMIA) that killed 85 people—as well as the 2015 death of AMIA special prosecutor Alberto Nisman. H.Res. 201 , reported by the House Foreign Affairs Committee in May 2017, would have expressed support for Argentina's investigation of the bombings. Two other resolutions, S.Res. 354 and H.Res. 704 , would have commended Nisman's work and life and called for a swift, transparent investigation into his death. For additional information, see CRS In Focus IF10932, Argentina: An Overview , by Mark P. Sullivan; and CRS In Focus IF10991, Argentina's Economic Crisis , by Rebecca M. Nelson. Brazil 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 by setbacks, however, including an extended period of military rule (1964-1985) and uneven economic performance. Brazil gradually consolidated liberal democracy following its political transition, and it implemented economic reforms in the 1990s that laid the foundation for stronger growth. A boom in international demand for Brazilian commodities—such as oil, iron, and soybeans—during the first decade of the 21 st century fueled a period of rapid economic expansion, which contributed to, and was reinforced by, the growth of Brazil's middle class. In addition to providing the Brazilian government with the resources necessary to address long-standing social disparities, this economic growth strengthened Brazil's international stature. Over the past several years, however, Brazil has struggled to emerge from a series of domestic crises. The economy contracted by nearly 7% from 2014 to 2016, according to the IMF, due to a decline in global commodity prices and the government's economic mismanagement. Although economic growth returned in 2017, the national unemployment rate remains above 11% and several million Brazilians who fell out of the middle class during the recession remain in poverty. At the same time, a sprawling corruption investigation under way since 2014 has implicated politicians from across the political spectrum and many of the country's most prominent business executives. The scandal contributed to the controversial impeachment of President Dilma Rousseff (2011-2016). It also fueled discontent with the country's political class, which was exacerbated by rising levels of violence and the enactment of unpopular economic reforms under President Michel Temer (2016-2018). Antiestablishment sentiment propelled right-wing populist Jair Bolsonaro to victory in the country's October 2018 presidential election; he began his four-year term on January 1, 2019. The United States traditionally has enjoyed robust political and economic relations with Brazil, though the countries' independent foreign policies and occasionally divergent national interests have led to some disagreements. U.S. trade policy has generated some friction over the past year as Brazilian officials have objected to the Trump Administration's decision to impose an import quota on Brazilian steel. Nevertheless, the countries have sought to increase cooperation in other areas, launching a new Permanent Forum on Security, collaborating on the provision of humanitarian assistance to Venezuelan migrants, and continuing negotiations over potential U.S. access to Brazil's Alcântara space launch center. President Bolsonaro has called for closer alignment with the United States, and U.S. and Brazilian officials have begun discussing ways to bolster commercial and defense ties and work together on global concerns. Congressional Action: During the 115 th Congress, several Members raised concerns about the state of democracy and human rights in Brazil. They condemned the March 2018 assassination of Rio de Janeiro City Councilor Marielle Franco, questioned the judicial process that led to the imprisonment of former president Luiz Inácio Lula da Silva (2003-2010), and called on the Trump Administration to engage with President Bolsonaro to ensure human rights protections for marginalized communities. The 115 th Congress also continued long-standing U.S. support for conservation efforts in Brazil. The Consolidated Appropriations Act, 2018 ( P.L. 115-141 ) provided $10.5 million for environmental programs in the Brazilian Amazon. The FY2019 foreign aid appropriations measures reported in the House and Senate both would have continued such assistance; the House Appropriations Committee's bill, H.R. 6385 , would have provided $10.5 million and the Senate Appropriations Committee's bill, S. 3108 , would have provided $11 million. For additional information, see CRS Insight IN10976, Brazil's Presidential Election , by Peter J. Meyer; and CRS In Focus IF10447, U.S.-Brazil Trade Relations , by M. Angeles Villarreal. Caribbean Region The Caribbean is a diverse region of 16 independent countries and 18 overseas territories that include 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 ). In June 2017, the State Department submitted a multiyear strategy for the Caribbean (required by P.L. 114-291 , the United Sates-Caribbean Strategic Enhancement Act of 2016). The strategy established a framework to strengthen U.S.-Caribbean relations in six priority areas: (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 OAS and 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 and Zika. 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 illicit trafficking in the region, advance public safety and security, and promote social development. Congress has supported funding for the CBSI. From FY2010 through FY2018, Congress appropriated almost $559 million for the CBSI, including $57.7 million in each of FY2017 and FY2018. These funds benefitted 13 Caribbean countries. The program has targeted assistance in five areas: maritime and aerial security cooperation, law enforcement capacity building, border/port security and firearms interdiction, justice sector reform, and crime prevention and at-risk youth. Many Caribbean nations also 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 goal of promoting a cleaner and more sustainable energy future in the Caribbean. The initiative included a variety of U.S. activities to facilitate cleaner energy resources; develop collaborated networks on clean energy; finance clean energy projects; increase energy efficiency; and expand access to electricity, information, and technology. In September 2017, Hurricanes Irma and Maria caused widespread damage in several Caribbean countries and foreign territories, especially in the Eastern Caribbean. Hurricane Irma struck during the first week of September, causing catastrophic damage to the island of Barbuda, with 95% of structures seriously damaged or destroyed. Hurricane Maria struck during the third week of September, killing 27 people in Dominica and causing significant structural damage to most buildings and severe damage to the agricultural sector. In the aftermath of the hurricanes, the United States provided almost $23 million in humanitarian funding to six Caribbean countries and foreign territories, including Antigua and Barbuda, Dominica, the Bahamas, St. Kitts and Nevis, and the foreign territories of St. Martin (French) and St. Maarten (Dutch). Congressional Action : For each of FY2018 and FY2019, the Trump Administration requested $36.2 million for the CBSI, about a 36% decrease from the $57.7 million provided in FY2017. For FY2018, Congress continued to fund the CBSI at the same level as in FY2017, $57.7 million, as set forth in the Consolidated Appropriations Act, 2018 ( P.L. 115-141 , Explanatory Statement, Division K). The law also provided $2 million for the CESI. For FY2019, both the House and Senate versions of the foreign aid appropriation bill would have rejected the Administration's proposed cuts for the CBSI. The House Appropriations Committee's bill, H.R. 6385 ( H.Rept. 115-829 ), would have provided $58 million for the CBSI, while the Senate Appropriations Committee's version, S. 3108 ( S.Rept. 115-282 ), would have provided $57.7 million. The report to the Senate bill also would have provided $2 million for the CESI to support enhanced efforts to help Latin American and Caribbean countries achieve greater energy independence from Venezuela. As noted above, the 115 th Congress did not complete action on FY2019 appropriations, but it did approve a series of continuing resolutions that continued FY2019 funding at the FY2018 level through December 21, 2018, leaving final action on FY2019 funding to the 116 th Congress. In July 2017, the House Western Hemisphere Subcommittee held an oversight hearing on the State Department's new multiyear strategy on the Caribbean (see Appendix ). For additional information, see CRS In Focus IF10789, Caribbean Basin Security Initiative , by Mark P. Sullivan; CRS In Focus IF10666, The Bahamas , by Mark P. Sullivan; CRS In Focus IF10407, Dominican Republic , by Clare Ribando Seelke; CRS In Focus IF10912, Jamaica , by Mark P. Sullivan; CRS In Focus IF10914, Trinidad and Tobago , by Mark P. Sullivan; and CRS Report R45006, U.S. Liquefied Natural Gas (LNG) Exports: Prospects for the Caribbean , by Michael Ratner et al. Also see sections on " Cuba " and " Haiti ," below. Central America's Northern Triangle Central America has received renewed attention from U.S. policymakers in recent years, as the region has become a major transit corridor for illicit drugs and a significant source of irregular migration to the United States. 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 nearly $1.5 billion of aid for Central America in FY2016 and FY2017, allocating most of the funds to El Salvador, Guatemala, and Honduras—the "Northern Triangle" countries of Central America (see Figure 3 ). 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 has maintained the U.S. Strategy for Engagement in Central America while seeking to enact some significant changes in U.S. policy toward the region. Over the past two years, the Administration has sought to cut foreign aid to Central America by more than a third and has placed a greater emphasis on security concerns. As noted above (" Migration Issues "), the Administration also has implemented a series of immigration policy changes that affect Central Americans living in the United States without authorization, including the phaseout of the DACA program and the termination of TPS for Salvadorans and Hondurans; those decisions currently are being contested in court. The Northern Triangle governments have raised concerns that the Administration's efforts to reduce assistance while simultaneously increasing deportations could exacerbate poverty and instability in the region. The Northern Triangle countries, with U.S. support, have made some tentative progress over the past three years. They have implemented some policy changes intended to stabilize their economies, but the improved macroeconomic situation has yet to translate into better living conditions for many residents since the governments have not invested in effective poverty-reduction programs. Security conditions also have improved in some respects, as homicide rates have declined for three consecutive years. At the same, the Northern Triangle countries continue to contend with some of the highest rates of violent crime in the world and impunity remains widespread. The countries' attorneys general—with the support of the U.N.-backed International Commission against Impunity in Guatemala (CICIG) and the Organization of American States-backed Mission to Support the Fight against Corruption and Impunity in Honduras (MACCIH)—have made significant progress in the investigation and prosecution of high-level corruption cases. Their efforts have generated fierce backlashes, however, and the Guatemalan and Honduran governments repeatedly have sought to undermine CICIG and MACCIH over the past year. (Also see section on " Corruption ," above.) Congressional Action: The 115 th Congress continued to demonstrate support for the U.S. Strategy for Engagement in Central America, though it began to reduce annual funding for the initiative. The Consolidated Appropriations Act, 2018 ( P.L. 115-141 ), provided an estimated $626.5 million for the Central America strategy, which is $166.5 million more than the Administration requested for FY2018 but $73.2 million less than Congress appropriated for the initiative in FY2017. The FY2019 foreign aid appropriations measures reported out of the House and Senate Appropriations Committees in June 2018, H.R. 6385 and S. 3108 , would have provided $595 and $515.5 million, respectively, to continue implementing the Central America strategy. The Trump Administration requested $435.5 million for Central America in FY2019. Other bills introduced during the 115 th Congress, such as S. 3540 and H.R. 4796 , included provisions intended to guide U.S. policy and improve the effectiveness of the Central America strategy. At the same time, Congress remained concerned about widespread corruption in the region. In May 2017, the House adopted a resolution, H.Res. 145 , that recognized the anticorruption efforts of CICIG, MACCIH, and the attorneys general of El Salvador, Guatemala, and Honduras and called on the Northern Triangle governments to provide the attorneys general with the support, resources, and independence they need to carry out their responsibilities. Congress also approved a provision included in the FY2019 National Defense Authorization Act ( P.L. 115-232 , §1287) that will require the Secretary of State to report the names of Salvadoran, Guatemalan, and Honduran officials known to have engaged in, or facilitated, acts of grand corruption or narcotics trafficking. Moreover, some Members of Congress spoke out about efforts to hinder anticorruption efforts in the Northern Triangle, particularly the Guatemalan president's attempts to undermine and expel CICIG, and called for sanctions to be imposed on corrupt officials. Congress also appropriated funding to support anticorruption efforts. The Consolidated Appropriations Act, 2018 ( P.L. 115-141 ), provided $6 million for CICIG and $31 million for MACCIH and the Northern Triangle's attorneys general. Some Members of Congress sought to suspend U.S. funding for CICIG after a Russian family convicted of participating in a passport forgery network in Guatemala alleged that the Russian government was using CICIG to persecute Russian dissidents. The U.S. State Department found no evidence supporting the allegations, however, and U.S. funding for the commission continued. The House and Senate Appropriations Committees both recommended continued funding for CICIG, MACCIH, and the attorneys general in their FY2019 foreign aid appropriations measures, H.R. 6385 and S. 3108 . For additional information, seeCRS 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 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. Colombia Colombia is a key U.S. ally in Latin America. Because of Colombia's prominence in the production of illegal drugs, the United States and Colombia 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. Between FY2000 and FY2016, the U.S. Congress appropriated more than $10 billion of assistance from U.S. State Department and Department of Defense accounts to carry out Plan Colombia and its successor strategies. Plan Colombia and its successors were both broad frameworks for U.S. assistance and ways to synchronize the support provided by various U.S. government agencies. Originally designed as a 6-year strategy to end the country's decades-long conflict, eliminate drug trafficking, and promote development, Plan Colombia ultimately became a 17-year U.S.-Colombian bilateral effort. Several analysts consider Plan Colombia a U.S. foreign policy success, although critics point to enduring problems, including illegal drug exports; uneven development, especially in rural areas; and continued murders of human rights and social activists. Revenues from cocaine and heroin trafficking provided resources to the Revolutionary Armed Forces of Colombia (FARC), the largest leftist guerrilla group operating in the country; the National Liberation Army (ELN), the country's second-largest rebel group; and Colombia's rightwing paramilitaries, known as the Self Defense Forces of Colombia (AUC), although the group formally demobilized in 2006. These three groups engaged in a multisided, violent conflict for decades, and the U.S. government declared all three foreign terrorist organizations. In August 2018, Iván Duque, a former senator in the Colombian Congress and member of the right leaning Democratic Center (CD) party, was inaugurated as Colombia's new president, succeeding President Juan Manuel Santos, who served two terms. Duque is the first "peacetime" president after more than five decades of conflict, inheriting a controversial peace agreement, which was the central legacy of President Santos and which won him the Nobel peace prize. The Santos government engaged in more than 50 rounds of intense, formal peace talks with the FARC from 2012 to 2016, which produced a peace accord that was ratified by the Colombian Congress in November 2016. President Duque and the CD party were vocal critics of the peace accord and boycotted the final vote in Congress. In the March 2018 legislative elections, the CD party moved from being in opposition in the Senate to become the dominant party. The national elections were notable for their relative lack of violence and higher voter turnout than in recent decades. Duque has set a course for economic renewal and lower taxes, fighting criminality, and rebuilding confidence in the country's institutions. In September 2018, President Duque outlined his broad policy goals in a speech before the U.N. General Assembly, where he denounced the authoritarian government of Venezuelan President Nicolás Maduro and proposed that his government take a lead role in containing Maduro's damage. Maduro's government has spawned a humanitarian crisis that has led to an exodus of Venezuelans fleeing to nearby countries, especially neighboring Colombia. (See " Venezuela " section.) According to U.S. estimates, Colombia in 2017 cultivated an unprecedented 209,000 hectares of coca, from which cocaine is derived, capable of generating 921 metric tons of cocaine. The U.N. estimates for 2017, which typically differ in quantity but follow the same trends as U.S. estimates, stated that Colombia's potential production of cocaine reached nearly 1,370 metric tons, 31% above its 2016 estimate. Cocaine exports, primarily to the U.S. market, remain a concern for U.S. lawmakers, despite Colombia's economic stability and improving security, in part due to the demobilization of about 11,000 former FARC. Key issues in the U.S.-Colombian relationship are implementing the Colombian government's peace accord with the FARC; fighting organized crime, which has flared since the FARC demobilized; and reducing corruption. In August 2018, Colombia held a referendum on measures to reduce public corruption that barely missed its threshold and did not pass. The U.S and Colombian governments have joint efforts to address the spike in assassinations of social leaders and human rights defenders and to more effectively combat cocaine production. In meetings between President Duque and U.S. Secretary of State Mike Pompeo in early January 2019, the two partners discussed cooperation on counternarcotics, peace accord implementation, and trade, and Pompeo vowed U.S. assistance to Colombia aimed at decreasing coca production by 50% by 2023.  Congressional Action: In May 2017, Congress enacted a FY2017 omnibus appropriations measure ( P.L. 115-31 ) that funded programs in Colombia at $391.3 million. The FY2018 omnibus appropriations measure, approved by Congress in March 2018 ( P.L. 115-141 ), again provided $391.3 million to support Colombia's transition to peace and peace accord implementation, address inequalities in historically marginalized areas, reintegrate demobilized fighters, and continue counternarcotics efforts, such as building state presence in former FARC-held areas. The Trump Administration's FY2019 budget request for Colombia was $265 million, approximately a 32% below the funds appropriated by Congress in FY2018, whereas both the House and Senate appropriations bills, H.R. 6385 and S. 3108 , would again maintain the funding at $391.3 million. The Administration's request would reduce postconflict recovery programs and place greater emphasis on counternarcotics and security. Colombia also has received additional U.S. humanitarian funding to help it cope with more than 1 million Venezuelan migrants. The U.S. government is providing humanitarian and emergency food assistance and helping to coordinate and support a regional response to the migration crisis. As of September 30, 2018, U.S. government humanitarian funding for the Venezuela response totaled approximately $96.5 million for both FY2017 and FY2018 combined, of which $54.8 million was for Colombia. 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 In Focus IF10817, Colombia's 2018 Elections , by June S. Beittel and Edward Y. Gracia. Cuba Cuba remains a one-party authoritarian state with a poor record on human rights. First Vice President Miguel Díaz-Canel succeeded Raúl Castro as president in April 2018, but Castro continues to head the Cuban Communist Party until 2021. The selection of Díaz-Canel, now 58 years of age, reflects the generational change in Cuban leadership that began several years ago and marks the first time since the 1959 Cuban revolution that a Castro is not in charge of the government. Over the past decade, Cuba has implemented gradual market-oriented economic policy changes, but critics maintain that it has not taken enough action to foster sustainable economic growth. Looking ahead, Díaz-Canel continues to faces two significant challenges—moving forward with economic reforms that produce results and responding to desires for greater freedom. Cuba is now in the midst of rewriting its 1976 constitution, with a planned national referendum on February 24, 2019. Among the changes are the addition of an appointed prime minister to oversee government operations, age and term limits on the president, and some market-oriented economic reforms, including the right to private property, but the new constitution would still ensure the state sector's dominance over the economy and the predominant role of the Communist Party in Cuba's political system. Congress has played an active role in shaping policy toward Cuba, including the enactment of legislation strengthening and at times easing U.S. economic sanctions. Since the early 1960s, the centerpiece of U.S. policy has consisted of economic sanctions aimed at isolating the Cuban government. In 2014, however, the Obama Administration initiated a major policy shift, moving away from sanctions toward a policy of engagement. The policy change included the restoration of diplomatic relations (July 2015); the rescission of Cuba's designation as a state sponsor of international terrorism (May 2015); and an increase in travel, commerce, and the flow of information to Cuba implemented through regulatory changes. President Trump unveiled a new policy toward Cuba in June 2017 increasing sanctions and partially rolling back some of the Obama Administration's efforts to normalize relations. The most significant changes include restrictions on transactions with companies controlled by the Cuban military and the elimination of individual people-to-people travel. In response to unexplained injuries of members of the U.S. diplomatic community at the U.S. Embassy in Havana, the State Department reduced the staff of the U.S. Embassy by about two-thirds; the reduction has affected embassy operations, especially visa processing, and made bilateral engagement more difficult. Congressional Action : In the 115 th Congress, debate over Cuba policy continued, especially with regard to economic sanctions. The 2018 farm bill, P.L. 115-334 ( H.R. 2 ), enacted in December 2018, has a provision permitting funding for two U.S. agricultural export promotion programs in Cuba. Two FY2019 House appropriations bills, Commerce ( H.R. 5952 ) and Financial Services ( H.R. 6258 and H.R. 6147 ), had provisions that would have tightened economic sanctions, but final action was not completed by the end of the 115 th Congress. Other bills were introduced but not acted upon; these bills would have eased or lifted sanctions altogether: H.R. 351 and S. 1287 (travel); H.R. 442 / S. 472 and S. 1286 (some economic sanctions); H.R. 498 (telecommunications); H.R. 525 (agricultural exports and investment); H.R. 572 (agricultural and medical exports and travel); H.R. 574 , H.R. 2966 , and S. 1699 (overall embargo); and S. 275 (private financing for U.S. agricultural exports). Congress continued to provide funding for democracy and human rights assistance in Cuba and for U.S.-government sponsored broadcasting. For FY2017, Congress provided $20 million in democracy assistance and $28.1 million for Cuba broadcasting ( P.L. 115-31 ). For FY2018, it provided $20 million for democracy assistance and $28.9 million for Cuba broadcasting ( P.L. 115-141 ; explanatory statement to H.R. 1625 ). For FY2019, the Trump Administration requested $10 million in democracy assistance and $13.7 million for Cuba broadcasting. The House Appropriations Committee's FY2019 State Department and Foreign Operations appropriations bill, H.R. 6385 , would have provided $30 million for democracy programs, whereas the Senate version, S. 3108 , would have provided $15 million; both bills would have provided $29 million for broadcasting. As noted above, the 115 th Congress approved a series of continuing resolutions that continued FY2019 funding at FY2018 levels through December 21, 2018, but did not complete action on FY2019 appropriations, leaving the task to the 116 th Congress. In other action, several approved measures— P.L. 115-232 , P.L. 115-244 , and P.L. 115-245 —have provisions extending a prohibition on FY2019 funding to close or relinquish control of the U.S. Naval Station at Guantanamo Bay, Cuba; the conference report to P.L. 115-232 also requires a report on security cooperation between Russia and Cuba. The FAA Reauthorization Act of 2018 ( P.L. 115-254 ) requires the Transportation Security Administration to brief Congress on certain aspects of Cuban airport security and efforts to better track public air charter flights between the United States and Cuba. In April 2018, the Senate approved S.Res. 224 , commemorating the legacy of Cuban democracy activist Oswaldo Payá. For additional information, see CRS Report R44822, Cuba: U.S. Policy in the 115th Congress , by Mark P. Sullivan; CRS In Focus IF10045, Cuba: U.S. Policy Overview , by Mark P. Sullivan; CRS Report RL31139, Cuba: U.S. Restrictions on Travel and Remittances , by Mark P. Sullivan; and CRS Report R43888, Cuba Sanctions: Legislative Restrictions Limiting the Normalization of Relations , by Dianne E. Rennack and Mark P. Sullivan. Haiti President Jovenel Moïse is completing his second year in office. He assumed office in February 2017 after Haiti had been almost a year without an elected president because of political gridlock and delayed elections. He continues to face a divided congress. Moïse came to office amid ongoing investigations into his possible involvement in money laundering, which he denies. Widespread corruption has been an impediment to good governance throughout much of Haiti's history. In November 2017, the Haitian Senate's Special Commission of Investigation released a report alleging embezzlement and fraud by 15 current and former Haitian officials, including two former prime ministers and President Moïse's chief of staff, in managing $2 billion in loans from Venezuela's PetroCaribe oil program. In early 2018, after the chief of the U.N. mission in Haiti welcomed the justice ministry's appointment of an investigative judge to look into citizens' complaints demanding accountability for those funds, Moïse recalled Haiti's Ambassador to the U.N. in protest. Foreign donors and civic society continued to demand more action against corruption. In October 2018, after a new wave of public protests, Moïse fired two staff members implicated in the PetroCaribe corruption case, and the prime minister created a new commission to investigate its scope. The government began to implement reforms recommended by the International Monetary Fund, which included the gradual elimination of subsidies, especially for energy, and the shifting of public resources toward investments in health, education, and social services. When the reduction of subsidies led to increased fuel prices of up to 51% in July 2018, violent protests ensued, leading to the resignation of Moïse's prime minister and the restoration of the subsidies. Moïse named a new prime minister, Jean-Henry Céant, of an opposition party, after consulting with the legislature to get a consensus candidate. Protests against proposed subsidy reductions and corruption have continued. Given Haiti's proximity to the United States, and the country's chronically unstable political environment and fragile economy, Haiti has been an ongoing concern for the United States. Many in the U.S. Congress view Haiti's stability with great concern, and have demonstrated a commitment to improve conditions there. Haiti is the poorest country in the Western Hemisphere, and chronic political instability and frequent natural disasters exacerbate its poverty. Almost 60% of the country's 10 million people live in poverty, and almost 25% of them live in extreme poverty. Haiti is still recovering from a devastating earthquake in 2010, as well as Hurricane Matthew, which hit the island in 2016. The latter worsened a process begun by a two-year drought, destroying Haiti's food supply and creating a humanitarian disaster. In addition, Haiti continues to struggle against a cholera epidemic inadvertently introduced by U.N. peacekeepers in 2010. Nonetheless, according to the State Department, Haiti is transitioning from a postdisaster era to one of reconstruction and long-term development. The Trump Administration and some in Congress contend that conditions in Haiti no longer warrant a reprieve for Haitian migrants who have been allowed to live and work in the United States under the TPS program since the 2010 earthquake. In November 2017, the Department of Homeland Security announced that TPS for Haitians would be terminated in July 2019. In August 2018, a group of 110 Members called on the Trump Administration to reinstate TPS, saying State Department documents showed the Administration made the decision "despite warnings of grave consequences for the U.S. national security." In October 2018, a U.S. district court in California issued a preliminary injunction against the TPS termination. As long as the injunction remains in effect, Haitians (and citizens from three other countries) will retain their TPS. Termination of this program could affect about 59,000 Haitians in the United States. On January 7, 2019, federal court proceedings began in New York for Saget et al v Trump , a case that challenges President Trump's motion to end TPS for Haitian nationals. In October 2017, the U.N. Stabilization Mission in Haiti (MINUSTAH, 2004-2017) was succeeded by a smaller mission, the U.N. Mission for Justice Support in Haiti (MINUJUSTH), which is focusing on rule of law, development of the Haitian National Police (HNP) force, and human rights. The HNP now have primary responsibility for domestic security. MINUSTAH helped facilitate elections, combat gangs and drug trafficking with the HNP, and respond to natural disasters. MINUSTAH was criticized, however, because of sexual abuse by some of its forces and for introducing cholera to the country. The U.N. maintains it has diplomatic immunity, but after years of international pressure said that it would support the epidemic's victims and a new $400 million plan to fight cholera in Haiti. Neither plan has been fully funded or implemented. Congressional Action: The Trump Administration's proposed FY2018 budget of $157 million for aid to Haiti would have reduced aid by about 15% from that provided in FY2017, but Congress rejected the request and provided about $184 million for Haiti, the same as in FY2017. The Consolidated Appropriations Act, 2018 ( P.L. 115-141 ), has several Haiti provisions. It continued to condition some assistance until the Secretary of State certified that the Haitian government was taking certain steps to strengthen the rule of law, combat corruption, increase government revenues, and resolve commercial disputes between U.S. entities and the Haitian government. It also continued to permit the Haitian government to purchase U.S. defense articles and services for its Coast Guard. In addition, the measure provided $10 million for multilateral efforts to assist communities affected by cholera resulting from MINUSTAH. The explanatory statement to the measure also provided $8.5 million for Haiti reforestation and $1.5 million for prison assistance. For FY2019, the Administration requested $170.5 million for Haiti, an 8% reduction from that provided in FY2017. Both the House and Senate Appropriations Committees' versions of the FY2019 foreign aid appropriations measure, H.R. 6385 and S. 3108 , would have continued to permit the Haitian government to purchase U.S. defense articles and services for its Coast Guard. The House version also would have continued a provision from FY2018 conditioning some assistance pending a certification from the Secretary of State that the Haitian government was taking certain steps to strengthen the rule of law, combat corruption, increase government revenues, and resolve commercial disputes between U.S. entities and the Haitian government. The Senate Appropriations Committee's report ( S.Rept. 115-282 ) to its version of the bill recommended $51 million in Development Assistance, $9 million in International Narcotics Control and Law Enforcement (INCLE) assistance (including $1.9 million for prison improvements), $255,000 in International Military Education and Training (IMET), $1.2 million in Foreign Military Financing (FMF), and $1.75 million to assist communities in Haiti affected by cholera resulting from the U.N. Stabilization Mission in Haiti. As noted above, Congress did not complete action on FY2019 foreign aid appropriations but approved a series of continuing resolutions that provided funding through December 21, 2018. As noted in the section on " Migration Issues " above, a range of proposals related to TPS were introduced in Congress, either to extend it, limit it, adjust some TPS holders to lawful permanent resident status, or make TPS holders subject to expedited removal, but no action was taken on these measures. For additional information, see CRS Report R45034, Haiti's Political and Economic Conditions: In Brief , by Maureen Taft-Morales. Mexico Congress has demonstrated renewed interest in Mexico, a top trade partner and energy supplier with which the United States shares a nearly 2,000-mile border and strong cultural, familial, and historical ties. Economically, the United States and Mexico are interdependent, and Congress closely followed efforts to renegotiate NAFTA, which began in August 2017, and ultimately resulted in a proposed United States-Mexico-Canada Agreement (USMCA) signed at the end of November 2018. Similarly, security conditions in Mexico affect U.S. national security, particularly along the U.S.-Mexican border. Observers are concerned about resurgent organized crime-related violence in Mexico. President Enrique Peña Nieto of the Institutional Revolutionary Party (PRI) completed his six-year term on December 1, 2018. Peña Nieto shepherded significant structural reforms through the Mexican congress in 2013-2014, including a reform that opened Mexico's energy market to foreign investment. From 2014 onward, however, he struggled to address human rights abuses, insecurity, and corruption. On December 1, 2018, Andrés Manuel López Obrador, the populist leader of the National Regeneration Movement (MORENA) party, took office for a six-year term after winning 53% of the vote in July presidential elections and majorities in both chambers of congress. López Obrador promised to govern differently than recent PRI and National Action Party (PAN) administrations that have presided over periods of moderate economic growth, rising insecurity, and ongoing corruption. Some observers are concerned that López Obrador may alter Mexico's historically investor-friendly policies and cause friction with the United States, but others predict that he will seek to address poverty and corruption and pursue pragmatic foreign relations. U.S.-Mexican relations remain relatively strong, but periodic tensions have emerged since January 2017. In recent years, both countries have prioritized bolstering economic ties, particularly energy cooperation; interdicting illegal migration from Central America; and combating drug trafficking, including heroin and fentanyl. Security cooperation has continued under the Mérida Initiative, a security partnership for which Congress has provided Mexico some $2.9 billion from FY2008 through FY2018. In January 2017, President Trump's assertion that Mexico should pay for a border wall, which Mexico has consistently opposed, led Peña Nieto to cancel a White House visit. Although the Mexican government continues to oppose paying for the border wall, has spoken out against the Administration's "zero tolerance" immigration policies, and is concerned about the future of the DACA initiative, bilateral security and migration efforts continue. Mexico also applied retaliatory tariffs in response to the Trump Administration's recent tariffs on U.S. imports of steel and aluminum. Congressional Action : The 115 th Congress closely followed the renegotiation of NAFTA and how the USMCA could affect the U.S. economy and U.S.-Mexican relations; consideration of the proposed USMCA will likely occur in the 116 th Congress (see " Trade Policy ," below). In March 2017, the Senate passed S.Res. 83 , a resolution calling for U.S. support for Mexico's efforts to combat fentanyl. In December 2017, the House approved H.Res. 336 , a resolution reiterating the importance of bilateral cooperation with Mexico. In November 2018, the House approved H.R. 1567 , which promotes economic partnership and cooperation between the United States and Mexico in the areas of academic exchange, entrepreneurship, and infrastructure integration. In March 2018, Congress provided $152.6 million in the Consolidated Appropriations Act, 2018 ( P.L. 115-141 ) for Mexico, with extra funds provided to combat the production and trafficking of opioids. The Trump Administration's FY2019 request for Mexico was for $78.9 million, some 43% lower than the FY2017 enacted amount ($138.5 million). The House Appropriations Committee's FY2019 version of the foreign aid appropriations bill, H.R. 6385 ( H.Rept. 115-829 ), recommended providing $125 million for Mexico. The Senate version of the bill, S. 3108 ( S.Rept. 115-282 ), recommended $169.5 million. For additional information, see CRS In Focus IF10867, Mexico's 2018 Elections: Results and Potential Implications , by Clare Ribando Seelke and Edward Y. Gracia; 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, Proposed U.S.-Mexico-Canada (USMCA) Trade Agreement , by Ian F. Fergusson and M. Angeles Villarreal; CRS In Focus IF10578, Mexico: Evolution of the Mérida Initiative, 2007-2019 , 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 Carla Y. Davis-Castro; 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. Nicaragua President Daniel Ortega, now aged 72, is currently suppressing popular unrest in a manner reminiscent of Anastasio Somoza, the dictator he helped overthrow in 1979 as a "comandante" of the leftist Sandinista National Liberation Front (FSLN). Ortega served on the Sandinista national reconstruction board, then as president from 1985 to 1990, during which time the United States backed right-wing "contras" in opposition to Sandinista governance. In the early 1990s, after decades of dictatorship and civil war, Nicaragua began to establish a democratic government. Democratic space has narrowed, however, as the FSLN and Ortega have consolidated control over the country's institutions. After leaving the presidency in 1990, Ortega served as an opposition leader in the legislature and then was reelected in 2006, 2011, and 2016. Nonetheless, popular opposition to Ortega's rule began to take hold in parts of the country, as his government grew increasingly authoritarian. Ortega buoyed his popular support by implementing social welfare programs that benefited Nicaragua's poor and by accommodating the business community. Domestic and international critics consistently objected to Ortega's antidemocratic policies and self-enrichment, however, and popular domestic support began to wane. Ortega was able to resist most of this pressure because the political opposition was weak, divided, and handicapped by FSLN control of the legislature, electoral council, and other aspects of Nicaraguan political life. Until 2018, for many Nicaraguans, Ortega's populist economic measures that improved their standard of living outweighed his authoritarian tendencies. Similarly, for many in the international community, the relative stability in Nicaragua outweighed Ortega's antidemocratic actions. Both domestic and international attitudes toward the Ortega government began to change in April 2018. Ortega's long-term strategy to retain control of the government began to unravel when he proposed reducing benefits of the social security system to shore up its insolvency. The announcement set off weeks of unexpected protests led by university students, who argued that corruption and mismanagement of social security system resources were the main factors behind the system's problems. Ortega repealed the proposed reforms, but protests continued and grew into mass antigovernment protests led by students, businesspeople, civil society groups, farmers, and the Catholic Church. The protests called for early elections and/or Ortega's resignation. The Ortega government and its parapolice supporters have violently repressed protests, leaving at least 320 people dead and thousands injured. The government has arrested over 400 people, with reports of torture and disappearances. Thousands of people have fled the country. In July 2018, the Inter-American Commission on Human Rights (IACHR) sent a team of independent experts to Nicaragua to investigate potential human rights abuse. They concluded that the security forces' actions could be considered crimes against humanity and called for Ortega to be investigated. Government authorities expelled the team in December 2018, and since then they have destroyed independent news facilities and stripped civil society groups of their legal standing. The government has accused protesters and journalists of plotting coups and conspiring to commit terrorist acts, and it has accused the IACHR investigators of echoing U.S. policies against Nicaragua. The Trump Administration has imposed sanctions against five high-level officials, including Vice President Rosario Murillo. Nicaragua is the second poorest country in the Western Hemisphere after Haiti. Nicaragua maintained growth levels above the average for Latin America over the past decade, but the Economist Intelligence Unit estimates the current political crisis will affect the economy with a contraction of almost 3% in 2018, and a further 0.7% contraction in 2019. Congressional Action: The 115 th Congress enacted the Nicaragua Human Rights and Anticorruption Act of 2018 in December 2018 ( P.L. 115-335 , H.R. 1918 ). The law requires the United States to vote against loans from the international financial institutions to the government of Nicaragua, except to address basic human needs or promote democracy. Loans to the government of Nicaragua may be provided if the U.S. Department of State certifies that Nicaragua has taken effective steps to combat corruption, hold free elections, and implement other reforms. The law also authorizes the President to impose sanctions (visa restrictions and assets blocking) on persons responsible for human rights violations or acts of corruption. For FY2018, Congress appropriated an estimated $10 million in Development Assistance to Nicaragua under the U.S. Strategy for Engagement in Central America. Under the Consolidated Appropriations Act, 2018 ( P.L. 115-141 , S.Rept. 115-152 ), Congress also required the Secretary of State to submit a report to the appropriate congressional committees on the involvement of senior Nicaraguan government officials in corrupt practices or violations of human rights in Nicaragua. For FY2019, the Senate Appropriations Committee's report to its version of the FY2019 foreign aid appropriations bill ( S.Rept. 115-282 to S. 3108 ) recommended $5 million in development assistance for Nicaragua. The House Appropriations Committee's report to its version of the FY2019 appropriations bill ( H.Rept. 115-829 to H.R. 6385 ) provided that the only funding made available in the act should be for programs to promote democracy and the rule of law. As noted above, the 115 th Congress did not complete action on FY2019 foreign aid appropriations, but it did approve continuing resolutions providing foreign assistance at FY2018 levels through December 21, 2018, leaving full-year funding to be decided by the 116 th Congress. In other action, on July 25, 2018, the House passed H.Res. 981 , "condemning the violence, persecution, intimidation, and murders committed by the Government of Nicaragua against its citizens." For additional information, see CRS Report R44560, Nicaragua: In Brief , by Maureen Taft-Morales. Peru Martín Vizcarra was sworn in as Peru's president in March 2018. He had been first vice president to Pedro Pablo Kuczynski, who resigned as president amid bribery allegations related to the Brazilian construction firm Odebrecht. An orderly, constitutional transition took place, and Vizcarra is serving out the remainder of the former president's five-year term, until July 2021. Officials from the previous four Peruvian governments—including their presidents—and the opposition have been implicated in the Odebrecht international bribery scandal. Keiko Fujimori, leader of the Fuerza Popular party, was arrested in October 2018 and placed in pretrial detention for 36 months, pending investigation into her alleged involvement in money laundering. Vizcarra has made fighting corruption a top priority. (Also see " Corruption " section above.) He responded swiftly and strongly to a new scandal in which high-level judicial officials were taped allegedly negotiating bribes in exchange for favors. Despite an opposition-dominated legislature that was obstructive to the previous administration, Vizcarra secured legislative support for a series of judicial and political reforms that the public voted on in a December 2018 referendum. An overwhelming majority of voters approved constitutional changes, including reform of the board that makes judicial appointments, reform of campaign financing rules, and the prohibition of consecutive reelection of legislators. Voters rejected a return to a bicameral legislature. Peru's economy has been one of the strongest in Latin America since 2001, consistently growing over 5% per year because of the boom in international prices for commodities—particularly petroleum and minerals. The Economist Intelligence Unit estimates that Peru's economic growth was 3.7% in 2018 and predicts an average of 3.9% annual growth in 2019-2023. In March 2018, Peru and the other 10 signatories of the Trans-Pacific Partnership (minus the United States, which withdrew in 2017) signed a new trade pact, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership. President Vizcarra is continuing the same types of market-friendly economic policies as his recent predecessors. In July 2018, Peru's congress granted the executive branch certain legislative authority for 60 days, and Vizcarra began issuing a series of legislative decrees designed to improve infrastructure and stimulate economic growth. Social unrest and debate over exploitation of natural resources long have been and likely will remain major challenges for any Peruvian government. Many disputes have involved the mining industry and the rights of indigenous peoples in those areas where mining exists or where mining interests intend to operate. In December 2018, citizens in three mining regions elected critics of mining as their governors. A current dispute involves a highway project that is to run through protected areas and indigenous reserves in the Amazon rainforest. Successive Peruvian governments have found it politically difficult to balance a stated desire to help the poor and indigenous with efforts to encourage investment, especially in mining, by the business sector. Congressional Action: For FY2018, the Trump Administration requested $49.7 million for Peru, a 23% reduction from the amount provided in FY2017, but Congress ultimately appropriated almost $74 million for Peru in the Consolidated Appropriations Act, 2018 ( P.L. 115-141 ). For FY2019, the Administration requested $47.4 million. The reports to the House and Senate Appropriations Committees' versions of FY2019 foreign aid appropriations, H.Rept. 115-829 to H.R. 6385 and S.Rept. 115-282 to S. 3108 , specified $32 million in INCLE assistance and $1.8 million in FMF. As noted above, the 115 th Congress did not complete action on FY2019 foreign aid appropriations, but it did approve measures funding foreign aid at FY2018 levels through December 21, 2018. Venezuela Venezuela remains in the throes of a deep economic and humanitarian crisis under the authoritarian rule of President Nicolás Maduro of the United Socialist Party of Venezuela (PSUV). Maduro, narrowly elected in 2013 for a six-year term after the death of President Hugo Chávez (in office 1999-2013), is unpopular. He has used the courts, security forces, and electoral council to stifle opposition, which is in disarray. On January 10, 2019, Maduro was inaugurated for a second term after winning reelection on May 20, 2018, in an unfair contest that did not meet international election standards. The United States, the European Union, Japan, and most Western Hemisphere countries deemed the election illegitimate. Some of those countries have downgraded their relations or enacted travel bans and sanctions on officials in Maduro's government; others may follow suit. They regard the opposition-controlled National Assembly as the only legitimate branch of government. Maduro's reelection capped off his efforts since 2017 to consolidate power. From March to July 2017, protesters called for President Maduro to release political prisoners and respect the National Assembly. Security forces quashed protests, with more than 130 killed and thousands injured. Maduro then orchestrated the controversial July 2017 election of a National Constituent Assembly to rewrite the constitution, which has usurped the National Assembly's powers. Since the May 2018 elections, Maduro's government has arrested and tortured dissidents, including military officers alleged to have been involved in an assassination attempt against him in August 2018. Venezuela also is experiencing a serious economic crisis, marked by rapid contraction of the economy (14% in 2017 and 18% in 2018), hyperinflation (to almost 1,400,000% in 2018), and severe shortages of food and medicine that have prompted a humanitarian crisis in the country. This crisis has driven more than 3 million Venezuelans to flee since 2015, according to the U.N. High Commissioner for Refugees. President Maduro has blamed U.S. sanctions for the country's economic problems while conditioning receipt of food assistance on support for his government and increasing military control over the economy. He maintains that Venezuela will seek to restructure its debts, although that appears unlikely. The government and state oil company Petróleos de Venezuela, S. A. (PdVSA) defaulted on bond payments in 2017. Lawsuits over nonpayment and seizures of PdVSA assets, including potentially its U.S. subsidiary (CITGO), are possible in 2019. The United States traditionally has had close relations with Venezuela, a major U.S. oil supplier, but friction increased under the Chávez government and has intensified under the Maduro regime. U.S. policymakers have had concerns about the deterioration of human rights and democracy in Venezuela and the lack of bilateral cooperation on antidrug and counterterrorism efforts. U.S. officials have expressed increasing concerns regarding Colombian criminal and terrorist groups in Venezuela. In the wake of the May elections, the Trump Administration increased sanctions on the Maduro government and assistance for neighboring countries sheltering Venezuelan migrants. The Trump Administration deemed the May 2018 elections "unfree and unfair" and Maduro's January 10, 2019, inauguration as an "illegitimate usurpation of power"; it regards the National Assembly as the only legitimate branch of government. The Administration has employed targeted sanctions against Venezuelan officials responsible for human rights violations, undermining democracy, and corruption, as well as officials and entities engaged in drug trafficking. The most recent sanctions, announced just prior to Maduro's inauguration, targeted 7 individuals and 23 companies that allegedly stole $2.4 billion. Beginning in August 2017, President Trump has imposed broader economic sanctions that restrict the ability of the government and PdVSA to access U.S. financial markets and bar U.S. purchases of Venezuela's new digital currency and Venezuelan debt. The Administration has considered broader sanctions to limit or prohibit trade with Venezuela. Some predict such sanctions could hasten Maduro's demise, whereas others caution that they could worsen the humanitarian crisis. The Administration also is providing nearly $97 million in humanitarian assistance for Venezuelans who have fled to other countries, including Colombia. Congressional Action: The 115 th Congress took several actions to respond to the deteriorating situation in Venezuela and the regional humanitarian and migration crisis it has wrought. In February 2017, the Senate approved S.Res. 35 , which, among its provisions, called for the release of political prisoners and expressed support for dialogue and OAS efforts. In December 2017, the House passed a bill and a resolution on Venezuela: H.R. 2658 , the Venezuela Humanitarian Assistance and Defense of Democratic Governance Act, which would have authorized humanitarian assistance for Venezuela, and H.Res. 259 , which urged the Venezuelan government to suspend the constituent assembly, hold elections, release political prisoners, and accept humanitarian aid. In FY2018 appropriations legislation ( P.L. 115-141 ) enacted in March 2018, Congress provided $15 million to support democracy and human rights in Venezuela. For FY2019, the Trump Administration requested $9 million in democracy and human rights funding for Venezuela, $6 million less than what Congress appropriated in FY2018. The House Appropriation Committee's version of the FY2019 foreign aid appropriations bill, H.R. 6385 , would have provided $15 million; the Senate Appropriations Committee's version, S. 3108 , would have provided $20 million. For additional information, CRS In Focus IF10230, Venezuela: Political and Economic Crisis and U.S. Policy , by Clare Ribando Seelke; CRS In Focus IF10715, Venezuela: Overview of U.S. Sanctions , by Mark P. Sullivan; CRS In Focus IF11029, The Venezuela Regional Migration Crisis , by Rhoda Margesson and Clare Ribando Seelke; CRS Report R44841, Venezuela: Background and U.S. Relations , coordinated by Clare Ribando Seelke; CRS Report R45072, Venezuela's Economic Crisis: Issues for Congress , by Rebecca M. Nelson; and CRS In Focus IF10857, Venezuela's Petroleum Sector and U.S. Sanctions , by Phillip Brown. Outlook for the 116th Congress Many of the U.S. economic, political, and security concerns discussed in this report likely will sustain congressional interest in Latin America and the Caribbean in the 116 th Congress. Congress still faces completing action on FY2019 foreign aid appropriations that propose significant cuts in assistance to the region, and in early 2019 it will begin consideration of the Trump Administration's FY2020 foreign aid budget request. The 116 th Congress likely will pay close attention to the crisis in Venezuela and consider steps to influence the Venezuelan government's behavior in returning to democratic rule and to relieve the humanitarian crisis. The proposed United States-Mexico-Canada Agreement (USMCA) will face congressional examination and likely consideration in the 116 th Congress; Congress must approve the agreement before it can enter into force. In Central America, a potential oversight issue is the effectiveness of U.S. assistance to the Northern Triangle countries related to efforts to combat insecurity, corruption, and human rights violations; of particular concern are efforts to undermine anticorruption efforts in Guatemala and Honduras, especially the Guatemalan president's action against the U.N.-backed CICIG. Congress also potentially could consider immigration legislation related to the termination of TPS for Nicaragua, Haiti, El Salvador, and Honduras and the rescission of DACA. Other potential oversight issues for the 116 th Congress include the surge in Colombian coca cultivation and cocaine production and the effectiveness of U.S. assistance focusing on counternarcotics and counterterrorism; the effectiveness of U.S. assistance to Mexico given the high level of drug trafficking-related violence in the country; how to respond to the increase in political repression and violence in Nicaragua; the extent and significance of Chinese and Russian engagement in the region and the appropriate U.S. policy response; and U.S. relations with Brazil under newly elected President Jair Bolsonaro, as well as concerns about the state of democracy and human rights in the country. Appendix. Hearings in the 115th Congress

Geographic proximity has ensured strong linkages between the United States and Latin America and the Caribbean, based on diverse U.S. interests, including economic, political, and security concerns. The United States is a major trading partner and the largest 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 three 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, the outlook for U.S. relations with the region has changed. The Administration proposed deep cuts in FY2018 and FY2019 assistance to the region compared with FY2017. On trade, President Trump ordered U.S. withdrawal from the proposed Trans-Pacific Partnership trade agreement, which would have increased U.S. economic linkages with Mexico, Chile, and Peru. President Trump criticized the North American Free Trade Agreement (NAFTA) with Mexico and Canada as unfair, warned that the United States might withdraw, and initiated renegotiations; ultimately, the three countries agreed to a United States-Mexico-Canada Agreement in late September 2018. The proposed agreement, which requires congressional approval, largely leaves NAFTA intact but includes some updates and changes, especially to the dairy and auto industries. Administration actions on immigration have caused concern in the region, including 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. President Trump unveiled a new policy in 2017 toward Cuba partially rolling back U.S. efforts to normalize relations and imposing new sanctions. Congressional Action in the 115th Congress Congress traditionally has played an active role in policy toward Latin America and the Caribbean in terms of both legislation and oversight. Congress rejected the Trump Administration's proposed FY2018 cuts in foreign assistance to the region when it enacted the Consolidated Appropriations Act, 2018 (P.L. 115-141). Although the 115th Congress did not complete action on FY2019 appropriations funding foreign aid, both House and Senate Appropriations Committees' bills, H.R. 6385 and S. 3108, would have funded key countries and initiatives approaching FY2017 amounts. In other action, Congress enacted the Nicaragua Human Rights and Anticorruption Act of 2018 (P.L. 115-335, H.R. 1918) in December 2018. The measure requires the United States to vote against loans from the international financial institutions to Nicaragua, except to address basic human needs or promote democracy, and authorizes the President to impose sanctions on persons responsible for human rights violations or acts of corruption. In August 2018, Congress enacted the FY2019 defense authorization measure, P.L. 115-232 (H.R. 5515), with several Latin America provisions, including required reports on narcotics trafficking corruption and illicit campaign financing in El Salvador, Guatemala, and Honduras and on security cooperation between Russia and Cuba, Nicaragua, and Venezuela. The House also approved H.R. 2658 on Venezuela in December 2017, which, among its provisions, would have authorized humanitarian assistance for Venezuela; similar bills were introduced in the Senate but were not considered. Both houses approved several resolutions indicating policy preferences on a range of issues and countries: S.Res. 35 and H.Res. 259 on Venezuela, S.Res. 83 and H.Res. 336 on Mexico, H.Res. 54 on Argentina, H.Res. 145 on Central America, S.Res. 224 on Cuba, and H.Res. 981 on Nicaragua. Looking ahead to the 116th Congress, in addition to completing action on FY2019 foreign aid appropriations, many of the U.S. economic, political, and security concerns discussed in this report likely will sustain congressional interest in Latin America and the Caribbean (see "Outlook for the 116th Congress," below.) This report, which will not be updated, tracks legislative action on Latin America and the Caribbean in the 115th Congress in 2017 and 2018.

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Money-Bail Systems The right to bail in noncapital cases has firm roots in the United States, dating back to colonial times and originating in English law. As the Supreme Court recognized, the "traditional right to freedom before conviction permits the unhampered preparation of a defense and prevents inflicting punishment prior to conviction." But the Supreme Court has never recognized a right to bail as absolute, and has held that the government may have legitimate interests in limiting the availability of bail, even for noncapital crimes, based not only on possible flight risk but also on other considerations, including the danger an arrestee poses to public safety or specific members of the community. Nonetheless, the Court has also observed that pretrial detention may have negative consequences for criminal defendants, such as by impairing their ability to maintain employment and to support dependents financially. The impact of state and municipal money-bail systems on indigent criminal defendants has prompted legislative interest in, and judicial challenges to, such systems. Money-bail systems allow defendants to avoid jail while awaiting trial by posting a bond according to a fee schedule. Typically, judges do not assess a detainee's individual characteristics beyond the offense charged; instead, judges set a defendant's bail based on the criminal offense with which he is charged. Defendants who cannot pay bail may remain detained pending trial. Money-bail systems differ from the federal bail system, which gives judicial officers greater discretion over the conditions of a defendant's pretrial release. Federal law also expressly provides that a "judicial officer may not impose a financial condition that results in the pretrial detention of the person." Critics of state and local money-bail systems assert, among other things, that fee schedules unduly burden indigent defendants, who face more difficulty paying bail—including relatively low bail fees associated with misdemeanor offenses—than nonindigent defendants accused of similar offenses. Supporters, on the other hand, contend that fee schedules help guarantee a defendant's appearance in subsequent proceedings and treat defendants uniformly. In recent years, a few jurisdictions, including New Mexico, Kentucky, New Jersey, Colorado, and Maryland, have considered legislative proposals or ballot initiatives to eliminate or alter their money-bail systems. Some states, including California, Colorado, and New Jersey, altered their money-bail systems to employ more individualized risk assessment tools rather than using the nature of the offense charged. Recently, defendants have challenged various state or municipal bail systems as inconsistent with the Constitution's Due Process and Equal Protection Clauses. For example, in Jones v. City of Clanton (formerly Varden v. City of Clanton ), the parties settled the case by making release on an unsecured bond the norm rather than the exception. Lawsuits in a few other local jurisdictions have similarly been settled. In Pierce v. City of Velda City , the U.S. District Court for the Eastern District of Missouri issued a declaratory judgment stating that "no person may, consistent with the Equal Protection Clause of the Fourteenth Amendment to the United States Constitution, be held in custody after an arrest because the person is too poor to post a monetary bond." Subsequently, the parties entered a settlement agreement on a new bail policy. During the latter years of the Obama Administration, the Department of Justice (DOJ) submitted a statement of interest in litigation challenging the constitutionality of local bail systems. The DOJ filed an amicus brief in a civil rights lawsuit challenging bail amounts based solely on the offense, calling such systems unconstitutional because of their impact upon indigent defendants. As of the date of this report, it is unclear whether the DOJ and the Trump Administration will continue to take an active role in this case. Pretrial Release and Pretrial Detention Money-bail is only one way states and municipalities provide for pretrial release. Absent clear statutory guidance, judges enjoy broad discretion to determine appropriate conditions for releasing a criminal defendant pending trial. When considering pretrial release, judges weigh several factors such as due process, securing a defendant's subsequent court appearance, and protecting society from the defendant. Judges may use various forms of pretrial release such as personal recognizance, secured or unsecured bonds, or conditional release. Historically, judges have denied defendants bail if they pose a flight risk upon release. For example, judges generally presume defendants charged with capital crimes pose a flight risk. The Supreme Court has recognized that the government may have other, constitutionally legitimate grounds for limiting pretrial release of defendants, including danger to public safety. Several state statutory and constitutional provisions deny bail to defendants arrested for capital crimes "where the proof is evident or the presumption is great," and a few also limit bail for noncapital offenses with certain characteristics. Some of these latter restrictions have been challenged legally. In contrast, federal law creates a rebuttable presumption that favors (but does not compel) detention of persons charged with certain offenses when a judge or magistrate determines, on the basis of clear and convincing evidence, that the defendant has a prior conviction for an offense included in one of nine categories of detention-qualifying offenses (crimes of violence, etc.), committed while the accused was free on pretrial release and for which the accused was convicted or released from prison within the last five years. Federal law also establishes a second rebuttable presumption of detention in favor of pretrial detention when the judge or magistrate finds probable cause to believe that the accused has committed a 10-year controlled substance offense, federal crime of terrorism offense, or various kidnapping or sexual offenses committed against a child. Constitutional Considerations Related to Bail and Indigence The Constitution governs pretrial detention and bail. For money-bail systems, particularly as they apply to indigent defendants, the key provisions are the Eighth Amendment's Excessive Bail Clause and the Fifth and Fourteenth Amendments' Due Process and Equal Protection Clauses. Eighth Amendment The Eighth Amendment of the U.S. Constitution states that "[e]xcessive bail shall not be required." Bail is excessive when "set higher than an amount that is reasonably likely to ensure the defendant's presence at the trial." While the Eighth Amendment expressly prohibits excessive bail, it does not establish an absolute right to bail. Whether an accused has a right to bail depends on how expansively a court interprets the provision. For example, in Stack v. Boyle , the Court declared that "this traditional right to freedom before conviction permits the unhampered preparation of a defense, and serves to prevent the infliction of punishment prior to conviction.... Unless this right to bail before trial is preserved, the presumption of innocence, secured only after centuries of struggle, would lose its meaning." However, in Carlson v. Landon , decided in the same term as Stack , the Court stated the following: The bail clause was lifted, with slight changes, from the English Bill of Rights Act. In England, that clause has never been thought to accord a right to bail in all cases, but merely to provide that bail shall not be excessive in those cases where it is proper to grant bail. When this clause was carried over into our Bill of Rights, nothing was said that indicated any different concept. The Eighth Amendment has not prevented Congress from defining the classes of cases in which bail shall be allowed in this country. Thus, in criminal cases, bail is not compulsory where the punishment may be death. Indeed, the very language of the Amendment fails to say all arrests must be bailable. Similarly, in United States v. Salerno (Salerno ), the Court found the federal Bail Reform Act to be constitutionally valid under the Eighth Amendment's Excessive Bail Clause. The Bail Reform Act allowed judges to detain individuals in certain limited circumstances when the accused poses a danger to the public at large or to particular members of the public. In upholding the act, the Court noted that the Excessive Bail Clause does not limit congressional considerations to question of flight. In other words, the clause permits the government pursuing compelling interests such as public safety "though regulation of pre-trial release." Due Process Requirements In addition to Eighth Amendment considerations, pretrial detention and bail must comport with due process principles. Due process requires that statutes imposing pretrial detention serve a compelling governmental interest and do not impose punishment before adjudication of guilt. Moreover, governmental action that deprives an individual of life, liberty, or property must be implemented in a fair, nonarbitrary manner. The U.S. Constitution's due process guarantees are contained in the Fifth Amendment and the Fourteenth Amendment. The Fifth Amendment applies to actions taken by the federal government, whereas the Fourteenth Amendment applies to actions taken by state governments. Each clause provides that the government shall not deprive a person of "life, liberty, or property, without due process of law." Due process may be procedural or substantive. Based on the principle of "fundamental fairness," procedural due process requires notice and an opportunity to be heard before a neutral party. Substantive due process "forbids the government to infringe certain 'fundamental' liberty interests at all, no matter what process is provided, unless the infringement is narrowly tailored to serve a compelling state interest." In Salerno , the Court found that the Bail Reform Act's regulatory character met substantive and procedural due process requirements. Discussing substantive due process, the Court stated the following: Unless Congress expressly intended to impose punitive restrictions, the punitive/regulatory distinction turns on whether an alternative purpose to which the restriction may rationally be connected is assignable for it and whether it appears excessive in relation to the alternative purpose assigned to it. We conclude that the detention imposed by the Act falls on the regulatory side of the dichotomy. The legislative history ... indicates that Congress did not formulate the pretrial detention provisions as a punishment for dangerous individuals. Congress instead perceived pretrial detention as a potential solution to a pressing societal problem. There is no doubt that preventing danger to the community is a legitimate regulatory goal, nor are the incidents of pretrial detention excessive in relation to the regulatory goal Congress sought to achieve. As for procedural due process, the Court found that the act's tailored procedural safeguards satisfied the Constitution. Equal Protection Considerations Under the Constitution's equal protection provisions, courts reviewing government action that distinguishes between classes of people apply different levels of scrutiny depending on the classification used. For example, the Supreme Court has held that governmental action that categorizes people based on certain "suspect" classifications, such as race, is subject to strict scrutiny, which is the most searching form of judicial review; other classifications, such as those based on age, are permissible if the statute's use of such classification is rationally related to a legitimate state interest. The Supreme Court has invalidated statutes that impose jail or other adverse consequences based on a defendant's indigence, but it has never held that money-bail systems are constitutionally invalid because indigent defendants have greater difficulty paying bail than other criminal defendants. The Supreme Court, however, has considered the constitutional implications of indigence for criminal defendants in other contexts. Supreme Court Jurisprudence Regarding Indigents In a series of cases, the Court held that imprisonment solely because of indigence constitutes invidious discrimination and is constitutionally impermissible. For example, in Bearden v. United States , the Court held that a court could not automatically revoke a defendant's probation for failing to pay a fine and make restitution unless such nonpayment was willful. After the defendant pleaded guilty to burglary and theft by receiving stolen property, the court sentenced him to three years' probation, a $500 fine, and restitution of $250 to be repaid according to a four-month schedule. After the defendant lost his job and could not make the payments, the court revoked his probation, sentencing him to serve the rest of his sentence. In determining the revocation's constitutionality, the Court analogized the equal protection concerns to the fundamental fairness issues of due process analysis and weighed factors including the "nature of the individual interest affected, the extent to which it is affected, the rationality of the connection between legislative means and purpose, [and] the existence of alternative means for effectuating the purpose ...." Acknowledging the state's interest in punishment and deterrence, the Court opined that this could be achieved by extending the repayment period or by the defendant performing public service. The Court held that a court must determine whether nonpayment was willful before revoking a defendant's probation. As the lower court had not made such a finding, the Supreme Court held that "fundamental fairness requires that the petitioner remain on probation" and remanded the case. In other cases, the Supreme Court has not recognized indigence as a suspect class warranting strict scrutiny analysis. For example, in Ma h er v. Roe , the Court held the following: An indigent woman desiring an abortion does not come within the limited category of disadvantaged classes so recognized by our cases. Nor does the fact that the impact of the regulation falls upon those who cannot pay lead to a different conclusion. In a sense, every denial of welfare to an indigent creates a wealth classification as compared to nonindigents who are able to pay for the desired goods or services. Accordingly, when weighing the constitutionality of bail statutes, some lower courts have used the rational basis standard to examine whether a bond requirement would rationally and reasonably ensure the defendant's appearance at trial or serve another legitimate government interest. Recent Lower Court Cases Concerning Bail and Indigents While the Supreme Court has recognized rights for indigents in the sentencing and postconviction contexts, it has not addressed such rights in the bail context. Some courts have viewed claims of excessive bail premised solely on indigence to be uncompelling. For example, in Katona v. City of Cheyenne , a Wyoming federal district court rejected an arrestee's assertion that $35 was excessive bail due to his indigence. Noting that excessive or denial of bail may trigger equal protection concerns, the court applied a rational basis standard of review, examining whether the bond requirement was "rationally and reasonably" related to nonresidents appearing at trial. Similarly, in Walker v. City of Calhoun , the U.S. Court of Appeals for the Eleventh Circuit vacated a preliminary injunction against the City of Calhoun's money-bail system for misdemeanor offenders. Arrested and charged with "being a pedestrian under the influence of alcohol," Mr. Walker spent six nights in jail because he could not afford the $160 cash bond set by the money-bail schedule. He filed a class action lawsuit alleging that the City of Calhoun violated his Fourteenth Amendment rights by jailing him and other class members "because of their inability to pay a generically set amount of money to secure release after an arrest." The district court found that the bail schedule "violate[d] the Constitution insofar as it permits individuals who have sufficient resources to post a bond (or to have one posted for them) to be released immediately, while individuals who do not have those resources must wait forty-eight hours for a hearing." Appealing to the Eleventh Circuit, the city defended its bail system as constitutional because it discriminated on the seriousness of the offense rather than on wealth. The city argued that the Fourteenth Amendment does not provide "an absolute entitlement to pretrial release" and that wealth-based distinctions are subject to rational basis review because wealth is not a suspect class. The city asserted that its bail system met the rational basis standard because it serves the "legitimate goal of assuring the presence of a defendant at trial." The Eleventh Circuit found that the district court erred in applying heightened scrutiny to wealth-based classifications. Citing the Supreme Court's San Antonio Independent School District v. Rodriguez decision, the Eleventh Circuit noted that whether the plaintiff suffered "an absolute deprivation" or a "mere diminishment" was key because "differential treatment by wealth is impermissible only where it results in a total deprivation of a benefit because of poverty." Because Mr. Walker was not totally deprived of pretrial release but had to wait 48 hours at most to "receive the same benefit as the more affluent," the Eleventh Circuit held that the "district court was wrong to apply heightened scrutiny under the Equal Protection Clause." Other courts have held that bail systems that incarcerate indigent individuals without considering their ability to pay are unconstitutional. In Pierce v. City of Velda City , the district court issued a declaratory judgment, stating that "no person may, consistent with the Equal Protection Clause of the Fourteenth Amendment to the United States Constitution, be held in custody after an arrest because the person is too poor to post a monetary bond." Ultimately, the parties resolved the case through a settlement agreement that changed the jurisdiction's bail system. Conclusion Recognizing that "[t]here can be no equal justice where the trial a man gets depends on the amount of money he has," the Supreme Court has invalidated statutes or actions that arguably punished individuals for indigence. But the Supreme Court has generally viewed pretrial release of criminal defendants to be a regulatory, rather than a penal, matter, noting that the government may have legitimate and, in some cases, compelling interests in limiting pretrial release for certain types of defendants. The Supreme Court has never squarely assessed whether applying money-bail systems to indigent criminal defendants as a class is permissible. Lower courts are split on whether money-bail systems impermissibly discriminate against indigents. Some courts have found money-bail systems to be constitutionally suspect, while others have upheld money-bail systems as rationally related to legitimate or compelling governmental interests, including providing for a defendant's subsequent court appearance.

Money-bail systems allow criminal defendants to avoid prison while awaiting trial by posting a bond set by a fee schedule. The impact of money-bail systems on indigent criminal defendants, however, has prompted legislative interest in and legal challenges to such systems, particularly when the bail does not reflect an individual's specific circumstances, such as potential flight risk or public safety. Critics of money-bail systems assert that fee schedules unduly burden indigent defendants, while supporters argue that fee schedules provide uniformity and ensure that defendants appear at trial. Several states and municipalities have reformed their bail systems. Voters in New Mexico approved a constitutional amendment that allows judges to deny bail to defendants considered exceptionally dangerous, but otherwise permits pretrial release of nondangerous indigent offenders who cannot make bail. Other jurisdictions have altered or eliminated their money-bail systems in recent years, including cities in Alabama, Georgia, and Maryland. Courts have heard legal challenges regarding whether state or local money-bail systems comport with the Constitution's Due Process and Equal Protection Clauses. The Supreme Court has established that the Constitution provides certain protections to indigents during sentencing and postconviction, including ensuring that an indigent's failure to pay a fine cannot result in an automatic revocation of probation or imprisonment beyond the statutory maximum term. The Court, however, has not addressed these rights in the bail context. Applying the rational basis standard, some courts have found money-bail systems that reasonably ensure a defendant's subsequent court appearance to be constitutional. Other courts have indicated that bail systems that detain indigent criminal defendants pretrial, without considering their ability to pay, may be unconstitutional.

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Introduction On January 5, 2011, the House of Representatives adopted an amendment to House Rule XII to require that Members of the House state the constitutional basis for Congress's power to enact the proposed legislation when introducing a bill or joint resolution. (The amendment does not pertain to concurrent or simple resolutions.) The Constitutional Authority Statement (CAS) rule, found at House Rule XII, clause 7(c), was subsequently adopted in the 113th, 114th, 115th, and 116th Congresses. As the CAS rule begins its ninth year, the requirement continues to be a topic of congressional debate and inquiry, as Members of the House contemplate how to comply with the rule prior to every submission of a bill or joint resolution. This report aims to aid in understanding the CAS requirement. It begins by providing a broad overview of (1) Congress's powers under the Constitution and (2) Congress's role in interpreting this document. The report then specifically addresses House Rule XII, clause 7(c), discussing its key requirements and limits, the legal effect of a CAS, and the debate over the rule's value. The report concludes by discussing trends with regard to the House's recent CAS practices and by providing considerations for congressional personnel drafting CASs. The report contains two tables: Table 1 identifies the constitutional provisions most commonly cited in CASs during the last six months of the 114 th and 115 th Congresses, and Table 2 lists suggested constitutional authorities for various types of legislation. Scope of Congress's Powers Under the Constitution Understanding the purpose and logic of the CAS rule first requires an understanding of both the powers provided to the Congress under the Constitution and Congress's role in interpreting the Constitution. The Framers of the Constitution feared tyranny as the result of the "accumulation of all powers" of government "in the same hands" and, thus, "sought to guard against it by dispersing federal power to three interdependent branches of Government." Reflecting this fear, the federal Constitution divides the government's power among the legislative, executive, and judicial branches, with the Congress exercising the legislative power, the President exercising the executive power, and the federal courts exercising the judicial power. "It is a breach of the National fundamental law" if Congress "gives up its legislative power" to one of the other branches or if Congress "attempts to invest itself or its members with either executive power or judicial power." While only Congress may exercise the legislative power, this power, like those belonging to the other branches of the federal government, is cabined by the terms of the Constitution. Article I, Section 1, of the Constitution vests "all legislative Powers herein granted ... in a Congress of the United States," with the phrase "herein granted" indicating that the Congress's authority to legislate is "confined to those powers expressly identified in the document." As a result, the Supreme Court has interpreted Article I's Vesting Clause as creating a Congress of specified or "enumerated powers." As the Court noted in United States v. Morrison , "[e]very law enacted by Congress must be based on one or more of its powers enumerated in the Constitution." Congress's Powers Congress's specified powers are primarily, but not exclusively, found in Section 8 of Article I of the Constitution. This section contains 18 clauses, 17 of which enumerate relatively specific powers granted to the Congress. Among the powers enumerated are Congress's powers to impose taxes, and spend the money collected to pay debts and provide for the "common defence" and "general welfare," regulate commerce, establish laws respecting naturalization and bankruptcy, regulate currency, establish post offices and roads, promote the "Progress of Science and useful Arts" by giving authors and inventors "exclusive rights" to their writings and discoveries (i.e., copyright and patent protections), and establish a judicial system. In addition, six of the clauses in Article I, Section 8, defining the substantive legislative jurisdiction of Congress, deal exclusively with wartime and military matters and include Congress's power to declare war and provide for an Army and Navy. Outside of Article I, Section 8, the Constitution contains several other provisions providing Congress with a specified power. For example, Article IV of the Constitution empowers Congress to enact laws regulating the validity of state "public Acts, Records, and judicial Proceedings" and rules respecting the territory and property belonging to the United States. And Article V authorizes Congress to propose amendments to the Constitution. Outside of the original constitutional text, many of the amendments to the Constitution explicitly restrict the power of Congress. Several of the Constitution's amendments, however, provide Congress with the power to enact certain legislation. For instance, the Thirteenth, Fourteenth, and Fifteenth Amendments, adopted following the Civil War, empower Congress to "enforce" the amendments' provisions prohibiting slavery, preventing the deprivations of certain civil rights, and outlawing the denial or abridgement of the right to vote on account of "race, color, or previous condition of servitude." The final clause of Article I, Section 8, the Necessary and Proper Clause, supplements Congress's enumerated powers, providing the legislative branch the power to adopt measures that assist in the achievement of ends contemplated by other provisions in the Constitution. Specifically, that clause provides Congress with the power to make "all Laws which shall be necessary and proper for carrying into Execution the foregoing Powers and all other Powers vested by this Constitution in the Government of the United States, or in any Department or Officer thereof." The Supreme Court has interpreted the scope of Congress's power under the Necessary and Proper Clause as "broad," in that the clause leaves to "Congress a large discretion as to the means that may be employed in executing a given power." In so holding, the Court has described the clause as providing the "broad power to enact laws that are 'convenient, or useful' or 'conducive' to" a more specific authority's "beneficial exercise." Consistent with this view, the Court has upheld legislation criminalizing perjury and witness tampering as an extension of Congress's power to constitute federal tribunals. Similarly, the Court upheld legislation prohibiting the bribery of officials who receive federal funds, as an extension of Congress's power to "appropriate federal moneys to promote the general welfare." More broadly, the Court has taken the view that other powers, such as the power to conduct oversight, are implied from the general vesting of legislative powers in Congress. Importantly, however, the Necessary and Proper Clause is not an independent source of power for Congress that, standing in isolation, permits it to exercise the legislative power. As the Supreme Court has noted, the clause is "not itself a grant of power, but a caveat that the Congress possesses all the means necessary to carry out the specifically granted 'foregoing' powers of § 8 'and all other Powers vested by this Constitution....'" Instead, in legislating, Congress "must rely upon its independent (though quite robust) Article I, § 8, powers" or in other powers implicitly or explicitly vested elsewhere in the Constitution to Congress. Importantly as well, the Necessary and Proper Clause authorizes Congress to not only take action to assist in the execution of its own powers under the Constitution, but also to provide support for the execution of "all other Powers vested by this Constitution in the Government of the United States." Pursuant to this authority, Congress may permissibly enact legislation to assure the proper exercise of powers given to other branches of the federal government. Limits on Congress's Powers The Constitution imposes two central types of limitations on the powers of Congress. First, the concept of enumerated powers creates what is often referred to as an "internal limit" on Congress's powers—that is, Congress's powers are restricted by and to the terms of their express grant. For instance, in United States v. Lopez , the Supreme Court interpreted the Commerce Clause as empowering Congress to regulate "three broad categories of activities": (1) "channels of interstate commerce," like roads and canals; (2) "persons or things in interstate commerce," and (3) activities that substantially affect interstate commerce. Having determined those limits to the clause, the Court held that Congress's power over commerce does not permit it to enact legislation prohibiting the possession of guns near a school (absent a connection to commercial activity) because such legislation does not regulate an economic activity that substantially affects interstate commerce. Likewise, the Court has interpreted the Fourteenth Amendment's Enforcement Clause as necessarily requiring a "congruence and proportionality" between the injury to be prevented or remedied by congressional legislation and the means that Congress adopted to that end. Applying this standard in City of Boerne v. Flores , the Court held that Congress exceeded the scope of its enforcement power under the Fourteenth Amendment by enacting the Religious Freedom Restoration Act (RFRA) insofar as that law unduly invaded the sovereign rights of the states. Adopted to protect the constitutional right to the free exercise of religion, RFRA, in relevant part, invalidated any state law that imposed a "substantial burden" on a religious practice without sufficient justification and narrow tailoring. Describing RFRA's operative standard as imposing a "stringent test" that amounted to a "considerable intrusion into the States' traditional prerogatives and general authority to regulate for the health and welfare of their citizens," the Court concluded that there was "a lack of proportionality or congruence between the means adopted and the legitimate end to be achieved" by RFRA. Second, beyond the internal limits on Congress's powers, the Constitution also imposes "external" constraints on congressional action, or affirmative prohibitions found elsewhere in the text or structure of the document. Article I, Section 9, lists specific constraints on the power of the federal government. Section 9 prohibits Congress from suspending the writ of habeas corpus in peacetime; passing bills of attainder or ex post facto laws; imposing taxes or duties on exports "from any state"; and granting titles of nobility. Section 9 also provides that Congress can suspend the writ of habeas corpus only in "cases of rebellion or invasion" when "public safety may require" such a suspension. Similarly, money can be drawn from the Treasury only upon an appropriation made by law. More broadly, Congress's powers are constrained by three principles undergirding the Constitution: federalism, separation of powers, and individual rights. Federalism constraints are grounded in states' status as separate and distinct sovereign entities and seek to preserve states' retained prerogatives under the U.S. constitutional system by enforcing certain limits on the federal government's jurisdiction. For instance, the Supreme Court has identified federalism-based constraints stemming from the Tenth Amendment—the provision of the Bill of Rights that reads, "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." More specifically, the Court has interpreted the Tenth Amendment to prevent the federal government from "commandeering" or requiring state executive officers or state legislators to carry out federal directives. Similarly, the Court has held that Congress cannot indirectly commandeer state governments by imposing limits on monetary grants that go so far as to functionally coerce states, leaving them with no choice but to comply with a federal directive. Second, separation of powers constraints are concerned with the proper allocation of authority among the three branches within the federal government. The Constitution assigns each branch of government distinct, but interrelated, roles, and one branch may not aggrandize its power by attempting to exercise powers assigned to another branch. For example, the Appointments Clause of the Constitution gives the President the authority to appoint principal officers of the United States with the Senate's advice and consent. Thus, when Congress purported to reserve to itself the right to appoint certain members of the Federal Election Commission in 1971, the Supreme Court struck down that law as being in violation of the Appointments Clause. Finally, constraints based on individual rights serve to prohibit congressional interference with the rights that individuals retain under the Constitution and, in particular, under the first 10 amendments to the Constitution, the Bill of Rights. The First Amendment, for example, prohibits Congress from enacting a law that abridges the freedom of speech. The Supreme Court has interpreted the First Amendment to mean that speech restrictions promulgated as a result of the content of the speech are presumptively unconstitutional. In keeping with this presumption, in United States v. Alvarez , the Court struck down a law that made it a crime to falsely claim that one had received military medals or decorations on the grounds that the law risked "significant First Amendment harm" by broadly empowering prosecutions of speech based on its content, without any notable limitations. Role of Congress in Interpreting the Constitution Given the powers of Congress and the limits on those powers under the Constitution, the question remains as to which branch of the federal government may interpret the scope of Congress's powers. The question is one that has been debated from the very beginnings of the country. In its 1803 decision in Marbury v. Madison, the Supreme Court held that the logic of having a written Constitution that enumerates the legal limits imposed on the federal government, coupled with the tenure protections provided to the federal judiciary under the Constitution, confirmed the Supreme Court's role in interpreting the Constitution and invalidating acts of other branches of government that contravene this document in the context of a live case or controversy. Pursuant to Marbury ' s famous command, it is "the province and duty of the judicial department to say what the law is." While Marbury firmly established that the judicial branch has a role in interpreting the Constitution, including the power to strike down laws held to be incompatible with the founding document, it did not, however, expressly state that the judiciary has a final or even exclusive role in defining the basic powers and limits of the federal government. To the contrary, the early history of the United States is replete with examples of all three branches of the federal government playing a role in constitutional interpretation, with Congress and the Executive openly questioning the Supreme Court's pronouncements on constitutional law, such as the Court's rulings on the National Bank or slavery. As these examples show, Marbury was not seen to interfere with the ability of either Congress or the President to interpret the Constitution. Rather, Marbury only asserted the judiciary's power to act as the ultimate expositor of the Constitution in the limited context of cases that were properly before the Court. Instead, Thomas Jefferson's view that "each of the three departments has equally the right to decide for itself what is its duty under the Constitution, without any regard to what the others may have decided for themselves under a similar question," appears to have prevailed in Congress during the early days of the United States. This is evidenced by the fact that Members of Congress spent "a considerable amount of time" "debating the constitutional limitations on" legislation during the first 100 years of the nation. In the mid-20 th century, however, the Supreme Court began articulating a theory of judicial supremacy, wherein the Court no longer shared its role in interpreting the Constitution with the other branches of the federal government, but rather characterized its role as being the preeminent arbiter of the Constitution's meaning. For example, in Cooper v. Aaron, the Court read Marbury as "declaring the basic principle that the federal judiciary is supreme in the exposition of the law of the Constitution, and [this] principle has ever since been respected by this Court and the Country as a permanent and indispensable feature of our constitutional system." In other words, the Cooper Court concluded that the "interpretation[s] of the [Constitution] enunciated by this Court ... [are] the supreme law of the land," with constitutional interpretations by other actors, including Congress, necessarily lacking the same force. Supporters of the judicial supremacy view assert that it promotes stability and uniformity in constitutional interpretation, as well as preserves constitutional norms from majoritarian pressures. The Court's decision in Cooper , coupled with broader institutional factors that may further constrain Congress's ability to engage in constitutional interpretation, has provided support for the notion of judicial supremacy in constitutional interpretation within the coordinate branches of government. As a result, while Congress certainly continues to debate about the Constitution during the legislative process, in the modern era, the Court's views on the Constitution appear to have taken on an elevated role vis-á-vis those views of the other branches of government. The theory of judicial supremacy is far from a consensus view, however, and several aspects of the American constitutional system may counsel for a more robust role for Congress in constitutional interpretation. In recent decades, a number of legal scholars and government officials have criticized the judicial supremacy view, instead advancing the view that the Constitution should more regularly be the subject of interpretation by those outside of the judicial branch. This view posits that Congress and others outside of the government possess independent and coordinate authority to interpret the Constitution. Supporters of this view point to the fact that the Constitution requires all Members of Congress to "be bound by Oath or Affirmation ... to support [the] Constitution ... ," a requirement that presumes Senators and Representatives must understand and interpret the Constitution in their work in Congress. Similarly, courts' practice of affording a presumption of constitutionality to laws passed by Congress necessarily assumes that Members of Congress engage in constitutional interpretation during the legislative process. In addition, if Congress opts not to engage in interpreting the Constitution, a vacuum could arise in constitutional dialogue because various judicially crafted doctrines generally serve to keep the courts from making pronouncements on a wide range of constitutional questions. Indeed, as Justice Kennedy observed in his concurring opinion in Trump v. Hawaii, because there are "numerous instances in which the statements and actions of Government officials are not subject to judicial scrutiny or intervention," it is "imperative" for public officials to "adhere to the Constitution and to its meaning and promise." These arguments can be seen as relevant to the current CAS requirement imposed under the House rules insofar as they suggest that Congress should have some role in interpreting the Constitution. House Rule XII, Clause 7(c), and Constitutional Authority Statements Originally adopted as an amendment to House Rule XII on January 5, 2011, the CAS rule prohibits Members from introducing a bill or joint resolution without a "statement citing as specifically as practicable the power or powers granted to Congress in the Constitution to enact the bill or joint resolution." The current CAS rule functionally replaced a requirement that existed during the 105th through 111th Congresses, mandating that committee reports for bills reported out of committee "include a statement citing the specific powers granted to the Congress in the Constitution to enact the law proposed by the bill or joint resolution." A CAS is not part of the text of the legislation; instead, it "accompanie[s]" the legislation. The CAS must be "submitted at the time the bill or joint resolution" is presented for introduction and referral, that is, when the legislation is dropped in the "hopper." The submitted CAS appears in the Congressional Record and is published electronically on Congress.gov. Compliance with the CAS Rule While the rule, on its face, requires Members to provide as "specific[] as practicable" "a statement citing ... the power or powers to Congress in the Constitution to enact the bill or joint resolution," the CAS rule itself is silent on various issues. For example, the rule does not prescribe any particular format or level of detail for CASs. The House Committee on Rules (Rules Committee) provided guidance soon after the rule was adopted, identifying the following five examples of citations to constitutional authority: 1. "The constitutional authority on which this bill rests is the power of Congress to make rules for the government and regulation of the land and naval forces, as enumerated in Article I, Section 8, Clause 14 of the United States Constitution." 2. "This bill is enacted pursuant to Section 2 of Amendment XV of the United States Constitution." 3. "This bill is enacted pursuant to the power granted to Congress under Article I, Section 8, Clause 3 of the United States Constitution." 4. "The Congress enacts this bill pursuant to Clause 1 of Section 8 of Article I of the United States Constitution and Amendment XVI of the United States Constitution." 5. "This bill makes specific changes to existing law in a manner that returns power to the States and to the people, in accordance with Amendment X of the United States Constitution." This guidance suggests that compliant CASs should generally discuss the affirmative constitutional authority that empowers Congress to enact particular legislation, but need not discuss any external constraints on Congress's powers to enact the legislation. For example, under this guidance, a CAS for a bill that proposed to ban all interstate shipments of religious pamphlets could be seen as compliant if it cited the Commerce Clause as the source of congressional power, even though the bill may run afoul of the Free Exercise and Free Speech Clauses of the First Amendment. Nonetheless, the last example provided by the Rules Committee suggests that a citation to a provision of the Constitution that does not explicitly grant power to the Congress—such as the Tenth Amendment, which preserves the powers of the states —may suffice to comply with the rule. More broadly, the Rules Committee guidance indicates that Members have significant discretion in determining whether particular CASs comply with the rule. The Rules Committee guidance notes that it is ultimately "the responsibility of the bill sponsor to determine what authorities [he or she] wish[es] to cite and to provide that information to the Legislative Counsel staff." In practice, outside commentators have noted that Members have generally complied with House Rule XII, clause 7(c). Such observations may be the result of how the rule is enforced. The Rules Committee has noted, "The adequacy and accuracy of the citation of constitutional authority is a matter for debate in the committees and in the House." This statement suggests that the CAS rule is enforced only insofar as "the House clerk ... acts to verify that each bill has a justification" and "not [in judging] the adequacy of the justification itself." Studies of CAS Practices Practices with Regard to Specificity Studies of past practices under House Rule XII, clause 7(c), support the view that Members have considerable leeway and discretion in crafting CASs. Professor Hanah Volokh of Emory University conducted a study of CAS practices early in the 112 th Congress, aggregating more than 1,700 statements submitted during the first four months of 2011. According to Professor Volokh, a "handful" of these CASs "engage[d]," in her opinion, "in a thorough and highly detailed explanation of the constitutional ramifications of the proposed legislation" by discussing the Federalist Papers or Supreme Court doctrine, among other things. The remainder, however, were less specific in their identification of Congress's powers. For example, 8% of the statements reviewed by Professor Volokh generally cited Article I, Section 8–without providing any further specificity as to the particular clauses within that section providing constitutional support for the proposed legislation. A study of the CASs for "every bill and joint resolution introduced" from January 5, 2011, to January 5, 2012, of that same Congress reported similar findings. According to the House Republican Study Committee, 15% of submitted CASs relied on Article I, Section 8 alone. In preparing various versions of this report, CRS conducted a similar study of CASs from the 114th and 115th Congresses. First, in 2017, CRS staff examined the 937 statements submitted between July 1, 2016, and January 1, 2017, consisting of 13 joint resolutions and 924 bills. In 2019, CRS staff examined 1,110 statements submitted between July 1, 2018, and January 2, 2019, consisting of 10 joint resolutions and 1,100 bills. Most commonly, in 58% of cases, the CAS cited to a specific clause in Article I, Section 8, such as the Taxing and Spending Clause or the Commerce Clause. Few submitted CASs consisted of more than a bare citation to an affirmative power granted to Congress in the Constitution. For example, four CASs examined from 2016 and six CAS examined from 2018 explicitly discussed Supreme Court case law that purportedly support the bill or joint resolution. Forty-four of the statements from 2016 and thirteen statements from 2018 cited to provisions of the Constitution that constrain rather than empower Congress or one of the other federal branches, such as the restrictions in Article I, Section 9 or the Bill of Rights. Few CASs went beyond the scope of the rule to detail why the constitutional provision cited empowers Congress to enact the proposed legislation. In line with the studies on CASs in the 112 th Congress, CRS found that numerous statements submitted during the sample periods contained general, rather than specific, references to the Constitution. As Table 1 below indicates, the most frequent citation in CASs accompanying recent legislation was a general reference to Article I, Section 8, of the Constitution. This occurred in 30% of all CASs during the 2016 sample period and 33% of all CASs during the 2018 sample period, a marked increase from the House Republican Study Committee and Volokh studies of the 112 th Congress. Similarly, the sixth and ninth most frequently cited constitutional provision in submitted statements during the respective sample periods was even broader: a general reference to Article I of the Constitution. Practices with Regard to Particular Clauses Beyond CAS practices with regard to specificity, the sample of recently submitted Rule XII statements is also noteworthy in that it highlights the specific clauses of the Constitution that Members have most frequently relied upon in submitted CASs. In particular, numerous recently submitted CASs are notable in that the statements raise certain questions about how a particular clause has been interpreted, both as a matter of historical practice and by the courts, and how that same clause is being cited by the relevant CAS. Among the most prominent examples of CASs that could be seen as adopting an interpretation of the Constitution that potentially diverges from historical understandings or judicial interpretations of a particular clause include statements that cite to the following clauses: Necessary and Proper Clause : One of the most frequently cited clauses in recent CASs was the Necessary and Proper Clause, which allows Congress to "make all Laws which shall be necessary and proper for carrying into Execution" the powers enumerated in Article I and "all other Powers vested by [the] Constitution in the Government of the United States, or in any Department or Officer thereof." About a quarter of all CASs in the CRS studies contained a citation to that clause, with 14% of the 2016 CASs and 19% of the 2018 CASs citing the Necessary and Proper Clause as the sole power to enact the underlying legislation. Citations to the Necessary and Proper Clause in isolation could be seen as somewhat anomalous, as that clause has never been viewed by the Court or by the Framers of the Constitution as a general source of power for Congress to do whatever is "necessary and proper." Instead, "[w]hile the Necessary and Proper Clause authorizes congressional action 'incidental to [an enumerated] power, and conducive to its beneficial exercise,'" it does not provide Congress with "great substantive and independent power." General Welfare Clause: The General Welfare Clause refers to a specific phrase contained within the language in Article I, Section 8, clause 1 empowering Congress to enact certain taxes and spend the money collected from taxation. Specifically, the first clause of Section 8 of Article I affords Congress the power to "lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the Common Defence and general Welfare of the United States .... " In CRS's studies, the Taxing and Spending Clause was the third most frequently cited clause by CASs. Not infrequently, a citation to this clause—commonly described in CASs as the "General Welfare Clause"—was used for legislation unrelated to the spending of money by the federal government. Importantly, the phrase "general Welfare" does not exist in isolation in the clause, which might otherwise empower Congress to enact laws that broadly promote the general welfare of the nation. Instead, the phrase "general Welfare" in Article I, Section 8, clause 1, is tied to the preceding language in the clause regarding the raising of revenue, and thus requires Congress to spend the money it collects from taxation to promote the general welfare. While this power is considerable, it is necessarily tied to spending legislation. Military Regulation Clause: The constitutional provision affording Congress with the power to "make rules for the Government and Regulation of the land and naval forces" is another frequently cited clause in recent CASs. Several of the bills to which such CASs are attached, however, do not purport to regulate the United States' armed forces, but instead prescribe broad regulations for the government as a whole. Such references to the Military Regulation Clause appear to stem from reading the first phrase of the clause—"make rules for the Government"—in isolation from the rest of the clause, as an independent power. However, such an understanding of the clause is inconsistent with traditional interpretations of the scope of that clause, which view it as solely related to Congress's power over the military. This interpretation also runs contrary to traditional rules of legal interpretation that counsel for reading phrases in a legal text in their context and not in isolation from the rest of the text. More broadly, interpreting the Military Regulation Clause to allow Congress to direct the actions of the federal government generally in whatever manner Congress wishes would arguably transform the clause from a narrow power, confined to matters related to the armed forces, to an open-ended police power, something otherwise rejected by the Framers of the Constitution. Appropriations Clause: A number of recent CASs cite provisions in Article I, Section 9, including several CASs that cite the Appropriations Clause as the authority for Congress to provide money for a particular project. The Appropriations Clause states, in relevant part, that "No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law." Like other provisions found in Section 9 of Article I, this clause generally has not been interpreted to grant Congress any affirmative power. Instead, in keeping with other provisions in Section 9, the Appropriations Clause has been seen to function as a restriction on the powers of the federal government. Specifically, the Appropriations Clause ensures that when the federal government spends money, "the payment of money from the Treasury must be authorized by a statute." It thus serves as an affirmative restriction on the power of the Executive and makes Congress's "power over the purse" exclusive in nature. As discussed above, Congress's power to spend money derives from the Taxing and Spending Clause. Bill of Rights: While not among the most frequent citations in CASs, occasionally one of the first 10 amendments to the Constitution—the Bill of Rights—has been cited in support of Congress's power to enact legislation. Congress may certainly have an interest in protecting the rights listed in the Bill of Rights, but it should be noted that the first 10 amendments to the Constitution do not themselves empower Congress to take any action, and they instead consist of "negative rights" protecting individuals from certain government conduct. The Bill of Rights often prohibits congressional action. As a result, if a sponsor proposes legislation intended to support individual liberties protected by the Constitution, the CAS for such legislation could instead rely on an affirmative power of the Congress, such as the powers provided in Article I, Section 8 of the Constitution. Another alternative would be the enforcement power of the Fourteenth Amendment, which the Supreme Court has held allows "Congress [to] enact so-called prophylactic legislation" aimed at "prevent[ing] and deter[ing] unconstitutional conduct." Nonetheless, it should be noted that the House Rules Committee has suggested that a citation to a provision of the Constitution that does not explicitly grant power to Congress may suffice to comply with the CAS rule. For example, a Member seeking to rescind or narrow the scope of an existing law could arguably believe it appropriate to identify constitutional principles found in the Bill of Rights or elsewhere that the Member believes are advanced by the proposed legislation. Legal Implications of a CAS CASs have limited legal import, in that the CAS of a bill enacted into law will likely not alter a court's view of the constitutionality of the legislation. At bottom, a CAS is a statement by one Member of Congress (i.e., the sponsor) when a piece of legislation is introduced. It is not formally part of a bill or joint resolution. Therefore, even if the underlying legislation is enacted into law, the CAS would have no formal legal effect because the CAS was not subject to the approval of both houses of Congress, or presented to the President, as is required by Article I, Section 7. Instead, CASs are a type of legislative history material that describes the initial thoughts of a single Member as to Congress's power to enact the bill. In this sense, one might view a CAS as akin to an isolated statement in the Congressional Record or a statement issued by the sponsor of a bill, which courts generally regard as "weak" forms of legislative history when considering Congress's intent in passing a law. In practice, in the few court cases that cite to a law's CAS, the underlying statement is mentioned merely in passing and had no apparent effect on the decision, as courts have independently evaluated the constitutionality of the legislation in question notwithstanding the existence of the CAS. This practice is in keeping with broader principles of constitutional law as adopted by the courts. One such principle holds that Congress generally may not independently and without further scrutiny in the context of a case or controversy before a court define its own powers under the Constitution. Another principle holds that an otherwise unconstitutional law will not be found to be permissible by a court merely because Congress believes the provision to be within its powers. Debate over the Rule Given the seeming ease of compliance with House Rule XII, clause 7(c) , and the tendency of some CASs to cite to general or arguably inapplicable provisions of the Constitution, questions might be raised about the desirability of the CAS rule. Critics have argued for its repeal, contending that the rule is symbolic and has little impact on congressional debate or dialogue about Congress's authority under the Constitution. In addition, some have asserted that Congress lacks the institutional capacity to interpret the Constitution, and the CAS rule demonstrates this insofar as there have been few meaningful debates in Congress over the scope of Congress's powers under the rule. Others contend that the administrative costs of complying with the rule outweigh any benefits from the CAS requirement. On the other hand, proponents characterize House Rule XII, clause 7(c), as an extension of the broader debate over Congress's role in interpreting the Constitution, providing a limited means by which Members of Congress may expressly engage in constitutional interpretation. As one commentator notes, "[f]undamentally, a [CAS] is a congressional interpretation of the Constitution," and supporters of the rule see several benefits to having the House of Representatives engage in a limited form of constitutional interpretation through the submission of CASs. According to the rule's proponents, statements submitted under House Rule XII are a "simple and straightforward self-monitoring mechanism" to ensure that Congress does not "usurp" powers not granted to it in the Constitution. In this sense, according to its proponents, the CAS rule serves to remind Members of the limits on Congress's institutional power. Additionally, supporters of House Rule XII, clause 7(c), argue that the rule enhances constitutional dialogue outside of the judiciary and promotes constitutional literacy within Congress by formally requiring Members to engage in even limited constitutional interpretation when introducing legislation. According to one commentator, the CAS rule could provide a foundation for a new sense within ... [Congress] ... that there is both reason and need for its members to develop deeper and broader understandings of the Constitution and constitutional interpretation—in the direction of Congress becoming ... not only a co-equal branch of the federal government, but a co-equal interpreter of the federal Constitution, if not more. Proponents of the rule have further contended that the rule could enhance the institutional credibility and reputation of Congress by making clear to constituents that Members "take seriously the constitutionality of their actions." According to one former Member, Congress's reputational problems partially relate to a belief that Congress is not really debating or deliberating in good faith but is simply retreating to partisan battle lines. This concern has been exacerbated by Congress abdicating and leaving to the courts its historical responsibility to consider constitutionality on its own. In this respect, the House Rule ... is a foot in the door. Under the House Rule, all members of the House are required, essentially for the first time, to take at least one aspect of their obligation to consider constitutionality more seriously. Nonetheless, even among proponents of the rule, informal suggestions have been made to improve the constitutional dialogue surrounding CASs. Among the primary changes proposed are the following: Enhancing the Content of CASs: Prompted by criticisms about how "thin many of [the CASs] are," some have suggested that the House rules be altered to require more formal and robust debate over the constitutionality of proposed legislation. One proposal called for time to be set aside for formal debate on the House floor about the constitutionality of legislation upon the motion of a single Member. Other proposals focus on changing the content of the CASs themselves by requiring more expansive statements that discuss the relationship between the cited provision of the Constitution and the bill itself. In addition, others have advocated that the CAS rule formally require that the statement discuss "[w]ith some depth" any "precedent germane to the authority to enact the" legislation. Finally, several commentators have proposed altering the rule so that Members must not only cite to the Constitution's affirmative grants of authority to Congress, but also discuss any potential limitations the Constitution may impose on Congress's power to legislate. Better Enforcing the CAS R ule : Given the large number of CASs that lack specificity or cite seemingly inapplicable clauses of the Constitution, supporters of the rule have argued that Members must be held accountable for ensuring that submitted CASs comply with both the letter and spirit of the requirement. One early version of the current CAS rule proposed in the 111th Congress would have deemed general citations to the "common defense clause, the general welfare clause, or the necessary and proper clause" insufficient to satisfy House Rule XII, clause 7(c). In addition, this proposal would have allowed a Member to initiate a point of order challenging the adequacy of a CAS, thereby subjecting the measure to a short debate that would resolve whether the submitted statement complied with House Rule XII. Others have urged that the Clerk of the House or a designee be empowered to "evaluate the content" of a submitted statement formally and "add a note indicating that the Statement submitted does not properly satisfy the Rule's specificity requirement." Under this proposal, any bill with such a notation could be "subject to a special privileged motion by a Member to recommit the bill for failure to follow the Rule." Changing Other Procedures Regarding CASs : Currently, the CAS focuses on a single moment: the initial introduction of a bill or joint resolution. Viewing this limitation on the use of a CAS as a shortcoming that prevents more robust constitutional debate, several proponents of the CAS rule have argued that the rule should apply during all stages of the legislative process, including during committee deliberations, so that the constitutionality of a bill or resolution is subject to broader consideration. Relatedly, because the CAS rule only applies at the beginning of the legislative process, the only Member who currently assesses Congress's authority to enact the legislation in question is the Member who introduced the legislation. In order to ensure that Members, who ordinarily must decide how to vote on another Member's bill, consider the constitutional implications of the legislation in question, some have suggested that the House rule "explicitly acknowledge" the independent "obligation" of Members to be "mindful of any constitutional objections" regarding the bill that is the subject of a vote. In what may be the broadest means to allow more Members to weigh in on the constitutional implications of a bill, at least one commentator has suggested (but ultimately rejects) changing the House rule so that the CAS is part of the text of a bill, as opposed to a statement attached to the bill. Such an approach could, at least in theory, formalize and elevate the role of the CAS because when a bill that contains a CAS in its text is put to a vote, multiple Members could potentially voice their agreement or disagreement with the bill's language assessing Congress's power to enact the underlying legislation. Each of the proposed modifications to the CAS rule could raise new concerns, however. For example, if House Rule XII were modified to require more robust discussions of the constitutionality of a given piece of legislation throughout the legislative process, such a modification could amplify the criticisms that the CAS rule requires considerable resources to ensure compliance. Moreover, if the rule were modified to require that CASs include additional content, without any changes to its current enforcement regime, the additional requirements could, in the view of at least one commentator, be ignored. Potential Resources and Considerations for Drafting CASs This section of the report identifies issues that Members and congressional staffers may find useful to consider when assessing whether and how a constitutional provision may provide a source of authority for legislation. First, the section notes available resources that may aid in interpreting the Constitution. Second, the section suggests potential constitutional bases for various types of legislation. Resources on the Constitution That May Be Relevant for CASs There are numerous resources that Members and staff could use to learn more about the affirmative powers afforded Congress by the Constitution and the limitations on those powers. The Constitution and its current amendments contain a little more than 7,500 words, and Congress regularly authorizes the printing and distribution of pocket versions of the Constitution for Members and staff. Moreover, a host of primary historical documents from the founding era are available electronically for those interested, including the following: Farrand ' s Records : Documentary records from the Constitutional Convention, including the notes gathered by various attendees, complied by historian Max Farrand. The Federalist Papers : A series of newspaper articles written by Alexander Hamilton, John Jay, and James Madison urging the ratification of the Constitution. Founder ' s Constitution : A joint venture of the University of Chicago Press and the Liberty Fund, providing various primary sources for each clause of the Constitution. Constitutional Sources Project (ConSource): ConSource provides free access to a "digital library of historical sources related to the creation, ratification, and amendment of the United States Constitution." In addition to these primary sources, Members and staff may wish to consult a number of secondary sources that are publicly available explaining the various clauses of the Constitution, including the following: Constitution Annotated ( CONAN ) : The Library of Congress, through the Congressional Research Service, regularly publishes and updates The Constitution of the United States of America: Analysis and Interpretation (popularly known as the Constitution Annotated or CONAN). CONAN contains an in-depth, accessible, and objective record of how each provision in the Constitution has been interpreted by the Supreme Court and other entities. Commentaries on the Constitution of the United States : Commentaries on the Constitution of the United States is a three-volume treatise written by Associate Justice Joseph Story in 1833. It is widely cited as an authoritative understanding of the Constitution. Interactive Constitution : For an overview of the Constitution, the congressionally chartered National Constitution Center has created the Interactive Constitution wherein "scholars of different perspectives discuss what they agree upon, and what they disagree about" with regard to broad concepts in constitutional law. The Heritage Foundation ' s Guide to the Constitution : The Heritage Foundation's Guide to the Constitution provides a clause-by-clause analysis of the Constitution with a series of explanatory essays from a number of legal scholars. The American Constitution Society ' s Keeping Faith With the Constitution : The American Constitution Society's Keeping Faith With the Constitution examines the text and history of the Constitution with a view toward how the Constitution's "words and principles" have been interpreted throughout U.S. history. Additional Considerations in Crafting CASs To aid drafters of CASs, Table 2 provides a list of suggested citations that could potentially be submitted in a CAS pursuant to House Rule XII, clause 7(c), for various types of commonly introduced legislation. Beyond these suggestions for citations to specific provisions of the Constitution, given the broader trends with regard to CAS practices discussed above, it may also be helpful to consider the following questions before submitting a CAS: Does the CAS cite to a specific clause of the Constitution? While several recent CASs have adopted the practice of citing to an entire Article of the Constitution or a section of the Constitution, such as Article I, Section 8, the prevailing customary practice has been to cite to a specific clause of the Constitution. To the extent a Member wishes to cite to a specific clause in a CAS, Table 2 may be a helpful resource to consult. Does the CAS cite only to the Necessary and Proper Clause? While a considerable number of CASs cite exclusively to the Necessary and Proper Clause, such a citation may raise questions with regard to whether the clause is intended to do more than supplement Congress's other enumerated powers under the Constitution. To the extent a Member may wish to cite to Congress's other, more specific enumerated powers for support for a given piece of legislation, Table 2 may be a helpful resource to consult. Does the CAS cite to a clause that affirmatively empowers Congress to take an action? Citations in CASs to clauses in Article I, Section 9 of the Constitution, which contains a list of limitations on the powers of the federal government, or the Bill of Rights, which consists of a number of rights retained vis-á-vis the federal government, may suggest a broader interpretation of such clauses. To the extent a Member prefers to cite to a clause that is more generally recognized to grant an affirmative power to Congress, Article I, Section 8 contains the vast majority of commonly cited clauses that provide Congress the power to legislate with respect to various subjects. Does the CAS cite to a clause that relates to and authorizes the underlying legislation? Perhaps most importantly, a Member may wish cite to a provision of the Constitution whose power, based on either historical understandings or judicial interpretations of a particular clause, has some relationship with the subject matter of the legislation. As discussed earlier in this report, citations to constitutional provisions like the General Welfare Clause and the Military Regulation Clause may be more limited than the language of the Constitution might suggest at first blush. To the extent a Member may want to confirm that a particular CAS citation relates to and authorizes the underlying legislation, attorneys in CRS's American Law Division can provide advice with regard to specific CAS citations. Conclusion A House Rule XII, clause 7(c), statement regarding the constitutionality of legislation is required only when a Member of the House introduces legislation. The CAS, by its nature, is just the starting point for constitutional dialogue respecting a bill or joint resolution. Nothing in the rule prohibits further discussions about the constitutional issues that a piece of legislation may implicate. While the customary practice with regard to CASs, to date, has been to provide a short citation to the provision in the Constitution that affirmatively grants Congress the authority to enact the underlying legislation, it is not unprecedented for Members to cite sources beyond the text of the Constitution, such as Supreme Court case law, primary source materials on the Constitution, or a constitutional law treatise. Other CASs have gone beyond citing to the affirmative powers that the Constitution provides Congress and have discussed potential restraints the Constitution imposes that may prohibit the enactment of the underlying legislation. Outside of a CAS, Members can request a formal floor debate respecting the constitutionality of pending legislation, and constitutional debate and dialogue can occur in a host of other contexts, including voting to enact legislation, committee hearings, committee reports, and more "informal practices, norms, and traditions." Also, Members of Congress have a variety of resources available to help inform their participation in constitutional debate, including "expert witnesses at hearings, their legally trained staff, [and] constitutional experts at the [CRS]." In particular, CRS's American Law Division regularly provides legal advice to Members and their staff on constitutional questions regarding pending legislation, whether by providing suggestions for a CAS or by formally rendering an opinion on the constitutionality of pending legislation. In this vein, Members and their staff have the capability to meaningfully participate in ongoing debates over the interpretation of the Constitution, beginning with the CAS.

On January 5, 2011, the House of Representatives adopted an amendment to House Rule XII to require that Members state the constitutional basis for Congress's power to enact the proposed legislation when introducing a bill or joint resolution. (The amendment does not pertain to concurrent or simple resolutions). This Constitutional Authority Statement (CAS) rule, found at House Rule XII, clause 7(c), was subsequently adopted by every subsequent Congress. Understanding the CAS rule first requires an understanding of both the powers provided to the Congress under the Constitution and Congress's role in interpreting the founding document. Article I's Vesting Clause creates a Congress of specified or "enumerated" powers, and every law Congress enacts must be based on one or more of its powers enumerated in the Constitution. The Constitution creates two central types of limitations on Congress's powers: (1) internal limits and (2) external limits. Internal limits are the restrictions inherent in the constitutional grants of power themselves, such as the limits on the scope of Congress's powers under the Commerce Clause. External limits, on the other hand, are the constraints contained in affirmative prohibitions found elsewhere in the text or structure of the document, such as the First Amendment's prohibition on Congress abridging the freedom of speech. While the Court's 1803 decision in Marbury v. Madison firmly cemented the judicial branch's role in interpreting the Constitution by recognizing the power of the Court to strike down legislation as unconstitutional, the early history of the nation is replete with examples of all three government branches playing a substantial role in constitutional interpretation. By the mid-20th century, however, the Supreme Court began articulating a theory of judicial supremacy that became widely accepted, wherein the federal judiciary is the final and exclusive arbiter of the Constitution's meaning. Nonetheless, in recent decades, a number of legal scholars and government officials have criticized this theory, instead promoting the view that the political branches of government possess the independent and coordinate authority to interpret the Constitution. In support of this view, some point to (1) the Constitution itself requiring all Members of Congress to be bound by an oath to support the Constitution; (2) the presumption of constitutionality that courts afford legislation enacted by Congress; and (3) the wide range of questions the Constitution requires Congress to resolve. A CAS is fundamentally a congressional interpretation of the Constitution, in that House Rule XII requires each Member introducing a piece of legislation to attach a statement that cites the power(s) that allows Congress to enact the legislation. The submitted CAS appears in the Congressional Record and is published on Congress.gov. The House Rules Committee has indicated that Members have significant discretion in determining whether particular CASs comply with the rule. The CAS rule is enforced only insofar as "the House clerk ... acts to verify that each bill has a justification" and "not [in judging] the adequacy of the justification itself." The most common means of complying with the rule is to cite to a specific clause in Article I, Section 8, such as the Taxing and Spending Clause. The CAS rule has itself been subject to much debate, with proponents arguing that the rule promotes constitutional dialogue in the House, while critics contend that the rule provides minimal benefits and is administratively costly.

crs_R45705

crs_R45705_0

Background The U.S. Constitution does not clearly specify how military bases should be managed. Article II, Section 2, appoints the President as the commander-in-chief, with the implied power to deploy, and redeploy, the armed forces as necessary for national defense. In common practice, this has included the authority to create and close military installations needed to accommodate and train personnel under the President's command. However, Article I, Section 8, charges Congress with the responsibility to raise armies, maintain a Navy, and regulate the militia. Through annual authorization and appropriation legislation, Congress legislates policy for managing DOD real property assets and funds the construction, maintenance, operation, and disposal of military infrastructure. Throughout most of American history, the President has exercised broad, relatively unchallenged authority for opening, closing, or realigning military installations. Congress largely deferred to the Executive branch primarily because the President, as commander-in-chief, is empowered with the responsibility of deploying military forces. Prompted by large-scale closures of World War II era infrastructure during the 1960s and 1970s, Congress enacted legislation in 1977 that effectively limited the Executive branch's ability to close or realign major military installations. The new statute, later codified as 10 U.S.C. 2687 (Section 612 of the Military Construction Authorization Act of 1978, P.L. 95-82 ), generally required DOD to conduct comprehensive and lengthy assessments of major basing decisions as part of a congressional report-and-wait process. These assessments could be challenged in court on environmental grounds or on questions related to their sufficiency, further lengthening delays. The new legislation effectively halted DOD's ability to close or realign domestic bases of significant size. In the decade that followed the passage of 10 U.S.C. 2687, congressional pressure grew to accommodate DOD basing priorities. By 1988, ongoing negotiations between the Secretary of Defense and the House and Senate Armed Service Committees led to new legislation ( P.L. 100-526 ) that authorized a limited number of base closures based on the oversight of an independent panel. Though later modified, the effort marked the beginning of the first Base Realignment and Closure (BRAC) process, which was intended to insulate base closings from considerations such as favoritism or other political interference. Widely considered a success, the 1988 BRAC legislation was taken up again and modified in succeeding BRAC rounds; first in 1991, 1993, and 1995; and again in 2005. Major Elements of the Modern BRAC Process The modern BRAC process refers to a temporary authority that amends the Defense Base Closure and Realignment Act of 1990 ( P.L. 101-510 ), hereinafter referred to as the Base Closure Act , and features a framework of elements that entrusts an independent commission with certifying closure and realignment recommendations made by the Secretary of Defense. In general, the process has required the Secretary to submit a list of military installations recommended for closure or realignment to an independent, bipartisan BRAC commission. After analyzing the Secretary's recommendations, the commission may accept, reject, or modify the list. Upon completing its review, the commission forwards its final findings and recommendations to the President. Upon acceptance of commission's recommendations, the President then submits them to Congress. If the President does not submit the recommendations to Congress within the timeframe required under the Base Closure Act, the BRAC process is terminated. Upon receipt of the report from the President, Congress has the opportunity to disapprove of the recommendations in toto through the enactment of a joint resolution. The hallmarks of this framework include establishment of an independent commission whose members are appointed by the President, in consultation with congressional leadership (and the advice and consent of the Senate); reliance on objective and uniform criteria for evaluating basing recommendations; GAO review and certification of DOD data; deliberations that include open hearings, solicitation of feedback, installation visits, and data available for public review; requirement that the commission's final list of closure and realignment actions be accepted or rejected in its entirety; and presidential and congressional off-ramps that would terminate the BRAC process when certain conditions are not met. The timeline to complete an entire BRAC round has varied; however, the most recent one conducted in 2005 took approximately 10 years, from authorization to completion (end of the six-year BRAC implementation period). Key milestones of a typical BRAC timeline include DOD force structure plan, infrastructure inventory, and analysis of options (up to four years); nomination and confirmation of BRAC commissioners; DOD submission of BRAC recommendations (and associated reports) to the commission; commission deliberations (typically four months); final report sent to the President for approval; 45-day deadline for Congress to reject recommendations in their entirety (Joint Resolution of Disapproval) or allow implementation to begin; DOD implementation (two years to begin; six years to complete); and DOD disposal of real property (indeterminate). BRAC Selection Criteria BRAC is often characterized as a cost efficiency measure that enables DOD to more effectively manage its real property assets by allowing it to shed excess infrastructure, but historically, potential costs and savings have been a consideration that have ranked below military value. No BRAC round has established cost savings targets, floors, or ceilings. During BRAC rounds in 1991, 1993, and 1995, Congress required the Secretary of Defense to develop and report a set of objective selection criteria that would be used for identifying bases for closure and realignment. For the 2005 round, Congress amended the BRAC statute to require the Secretary to regard military value (defined below) as the primary consideration. Other factors, such as potential costs and savings, were explicitly categorized as lower priority. Because the amended legislative language reflected longstanding DOD policy, the 2005 BRAC criteria appear almost identical when compared with previous versions, with additional language added for emphasis or included for explanatory examples. The excerpt below indicates the 2005 BRAC selection criteria. Emphasized text (in italics) represents new language not included as part of the 1995 criteria. SEC. 2913. SELECTION CRITERIA FOR 2005 ROUND. (a) FINAL SELECTION CRITERIA.—The final criteria to be used by the Secretary in making recommendations for the closure or realignment of military installations inside the United States under this part in 2005 shall be the military value and other criteria specified in subsections (b) and (c). (b) MILITARY VALUE CRITERIA.—The military value criteria are as follows: (1) The current and future mission capabilities and the impact on operational readiness of the total force of the Department of Defense, including the impact on joint warfighting, training, and readiness. (2) The availability and condition of land, facilities, and associated airspace (including training areas suitable for maneuver by ground, naval, or air forces throughout a diversity of climate and terrain areas and staging areas for the use of the Armed Forces in homeland defense missions) at both existing and potential receiving locations. (3) The ability to accommodate contingency, mobilization, surge, and future total force requirements at both existing and potential receiving locations to support operations and training. (4) The cost of operations and the manpower implications. (c). OTHER CRITERIA.—The other criteria that the Secretary shall use in making recommendations for the closure or realignment of military installations inside the United States under this part in 2005 are as follows: (1) The extent and timing of potential costs and savings, including the number of years, beginning with the date of completion of the closure or realignment, for the savings to exceed the costs. (2) The economic impact on existing communities in the vicinity of military installations. (3) The ability of the infrastructure of both the existing and potential receiving communities to support forces, missions, and personnel. (4) The environmental impact , including the impact of costs related to potential environ mental restoration, waste management, and environmental compliance activities. Disposal of Real Property The transfer and disposal of DOD real property made available following the implementation of a BRAC round is a complex process that may extend for years beyond the initial six-year implementation window. Disposal may be delayed or otherwise affected by the participation of local and state communities and the degree to which environmental remediation by federal authorities is necessary. The graph below shows the total acreage from previous BRAC rounds yet to be disposed. The Base Closure Act authorizes a variety of conveyance mechanisms not otherwise available for the transfer and disposal of federal property, a process typically performed by the General Services Administration (GSA). Under a BRAC, conveyance authority is delegated from GSA, through the Secretary of Defense to the various military departments, which receive special approval to supersede GSA regulations with BRAC specific regulations. The primary difference between the routine disposal of federal property and real property conveyed under a BRAC is the role of local communities. Under normal (non-BRAC) circumstances, the General Services Administration (GSA) is directly responsible for disposing of any surplus federal real property, which includes defense property. A military department in possession would, for example, declare property as excess to its needs and turn over the administration of a site to the GSA. The GSA would then follow a number of consecutive steps for disposal of federal property laid out in statute. It would first offer the excess property to other federal agencies. If none expressed an interest, the excess property would be declared surplus . The GSA would then offer the surplus property to state or local governments and non-profits that might use it for a public benefit ( public benefit conveyance) , such as a homeless shelter or medical center. Finally, if the property has neither been transferred nor conveyed in the previous steps, the surplus property would be offered for sale to the public. Under a BRAC, local communities can significantly affect the BRAC property transfer and disposal decisions, which are managed by the Secretary of the responsible military department. Once approved for closure, communities around an installation typically organize a Local Redevelopment Authority (LRA) for the purpose of creating and executing a redevelopment plan for the property. While the plan is not binding on DOD, the Department has been statutorily directed to give the plan considerable weight. DOD makes economic development grants and technical support available through its Office of Economic Adjustment (OEA) to assist LRAs with the process. In recent BRAC rounds, Congress has authorized a special transfer authority that has permitted DOD to transfer title to property at less than fair market value, or even at no cost, if the LRA agrees to certain conditions designed to create employment at the former defense facility. This has been referred to as an Economic Development Conveyance (EDC). BRAC Savings DOD has asserted that savings generated from BRAC are generally the result of avoiding the cost of retaining and operating unneeded infrastructure, with upfront costs eventually offset by annual savings. Between FY2012 and FY2018, the Department consistently argued for a new BRAC, asserting that "absent another BRAC round, the Department will continue to operate some of its installations sub-optimally as other efficiency measures, changing force structure, and technology reduce the number of missions and personnel." Emphasizing the potential cost savings, DOD has suggested a new "efficiency-focused BRAC" could save the Department billions of dollars annually: "Savings from BRAC rounds are real and substantial. The last five BRAC rounds are collectively saving the Department $12B annually. A new efficiency-focused BRAC could save the Department an additional ~$2B annually (based on the '93/'95 rounds)." In its ongoing series of BRAC-related reports, the GAO has noted the unreliability of DOD cost savings estimates. In 2013, GAO concluded that, though the Department had achieved annual recurring savings as the result of the 2005 round, visibility into the outcome has been limited due to missing and inconsistent recordkeeping. Similar studies have raised questions about the data DOD has used to predict and monitor BRAC effectiveness, long-term savings, and outcomes. For example "... the services did not develop baseline operating costs before implementing the BRAC recommendations, which would have enabled it to determine whether savings were achieved." "... We found that DOD's process for providing the BRAC commission with cost and savings estimates was hindered by underestimating recommendation-specific requirements and that DOD did not fully anticipate information technology requirements for many of the recommendations." "The department cannot provide documentation to show to what extent it reduced plant replacement value or vacated leased space as it reported in May 2005 that it was intended to do.... In addition, DOD bundled multiple closures ... thus limiting visibility into the estimated costs and savings for individual closures and realignments." "... DOD has not reported to Congress how the cleanup of emerging contaminants, especially certain perfluorinated compounds, at installations closed under BRAC will significantly increase the estimated (BRAC) cleanup costs." "... We found that OSD (Office of the Secretary of Defense) did not have a fully developed method for accurately collecting information on costs, savings, and efficiencies achieved specifically from joint basing, and that OSD had not developed a plan to guide joint bases in achieving cost savings and efficiencies...." "... DOD has not committed to take action on some of our recommendations related to implementing any future BRAC rounds, such as improving DOD's ability to estimate potential liabilities, and savings to achieve desired outcomes." In its final report to the President, the 2005 BRAC commission noted DOD's initial estimate of savings had been "vastly overestimated," and suggested that the Department had claimed savings that were "not truly savings in the commonly understood sense of the term." Reflecting on the quality of cost estimates and savings associated with 2005 BRAC round, Anthony Principi, Chairman of the 2005 Defense Base Closure and Realignment Commission, has suggested opportunities exist for the DOD to improve its analysis by adopting more consistent accounting practices and inclusive metrics: To start, DoD has to do a better job estimating the true cost of any closure or realignment.... Second, the cost of base realignment actions (COBRA) accounting procedure, used by DoD as a basis of comparison among scenarios, should include cost estimates for environmental restoration not just "clean to current use" standards. In addition, COBRA or some other cost evaluation process should also include transportation and infrastructure costs and burden sharing with the federal government.... In addition to refining DOD accounting metrics, some observers have suggested congressional visibility into BRAC cost and long-term effectiveness could be improved by amending the process to require the Department to disclose how closure and realignment recommendations meet expected cost saving and reduced infrastructure targets. Excess Infrastructure A BRAC process is the chief means by which DOD disposes of excess infrastructure. Each year between 2013 and 2017, the Department requested a new BRAC round as a means of realizing greater efficiency and reducing excess infrastructure. It has also attempted to allay concerns related to the 2005 BRAC experience - marked by unexpectedly high costs and complexity - by emphasizing cost savings and efficiencies rather than force transformation. In April 2016, DOD submitted to the House Armed Services Committee an I nfrastructure C apacity R eport (interim version) that assessed 22% of the Department's base infrastructure excess to its needs. The methodology used in the report—required by Section 2815 of the National Defense Authorization Act (NDAA) for FY2016 (P.L. 114-92)—remained consistent with excess capacity reports submitted prior to the 1998 and 2005 BRAC rounds round. The Department stated its purpose for obtaining "a sense of excess and whether excess remains after various changes, such as (prior) BRAC or force structure reductions." A final infrastructure capacity report, submitted to Congress in October 2017, modified the original excess capacity estimate to 19%. The Department concluded its infrastructure capacity analysis by arguing it had established sufficient justification for a new BRAC round, a process that would allow it to more effectively dispose of excess infrastructure and manage remaining real property assets. The Department believes we have addressed all congressional concerns.... The time to authorize another BRAC round is now. The BRAC process requires considerable time to analyze and develop recommendations, have those recommendations reviewed by the independent BRAC Commission, and then implemented over a six-year period of time. The longer authorization is delayed, the longer the Department will be forced to expend valuable resources on unnecessary facilities instead of weapons systems, readiness, and other national security priorities. Critics of the Department's methodology for estimating excess infrastructure have asserted it includes unreasonable research assumptions and metrics, undermining the basis for DOD's conclusion. For example, observers have cited the report's reliance on Cold War baseline values to establish excess capacity, inconsistent application of existing metrics for measuring capacity shortfalls, and overly broad categorization schemes. Some observers have also cited longstanding data management challenges that continue to affect the Department's ability to measure current excess facility inventory and utilization rates. Others have noted the dearth of data that support DOD claims related to BRAC effectiveness and the disposal of excess property. During a news briefing on the FY2019 defense budget, Undersecretary of Defense (Comptroller) David L. Norquist noted that the Department had declined to propose a BRAC round that year, stating that it would work instead to focus on internal reforms while preparing for a financial audit. And so, I think we're looking at doing two things, going forward. One is, working with Congress to find common areas where we can make reforms and changes that don't create the same types of obstacles. The other is that we are undergoing a financial-statement audit that includes a look at property, and assets and investments and improving the accuracy of the data behind it. And as a view of being able to take advantage of the data coming out of that process, to help us make better decision-making on real property. But, yes, you are correct, there is not (a) request for another BRAC round in this budget. In testimony before the Senate Appropriations Committee Subcommittee on Military Construction, Veterans Affairs, and Related Agencies, Lucian Niemeyer, Assistant Secretary of Defense for Energy, Installations and Environment, indicated DOD would be working in FY2019 to improve its excess infrastructure accounting processes and demolish unneeded infrastructure: In lieu of another request for legislation in FY 2019 to authorize an additional Base Realignment and Closure (BRAC) round, we will review our facilities, to include facility usage optimization review to ensure we have a better accounting of excess infrastructure. We also have proposed for FY 2019 increased efforts to demolish unneeded or obsolete facilities over the course of this year. Legacy of the 2005 BRAC Round The 2005 BRAC round was unique among all previous rounds due to its relative size, scope and complexity. (See Figure 2 for comparison of major and minor BRAC actions between rounds.) Colloquially called "the mother of all BRACs," the objectives of the 2005 round were primarily about transforming military infrastructure; however, unanticipated expenses have played a role in shaping subsequent congressional views of the BRAC process and, according to many observers, dampened support for consideration of a new round. Savings estimates submitted during the 2005 round were overvalued by as much as 67%, according to GAO analysis, with one-time implementation costs rising from $21 to $35.1 billion. GAO found that the $14.1 billion increase was due primarily to the rising cost of new construction associated with subsidiary projects not included in the original BRAC implementation plan. Referring to the implementation of the 2005 round, Assistant Secretary Niemeyer, noted, "BRAC legislation effectively limited the ability of Congress to oversee BRAC implementation costs and the Department made deliberate decisions to use BRAC implementation as a recapitalization tool, expanding facility requirements and associated costs." To address congressional concerns about spiraling costs in new BRAC rounds, DOD has periodically proposed legislative language that would constrain the Secretary's ability to recommend BRAC actions that would not yield savings within 20 years and to emphasize recommendations that would yield net savings within five years. The Department of Defense Base Closure Account Each year, Congress appropriates funding for the Department of Defense Base Closure Account, part of the Military Construction Defense-Wide appropriation. With no BRAC round authorized or underway, the primary purpose of continuing BRAC appropriations is to fund the environmental cleanup and caretaker functions at bases that were closed under prior rounds (see Figure 3 ). In FY2020, the Trump Administration has requested $278.5 million for BRAC continuing environmental and caretaker costs, with $158.3 million provided for the Navy (57%), $66.1 million for the Army (24%), and $54 million for the Air Force (19%). The total request represents a $63 million decrease (19%) from FY2019 enacted levels ($342 million). In FY2018, Congress urged DOD to accelerate environmental remediation at BRAC sites. In report language, appropriators stated that additional funds were provided to speed environmental remediation at installations closed under previous rounds. Accelerated cleanup.—The agreement includes additional funding to accelerate environmental remediation at installations closed during previous Base Realignment and Closure (BRAC) rounds. Priority should be given to those sites with newly identified radiological cleanup cost. There are many factors hindering the cleanup of BRAC sites. However, strategic investments can lead to quicker clean-ups and faster turnover of DOD property to the local community. Therefore, the Department is directed to submit to the congressional defense committees a spend plan for the additional BRAC funds not later than 30 days after enactment of this Act. Congressional Action on BRAC Prohibition on Conducting a New Round Congressional authorizers and appropriators have regularly inserted language into annual defense legislation that would disallow the use of funds for the purpose of a new BRAC round. In FY2019, for example, though DOD did not propose a BRAC, authorizers inserted language into the annual NDAA that prohibited a new round: SEC. 2703. Prohibition on Conducting Additional Base Realignment and Closure (BRAC) Round. Nothing in this Act shall be construed to authorize an additional Base Realignment and Closure (BRAC) round. A similar provision was included in the final FY2019 defense appropriations bill: SEC. 8122. None of the funds made available by this Act may be used to propose, plan for, or execute a new or additional Base Realignment and Closure (BRAC) round. BRAC Legislation in the 115th Congress In 2017, Members in both chambers proposed legislation that would have authorized a new round of base closures. Though no legislation for a full BRAC was enacted, a provision included the following year in the final FY2019 NDAA. Under the new scenario described by Section 2702 of the John S. McCain National Defense Authorization Act for Fiscal Year 2019 ( H.R. 5515 , P.L. 115-232 ), BRAC-like actions are authorized within the confines of a state based on the recommendation of the governor and support of local communities affected by the proposed actions. Unlike a traditional BRAC process, the new authorities would forgo the creation of an independent review panel. The Secretary of Defense is, instead, required to deliver a report of planned BRAC actions to congressional defense committees and, following a 90-day waiting period, begin implementation. For details, please refer to "In-State BRAC" in Appendix A of this report. The BRAC related legislative proposals above illustrate the flexibility Congress has for amending or adopting the template of past BRAC processes that DOD has called "the only fair, objective, and comprehensive process to achieve these goals (eliminating excess infrastructure)." Congress may consider whether future legislative proposals for base closures and realignments will adopt the lessons learned from previous rounds while retaining the basic framework, or fundamentally alter the process. BRAC Legislation in the 116th Congress No BRAC legislation has so far been proposed in the 116 th Congress. Additionally, the Department has asserted that it does not intend to use the new BRAC-like authorities authorized by Section 2702 of the FY2019 NDAA. To date, DOD has received no state requests under this authority. Appendix A. Legislative References BRAC Authorizing Legislation 1988 Round The Defense Authorization Amendments and Base Closure and Realignment Act, enacted October 24, 1988 (P.L.100-526) 1991, 1993, 1995 Rounds National Defense Authorization Act for Fiscal Year 1991, enacted November 5, 1990 (P.L. 107-107, Base Closure and Realignment Act of 1990, Title XXIX) 2005 Round National Defense Authorization Act for Fiscal Year 2002, ( P.L. 101-510 ; amended the Defense Base Closure and Realignment Act of 1990 ( P.L. 101-510 ) 10 U.S.C. 2687, 10 U.S.C. 993 Summary In 1977, Congress enacted 10 U.S.C. 2687, the first statutory restriction on the President's ability to close or realign military installations. Amended over the years, the statute has retained its essential elements, establishing procedures the Secretary of Defense must follow before closing a military installation where a threshold number (currently 300) of civilian personnel are authorized to be employed, or realigning an installation that involves a reduction by more than 50% (or 1,000) of civilian workers. A more recent statute, 10 U.S.C. 993, introduced additional reporting requirements that would restrict the Secretary's ability to realign installations if the plan would affect more than 1,000 assigned members of the Armed Forces. In-State BRAC Section 2702 of the John S. McCain National Defense Authorization Act for Fiscal Year 2019 ( H.R. 5515 , P.L. 115-232 ) authorizes new in-state BRAC authorities. Text of the provision is included below in its entirety. SEC. 2702. ADDITIONAL AUTHORITY TO REALIGN OR CLOSE CERTAIN MILITARY INSTALLATIONS. (a) Authorization.—Notwithstanding sections 993 or 2687 of title 10, United States Code, and subject to subsection (d), the Secretary of Defense may take such actions as may be necessary to carry out the realignment or closure of a military installation in a State during a fiscal year if— (1) the military installation is the subject of a notice which is described in subsection (b); and (2) the Secretary includes the military installation in the report submitted under paragraph (2) of subsection (c) with respect to the fiscal year. (b) Notice From Governor of State.—A notice described in this subsection is a notice received by the Secretary of Defense from the Governor of a State (or, in the case of the District of Columbia, the Mayor of the District of Columbia) in which the Governor recommends that the Secretary carry out the realignment or closure of a military installation located in the State, and which includes each of the following elements: (1) A specific description of the military installation, or a specific description of the relevant real and personal property. (2) Statements of support for the realignment or closure from units of local government in which the installation is located. (3) A detailed plan for the reuse or redevelopment of the real and personal property of the installation, together with a description of the local redevelopment authority which will be responsible for the implementation of the plan. (c) Response to Notice.— (1) Mandatory response to governor and congress.—Not later than 1 year after receiving a notice from the Governor of a State (or, in the case of the District of Columbia, from the Mayor of the District of Columbia), the Secretary of Defense shall submit a response to the notice to the Governor and the congressional defense committees indicating whether or not the Secretary accepts the recommendation for the realignment or closure of a military installation which is the subject of the notice. (2) Acceptance of recommendation.—If the Secretary of Defense determines that it is in the interests of the United States to accept the recommendation for the realignment or closure of a military installation which is the subject of a notice received under subsection (b) and intends to carry out the realignment or closure of the installation pursuant to the authority of this section during a fiscal year, at the time the budget is submitted under section 1105(a) of title 31, United States Code, for the fiscal year, the Secretary shall submit a report to the congressional defense committees which includes the following: (A) The identification of each military installation for which the Secretary intends to carry out a realignment or closure pursuant to the authority of this section during the fiscal year, together with the reasons the Secretary of Defense believes that it is in the interest of the United States to accept the recommendation of the Governor of the State involved for the realignment or closure of the installation. (B) For each military installation identified under subparagraph (A), a master plan describing the required scope of work, cost, and timing for all facility actions needed to carry out the realignment or closure, including the construction of new facilities and the repair or renovation of existing facilities. (C) For each military installation identified under subparagraph (A), a certification that, not later than the end of the fifth fiscal year after the completion of the realignment or closure, the savings resulting from the realignment or closure will exceed the costs of carrying out the realignment or closure, together with an estimate of the annual recurring savings that would be achieved by the realignment or closure of the installation and the timeframe required for the financial savings to exceed the costs of carrying out the realignment or closure. (d) Limitations.— (1) Timing.—The Secretary may not initiate the realignment or closure of a military installation pursuant to the authority of this section until the expiration of the 90-day period beginning on the date the Secretary submits the report under paragraph (2) of subsection (c). (2) Total costs.—Subject to appropriations, the aggregate cost to the government in carrying out the realignment or closure of military installations pursuant to the authority of this section for all fiscal years may not exceed $2,000,000,000. In determining the cost to the government for purposes of this section, there shall be included the costs of planning and design, military construction, operations and maintenance, environmental restoration, information technology, termination of public-private contracts, guarantees, and other factors contributing to the cost of carrying out the realignment or closure, as determined by the Secretary. (e) Process for Implementation.—The implementation of the realignment or closure of a military installation pursuant to the authority of this section shall be carried out in accordance with section 2905 of the Defense Base Closure and Realignment Act of 1990 (title XXIX of P.L. 101-510 ; 10 U.S.C. 2687 note) in the same manner as the implementation of a realignment or closure of a military installation pursuant to the authority of such Act. (f) State Defined.—In this section, the term ``State'' means each of the several States, the District of Columbia, the Commonwealth of Puerto Rico, American Samoa, Guam, the United States Virgin Islands, and the Commonwealth of the Northern Mariana Islands. (g) Termination of Authority.—The authority of the Secretary to carry out a realignment or closure pursuant to this section shall terminate at the end of fiscal year 2029. Appendix B. BRAC Acreage Disposal Status, By State

Since 1977, statutory thresholds have effectively constrained the President's ability to close or realign major military installations in the United States. Congress has instead periodically granted temporary authorities—known as a Base Realignment and Closure (BRAC)—that have established independent commissions for the review and approval of basing changes submitted by the Secretary of Defense. These unique and transient authorities last expired on April 16, 2006. There have been five rounds of base closures: 1988, 1991, 1993, 1995, and 2005. Though Congress has periodically adjusted the BRAC process to account for lessons learned, the modern framework has remained generally consistent with earlier rounds, and includes establishment of an independent commission; reliance on objective and uniform criteria; Government Accountability Office (GAO) review and certification of Department of Defense (DOD) data; deliberations designed to be transparent that include open hearings, solicitation of feedback, installation visits, and data available for public review; and requirement that the final list of closure and realignment recommendations be accepted or rejected in their entirety. Congress has defined BRAC selection criteria in statute, thus requiring the Secretary to prioritize military value over cost savings. Additionally, Congress has required the Secretary to align the Department's recommendations with a comprehensive 20-year force structure plan. The commission may modify, reject, or add recommendations during its review before forwarding a final list to the President. After receiving the Commission's list of recommendations, the President may either accept the report in its entirety or seek to modify it by indicating disapproval and returning it to the commission for further evaluation. If the President accepts the commission's recommendations, they are forwarded to Congress. BRAC implementation begins by default unless Congress rejects the recommendations in their entirety within 45 days by enacting a joint resolution. During the implementation phase, DOD is required to initiate closures and realignments within two years and complete all actions within six years. The BRAC process represents a legislative compromise between the executive and legislative branches wherein each shares power in managing the closure and realignment of military bases. The imposition of an independent, third-party mediator was intended to insulate base closings from political considerations by both branches that had complicated similar actions in the past. This report provides background on the development of BRAC, describes its major elements and milestones, and outlines issues frequently cited in the context of new rounds, such as potential savings.

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Introduction Federal land management decisions influence the U.S. economy, environment, and social welfare. These decisions determine how the nation's federal lands will be acquired or disposed of, developed, managed, and protected. Their impact may be local, regional, or national. This report discusses selected federal land policy issues that the 116 th Congress may consider through oversight, authorizations, or appropriations. The report also identifies CRS products that provide more detailed information. The federal government manages roughly 640 million acres of surface land, approximately 28% of the 2.27 billion acres of land in the United States. Four agencies (referred to in this report as the federal land management agencies, or FLMAs) administer a total of 608 million acres (~95%) of these federal lands: the Forest Service (FS) in the Department of Agriculture (USDA), and the Bureau of Land Management (BLM), U.S. Fish and Wildlife Service (FWS), and National Park Service (NPS), all in the Department of the Interior (DOI). Most of these lands are in the West and Alaska, where the percentage of federal ownership is significantly higher than elsewhere in the nation (see Figure 1 ). In addition, the Department of Defense administers approximately 11 million acres in military bases, training ranges, and more; and numerous other agencies administer the remaining federal acreage. The federal estate also extends to energy and mineral resources located below ground and offshore. BLM manages the federal onshore subsurface mineral estate. The Bureau of Ocean and Energy Management (BOEM), also in DOI, manages access to about 1.7 billion offshore acres located beyond state coastal waters, referred to as U.S. offshore areas or the outer continental shelf (OCS). Not all of these acres can be expected to contain extractable mineral and energy resources, however. Federal land policy and management issues generally fall into several broad thematic questions: Should federal land be managed to produce national or local benefits? How should current uses be balanced with future resources and opportunities? Should current uses, management, and protection programs be replaced with alternatives? Who decides how federal land resources should be managed, and how are the decisions made? Some stakeholders seek to maintain or enhance the federal estate, while others seek to divest the federal estate to state or private ownership. Some issues, such as forest management and fire protection, involve both federal and nonfederal (state, local, or privately owned) land. In many cases, policy positions on federal land issues do not divide along clear party lines. Instead, they may be split along the lines of rural-urban, eastern-western, and coastal-interior interests. Several committees in the House and Senate have jurisdiction over federal land issues. For example, issues involving the management of the national forests cross multiple committee jurisdictions, including the Committee on Agriculture and the Committee on Natural Resources in the House, and the Committee on Agriculture, Nutrition and Forestry and Committee on Energy and Natural Resources in the Senate. In addition, federal land issues are often addressed during consideration of annual appropriations for the FLMAs' programs and activities. These agencies and programs typically receive appropriations through annual Interior, Environment, and Related Agencies appropriations laws. This report introduces selected federal land issues, many of which are complex and interrelated. The discussions are broad and aim to introduce the range of issues regarding federal land management, while providing references to more detailed and specific CRS products. The issues are grouped into these broad categories Federal Estate Ownership, Funding Issues Related to Federal Lands, Climate Policy and Federal Land Management, Energy and Minerals Resources, Forest Management, Range Management, Recreation, Other Land Designations, Species Management, and Wildfire Management. This report generally contains the most recent available data and estimates. Federal Estate Ownership Federal land ownership began when the original 13 states ceded title of some of their land to the newly formed central government. The early federal policy was to dispose of federal land to generate revenue and encourage western settlement and development. However, Congress began to withdraw, reserve, and protect federal land through the creation of national parks and forest reserves starting in the late 1800s. This "reservation era" laid the foundation for the current federal agencies, whose primary purpose is to manage natural resources on federal lands. The four FLMAs and BOEM were created at different times, with different missions and purposes, as discussed below. The ownership and use of federal lands has generated controversy since the late 1800s. One key area of debate is the extent of the federal estate, or, in other words, how much land the federal government should own. This debate includes questions about whether some federal lands should be disposed to state or private ownership, or whether additional land should be acquired for recreation, conservation, open space, or other purposes. For lands retained in federal ownership, discussion has focused on whether to curtail or expand certain land designations (e.g., national monuments proclaimed by the President or wilderness areas designated by Congress) and whether current management procedures should be changed (e.g., to allow a greater role for state and local governments or to expand economic considerations in decisionmaking). A separate issue is how to ensure the security of international borders while protecting the federal lands and resources along the border, which are managed by multiple agencies with their own missions. In recent years, some states have initiated efforts to assume title to the federal lands within their borders, echoing efforts of the "Sagebrush Rebellion" during the 1980s. These efforts generally are in response to concerns about the amount of federal land within the state, as well as concerns about how the land is managed, fiscally and otherwise. Debates about federal land ownership—including efforts to divest federal lands—often hinge on constitutional principles such as the Property Clause and the Supremacy Clause. The Property Clause grants Congress authority over the lands, territories, or other property of the United States: "the Congress shall have Power to dispose of and make all needful Rules and Regulations respecting the Territory or other Property belonging to the United States." The Supremacy Clause establishes federal preemption over state law, meaning that where a state law conflicts with federal law, the federal law will prevail. Through these constitutional principles, the U.S. Supreme Court has described Congress's power over federal lands as "without limitations." For instance, Congress could choose to transfer to states or other entities the ownership of areas of federal land, among other options. CRS Products CRS Report R42346, Federal Land Ownership: Overview and Data , by Carol Hardy Vincent, Laura A. Hanson, and Carla N. Argueta. CRS Report R44267, State Management of Federal Lands: Frequently Asked Questions , by Carol Hardy Vincent. Agencies Managing Federal Lands The four FLMAs and BOEM manage most federal lands (onshore and offshore, surface and subsurface) Forest Service (FS) , in the Department of Agriculture, manages the 193 million acre National Forest System under a multiple-use mission, including livestock grazing, energy and mineral development, recreation, timber production, watershed protection, and wildlife and fish habitat. Balancing the multiple uses across the national forest system has sometimes led to a lack of consensus regarding management decisions and practices. Bureau of Land Management (BLM) , in the Department of the Interior (DOI), manages 246 million acres of public lands, also under a multiple-use mission of livestock grazing, energy and mineral development, recreation, timber production, watershed protection, and wildlife and fish habitat. Differences of opinion sometimes arise among and between users and land managers as a result of the multiple use opportunities on BLM lands. U.S. Fish and Wildlife Service (FWS) , in DOI, manages 89 million acres as part of the National Wildlife Refuge System (NWRS) as well as additional surface, submerged, and offshore areas. FWS manages the NWRS through a dominant-use mission—to conserve plants and animals and associated habitats for the benefit of present and future generations. In addition, FWS administers each unit of the NWRS pursuant to any additional purposes specified for that unit. Other uses are permitted only to the extent that they are compatible with the conservation mission of the NWRS and any purposes identified for individual units. Determining compatibility can be challenging, but the FWS's stated mission generally has been seen to have helped reduce disagreements over refuge management and use. National Park Service (NPS) , in DOI, manages 80 million acres in the National Park System. The NPS has a dual mission—to preserve unique resources and to provide for their enjoyment by the public. NPS laws, regulations, and policies emphasize the conservation of park resources in conservation/use conflicts. Tension between providing recreation and preserving resources has produced management challenges for NPS. Bureau of Ocean Management (BOEM) , also in DOI, manages energy resources in areas of the outer continental shelf (OCS) covering approximately 1.7 billion acres located beyond state waters. These areas are defined in the Submerged Lands Act and the Outer Continental Shelf Lands Act (OCSLA). BOEM's mission is to balance energy independence, environmental protection, and economic development through responsible, science-based management of offshore conventional and renewable energy resources. BOEM schedules and conducts OCS oil and gas lease sales, administers existing oil and gas leases, and issues easements and leases for deploying renewable energy technologies, among other responsibilities. CRS Products CRS In Focus IF10585, The Federal Land Management Agencies , by Katie Hoover. CRS Report R42656, Federal Land Management Agencies and Programs: CRS Experts , by R. Eliot Crafton. CRS Report R45340, Federal Land Designations: A Brief Guide , coordinated by Laura B. Comay. CRS In Focus IF10832, Federal and Indian Lands on the U.S.-Mexico Border , by Carol Hardy Vincent and James C. Uzel. CRS Report R45265, U.S. Fish and Wildlife Service: An Overview , by R. Eliot Crafton. CRS Report RS20158, National Park System: Establishing New Units , by Laura B. Comay. CRS Report R43872, National Forest System Management: Overview, Appropriations, and Issues for Congress , by Katie Hoover. Agency Acquisition and Disposal Authorities Congress has granted the FLMAs various authorities to acquire and dispose of land. The extent of this authority differs considerably among the agencies. The BLM has relatively broad authority for both acquisitions and disposals under the Federal Land Policy and Management Act of 1976 (FLPMA). By contrast, NPS has no general authority to acquire land to create new park units or to dispose of park lands without congressional action. The FS authority to acquire lands is limited mostly to lands within or contiguous to the boundaries of a national forest, including the authority to acquire access corridors to national forests across nonfederal lands. The agency has various authorities to dispose of land, but they are relatively constrained and infrequently used. FWS has various authorities to acquire lands, but no general authority to dispose of its lands. For example, the Migratory Bird Conservation Act of 1929 grants FWS authority to acquire land for the National Wildlife Refuge System—using funds from sources that include the sale of hunting and conservation stamps—after state consultation and agreement. The current acquisition and disposal authorities form the backdrop for consideration of measures to establish, modify, or eliminate authorities, or to provide for the acquisition or disposal of particular lands. Congress also addresses acquisition and disposal policy in the context of debates on the role and goals of the federal government in owning and managing land generally. CRS Product CRS Report RL34273, Federal Land Ownership: Acquisition and Disposal Authorities , by Carol Hardy Vincent et al. Funding Issues Funding for federal land and FLMA natural resource programs presents an array of issues for Congress. The FLMAs receive their discretionary appropriations through Interior, Environment, and Related Agencies appropriations laws. In addition to other questions related directly to appropriations, some funding questions relate to the Land and Water Conservation Fund (LWCF). Congress appropriates funds from the LWCF for land acquisition by federal agencies, outdoor recreation needs of states, and other purposes. Under debate are the levels, sources, and uses of funding and whether some funding should be continued as discretionary. A second set of questions relates to the compensation of states or counties for the presence of nontaxable federal lands and resources, including whether to revise or maintain existing payment programs. A third set of issues relates to the maintenance of assets by the agencies, particularly how to address their backlog of maintenance projects while achieving other government priorities. CRS Products CRS Report R44934, Interior, Environment, and Related Agencies: Overview of FY2019 Appropriations , by Carol Hardy Vincent. CRS Report R43822, Federal Land Management Agencies: Appropriations and Revenues , coordinated by Carol Hardy Vincent. CRS In Focus IF10381, Bureau of Land Management: FY2019 Appropriations , by Carol Hardy Vincent. CRS In Focus IF10846, U.S. Fish and Wildlife Service: FY2019 Appropriations , by R. Eliot Crafton. CRS In Focus IF10900, National Park Service: FY2019 Appropriations , by Laura B. Comay. CRS In Focus IF11178, National Park Service: FY2020 Appropriations , by Laura B. Comay. CRS In Focus IF11169, Forest Service: FY2019 Appropriations and FY2020 Request , by Katie Hoover. Land and Water Conservation Fund The Land and Water Conservation Fund Act of 1965 was enacted to help preserve, develop, and assure access to outdoor recreation facilities to strengthen the health of U.S. citizens. The law created the Land and Water Conservation Fund in the U.S. Treasury as a funding source to implement its outdoor recreation purposes. The LWCF has been the principal source of monies for land acquisition for outdoor recreation by the four FLMAs. The LWCF also has funded a matching grant program to assist states with outdoor recreational needs and other federal programs with purposes related to lands and resources. The provisions of the LWCF Act that provide for $900 million in specified revenues to be deposited in the fund annually have been permanently extended. Nearly all of the revenues are derived from oil and gas leasing in the OCS. Congress determines the level of discretionary appropriations each year, and yearly appropriations have fluctuated widely since the origin of the program. In addition to any discretionary appropriations, the state grant program receives (mandatory) permanent appropriations. There is a difference of opinion as to how funds in the LWCF should be allocated. Current congressional issues include deciding the amount to appropriate for land acquisition, the state grant program, and other purposes. Several other issues have been under debate, including whether to provide the fund with additional permanent appropriations; direct revenues from other activities to the LWCF; limit the use of funds for particular purposes, such as federal land acquisition; and require some of the funds to be used for certain purposes, such as facility maintenance. Another area of focus is the state grant program, with issues including the impact of anticipated increases in mandatory funding, the way in which funds are apportioned among the states, and the extent to which the grants should be competitive. CRS Products CRS In Focus IF10323, Land and Water Conservation Fund (LWCF): Frequently Asked Questions Related to Provisions Scheduled to Expire on September 30, 2018 , by Carol Hardy Vincent and Bill Heniff Jr. CRS Report RL33531, Land and Water Conservation Fund: Overview, Funding History, and Issues , by Carol Hardy Vincent. CRS Report R44121, Land and Water Conservation Fund: Appropriations for "Other Purposes , " by Carol Hardy Vincent. Federal Payment and Revenue-Sharing Programs As a condition of statehood, most states forever waived the right to tax federal lands within their borders. However, some assert that states or counties should be compensated for services related to the presence of federal lands, such as fire protection, police cooperation, or longer roads to skirt the federal property. Under federal law, state and local governments receive payments through various programs due to the presence of federally owned land. Some of these programs are run by specific agencies and apply only to that agency's land. Many of the payment programs are based on revenue generated from specific land uses and activities, while other payment programs are based on acreage of federal land and other factors. The adequacy, coverage, equity, and sources of the payments for all of these programs are recurring issues for Congress. The most widely applicable onshore program, administered by DOI, applies to many types of federally owned land and is called Payments in Lieu of Taxes (PILT). Each eligible county's PILT payment is calculated using a complex formula based on five factors, including federal acreage and population. Most counties containing the lands administered by the four FLMAs are eligible for PILT payments. Counties with NPS lands receive payments primarily under PILT. Counties containing certain FWS lands are eligible to receive PILT payments, and FWS also has an additional payment program for certain refuge lands, known as the Refuge Revenue Sharing program. In addition to PILT payments, counties containing FS and BLM lands also receive payments based primarily on receipts from revenue-producing activities on their lands. Some of the payments from these other programs will be offset in the county's PILT payment in the following year. One program (Secure Rural Schools, or SRS) compensated counties with FS lands or certain BLM lands in Oregon for declining timber harvests. The authorization for the SRS program expired after FY2018, and the last authorized payments are to be disbursed in FY2019. The federal government shares the revenue from mineral and energy development, both onshore and offshore. Revenue collected (rents, bonuses, and royalties) from onshore mineral and energy development is shared 50% with the states, under the Mineral Leasing Act of 1920 (less administrative costs). Alaska, however, receives 90% of all revenues collected on federal onshore leases (less administrative costs). Revenue collected from offshore mineral and energy development on the outer continental shelf (OCS) is shared with the coastal states, albeit at a lower rate. The OCSLA allocates 27% of the revenue generated from certain federal offshore leases to the coastal states. Separately, the Gulf of Mexico Energy Security Act of 2006 (GOMESA; P.L. 109-432 ) provided for revenue sharing at a rate of 37.5% for four coastal states, up to a collective cap. Some coastal states have advocated for a greater share of the OCS revenues based on the impacts oil and gas projects have on coastal infrastructure and the environment, while other states and stakeholders have contended that more of the revenue should go to the general fund of the Treasury or to other federal programs. CRS Products CRS Report RL31392, PILT (Payments in Lieu of Taxes): Somewhat Simplified , by Katie Hoover. CRS Report R41303, Reauthorizing the Secure Rural Schools and Community Self-Determination Act of 2000 , by Katie Hoover. CRS Report R42404, Fish and Wildlife Service: Compensation to Local Governments , by R. Eliot Crafton. CRS Report R42951, The Oregon and California Railroad Lands (O&C Lands): Issues for Congress , by Katie Hoover. CRS Report R43891, Mineral Royalties on Federal Lands: Issues for Congress , by Marc Humphries. CRS Report R42439, Compensating State and Local Governments for the Tax-Exempt Status of Federal Lands: What Is Fair and Consistent? , by Katie Hoover. Deferred Maintenance The FLMAs have maintenance responsibility for their buildings, roads and trails, recreation sites, and other infrastructure. Congress continues to focus on the agencies' deferred maintenance and repairs , defined as "maintenance and repairs that were not performed when they should have been or were scheduled to be and which are put off or delayed for a future period." The agencies assert that continuing to defer maintenance of facilities accelerates their rate of deterioration, increases their repair costs, and decreases their value and safety. Congressional and administrative attention has centered on the NPS backlog, which has continued to increase from an FY1999 estimate of $4.25 billion in nominal dollars. Currently, DOI estimates deferred maintenance for NPS for FY2017 at $11.2 billion. Nearly three-fifths of the backlogged maintenance is for roads, bridges, and trails. The other FLMAs also have maintenance backlogs. DOI estimates that deferred maintenance for FY2017 for FWS is $1.4 billion and the BLM backlog is $0.8 billion. FS estimated its backlog for FY2017 at $5.0 billion, with approximately 70% for roads, bridges, and trails. Thus, the four agencies together had a combined FY2017 backlog estimated at $18.5 billion. The backlogs have been attributed to decades of funding shortfalls to address capital improvement projects. However, it is not always clear how much total funding has been provided for deferred maintenance each year because some annual presidential budget requests and appropriations documents did not identify and aggregate all funds for deferred maintenance. Currently, there is debate over the appropriate level of funds to maintain infrastructure, whether to use funds from other discretionary or mandatory programs or sources, how to balance maintenance of the existing infrastructure with the acquisition of new assets, and the priority of maintaining infrastructure relative to other government functions. CRS Products CRS Report R43997, Deferred Maintenance of Federal Land Management Agencies: FY2007-FY2016 Estimates and Issues , by Carol Hardy Vincent. CRS Report R44924, The National Park Service's Maintenance Backlog: Frequently Asked Questions , by Laura B. Comay. CRS In Focus IF10987, Legislative Proposals for a National Park Service Deferred Maintenance Fund , by Laura B. Comay. Climate Policy and Federal Land Management Scientific evidence shows that the United States' climate has been changing in recent decades. This poses several interrelated and complex issues for the management of federal lands and their resources, in terms of mitigation, adaptation, and resiliency. Overall, climate change is introducing uncertainty about conditions previously considered relatively stable and predictable. Given the diversity of federal land and resources, concerns are wide-ranging and include invasive species, sea-level rise, wildlife habitat changes, and increased vulnerability to extreme weather events, as well as uncertainty about the effects of these changes on tourism and recreation. Some specific observed effects of climate change include a fire season that begins earlier and lasts longer in some locations, warmer winter temperatures that allow for a longer tourism season but also for various insect and disease infestations to persist in some areas, and habitat shifts that affect the status of sensitive species but may also increase forest productivity. Another concern is how climate change may affect some iconic federal lands, such as the diminishing size of the glaciers at Glacier National Park in Montana and several parks in Alaska, or the flooding of some wildlife refuges. The role of the FLMAs in responding to climate change is an area under debate. Some stakeholders are concerned that a focus on climate change adaptation may divert resources and attention from other agency activities and near-term challenges. Others see future climate conditions as representing an increased risk to the effective performance of agency missions and roles. A related debate concerns the impact of energy production on federal lands. Both traditional sources of energy (nonrenewable fossil fuels such as oil, gas, and coal) and alternative sources of energy (renewable fuels such as solar, wind, and geothermal) are available on some federal lands. A 2018 report from the U.S. Geological Survey estimated that greenhouse gas emissions resulting from the extraction and use of fossil fuels produced on federal lands account for, on average, approximately 24% of national emissions for carbon dioxide, 7% for methane, and 1.5% for nitrous oxide. In addition, the report estimated that carbon sequestration on federal lands offset approximately 15% of those carbon dioxide emissions over the study period, 2005 through 2014. This, along with other factors, has contributed to questions among observers about the extent to which the agencies should provide access to and promote different sources of energy production on federal lands based on the effects on climate from that production. Since fossil fuel emissions contribute to climate change, some stakeholders concerned about climate change assert that the agencies should prioritize renewable energy production on federal lands over traditional energy sources. Others assert that, even with renewable energy growth, conventional sources will continue to be needed in the foreseeable future, and that the United States should pursue a robust traditional energy program to ensure U.S. energy security and remain competitive with other nations, including continuing to make fossil fuel production available on federal lands. Specific legislative issues for Congress may include the extent to which the FLMAs manage in furtherance of long-term climate policy goals, and proposals to restructure or improve collaboration among the FLMAs regarding climate change activities and reporting. CRS Products CRS Report R43915, Climate Change Adaptation by Federal Agencies: An Analysis of Plans and Issues for Congress , coordinated by Jane A. Leggett. Energy and Mineral Resources Much of the onshore federal estate is open to energy and mineral exploration and development, including BLM and many FS lands. However, many NPS lands and designated wilderness areas, as well as certain other federal lands, have been specifically withdrawn from exploration and development. Most offshore federal acres on the U.S. outer continental shelf are also available for exploration and development, although BOEM has not scheduled lease sales in all available areas. Energy production on federal lands contributes to total U.S. energy production. For example, in 2017, as a percentage of total U.S. production, approximately 24% of crude oil and 13% of natural gas production came from federal lands. Coal production from federal lands has consistently accounted for about 40% of annual U.S. coal production over the past decade. Federal lands also are available for renewable energy projects. Geothermal capacity on federal lands represents 40% of U.S. total geothermal electric generating capacity. Solar and wind energy potential on federal lands is growing and, based on BLM-approved projects, there is potential for 3,300 megawatts (MW) of wind and 6,300 MW of solar energy on federal lands. The first U.S. offshore wind farm began regular operations in 2016, and BOEM has issued 13 wind energy leases off the coasts of eight East Coast states. The 116 th Congress may continue debate over issues related to access to and availability of onshore and offshore federal lands for energy and mineral development. This discussion includes how to balance energy and mineral development with environmental protection, postproduction remediation, and other uses for those federal lands. Some would like to open more federal lands for energy development, whereas others have sought to retain or increase restrictions and withdrawals for certain areas they consider too sensitive or inappropriate for traditional and/or renewable energy development. Congress also continues to focus on the energy and mineral permitting processes, the timeline for energy and mineral development, and issues related to royalty collections. Other issues may include the federal management of split estates, which occur when the surface and subsurface rights are held by different entities. Onshore Resources Oil and Natural Gas Onshore oil and natural gas produced on federal lands in 2017 accounted for 5% and 9% of total U.S. oil and gas production, respectively. Development of oil, gas, and coal on federal lands is governed primarily by the Mineral Leasing Act of 1920 (MLA). The MLA authorizes the Secretary of the Interior—through BLM—to lease the subsurface rights to most BLM and FS lands that contain fossil fuel deposits, with the federal government retaining title to the lands. Leases include an annual rental fee and a royalty payment generally determined by a percentage of the value or amount of the resource removed or sold from the federal land. Congress has at times debated raising the onshore royalty rate for federal oil and gas leases, which has remained at the statutory minimum of 12.5% since the enactment of the MLA in 1920. Access to federal lands for energy and mineral development has been controversial. The oil and gas industry contends that entry into currently unavailable areas is necessary to ensure future domestic oil and gas supplies. Opponents maintain that the restricted lands are unique or environmentally sensitive and that the United States could realize equivalent energy gains through conservation and increased exploration on current leases or elsewhere. Another controversial issue is the permitting process and timeline, which the Energy Policy Act of 2005 (EPAct05) revised for oil and gas permits. An additional contested issue has been whether to pursue oil and gas development in the Arctic National Wildlife Refuge in northeastern Alaska. P.L. 115-97 , enacted in December 2017, provided for the establishment of an oil and gas program in the refuge. CRS Products CRS In Focus IF10127, Energy and Mineral Development on Federal Land , by Marc Humphries. CRS Report R42432, U.S. Crude Oil and Natural Gas Production in Federal and Nonfederal Areas , by Marc Humphries. CRS Report RL33872, Arctic National Wildlife Refuge (ANWR): An Overview , by Laura B. Comay, Michael Ratner, and R. Eliot Crafton. CRS Report R43891, Mineral Royalties on Federal Lands: Issues for Congress , by Marc Humphries. Coal Congress debates several issues regarding coal production on federal lands, including how to balance coal production against other resource values and the potential effects of coal production on issues related to climate change. Other concerns include how to assess the value of the coal resource, what is the fair market value for the coal, and what should be the government's royalty. A 2013 GAO analysis found inconsistencies in how BLM evaluated and documented federal coal leases. In addition, a 2013 DOI Inspector General report found that BLM may have violated MLA provisions by accepting below-cost bids for federal coal leases. The Obama Administration issued a new rule for the valuation of coal, which reaffirmed that the value for royalty purposes is at or near the mine site and that gross proceeds from arm's-length contracts are the best indication of market value. This rule was repealed by the Trump Administration on August 7, 2017 (to comply with Executive Order (E.O.) 13783), returning to the previous valuation rules in place. E.O. 13783 also lifted "any and all" moratoria on federal coal leasing put in place by the Obama Administration. CRS Products CRS Report R44922, The U.S. Coal Industry: Historical Trends and Recent Developments , by Marc Humphries. Renewable Energy on Federal Land Both BLM and FS manage land that is considered suitable for renewable energy generation and as such have authorized projects for geothermal, wind, solar, and biomass energy production. BLM manages the solar and wind energy programs on about 20 million acres for each program and about 800 geothermal leases on federal lands. Interest in renewable energy production comes in part from concern over the impact of emissions from fossil fuel-fired power plants and the related adoption of statewide renewable portfolio standards that require electricity producers to supply a certain minimum share (which varies by state) of electricity from renewable sources. Congressional interest in renewable energy resources on onshore federal lands has focused on whether to expand the leasing program for wind and solar projects versus maintaining the current right-of-way authorization process, and how to balance environmental concerns with the development and production of these resources. Geothermal Energy . Geothermal energy is produced from heat stored under the surface of the earth. Geothermal leasing on federal lands is conducted under the authority of the Geothermal Steam Act of 1970, as amended, and is managed by BLM, in consultation with FS. Wind and Solar Energy . Development of solar and wind energy sources on BLM and FS lands is governed primarily by right-of-way authorities under Title V of FLPMA. The potential wildlife impacts from wind turbines and water supply requirements from some solar energy infrastructure remain controversial. Issues for Congress include how to manage the leasing process and whether or how to balance such projects against other land uses identified by statute. Woody Biomass. Removing woody biomass from federal lands for energy production has received special attention because of biomass's widespread availability. Proponents assert that removing biomass density on NFS and BLM lands also provides landscape benefits (e.g., improved forest resiliency, reduced risk of catastrophic wildfires). Opponents, however, identify that incentives to use wood and wood waste might increase land disturbances on federal lands, and they are concerned about related wildlife, landscape, and ecosystem impacts. Other issues include the role of the federal government in developing and supporting emerging markets for woody biomass energy production, and whether to include biomass removed from federal lands in the Renewable Fuel Standard. Locatable Minerals Locatable minerals include metallic minerals (e.g., gold, silver, copper), nonmetallic minerals (e.g., mica, gypsum), and other minerals generally found in the subsurface. Developing these minerals on federal lands is guided by the General Mining Law of 1872. The law, largely unchanged since enactment, grants free access to individuals and corporations to prospect for minerals in public domain lands, and allows them, upon making a discovery, to stake (or "locate") a claim on the deposit. A claim gives the holder the right to develop the minerals and apply for a patent to obtain full title of the land and minerals. Congress has imposed a moratorium on mining claim patents in the annual Interior appropriations laws since FY1995, but has not restricted the right to stake claims or extract minerals. The mining industry supports the claim-patent system, which offers the right to enter federal lands and prospect for and develop minerals. Critics consider the claim-patent system to not properly value publicly owned resources because royalty payments are not required and the amounts paid to maintain a claim and to obtain a patent are small. New mining claim location and annual claim maintenance fees are currently $37 and $155 per claim, respectively. Offshore Resources The federal government is responsible for managing energy resources in approximately 1.7 billion acres of offshore areas belonging to the United States (see Figure 1 ). These offshore resources are governed by the Outer Continental Shelf Lands Act of 1953 (OCSLA), as amended, and management involves balancing domestic energy demands with protection of the environment and other factors. Policymakers have debated access to ocean areas for offshore drilling, weighing factors such as regional economic needs, U.S. energy security, the vulnerability of oceans and shoreline communities to oil-spill risks, and the contribution of oil and gas drilling to climate change. Some support banning drilling in certain regions or throughout the OCS, through congressional moratoria, presidential withdrawals, and other measures. Others contend that increasing offshore oil and gas development will strengthen and diversify the nation's domestic energy portfolio and that drilling can be done in a safe manner that protects marine and coastal areas. Offshore Oil and Gas Leases The Bureau of Ocean Energy Management administers approximately 2,600 active oil and gas leases on nearly 14 million acres on the OCS. Under the OCSLA, BOEM prepares forward-looking, five-year leasing programs to govern oil and gas lease sales. BOEM released its final leasing program for 2017-2022 in November 2016, under the Obama Administration. The program schedules 10 lease sales in the Gulf of Mexico region and 1 in the Alaska region, with no sales in the Atlantic or Pacific regions. In January 2018, under the Trump Administration, BOEM released a draft proposed program for 2019-2024, which would replace the final years of the Obama Administration program. The program proposes 12 lease sales in the Gulf of Mexico region, 19 sales in the Alaska region, 9 lease sales in the Atlantic region, and 7 lease sales in the Pacific region. The proposed sales would cover all U.S. offshore areas not prohibited from oil and gas development, including areas with both high and low levels of estimated resources. The draft proposal is the first of three program versions; under the OCSLA process, subsequent versions could remove proposed lease sales but could not add new sales. Under the OCSLA, the President may withdraw unleased lands on the OCS from leasing disposition. President Obama indefinitely withdrew from leasing disposition large portions of the Arctic OCS as well as certain areas in the Atlantic region, but these withdrawals were modified by President Trump. Congress also has established leasing moratoria; for example, the GOMESA established a moratorium on preleasing, leasing, and related activity in the eastern Gulf of Mexico through June 2022. The 116 th Congress may consider multiple issues related to offshore oil and gas exploration, including questions about allowing or prohibiting access to ocean areas and how such changes may impact domestic energy markets and affect the risk of oil spills. Other issues concern the use of OCS revenues and the extent to which they should be shared with coastal states (see " Federal Payment and Revenue-Sharing Programs " section). Offshore Renewable Energy Sources BOEM also is responsible for managing leases, easements, and rights-of-way to support development of energy from renewable ocean energy resources, including offshore wind, thermal power, and kinetic forces from ocean tides and waves. As of January 2019, BOEM had issued 13 offshore wind energy leases in areas off the coasts of Massachusetts, Rhode Island, Delaware, Maryland, Virginia, New York, New Jersey, and North Carolina. In December 2016, the first U.S. offshore wind farm, off the coast of Rhode Island, began regular operations. Issues for Congress include whether to take steps to facilitate the development of offshore wind and other renewables, such as through research and development, project loan guarantees, extension of federal tax credits for renewable energy production, or oversight of regulatory issues for these emerging industries. CRS Products CRS Report R44504, The Bureau of Ocean Energy Management's Five-Year Program for Offshore Oil and Gas Leasing: History and Final Program for 2017-2022 , by Laura B. Comay, Marc Humphries, and Adam Vann. CRS Report R44692, Five-Year Program for Federal Offshore Oil and Gas Leasing: Status and Issues in Brief , by Laura B. Comay. CRS Report RL33404, Offshore Oil and Gas Development: Legal Framework , by Adam Vann. Forest Management Management of federal forests presents several policy questions for Congress. For instance, there are questions about the appropriate level of timber harvesting on federal forest lands, particularly FS and BLM lands, and how to balance timber harvesting against the other statutory uses and values for these federal lands. Further, Congress may debate whether or how the agencies use timber harvesting or other active forest management techniques to achieve other resource-management objectives, such as improving wildlife habitat or improving a forest's resistance and resilience to disturbance events (e.g., wildfire, ice storm). FS manages 145 million acres of forests and woodlands in the National Forest System (NFS). In FY2018, approximately 2.8 billion board feet of timber and other forest products were harvested from NFS lands, at a value of $188.8 million. BLM manages approximately 38 million acres of forest and woodlands. The vast majority are public domain forests, managed under the principles of multiple use and sustained yield as established by FLPMA. The 2.6 million acres of Oregon & California (O&C) Railroad Lands in western Oregon, however, are managed under a statutory direction for permanent forest production, as well as watershed protection, recreation, and contributing to the economic stability of local communities and industries. In FY2018, approximately 177.8 million board feet of timber and other forest products were harvested from BLM lands, at a value of $41.3 million. The NPS and FWS have limited authorities to cut, sell, or dispose of timber from their lands and have established policies to do so only in certain cases, such as controlling for insect and disease outbreaks. In the past few years, the ecological condition of the federal forests has been one focus of discussion. Many believe that federal forests are ecologically degraded, contending that decades of wildfire suppression and other forest-management decisions have created overgrown forests overstocked with biomass (fuels) that are susceptible to insect and disease outbreaks and can serve to increase the spread or intensity of wildfires. These observers advocate rapid action to improve forest conditions, including activities such as prescribed burning, forest thinning, salvaging dead and dying trees, and increased commercial timber production. Critics counter that authorities to reduce fuel levels are adequate, treatments that remove commercial timber degrade other ecosystem conditions and waste taxpayer dollars, and expedited processes for treatments may reduce public oversight of commercial timber harvesting. The 115 th Congress enacted several provisions intended to expedite specific forest management projects on federal land and encourage forest restoration projects across larger areas, including projects which involve nonfederal landowners. CRS Products CRS Report R45696, Forest Management Provisions Enacted in the 115th Congress , by Katie Hoover et al. CRS Report R45688, Timber Harvesting on Federal Lands , by Anne A. Riddle. CRS Report R43872, National Forest System Management: Overview, Appropriations, and Issues for Congress , by Katie Hoover. CRS Report R42951, The Oregon and California Railroad Lands (O&C Lands): Issues for Congress , by Katie Hoover. Range Management Livestock Grazing Management of federal rangelands, particularly by BLM and FS, presents an array of policy matters for Congress. Several issues pertain to livestock grazing. There is debate about the appropriate fee that should be charged for grazing private livestock on BLM and FS lands, including what criteria should prevail in setting the fee. Today, these federal agencies charge fees under a formula established by law in 1978, then continued indefinitely through an executive order issued by President Reagan in 1986. The BLM and FS are generally charging a 2019 grazing fee of $1.35 per animal unit month (AUM) for grazing on their lands. Conservation groups, among others, generally seek increased fees to recover program costs or approximate market value, whereas livestock producers who use federal lands want to keep fees low to sustain ranching and rural economies. The BLM and FS issue to ranchers permits and/or leases that specify the terms and conditions for grazing on agency lands. Permits and leases generally cover a 10-year period and may be renewed. Congress has considered whether to extend the permit/lease length (e.g., to 20 years) to strengthen the predictability and continuity of operations. Longer permit terms have been opposed because they potentially reduce the opportunities to analyze the impact of grazing on lands and resources. The effect of livestock grazing on rangelands has been part of an ongoing debate on the health and productivity of rangelands. Due to concerns about the impact of grazing on rangelands, some recent measures would restrict or eliminate grazing, for instance, through voluntary retirement of permits and leases and subsequent closure of the allotments to grazing. These efforts are opposed by those who assert that ranching can benefit rangelands and who support ranching on federal lands for not only environmental but lifestyle and economic reasons. Another focus of the discussion on range health and productivity is the spread of invasive and noxious weeds. (See " Invasive Species " section, below.) Wild Horses and Burros There is continued congressional interest in management of wild horses and burros, which are protected on BLM and FS lands under the Wild Free-Roaming Horses and Burros Act of 1971. Under the act, the agencies inventory horse and burro populations on their lands to determine appropriate management levels (AMLs). Most of the animals are on BLM lands, although both BLM and FS have populations exceeding their national AMLs. BLM estimates the maximum AML at 26,690 wild horses and burros, and it estimates population on the range at 81,951. Furthermore, off the range, BLM provides funds to care for 50,864 additional wild horses and burros in short-term corrals, long-term (pasture) holding facilities, and eco-sanctuaries. The Forest Service estimates population on lands managed by the agency at 9,300 wild horses and burros. The agencies are statutorily authorized to remove excess animals from the range and use a variety of methods to meet AML. This includes programs to adopt and sell animals, to care for animals off-range, to administer fertility control, and to establish ecosanctuaries. Questions for Congress include the sufficiency of these authorities and programs for managing wild horses and burros. Another controversial question is whether the agencies should humanely destroy excess animals, as required under the 1971 law, or whether Congress should continue to prohibit the BLM from using funds to slaughter healthy animals. Additional topics of discussion center on the costs of management, particularly the relatively high cost of caring for animals off-range. Other options focus on keeping animals on the range, such as by expanding areas for herds and/or changing the method for determining AML. CRS Products CRS Report RS21232, Grazing Fees: Overview and Issues , by Carol Hardy Vincent. CRS In Focus IF11060, Wild Horse and Burro Management: Overview of Costs , by Carol Hardy Vincent. Recreation The abundance and diversity of recreational uses of federal lands and waters has increased the challenge of balancing different types of recreation with each other and with other land uses. One issue is how—or whether—fees should be collected for recreational activities on federal lands. The Federal Lands Recreation Enhancement Act (FLREA) established a recreation fee program for the four FLMAs and the Bureau of Reclamation. The authorization ends on September 30, 2020. FLREA authorizes the agencies to charge, collect, and spend fees for recreation on their lands, with most of the money remaining at the collecting site. The 116 th Congress faces issues including whether to let lapse, extend, make permanent, or amend the program. Current oversight issues for Congress relate to various aspects of agency implementation of the fee program, including the determination of fee changes, use of collected revenue, and pace of obligation of fee collections. Supporters of the program contend that it sets fair and similar fees among agencies and keeps most fees on-site for improvements that visitors desire. Some support new or increased fees or full extension of the program to other agencies, especially the U.S. Army Corps of Engineers. Among critics, some oppose recreation fees in general. Others assert that fees are appropriate for fewer agencies or types of lands, that the fee structure should be simplified, or that more of the fees should be used to reduce agency maintenance backlogs. Another contentious issue is the use of off-highway vehicles (OHVs)—all-terrain vehicles, snowmobiles, personal watercraft, and others—on federal lands and waters. OHV use is a popular recreational activity on BLM and FS land, while NPS and FWS have fewer lands allowing them. OHV supporters contend that the vehicles facilitate visitor access to hard-to-reach natural areas and bring economic benefits to communities serving riders. Critics raise concerns about disturbance of nonmotorized recreation and potential damage to wildlife habitat and ecosystems. Issues for Congress include broad questions of OHV access and management, as well as OHV use at individual parks, forests, conservation areas, and other federal sites. Access to opportunities on federal lands for hunting, fishing, and recreational shooting (e.g., at shooting ranges) is of perennial interest to Congress. Hunting and fishing are allowed on the majority of federal lands, but some contend they are unnecessarily restricted by protective designations, barriers to physical access, and agency planning processes. Others question whether opening more FLMA lands to hunting, fishing, and recreational shooting is fully consistent with good game management, public safety, other recreational uses, resource management, and the statutory purposes of the lands. Issues for Congress include questions of whether or how to balance hunting and fishing against other uses, as well as management of equipment used for hunting and fishing activities, including types of firearms and composition of ammunition and fishing tackle. CRS Products CRS In Focus IF10151, Federal Lands Recreation Enhancement Act: Overview and Issues , by Carol Hardy Vincent. CRS Report R45103, Hunting and Fishing on Federal Lands and Waters: Overview and Issues for Congress , by R. Eliot Crafton. CRS In Focus IF10746, Hunting, Fishing, and Related Issues in the 115th Congress , by R. Eliot Crafton. Other Land Designations Congress, the President, and some executive branch officials may establish individual designations on federal lands. Although many designations are unique, some have been more commonly applied, such as national recreation area, national scenic area, and national monument. Congress has conferred designations on some nonfederal lands, such as national heritage areas, to commemorate, conserve, and promote important natural, scenic, historical, cultural, and recreational resources. Congress and previous Administrations also have designated certain offshore areas as marine national monuments or sanctuaries. Controversial issues involve the types, locations, and management of such designations, and the extent to which some designations should be altered, expanded, or reduced. In addition, Congress has created three cross-cutting systems of federal land designations to preserve or emphasize particular values or resources, or to protect the natural conditions for biological, recreation, or scenic purposes. These systems are the National Wilderness Preservation System, the National Wild and Scenic Rivers System, and the National Trails System. The units of these systems can be on one or more agencies' lands, and the agencies manage them within parameters set in statute. CRS Products CRS Report R45340, Federal Land Designations: A Brief Guide , coordinated by Laura B. Comay. CRS Report RL33462, Heritage Areas: Background, Proposals, and Current Issues , by Laura B. Comay and Carol Hardy Vincent. CRS Report R41285, Congressionally Designated Special Management Areas in the National Forest System , by Katie Hoover. National Monuments and the Antiquities Act The Antiquities Act of 1906 authorizes the President to proclaim national monuments on federal lands that contain historic landmarks, historic and prehistoric structures, or other objects of natural, historic, or scientific interest. The President is to reserve "the smallest area compatible with the proper care and management of the objects to be protected." Seventeen of the 20 Presidents since 1906, including President Trump, have used this authority to establish, enlarge, diminish, or make other changes to proclaimed national monuments. Congress has modified many of these proclamations, abolished some monuments, and created monuments under its own authority. Since the enactment of the Antiquities Act, presidential establishment of monuments sometimes has been contentious. Most recently, the Trump Administration has reviewed and recommended changes to some proclaimed national monuments, and President Trump has modified and established some monuments. Congress continues to address the role of the President in proclaiming monuments. Some seek to impose restrictions on the President's authority to proclaim monuments. Among the bills considered in recent Congresses are those to block monuments from being declared in particular states; limit the size or duration of withdrawals; require the approval of Congress, the pertinent state legislature, or the pertinent governor before a monument could be proclaimed; or require the President to follow certain procedures prior to proclaiming a new monument. Others promote the President's authority to act promptly to protect valuable resources on federal lands that may be vulnerable, and they note that Presidents of both parties have used the authority for over a century. They favor the Antiquities Act in its present form, asserting that the courts have upheld monument designations and that large segments of the public support monument designations for the recreational, preservation, and economic benefits that such designations can bring. CRS Products CRS Report R41330, National Monuments and the Antiquities Act , by Carol Hardy Vincent. CRS Report R44988, Executive Order for Review of National Monuments: Background and Data , by Carol Hardy Vincent and Laura A. Hanson. CRS Report R44886, Monument Proclamations Under Executive Order Review: Comparison of Selected Provisions , by Carol Hardy Vincent and Laura A. Hanson. Wilderness and Roadless Areas In 1964, the Wilderness Act created the National Wilderness Preservation System, with statutory protections that emphasize preserving certain areas in their natural states. Units of the system can be designated only by Congress. Many bills to designate wilderness areas have been introduced in each Congress. As of March 1, 2019, there were 802 wilderness areas, totaling over 111 million acres in 44 states (and Puerto Rico) and managed by all four of the FLMAs. A wilderness designation generally prohibits commercial activities, motorized access, and human infrastructure from wilderness areas, subject to valid existing rights. Advocates propose wilderness designations to preserve the generally undeveloped conditions of the areas. Opponents see such designations as preventing certain uses and potential economic development in rural areas where such opportunities are relatively limited. Designation of new wilderness areas can be controversial, and questions persist over the management of areas being considered for wilderness designation. FS reviews the wilderness potential of NFS lands during the forest planning process and recommends any identified potential wilderness areas for congressional consideration. Management activities or uses that may reduce the wilderness potential of a recommended wilderness area may be restricted. Questions also persist over BLM wilderness study areas (WSAs). These WSAs are the areas BLM studied as potential wilderness and made subsequent recommendations to Congress regarding their suitability for designation as wilderness. BLM is required by FLPMA to protect the wilderness characteristics of WSAs, meaning that many uses in these areas are restricted or prohibited. Congress has designated some WSAs as wilderness, and has also included legislative language releasing BLM from the requirement to protect the wilderness characteristics of other WSAs. FS also manages approximately 58 million acres of lands identified as "inventoried roadless areas." These lands are not part of the National Wilderness Preservation System, but certain activities—such as road construction or timber harvesting—are restricted on these lands, with some exceptions. The Clinton and George W. Bush Administrations each promulgated different roadless area regulations. Both were heavily litigated; however, the Clinton policy to prohibit many activities on roadless areas remains intact after the Supreme Court refused to review a lower court's 2012 decision striking down the Bush rule. In 2018, the Forest Service initiated a rulemaking process to develop a new roadless rule specific to the national forests in the state of Alaska. CRS Products CRS Report RL31447, Wilderness: Overview, Management, and Statistics , by Katie Hoover. CRS Report R41610, Wilderness: Issues and Legislation , by Katie Hoover and Sandra L. Johnson. The National Wild and Scenic Rivers System and the National Trails System Congress established the National Wild and Scenic Rivers System with the passage of the Wild and Scenic Rivers Act of 1968. The act established a policy of preserving designated free-flowing rivers for the benefit and enjoyment of present and future generations. River units designated as part of the system are classified and administered as wild, scenic, or recreational rivers, based on the condition of the river, the amount of development in the river or on the shorelines, and the degree of accessibility by road or trail at the time of designation. The system contains both federal and nonfederal river segments. Typically, rivers are added to the system by an act of Congress, but may also be added by state nomination with the approval of the Secretary of the Interior. As of March 1, 2019, there are more than 200 river units with roughly 13,300 miles in 40 states and Puerto Rico, administered by all four FLMAs, or by state, local, or tribal governments. Designation and management of lands within river corridors has been controversial in some cases. Issues include concerns about private property rights and water rights within designated river corridors. Controversies have arisen over state or federal projects prohibited within a corridor, such as construction of major highway crossings, bridges, or other activities that may affect the flow or character of the designated river segment. The extent of local input in developing river management plans is another recurring issue. The National Trails System Act of 1968 authorized a national system of trails, across federal and nonfederal lands, to provide additional outdoor recreation opportunities and to promote access to the outdoor areas and historic resources of the nation. The system today consists of four types of trails and can be found in all 50 states, the District of Columbia, and Puerto Rico. This includes 11 national scenic trails and 19 national historic trails that covers roughly 55,000 miles. In addition, almost 1,300 national recreation trails and 7 connecting-and-side trails have been established administratively as part of the system. National trails are administered by NPS, FS, and BLM, in cooperation with appropriate state and local authorities. Most recreation uses are permitted, as are other uses or facilities that do not substantially interfere with the nature and purposes of the trail. However, motorized vehicles are prohibited on many trails. Ongoing issues for Congress include whether to designate additional trails, whether or how to balance trail designation with other potential land uses, what activities should be permitted on trails, and what portion of trail funding should be from federal versus nonfederal sources. Some Members have expressed interest in new types of trails for the system, such as "national discovery trails," which would be interstate trails connecting representative examples of metropolitan, urban, rural, and backcountry regions. CRS Products CRS Report R42614, The National Wild and Scenic Rivers System: A Brief Overview , by Sandra L. Johnson and Laura B. Comay. CRS Report R43868, The National Trails System: A Brief Overview , by Sandra L. Johnson and Laura B. Comay. National Marine Sanctuaries and Marine National Monuments The National Marine Sanctuaries Act (NMSA) authorizes the National Oceanic and Atmospheric Administration (NOAA) to designate specific areas for protection of their ecological, aesthetic, historical, cultural, scientific, or educational qualities. The NOAA Office of National Marine Sanctuaries serves as the trustee for the 13 national marine sanctuaries (NMSs) designated under NMSA. Sanctuaries are located in marine areas and waters under state or federal jurisdiction. Sites are designated for specific reasons, such as protecting cultural artifacts (e.g., sunken vessels), particular species (e.g., humpback whales), or unique areas and entire ecosystems (e.g., Monterey Bay). Two areas currently under consideration for designation are Mallows Bay, Potomac River, MD, and Lake Michigan, WI. The NMSA requires the development and implementation of management plans for each sanctuary, which provide the basis for managing or limiting incompatible activities. For most NMSs, questions related to developing or amending management plans have focused on identifying and limiting incompatible activities. Five large marine national monuments have been designated by the President under the Antiquities Act, the most recent being the Northeast Canyons and Seamounts Marine National Monument in 2016, the first designated in the Atlantic Ocean. Within the monuments, the removing, taking, harvesting, possessing, injuring, or damaging of monument resources is prohibited except as provided under regulated activities. For example, some exceptions have been provided for recreational fishing and subsistence use within certain marine national monuments. All five marine national monuments are managed cooperatively by the Department of the Interior (FWS) and Department of Commerce (NOAA). One of the main differences between national marine sanctuaries and marine national monuments is their designation process. While monuments are designated by presidential proclamation or through congressional legislation, the NMS designation process is an administrative action, requiring nomination, public scoping, public comment, and congressional and state review prior to the Secretary of Commerce's approval of the designation. Some stakeholders from extractive industries, such as the fishing industry, have voiced concerns that the national monument designation process does not provide opportunities to examine the tradeoffs between resource protection and resource use. On the other hand, some environmentalists have voiced concerns with the low number of NMS designations and what they see as inadequate protection of some sanctuary resources, such as fish populations. Some observers question whether the overriding purpose of the NMSA is to preserve and protect marine areas or to create multiple use management areas. Most agree that the designation and management of national marine sanctuaries and marine national monuments will continue to inspire debate over the role of marine protected areas. The Trump Administration has reviewed and recommended changes to the size and management of some marine national monuments. Species Management Each FLMA has a responsibility to manage the plant and animal resources under its purview. An agency's responsibilities may be based on widely applicable statutes or directives, including the Endangered Species Act, the Migratory Bird Treaty Act, the Fish and Wildlife Coordination Act, executive orders, and other regulations. Species management could also be based on authorities specific to each FLMA. In addition, each FLMA must work closely with state authorities to address species management issues. In the case of the National Wildlife Refuge System (administered by FWS), the conservation of plants and animals is the mission of the system, and other uses are allowed to the extent they are compatible with that mission and any specific purposes of an individual system unit. While most refuges are open for public enjoyment, some refuges or parts of refuges (such as island seabird colonies) might be closed to visitors to preserve natural resources. For the National Park System, resource conservation (including wildlife resources) is part of the National Park Service's dual mission, shared with the other goal of public enjoyment. The FS and BLM have multiple use missions, with species management being one of several agency responsibilities. The federal land management agencies do not exercise their wildlife authorities alone. Often, Congress has directed federal agencies to share management of their wildlife resources with state agencies. For example, where game species are found on federal land and hunting is generally allowed on that land, federal agencies work with states on wildlife censuses and require appropriate state licenses to hunt on the federal lands. In addition, federal agencies often cooperate with states to enhance wildlife habitat for the benefit of both jurisdictions. The four FLMAs do not each maintain specific data on how many acres of land are open to hunting, fishing, and recreational shooting. However, both BLM and FS are required to open lands under their administration to hunting, fishing, and recreational shooting, subject to any existing and applicable law, unless the respective Secretary specifically closes an area. Both agencies estimate that nearly all of their lands are open to these activities. FWS is required to report the number of refuges open to hunting and fishing as well as the acreage available for hunting on an annual basis. As of FY2017, there were 277 refuges open to fishing and 336 refuges open to hunting, providing access to 86 million acres for hunting. Congress frequently considers species management issues, such as balancing land and resources use, providing access to hunting and fishing on federal lands, and implementing endangered species protections. Endangered Species The protection of endangered and threatened species—under the 1973 Endangered Species Act (ESA) —can be controversial due to balancing the needs for natural resources use and development and species protection. Under the ESA, all federal agencies must "utilize their authorities in furtherance of the purposes of this Act by carrying out programs for the conservation of endangered species and threatened species listed pursuant to ... this Act." As a result, the FLMAs consider species listed as threatened or endangered in their land management plans, timber sales, energy or mineral leasing plans, and all other relevant aspects of their activities that might affect listed species. They consult with FWS (or NMFS, for most marine species and for anadromous fish such as salmon) about those effects. The majority of these consultations result in little or no change in the actions of the land managers. Congress has considered altering ESA implementation in various ways. For example, bills were introduced in the 115 th Congress that would have redefined the process for listing a species, defined the types of data used to evaluate species, and changed the types of species that can be listed under ESA, among others. Debate has also centered on certain species, particularly where conservation of species generates conflict over resources in various habitats. Examples of these species include sage grouse (energy and other resources in sage brush habitat), grey wolves (ranching), and polar bears (energy development in northern Alaska), among others. Proposals resulting from issues regarding certain species include granting greater authority to states over whether a species may be listed, changing the listing status of a species, and creating special conditions for the treatment of a listed species. CRS Products CRS Report RL31654, The Endangered Species Act: A Primer , by Pervaze A. Sheikh. CRS Report RL32992, The Endangered Species Act and "Sound Science , " by Pervaze A. Sheikh. CRS Report R40787, Endangered Species Act (ESA): The Exemption Process , by Pervaze A. Sheikh. Invasive Species While habitat loss is a major factor in the decline of species, invasive species have long been considered the second-most-important factor. Invasive species—nonnative or alien species that cause or are likely to cause harm to the environment, the economy, or human health upon introduction, establishment, and spread—have the potential to affect habitats and people across the United States and U.S. territories, including on federal lands and waters. For example, gypsy moths have been a pest in many eastern national forests as well as Shenandoah National Park. A fungus causing white-nose syndrome has caused widespread mortality in bat populations in the central and eastern states, including those in caves on national park and national forest lands. Burmese pythons prey on native species of birds, mammals, and reptiles in south Florida, including in the Everglades National Park. Many stakeholders believe the most effective way to deal with invasive species is to prevent their introduction and spread. For species already introduced, finding effective management approaches is important, though potentially difficult or controversial. Control efforts can be complex and expensive, and may require collaboration and coordination between multiple stakeholders. Addressing invasive species is a responsibility shared by several federal agencies, in addition to the FLMAs. These agencies are required to plan and carry out control activities and to develop strategic plans to implement such activities. Control activities are required to manage invasive populations, prevent or inhibit the introduction and spread invasive species, and to restore impacted areas. Further, agencies must consider both ecological and economic aspects in developing their strategic plans and implementing control activities, and they must coordinate with state, local, and tribal representatives. Legislation to address the introduction and spread of invasive species as well as the impacts that arise from these species is of perennial interest to Congress. CRS Product CRS Report R43258, Invasive Species: Major Laws and the Role of Selected Federal Agencies , by Renée Johnson, R. Eliot Crafton, and Harold F. Upton. CRS In Focus IF11011, Invasive Species: A Brief Overview , by R. Eliot Crafton and Sahar Angadjivand. Wildfire Management Wildfire is a concern because it can lead to loss of human life, damage communities and timber resources, and affect soils, watersheds, water quality, and wildlife. Management of wildfire—an unplanned and unwanted wildland fire—includes preparedness, suppression, fuel reduction, site rehabilitation, and more. A record-setting 10.1 million acres burned in 2015 due to wildfire, and 10.0 million acres burned two years later in 2017. In 2018, 8.8 million acres burned. The federal government is responsible for managing wildfires that begin on federal land. FS and DOI have overseen wildfire management, with FS receiving approximately two-thirds of federal funding. Wildfire management funding—including supplemental appropriations—has averaged $3.8 billion annually over the last 10 years (FY2009 through FY2018), ranging from a low of $2.7 billion in FY2012 to a high of $4.9 billion in both FY2016 and FY2018. Congressional activity regarding wildfire management typically peaks during the fire season, and during the early part of the budget process. Legislative issues for Congress include oversight of the agencies' fire management activities and other wildland management practices that have altered fuel loads over time, and consideration of programs and processes for reducing fuel loads. Funding also is a perennial concern, particularly for suppression purposes, an activity for which costs are generally rising but vary annually and are difficult to predict. The 115 th Congress enacted a new adjustment to the discretionary spending limits for wildfire suppression operations, starting in FY2020. This means that Congress can appropriate some wildfire suppression funds—subject to certain criteria—effectively outside of the discretionary spending limits. There is also congressional interest in the federal roles and responsibilities for wildfire protection, response, and damages, including activities such as air tanker readiness and efficacy and liability issues. Other issues include the use of new technologies for wildfire detection and response, such as unmanned aircrafts. Another issue is the impact of the expanding wildland-urban interface (WUI), which is the area where structures (usually homes) are intermingled with or adjacent to vegetated wildlands (forests or rangelands). The proximity to vegetated landscapes puts these areas at a potential risk of experiencing wildfires and associated damage. Approximately 10% of all land within the lower 48 states is classified as WUI. CRS Products CRS In Focus IF10244, Wildfire Statistics , by Katie Hoover. CRS In Focus IF10732, Federal Assistance for Wildfire Response and Recovery , by Katie Hoover. CRS Report R44966, Wildfire Suppression Spending: Background, Issues, and Legislation in the 115th Congress , by Katie Hoover and Bruce R. Lindsay. CRS Report R45005, Wildfire Management Funding: Background, Issues, and FY2018 Appropriations , by Katie Hoover, Wildfire Management Funding: Background, Issues, and FY2018 Appropriations, by Katie Hoover.

The Property Clause in the U.S. Constitution (Article IV, §3, clause 2) grants Congress the authority to acquire, dispose of, and manage federal property. The 116th Congress faces multiple policy issues related to federal lands and natural resources. These issues include how much and which land the government should own and how lands and resources should be used and managed. These issues affect local communities, industries, ecosystems, and the nation. There are approximately 640 million surface acres of federally owned land in the United States. Four agencies (referred to in this report as the federal land management agencies, or FLMAs) administer approximately 608 million surface acres (~95%) of federal lands: the Forest Service (FS) in the Department of Agriculture (USDA), and the Bureau of Land Management (BLM), U.S. Fish and Wildlife Service (FWS), and National Park Service (NPS), all in the Department of the Interior (DOI). The federal estate also extends to energy and mineral resources located below ground and offshore. BLM manages the onshore subsurface mineral estate and the Bureau of Ocean Energy Management, also in DOI, manages access to approximately 1.7 billion offshore acres in federal waters on the U.S. outer continental shelf. However, not all of these onshore or offshore acres can be expected to contain extractable mineral and energy resources. This report introduces some of the broad themes and issues Congress has considered when addressing federal land policy and resource management. These include questions about the extent and location of the federal estate. For example, typically Congress considers both measures to authorize and fund the acquisition of additional lands and measures to convey some land out of federal ownership or management. Other issues for Congress include whether certain lands or resources should have additional protections, for example, through designation as wilderness or national monuments, or protection of endangered species and their habitat. Other policy questions involve how federal land should be used. Certain federal lands are considered primary- or dominant-use lands as specified in statute by Congress. For example, the dominant-use mission of the National Wildlife Refuge System is the conservation of fish, wildlife, and plant resources and associated habitats for the benefit of current and future Americans, and the dual-use mission of the National Park System is to conserve unique resources and provide for their use and enjoyment by the public. BLM and FS lands, however, have a statutory mission to balance multiple uses: recreation, grazing, timber, habitat and watershed protection, and energy production, among others. Conflicts arise as users and land managers attempt to balance these uses. Congress often addresses bills to clarify, prioritize, and alter land uses, including timber harvesting, livestock grazing, and recreation (motorized and nonmotorized). With respect to energy uses, in addition to questions about balancing energy production against other uses, other questions include how to balance traditional and alternative energy production on federal lands. Additional issues of debate include whether or how to charge for access and use of federal resources and lands, how to use any funds collected, and whether or how to compensate local governments for the presence of untaxed federal lands within their borders. Congress also faces questions about wildfire management on both federal and nonfederal lands, including questions of risk management and funding suppression efforts.

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T his report describes actions taken by the Administration and Congress to provide FY2019 appropriations for Commerce, Justice, Science, and Related Agencies (CJS) accounts. It also provides an overview of enacted FY2018 appropriations for agencies and bureaus funded as part of annual CJS appropriations. The second part of this report provides an overview of historical funding trends for CJS. The dollar amounts in this report reflect only new funding 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 presented in the report. Overview of CJS 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 agencies 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 Service; the Drug Enforcement Administration; and the Bureau of Alcohol, Tobacco, Firearms, and Explosives, along with funding for a variety of 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. Department of Commerce 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, among others, 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 major 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; Economics and Statistics Administration (ESA) 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 , a component of ESA, 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 enhancing economic security; and National Oceanic and Atmospheric Administration (NOAA) provides weather forecasts and research, oceanic and atmospheric monitoring, fisheries management and research, ocean exploration, and support of marine commerce. Department of Justice 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 functions of DOJ offices and agencies 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 offenders who have not been sentenced, 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; 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. Science Offices and Agencies5 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. Office of Science and Technology Policy 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. The National Space Council 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 previously existed from 1988 to 1993 and was reestablished by the Trump Administration in June 2017. National Aeronautics and Space Administration 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. National Science Foundation 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. 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. Related Agencies 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 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. FY2018 Enacted Funding For FY2018, Congress and the President provided a total of $72.119 billion for CJS. This included $70.921 billion in regular funding provided pursuant to the Consolidated Appropriations Act, 2018 ( P.L. 115-141 , see Table 1 ) and $1.198 billion in emergency-designated funding provided pursuant to the Further Additional Supplemental Appropriations for Disaster Relief Requirements Act, 2018 ( P.L. 115-123 , see Table 2 ). For FY2018, the Department of Commerce received $12.137 billion ($11.137 billion in regular funding and $1.000 billion in supplemental funding), the Department of Justice received $30.384 billion ($30.299 billion in regular funding and $85 million in supplemental funding), the science agencies received $28.609 billion ($28.511 billion in regular funding and $98 million in supplemental funding), and the related agencies received $989 million ($974 million in regular funding and $15 million in supplemental funding). Comparisons in this report between FY2018 enacted funding and the Administration's FY2019 request, the House and Senate committee-reported FY2019 amounts, and FY2019 enacted funding are based on FY2018 regular funding (i.e., FY2018 enacted funding excluding supplemental appropriations). The Administration's FY2019 Budget Request The Administration requested $66.555 billion for CJS for FY2019, which was 6.2% less than FY2018 regular funding. When comparing the Administration's FY2019 request to the FY2018 funding, it should be considered that the Administration formulated its FY2019 budget request before full-year appropriations for FY2018 were enacted. FY2018 funding levels, for the purposes of the Administration's request, were calculated based on FY2017 funding minus a reduction (0.6791%) as extended under a series of continuing resolutions. The Administration requested the following: $9.797 billion for the Department of Commerce, which was 12.0% less than FY2018 regular funding; $28.835 billion for the Department of Justice, which was 4.8% less than FY2018 regular funding; $27.372 billion for the science agencies, which was 4.0% less than FY2018 regular funding; and $551 million for the related agencies, which was 43.4% less than FY2018 regular funding. The Administration's FY2019 budget for CJS proposed eliminating several agencies and programs: EDA, NIST's Manufacturing Extension Partnership, the Community Relations Service (its functions would have been moved to DOJ's Civil Rights Division), COPS Office (grants managed by the COPS Office would have been moved to OJP), NASA's Education program, and the Legal Services Corporation. The Administration requested some funding for the EDA and Legal Services Corporation for what would have been an orderly closeout of these agencies had Congress adopted the Administration's proposal. The Administration's budget also proposed to move 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. The Administration's requested funding for many CJS accounts was below FY2018 levels; however, there were a handful of exceptions: the Census Bureau's Periodic Census and Programs account (+$1.007 billion, +39.6%), DOJ's Executive Office of Immigration Review (+$59 million, +11.8%), ATF (+$23 million, +1.8%), BIS (+$7 million, +6.3%), NSF's Agency Operations and Award Management account (+$5 million, +1.6%), ESA (+$2 million, +2.0%), and the State Justice Institute (+$2 million, +35.1%). The Administration also proposed a new account structure for NASA, with three new accounts: Exploration Research and Technology, Deep Space Exploration Systems, and low Earth orbit (LEO) and Spaceflight Operations. The proposed Exploration Research and Technology account would have combined the Space Technology account with some elements of the Exploration account and the proposed Deep Space Exploration Systems account would have been the Exploration account minus the elements moved to the Exploration Research and Technology account. LEO and Spaceflight Operations would essentially have been a renaming of the Space Operations account. The House Committee-Reported Bill (H.R. 5952) The House committee-reported bill ( H.R. 5952 ) would have provided a total of $73.923 billion for CJS for FY2019, an amount that was 4.2% greater than regular FY2018 funding and 11.1% greater than the Administration's request. The House Committee on Appropriations recommended the following: $12.106 billion for the Department of Commerce, which was 8.7% greater than regular FY2018 funding and 23.6% greater than the Administration's request; $31.113 billion for the Department of Justice, which was 2.7% greater than regular FY2018 funding and 7.9% greater than the Administration's request; $29.728 billion for the science agencies, which was 4.3% greater than regular FY2018 funding and 8.6% greater than the Administration's request; and $976 million for the related agencies, which was 0.2% greater than regular FY2018 funding and 77.1% greater than the Administration's request. The committee-reported bill would have increased funding for most CJS accounts compared to regular FY2018 funding. Some of the exceptions included the following: ITA (-$2 million, -0.4%); NIST's Scientific and Technical Research and Services account (-$5 million, -0.6%); NIST's Industrial Technology Services account (-$10 million, -6.5%); NIST's Construction of Research Facilities account (-$199 million, -62.4%); NOAA's Operations, Research, and Facilities account (-$63 million, -1.8%); NOAA's Procurement, Acquisition, and Construction account (-$683 million, -29.8%); U.S. Marshals' Construction account (-$28 million, -53.2%); FBI's Construction account (-$305 million, -82.4%); BOP's Buildings and Facilities account (-$12 million, -7.2%); Juvenile Justice Programs (-$71 million, -25.0%); and NASA's Education account (-$10 million, -10.0%). In general, the committee-reported bill would have funded CJS accounts at or above the Administration's request, but there were a few exceptions: BIS (-$7 million, -5.9%); NOAA's Procurement, Acquisition, and Construction account (-$15 million, -0.9%); DOJ's General Administration Salaries and Expenses (-$12 million, -10.3%); Juvenile Justice Programs (-$18 million, -7.6%); NASA's Operations Research and Technology account (-$103 million, -10.2%); and the State Justice Institute (-$1 million, -15.9%). The House Committee on Appropriations did not adopt most of the Administration's proposals. The committee did not eliminate funding for EDA, NIST's Manufacturing Extension Partnership, the Community Relations Service, NASA's Education program, and the Legal Services Corporation. With the exception of NASA's Education program, the committee-reported bill would have funded these agencies and programs at a level equal to FY2018 regular funding. Additionally, the committee-reported bill did not provide funding for the HIDTA program under the DEA. However, the committee adopted two of the Administration's proposals. Funding for the COPS program would have been moved to OJP under H.R. 5952 . Also, the committee-reported bill included the Administration's proposed account structure for NASA. The Senate Committee-Reported Bill (S. 3072) The Senate committee-reported bill ( S. 3072 ) would have provided a total of $72.648 billion for CJS for FY2019, an amount that was 2.4% more than regular FY2018 funding and 9.2% more than the Administration's request. The Senate committee-reported bill would have provided the following: $11.572 billion for the Department of Commerce, which was 3.9% more than regular FY2018 funding and 18.1% more than the Administration's request; $30.699 billion for the Department of Justice, which was 1.3% more than regular FY2018 funding and 6.5% more than the Administration's request; $29.400 billion for the science agencies, which was 3.1% more than regular FY2018 funding and 7.4% more than the Administration's request; and $977 million for the related agencies, which was 0.4% more than regular FY2018 funding and 77.3% more than the Administration's request. In general, the Senate Committee on Appropriations recommended funding many CJS accounts at or above the regular FY2018 funding amount. A few notable exceptions included the following: NIST's Construction of Research Facilities account (-$161 million, -50.5%); NOAA's Procurement, Acquisition, and Construction account (-$484 million, -21.1%); U.S. Marshals' Construction account (-$18 million, -34.5%); DOJ's Interagency Law Enforcement account (-$21 million, -3.9%); NASA's Space Operations account (-$112 million, -2.4%); NASA's Safety, Security, and Mission Services account (-$77 million, -2.7%); and NASA's Construction and Environmental Compliance and Restoration account (-$174 million, -31.0%). The Senate committee-reported bill would have funded nearly every CJS account at or above the level requested by the Administration. The Senate Committee on Appropriations also declined to adopt many of the proposals the Administration put forth in its FY2019 budget. Unlike the House committee-reported bill, S. 3072 would have funded the COPS program through its own account and the committee did not include the Administration's new account structure for NASA. The committee did propose changing the name of NASA's Education account to "Science, Technology, Engineering, and Mathematics Opportunities." The Senate bill would have also funded the Office on Violence Against Women via a transfer from the Crime Victims Fund. FY2019 Enacted Funding On February 15, 2019, President Trump signed into law the Consolidated Appropriations Act, 2019 ( P.L. 116-6 ), which includes $72.908 billion for CJS. The FY2019 enacted amount is 2.8% more than regular FY2018 funding and 9.5% more than the Administration's request. The act includes the following: $11.414 billion for the Department of Commerce, which is 2.5% more than regular FY2018 funding and 16.5% more than the Administration's request; $30.934 billion for the Department of Justice, which is 2.1% more than regular FY2018 funding and 7.3% more than the Administration's request; $29.583 billion for the science agencies, which is 3.8% more than regular FY2018 funding and 8.1% more than the Administration's request; and $977 million for the related agencies, which is 0.3% more than regular FY2018 funding and 77.3% more than the Administration's request. FY2019 enacted funding is generally in-line with regular FY2018 funding and higher than the Administration's request. Some notable increases in FY2019 enacted funding compared to regular FY2018 funding include the following: Census Bureau's Periodic Censuses and Programs account (+$1.007 billion, +39.6%), Executive Office of Immigration Review (+$59 million, +11.8%), U.S. Attorneys (+$75 million, +3.5%), U.S. Marshals' Salaries and Expenses account (+$47 million, +3.5%), FBI's Salaries and Expenses account (+$162 million, +1.8%), DEA's Salaries and Expenses account (+$77 million, +3.5%), BOP's Salaries and Expenses account (+$136 million, +1.9%), BOP's Buildings and Facilities account (+$102 million, 63.4%), NASA's Science account (+$684 million, +11.0%), NASA's Space Technology account (+$167 million, +22.0%), NASA's Exploration account (+$261 million, +5.4%), NSF's Research and Related Activities account (+$186 million, +2.9%), and NSF's Major Research Equipment and Facilities Construction account (+$113 million, +61.8%). There were also a few notable decreases in FY2019 enacted funding compared to regular FY2018 funding: NIST's Construction of Research Facilities account (-$213 million, -66.8%); NOAA's Procurement, Acquisition, and Construction account (-$535 million, -23.4%); U.S. Marshals' Construction account (-$38 million, -71.9%); NASA's Space Operations account (-$112 million, -2.4%); and NASA's Construction and Environmental Compliance and Restoration account (-$214 million, -38.1%). Congress largely declined to adopt the Administration's proposals for CJS. Congress did not adopt the Administration's proposed account structure for NASA (though Congress changed the name of NASA's Education account to the "Science, Technology, Engineering, and Mathematics Engagement" account), it did not move funding for the HIDTA program to the DEA, and it did not move COPS funding to OJP. Congress also provided funding for the EDA, NIST's Manufacturing Extension Partnership, DOJ's Community Relations Service, and the Legal Services Corporation, all of which the Administration proposed eliminating. Table 1 outlines the FY2018 funding, the Administration's FY2019 request, the House and the Senate committee-reported amounts, and FY2019 funding for the Department of Commerce, the Department of Justice, the science agencies, and the related agencies. Table 2 provides information on FY2018 supplemental funding for CJS. Historical Funding for CJS Figure 1 shows the total CJS funding for FY2009-FY2018, in both nominal and inflation-adjusted dollars (more-detailed historical appropriations data can be found in Table 3 ). The data show that nominal funding for CJS reached a new 10-year high in FY2018, if emergency supplemental funding from the American Recovery and Reinvestment Act of 2009 (ARRA, P.L. 111-5 ) is not counted. Otherwise, peak funding for CJS over the past 10 fiscal years was in FY2009 when ARRA provided a substantial increase in funding. The $15.992 billion in funding for CJS under ARRA added approximately 25% to the amount Congress and the President provided for CJS through the regular appropriation process that year. While regular nominal funding over the past 10 fiscal years was at its highest in FY2018, in inflation-adjusted terms, funding for FY2018 was lower than it was in FY2010. Increased funding for CJS coincides with the increase 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 FY2018. A sequestration of discretionary funding, ordered pursuant to the BCA, cut nearly $4 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 FY2009-FY2018 by major component (i.e., the Departments of Commerce and Justice, NASA, and the NSF). Increases in CJS funding in FY2009 (not including ARRA funding) and FY2010 largely resulted from more funding for the Department of Commerce in support of the 2010 decennial census, though there were small increases during that same time in funding for DOJ, NASA, and NSF. Although decreased appropriations for the Department of Commerce mostly explain the overall decrease in CJS appropriations from FY2010 to FY2013 (a 47.4% reduction), 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 decennial census. However, over this time period there have also been steady increases in funding for DOJ (+9.5%), NASA (+18.0%), and NSF (+8.5%), as higher discretionary spending caps have been used to provide additional funding to these agencies. Also, the increase in funding for the Department of Commerce is not solely due to more funding for the Census Bureau. Funding has increased for other agencies within the department, such as NOAA (+18.7%) and NIST (+$41.0%).

This report describes actions taken by the Trump Administration and Congress to provide FY2019 funding for Commerce, Justice, Science, and Related Agencies (CJS) accounts. It also provides an overview of enacted FY2018 funding for agencies and bureaus funded as part of annual CJS appropriations acts. The Administration requested $66.555 billion for CJS for FY2019. The request included $9.797 billion for the Department of Commerce, $28.835 billion for the Department of Justice (DOJ), $27.372 billion for the science agencies, and $551 million for the related agencies. The Administration's budget proposed eliminating funding for several CJS agencies and accounts. The Administration proposed moving funding for the High Intensity Drug Trafficking Areas program from the Office of National Drug Control Policy to the Drug Enforcement Administration, closing the Community Oriented Policing Services (COPS) Office and moving its responsibilities to the Office of Justice Programs (OJP), and a new account structure for the National Aeronautics and Space Administration (NASA). The bill reported by the House Committee on Appropriations (H.R. 5952) would have provided a total of $73.923 billion for CJS for FY2019. The bill would have provided $12.106 billion for the Department of Commerce, $31.113 billion for DOJ, $29.728 billion for the science agencies, and $976 million for the related agencies. The committee largely declined to adopt many of the Administration's proposals to eliminate funding for several CJS agencies and accounts, though the committee-reported bill would have moved funding for the COPS program to OJP and it included the Administration's proposed account structure for NASA. The bill reported by the Senate Committee on Appropriations (S. 3072) would have provided a total of $72.648 billion for CJS for FY2019. The bill would have provided $11.572 billion for the Department of Commerce, $30.699 billion for DOJ, $29.400 billion for the science agencies, and $977 million for the related agencies. The Senate Committee on Appropriations largely declined to adopt many of the proposals put forth by the Administration in its FY2019 budget. Unlike the Administration's request and the House committee-reported bill, S. 3072 would have funded the COPS program through its own account and the committee did not include the Administration's new account structure for NASA. FY2019 enacted funding for CJS is $72.908 billion. This amount includes $11.414 billion for the Department of Commerce, $30.934 billion for DOJ, $29.583 billion for the science agencies, and $977 million for the related agencies. In general, FY2019 funding for CJS is in-line with FY2018 enacted funding, with a few notable exceptions. These include increased funding for the Census Bureau to help ramp up operations for the 2020 decennial census, increased funding for DOJ's law enforcement agencies and the federal prisons system, and increased funding for several NASA accounts. For FY2018, Congress and the President provided a total of $72.119 billion in funding for CJS. This included $70.921 billion in regular funding provided in the Consolidated Appropriations Act, 2018 (P.L. 115-141) and $1.198 billion in emergency-designated funding provided in the Further Additional Supplemental Appropriations for Disaster Relief Requirements Act, 2018 (P.L. 115-123).

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Brief History Prior to 1867, Qatar was ruled by the family of the leaders of neighboring Bahrain, the Al Khalifa. That year, an uprising in the territory led the United Kingdom, then the main Western power in the Persian Gulf region, to install a leading Qatari family, the Al Thani, to rule over what is now Qatar. The Al Thani family claims descent from the central Arabian tribe of Banu Tamim, the tribe to which Shaykh Muhammad ibn Abd Al Wahhab, the founder of Wahhabism, belonged. Thus, Qatar officially subscribes to Wahhabism, a conservative Islamic tradition that it shares with Saudi Arabia. In 1916, in the aftermath of World War I and the demise of the Ottoman Empire, Qatar and Britain signed an agreement under which Qatar formally became a British protectorate. In 1971, after Britain announced it would no longer exercise responsibility for Persian Gulf security, Qatar and Bahrain considered joining with the seven emirates (principalities) that were then called the "Trucial States" to form the United Arab Emirates. However, Qatar and Bahrain decided to become independent rather than join that union. The UAE was separately formed in late 1971. Qatar adopted its first written constitution in April 1970 and became fully independent on September 1, 1971. The United States opened an embassy in Doha in 1973. The last U.S. Ambassador to Qatar, Dana Shell Smith, resigned from that post in June 2017, reportedly over disagreements with the Trump Administration. Mary Catherine Phee has been nominated as a replacement. Governance Qatar's governing structure approximates that of the other GCC states. The country is led by a hereditary Amir (literally "prince," but interpreted as "ruler"), Shaykh Tamim bin Hamad Al Thani. He became ruler in June 2013 when his father, Amir Hamad bin Khalifa Al Thani, relinquished power voluntarily. The Amir governs through a prime minister, who is a member of the Al Thani family, and a cabinet, several of whom are members of the Al Thani family or of prominent allied families. Amir Tamim serves concurrently as Minister of Defense, although most of the defense policy functions are performed by the Minister of State for Defense, a position with less authority than that of full minister. In November 2014, Amir Tamim appointed a younger brother, Shaykh Abdullah bin Hamad, to be deputy Amir and the heir apparent. The Prime Minister, Shaykh Abdullah bin Nasir bin Khalifa Al Thani, also serves as Interior Minister. There is dissent within the Al Thani family—mostly from those of lineages linked to ousted former Qatari rulers—but no significant challenge to Tamim's rule is evident. There were no significant protests in Qatar during the "Arab Spring" uprising of 2011 or since. Political parties are banned, and unlike in Kuwait and Bahrain, there are no well-defined "political societies" that act as the equivalent of parties. Political disagreements in Qatar are aired mainly in private as part of a process of consensus building in which the leadership tries to balance the interests of the various families and other constituencies. Then-Amir Hamad put a revised constitution to a public referendum on April 29, 2003, achieving a 98% vote in favor. Nevertheless, it left in place significant limitations: for example, it affirms that Qatar is a hereditary emirate. Some Western experts also criticize Qatar's constitution for specifying Islamic law as the main source of legislation. The constitution stipulates that elections will be held for 30 of the 45 seats of the country's Advisory Council ( Majlis Ash-Shura ), a national legislative body, but elections have been repeatedly delayed. The elected Council is also to have broader powers, including the ability to remove ministers (two-thirds majority vote), to approve a national budget, and to draft and vote on proposed legislation that can become law (two-thirds majority vote and concurrence by the Amir). In 2008, it was agreed that naturalized Qataris who have been citizens for at least 10 years will be eligible to vote, and those whose fathers were born in Qatar will be eligible to run. Qatar is the only GCC state other than Saudi Arabia not to have held elections for any seats in a legislative body. The country holds elections for a 29-seat Central Municipal Council. Elections for the fourth Council (each serving a four-year term) were held on May 13, 2015. The Central Municipal Council advises the Minister of Municipality and Urban Affairs on local public services. Voter registration and turnout—21,735 voters registered out of an estimate 150,000 eligible voters, and 15,171 of those voted—were lower than expected, suggesting that citizens viewed the Council as lacking influence. The State Department stated that "observers considered [the municipal council elections] free and fair." Human Rights Issues7 Recent State Department reports identify the most significant human rights problems in the country as limits on the ability of citizens to choose their government in free and fair elections; restrictions on freedoms of assembly and association, including prohibitions on political parties and labor unions; restrictions on the rights of expatriate workers; and criminalization of consensual same-sex sexual activity. A nominally independent, government-funded National Human Rights Committee (NHRC) investigates allegations of human rights abuses in the country. It is under the authority of the Qatar Foundation that was founded and is still run by the Amir's mother, Shaykha Moza. The NHRC also monitors the situation of about 1,000-2,000 stateless residents (" bidoons "), who are able to register for public services but cannot own property or travel freely to other GCC countries. Although the constitution provides for an independent judiciary, the Amir, based on recommended selections from the Supreme Judicial Council, appoints all judges, who hold their positions at his discretion. Freedom of Expression As have the other GCC states, Qatar has, since the 2011 "Arab Spring" uprisings, issued new laws that restrict freedom of expression and increase penalties for criticizing the ruling establishment. In 2014, the government approved a new cybercrimes law that provides for up to three years in prison for anyone convicted of threatening Qatar's security or of spreading "false news." A November 2015 law increased penalties for removing or expressing contempt at the national flag or the GCC flag. In July 2017, the country held a national conference on freedom of expression at which, according to the State Department, members of international human rights organizations were able to criticize the country's human rights record. Al Jazeera. The government owns and continues to partially fund the Al Jazeera satellite television network, which has evolved into a global media conglomerate that features debates on controversial issues, as well as criticism of some Arab leaders. The State Department quotes "some observers and former Al Jazeera employees" as alleging that the government "influences" Al Jazeera content. Some Members of Congress have asserted that Al Jazeera is an arm of the Qatar government and that its U.S. bureau should be required to register under the Foreign Agents Registration Act (FARA). Women's Rights According to the State Department, social and legal discrimination against women continues, despite the constitutional assertion of equality. No specific law criminalizes domestic violence, and a national housing law discriminates against women married to noncitizen men and divorced women. The laws criminalizes rape. Court testimony by women carries half the weight of that of a man. On the other hand, women in Qatar drive and own property, and constitute about 15% of business owners and more than a third of the overall workforce, including in professional positions. Women serve in public office, such as minister of public health, chair of the Qatar Foundation, head of the General Authority for Museums, permanent representative to the United Nations, and ambassadors to Croatia and the Holy See. In November 2017, the Amir appointed four women to the national consultative council for the first time in the legislative body's history. However, most of the other small GCC states have more than one female minister. Trafficking in Persons and Labor Issues11 The State Department's Trafficking in Persons report for 2018 upgraded Qatar's ranking to Tier 2 from Tier 2: Watch List, on the basis that the government has made significant efforts to comply with the minimum standards for the elimination of trafficking over the past year. Qatar enacted a Domestic Worker Law to better protect domestic workers and, in recent years, it also established a coordinating body to oversee and facilitate anti-trafficking initiatives and enacting a law that reforms the sponsorship system to significantly reduce vulnerability to forced labor. But Qatar remains a destination country for men and women subjected to forced labor and, to a much lesser extent, forced prostitution. Female domestic workers are particularly vulnerable to trafficking due to their isolation in private residences and lack of protection under Qatari labor laws. In the course of the January 2018 U.S.-Qatar "Strategic Dialogue," the two countries signed a memorandum of understanding to create a framework to combat trafficking in persons. The State Department assesses Qatar's labor rights as not adequately protecting the rights of workers to form and join independent unions, conduct legal strikes, or bargain collectively. Qatari law does not prohibit antiunion discrimination or provide for reinstatement of workers fired for union activity. The single permitted trade union, the General Union of Workers of Qatar, is assessed as "not functioning." International scrutiny of Qatar's labor practices has increased as Qatar makes preparations to host the 2022 FIFA World Cup soccer tournament; additional engineers, construction workers, and other laborers have been hired to work in Qatar. Some workers report not being paid for work and a lack of dispute resolution, causing salary delays or nonpayment. Some human rights groups have criticized Qatar for allowing outdoor work (primarily construction) in very hot weather. Yet, the State Department credits the country with taking steps to protect labor rights, including for expatriate workers. In December 2016, a labor reform went into effect that offers greater protections for foreign workers by changing the " kafala " system (sponsorship requirement for foreign workers) to enable employees to switch employers at the end of their labor contracts rather than having to leave Qatar when their contracts end. In 2018, the government established and is funding several housing sites to replace unsafe temporary housing for expatriate workers. The government also has stepped up arrests and prosecutions of individuals for suspected labor law violations, and has increased its cooperation with the ILO to take in worker complaints and better inform expatriate workers of their rights. Religious Freedom14 Qatar's constitution stipulates that Islam is the state religion and Islamic law is "a main source of legislation," but Qatari laws incorporate secular legal traditions as well as Islamic law. The law recognizes only Islam, Christianity, and Judaism. The overwhelming majority (as much as 95%) of Qatari citizens are Sunni Muslims, possibly explaining why there have been no signs of sectarian schisms within the citizenry. The government permits eight registered Christian denominations to worship publicly at the Mesaymir Religious Complex (commonly referred to as "Church City"), and it has allowed the Evangelical Churches Alliance of Qatar to build a church. Jews and adherents of unrecognized religions—such as Hindus, Buddhists, and Baha'is—are allowed to worship privately but do not have authorized facilities in which to practice their religions. Qatari officials state that they are open to considering the creation of dedicated worship spaces for Hindus, Jews, and Buddhists and that any organized, non-Muslim religious group could use the same process as Christians to apply for official registration. Members of at least one group reportedly filed for land in previous years to build their own complex but received no response from the government. Foreign Policy Qatar uses its financial resources to implement a foreign policy that engages a wide range of regional actors, including those that are at odds with each other. Qatari officials periodically meet with Israeli officials while at the same hosting leaders of the Palestinian militant group, Hamas. Qatar maintains consistent ties to Iran while at the same time hosting U.S. forces that contain Iran's military power. Qatar hosts an office of the Afghan Taliban movement that facilitates U.S.-Taliban talks. Its policies have enabled Qatar to mediate some regional conflicts and to obtain the freedom of captives held by regional armed groups. Yet, Qatar often backs regional actors at odds with those backed by de facto GCC leader Saudi Arabia and other GCC states, causing Saudi Arabia and its close allies in the GCC to accuse Qatar of undermining the other GCC countries. As have some of the other GCC states, Qatar has shown an increasing willingness to use its own military forces to try to shape the outcome of regional conflicts. Qatar and the Intra-GCC Dispute A consistent source of friction within the GCC has been Qatar's embrace of Muslim Brotherhood movements as representing a moderate political Islamist movement that can foster regional stability. Qatar hosts Islamists who adhere to the Brotherhood's traditions, including the aging, outspoken Egyptian cleric Yusuf al-Qaradawi. In 2013-2014, differences over this and other issues widened to the point where Saudi Arabia, UAE, and Bahrain withdrew their ambassadors from Doha in March 2014, accusing Qatar of supporting "terrorism." The Ambassadors returned in November 2014 in exchange for a reported pledge by Qatar to fully implement a November 2013 "Riyadh Agreement" that committed Qatar to noninterference in the affairs of other GCC states and to refrain from supporting Muslim Brotherhood-linked organizations. These differences erupted again following the May 20-22, 2017, visit of President Donald Trump to Saudi Arabia, during which expressed substantial support for Saudi leaders. On June 5, 2017, Saudi Arabia, UAE, and Bahrain, joined by Egypt and a few other Muslim countries, severed diplomatic relations with Qatar, expelled Qatar's diplomats, recalled their ambassadors, and imposed limits on the entry and transit of Qatari nationals and vessels in their territories, waters, and airspace. They also accused Qatar of supporting terrorist groups and Iran. On June 22, 2017, the Saudi-led group presented Qatar with 13 demands, including closing Al Jazeera, severing relations with the Muslim Brotherhood, scaling back relations with Iran, closing a Turkish military base in Qatar, and paying reparations for its actions. Amir Tamim expressed openness to negotiations but said it would not "surrender" its sovereignty. The Saudi-led group subsequently reframed its demands as six "principles," among which were for Qatar to "combat extremism and terrorism" and prevent their financing, suspend "all acts of provocation," fully comply with the commitments Qatar made in 2013 and 2014 (see above), and refrain "from interfering in the internal affairs of states." President Trump initially responded to the crisis by echoing the Saudi-led criticism of Qatar's policies, but later sought to settle the rift. Then-Secretary of State Rex Tillerson, working with Kuwait, took the lead within the Trump Administration to mediating the dispute, including by conducting "shuttle diplomacy" in the region during July 10-13, 2017. President Trump facilitated a phone call between Amir Tamim and Saudi Crown Prince Mohammad bin Salman on September 9, 2017, but the direct dialogue faltered over a dispute about which leader had initiated the talks. No subsequent meetings between President Trump and the leaders of the parties to the dispute, or subsequent actions or proposals, have produced any significant progress toward resolution of the rift. Secretary of State Pompeo's visit to the Gulf states in January 2019 produced no evident movement, and the U.S. envoy who was assigned to work on this issue, General Anthony Zinni (retired), resigned as envoy in early January 2019. Yet, there are signs that Saudi Arabia and the UAE, facing criticism over the Kashoggi issue and their involvement in Yemen, might want to de-escalate the dispute. Qatari forces and commanders have been participating in GCC "Gulf Shield" military exercises and command meetings in Saudi Arabia and other GCC states. Amir Tamim was invited by Saudi Arabia to the annual GCC summit in Dammam, Saudi Arabia, during December 7-9, 2018, but he did not attend. Qatar asserts that the blockading countries are seeking to change Qatar's leadership and might take military action to force Qatar to accept their demands. In December 2017, Saudi Arabia "permanently" closed its Salwa border crossing into Qatar, and some press reports say that Saudi Arabia is contemplating building a canal that would physically separate its territory from that of Qatar. Qatari officials assert that the country's ample wealth is enabling it to limit the economic effects of the Saudi-led move, but that the blockade has separated families and caused other social disruptions. Qataris reportedly have rallied around their leadership to resist Saudi-led demands. The dispute has to date thwarted U.S. efforts to assemble the a new "Middle East Strategic Alliance" to counter Iran and regional terrorist groups. This alliance – to consist of the United States, the GCC countries, and other Sunni-led states, is reportedly to be formally unveiled at U.S.-GCC summit that has been repeatedly postponed since early 2018 and is not scheduled. The MESA has also been hampered by the global criticism of Saudi de facto leader Crown Prince Mohammad bin Salman for his possible involvement in the October 2018 killing of U.S.-based Saudi journalist Jamal Kashoggi at the Saudi consulate in Istanbul, and Egypt's April 2019 decision to refrain from joining the Alliance. Qatar's disputes with other GCC countries have come despite the resolution in 2011 of a long-standing territorial dispute between Qatar and Bahrain, dating back to the 18 th century, when the ruling families of both countries controlled parts of the Arabian peninsula. Qatar and Bahrain referred the dispute to the International Court of Justice (ICJ) in 1991 after clashes in 1986 in which Qatar landed military personnel on a disputed man-made reef (Fasht al-Dibal). In March 2001, the ICJ sided with Bahrain on the central dispute over the Hawar Islands, but with Qatar on ownership of the Fasht al-Dibal reef and the town of Zubara on the Qatari mainland, where some members of the ruling Al Khalifa family of Bahrain are buried. Two smaller islands, Janan and Hadd Janan, were awarded to Qatar. Qatar accepted the ruling as binding. Iran Even though the Saudi-led bloc asserts that Qatar had close relations with Iran, Qatar has long helped counter Iran strategically. Qatar enforced international sanctions against Iran during 2010-2016, and no Qatar-based entity has been designated by the United States as an Iran sanctions violator. Amir Tamim attended both U.S.-GCC summits (May 2015 at Camp David and April 2016 in Saudi Arabia) that addressed GCC concerns about the July 2015 U.S.-led multilateral agreement on Iran's nuclear program (Joint Comprehensive Plan of Action, JCPOA). Qatar withdrew its Ambassador from Tehran in January 2016 in solidarity with Saudi Arabia over the Saudi execution of a dissident Shiite cleric, and Qatar joined the February 2016 GCC declaration that Lebanese Hezbollah is a terrorist group. Yet Qatari leaders have always argued that dialogue with Iran is key to reducing regional tensions. Qatar and Iran have shared a large natural gas field in the Persian Gulf without incident, although some Iranian officials have occasionally accused Qatar of cheating on the arrangement. In February 2010, as Crown Prince, Shaykh Tamim, visited Iran for talks with Iranian leaders, and as Amir, he has maintained direct contact with Iran's President Hassan Rouhani. Apparently perceiving that the June 2017 intra-GCC rift provided an opportunity to drive a wedge within the GCC, Iran supported Qatar in the dispute and has exported additional foodstuffs to Qatar to help it compensate for the cutoff of Saudi food exports. It has permitted Qatar Airways to overfly its airspace in light of the Saudi, UAE, and Bahraini denial of their airspace to that carrier. In August 2017, Qatar formally restored full diplomatic relations with Iran. Qatar did not directly support the May 8, 2018, U.S. withdrawal from the JCPOA, instead issuing a statement hoping that efforts to "denuclearize" the region will not lead to "escalation." Saudi official statements also cited Qatar's alleged support for pro-Iranian dissidents in Bahrain as part of the justification for isolating Qatar in June 2017. Contributing to that Saudi perception was Qatar's brokering in 2008 of the "Doha Agreement" to resolve a political crisis in Lebanon that led to clashes between Lebanon government forces and Hezbollah. Qatar's role as a mediator stemmed, at least in part, from Qatar's role in helping reconstruct Lebanon after the 2006 Israel-Hezbollah war, and from then-Amir Hamad's postwar visit to Hezbollah strongholds in Lebanon. Further fueling Saudi and UAE suspicions was a 2017 Qatari payment to certain Iraqi Shiite militia factions of several hundred million dollars to release Qatari citizens, including royal family members, who were kidnapped in 2016 while falcon hunting in southern Iraq. Egypt In Egypt, after the fall of Egyptian President Hosni Mubarak in 2011, a Muslim Brotherhood-linked figure, Muhammad Morsi, won presidential elections in 2012. Qatar contributed about $5 billion in aid, aggravating a split between Qatar and the other GCC states over the Muslim Brotherhood. Saudi Arabia and the UAE backed Morsi's ouster by Egypt's military in 2013. Because of its support for Morsi, Qatar's relations with former military leader and now President Abdel Fattah el-Sisi have been strained, and Egypt joined the 2017 Saudi-led move against Qatar. Libya In Libya, Qatar joined the United States and several GCC and other partner countries in air operations to help oust Qadhafi in 2011. Subsequently, however, Qatar has supported Muslim Brotherhood-linked factions in Libya opposed by the UAE, Egypt, and Saudi Arabia. This difference in approaches in Libya among the GCC states contributed to the intra-GCC rift. As of April 2019, it appears that the UAE and Egypt-backed ex-military commander Khalifa Hifter, who has consolidated his control of much of Libya over the past four years, is poised to reunite the country by force. Yemen In 2015, Qatar joined the Saudi-led military coalition that is battling Iran-backed Zaidi Shiite Houthi rebels in Yemen, including conducting air strikes against Houthi and allied positions. This was a departure from Qatar's 2006-2007 failed efforts to mediate between the Houthis and the government of President Ali Abdullah Saleh, who left office in 2012 following an "Arab Spring"-related uprising in Yemen. In September 2015, Qatar deployed about 1,000 military personnel, along with armor, to Yemen. Four Qatar soldiers were killed fighting there. As a result of the intra-GCC rift, in mid-2017 Qatar withdrew from the Saudi-led military effort in Yemen. Syria, Iraq, and Anti-Islamic State Operations In Syria, Qatar provided funds and weaponry to rebels fighting the regime of President Bashar Al Asad, including those, such as Ahrar Al Sham, that competed with and sometimes fought anti-Asad factions supported by Saudi Arabia and the UAE. Qatar also built ties to Jabhat al Nusra (JAN), an Al Qaeda affiliate that was designated by the United States as a Foreign Terrorist Organization (FTO), although Qatari officials assert that their intent was to induce the group to sever its ties to Al Qaeda, which it formally did in July 2016. Qatari mediation also obtained the release of Lebanese and Western prisoners captured by that group. However, Asad regime recent gains in Syria likely render Qatar's involvement moot. Qatar has not, to date, followed Kuwait or Bahrain in reopening its embassy in Damascus; its Foreign Minister stated in January 2019 that Qatar saw "no reason" to do so. According to the State Department, Qatar has allowed 20,000 Syrians fleeing the civil war there to retain residency in Qatar. Qatar is a member of the U.S.-led coalition combating the Islamic State. In 2014, Qatar flew some airstrikes in Syria against Islamic State positions. However, after several weeks, the coalition ceased identifying Qatar as a participant in coalition strikes inside Syria. Neither Qatar nor any other GCC state participated in coalition air operations against the Islamic State inside Iraq. In April 2017, Qatar reportedly paid ransom to obtain the release of 26 Qatari ruling family members abducted Iraqi Shia militiamen while on a hunting trip in southern Iraq in 2015. The Iraqi government said in June 2017 that it, not Shia fighters, received the ransom. Lebanon Qatar has sought to exert some influence in Lebanon, possibly as a counterweight to that exerted by Saudi Arabia. In January 2019, Amir Tamim was one of the few regional leaders to attend an Arab League summit held in Beirut. In late January 2019, Qatar announced a $500 million investment in Lebanon government bonds to support that country's ailing economy. Israeli-Palestinian Issues/Hamas Qatar has attempted to play a role in Israeli-Palestinian peace negotiations by engaging all parties. In directly engaging Israel, in 1996, then-Amir Hamad hosted a visit by then-Prime Minister of Israel Shimon Peres and allowed Israel to open a formal trade office in Doha—going beyond the GCC's dropping in 1998 of the secondary Arab League boycott of Israel. In April 2008, then-Foreign Minister Tzipi Livni attended the government-sponsored Doha Forum and met with Amir Hamad. Qatar ordered the Israeli offices in Doha closed in January 2009 at the height of an Israel-Hamas conflict and the offices have not formally reopened. Still, small levels of direct Israel-Qatar trade reportedly continue; Israeli exports to Qatar consist mostly of machinery and technology, and imports from Qatar are primarily plastics. Amir Tamim regularly accuses Israel of abuses against the Palestinians and expresses consistent support for Palestinian efforts for full United Nations membership and recognition, while at the same time backing negotiations between the Palestinians and Israel. Qatar has also engaged the Islamist group Hamas, a Muslim Brotherhood offshoot that has exercised de facto control of the Gaza Strip since 2007. Qatari officials assert that their engagement with Hamas can help broker reconciliation between Hamas and the Fatah-led Palestinian Authority (PA). U.S. officials have told Members of Congress that Qatar's leverage over Hamas can be helpful to reducing conflict between Hamas and Israel and that Qatar has pledged that none of its assistance to the Palestinians goes to Hamas. Qatar reportedly asked former Hamas political bureau chief Khalid Meshal to leave Qatar after the intra-GCC rift erupted, apparently to accommodate the blockading states. Qatar's critics assert that Hamas leaders are too often featured on Al Jazeera and that Qatar's relations with Hamas constitute support for a terrorist organization. In the 115 th Congress, the Palestinian International Terrorism Support Act of 2017 ( H.R. 2712 ), which was ordered to be reported to the full House on November 15, 2017, appeared directed at Qatar by sanctioning foreign governments determined to be providing financial or other material support to Hamas or its leaders. As have the other Gulf states, Qatar has sought to compensate for a curtailment of U.S. contributions to the U.N. Relief Works Agency (UNRWA). In April 2018, Qatar donated $50 million to that agency. In December 2018, Qatar reached a two-year agreement with UNRWA to donate to that agency's programs in education and health care. Afghanistan/Taliban Office Qatari forces did not join any U.S.-led operations inside Afghanistan, but its facilities and forces support U.S. operations there, and Qatar has brokered talks between the United States and Taliban representatives. Unlike Saudi Arabia and UAE, Qatar did not recognize the Taliban as the legitimate government of Kabul when the movement ruled during 1996-2001. In June 2013, the Taliban opened a representative office in Qatar, but it violated U.S.-Qatar-Taliban understandings by raising a flag of the former Taliban regime on the building and Qatar, at U.S. request, immediately closed the office. Taliban officials remained in Qatar, and revived U.S.-Taliban talks led to the May 31, 2014, exchange of captured U.S. soldier Bowe Bergdahl for five Taliban figures held by the United States at the prison facility in Guantanamo Bay, Cuba. The five were banned from traveling outside Qatar until there is an agreed solution that would ensure that they could not rejoin the Taliban insurgency. In November 2018, the five joined the Taliban representative office in Doha. Qatar permitted the Taliban office in Qatar to formally reopen in 2015. Deputy Assistant Secretary of State for South and Central Asia Alice Wells met with Taliban figures from the office in Doha in July 2018 for discussions about a future peace settlement in Afghanistan. Since mid-2018, further talks, with increasing levels of intensity, have taken place in Doha between Taliban negotiators and the U.S. envoy for Afghanistan, Ambassador Zalmay Khalilzad. Qatar might also have some contacts with the Haqqani Network, a U.S.-designated Foreign Terrorist Organization (FTO) that is allied with the Taliban. In January 2016, Qatari mediation reportedly caused the Haqqani Network to release a Canadian hostage, Colin Rutherford. The mediation did not, as Qatar had hoped, lead to the freedom of the Coleman family, also held by that group, who were rescued from the group by a U.S. and Pakistani operation in October 2016. In January 2018, Qatar's air force completed the first two flights of its C-17 (Globemaster) cargo aircraft to Afghanistan and back. According to then-Defense Secretary Mattis, the flights provided logistical support to the NATO "counterterrorism" campaign there. Other Qatari Relationships and Mediation Efforts39 Somewhat outside the traditional Middle East: Qatar has played an active role in mediating conflict over Sudan's Darfur region. In 2010, Qatar, including through grants and promises of investment, helped broker a series of agreements, collectively known as the Doha Agreements, between the government and various rebel factions. In March 2018, Qatar and Sudan signed an agreement to jointly invest $4 billion to develop the Red Sea port of Suakin off Sudan's coast. Qatar has forged relationships with several countries in Central Asia, possibly in an effort to shape energy routes in the region. Amir Tamim has exchanged leadership visits with the President of Turkmenistan, Gurbanguly Berdymukhamedov in 2016 and 2017. The two countries are major world gas suppliers. The leader of Tajikistan, Imamali Rahmonov, visited Doha in February 2017 to reportedly discuss Qatari investment and other joint projects. Qatar funded a large portion of a $100 million mosque in Dushanbe, which purports to be the largest mosque in Central Asia. U.S.-Qatar Defense and Security Cooperation U.S.-Qatar defense and security relations are long-standing and extensive—a characterization emphasized by senior U.S. officials in the course of the two U.S.-Qatar "Strategic Dialogue" sessions—in Washington, DC, in January 2018, and in Doha in January 2019. Senior U.S. officials have praised Qatar as "a longtime friend and military partner for peace and stability in the Middle East and a supporter of NATO's mission in Afghanistan." The U.S-Qatar defense relationship emerged during the 1980-1988 Iran-Iraq war. The six Gulf monarchies formed the GCC in late 1981 and collectively backed Iraq against the threat posed by Iran in that war, despite their political and ideological differences with Iraq's Saddam Hussein. In the latter stages of that war, Iran attacked international shipping in the Gulf and some Gulf state oil loading facilities, but none in Qatar. After Iraq invaded GCC member Kuwait in August 1990, the GCC participated in the U.S.-led military coalition that expelled Iraq from Kuwait in February 1991. In January 1991, Qatari armored forces helped coalition troops defeat an Iraqi attack on the Saudi town of Khafji. The Qatari participation in that war ended U.S.-Qatar strains over Qatar's illicit procurement in the late 1980s of U.S.-made "Stinger" shoulder-held antiaircraft missiles. U.S.-Qatar defense relations subsequently deepened and the two countries signed a formal defense cooperation agreement (DCA). U.S. Central Command (CENTCOM) Commander General Joseph Votel testified on February 27, 2018, that U.S. operations have not been affected by the intra-GCC rift. Qatar, one of the wealthiest states in the world on a per capita gross domestic product (GDP) basis, receives virtually no U.S. military assistance. At times, small amounts of U.S. aid have been provided to help Qatar develop capabilities to prevent smuggling and the movement of terrorists or proliferation-related gear into Qatar or around its waterways. Defense Cooperation Agreement (DCA) The United States and Qatar signed a formal defense cooperation agreement (DCA) on June 23, 1992. The DCA was renewed for 10 years, reportedly with some modifications, in December 2013. The text of the pact is classified, but it reportedly addresses U.S. military access to Qatari military facilities, prepositioning of U.S. armor and other military equipment, and U.S. training of Qatar's military forces. Up to 13,000 U.S. troops are deployed at the various facilities in Qatar. Most are U.S. Air Force personnel based at the large Al Udeid air base southwest of Doha, working as part of the Coalition Forward Air Component Command (CFACC). The U.S. personnel deployed to Qatar participate in U.S. operations such as Operation Inherent Resolve (OIR) against the Islamic State organization and Operation Freedom's Sentinel in Afghanistan, and they provide a substantial capability against Iran. The U.S. Army component of U.S. Central Command prepositions armor (enough to outfit one brigade) at Camp As Sayliyah outside Doha. U.S. armor stationed in Qatar was deployed in Operation Iraqi Freedom that removed Saddam Hussein from power in Iraq in 2003. The DCA also reportedly addresses U.S. training of Qatar's military. Qatar's force of about 12,000 is the smallest in the region except for Bahrain. Of that force, about 8,500 are ground forces, 1,800 are naval forces, and 1,500 are air forces. A 2014 law mandates four months (three months for students) of military training for males between the ages of 18 and 35, with a reserve commitment of 10 years (up to age 40). General Votel's February 2018 testimony, referenced above, stated that Qatar is seeking to expand its military both in size and capacity. Al Udeid Expansion/Permanent U.S. Basing in Qatar?46 Since 2002, Qatar has contributed over $8 billion to support U.S. and coalition operations at Al Udeid. The air field, which also hosts the forward headquarters for CENTCOM, has been steadily expanded and enhanced not only with Qatari funding but also about $450 million in U.S. military construction funding since 2003. In March 2018, the State Department approved the sale to Qatar of equipment, with an estimated value of about $200 million, to upgrade the Air Operation Center at Al Udeid. The January 2018 Strategic Dialogue resulted in a number of U.S.-Qatar announcements of expanded defense and security cooperation, including Qatari offers to fund capital expenditures that offer the possibility of an "enduring" U.S. military presence in Qatar and to discuss the possibility of "permanent [U.S.] basing" there. To enable an enduring U.S. presence, Qatar is expanding and enhance Al Udeid over the next two decades—an effort that would facilitate an enduring U.S. presence there. On July 24, 2018, the U.S. and Qatari military attended a groundbreaking ceremony for the Al Udeid expansion, which will include over 200 housing units for families of officers and expansion of the base's ramps and cargo facilities. On January 24, 2019, in the course of the second U.S.-Qatar Strategic Dialogue, the Qatar Ministry of Defense and the U.S. Department of Defense signed a memorandum of understanding that DOD referred to as a "positive step towards the eventual formalization of Qatar's commitment to support sustainment costs and future infrastructure costs at [Al Udeid Air Base]." Qatar has also extended the Hamad Port to be able to accommodate U.S. Navy operations were there a U.S. decision to base such operations in Qatar. U.S. Arms Sales to Qatar Qatar's forces continue to field mostly French-made equipment, such as the AMX-30 main battle tank, but Qatar is increasingly shifting its weaponry mix to U.S.-made equipment. According to General Votel's February 27, 2018, testimony, Qatar is currently the second-largest U.S. Foreign Military Sales (FMS) customer, with $25 billion in new FMS cases. And, Qatar is "on track" to surpass $40 billion in the next five years with additional FMS purchases. The joint statement of the U.S.-Qatar Strategic Dialogue in January 2018 said that Qatari FMS purchases had resulted in over 110,000 American jobs and the sustainment of critical U.S. military capabilities. Tanks. Qatar's 30 main battle tanks are French-made AMX-30s. In 2015, Germany exported several "Leopard 2" tanks to Qatar. Qatar has not purchased U.S.-made tanks, to date. Combat Aircraft. Qatar currently has only 18 combat aircraft, of which 12 are French-made Mirage 2000s. To redress that deficiency, in 2013 Qatar submitted a letter of request to purchase 72 U.S.-made F-15s. After a long delay reportedly linked to the U.S. commitment to Israel's "Qualitative Military Edge" (QME), on November 17, 2016, the Defense Security Cooperation Agency (DSCA) notified Congress of the potential sale, which has an estimated value of $21 billion. The FY2016 National Defense Authorization Act (Section 1278 of P.L. 114-92 ) required a DoD briefing for Congress on the sale, including its effect on Israel's QME. On June 14, 2017, the United States and Qatar signed an agreement for a reported 36 of the F-15 fighters, which predated (and therefore were not covered by) then-Senate Foreign Relations Committee Chairman Senator Bob Corker's June 26, 2017 announcement that he would not provide informal concurrence to arms sales to the GCC countries until the intra-GCC rift was resolved. That blanket hold was dropped on February 8, 2018. In December 2017, the Defense Department announced that Qatar would buy the second group of 36 F-15s under the sale agreement. Deliveries of all aircraft are to be completed by the end of 2022. Qatar signed a $7 billion agreement in May 2015 to purchase 24 French-made Rafale aircraft, and, in September 2017, a "Statement of Intent" with Britain to purchase 24 Typhoon combat aircraft. Heli copters . In 2012, the United States sold Qatar AH-64 Apache attack helicopters and related equipment; UH-60 M Blackhawk helicopters; and MH-60 Seahawk helicopters. The total potential value of the sales was estimated at about $6.6 billion, of which about half consisted of the Apache sale. On April 9, 2018, DSCA announced that the State Department had approved a sale to Qatar of 5,000 Advanced Precision Kill Weapons Systems II Guidance Sections for use on its Apache fleet, with an estimated sale value of $300 million. Short-Range Missile and Rocket Systems. Qatar is not known to have any extended-range missiles, but various suppliers have provided the country with short-range systems that can be used primarily in ground operations. During 2012-2013, the United States sold Qatar Hellfire air-to-ground missiles, Javelin guided missiles, the M142 High Mobility Artillery Rocket System (HIMARS), the Army Tactical Missile System (ATACMS), and the M31A1 Guided Multiple Launch Rocket System (GMLRS). The total potential value of the sales was estimated at about $665 million. On April 22, 2016, the Defense Security Cooperation Agency notified to Congress a potential sale to Qatar of 252 RIM-116C Rolling Airframe Tactical Missiles and 2 RIM 116C-2 Rolling Airframe Telemetry Missiles, plus associated equipment and support, with an estimated sale value of $260 million. On May 26, 2016, DSCA notified to Congress an additional sale of 10 Javelin launch units and 50 Javelin missiles, with an estimated value of $20 million. On November 27, 2018, DSCA notified Congress of a State Department approval of a commercial sale by Raytheon of 40 National Advanced Surface-to-Air Missile Systems (NADSAMS) at an estimated value of $215 million. Ballistic Missiles . At its national day parade in Doha in mid-December 2017, the Qatari military displayed its newly purchased SY 400-BP-12A ballistic missile, which has a 120-mile range and is considered suited to a surface attack mission. The display was widely viewed as an effort to demonstrate to the Saudi-led bloc Qatar's capabilities to resist concerted pressure. Ballistic Missile Defense (BMD) Systems . Qatar has purchased various U.S.-made BMD systems, consistent with U.S. efforts to promote a coordinated Gulf missile defense capability against Iran's missile arsenal. In 2012, the United States sold Qatar Patriot Configuration 3 (PAC-3, made by Raytheon) fire units and missiles at an estimated value of nearly $10 billion. Also that year, the United States agreed to sell Qatar the Terminal High Altitude Area Air Defense (THAAD), the most sophisticated ground-based missile defense system the United States has made available for sale. However, because of Qatar's budget difficulties and operational concerns, the THAAD sale has not been finalized. In February 2017, Raytheon concluded an agreement to sell Qatar an early warning radar system to improve the capabilities of its existing missile defense systems, with an estimated value of $1.1 billion. In December 2017, the Defense Department awarded Raytheon a $150 million contract to provide Qatar with services and support for its PAC-3 system. Naval Vessels . In August 2016, DSCA transmitted a proposed sale to Qatar of an unspecified number of U.S.-made Mk-V fast patrol boats, along with other equipment, with a total estimated value of about $124 million. In August 2017, Qatar finalized a purchase from Italy of four multirole corvette ships, two fast patrol missile ships, and an amphibious logistics ship, with an estimated value of over $5 billion. Other Defense Partnerships Qatar has also developed relations with NATO under the "Istanbul Cooperation Initiative" (ICI). Qatar's Ambassador to Belgium serves as the interlocutor with NATO, the headquarters of which is based near Brussels. In June 2018, Qatar's Defense Minister said that his country's long-term strategic "ambition" is to join NATO. France As noted above, Qatar has historically bought most of its major combat systems from France. On March 28, 2019, French Prime Minister Edouard Phillipe visited Doha and signed with Qatar's Defense and Interior Minister five agreements to boost ties. The agreements focused on defense information exchange, cooperation to combat cybercrime, and culture and education agreements. Turkey Qatar's defense relationship with Turkey has become an element in Qatar's efforts to resist the Saudi-led pressure in the intra-GCC crisis. In 2014, Qatar allowed Turkey—a country that, like Qatar, often supports Muslim Brotherhood—to open a military base (Tariq bin Ziyad base) in Qatar, an initiative that might have contributed to Turkey's support for Qatar in the June 2017 intra-GCC rift. One of the "13 demands" of the Saudi-led bloc has been that Qatar close the Turkish base in Qatar—a demand Qatari officials say will not be met. Turkey has demonstrated its support for Qatar by sending additional troops there and conducting joint exercises in August 2017 and by increasing food exports to replace those previously provided by Saudi Arabia. Turkey further added to its Qatar troop contingent in December 2017. Russia Qatar has broadened its relationship with Russia since early 2016 in conjunction with efforts to resolve the conflict in Syria and in recognition of Russia's heightened role in the region. One of Qatar's sovereign wealth funds has increased its investments in Russia, particularly in its large Rosneft energy firm. Amir Tamim has made several visits to Russia, the latest of which was in March 2018. During the visit, it was announced that Qatar Airways would buy a 25% stake in the Vnukovo International Airport, one of Moscow's airports. Qatar is also reportedly considering buying the S-400 sophisticated air defense system. Qatar-Russia discussions about the purchase have apparently caused a degree of alarm among the Saudi-led states, with Saudi Arabia going so far as to threaten military action against Qatar if it buys the system. Saudi officials also reportedly asked French President Emmanuel Macron to persuade Qatar not to buy the weapon. Were Qatar to purchase the S-400, it might be subject to U.S. sanctions under Section 231 of the Countering America's Adversaries through Sanctions Act ( P.L. 115-44 ). That section sanctions persons or entities that conduct transactions with Russia's defense or intelligence sector. It mandates the imposition of several sanctions that might include restrictions on certain exports to Qatar, restrictions on Qatari banking activities in the United States, restrictions on Qatari acquisition of property in the United States, and a ban on U.S. investments in any Qatari sovereign debt. Counterterrorism Cooperation63 U.S.-Qatar's cooperation against groups that both countries agree are terrorist groups, such as the Islamic State organization, is extensive. However, some groups that the United States considers as terrorist organizations, such as Hamas, are considered by Qatar to be Arab movements pursuing legitimate goals. Perhaps in part as a means to attract U.S. support in the context of the intra-GCC rift, on July 10, 2017, Qatar's foreign minister and then-Secretary Tillerson signed in Doha a Memorandum of Understanding on broad U.S.-Qatar counterterrorism cooperation, including but going beyond just combatting terrorism financing. The United States and Qatar held a Counterterrorism Dialogue on November 8, 2017, in which they reaffirmed progress on implementing the MoU. The joint statement of the January 2018 Strategic Dialogue noted "positive progress" under the July 2017 MoU, and thanked Qatar for its action to counter terrorism. The statement also noted the recent conclusion of a memorandum of understanding between the U.S. Attorney General and his Qatari counterpart on the fight against terrorism and its financing and combating cybercrime. In an effort to implement the U.S.-Qatar MoU, and perhaps also as a gesture to the blockading states, on March 22, 2018, the Qatar Ministry of Interior issued list of 19 individuals and eight entities that it considers as "terrorists." The list includes 10 persons who are also are also named as terrorists by the blockading GCC states. On April 2-5, 2018, Qatar held a conference attended by international experts and security professionals from 42 countries. Qatar participates in the State Department's Antiterrorism Assistance (ATA) program to boost domestic security capabilities, and it has continued to participate in and host Global Counterterrorism Forum events. Under the ATA program, participating countries are provided with U.S. training and advice on equipment and techniques to prevent terrorists from entering or moving across their borders. However, Qatari agencies such as the State Security Bureau and the Ministry of Interior have limited manpower and are reliant on nationals from third countries to fill law enforcement positions—a limitation Qatar has tried to address by employing U.S. and other Western-supplied high technology. In the past, at least one high-ranking Qatari official provided support to Al Qaeda figures residing in or transiting Qatar, including suspected September 11, 2001, attacks mastermind Khalid Shaykh Mohammad. None of the September 11 hijackers was a Qatari national. Terrorism Financing Issues U.S. officials have stated that Qatar is taking steps to prevent terrorism financing and the movement of suspected terrorists into or through Qatar. The country is a member of the Middle East North Africa Financial Action Task Force (MENAFATF), a regional financial action task force that coordinates efforts combatting money laundering and terrorism financing. In 2014, the Amir approved Law Number 14, the "Cybercrime Prevention Law," which criminalized terrorism-linked cyber offenses, and clarified that it is illegal to use an information network to contact a terrorist organization or raise funds for terrorist groups, or to promote the ideology of terrorist organizations. In 2017, the country passed updated terrorism financing legislation. In February 2017, Qatar hosted a meeting of the "Egmont Group" global working group consisting of 152 country Financial Intelligence Units. Qatar is a member of the Terrorist Financing Targeting Center (TFTC), a U.S.-GCC initiative announced during President Trump's May 2017 visit to Saudi Arabia. In October 2017, and despite the intra-GCC rift, Qatar joined the United States and other TFTC countries in designating terrorists affiliated with Al Qaeda and ISIS. The State Department's 2017 report on international terrorism says that, in 2017, Qatar took sweeping measures to monitor and restrict the overseas activities of Qatari charities. According to the State Department's report on international terrorism for 2015, entities and individuals within Qatar continue to serve as a source of financial support for terrorist and violent extremist groups, particularly regional Al Qa'ida affiliates such as the Nusrah Front." The State Department report for 2017 stated: "While the Government of Qatar has made progress on countering the financing of terrorism, terrorist financiers within the country are still able to exploit Qatar's informal financial system." The United States has imposed sanctions on several persons living in Qatar, including Qatari nationals, for allegedly raising funds or making donations to both Al Qaeda and the Islamic State. Countering Violent Extremism Qatar has hosted workshops on developing plans to counter violent extremism and has participated in similar sessions hosted by the UAE's Hedayat Center that focuses on that issue. Also in 2015, Qatar pledged funding to the U.N. Office on Drugs and Crime (UNODC) to help address violent extremism and radicalization among youth and vulnerable populations. However, some experts have noted that the government has violated a pledge to the United States not to allow Qatari preachers to conduct what some consider religious incitement in mosques in Education City, where several U.S. universities have branches. Education City was established by the Qatar Foundation, which is at the core of Qatar's strategy to counter violent extremism through investment in education. Economic Issues Even before the June 2017 intra-GCC rift, Qatar had been wrestling with the economic effects of the fall in world energy prices since mid-2014—a development that has caused GCC economic growth to slow, their budgets to fall into deficit, and the balance of their ample sovereign wealth funds to decline. Oil and gas reserves have made Qatar the country with the world's highest per capita income. Qatar is a member of the Organization of the Petroleum Exporting Countries (OPEC), along with other GCC states Saudi Arabia, Kuwait, and UAE and other countries. However, on December 3, 2018, Qatar announced it would withdraw from OPEC in early 2019 in order to focus on its more high-priority natural gas exports. Some observers attributed the decision, at least in part, to the ongoing intra-GCC rift, insofar as rival Saudi Arabia is considered the dominant actor within OPEC. The economic impact on Qatar of the June 2017 intra-GCC rift is difficult to discern. About 40% of Qatar's food was imported from Saudi Arabia precrisis, and there were reports of runs on stocks of food when the blockade began. However, the government's ample financial resources enabled it to quickly arrange substitute sources of goods primarily from Turkey, Iran, and India. The effects on Qatar's growing international air carrier, Qatar Airways, have been significant because of the prohibition on its overflying the blockading states. In November 2017, Iran and Turkey signed a deal with Qatar to facilitate the mutual transiting of goods. Qatar's main sovereign wealth fund, run by the Qatar Investment Authority (QIA), as well as funds held by the Central Bank, total about $350 billion, according to Qatar's Central Bank governor in July 2017, giving the country a substantial cushion to weather its financial demands. QIA's investments consist of real estate and other relatively illiquid holdings, such as interest in London's Canary Wharf project. In May 2016, Qatar offered $9 billion in bonds as a means of raising funds without drawing down its investment holdings. In April 2018, the country raised $12 billion in another, larger, bond issue. Qatar also has cut some subsidies to address its budgetary shortfalls. In early October 2017, it was reported that QIA is considering divesting a large portion of its overseas assets and investing the funds locally—a move that is at least partly attributable to the economic pressures of the intra-GCC rift. The intra-GCC rift has not harmed Qatar's ability to earn substantial funds from energy exports. Oil and gas still account for 92% of Qatar's export earnings, and 56% of government revenues. Proven oil reserves of about 25 billion barrels are far less than those of Saudi Arabia and Kuwait, but enough to enable Qatar to continue its current levels of oil production (about 700,000 barrels per day) for over 50 years. Its proven reserves of natural gas exceed 25 trillion cubic meters, about 13% of the world's total and third largest in the world. Along with Kuwait and UAE, in November 2016 Qatar agreed to a modest oil production cut (about 30,000 barrels per day) as part of an OPEC-wide production cut intended to raise world crude oil prices. Qatar is the world's largest supplier of liquefied natural gas (LNG), which is exported from the large Ras Laffan processing site north of Doha. That facility has been built up with U.S.-made equipment, much of which was exported with the help of about $1 billion in Export-Import Bank loan guarantees. Qatar is a member and hosts the headquarters of the Gas Exporting Countries Forum (GECF), which is a nascent natural gas cartel and includes Iran and Russia, among other countries. State-run Qatar Petroleum is a major investor in the emerging U.S. LNG export market, with a 70% stake (Exxon-Mobil and Conoco-Phillips are minority stakeholders) in an LNG terminal in Texas that is seeking U.S. government approval to expand the facility to the point where it can export over 15 million tons of LNG per year. In June 2018, Qatar Petroleum bought a 30% state in an Exxon-Mobil-run development of an onshore shale natural gas basin in Argentina (Vaca Muerta). Qatar is the source of the gas supplies for the Dolphin Gas Project established by the UAE in 1999 and which became operational in 2007. The project involves production and processing of natural gas from Qatar's offshore North Field, which is connected to Iran's South Pars Field (see Figure 2 ), and transportation of the processed gas by subsea pipeline to the UAE and Oman. Its gas industry gives Qatar some counter leverage against the Saudi-led group, but Qatar has said it will not reduce its gas supplies under existing agreements with other GCC states. Both the UAE and Qatar have filed complaints at the WTO over their boycotting each other's goods; the United States reportedly has backed the UAE's arguments that the WTO does not have the authority to adjudicate issues of national security. Because prices of hydrocarbon exports have fallen dramatically since mid-2014, in 2016 Qatar ran its first budget deficit (about $13 billion). As have other GCC rulers, Qatari leaders assert publicly that the country needs to diversify its economy, that generous benefits and subsidies need to be reduced, and that government must operate more efficiently. At the same time, the leadership apparently seeks to minimize the effect of any cutbacks on Qatari citizens. Still, if oil prices remain far below their 2014 levels and the intra-GCC rift continues much further, it is likely that many Qatari citizens will be required to seek employment in the private sector, which they generally have shunned in favor of less demanding jobs in the government. The national development strategy from 2011 to 2016 focused on Qatar's housing, water, roads, airports, and shipping infrastructure in part to promote economic diversification, as well as to prepare to host the 2022 FIFA World Cup soccer tournament, investing as much as $200 billion. In Doha, the result has been a construction boom, which by some reports has outpaced the capacity of the government to manage, and perhaps fund. A metro transportation system is under construction in Doha. U.S.-Qatar Economic Relations In contrast to the two least wealthy GCC states (Bahrain and Oman), which have free trade agreements with the United States, Qatar and the United States have not negotiated an FTA. However, in April 2004, the United States and Qatar signed a Trade and Investment Framework Agreement (TIFA). Qatar has used the benefits of the more limited agreement to undertake large investments in the United States, including the City Center project in Washington, DC. Also, several U.S. universities and other institutions, such as Cornell University, Carnegie Mellon University, Georgetown University, Brookings Institution, and Rand Corporation, have established branches and offices at the Qatar Foundation's Education City outside Doha. In 2005, Qatar donated $100 million to the victims of Hurricane Katrina. The joint statement of the January 2018 U.S.-Qatar Strategic Dialogue "recognized" QIA's commitment of $45 billion in future investments in U.S. companies and real estate. According to the U.S. Census Bureau's "Foreign Trade Statistics" compilation, the United States exported $4.9 billion in goods to Qatar in 2016 (about $600 million higher than 2015), and imported $1.16 billion worth of Qatari goods in 2016, slightly less than in 2015. U.S. exports to Qatar for 2017 ran about 40% less than the 2016 level, but U.S. imports from Qatar were about the same as in 2016. U.S. exports to Qatar rebounded to $4.4 billion in 2018 and imports were about $1.57 billion. U.S. exports to Qatar consist mainly of aircraft, machinery, and information technology. U.S. imports from Qatar consist mainly of petroleum products, but U.S. imports of Qatar's crude oil or natural gas have declined to negligible levels in recent years, reflecting the significant increase in U.S. domestic production of those commodities. Qatar's growing airline, Qatar Airways, is a major buyer of U.S. commercial aircraft. In October 2016, the airline agreed to purchase from Boeing up to another 100 passenger jets with an estimated value of $18 billion—likely about $10 billion if standard industry discounts are applied. However, some U.S. airlines challenged Qatar Airways' benefits under a U.S.-Qatar "open skies" agreement. The U.S. carriers asserted that the airline's privileges under that agreement should be revoked because the airline's aircraft purchases are subsidized by Qatar's government, giving it an unfair competitive advantage. The Obama Administration did not reopen that agreement in response to the complaints, nor did the Trump Administration. However, the United States and Qatar reached a set of "understandings" on civil aviation on January 29, 2018, committing Qatar Airways to financial transparency and containing some limitations on the airline's ability to pick up passengers in Europe for flights to the United States. Some assert that Qatar Airway's 2018 purchase of Air Italy might represent a violation of those limitations. U.S. Assistance As one of the wealthiest countries per capita in the world, Qatar gets negligible amounts of U.S. assistance. In FY2016, the United States spent about $100,000 on programs in Qatar, about two-thirds of which was for counternarcotics programming. In FY2015, the United States spent $35,000 on programs in Qatar, of which two-thirds was for counternarcotics.

The State of Qatar has employed its ample financial resources to exert regional influence separate from and independent of Saudi Arabia, the de facto leader of the Gulf Cooperation Council (GCC: Saudi Arabia, Kuwait, Qatar, United Arab Emirates, Bahrain, and Oman), an alliance of six Gulf monarchies. Qatar has intervened in several regional conflicts, including in Syria and Libya, and has engaged both Sunni Islamist and Iran-backed Shiite groups in Lebanon, Sudan, the Gaza Strip, Iraq, and Afghanistan. Qatar has maintained consistent dialogue with Iran while also supporting U.S. and GCC efforts to limit Iran's regional influence. Qatar's independent policies, which include supporting regional Muslim Brotherhood organizations and hosting a global media network often critical of Arab leaders called Al Jazeera, have caused a backlash against Qatar by Saudi Arabia and some other GCC members. A rift within the GCC opened on June 5, 2017, when Saudi Arabia, the UAE, and Bahrain, joined by Egypt and a few other governments, severed relations with Qatar and imposed limits on the entry and transit of Qatari nationals and vessels in their territories, waters, and airspace. The Trump Administration has sought, unsuccessfully to date, to mediate a resolution of the dispute. The rift has hindered U.S. efforts to hold another U.S.-GCC summit that would formalize a new "Middle East Strategic Alliance" of the United States, the GCC, and other Sunni-led countries in the region to counter Iran and other regional threats. Qatar has countered the Saudi-led pressure with new arms buys and deepening relations with Turkey and Iran. As do the other GCC leaders, Qatar's leaders have looked to the United States to guarantee their external security since the 1980s. Since 1992, the United States and Qatar have had a formal Defense Cooperation Agreement (DCA) that reportedly addresses a U.S. troop presence in Qatar, consideration of U.S. arms sales to Qatar, U.S. training, and other defense cooperation. Under the DCA, Qatar hosts about 13,000 U.S. forces and the regional headquarters for U.S. Central Command (CENTCOM) at various military facilities, including the large Al Udeid Air Base. U.S. forces in Qatar participate in all U.S. operations in the region. Qatar is a significant buyer of U.S.-made weaponry, including combat aircraft. In January 2018, Qatar and the United States inaugurated a "Strategic Dialogue" to strengthen the U.S.-Qatar defense partnership, which Qatar says might include permanent U.S. basing there. The second iteration of the dialogue, in January 2019, resulted in a U.S.-Qatar memorandum of understanding to expand Al Udeid Air Base to improve and expand accommodation for U.S. military personnel. Qatar signed a broad memorandum of understanding with the United States in 2017 to cooperate against international terrorism. That MOU appeared intended to counter assertions that Qatar's ties to regional Islamist movements support terrorism. The voluntary relinquishing of power in 2013 by Qatar's former Amir (ruler), Shaykh Hamad bin Khalifa Al Thani, departed from GCC patterns of governance in which leaders generally remain in power for life. However, Qatar is the only one of the smaller GCC states that has not yet held elections for a legislative body. U.S. and international reports criticize Qatar for failing to adhere to international standards of labor rights practices, but credit it for taking steps in 2018 to improve the conditions for expatriate workers. As are the other GCC states, Qatar is wrestling with the fluctuations in global hydrocarbons prices since 2014, now compounded by the Saudi-led embargo. Qatar is positioned to weather these headwinds because of its small population and substantial financial reserves. But, Qatar shares with virtually all the other GCC states a lack of economic diversification and reliance on revenues from sales of hydrocarbon products. On December 3, 2018, Qatar announced it would withdraw from the OPEC oil cartel in order to focus on its natural gas export sector.

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The Once, But Perhaps Not Future, King Because of technological advances in digitization and data processing, electronic forms of payment have become increasingly available, convenient, and cost efficient. Established technologies, such as credit and debit cards, have long been a popular payment option. In addition, new payment methods (e.g., PayPal's Venmo app and Square's point-of-sale hardware, among others) use underlying traditional banking and payments systems to make electronic payments less expensive and more available to individuals and small businesses. Newer digital currencies, such as cryptocurrencies, offer alternative (though not yet widely adopted) options that have a high degree of independence from traditional systems. Although cash remains an important method of payment in the United States (see Figure 1 ), anecdotal reporting suggests that various electronic payment systems have become so effective and inexpensive relative to cash payments that some U.S. businesses—even those at which sales generally have a low dollar value—are increasingly choosing not to accept cash. In some developed countries, such as Sweden, cash payments are becoming relatively scarce. In addition, a number of central banks worldwide are examining the possibility of issuing government-backed digital currencies that exist only electronically. These trends suggest that due to buyer or seller preference or government policy, the role of cash in the payment system may continue to decline, perhaps significantly, in coming years. Some observers have examined the consequences of an evolution away from cash. Proponents of reducing the use of physical currency (or even eliminating it all together and becoming a cashless society ) argue that it will generate important benefits, including potentially improved efficiency of the payment system, a reduction of crime, and less constrained monetary policy. Proponents of maintaining cash as a payment option argue that significant reductions in cash usage and acceptance would further marginalize people with limited access to the financial system, increase the financial system's vulnerability to cyberattack, and reduce personal privacy. Given developments and debate in this area, Congress may consider policy issues related to the declining use of cash relative to electronic forms of payment. This report is divided into two parts. The first part analyzes cash and noncash payment systems, and the second analyzes potential outcomes if cash were to be significantly displaced as a commonly accepted form of payment. Part I describes the characteristics of cash and the various electronic payment systems that could potentially supplant cash. The noncash payment systems include traditional electronic payment systems (such as credit cards or payment apps) and alternative electronic payment systems, focusing on private systems using distributed ledger technology (such as cryptocurrencies) and central bank digital currencies (which are only under consideration by central banks at this time). Part I also examines the advantages and costs specific to each payment system and the potential obstacles to the adoption of alternative electronic payment systems. Part II of this report analyzes the potential implications of a reduced role of cash payments in the economy, including potential benefits, costs, and risks. The report also includes an Appendix that presents two international case studies of economies in which noncash payment systems rapidly expanded. Part I: Analysis of Cash and Noncash Payment Systems This section provides analysis of cash, traditional noncash payment systems, and potential alternative payment systems. It describes the characteristics, presents usage data, and analyzes the advantages and costs of each system. It also includes a discussion on the potential decline in cash usage and a short inset on the legality of businesses' refusing to accept cash. Physical Currency—Cash Overview How well something serves as money in a payment system depends on how well it serves as (1) a medium of exchange, (2) a unit of account, and (3) a store of value. To function as a medium of exchange , the thing must be tradable and agreed to have value. To function as a unit of account , the thing must act as a good measurement system. To function as a store of value , the thing must be able to purchase approximately the same value of goods and services at some future date as it can purchase now. Currently, cash continues to serve the three functions of money well as part of a robust, physical payment system. Physical currency can be carried easily in a pocket and thus is tradeable. Each unit of currency (e.g., a dollar) is identical and can be divided into fractions (e.g., cents) of the whole, making dollars effective units of account. A bill or coin, when well cared for, will not degrade substantively for years, meaning it can function as a store of value. In the United States, paper currency and coins are produced by the Bureau of Engraving and Printing (BEP) and the United States Mint, respectively, both of which are units within the Department of the Treasury (Treasury). The Federal Reserve (the Fed) distributes the currency and coin to banks, savings associations, and credit unions upon request, and the banks in turn make the cash available to their customers. When a bank orders cash, the Fed deducts the amount from the bank's Fed account. The revenues and costs to the government from this system are examined in the " Cash Effects on Government " section below. Data suggests that the demand for cash in the United States has continued to grow despite the introduction of new payment services and systems. Fed data indicates that the amount of currency in circulation has increased steadily over at least the past 20 years (see Figure 2 ). As of December 31, 2018, there were more than 43 billion notes (more commonly called bills ) worth over $1.67 trillion in circulation. The Fed determines how many new notes "are needed to meet the public's demand [, which]…reflects the Board's assessment of the expected growth rates for payments of currency to and receipts of currency from circulation." This growth in demand is not wholly surprising, because demand for cash would be expected to grow as does the economy, the population, and price levels. In addition, the demand for cash is growing because certain people may be increasingly using it solely as a store of value or safe investment (imagine the proverbial risk-averse saver keeping money under the mattress), rather than to make purchases. In addition, there remains a high demand for U.S. currency abroad, both as a store of value and medium of exchange. Some evidence suggests people are using cash for payments less often. For example, according to preliminary findings of a Fed survey, cash transactions in the United States fell from 40.7% of all transactions in 2012 to 32.5% in 2015. Taken together with data from the triennial Federal Reserve Payment S tudy , these survey results suggest the number of cash transactions during that time fell from roughly 84.8 billion per year to 69.4 billion. However, Fed economists have subsequently noted that significant changes in the survey methodology and unaccounted for effects from economic conditions means the eight-point decline in the share of transactions "almost surely does not accurately reflect actual changes in consumer preferences for cash." After making adjustments to account for these factors, those economists estimated the decline in the percentage of transactions that were in cash was roughly half of the initially estimated decline in the share of cash transactions. The most recent data indicates that Americans used cash for 31% of their transactions in 2016, with stronger cash preference for small, in-person transactions (60% of in-person transactions under $10). Advantages and Costs of Cash Cash Advantages for Consumers and Businesses One of the main benefits of cash is that it is a simple, easy, robust payment mechanism that requires no ancillary technologies. Payers and payees validate and settle transactions simply by physically exchanging the currency; the consumer needs no magnetic-stripe card or mobile device, and the seller does not need a card-reading machine or other payment-receiving device. Relatedly, some observers assert cash provides a security against potential disruptions to electronic payment systems. For example, in the event of a significant cyberattack or extended power outage, cash could continue to serve the functions of money while electronic payment systems could not. Cash also acts as a safe asset in which to invest savings and its usage can involve a high degree of privacy, features that will be examined in more detail in the " Potential Costs and Risks of a Reduced Role for Cash " section below. In addition, holding cash might impart other psychological benefits to a consumer, such as feelings of greater control over budgeting and associations with wealth. Cash Costs for Consumers and Businesses Using and accepting cash involves certain costs to consumers and businesses. For example, consumers may have to pay fees to withdraw cash from automatic teller machines (ATMs). Banks with more than $1 billion in assets are required to report their revenue from ATM fees, and a Congressional Research Service (CRS) analysis indicates those banks collected at least $1.9 billion in ATM fees in 2018. Other costs—including consumer losses through theft, misplacement, or accidental destruction of cash—are more difficult to estimate. Businesses must pay for cash management services, such as cash delivery with armored trucks (an industry with estimated annual U.S. revenues of $2.8 billion) and security systems to dissuade thieves or robbers from attempting to steal cash kept on the retailer's premises. Despite these efforts, U.S. businesses lose about $40 billion in employee cash thefts per year. Similar to consumer's costs, quantifying all the costs of cash to businesses presents challenges, as certain costs are not straightforward and easily measurable. For example, some portion of retail staff and managers' paid time is spent counting cash and reconciling tills. Cash Effects on Government Revenues In addition to its impacts on consumers and businesses, cash directly affects government revenues through three main mechanisms: (1) seigniorage (i.e., the "profit" the government makes by producing cash), (2) Federal Reserve remittances to the Treasury, and (3) tax evasion. Two of these mechanisms—seigniorage and remittances—increase government revenues. The third mechanism—tax evasion, facilitated by the anonymous and difficult-to-trace nature of cash transactions—decreases government revenue. Revenue Generating: Seignoriage . In general, the value of the physical currency produced by the government exceeds the cost incurred to produce it. For example, a $100 bill costs about 14 cents to print, generating revenues $99.86 greater than cost. The profit generated by this difference is called seigniorage, and this income would decrease if demand for cash were to fall. In FY2017, the U.S. Mint generated $391.5 million in net income from circulating coins and the U.S. Bureau of Engraving and Printing generated revenues $693 million greater than expenses. Revenue Generating: Fed Remittances . The second source of cash-generating revenue is remittances, which are transferred from the Fed to the U.S. Treasury. Any income the Fed earns after expenses and dividends paid to member banks, it remits to the Treasury (in 2017, the amount was $80.6 billion), and hence becomes a source of revenue for the federal government. A significant expense for the Fed is the interest it pays on depository institutions' deposits held in their Fed accounts. Such payments accounted for $28.9 billion of the Fed's $35.4 billion total expenses in 2017. However, currency is a Fed liability on which it pays no interest. Recall that when a bank orders cash from the Fed, the Fed deducts the amount from the bank's account. Thus, the more cash that is in circulation, the less interest the Fed must pay, and the greater its remittances to Treasury. In January 2019, there was approximately $1.7 trillion of currency in circulation, and the Fed (as of this publication) paid an annual interest rate of 2.4% on reserve balances. By these measures, if all currency were instead bank reserve balances held at the Fed, it could increase Fed expenses (and thus reduce government revenues) by more than $40 billion a year. If interest rates on reserves (which change when the Fed alters monetary policy) rose or fell, then expenses would increase or decrease, respectively, in this scenario. Revenue Reducing: Tax Evasion . Because cash leaves no electronic record, wage earners and businesses are able to underreport (in general, illegally) how much cash they receive in order to reduce their tax payments. Thus, cash contributes to the tax gap —the difference between what the government is owed and what is actually paid. The most recent Internal Revenue Service estimate released in 2016 examined the tax gap for the years 2008-2010, and found that the gap due to underreporting averaged $387 billion a year. This estimate does not directly measure how much underreporting is facilitated by cash payments, and the figure for recent years is likely to be different. However, it provides a general context for how much tax revenue the government does not collect due to underreporting that is at least in part made possible by cash transactions. The Potential Decline of Cash Usage Businesses have long set conditions under which they would not accept cash. For example, certain businesses refuse to accept high-denomination bills. However, according to anecdotal reporting, retail businesses are increasingly deciding that the costs of transacting in cash are high enough that they would rather not accept it at all. Notably, this is occurring at businesses at which transactions are typically in-person for small dollar amounts—traditionally viewed as the type of transactions for which cash is the least costly option. If these stories are in fact indicative of a sustained trend, widespread non-acceptance of cash could have a variety of effects on consumers, businesses, as well as society and the economy at large. One particular effect that has drawn significant attention, as well as litigation, is that non-acceptance of cash could potentially marginalize those that have limited access to the financial system or mobile technological devices. This issue is examined in the " Lack of Financial Access for Certain Groups " section later in the report. Traditional Noncash Payment Systems Overview Were cash to decline as a payment system, the most likely replacement—at least at the current time—would appear to be traditional noncash, electronic payment systems, such as debit cards, credit cards, or payment mobile apps. In traditional noncash payment systems like those that are prevalent today, participants hold their money in an account at a bank or other financial intermediary that maintains accurate ledgers of how much money each customer has available. To make a payment, the payer instructs (using a physical check or an electronic message) the intermediary to transfer money to the recipient's account. If the recipient holds an account at a different intermediary, those intermediaries will send messages to each other via messaging networks connecting them, instructing each to make the necessary changes to their ledgers. The intermediaries validate the transaction, ensure the payer has sufficient funds for the payment, deduct the appropriate amount from the payer's account, and add that amount to the payee's account. For example, in the United States, a retail consumer may initiate an electronic payment by swiping a debit card, at which time an electronic message is sent over a network instructing the purchaser's bank to send payment to the seller's bank. Those banks then make the appropriate changes to their account ledgers (possibly using the Fed's payment system) reflecting that value has been transferred from the purchaser's account to the seller's account. As with physical currency, digital entries in account ledgers can serve the three functions of money well for use in payments. Instructions to change entries in a ledger can easily be sent, making the values in the ledger easily tradable. Numerical entries can be denominated in identical and divisible units, making them good units of account. Because numbers in a ledger can remain unchanged during periods when no transactions are made, they can serve as a store of value. According to the most recent complete Federal Reserve Payment S tudy on noncash payments, the number of traditional noncash payments made in the U.S. totaled more than 144 billion transactions with a value of almost $178 trillion in 2015. These included payments via debit cards (69.5 billion transactions worth $2.56 trillion), credit cards (33.8 billion transactions worth $3.16 trillion), automated clearing house payments (ACH; 23.5 billion transactions worth $26.83 trillion), and check payments (17.3 billion payments worth $26.83 trillion). Between 2012 and 2015, the number of transactions of the three electronic systems, debit, credit, and ACH, grew at annual rates of 7.1%, 8.0%, and 4.9%, respectively. Their values grew by 6.8%, 7.4%, and 4.0%, respectively. Check payments declined by an annual rate of 4.4% by number and 0.5% by value. According to a recent supplement to that study, both the growth of electronic payments and the decline of check payments accelerated in 2017. Advantages and Costs of Traditional Noncash Payment Systems Traditional Noncash Payment System's Advantages Payment based on physically exchanging currency has some notable shortcomings that can be addressed by a payment system based on maintaining account ledgers. One is that physical currency requires both the payer and the payee to either (1) be physically near each other, allowing the physical currency to pass from the possession of the former into the possession of the latter; or (2) have a sufficient trust in each other that the payee believes an assurance that he or she will receive the currency later. Another shortcoming is that holders of physical currency may have little recourse if it is lost, stolen, or accidentally destroyed. If, instead, money is exchanged by making valid changes in ledgers maintained by trusted intermediaries, the exchange can be accomplished without the risk of lost, stolen, or damaged currency. In addition, noncash systems can make payments fast, easy, and convenient. Using them decreases the need for people to make regular estimations of how much cash they need to have on a particular day, the frequency of trips to the bank or ATM to get cash, and the amount of time waiting for cashiers to make change. Instead, a plastic card or an app on a mobile device can replace those activities with a card swipe or button push. As information technology has progressed, the convenience has increased and the option to use electronic payments has become nearly ubiquitous. Until fairly recently, it was not uncommon for a retail establishment to reject card payments. Now, services such as Venmo, Apple Pay, and Google Pay, and card-reading devices, such as those made by Square, have made electronic payment options increasingly available, even for individuals to accept electronic payments from other individuals. The previously mentioned anecdotal reporting suggests there is a growing number of establishments that only accept electronic payments. For these systems to work well, participants must trust that banks and other intermediaries are keeping accurate ledgers that are changed only for valid transfers. Otherwise, an individual's money could be lost or stolen if a bank records the account as having an inaccurately low amount or transfers value without his or her permission. Another advantage of systems using traditional intermediaries is that they have a number of features that generate a high degree of trust and accuracy. Banks and other intermediaries have both a market and governmental incentive to be accurate. A bank or financial intermediary that does not have a good reputation for protecting a customer's money and processing transactions accurately would likely lose customers. In addition, governments typically subject banks to laws and regulations designed in part to ensure that banks are well run and that the money they hold is safe. As such, banks take substantial measures to ensure security and accuracy. In addition, intermediaries generally are required to provide certain protections to consumers involved in electronic transactions, in part to protect them from losses resulting from unauthorized transfers. For example, the Electronic Fund Transfer Act ( P.L. 95-630 ) limits consumers' liability for unauthorized transfers made using their accounts. Similarly, the Fair Credit Billing Act ( P.L. 93-495 ) requires credit card companies to take certain steps to correct billing errors, including when the goods or services a consumer purchased are not delivered as agreed. Both laws also require financial institutions to make certain disclosures to consumers related to the costs and terms of using an institution's services. Traditional Noncash Payment System's Costs Significant costs and physical infrastructure underlie systems for electronic money transfers to ensure the systems' integrity, performance, and availability. For example, payment system providers operate and maintain robust digital networks to connect retail locations with banks. The Fed operates and maintains electronics networks to connect banks to itself and each other. These intermediaries store and protect huge amounts of data. Because these intermediaries are generally highly regulated, they incur regulatory compliance costs. Intermediaries recoup the costs associated with these systems and regulations and earn profits by charging fees directly when the system is used (such as the fees a merchant pays to have a card reading machine and "swipe fees" on each card transaction) or by charging fees for related services (such as checking account fees). It is difficult to quantify how much traditional noncash payment systems cost and what portion of those costs is passed on to consumers and businesses. Performing a quantitative analysis is beyond the scope of this report. What bears mentioning here is that certain costs of traditional payment systems—and, in particular, the fees intermediaries in those systems charge—have at times been high enough to raise policymakers' concern and elicit policy responses. For example, in response to businesses' assertions that Visa and MasterCard had exercised market power in setting debit card swipe fees at unfairly high levels, Congress included Section 1075 in the Dodd-Frank Consumer Protection and Wall Street Reform Act (Dodd-Frank Act; P.L. 111-203 )—sometimes called the Durbin Amendment. Section 1075 directs the Fed to limit debit card swipe fees charged by banks with assets of more than $10 billion. In addition, studies on unbanked and underbanked populations cite the fees associated with traditional bank accounts, a portion of which may be the result of providing payment services, as a possible cause for those populations' limited interaction with the traditional banking system. Although electronic payment systems protect customers from physical theft and are subject to a complex and sometimes overlapping array of state and federal laws, regulators, and regulations related to cybersecurity, they could nevertheless expose individuals to cyber-theft and identity theft. In addition, the systems themselves could be susceptible to disruption from cyberattacks. The occurrence of successful hacks of banks and other financial institutions, wherein huge amounts of individuals' personal information are stolen or compromised, illustrates cyber-related risks. For example, in 2014, JPMorgan Chase, the largest U.S. bank, experienced a data breach that exposed financial records of 76 million households. However, no consensus exists on how best to reduce the occurrence of such incidents, and whether current cybersecurity measures and regulatory frameworks are effective and efficient in mitigating cybersecurity risk is an open question. For a more detailed examination of cybersecurity at financial institutions, see CRS Report R44429, Financial Services and Cybersecurity: The Federal Role , by N. Eric Weiss and M. Maureen Murphy. In addition, although the traditional electronic payment system is sufficiently fast and convenient to complete many transactions, other transactions can involve problematic delays. One such delay that can be particularly costly for consumers is the lag between when a payment (such as a paycheck) is deposited and when the full amount of the funds are available to the individual. Depending on factors related to which networks the payer's and payee's bank uses to process payments, it can take up to two business days (or more under certain circumstances) after a deposit is made for banks to fully validate, process, and settle the deposit. Settlement delays can create a situation in which an individual has made a deposit that would give sufficient funds to pay a bill that is due, but nevertheless may overdraw the account because the deposit is awaiting processing. In such a situation, the individual faces a choice between costly outcomes—a late payment penalty on the bill, an overdraft fee on the bank account, or a fee from a check cashing or payday lending service. These costs are likely disproportionately borne by low- or moderate-income individuals who typically have low balances in their bank accounts. Faster or immediate payment processing could potentially reduce or eliminate costs incurred by individuals facing this situation. While delays in the payment system may seem anachronistic at a time when digital messages can be sent and data processed nearly instantaneously, the fact remains that aspects of the systems, networks, and infrastructures used today (including those operated by the Fed) were developed and deployed decades ago. Both the Fed and private institutions are working to increase system speed and efforts are underway to make real-time payments in the United States the norm. However, payment system operators arguably have little incentive to achieve faster or real-time payments because (1) they are in compliance with the current requirement facing banks pursuant to the Expedited Funds Availability Act of 1987 ( P.L. 108-100 ) to generally make most types of deposits available by the second business day, (2) updating legacy systems is costly for the institutions that operate them, and (3) banks are generating revenue through overdraft fees. Alternative Electronic Payment Systems Currently, it appears that the traditional noncash payment systems described above likely would replace cash payments should cash usage significantly decline. However some observers, citing the various costs and disadvantages associated with those systems—including delays in processing as well as reliance on traditional financial intermediaries—point to alternative electronic payment systems as potential dominant payment systems of the future. Cryptocurrenc y , such as Bitcoin , is the most well-known of these alternatives. Described in more detail below, cryptocurrencies use blockchain technology and public or "distributed" ledgers to achieve validated transfers of digital representations of value. The use of these systems to make payments is quite rare relative to cash and traditional systems, and the role they will play in the future is speculative. Nevertheless, their potential to significantly affect the usage of cash and traditional systems for payments has drawn the attention of central banks. Some central banks are examining whether they should create a comparable payment system of digital currencies to offer the advantages of those systems themselves and to avoid being bypassed in the future. This section briefly describes (1) existing private alternative electronic payment systems and (2) possible future central bank-run systems. With respect to alternative electronic payment systems, the section examines their potential advantages, costs, and obstacles to their widespread adoption. With respect to a potential central bank-run system, which is more speculative at this time, the section examines potential advantages and obstacles to their widespread adoption and uncertainties they present. Private Payment Systems Using Distributed Ledgers Overview In general, private electronic payment systems using distributed ledgers allow individuals to 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. 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) not because they trust each other but because they trust the platform and its protocols to prevent invalid changes to the ledger. A notable feature of transfers using blockchain is that they require no centralized, trusted intermediary such as a bank, government central bank, or other financial or government institution. Proponents envision these systems could achieve instantaneous transfers, although they currently require minutes or hours to finalize transfers. The decentralized nature of digital currencies and their recent proliferation poses challenges to performing industry-wide analysis of their use in payments. For example, as of August 27, 2018, one industry group purported to track trading prices of 1,890 cryptocurrencies alone. For brevity and clarity, this report uses statistics on Bitcoin—the first and most well-known cryptocurrency, the total value of which accounts for more than half of the industry as a whole —as an illustrative example of a digital currency's use in payments. In January 2017, the price of a Bitcoin on an exchange was about $993. The price surged during the year, peaking at about $19,650 in December 2017, an almost 1,880% increase. However, the price then dramatically declined. Overall, the price of Bitcoin has experienced a high degree of volatility. On March 12, 2018, the price of Bitcoin was $3,860, down 80% from its peak. More recently, the price rebounded and was $5,948 on May 8, 2019. Although price data on Bitcoin illustrates the public interest in and overall demand for this cryptocurrency, it is a poor indicator of how often it is being exchanged for goods and services (i.e., how often it is being used as money). Certain analyses appear to show that digital currencies are not being widely used and accepted as payment for goods and services, but rather as investment vehicles. The number of Bitcoin transactions may serve as a better indicator—though a flawed one—of the use of Bitcoin as a payment system. This number reveals how many times Bitcoins are transferred between accounts each day, and data indicates the number of transactions is miniscule compared with those of traditional systems. For example, in 2019 through March 12, the Bitcoin system averaged about 310,000 transactions per day globally, a pace that would result in about 113 million transactions per year. Recall that in the United States alone, more than 144 billion traditional (nearly 1,275 times as many) noncash payments were made in 2015. Moreover, one problem with this measure it that it is a count of how many times two parties have exchanged Bitcoin, not a count of how many times Bitcoin has been used to buy something. Some portion of those exchanges, possibly a significantly large portion, is driven by investors giving fiat currency to an exchange to buy and hold the Bitcoin as an investment. In those transfers, Bitcoin is not acting as money (i.e., not being exchanged for a good or service). Potential Advantages, Obstacles, and Costs to Private Payment Systems Using Distributed Ledgers Advantages of Private Payment Systems Using Distributed Ledgers . As discussed in an earlier section, traditional electronic payment systems involve a number of intermediaries, such as government central banks and private financial institutions. To carry out transactions, these institutions operate and maintain extensive electronic networks and other infrastructure, employ workers, and require time to finalize transactions. To meet costs and earn profits, these institutions charge various user fees. Cryptocurrency advocates anticipate that a decentralized payment system operated through the internet could be less costly than traditional payment systems and existing infrastructures. However, whether such efficiencies can or will be achieved remains an open question. In addition, opening a bank account or otherwise using traditional electronic payment systems generally requires an individual to divulge to a financial institution certain basic personal information, such as name, Social Security number, and birthdate. Financial institutions store and may analyze or share this information. In some instances hackers have stolen personal information from financial institutions, causing concerns over how well these institutions can protect sensitive data. Individuals seeking a higher degree of privacy or control over their personal data than that afforded by traditional systems may choose to use an alternative digital currency system that provides a degree of pseudonymity or anonymity. Although inflation in the United States and other developed economies has been low in recent decades, some individuals may nevertheless believe that nontraditional digital money may maintain its value better than government-backed money in traditional systems. The dollar and most modern currencies are fiat money—that is, money that derives value based solely on government decree. Historically, incidents of hyperinflation in certain countries have seen government-backed currencies lose most or nearly all of their value. Thus, some individuals may judge the probability of their fiat money losing a significant portion of its value to be undesirably high. These individuals may place greater trust in the ability of a decentralized network using cryptographic protocols that limit the creation of new money to maintain stable value of money than in the ability of government institutions to do so. Obstacles to Widespread Adoption of Private Payment Systems Using Distributed Ledgers . Several characteristics of cryptocurrency undermine its ability to serve the functions of money in a payment system. Currently, a relatively small number of businesses and individuals use or accept cryptocurrency for payment. As discussed above, Bitcoin transactions have averaged about 310,000 per day globally. Cryptocurrency may be used as a medium of exchange less frequently than traditional money for several reasons. Unlike the dollar and most other government-backed currencies, cryptocurrencies are not legal tender, meaning creditors are not legally required to accept them to settle debts. Consumers and businesses also may be hesitant to place their trust in these systems because they have limited understanding of them. Relatedly, consumers and businesses may have sufficient trust in and be generally satisfied with traditional payment systems. The recent high volatility in the price of many cryptocurrencies undermines their ability to serve as a unit of account and a store of value. Cryptocurrencies can have significant value fluctuations within short periods of time; as a result, pricing goods and services in units of cryptocurrency would require frequent repricing and likely would cause confusion among buyers and sellers. Whether cryptocurrency systems are scalable —meaning their capacity can be increased in a cost-effective way without loss of functionality—is uncertain. At present, the systems underlying cryptocurrencies do not appear capable of processing the number of transactions that would be required of a widely adopted, global payment system. One concern involves the significant energy consumption required to run and cool the computers that validate the transactions on these platforms. Costs of Private Payment Systems Using Distributed Ledgers . As the energy consumption of a digital currency system demonstrates, these systems are not costless. In addition to energy, they require computer hardware and facilities. Often making payments on these platforms involves paying fees. Whether these direct economic costs of using the system are fixed or—as they develop and mature—become less than existing systems is an open question. Digital currency systems, at least as currently designed and regulated, also might impose other costs on society. Some critics of these systems fear their pseudonymous, decentralized nature may provide a new avenue for criminals to launder money, evade taxes, or sidestep financial sanctions. For example, Bitcoin was the currency used on the internet-based, illegal drug marketplace and Bitcoin escrow service called Silk Road. This marketplace facilitated more than 100,000 illegal drug sales from approximately January 2011 to October 2013, at which time the government shut down the website and arrested the individuals running the site. Consumer groups and other observers 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. In addition, the laws and regulations that do apply generally have not been implemented specifically to address digital currencies or related businesses. Whether the current regulatory regime applied to digital currency transactions, but originally implemented for different financial activities (e.g., traditional money transmission), is effective and efficient is a debated issue. Finally, some central bankers and other experts and observers have speculated that the widespread adoption of cryptocurrencies could affect the ability of the Fed and other central banks to implement and transmit monetary policy. The Fed conducts monetary policy with the goals of achieving price stability and low unemployment. Like other central banks it achieves its goals by, putting it simply, controlling the amount of money in circulation in the economy. If one or more additional currencies that the government did not control the supply of were also prevalent and viable payment options, it could limit central banks' ability to transmit monetary policy to financial markets and the real economy. In this scenario, central banks likely would have to make larger adjustments to the fiat currency they do control to have the same effect as previous adjustments. Another possibility is that they would have to start buying and selling the digital currencies themselves in an effort to affect the availability of these currencies. These risks have led some central banks and other observers to suggest that perhaps central banks could issue their own digital currencies. Central Bank Digital Currencies Overview The risks and challenges posed by private digital currencies have led some observers to suggest that perhaps central banks should offer their own central bank digital currencies (CBDCs) to realize certain hoped-for efficiencies in the payment system in a way that would be "safe, robust, and convenient." To date, no country has successfully created a CBDC for payment use by the general public. The extent to which a central bank could or would want to create a new, digital-only payment system likely would be weighed against the consideration that these government institutions already have trusted digital payment systems in place. Because of such considerations, the exact form that CBDCs would take could vary across a number of features and characteristics. Nevertheless, some central banks are examining the idea of CBDCs and the possible benefits and issues they may present. For the purposes of this discussion, this report examines a CBDC that would be available to consumers for retail payments. Some proposals would limit CBDCs to wholesale payments between banks and other financial institutions. Potential Advantages, Obstacles, and Uncertainties of CBDCs Potential Advantages of CBDCs . Proponents of CBDCs generally argue they could provide efficiency gains over traditional legacy systems and contend that central banks could use the technologies underlying digital currencies to deploy a faster, less costly government-supported payment system. Observers have speculated that a CBDC could take the form of a central bank allowing individuals to hold accounts directly at the central bank. Advocates argue that a CBDC created in this way could increase systemic stability by imposing additional discipline on commercial banks. Because consumers would have the alternative of safe deposits made directly with the central bank, commercial banks likely would have to offer interest rates and limit risks at levels necessary to attract deposits above any deposit insurance limit. In addition, CBDCs could increase government revenue through a seignoriage-like mechanism. A more expansive definition of seignoriage is the income government obtains from having government liabilities act as money. Physical money—because it is liquid and low-risk—earns no interest rate and carries a cost to produce. Money—both physical and electronic in the traditional system—is also a balance sheet liability to the issuing authority, such as the Fed or other central banks. If the Fed allowed individuals to hold accounts directly with the Fed, the Fed would issue low- or no-interest liabilities to individuals (as electronic entries in a ledger produced at less cost than physical currency). Then, as happens now, the Fed would use those liabilities to fund purchases of assets that earn a higher interest rate than what the Fed pays on liabilities. This would produce income, perhaps greater income than is earned through traditional seignoriage. Potential Obstacles to Creation of CBDCs . One of the main arguments critics—including various central bank officials—make against CBDCs is that there is no "compelling demonstrated need" for such a currency, because central banks and private banks already operate trusted electronic payment systems that generally offer fast, easy, and inexpensive transfers of value. Opponents also argue that a CBDC in the form of individual direct accounts at the central bank would reduce the role of private banks in financial intermediation and potentially expand the role of government central banks inappropriately. A portion of consumers likely would shift their deposits away from private banks toward central bank digital money, which would be a safe, government-backed liquid asset. Deprived of this funding, private banks likely would have to reduce their lending, leaving central banks to decide whether or how they should support lending markets to avoid a reduction in credit availability. In addition, skeptics of CBDCs object to the assertion that these currencies would increase systemic stability, arguing that CBDCs would create a less-stable system because they would facilitate runs on private banks. These critics argue that at the first signs of distress at an individual institution or the bank industry, depositors would transfer their funds to this alternative liquid, government-backed asset. Uncertaint y : CBDCs' Potential Effects on Monetary Policy . Observers also disagree over whether CBDCs would have a desirable effect on central banks' role and abilities in carrying out monetary policy. Proponents argue that, if individuals held a CBDC on which the central bank set interest rates, the central bank could directly transmit a policy rate to the macroeconomy, rather than achieving transmission through the rates the central bank charges banks and the indirect influence of rates in particular markets. In addition, if holding cash (which in effect has a 0% interest rate) were not an option for consumers, central banks potentially would be less constrained by the zero lower bound . The zero lower bound is the idea that the ability of individuals and businesses to hold cash and thus avoid negative interest rates limits central banks' ability to transmit negative interest rates to the economy. Critics argue that taking on such a direct and influential role in private financial markets is an inappropriately expansive role for a central bank. They assert that if CBDCs were to displace cash and private bank deposits, central banks would have to increase asset holdings, support lending markets, and otherwise provide a number of credit intermediation activities that private institutions currently perform in response to market conditions. Part II: Potential Implications of a Reduced Role for Cash As discussed above, although cash remains a frequently used payment system, other payment systems continue to develop that offer their own advantages and costs. Various trends suggest that due to market preference or government policy, the role of cash in the payment system has begun to decline and may continue to decline, perhaps significantly, in coming years. If the relative benefits and costs of cash and the various other payment methods evolve in such a way that cash is significantly displaced as a commonly accepted form of payment, that evolution could have a number of effects, both positive and negative, on the economy and society. This section of the report describes a number of potential benefits of a reduced role for cash in the U.S. economy and the various risks and costs that may occur. Many of the factors discussed below may not occur wholly as a benefit, risk, or cost; rather, a potential benefit may bring with it a risk, and vice versa. Potential Benefits of a Reduced Role for Cash Some observers argue that reducing or eliminating cash payments in the U.S. economy will produce certain beneficial outcomes, including improved efficiency in payments, reduced criminality, and improved ability for the Fed to implement certain monetary policy. As discussed below, although these outcomes generally may be beneficial, that does not mean that there are not certain costs, or drawbacks, that may counterbalance these positive effects. More Efficient Payments Proponents of noncash payment systems assert that net economic benefits from the use and maintenance of a cash payment system are (or will become as technology advances) less than the net benefits of using and maintaining noncash systems. Put another way, they argue that the resources, labor, and capital that go into the cash system—for example, producing currency; stocking and maintaining ATMs; safely transporting cash; protecting businesses from theft and robbery—make it less efficient than noncash systems. If true—and absent policy interventions—market forces likely will result in the displacement of cash by other payment methods as businesses increasingly choose not to accept cash and consumers increasingly prefer not to use it. Under this scenario, although the payment system on net may be more efficient, it would not necessarily be true that all people would benefit, as is discussed in the " Potential Costs and Risks of a Reduced Role for Cash " section. Impediment to Crime Proponents of cashless societies assert that the elimination of cash would reduce crime by making operating an illegal enterprise more difficult and certain crimes, such as robbery and burglary, less remunerative. These proponents argue that criminals are more likely to conduct business in cash and to hold cash as an asset, in large part because cash is anonymous and allows them to avoid establishing relationships with and generating records at financial institutions that may be subject to anti-money laundering reporting and compliance requirements. Accordingly, they assert that the elimination of cash would be beneficial on net, because operating a criminal enterprise would become more difficult. Certain studies have shown that the prevalence of cash is correlated with the incidence of crime. In addition, the amount of "strong" currencies (i.e., highly valuable and highly stable currencies) in circulation exceeds what many people would consider a reasonable amount needed for typical consumer transactions. For example, with the U.S. population at approximately 329 million, the $1.6 trillion of currency in circulation equates to about $4,900 per person. Proponents of a cashless society assert that this number is inflated due in part to the cash demand of criminals (although part is also due to demand for the U.S. dollar from abroad). Although a robust analysis of this question is beyond the scope of this report, arguments that cash facilitates crime and even that reducing cash may reduce crime appear in certain cases to be well founded. However, when analyzing the net benefit to society of going cashless, reduced crime should be weighed against any cost that a reduction in cash would impose on legitimate cash users. One such legitimate group is examined in more detail in the " Lack of Financial Access for Certain Groups " section below. The effect a reduction in cash payments would have on crime should not be overstated, as criminals likely would seek other ways to commit and hide their crimes. For example, the prevalence of cybercrime may increase. Elimination of a Monetary Policy Constraint Another benefit (from a macroeconomic perspective) of a cashless society cited by economists would be the potential elimination of the practical inability of central banks, such as the Fed, to implement negative interest rates. When an economy is in recession or otherwise performing poorly, one monetary policy response is to lower interest rates. Lower interest rates can spur companies to borrow in order to invest and spur consumers to borrow in order to make additional purchases, thus boosting economic activity and mitigating the impact of recessions. However, many economists believe that policymakers are constrained by a zero lower bound—that whatever policy rate they may set, interest rates in many markets will not fall below zero. The reason is that holding cash offers a zero interest rate. Thus, if the Fed attempted to implement negative interest rates, individuals could avoid those rates by transferring their funds into cash. If holding cash was not an available option, it would be easier for negative interest rates to be transmitted to more financial markets. However, any benefit provided by increasing policymakers' ability to affect the macroeconomy with negative interest rates should be weighed against the cost it would impose on the individual savers whose account balances would decrease in value during a period of negative interest rates. Potential Costs and Risks of a Reduced Role for Cash Skeptics of reducing or eliminating the role of cash in the economy assert that cash serves a number of beneficial purposes, and argue that eliminating it would have adverse effects on certain financially vulnerable groups, eliminate an asset that provides safety against cyber vulnerabilities and financial crises, and reduce individuals' privacy. As with potential benefits to a reduction in cash, many of the factors discussed below may not occur wholly as a risk or cost, and they must be weighed against potential benefits when considering their overall impact. Lack of Financial Access for Certain Groups If the United States were to move toward becoming a cashless society that required consumers to use noncash, electronic payment services, it could present difficulties for those segments of the population who lack access to the financial system or to an electronic network. Access to electronic payments typically requires an account with some financial institution, usually a bank. Often—and increasingly—it also involves using or accessing a device connected to the internet. However, these factors can present hardships and obstacles for certain vulnerable groups. The Federal Deposit Insurance Corporation reported that in the United States in 2015, 9 million households were unbanked, meaning that no member had a bank account. Of these, 37.8% reported that the main reason was that they do not have enough money to keep in an account, 9.4% reported that fees were too high, and 1.9% reported fees were unpredictable. In total, this indicates almost half of the total unbanked, or roughly 4.5 million households, do not access banking services due to economic obstacles. Sweden has been at the forefront of the move away from cash (see Appendix ), and observers there, including Stefan Ingves, governor of Sweden's central bank, have voiced some of these concerns about going cashless. In addition, anecdotal reporting indicates that retirees in Sweden are finding the change difficult and costly. In the United States, many assert that it would be beneficial to bring the unbanked into the banking system. Nevertheless, if the unbanked engaged with the banking system at a relatively high cost only because cash (which was a less expensive option for them) was no longer available, it would likely be a detrimental outcome for this group. Conversely, if the move to a cashless system led to less costly financial access for this group, they may stand to benefit. Loss of Safety Provided by Cash Proponents of cash often cite the robustness of physical currency as a payment system. Once in an individual's possession, cash does not rely on financial institutions or information technology (IT) based payment networks. These proponents argue that if payments became entirely electronic, events such as power outages, hacker attacks, or (in the event of future cyber war) a state-sponsored attack would be capable of shutting down the most simple financial transaction—the exchange of money for goods and services. The financial system is already exposed to these threats to varying degrees, but the argument is that the elimination of cash amplifies those risks. Because it functions well as a store of value, cash is a relatively safe asset in which to invest savings with no risk of losses resulting from a decline in a securities value or the failure of financial institutions or other entities. The perceived safety of cash and its non-reliance on financial institutions also makes it desirable in times of financial turmoil or distress, when confidence in such institutions decreases. During these periods, many people prefer assets that are free from credit risk. For some of these individuals, deposit insurance guarantees may not wholly eliminate their fear of losses, whereas the safety of physical currency would. Holding cash, then, could also provide a sense of security to risk-adverse people that may mistrust the financial system. Privacy Concerns Opening a bank account or otherwise using traditional noncash payment systems generally requires an individual to divulge certain basic personal information, such as name, Social Security number, and birthdate, to a financial institution. Financial institutions store this information and information about the transactions linked to this identity. Under certain circumstances, they may analyze or share this information, such as with a credit-reporting agency. In some instances hackers have stolen personal information from financial institutions, causing concerns over how well these institutions can protect sensitive data. Finally, provided it follows proper legal procedures, the government also can access this information under certain circumstances. Similarly, although new alternative payment systems may offer a degree of anonymity or pseudonymity, these systems still generate an unalterable record of transactions between parties. Cash, by contrast, can be used anonymously, and people may wish to use cash for legitimate purposes to ensure their privacy. Certain consumers who are uncomfortable divulging and generating private information—even basic information that a transaction occurred—may prefer cash to any electronic payment methods. Prospectus Cash has a number of advantageous features that has made it a simple and robust payment system throughout most of human history. It is difficult to imagine conditions under which cash would be replaced entirely, and disappear from the economy, at least in the near future. Nevertheless, its hegemony as a payment system appears to have come to an end, as electronic payment systems have gained popularity, and the ubiquity of cash acceptance for in-person purchases also seems precarious. If noncash payment systems significantly displace cash and cash usage and acceptance significantly declines, there would be a number of effects (both positive and negative) on the economy and society. Now or in the near future, policymakers may face decisions about whether to impede or hasten the decline of cash and consider the implications of doing so. Appendix. International Case Studies Two countries provide interesting case studies of market forces drastically changing the way a society makes payments. Sweden In recent years, the use of cash in Sweden has quickly and substantially declined, dropping from 40% to 13% of transactions between 2010 and 2018. In many cases, businesses no longer accept cash, and one survey indicated that two-thirds of small businesses planned to stop accepting cash. Anecdotal reporting indicates that about 5% of bank branches accept cash deposits or offer cash withdrawals. Furthermore, Sweden's central bank is examining the possibility of creating registered accounts for the purpose of issuing currency electronically. Reportedly, many Swedes are generally in favor of the trend (the displacement of cash is due largely to consumer preference), though some have voiced concerns about financial access issues that the change causes for certain groups, such as the elderly. Observers have put forward a number of explanations for the Sweden's growing preference for electronic payment methods such as cards and mobile app enabled payments. One argument asserts that Sweden is an especially technology savvy country. As such, Swedes are comfortable using electronic payment systems, and Swedish companies have developed fast and easy payment technologies, such as iZettle and Swish. Some observers also have suggested that Swedes are especially trusting of institutions and thus have fewer privacy concerns. Some have noted that the timing of the start of the decline in cash use among Swedes coincided with the start of a transition to new Swedish banknotes and coins. They suggest that this spurred people and businesses to make a switch not to the new bills and coins but instead to electronic payment methods. Kenya In 2007, a company named Safaricom—Kenya's largest mobile phone network operator—introduced a "mobile money" service called M-Pesa ("M" stands for "mobile" and "pesa" is the Swahili word for money). Users of the service download a phone application and deposit cash with M-Pesa employees called "agents." They can then transfer money into any other M-Pesa account using their phone. Originally intended as a service for Kenyans who had moved to a city to earn money to send back home to rural areas, the service became tremendously popular as a general use payment system. By 2016, there were approximately 31.6 million mobile money accounts in Kenya, which had a total population of 47.6 million in 2017. Many observers identify the combination of lack of access to traditional banking services and the proliferation of mobile phones in Kenya as a driving factor for the expansion of M-Pesa and subsequent mobile money services. These observers argue that in Kenya, as with many developing and largely rural nations, both consumers and banks view financial and bank services as a business need of the rich. In 2006, before the introduction of M-Pesa, just 19% of Kenyans had bank accounts and there was 1.5 bank branches for every 100,000 people. However, 54% of Kenyans had their own mobile phone or access to one. Another explanation for the rise of mobile money is that Safaricom successfully identified a large, profitable, and previously untapped market in Kenya. Available mobile technology and its proliferation among the population meant low-cost money transfers could be profitably offered to lower-income consumers. Certain observers assert that the success of M-Pesa has caused Kenyan financial institutions to reevaluate their business models, shifting their focus to offering services to lower-income groups than they previously targeted, and cite the increase in bank accounts and the decline of the average account balances as evidence of this change. As a result, the portion of the Kenyan population with access to some type of formal financial services has grown from 27% in 2006 to 75% in 2017. Although mobile money appears to have filled a market need, the degree to which it has displaced cash should not be overstated. An official at Safaricom estimated in February 2018 that as many as 8 out of 10 transactions are still cash transactions, as Kenyans still reportedly prefer cash for small, in-person purchases because of convenience and using M-Pesa generally involves fees. In addition, workers are still generally paid in cash.

Electronic forms of payment have become increasingly available, convenient, and cost efficient due to technological advances in digitization and data processing. Anecdotal reporting and certain analyses suggest that businesses and consumers are increasingly eschewing cash payments in favor of electronic payment methods. Such trends have led analysts and policymakers to examine the possibility that the use and acceptance of cash will significantly decline in coming years and to consider the effects of such an evolution. Cash is still a common and widely accepted payment system in the United States. Cash's advantages include its simplicity and robustness as a payment system that requires no ancillary technologies. In addition, it provides privacy in transactions and protection from cyber threats or financial institution failures. However, using cash involves costs to businesses and consumers who pay fees to obtain, manage, and protect cash and exposes its users to loss through misplacement, theft, or accidental destruction of physical currency. Cash also concurrently generates government revenues through "profits" earned by producing it and by acting as interest-free liabilities to the Federal Reserve (in contrast to reserve balances on which the Federal Reserve pays interest), while reducing government revenues by facilitating some tax avoidance. The relative advantages and costs of various payment methods will largely determine whether and to what degree electronic payment systems will displace cash. Traditional noncash payment systems (such as credit and debit cards and interbank clearing systems) involving intermediaries such as banks and central banks address some of the shortcomings of cash payments. These systems can execute payments over physical distance, allow businesses and consumers to avoid some of the costs and risks of using cash, and are run by generally trusted and closely regulated intermediaries. However, the maintenance and operation of legacy noncash systems involve their own costs, and the intermediaries charge fees to recoup those costs and earn profits. The time it takes to finalize certain transactions—including crediting customer accounts for check or electronic deposits—can lead to consumers incurring additional costs. In addition, these systems involve cybersecurity risks and generally require customers to divulge their private personal information to gain system access, which raises privacy concerns. To date, the migration away from cash has largely been in favor of traditional noncash payment systems; however, some observers predict new alternative systems will play a larger role in the future. Such alternative systems aim to address some of the inefficiencies and risks of traditional noncash systems, but face obstacles to achieving that aim and involve costs of their own. Private systems using distributed ledger technology, such as cryptocurrencies, may not serve the main functions of money well and face challenges to widespread acceptance and technological scalability. These systems also raise concerns among certain observers related to whether these systems could facilitate crime, provide inadequate protections to consumers, and may adversely affect governments' ability to implement or transmit monetary policy. 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—called central bank digital currencies (CBDCs)—in 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 the appropriate role of a central bank in the financial system and the economy. If the relative benefits and costs of cash and the various other payment methods evolve in such a way that cash is significantly displaced as a commonly accepted form of payment, that evolution could have a number of effects, both positive and negative, on the economy and society. Proponents of reducing cash usage (or even eliminating it all together and becoming a cashless society) argue that doing so will generate important benefits, including potentially improved efficiency of the payment system, a reduction of crime, and less constrained monetary policy. Proponents of maintaining cash as a payment option argue that significant reductions in cash usage and acceptance would further marginalize people with limited access to the financial system, increase the financial system's vulnerability to cyberattack, and reduce personal privacy. Based on their assessment of the magnitude of these benefits and costs and the likelihood that market forces will displace cash as a payment system, policymakers may choose to encourage or discourage this trend.

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Introduction Over the last decade, migration to the United States from Central America—in particular from El Salvador, Guatemala, and Honduras (known collectively as the Northern Triangle)—has increased considerably. From 2006 to 2016, the number of individuals living in the United States who were born in the Northern Triangle grew from 2.2 million to almost 3 million; this increase (37%) was more than twice the increase for the total foreign-born population (16%). During the same period, the foreign-born population from Mexico living in the United States held steady at 11.5 million (which is more than any other country-of-birth group). In 2016, the foreign-born population from the Northern Triangle comprised less than 1.0% of the U.S. population and 6.8% of the 43.7 million foreign-born residents of the United States, up from 5.8% in 2006. Even though total apprehensions of illegal border crossers were at a 45-year low in FY2017, the number of families from the Northern Triangle apprehended at the U.S.-Mexico border has increased in recent years. While earlier migrants apprehended at the Southwest border were predominantly single, adult males from Mexico, currently the majority of apprehended migrants are families and unaccompanied children, and the majority of apprehended migrants come from the Northern Triangle. An increasing share of those arriving at the Southwest border are requesting asylum, some at official ports of entry and others after entering the United States "without inspection" (i.e., illegally) between U.S. ports of entry. This is adding to a large backlog of asylum cases in U.S. immigration courts. In the past year, news reports of migrant "caravans" from the Northern Triangle traveling toward the U.S. border have sparked intense interest and many questions from Congress, including the following: What factors are contributing to the increase in migration from the Northern Triangle to the United States? Is the choice to migrate in large groups a new trend? How are the United States, Mexico, and Central American governments responding? How are U.S. policies at the border—including security screening, removal proceedings, military involvement, and asylum processing—being implemented? This report addresses these and other frequently asked questions. How do current levels of Central American migrants apprehended at the Southwest border of the United States compare with earlier apprehension levels for Central Americans?7 The increase in the number of Central American migrants apprehended at the Southwest border is occurring within the context of historically low levels of total alien apprehensions (see Figure 1 ). Apprehensions of migrants of all nationalities increased consistently beginning in 1960, fluctuated between two peaks of 1.62 million in FY1986 and 1.64 million in FY2000, and then declined to a 45-year low of approximately 304,000 in FY2017. Apprehensions increased in FY2018 to 397,000, which was comparable to the annual Southwest border average (401,000) for the most recent 10-year period (FY2009-FY2018). Two demographic shifts, illustrated in the apprehension data, characterize recent migrant flows. First, over the past two decades the national origins of apprehended aliens have changed. In FY2000, almost all Southwest border apprehensions (98%) were of Mexican nationals. Beginning in FY2012, however, the percentage of apprehended aliens from Honduras, Guatemala, and El Salvador started to increase as a share of total apprehensions. By FY2018, foreign nationals from those three countries made up 52% of all apprehensions. Second, the type of migrants apprehended has also shifted. In the past, single adult males made up over 90% of apprehended aliens. Currently, the majority of apprehended migrants are families and unaccompanied children. From FY2012 to FY2018, the predominant national origins of such families changed from Mexico to the Northern Triangle countries (see Figure 2 ). (For more information, see CRS Report R45266, The Trump Administration's "Zero Tolerance" Immigration Enforcement Policy .) Why are people leaving the Northern Triangle countries of El Salvador, Guatemala, and Honduras?12 Many factors—including those in their countries of origin, destination countries (often the United States), and other countries—contribute to people's decisions to emigrate from the Northern Triangle. Drivers of migration are interrelated, often reinforcing one another. Over time, weak institutions and corrupt government officials, economic growth that does not significantly reduce chronic poverty, rising levels of crime, and demand for illicit drugs result in insecurity and citizens' low levels of confidence in government institutions. These in turn contribute to an increased desire to leave a country. The Northern Triangle countries have long histories of autocratic rule, weak institutions, and corruption. A lack of political will and capacity, rampant bribery and embezzlement of state funds, and some of the lowest tax collection rates in Latin America divert and diminish resources, leaving state institutions and programs underfunded. These problems also limit the governments' abilities to respond to crises such as natural disasters and food insecurity. All of these factors help perpetuate chronic poverty. While often cited as a leading cause of emigration from the Northern Triangle, poverty alone does not explain it. Over the past decade, transnational criminal organizations have used the Central American corridor for a range of illicit activities, including trafficking approximately 90% of cocaine bound for the United States. As a result, Northern Triangle countries have experienced extremely elevated homicide rates and general crime committed by drug traffickers, gangs, and other criminal groups. For instance, clashes between street gangs and, in El Salvador, between gangs and security forces, have paralyzed cities and some rural areas. A recent study found that the probability that an individual intends to migrate is 10-15 percentage points higher for Salvadorans and Hondurans who have been victims of multiple crimes than for those who have not. Finally, Central America has always been particularly subject to climate variability. According to the World Risk Index, Guatemala and El Salvador are among the 15 countries in the world most exposed to natural disasters, especially earthquakes and droughts. About one-fourth of those employed in the Northern Triangle work in the agriculture sector; widespread crop failures can have a devastating impact on people's livelihoods and ability to feed their families. According to the 2018 Global Hunger Index, Guatemala and Honduras ranked second and third in hunger levels in Central America and the Caribbean, behind Haiti. Research indicates that more intense and erratic weather patterns in recent years are strongly linked to food insecurity and migration. (For more information, see CRS Report R44812, U.S. Strategy for Engagement in Central America: Policy Issues for Congress ; CRS Report RL34027, Honduras: Background and U.S. Relations ; CRS Report R43616, El Salvador: Background and U.S. Relations ; CRS Report R42580, Guatemala: Political and Socioeconomic Conditions and U.S. Relations ; and CRS Report RL34112, Gangs in Central America .) What factors are attracting people from the Northern Triangle to the United States?23 The factors discussed above intersect with factors attracting migrants to the United States. Economic opportunity may motivate Northern Triangle families and unaccompanied children to migrate. Despite challenging labor market conditions for low-skilled minority youth in the United States, economic prospects for industrial sectors employing low-skilled workers have improved recently. Educational opportunities may also be a motivating factor in migration, as perceptions of free public education through high school may be widespread among young migrants. Family reunification is a key motive, as many migrants have family members among the sizable Salvadoran, Guatemalan, and Honduran foreign-born populations residing in the United States. While the impacts of actual and perceived U.S. immigration policies have been widely debated, it remains unclear if, and how, specific immigration policies have motivated families and children to migrate to the United States. Some contend that the United States' asylum policy, which allows asylum seekers to remain in the United States while they await a decision on their cases, has encouraged recent family and unaccompanied child migration to the country. Currently, immigration courts face a backlog of over 700,000 asylum cases, resulting in wait times of months or years, and a substantial portion of asylum seekers fail to appear in court. Others have argued that the revised humanitarian relief policies for unaccompanied children included in the Trafficking Victims Protection Reauthorization Act (TVPRA) of 2008, which expanded immigration relief options for such children, fostered a similar result among this migrant population. (For more information, see archived CRS Report R43628, Unaccompanied Alien Children: Potential Factors Contributing to Recent Immigration .) Why do some migrants choose to travel in large groups? Is this a new phenomenon?26 Migrants from the Northern Triangle traveling to the United States customarily have used various means to get to the Mexico-U.S. border, including walking, hitchhiking, riding on the top of trains through Mexico, and riding buses, all with or without the assistance of smugglers. Central American migrants have joined into groups to make the journey together as a way to share resources, avoid the cost of smugglers, and gain protection by the safety offered in numbers. "Caravans" have reportedly occurred for a least a decade, but they received little attention until last spring when a group of roughly 1,000 Central American migrants headed to the United States. About 400 migrants eventually made it to the U.S. border. In past years, ad hoc processions have been loosely organized by nonprofit groups wanting to call attention to the plight of migrants in their home communities, particularly those of families with children fleeing unsafe environments, poverty, and lack of protection from gang violence and extortion. Mobile phone technology has facilitated navigation and affords communication with impromptu groups, resulting in migrations that can expand and contract along the way. Actions by Governments and International Organizations What is the United States doing to address the factors driving migration from the Northern Triangle?31 Under the U.S. Strategy for Engagement in Central America, the United States is working with Central American governments to promote economic prosperity, improve security, and strengthen governance in the region. The Obama Administration launched the strategy following a surge in apprehensions of unaccompanied alien children in 2014, and the Trump Administration largely has left the strategy in place. Congress appropriated an estimated $2.1 billion to support the strategy from FY2016-FY2018, roughly doubling annual aid levels for the region. The governments of El Salvador, Guatemala, and Honduras are carrying out complementary efforts under their Plan of the Alliance for Prosperity in the Northern Triangle. They collectively allocated an estimated $7.7 billion to the initiative from 2016-2018, though some analysts have questioned whether those funds have been targeted effectively. On December 18, 2018, the Trump Administration committed to providing $5.8 billion in public and private investment to support institutional reforms and development in the Northern Triangle. Nearly all of the foreign assistance included in that figure was appropriated in prior years and the remainder consists of potential loans, loan guarantees, and private sector resources that the U.S. Overseas Private Investment Corporation could mobilize if it is able to identify commercially viable projects. (For more information, see CRS Report R44812, U.S. Strategy for Engagement in Central America: Policy Issues for Congress .) What results have recent U.S. assistance efforts in the Northern Triangle produced?36 It is too early to assess the full impact of recent U.S. efforts because implementation did not begin until 2017 for many of the programs funded under the U.S. Strategy for Engagement in Central America. Nevertheless, the Northern Triangle countries, with U.S. support, have made some tentative progress. For example, they have implemented some policy changes that have contributed to economic stability. At the same time, living conditions have yet to improve for many residents because the Northern Triangle governments have not invested in effective poverty-reduction programs. Security conditions also have improved in some respects, as homicide rates have declined for three consecutive years. Still, many Northern Triangle residents continue to feel insecure, and the percentage of individuals reporting they were victims of crime increased in all three nations between 2014 and 2017. The countries' attorneys general—with the support of the U.N.-backed International Commission against Impunity in Guatemala and the Organization of American States-backed Mission to Support the Fight against Corruption and Impunity in Honduras—have made significant progress in the investigation and prosecution of high-level corruption cases. Those efforts could be undermined, however, as they have received considerable pushback from political and economic elites in the region. (For more information, see CRS Report R44812, U.S. Strategy for Engagement in Central America: Policy Issues for Congress .) What is Mexico doing to address the flow of Central American migrants through its territory?42 Since a surge of unaccompanied child migrants from the Northern Triangle transited Mexico to the United States in 2014, Mexico has helped the United States manage flows of Central American migrants and has received more than $100 million in U.S. funding for those efforts. From 2015 through 2018, Mexico returned almost 524,000 migrants who entered it from the Northern Triangle countries. At the same time, Mexico has provided temporary visas for those who want to work in its southern border states, as well as humanitarian visas and access to asylum for those who do not raise criminal or terrorist concerns when their biometric information is run against U.S. databases. President Andrés Manuel López Obrador has thus far been willing to shelter some U.S.-bound Central American migrants, but he urged the U.S. government to invest in southern Mexico and Central America to prevent future unauthorized migration. On December 18, 2018, the two governments made a joint announcement in support of economic development in Mexico and the Northern Triangle. The Mexican government has faced pressure from the United States to help contain and disperse recent caravans of Central American migrants transiting the country; humanitarian groups, by contrast, have urged it to assist the migrants. In fall 2018, Mexican citizens, aid groups, and local, state, and federal entities provided migrants with food, shelter, and emergency aid. As of early December 2018, the U.N. High Commissioner for Refugees (UNHCR) reported that 3,300 members of migrant caravans had applied for asylum in Mexico. At the same time, more than 3,000 people had accepted voluntary repatriation to their countries of origin. With U.S. ports of entry limiting the number of migrants accepted each day for asylum screening, border cities may have to shelter thousands of migrants for many months. Mexico's refugee agency, which has received support from UNHCR (discussed below), was overwhelmed processing record numbers of applications prior to the arrival of recent migrant caravans. In late 2018, the U.S. and Mexican governments were negotiating an agreement—dubbed "Remain in Mexico"—that would have required U.S.-bound asylum seekers who could not demonstrate that they faced imminent danger in Mexico to remain there as their U.S. asylum claims were processed. Prior to the conclusion of a final bilateral agreement, the U.S. Department of Homeland Security (DHS) notified Mexico that it would implement a new policy under Section 235(b)(2)(C) of the Immigration and Nationality Act to return some non-Mexican asylum seekers (excluding unaccompanied minors) to Mexico to await their immigration court decisions. Mexico responded with a statement declaring that it has the right to admit or reject foreigners arriving in its territory, and that it would provide humanitarian visas and work permits to certain non-Mexicans awaiting U.S. immigration proceedings and offer some individuals the ability to apply for asylum in Mexico. Mexico reportedly began implementing this policy in mid-January, and the United States returned the first asylum seeker to Mexico under its new policy—dubbed the "Migrant Protection Protocols"—on January 29, 2019. Mexican officials have reportedly stated that they will not accept minors or individuals over age 60 awaiting asylum claims. Concerns over the costs to local governments of sheltering migrants and the safety of migrants could make this policy difficult to maintain. (For more information, see CRS In Focus IF10215, Mexico's Immigration Control Efforts .) What is the role of the United Nations and other organizations in addressing the humanitarian needs of migrants from the Northern Triangle?55 A range of organizations provide humanitarian assistance to people traveling from the Northern Triangle toward the United States, including U.N. entities and other intergovernmental organizations, local and national non-governmental organizations, and the private sector. According to UNHCR —a key U.N. entity operating in the region— comprehensive assistance is needed at all phases of the journey, including food, medical care, shelter, protection, and, in many cases, legal support. Experts characterize this flow of people from the Northern Triangle as mixed migration, defined as different groups—such as economic migrants, refugees, asylum-seekers, trafficked persons, and unaccompanied children—who travel the same routes and use the same modes of transportation. The distinctions between groups in mixed migration flows raise questions about their status and rights. While refugees are granted certain rights and protection under international refugee law, migrants are not protected by a comparable set of rules or treaties. Nevertheless, UN HCR asserts that transit and destination countries should provide all of these groups access to humanitarian assistance, protection , and due process to assess their asylum claims, even if they do not qualify as refugees. Those who flee are often unsafe not only in their home countries, but also during their journey north where they face recruitment into criminal gangs, sexual and gender-based violence, and murder. Many are vulnerable, including women, children, the elderly, and those with disabilities. In Mexico, UNHCR provides immediate and longer-term support by working with local and federal governments and alongside civil society and other partners. In addition to shelter and cash-based humanitarian assistance, broader safety mechanisms include improved screening procedures and dissemination of information for those fleeing violence, increased ways to guard against smugglers and traffickers, and enhanced access to the Mexican asylum system. Even with additional support from UNHCR, Mexico's Commission for the Aid of Refugees (COMAR) lacks sufficient capacity to process claims. UNHCR and other organizations are also being mobilized along the caravan routes in places such as Chiapas, Oaxaca, and Tijuana. International humanitarian efforts aim to align with the Comprehensive Regional Protection and Solutions Framework, an intergovernmental agreement that defends the rights of migrants and refugees who live in or cross the territories of Belize, Costa Rica, Guatemala, Honduras, Mexico, and Panama. In general, most Latin American and Caribbean countries are part of an ongoing forum to address issues driving displacement such as poverty, economic decline, inflation, violence, disease, and food insecurity. In the current situation, U.N. and other experts urge donors to provide timely and predictable international funding to support host governments and local communities that are assisting arriv als. The Role of U.S. Government Agencies and the Military What is the role of U.S. government agencies involved in processing migrants at the Southwest U.S. border?67 Several federal agencies are involved in immigration processing at land, air, and sea ports of entry and along U.S. borders shared with Mexico and Canada. The following descriptions are not exhaustive of all the duties carried out by each entity; they are a selection of duties relevant to immigration enforcement at the Southwest border at and between land ports of entry. The Department of Homeland Security (DHS) includes several relevant components: Customs and Border Protection (CBP) is responsible for facilitating lawful trade and travel while preventing unauthorized people and contraband from entering the country. Within CBP, U.S. Border Patrol is the law enforcement agency that secures U.S. borders at and between ports of entry; Border Patrol agents apprehend and hold foreign nationals who have no valid entry documents when they reach ports of entry or who attempt to cross between ports of entry. CBP's Office of Field Operations (OFO) operates U.S. ports of entry and conducts immigration inspections of arriving foreign nationals to determine their admissibility to the United States. Immigration and Customs Enforcement (ICE) is responsible for protecting the country from cross-border crime and illegal immigration that threatens national security and public safety. ICE's Enforcement and Removal Operations (ERO) enforces immigration laws pertaining to the detention and removal of unauthorized aliens and oversees detention centers, including family detention centers. ICE also finds and removes deportable aliens located in the U.S. interior. United States Citizenship and Immigration Services (USCIS) is responsible for adjudication of immigration and naturalization petitions, consideration of refugee and asylum claims and related humanitarian and international concerns, and other services, such as issuing employment authorizations and processing nonimmigrant change-of-status petitions. At the border, USCIS asylum officers interview foreign nationals who arrive without admissions documents at a port of entry or who encounter a Border Patrol agent and express a fear of return to their home countries based on persecution. If migrants are found to have "credible fear," they are referred to an immigration judge for a hearing. The Department of Justice (DOJ) runs the Executive Office for Immigration Review (EOIR ), the federal government's immigration courts. Immigration judges determine whether an alien is removable or is eligible for some type of immigration relief during the removal process (e.g., asylum or withholding of removal). The standard removal process is a civil administrative proceeding involving a DHS attorney and an EOIR immigration judge to determine whether an alien should be removed. (For more information, see CRS Report R43892, Alien Removals and Returns: Overview and Trends .) The Department of Health and Human Services' (HHS ' ) Office of Refugee Resettlement (ORR) is responsible for the care of unaccompanied alien children (UAC) and their subsequent placement in appropriate custody. ICE handles custody transfer or repatriation. (For more information, see archived CRS Report R43599, Unaccompanied Alien Children: An Overview .) How does the United States process unlawful border crossers?68 Aliens apprehended for illegally entering the United States between U.S. ports of entry generally face civil penalties for illegal presence in the United States and may face criminal penalties for illegal entry. Aliens who have been removed face additional criminal penalties if they are apprehended for illegal reentry. Aliens apprehended for illegal entry and reentry are subject to prosecution in federal criminal courts by DOJ. All apprehended aliens, including children, are placed into one of two types of immigration removal proceedings: standard proceedings that involve formal hearings in an immigration court run by DOJ's EOIR before an immigration judge, or streamlined "expedited removal" proceedings without such hearings. ICE is responsible for legally representing the government during removal proceedings. CBP may refer aliens to DOJ for criminal prosecution depending on whether they meet current criminal enforcement priorities. If CBP does not refer apprehended aliens to DOJ for criminal prosecution, CBP may either return them to their home countries using expedited removal or transfer them to ICE custody for immigration detention while they are in formal removal proceedings. (For more information, see CRS Report R45314, Expedited Removal of Aliens: Legal Framework .) Aliens who wish to request asylum may do so at a U.S. port of entry before a CBP officer or upon apprehension by a CBP officer between U.S. ports of entry. Aliens requesting asylum at the border are entitled to an interview assessing the credibility of their asylum claims. (For more information, see " What is the process for seeking asylum in the United States? " below.) During the brief period when the Trump Administration's "zero tolerance" policy was in effect (May and June 2018), DOJ sought the prosecution of all adults caught entering illegally, including asylum seekers and adults accompanied by children. On June 20, 2018, following considerable and largely negative public attention to family separations stemming from the zero tolerance policy, President Trump issued an executive order (EO) effectively ending the policy. While it was in effect, DHS classified all children accompanying criminally prosecuted adults as UAC and turned them over to HHS' ORR, where they were housed temporarily in its shelters. After the prosecuted adults served any applicable criminal sentence, they were transferred to ICE custody, placed in immigration detention, and eventually, in most cases, reunited with their children, either in family detention or upon release into the United States on bond, an order of supervision, or another condition of release. Other parents were deported before they were reunited with their children, and a small number of parents still in the United States remain separated from their children. (For more information, see CRS Report R45266, The Trump Administration's "Zero Tolerance" Immigration Enforcement Policy .) What is the process for seeking asylum in the United States?69 The Immigration and Nationality Act (INA) provides, subject to certain exceptions and restrictions, that aliens who are in the United States or who arrive in the United States (whether or not at an official port of entry) may apply for asylum, regardless of their immigration status. Asylum may be granted by a USCIS asylum officer or a DOJ EOIR immigration judge. To receive asylum, an alien must establish, among other requirements, that he or she is unable or unwilling to return to his or her home country because of past persecution or a well-founded fear of future persecution based on one of five protected grounds (race, religion, nationality, membership in a particular social group, or political opinion). Certain aliens, such as those who are determined to pose a danger to U.S. security, are ineligible to receive asylum. Special asylum provisions apply to aliens who are subject to a streamlined removal process known as expedited removal. In order for such an alien to be considered for asylum, a USCIS asylum officer first must determine that the alien has a credible fear of persecution. (For more information, see CRS Report R45314, Expedited Removal of Aliens: Legal Framework .) What did former Attorney General Sessions decide about domestic violence and gang violence as grounds for asylum? What is the status of that decision?70 In June 2018, the Attorney General, whose decisions are binding on DHS officers and immigration judges, issued a decision regarding the adjudication of asylum claims based on "membership in a particular social group." In the decision, Attorney General Sessions stated that "[g]enerally, claims by aliens pertaining to domestic violence or gang violence perpetrated by non-governmental actors will not qualify for asylum" based on the "membership in a particular social group" ground. He further noted that because such claims would not generally qualify for asylum, they also would not generally meet the threshold for a finding of a credible fear of persecution. USCIS subsequently issued a policy memorandum to provide guidance to its asylum officers in light of the Attorney General's decision. The memorandum included guidance on determining whether an alien is eligible for asylum as well as whether an alien has a credible fear of persecution and thus can pursue an asylum claim. The new policies regarding credible fear of persecution determinations were challenged in federal court. In December 2018, a federal district court judge permanently enjoined the U.S. government from continuing some of the new credible fear policies. Other components of the former Attorney General's decision and the USCIS memorandum, including standards for adjudicating asylum claims, remain in effect. (For more information, CRS Legal Sidebar LSB10207, Asylum and Related Protections for Aliens Who Fear Gang and Domestic Violence .) How does the United States screen for security threats among those seeking entry at the Southwest border?74 TECS (not an acronym) is the main system that CBP officers employ at the border and elsewhere to screen arriving travelers and determine their admissibility. CBP also uses the Automated Targeting System (ATS), which is a decision support tool. As one of its functions, ATS "compares information about travelers and cargo arriving in, transiting through, or exiting the country, against law enforcement and intelligence databases," including information from the Terrorist Screening Databased (TSDB, commonly referred to as the terrorist watchlist). As its name suggests, Automated Targeting System-Passenger (ATS-P) is the portion of ATS focused on passengers, "for the identification of potential terrorists, transnational criminals, and, in some cases, other persons who pose a higher risk of violating U.S. law" and is used by CBP personnel at the border, ports of entry, and elsewhere, including screening the passenger manifests of all U.S. bound international flights. (For more information, see CRS Report R44678, The Terrorist Screening Database and Preventing Terrorist Travel .) What types of missions do military personnel typically perform on the Southwest border?78 Active duty and National Guard personnel have performed a variety of missions on the Southwest border in the past, including ground and aerial surveillance, road and fencing construction, intelligence analysis, transportation, maintenance, and communications support. According to a DOD news release, the National Guard personnel who deployed to the border in April 2018 would provide "surveillance, engineering, administrative and mechanical support to border agents." A subsequent DOD news release announcing the deployment of active duty personnel in October 2018 stated that CBP " requested aid in air and ground transportation, and logistics support, to move CBP personnel where needed. Officials also asked for engineering capabilities and equipment to secure legal crossings, and medical support units. CBP also asked for housing for deployed Border Protection personnel and extensive planning support." The Trump Administration issued a memo on November 20, 2018, which authorized military personnel to perform those military protective activities that the Secretary of Defense determines are reasonably necessary to ensure the protection of Federal personnel, including a show or use of force (including lethal force, where necessary), crowd control, temporary detention and cursory search. Department of Defense personnel shall not, without further direction from the President, conduct traditional civilian law enforcement activities, such as arrest, search, and seizure in connection with the enforcement of the laws. During a discussion with reporters on November 21, 2018, Secretary of Defense James Mattis responded to questions about the potential use of military personnel in a law enforcement role: The one point I want to make again is we are not doing law enforcement. We do not have arrest authority. Now the governors could give their troops arrest authority. I don't think they've done that, but there are—is no arrest authority under Posse Comitatus for the U.S. federal troops. You know, that can be done but it has to be done in accordance with the law, and that has not been done nor has it been anticipated. Later in the interview he stated On detention, we do not have arrest authority. Detention would—I would put it in terms of minutes. In other words, if someone's beating on a Border Patrolman and if we were in position to have to do something about it, we could stop them from beating on them and take him over and deliver him to a Border Patrolman, who would then arrest him for it…. There's no violation of Posse Comitatus, there's no violation here at all. We're not going to arrest or anything else. To stop someone from beating on someone and turn them over to someone else—this is minutes not even hours, okay? According to a January 14 news release from DOD, Acting Secretary of Defense Patrick Shanahan approved continued DOD assistance to DHS through September 30, 2019. It also noted that "DOD is transitioning its support at the southwestern border from hardening ports of entry to mobile surveillance and detection, as well as concertina wire emplacement between ports of entry. DOD will continue to provide aviation support." How does the Posse Comitatus Act limit the use of military personnel?85 The Posse Comitatus Act constrains how military personnel may be used in a law enforcement capacity at the border. The Posse Comitatus Act is a criminal prohibition that provides Whoever, except in cases and under circumstances expressly authorized by the Constitution or Act of Congress, willfully uses any part of the Army or the Air Force as a posse comitatus or otherwise to execute the laws shall be fined under this title or imprisoned not more than two years, or both. Consequently, there must be a constitutional or statutory authority to use federal troops in a law enforcement capacity to enforce immigration or customs laws directly by, for example, stopping aliens from entering the country unlawfully, apprehending gang members, or seizing contraband. As noted in a section below, federal law permits the Armed Forces to act in a supporting role for civil authorities by providing logistics or operating and maintaining equipment, among other things. Case law suggests that the Posse Comitatus Act is violated when (1) civilian law enforcement officials make a direct active use of military personnel to execute the law; (2) the use of the military pervades the activities of the civilian officials; or (3) the military is used so as to subject persons to the exercise of military power which is regulatory, prescriptive, or compulsory in nature. The Posse Comitatus Act does not apply to the National Guard unless it is activated for federal service. One possible statutory exception the President could potentially invoke for direct military enforcement is the Insurrection Act provision for sending troops whenever he determines that "unlawful obstructions, combinations, or assemblages, or rebellion against the authority of the United States, make it impracticable to enforce the laws of the United States … by the ordinary course of judicial proceedings." However, the Insurrection Act appears never to have been invoked to respond to unlawful migrant border crossings, and its application in such a situation has not been tested in court. The executive branch has long asserted two constitutional exceptions to the Posse Comitatus Act "based upon the inherent legal right of the U.S. Government … to insure the preservation of public order and the carrying out of governmental operations within its territorial limits, by force if necessary." These exceptions include the emergency authority "to prevent loss of life or wanton destruction of property and to restore governmental functioning and public order when sudden and unexpected civil disturbances, disasters, or calamities seriously endanger life and property and disrupt normal governmental functions to such an extent that duly constituted local authorities are unable to control the situation"; and the authority to "protect Federal property and Federal governmental functions when the need for protection exists and duly constituted local authorities are unable or decline to provide adequate protection." (For more information, see CRS Report R42659, The Posse Comitatus Act and Related Matters: The Use of the Military to Execute Civilian Law .) Can the Department of Defense build the border wall?90 President Trump has contemplated proclaiming a national emergency pursuant to the National Emergencies Act (NEA) in order to fund a physical barrier at the southern border with Mexico using DOD funds. Declaring a national emergency could permit the President to invoke two statutes that could potentially permit either the use of unobligated military construction funds or the reprogramming of Army Corps of Engineers civil works funds. Military Construction Funds . Upon declaring a national emergency pursuant to the NEA, the President may invoke the emergency military construction authority in 10 U.S.C. §2808. 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." Section 2808 limits the funds available for emergency military construction to "the total amount of funds that have been appropriated for military construction" that have not been obligated. With certain limited exceptions, Presidents have generally invoked this authority in connection with construction at military bases in foreign countries. The circumstances in which the Section 2808 authority could be used to deploy barriers along the border appears to be a question of first impression, and one that is likely to be vigorously litigated. It appears that three interpretive questions could impede such use. First , there may be dispute about whether conditions at the border provide a sufficient factual basis to invoke Section 2808. Before the Section 2808 authority may be used, the President must determine that the relevant construction project would address a problem qualifying as a national emergency "that requires use of the armed forces." Moreover, the construction project must be "necessary to support such use of the armed forces." Second , if the above criteria are met, then an assessment would be necessary to determine whether construction of a border wall qualifies as a "military construction project" within the meaning of Section 2808. Title 10 defines the term "military construction project" for purposes of Section 2808 to include "military construction work," and defines "military construction" as "includ[ing] 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." Because there does not appear to be case law addressing the scope of this definition of "military construction," the question of whether Section 2808 extends to the construction of a border wall appears to be an issue of first impression. Third , if a court were to review the invocation of Section 2808 to construct a border wall, its analysis might be informed by the location of particular barriers. It is possible that a border wall will be "necessary to support such use of the armed forces" at some locations but not others. Likewise, the construction of a wall over certain areas of the border—specifically, areas that directly abut military bases—would appear to have a greater claim to qualifying as construction undertaken "with respect to a military installation" than construction at other locations along the border. Army Corp s of Engineers Funds. Section 2293 of Title 33, U.S. Code, authorizes the Secretary of the Army to terminate or defer Army civil works projects that are "not essential to the national defense" upon a declaration of a national emergency under the NEA "that requires or may require the use of the Armed Forces." 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." As with Section 2808, it is unsettled whether the construction of a border wall would qualify as an "authorized civil works, military construction, [or] civil defense project[]." This uncertainty is compounded by the difficulty of determining whether the qualifier "authorized" modifies all of the items enumerated in Section 2293 or only the term "civil works." If the term "authorized" modifies all of the items in the relevant sentence, then Section 2293 arguably would not allow the President to construct a border wall if that term is read to mean specifically authorized by Congress. Courts have traditionally afforded significant deference to executive claims of military necessity, deference which may stand as a substantial obstacle to legal challenges to any factual findings supporting the invocation of either Section 2808 or Section 2293. (For more information, see CRS Legal Sidebar LSB10242, Can the Department of Defense Build the Border Wall? ) The Role of the U.S. President What authority does the President have to use military personnel to support border security operations?96 The President's authority to use military personnel to support border security operations depends on whether those personnel are active duty troops serving under Title 10, U.S. Code, or National Guard troops operating under Title 32, U.S. Code. Section 502 of Title 32, U.S. Code, provides the authority for the Secretary of the Army and the Secretary of the Air Force to call National Guard units to full-time duty under Title 32 status for training "or other duty in addition to" mandatory training. Section 502(f) "other duty" may include "homeland defense activities." Such activities are defined to mean activities: undertaken for the military protection of the territory or domestic population of the United States, or of infrastructure or other assets of the United States determined by the Secretary of Defense as being critical to national security, from a threat or aggression against the United States. Chapter 15 of Title 10, U.S. Code—Military Support for Civilian Law Enforcement Agencies—provides general legislative authority for the Armed Forces to provide certain types of support to federal, state, and local law enforcement agencies, particularly in counterdrug, counterterrorism, and counter-transnational crime efforts. Such authorities permit the military to provide certain types of support for border security and immigration control operations. These authorities permit DOD to share information collected during the normal course of military operations, loan equipment and facilities, provide expert advice and training, and maintain and operate equipment. To assist federal law enforcement agencies, military personnel may maintain and operate equipment in conjunction with counterterrorism operations or the enforcement of counterdrug laws, immigration laws, and customs requirements. To assist federal law enforcement agencies in counter drug operations, military personnel may, among other things, engage in the "[c]onstruction of roads and fences and installation of lighting to block drug smuggling corridors across international boundaries of the United States." Chapter 15 support authority "does not include or permit direct participation by a member of the Army, Navy, Air Force, or Marine Corps in a search, seizure, arrest, or other similar activity unless participation in such activity by such member is otherwise authorized by law." One other possible source of authority is Section 1059 of the National Defense Authorization Act of 2016. That provision authorized the Secretary of Defense, with the concurrence of the Secretary of Homeland Security, to spend up to $75 million of 2016 DOD funds to provide assistance to CBP "for purposes of increasing ongoing efforts to secure the southern land border of the United States." The types of assistance permitted include "deployment of members and units of the regular and reserve components of the Armed Forces to the southern land border of the United States" along with "manned aircraft, unmanned aerial surveillance systems, and ground-based surveillance systems to support continuous surveillance of the southern land border of the United States" and "[i]ntelligence analysis support." (For more information, see CRS Legal Sidebar LSB10121, The President's Authority to Use the National Guard or the Armed Forces to Secure the Border .) What authority does the President have to cut off aid to the Northern Triangle countries?111 Congress provided the President with significant discretion to reduce foreign assistance to Central America in FY2018. In the Consolidated Appropriations Act, 2018 ( P.L. 115-141 ), Congress designated "up to" $615 million for the Central America strategy, effectively placing a ceiling on aid but no floor. The act also 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 a variety of congressional concerns, including improving border security, combating corruption, and protecting human rights. The act empowers the Secretary of State to suspend and reprogram aid if he determines the governments have made "insufficient progress" in addressing the legislative requirements. The President's ability to modify assistance to the Northern Triangle countries for FY2019 will depend on provisions Congress may include in future appropriations legislation. What actions has the President taken to restrict eligibility for asylum?112 Citing constitutional and statutory authority, the President issued a presidential proclamation on November 9, 2018, to immediately suspend the entry into the United States of aliens who cross the Southwest border between ports of entry. The proclamation indicates that its entry suspension provisions will expire 90 days after its issuance date or on the date that the United States and Mexico reach a bilateral agreement that allows for the removal of asylum seekers to Mexico, whichever is earlier. Also on November 9, 2018, DHS and DOJ jointly issued an interim final rule to bar an alien who enters the United States in contravention of the proclamation from eligibility for asylum. Under the rule, an asylum officer is to make a negative credible fear determination in the case of such an alien. (For more information, see CRS Insight IN10993, Presidential Proclamation on Unlawful Border Crossers and Asylum .) The proclamation and the rule are being challenged in federal court. As of the date of this report, the changes to the asylum process set forth in the rule are not in effect. (For more information, see CRS Legal Sidebar LSB10222, District Court Temporarily Blocks Implementation of Asylum Restrictions on Unlawful Entrants at the Southern Border .) Where can more information be found? For more information on relevant topics and issues Congress may consider, see the following reports or contact the authors: CRS Report R44812, U.S. Strategy for Engagement in Central America: Policy Issues for Congress , by Peter J. Meyer CRS Report R45120, Latin America and the Caribbean: Issues in the 115th Congress , coordinated by Mark P. Sullivan (see "Migration Issues" section) CRS In Focus IF10215, Mexico's Immigration Control Efforts , by Clare Ribando Seelke and Carla Y. Davis-Castro CRS Report R43616, El Salvador: Background and U.S. Relations , by Clare Ribando Seelke CRS Report RL34027, Honduras: Background and U.S. Relations , by Peter J. Meyer CRS Report R42580, Guatemala: Political and Socioeconomic Conditions and U.S. Relations , by Maureen Taft-Morales CRS Report R45266, The Trump Administration's "Zero Tolerance" Immigration Enforcement Policy , by William A. Kandel CRS Insight IN10993, Presidential Proclamation on Unlawful Border Crossers and Asylum , by Andorra Bruno CRS Report RS20844, Temporary Protected Status: Overview and Current Issues , by Jill H. Wilson CRS Legal Sidebar LSB10150, An Overview of U.S. Immigration Laws Regulating the Admission and Exclusion of Aliens at the Border , by Hillel R. Smith CRS Report R42138, Border Security: Immigration Enforcement Between Ports of Entry , coordinated by Audrey Singer CRS Report R43356, Border Security: Immigration Inspections at Ports of Entry , by Audrey Singer CRS Report R43599, Unaccompanied Alien Children: An Overview , by William A. Kandel CRS Legal Sidebar LSB10121, The President's Authority to Use the National Guard or the Armed Forces to Secure the Border , by Jennifer K. Elsea

Over the last decade, migration to the United States from Central America—in particular from El Salvador, Guatemala, and Honduras (known collectively as the Northern Triangle)—has increased considerably. Families migrating from this region, many seeking asylum, have made up an increasing share of the migrants seeking admission to the United States at the U.S.-Mexico border. In the past year, news reports of migrant "caravans" from the Northern Triangle traveling toward the United States have sparked intense interest and questions from Congress. Many factors, both in their countries of origin and elsewhere, contribute to people's decisions to emigrate from the Northern Triangle. Weak institutions and corrupt government officials, chronic poverty, rising levels of crime, and demand for illicit drugs result in insecurity and citizens' low levels of confidence in government institutions. These "push" factors intersect with "pull" factors attracting migrants to the United States, including economic and educational opportunities and a desire to reunify with family members. Addressing these factors is complex. Under the U.S. Strategy for Engagement in Central America, the United States is working with Central American governments to promote economic prosperity, improve security, and strengthen governance in the region. Since 2014, Mexico has helped the United States manage flows of Central American migrants, including a recent decision to allow certain U.S.-bound asylum seekers to remain in Mexico while awaiting U.S. immigration proceedings. The United Nations High Commissioner for Refugees (UNHCR)—in collaboration with local and federal governments and civil society—is providing immediate and longer-term support for Mexico's refugee agency and migrants in transit. Central Americans who wish to request asylum in the United States may do so at a U.S. port of entry before a Customs and Border Protection (CBP) officer or upon apprehension by a CBP officer between U.S. ports of entry. Those requesting asylum at the border undergo screening to determine whether they can pursue an asylum claim. To receive asylum, a foreign national must establish, among other requirements, that he or she is unable or unwilling to return to his or her home country because of past persecution or a well-founded fear of future persecution based on one of five protected grounds (race, religion, nationality, membership in a particular social group, or political opinion). In 2018, President Trump, the Department of Homeland Security (DHS), and the Department of Justice (DOJ) took various actions to tighten the U.S. asylum system. These actions have been met with legal challenges. For example, on November 9, 2018, the President issued a presidential proclamation to suspend immediately the entry into the United States of aliens who cross the Southwest border between ports of entry. This proclamation and a related DHS-DOJ rule are being challenged in federal court. Chapter 15, Title 10 of the U.S. Code provides general legislative authority for the Armed Forces to provide certain types of support to federal, state, and local law enforcement agencies. In October 2018, active-duty personnel were deployed to the Southwest border to provide assistance in air and ground transportation, logistics support, engineering capabilities and equipment, medical support, housing, and planning support. The Posse Comitatus Act constrains the manner in which military personnel may be used in a law enforcement capacity at the border. President Trump has contemplated proclaiming a national emergency pursuant to the National Emergencies Act (NEA) in order to fund a physical barrier at the southern border with Mexico using DOD funds. Congress provided the President with significant discretion to reduce foreign assistance to Central America in FY2018, dependent on the governments of El Salvador, Guatemala, and Honduras addressing a variety of congressional concerns, including improving border security, combating corruption, and protecting human rights. The President's ability to modify assistance to the Northern Triangle for the remainder of FY2019 will depend on provisions Congress may include in future appropriations legislation.

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Introduction The federal government is the nation's largest employer, with over two million workers employed in the United States, U.S. Territories, and foreign countries. A majority of these employees work in the competitive service of the executive branch. Applicants for competitive service positions compete with other applicants and are evaluated according to objective standards. The executive branch includes two other service classifications—the excepted service and the Senior Executive Service (SES)—with hiring and removal standards that diverge from those prescribed for the competitive service. Positions in the excepted service are specifically excepted from the competitive service by statute, by the President, or by the Office of Personnel Management (OPM). SES positions are also not in the competitive service. The SES includes senior managerial, supervisory, and policy positions that are subject to a different pay scale, as well as different hiring and removal standards. This report examines the three service classifications, and reviews some of the central features and notable differences among these classifications. Competitive Service The competitive service consists of all civil service positions in the executive branch, except the following: positions that are specifically excepted from the competitive service by or under statute; positions to which appointments are made by presidential nomination for confirmation by the Senate, unless the Senate otherwise directs; and positions in the SES. Appointment Process The competitive service also includes non-executive branch positions and positions in the District of Columbia government that are specifically included in the competitive service by statute. OPM administers examinations for entrance into the competitive service. These examinations are meant to be "practical in character" and relate to "matters that fairly test the relative capacity and fitness of the applicants for the appointment sought[.]" OPM identifies the relative weights for the subjects in an examination, and assigns numerical ratings on a 100-point scale. Applicants who meet the minimum requirements for entrance to an examination, such as citizenship and residence requirements, and are rated 70 or more in the examination are eligible for appointment in the competitive service. These individuals are placed on registers or lists of eligibles. When an agency seeks to fill a competitive service position, it requests a certificate of eligibles from OPM. This certificate is to include enough names from the top of the relevant register to allow an agency appointing official to consider at least three individuals for every position to be filled. The competitive service includes several types of appointments. An individual selected for a continuing position is generally appointed as a career-conditional employee subject to an initial one-year probationary period. After three continuous years of service in a career-conditional appointment, an employee will be converted to a career appointment. A term appointment is a nonpermanent appointment for a period of more than one year, but less than four years. An agency may make a term appointment when the need for an employee's services is not permanent, but involves a special project, extraordinary workload, or reorganization. A temporary appointment is a time-limited appointment for a period not to exceed one year. An agency may make a temporary appointment to fill a short-term position or meet an employment need that is scheduled to end within a specified timeframe. Pay Structure Employees in the competitive service are generally paid in accordance with the General Schedule, a schedule of annual basic pay rates that consists of 15 grades, designated "GS-1" through "GS-15." The grades include 10 steps that provide for increasing rates of pay. An employee who has not reached the maximum pay rate for his or her position is generally advanced to the next step at specified intervals. General Schedule salaries are based on the principles that there is equal pay for substantially equal work within a local pay area, that any pay distinctions are based on work and performance, that federal pay rates are comparable with non-federal pay rates for the same level of work, and that any pay disparities between federal and non-federal employees should be eliminated. Adverse Action Protections and Procedures Employees in the competitive service who are not serving a probationary or trial period, or have completed one year of current continuous service in a position other than a temporary appointment limited to one year or less, maintain specified notice and appeal rights for adverse personnel actions. Before an agency may suspend such a qualifying employee for 14 days or less, the employee must be given an advance written notice that identifies the specific reasons for the suspension. The employee must also be provided a reasonable time to answer the notice and furnish affidavits and other evidence to support the answer. Similar notice is required before an agency may subject a qualifying employee to other adverse personnel actions. Before a removal, a suspension for more than 14 days, a reduction in grade or pay, or a furlough of 30 days or less, the agency must provide at least 30 days' advance written notice to the employee. The employee must also be given a reasonable time to respond to the notice and provide affidavits and other evidence to support the answer. Unlike suspensions for 14 days or less, these adverse actions may be appealed to the Merit Systems Protection Board (MSPB or Board), an independent, quasi-judicial agency that reviews and adjudicates specified personnel actions taken against qualifying federal employees. In general, an agency must establish three factors to withstand an individual's challenge of his or her adverse personnel action. First, the agency must prove, by a preponderance of the evidence, that the charged conduct occurred. Second, it must establish a nexus between that conduct and the efficiency of the civil service. Finally, the agency must show that the penalty imposed on the employee is reasonable. An agency's action may not be sustained if the appellant shows: (1) harmful error in applying the agency's procedures in arriving at its decision; (2) that the decision was based on a prohibited personnel practice; or (3) that the decision was not in accordance with law. Excepted Service Appointment Process About one-third of all federal workers are employed in the excepted service. The excepted service consists of those civil service positions that are not in the competitive service or the SES. Positions in the excepted service may be designated by statute or by OPM, and are not subject to competitive examination. OPM will exempt a position from the competitive service when it determines that an appointment through competitive examination is not practicable, or the recruitment of certain students or recent graduates would be better achieved through alternate recruitment and assessment processes. For example, OPM may determine that a position should be excepted from the competitive service because it is impracticable to examine the knowledge, skills, and abilities required for a position. Positions in the excepted service are categorized into four schedules. Schedule A includes positions that are not of a confidential or policy-determining character for which it is not practicable to examine applicants. Attorneys, chaplains, and short-term positions for which there is a critical hiring need are examples of schedule A positions. Schedule B also includes positions that are not of a confidential or policy-determining character for which it is not practicable to examine applicants. Unlike Schedule A positions, however, these positions require an applicant to satisfy basic qualification standards established by OPM for the relevant occupation and grade level. Individuals appointed to schedule B positions engage in a variety of activities, including policy analysis, teaching, and technical assistance. Positions in schedule C are policy-determining or involve a close and confidential working relationship with the head of an agency or other key appointed officials. These positions include most political appointees below the cabinet and subcabinet levels. An agency's senior advisor and special assistant positions are typically in schedule C. Finally, schedule D includes positions that are not of a confidential or policy-determining character for which competitive examination makes it difficult to recruit a sufficient number of certain students or recent graduates. Examples of schedule D positions include those involving science, technology, engineering, or mathematics (STEM) occupations and positions in the Presidential Management Fellows Program. Schedule D positions generally require an applicant to satisfy basic qualification standards established by OPM for the relevant occupation and grade level. Pay Structure Like employees in the competitive service, excepted service employees are generally paid in accordance with the General Schedule. Adverse Action Protections and Procedures In addition, excepted service employees maintain the same notice and appeal rights for adverse personnel actions. Some employees in the excepted service, however, must satisfy different durational requirements before these rights become available. So-called "preference eligibles" in an executive agency, the Postal Service, or the Postal Rate Commission must complete one year of current continuous service to avail themselves of the relevant notice and appeal rights. The term "preference eligible" refers to specified military veterans and some of their family members, such as an unmarried widow, and the wife or husband of a service-connected disabled veteran. Employees in the excepted service who are not preference eligibles and (1) are not serving a probationary or trial period under an initial appointment pending conversion to the competitive service, or (2) have completed two years of current or continuous service in the same or similar position, have the same notice and appeal rights as qualifying employees in the competitive service. Senior Executive Service The SES is a cadre of high-level government administrators who manage major programs and projects within most federal agencies. While they are considered federal employees within the civil service system, the SES is governed by a regulatory structure separate from the competitive and excepted services. As defined in statute, SES positions are generally managerial or supervisory positions that are classified above the GS-15 grade (or certain equivalent positions) and need not be appointed by the President and confirmed by the Senate. In these leadership roles, SES members may serve as intermediaries between top-level political appointees of an agency who seek to carry out the objectives of a particular President and career civil servants with institutional experience relating to relevant issues. According to a 2018 report, there are currently more than 7,000 permanent SES positions. Positions and Appointment Process There are two types of SES positions: (1) career reserved and (2) general. Career reserved positions must be filled with career appointees to shield certain SES roles from political influence. Generally, agency heads are to determine whether a particular SES position warrants a career reserved designation, to "ensure impartiality, or the public's confidence in the impartiality, of the Government." OPM regulations reflect the types of SES roles in which this designation is appropriate, including those involving adjudication and appeals, auditing, and law enforcement duties. General positions may be filled by career appointees, as well as other noncareer and limited term (i.e., political) appointees. There are four types of SES appointments: career, noncareer, limited term, and limited emergency appointees. The SES mainly consists of "career appointees" chosen through a merit-based competitive hiring process. As part of this process, each agency must maintain a recruitment program for career appointees, as well as at least one executive board that reviews qualifications and makes recommendations regarding SES candidates. An OPM-convened Qualification Review Board (QRB) must certify the executive and managerial qualifications of a selected candidate before a career appointment may be made to an SES position. Unlike career appointees, noncareer appointees are not subject to the competitive selection process, but agency heads must determine that these appointees meet the qualifications of the SES position. While noncareer appointees are not QRB-certified, OPM must approve these appointees. Limited term and limited emergency appointees make up a small subset of the SES, and their terms are non-renewable. These appointments are used when a position is needed for a specified period (such as to manage a special project), or a position is established to meet a "bona fide, unanticipated, urgent need." Limited term and limited emergency appointments are also subject to OPM approval. To restrict the politicization of the SES, Title 5 of the U.S. Code (Title 5) limits the number of noncareer and limited term appointees who may serve in SES positions. Pay Structure and Performance Appraisal The SES pay structure is also distinct from the rest of the civil service. Title 5 specifies that the pay rate of each senior executive is based on the executive's individual performance or contribution to agency performance (or both), as measured under a "rigorous" performance appraisal system. Each federal agency must maintain at least one of these appraisal systems, subject to OPM standards, review, and approval. Performance appraisals of SES members may consider factors such as improvements in efficiency, productivity, and quality of work or service, cost efficiency, and performance timeliness. In response to earlier concerns that SES appraisal systems were flawed because most executives received the highest rating, Title 5 tasks OPM, in collaboration with the Office of Management and Budget, with the establishment and maintenance of a government-wide performance appraisal system certification process, in an effort to ensure that an agency's appraisal systems for SES employees make "meaningful distinctions based on relative performance." Title 5 also sets out different pay rates for the SES, with a minimum rate of basic pay equal to 120 percent of the rate for GS-15, step 1, and a maximum rate of basic pay equal to the rate for Level III of the Executive Schedule. But SES members' annual aggregate pay (that includes additional compensation such as bonuses, awards, and other payments in addition to basic pay) is capped at the rate for Level I of the Executive Schedule. If a senior executive's total compensation exceeds the aggregate limitation, the executive receives the overage in the following calendar year. To encourage federal agencies to establish and maintain an OPM-certified performance appraisal system, Title 5 allows for a higher range of SES pay for agencies that have these certified systems. Adverse Action Protections and Procedures Title 5 also articulates conditions and procedures for removing, suspending, or taking other adverse actions against a member of the SES. Career SES appointees who have successfully completed a one-year probationary period may be removed or subject to adverse action only for specified reasons. For example, an SES career appointee may be removed from the civil service or suspended for more than 14 days only for misconduct, neglect of duty, malfeasance, or failure to accept a directed reassignment or to accompany a position in a transfer of function. SES members must receive advance written notice about the action and opportunity to provide an answer or receive hearing, subject to exception. The senior executive may also appeal the employment action to the MSPB. A career appointee receiving a single unsatisfactory performance rating may be reassigned or transferred within the SES or removed from the SES. A career SES member who receives two unsatisfactory ratings in any period of five consecutive years, or twice in any period of three consecutive years receives less than fully successful ratings, must be removed from the SES. Affected SES career appointees must receive advance written notice of these actions. While these appointees may not appeal these actions to the MSPB, they may request an informal hearing before the Board. SES career appointees are also generally entitled to be placed in a civil service position at GS-15 or above (or an equivalent position). In comparison, noncareer, limited term, and limited emergency appointees are generally not subject to the same removal protections and may be removed from the SES at any time. The procedures for removal of noncareer and limited term appointees are largely not addressed in federal statute, and the terms and procedures for their removal are mainly at the discretion of the agency head. In response to concerns about performance and accountability of SES members employed by the Department of Veterans Affairs (VA), Congress recently created special removal requirements that apply to these positions. In 2017, Congress passed the Department of Veterans Affairs Accountability and Whistleblower Protection Act, which amended an existing provision concerning removal procedures for these covered senior executives. Under the 2017 Act, the VA Secretary has discretion to suspend, demote, remove, or take other actions against SES career appointees or other high-level executives if the Secretary determines that the individual's misconduct or performance warrants such action. To address SES job performance issues more expeditiously, SES employees at the VA Department are entitled to abbreviated notice and appeals rights, as compared to the removal procedures in place in other federal agencies.

According to the Office of Personnel Management (OPM), the federal workforce consists of an estimated two million civilian employees. Federal law categorizes these employees into three types of service—the competitive service, the excepted service, and the Senior Executive Service (SES)—that may be distinguished by different selection, compensation, and other standards. Title 5 of the U.S. Code (Title 5) contains most of the standards governing federal employment, and OPM is generally responsible for implementing these requirements. The competitive service largely consists of all civil service positions in the executive branch, other than (1) positions excepted from the competitive service by statute; (2) positions appointed by the President and confirmed by the Senate; and (3) the SES. Traditionally, OPM has administered examinations for entrance into the competitive service. These examinations are meant to be "practical in character" and relate to "matters that fairly test the relative capacity and fitness of the applicants for the appointment sought." Title 5 also authorizes OPM to prescribe rules allowing agencies to hire candidates directly under specified circumstances. The excepted service includes designated civil service positions that are not in the competitive service or the SES and are not subject to competitive examination. OPM maintains authority to exempt a position from the competitive service when it determines that an appointment through competitive examination is not practicable, or the recruitment of students or recent graduates would be better achieved through alternate recruitment and assessment processes. The pay structure for the competitive service and the excepted service is similar. Both services are typically paid in accordance with the General Schedule, a schedule of annual basic pay rates that consists of 15 grades, designated "GS-1" through "GS-15." This fixed pay scale is generally designed to reflect, among other things, equal pay for substantially equal work within a local pay area. Additionally, the competitive service and the excepted service generally have similar notice and appeal rights for adverse personnel actions. For example, before a removal, a suspension for more than 14 days, a reduction in grade or pay, or a furlough of 30 days or less, the agency must provide at least 30 days' advance written notice to the affected employee. The employee must also be given a reasonable time to respond to the notice and provide affidavits and other evidence to support the answer. Some adverse actions may also be appealed to the Merit Systems Protection Board (MSPB or Board), an independent, quasi-judicial agency that reviews and adjudicates specified personnel actions taken against qualifying federal employees. The SES is a corps of some 7,000 high-level government administrators who manage major programs and projects within most federal agencies. In these leadership roles, SES members may serve as a link between top-level political appointees of an agency and career civil servants within the agency. The SES is governed by a regulatory structure separate from the competitive and excepted services. While SES members are primarily career appointees chosen through a merit-based competitive hiring process, others are noncareer, limited term or limited emergency appointees (commonly political appointees) selected by agency leadership. To shield certain SES roles from political influence, some SES positions (career reserved positions) must be filled with career appointees, and Title 5 limits the number of noncareer and limited term appointees that may serve in SES positions. The SES pay structure is distinct from the rest of the civil service. Title 5 specifies that SES members are paid within a particular range based on an executive's individual performance or contribution to agency performance (or both), as measured under a performance appraisal system. In addition, Title 5 articulates special conditions and procedures for removing, suspending, or taking other adverse actions against a member of the SES. For example, career SES appointees who have successfully completed a one-year probationary period may be removed or subject to adverse action only for specified reasons, including misconduct and substandard performance. Career appointees must receive advance written notice of these actions, and an opportunity to appeal the action. In comparison, noncareer, limited term, and limited emergency appointees are generally not subject to the same protections and may be removed from the SES at any time.

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Introduction Political and economic developments in Cuba and U.S. policy toward the island nation, located 90 miles from the United States, have been significant congressional concerns for many years. Especially since the end of the Cold War, Congress has played an active role in shaping U.S. policy toward Cuba, first with the enactment of the Cuban Democracy Act of 1992 (CDA; P.L. 102-484 , Title XVII) and then with the Cuban Liberty and Democratic Solidarity (LIBERTAD) Act of 1996 ( P.L. 104-114 ). Both measures tightened U.S. economic sanctions on Cuba that had first been imposed in the early 1960s; however, both measures also provided road maps for normalization of relations, dependent on significant political and economic changes in Cuba. Congress partially modified its sanctions-based policy toward Cuba when it enacted the Trade Sanctions Reform and Export Enhancement Act of 2000 (TSRA; P.L. 106-387 , Title IX) allowing for U.S. agricultural exports to Cuba. Over the past decade, much of the debate in Congress over U.S. policy has focused on U.S. sanctions. In 2009, Congress took legislative action in an appropriations measure ( P.L. 111-8 ) to ease restrictions on family travel and travel for the marketing of agricultural exports, marking the first congressional action easing Cuba sanctions in almost a decade. The Obama Administration took further action in 2009 by lifting restrictions on family travel and family remittances and in 2011 by further easing restrictions on educational and religious travel and remittances to other than family members. President Obama announced a major shift in U.S. policy toward Cuba in December 2014 that moved away from a sanctions-based policy aimed at isolating Cuba toward a policy of engagement and a normalization of relations. The policy shift led to the restoration of diplomatic relations, the rescission of Cuba's designation as a state sponsor of international terrorism, and the easing of some restrictions on travel and commerce with Cuba. There was mixed reaction in Congress, with some Members of Congress supporting the change and others opposing it. Legislative initiatives in the 114 th Congress in 2015-2016 reflected this policy divide, with some bills introduced that would have further eased U.S. economic sanctions and others that would have blocked the policy shift and introduced new sanctions; ultimately no action was taken on either policy approach. President Trump announced a new policy approach toward Cuba in June 2017 that partially rolled back efforts to normalize relations and imposed new sanctions on Cuba, including restrictions on the permissible category of people-to-people educational travel to Cuba and on transactions with companies controlled by the Cuban military. Again, reaction in the 115 th Congress in 2017-2018 was mixed, with legislative initiatives reflecting the policy divide between those wanting to tighten sanctions and those wanting to ease them. Ultimately the only legislative action taken with regard to sanctions was a provision in the 2018 farm bill ( P.L. 115-334 ) that permits funding for two U.S. agricultural exports promotion programs in Cuba. This marked the first time Congress had eased Cuba sanctions, albeit slightly, in almost a decade. This report examines U.S. policy toward Cuba in the 116 th Congress. It is divided into three major sections analyzing: (1) Cuba's political and economic environment; (2) U.S. policy toward Cuba; and (3) selected issues in U.S.-Cuban relations, including restrictions on travel and trade, democracy and human rights funding for Cuba, U.S. government-sponsored radio and television broadcasting to Cuba (Radio and T Martí), migration issues, antidrug cooperation, property claims, and U.S. fugitives from justice in Cuba. Relevant legislative initiatives in the 116 th Congress are noted throughout the report, and Appendix A lists enacted measures and other bills and resolutions. Appendix B provides links to U.S. government information and reports on Cuba. For more on Cuba from CRS, see the following: CRS In Focus IF10045, Cuba: U.S. Policy Overview , by Mark P. Sullivan; CRS Report R43888, Cuba Sanctions: Legislative Restrictions Limiting the Normalization of Relations , by Dianne E. Rennack and Mark P. Sullivan; CRS Report RL31139, Cuba: U.S. Restrictions on Travel and Remittances , by Mark P. Sullivan; and CRS Report R44137, Naval Station Guantanamo Bay: History and Legal Issues Regarding Its Lease Agreements , by Jennifer K. Elsea and Daniel H. Else. Cuba's Political and Economic Environment Brief Historical Background1 Cuba became an independent nation in 1902. From its discovery by Columbus in 1492 until the Spanish-American War in 1898, Cuba was a Spanish colony. In the 19 th century, the country became a major sugar producer, with slaves from Africa brought in increasing numbers to work the sugar plantations. The drive for independence from Spain grew stronger in the second half of the 19 th century, but independence came about only after the United States entered the conflict, when the USS Maine sank in Havana Harbor after an explosion of undetermined origin. In the aftermath of the Spanish-American War, the United States ruled Cuba for four years until Cuba was granted its independence in 1902. Nevertheless, the United States retained the right to intervene in Cuba to preserve Cuban independence and maintain stability in accordance with the Platt Amendment, which became part of the Cuban Constitution of 1901; the United States established a naval station at Guantanamo Bay, Cuba, in 1903, which continues in operation today. The United States subsequently intervened militarily three times between 1906 and 1921 to restore order, but in 1934, the Platt Amendment was repealed. Cuba's political system as an independent nation often was dominated by authoritarian figures. Gerardo Machado (1925-1933), who served two terms as president, became increasingly dictatorial until he was ousted by the military. A short-lived reformist government gave way to a series of governments that were dominated behind the scenes by military leader Fulgencio Batista until he was elected president in 1940. Batista was voted out of office in 1944 and was followed by two successive presidents in a democratic era that ultimately became characterized by corruption and increasing political violence. Batista seized power in a bloodless coup in 1952, and his rule progressed into a brutal dictatorship that fueled popular unrest and set the stage for Fidel Castro's rise to power. Castro led an unsuccessful attack on military barracks in Santiago, Cuba, on July 26, 1953. After a brief jail term, he went into exile in Mexico, where he formed the 26 th of July Movement. Castro returned to Cuba in 1956 with the goal of overthrowing the Batista dictatorship. His revolutionary movement was based in the Sierra Maestra Mountains in eastern Cuba, and it joined with other resistance groups seeking Batista's ouster. Batista ultimately fled the country on January 1, 1959, leading to 47 years of rule under Fidel Castro until he stepped down from power provisionally in 2006 because of poor health and ceded power to his brother Raúl Castro. Although Fidel Castro had promised a return to democratic constitutional rule when he first took power, he instead moved to consolidate his rule, repress dissent, and imprison or execute thousands of opponents. Under the new revolutionary government, Castro's supporters gradually displaced members of less radical groups. Castro moved toward close relations with the Soviet Union, and relations with the United States deteriorated rapidly as the Cuban government expropriated U.S. properties. In April 1961, Castro declared that the Cuban revolution was socialist, and in December 1961, he proclaimed himself to be a Marxist-Leninist. Over the next 30 years, Cuba was a close ally of the Soviet Union and depended on it for significant assistance until the dissolution of the Soviet Union in 1991. Castro ruled by decree until 1976 when he became the country's president (technically, president of the Council of State) under a new constitution that set forth the Cuban Communist Party (PCC), which Castro headed, as the leading force in state and society. When Fidel stepped down in July 2006 because of poor health, his brother Raúl, Cuba's long-time defense minister and first vice president, became provisional president. In 2008, after Fidel announced that he would not be returning to government, Cuba's National Assembly chose Raúl as president and he went on to serve two five-year terms until April 2018. More than 10 years after stepping down from power, Fidel Castro died in November 2016 at 90 years of age. While out of power, Fidel continued to author essays published in Cuban media that cast a shadow on Raúl Castro's rule, and many observers believe that the former leader encouraged so-called hard-liners in the party and government bureaucracy to slow the pace of economic reforms advanced by Raúl. Raúl Castro's government (2006-2018) stands out for two significant policy developments. First the government implemented a series of gradual market-oriented economic policy changes including authorization for limited private sector activity, the legalization of property rights, and an opening to further foreign investment. Critics, however, maintain that the government did not go far enough toward enacting deeper reforms needed to stimulate the Cuban economy and foster sustainable economic growth. The second notable policy development was the rapprochement in bilateral relations with the Obama Administration; this rapprochement led to the reestablishment of diplomatic relations and government-to-government engagement and cooperation on a wide range of issues. Political Conditions Current President Miguel Díaz-Canel Bermúdez succeeded Raúl Castro in April 2018 after Castro completed his second five-year term. Cuba does not have direct elections for president; instead, Cuba's legislature, the National Assembly of People's Power, selected Díaz-Canel as president of the country's 31-member Council of State, which, pursuant to Cuba's constitution (Article 74), makes Díaz-Canel Cuba's head of state and government. Most observers saw Díaz-Canel, who had been serving as first vice president since 2013, as the "heir apparent," although Raúl is continuing in his position as first secretary of the PCC until 2021. Díaz-Canel, who turned 58 a day after becoming president, is an engineer by training. His appointment as first vice president in 2013 made him the official constitutional successor in case Castro died or could not fulfill his duties. His appointment also represented a move toward bringing about generational change in Cuba's political system; Raúl Castro was 86 years old when he stepped down as president. Díaz-Canel became a member of the Politburo in 2003 (the PCC's highest decisionmaking body), held top PCC positions in two provinces, and was higher education minister from 2009 until 2012, when he was tapped to become a vice president on the Council of State. Cuba's 2018 political transition is notable because it is the first time since the 1959 Cuban revolution that a Castro is not in charge of the government. A majority of Cubans today have only lived under the rule of the Castros. Raúl's departure can be viewed as a culmination of the generational leadership change that began several years ago in the government's lower ranks. It is also the first time that Cuba's head of government is not leader of the PCC. Raúl Castro, however, has indicated that he expects Díaz-Canel to take over as first secretary of the PCC when his term as party leader ends. Another element of the transition is the composition of the 31-member Council of State. The National Assembly selected 72-year-old Salvador Valdés Mesa as first vice president, not from the younger generation, but also not from the historical revolutionary period. Valdés Mesa, who already had been serving as one of five vice presidents and is on the PCC's Politburo, is the first Afro-Cuban to hold such a high government position. Of the Council of State's members, 45% are new, 48% are women, and 45% are Afro-Cuban or mixed race. Several older revolutionary-era leaders remained on the Council, including Ramiro Valdés, 86 years old, who continues as a vice president. Nevertheless, the average age of Council of State members is 54, with 77% born after the 1959 Cuban revolution. President Díaz-Canel faces two enormous challenges—reforming the economy and responding to citizens' desires for greater freedom. As noted above, Raúl Castro had managed the opening of Cuba's economy to the world, with diversified trade relations, increased foreign investment, and a growing private sector, but the slow pace of economic reform stunted economic growth and disheartened Cubans yearning for more economic freedom. The liberalization of some individual freedoms that occurred under Raúl Castro (such as legalization of cell phones and personal computers, expansion of internet connectivity, and the elimination of an exit permit to travel abroad) has increased Cubans' appetite for access to information and the desire for more social and political expression. Most observers did not anticipate immediate major policy changes under Díaz-Canel, and after the new president marked his first 100 days in office in July 2018, observers maintained that little had changed politically or economically. In December 2018, however, President Díaz-Canel made several decisions that appeared to demonstrate his independence from the previous government and indicate that he was more responsive to public concerns and criticisms. Díaz-Canel eased forthcoming harsh regulations that were about to be implemented on the private sector; many observers believed these regulations would have shrunk the sector (see " Economic Conditions " section below). His government also backed away from full implementation of controversial Decree 349 that had been issued in July 2018 to regulate artistic expression. After the unpopular decree triggered a flood of criticism from Cuba's artistic community, the government announced that the measure would be implemented gradually and applied with consensus. It remains to be seen, however, whether the government's action will satisfy those working in Cuba's vibrant arts community. In a third action, the government eliminated a proposed constitutional change that could have paved the way for same-sex marriage after strong public criticisms of the provision (see discussion below on constitutional changes). Looking ahead, another important question may be the extent of influence that Castro and other revolutionary figures might have on current government policy. As noted, Raúl will head the PCC until 2021. The former president also headed a commission drafting proposed changes to Cuba's 1976 constitution (see discussion below). In July 2018, President Díaz-Canel named his Council of Ministers or Cabinet, but a majority of ministers were holdovers from the Castro government, including those occupying key ministries such as defense, interior, and foreign relations; 9 of 26 ministers were new, as well as 2 vice presidents. In January 2019, however, Díaz-Canel replaced the ministers of finance and transportation that had been holdovers from the previous government. Constitutional Changes. On February 24, 2019, almost 87% of Cubans approved a new constitution in a national referendum. Originally drafted by a commission headed by Raúl Castro and approved by the National Assembly in July 2018, the proposed overhaul of the 1976 constitution was subject to public debate in thousands of workplaces and community meetings into November. After considering public suggestions, the National Assembly made additional changes to the draft constitution, and the National Assembly approved a new version in December 2018. One of the more controversial changes made by the commission was the elimination of a provision that would have redefined matrimony as gender neutral compared to the current constitution, which refers to marriage as the union between a man and a woman. Cuba's evangelical churches orchestrated a campaign against the provision, and Cuban Catholic bishops issued a pastoral message against it. The commission chose to eliminate the proposed provision altogether, with the proposed constitution remaining silent on defining matrimony, and maintained that the issue would be addressed in future legislation within two years. Among the provisions of the new constitution are the addition of an appointed prime minster as head of government to oversee government operations—to be proposed by the President and designated by the National Assembly (Articles 140 and 141); an age limit of 60 to become president (Article 127) with a limit of two five-year terms (Article 126); the right to own private property (Article 22); and the acknowledgement of foreign investment as an important element of the country's economic development (Article 28). The new constitution still ensures the state's control over the economy and the role of centralized planning (Article 19), and the Communist Party still would be the only recognized party (Article 5). Human Rights The Cuban government has a poor record on human rights, with the government sharply restricting freedoms of expression, association, assembly, movement, and other basic rights since the early years of the Cuban revolution. The government has continued to harass members of human rights and other dissident organizations. These organizations include the Ladies in White ( Las Damas de Blanco ), currently led by Berta Soler, formed in 2003 by the female relatives of the "group of 75" dissidents arrested that year. Another is the Patriotic Union of Cuba (UNPACU), led by José Daniel Ferrer, established in 2011 by several dissident groups with the goal of working peacefully for civil liberties and human rights. In August 2018, the Cuban government imprisoned Ferrer arbitrarily for 11 days with no access to his family, according to Amnesty International. In past years, several political prisoners conducted hunger strikes, including two who died, Orlando Zapata Tamayo in 2010 and Wilman Villar Mendoza in 2012. In 2017, Hamel Santiago Maz Hernández, a member of UNPACU, died in prison; he had been imprisoned in 2016 after being accused of descato (lack of respect for the government). Although the human rights situation in Cuba remains poor, the country has made some advances in recent years. In 2008, Cuba lifted a ban on Cubans staying in hotels that previously had been restricted to foreign tourists in a policy that had been pejoratively referred to as "tourist apartheid." In recent years, as the government has enacted limited economic reforms, it has been much more open to debate on economic issues. In 2013, Cuba eliminated its long-standing policy of requiring an exit permit and letter of invitation for Cubans to travel abroad. The change has allowed prominent dissidents and human rights activists to travel abroad and return to Cuba. In recent years, the Cuban government has moved to expand internet connectivity through "hotspots" first begun in 2015 and through the launching of internet capability on cellphones in late 2018. As noted below, short-term detentions for political reasons declined significantly in 2017 and 2018, although there were still almost 2,900 such detentions in 2018. Political Prisoners. In October 2018, the State Department's U.S. Mission to the United Nations launched a campaign to call attention to the plight of Cuba's "estimated 130 political prisoners." Secretary of State Mike Pompeo wrote an open letter to Cuban Foreign Minister Bruno Rodriguez in December 2018, asking for a substantive explanation for the continued detention of eight specific political prisoners and an explanation of the charges and evidence against other individuals held as political prisoners. In January 2019, the Havana-based Cuban Commission for Human Rights and National Reconciliation (CCDHRN) estimated that Cuba held some 130-140 political prisoners. In June 2018, the CCDHRN made public a list with 120 who are prisoners for political reasons, consisting of 96 opponents or those disaffected toward the regime (more than 40 are members of UNPACU) and 24 accused of employing or planning some form of force or violence. According to the State Department's human rights report on Cuba covering 2018, issued in March 2019, the government refused international humanitarian organizations and the United Nations access to its prisons and detention centers, and closely monitored and often harassed domestic human rights organizations. The report noted the lack of governmental transparency, along with its systematic violations of due process rights, which masked the nature of criminal charges and prosecutions and allowed the government to prosecute peaceful human rights activists for criminal violations or "pre-criminal dangerousness." Political activist Dr. Eduardo Cardet, designated by Amnesty International (AI) as a "prisoner of conscience," has been imprisoned since November 2016 for publicly criticizing Fidel Castro and was sentenced to three years in prison. AI maintains that Cardet, a leader in the dissident Christian Liberation Movement, was sent to prison solely for peacefully exercising his right to freedom of expression and has called for his immediate release. In 2018, the Cuban government released two political prisoners after hunger strikes: in July, AI-designated prisoner of conscience Dr. Ariel Ruiz Urquiola, who had been sentenced to a year in prison in May 2018 for the crime of disrespecting authority ( desacato ); and in October, UNPACU activist Tomás Núñez Magdariaga who had been sentenced to a year in jail for allegedly making threats to a security agent. Short- T erm Detentions. Short-term detentions for political reasons increased significantly from 2010 through 2016, a reflection of the government's change of tactics in repressing dissent away from long-term imprisonment. The CCDHRN reports that the number of such detentions grew annually from at least 2,074 in 2010 to at least 8,899 in 2014. The CCDHRN reported a slight decrease to 8,616 short-term detentions in 2015, but this figure increased again to at least 9,940 detentions for political reasons in 2016, the highest level recorded by the human rights organization. Since 2017, however, the CCDHRN has reported a significant decline in short-term detentions. In 2017, the number of short-term detentions fell to 5,155, almost half the number detained in 2016 and the lowest level since 2011. The decline in short-term detentions continued in 2018, with 2,873 reported short-term detentions, almost a 45% decline from 2017 and the lowest level since 2010. Bloggers, Civil Society Groups , and Independent Media . Numerous independent Cuban blogs have been established over the past dozen years. Cuban blogger Yoani Sánchez has received considerable international attention since 2007 for her website, Generación Y , which includes commentary critical of the Cuban government. In May 2014, Sánchez launched an independent digital newspaper in Cuba, 14 y medio , available on the internet, but distributed through a variety of methods in Cuba, including CDs, USB flash drives, and DVDs. Estado de SATS , a forum founded in 2010 by human rights activist Antonio Rodiles, has had the goal of encouraging open debate on cultural, social, and political issues. The group has hosted numerous events and human rights activities over the years, but it and its founder have also been the target of government harassment. Other notable online forums and independent or alternative media that have developed include Cuba Posible (founded by two former editors of the Catholic publication Espacio Laical ) , Periodismo del Barrio (focusing especially on environmental issues), El Toque , O nCuba (a Miami-based digital magazine with a news bureau in Havana), and Tremenda Nota (focusing on the LGBT community). Trafficking in Persons. The State Department released its 2018 Trafficking in Persons (TIP) Report in June 2018, and for the fourth consecutive year Cuba was placed on the Tier 2 Watch List (in prior years, Cuba had Tier 3 status). Tier 3 status refers to countries whose governments do not fully comply with the minimum standards for combatting trafficking and are not making significant efforts to do so. In contrast, Tier 2 Watch List status refers to countries whose governments, despite making significant efforts, do not fully comply with the minimum standards and still have some specific problems (e.g., an increasing number of victims or failure to provide evidence of increasing antitrafficking efforts) or whose governments have made commitments to take additional antitrafficking steps over the next year. Normally, a country is automatically downgraded to Tier 3 status if it is on the Tier 2 Watch List for three consecutive years unless the Secretary of State authorizes a waiver. The State Department issued such a waiver for Cuba in 2017 because the government had devoted sufficient resources to a written plan that, if implemented, would constitute significant efforts to meet the minimum standards for the elimination of trafficking. In the 2018 TIP report, the State Department again issued a waiver for Cuba allowing it to remain on the Tier 2 Watch List for the fourth consecutive year. Such a waiver, however, is only permitted for two years. After the third year, the country must either go up to Tier 2 or down to Tier 3. In its 2018 TIP report, the State Department noted the Cuban government's significant efforts to prosecute and convict more traffickers, create a directorate to provide specialized attention to child victims of crime and violence, including trafficking, and publish its antitrafficking plan for 2017-2020. The State Department also noted, however, that the Cuban government did not demonstrate increasing efforts compared to the previous reporting period. It maintained that the government did not criminalize most forms of forced labor or sex trafficking for children ages 16 or 17, and did not report providing specialized services to identified victims. The State Department also made several recommendations for Cuba to improve its antitrafficking efforts, including the enactment of a comprehensive antitrafficking law that prohibits and sufficiently punishes all forms of trafficking. (Also see discussions of Cuba's medical missions, which some observer consider forced labor, in the " Foreign Relations " and " Migration Issues " sections below.) Engagement between U.S. and Cuban officials on antitrafficking issues has increased in recent years. In January 2017, U.S. officials met with Cuban counterparts in their fourth such exchange to discuss bilateral efforts to address human trafficking. Subsequently, in January 2017, the United States and Cuba signed a broad memorandum of understanding on law enforcement cooperation in which the two countries stated their intention to collaborate on the prevention, interdiction, monitoring, and prosecution of transnational or serious crimes, including trafficking in persons. In February 2018, the State Department and the Department of Homeland Security hosted meetings in Washington, DC, with Cuban officials on efforts to combat trafficking in persons. Economic Conditions Cuba's economy continues to be largely state-controlled, with the government owning most means of production and employing a majority of the workforce. Key sectors of the economy that generate foreign exchange include the export of professional services (largely medical personnel to Venezuela); tourism, which has grown significantly since the mid-1990s, with an estimated 4.75 million tourists visiting Cuba in 2018; nickel mining, with the Canadian mining company Sherritt International involved in a joint investment project; and a biotechnology and pharmaceutical sector that supplies the domestic health care system and has fostered a significant export industry. Remittances from relatives living abroad, especially from the United States, also have become an important source of hard currency, amounting to some $3.5 billion in 2017. The once-dominant sugar industry has declined significantly over the past 20 years. Because of drought, damage from Hurricane Irma, and subsequent months of heavy rains, the 2017-2018 sugar harvest dropped by almost 44% to just over 1 million metric tons (MT), compared to 1.8 million MT the previous year. The outlook for the 2018-2019 harvest is 1.5 million MT, almost a 50% improvement; for comparison, in 1990, Cuba produced 8.4 million MT of sugar. For almost 20 years, Cuba has depended heavily on Venezuela for its oil needs. In 2000, the two countries signed a preferential oil agreement (essentially an oil-for-medical-personnel barter arrangement) that provided Cuba with some 90,000-100,000 barrels of oil per day, about two-thirds of its consumption. Cuba's goal of becoming a net oil exporter with the development of its offshore deepwater oil reserves was set back in 2012, when the drilling of three exploratory oil wells was unsuccessful. This setback, combined with Venezuela's economic difficulties, has raised Cuban concerns about the security of the support received from Venezuela. Since 2015, Venezuela has cut the amount of oil that it sends to Cuba, and Cuba has increasingly turned to other suppliers for its oil needs, such as Algeria and Russia. Cuba now reportedly receives between 40,000-50,000 barrels of oil per day from Venezuela, about one-third of its consumption. The government of Raúl Castro implemented a number of economic policy changes, but economists were generally disappointed that more far-reaching reforms were not undertaken. At the PCC's seventh party congress, held in April 2016, Raúl Castro reasserted that Cuba would move forward with updating its economic model "without haste, but without pause." A number of Cuba's economists have pressed the government to enact more far-reaching reforms and embrace competition for key parts of the economy and state-run enterprises. These economists criticize the government's continued reliance on central planning and its monopoly on foreign trade. Economic Growth. The Cuban government reports that the economy grew 1.8% in 2017 and an estimated 1.2% in 2018. President Díaz-Canel has said that austerity measures begun in 2016 will continue in 2019. The economy has been hurt by reduced support from Venezuela over the past several years and the unexpected December 2018 ending of Cuba's program sending medical professionals to Brazil, which had provided Cuba with some $400 million a year. The Economist Intelligence Unit (EIU) predicts economic growth will slow to 0.7% in 2019 and 0.3% in 2020 because of reduced aid and oil shipments from Venezuela. Private Sector. The Cuban government employs a majority of the labor force, but the government has been allowing more private-sector activities. In 2010, the government opened up a wide range of activities for self-employment and small businesses to almost 200 categories of work. The number of self-employed or cuentapropistas rose from 144,000 in 2009 to about 591,000 in May 2018, but declined to almost 581,000 at the end of 2018. Analysts contend that the government needs to do more to aid the development of the private sector, including an expansion of authorized activities to include more white-collar occupations and state support for credit to support small businesses. Beginning in mid-2017, the government took several steps that restricted private-sector development. It temporarily stopped issuing new licenses for 27 private-sector occupations, including for private restaurants and for renting private residences, closed a fast-growing cooperative that had provided accounting and business consultancy services, and put restrictions on construction cooperatives. The government maintains that it took the actions to "perfect" the functioning of the private sector and curb illicit activities, such as the sale of stolen state property, tax evasion, and labor violations. In July 2018, the government released regulations that were to take effect in December 2018 that would have limited an individual to one business license, reduced and consolidated the permissible 200 categories of work to 123 categories, and limited the size of private restaurants. The aims of the new regulations were to increase taxation oversight of the private sector and to control the concentration of wealth and rising inequality, but many observers believed the regulations were aimed at stifling private-sector growth because of the government's concerns regarding that sector's independence from the government. Two days before the regulations were to go into effect, President Díaz-Canel did an about-face and announced that some aspects of the regulations viewed as especially egregious by the private sector would be eliminated or eased. Most significantly, individuals would not be limited to one licensed activity; restaurants, bars, and cafeterias would not be subject to a limit of 50 seats; and requirements for maintaining a minimum balance in bank accounts would be reduced from the equivalent of three months of tax payments to two months and would apply to just six of the 123 categories of employment. Analysts generally view the backtracking as an indication that President Díaz-Canel is willing to make policy changes in response to public opinion and as a sign that the government does not want to shrink the private sector. Foreign Investment. The Cuban government adopted a new foreign investment law in 2014 with the goal of attracting increased levels of foreign capital to the country. The law cut taxes on profits by half, to 15%, and exempts companies from paying taxes for the first eight years of operation. It also eliminated employment or labor taxes, although companies still must hire labor through state-run companies, with agreed wages. A fast-track procedure for small projects reportedly streamlines the approval process, and the government agreed to improve the transparency and time of the approval process for larger investments. A Mariel Special Development Zone (ZED Mariel) was established in 2014 near the port of Mariel to attract foreign investment. To date, ZED Mariel has approved some 43 investment projects, which are at various stages of development. In November 2017, Cuba approved a project for Rimco (the exclusive dealer for Caterpillar in Puerto Rico, the U.S. Virgin Islands, and the Eastern Caribbean) to become the first U.S. company to be located in the ZED Mariel. Rimco plans to set up a warehouse and distribution center to distribute Caterpillar equipment. In September 2018, the Roswell Park Comprehensive Cancer Center of Buffalo, NY, announced it was entering into a joint venture with Cuba's Center for Molecular Immunology focused on the development of cancer therapies; the joint venture will be located in the ZED Mariel. According to Cuba's Minister of Foreign Trade and Investment Rodrigo Malmierca, Cuba has signed more than 200 investment projects valued at $5.5 billion since it made changes to its investment law in 2014, with $1.5 billion of that in 2018. The actual amount invested reportedly is much less, estimated at $500 million annually. In November 2018, the Cuban government updated its wish list for foreign investment, which includes 525 projects representing potential investment of $11.6 billion in such high-priority areas as tourism, agriculture and food production, oil, the industrial sector, and biotechnology. Foreign Relations During the Cold War, Cuba had extensive relations with, and support from, the Soviet Union, which provided billions of dollars in annual subsidies to sustain the Cuban economy. This subsidy system helped to fund an activist foreign policy and support for guerrilla movements and revolutionary governments in Latin America and Africa. With an end to the Cold War, the dissolution of the Soviet Union, and the loss of Soviet financial support, Cuba was forced to abandon its revolutionary activities abroad. As its economy reeled from the loss of Soviet support, Cuba was forced to open up its economy and engage in economic relations with countries worldwide. In ensuing years, Cuba diversified its trading partners, although Venezuela under populist leftist President Hugo Chávez (1999-2013) became one of Cuba's most important partners, leading to Cuba's dependence on Venezuela for oil imports. In 2017, the leading sources of Cuba's imports in terms of value were Venezuela (18.1%, down from 40% in 2014), China (16.3%), and Spain (10.8%); the leading destinations of Cuban exports were Canada (19.4%), Venezuela (15.6%), Spain (8.6%), and China (5.2%). Russia. Relations with Russia, which had diminished significantly in the aftermath of the Cold War, have strengthened somewhat over the past several years. In 2014, Russia agreed to write off 90% of Cuba's $32 billion Soviet-era debt, with some $3.5 billion to be paid back by Cuba over a 10-year period that would fund Russian investment projects in Cuba. Trade relations between Russia and Cuba have not been significant, although Russian exports to Cuba have grown over the past three years, amounting to almost $373 million in 2018, led by motor vehicles (and parts) and oil. Russian energy companies Zarubezhneft and Rosneft are currently involved in oil exploration in Cuba, and in 2017, Rosneft began shipping oil to Cuba amid Cuba's efforts to diversify its foreign oil sources because of Venezuela's diminished capacity. Russian officials publicly welcomed the improvement in U.S.-Cuban relations under the Obama Administration, although some analysts viewed the change in U.S. policy as a setback for Russian overtures in the region. As U.S.-Cuban normalization talks were beginning in Havana in January 2015, a Russian intelligence ship docked in Havana (the ship also docked in Havana in 2014, 2017, and 2018). In December 2016, Russia and Cuba signed a bilateral cooperation agreement for Russia's support to help Cuba modernize its defense sector until 2020. Some reports indicate that as U.S. relations with Cuba have deteriorated under the Trump Administration, Russia has been attempting to increase its ties, including high-level meetings between government officials and increased economic, military, and cultural engagement. For Cuba, a deepening of relations with Russia could help economically, especially regarding oil, and also could serve as a counterbalance to the partial rollback of U.S. engagement policy by the Trump Administration. However, President Díaz-Canel's three-day trip to Russia in November 2018 reportedly did not yield significant results. Press reports indicate that Cuba received a $50 million credit line for purchases of Russian military weapons and spare parts and contracts to modernize three power plants and a metal processing plant and upgrade Cuba's railway system. There has been concern in Congress about the role of Russia in Latin America, including in Cuba. The conference report to the John S. McCain National Defense Authorization Act for FY2019, P.L. 115-232 ( H.R. 5515 ) required the Defense Intelligence Agency to submit a report to Congress on security cooperation between Russia and Cuba (as well as between Russia and Nicaragua and Venezuela). Among the areas of cooperation noted in the report, which was submitted to Congress in February 2019, was a Russian-Cuban announcement in 2017 of a plan to construct a GLONASS satellite navigation station in Cuba, and a 2013 Russia-Cuba agreement permitting Russian military vessels to refuel and resupply in Cuban ports. According to the report, the Russian Navy currently uses Cuban ports for maintenance, minor repairs, and refueling, and may seek to establish a permanent naval logistics facility in the country. China. During the Cold War, Cuba and China did not have close relations because of Sino-Soviet tensions, but bilateral relations with China have grown closer over the past 15 years, resulting in a notable increase in trade. Since 2004, Chinese leaders have made a series of visits to Cuba and Cuban officials in turn have visited China, including a November 2018 visit by President Díaz-Canel. During the visit, Chinese President Xi Jinping called for a long-term plan to promote the development of China-Cuba ties. He said that China would welcome Cuba's participation in the Belt and Road Initiative, which is focused on infrastructure development around the world. President Xi called on both countries to enhance cooperation on trade, energy, agriculture, tourism, and biopharmaceutical manufacturing. While Cuba's relationship with China undoubtedly has an ideological component since both are the among the world's remaining communist regimes, economic linkages and cooperation appear to be the most significant component of bilateral relations. According to Cuban trade statistics, total Cuba-China trade in 2017 was valued at almost $2 billion (accounting for 16.1% of Cuba's trade worldwide), with Cuba exporting $364 million to China and importing almost $1.7 billion. This was a 21% drop from 2016, when total Cuba-China trade almost reached $2.6 billion, and an almost 30% drop in Cuba's imports from China compared to 2016. The fall in imports from China reflects Cuba's difficult economic situation as Venezuelan support has diminished. In response to a cash crunch, the Cuban government has cut imports and reduced the use of fuel and electricity. China reportedly had been reluctant to invest in Cuba because of the uninviting business environment, but recently that has begun to change. In 2015, the Chinese cellphone company Huawei reached an agreement with the Cuban telecommunications company ETECSA to set up Wi-Fi hotspots at public locations, and is helping to wire homes. In 2016, the Chinese company Haier set up a plant assembling laptops and tablets in Cuba. Over the past two years, Chinese financing has been supporting the modernization of a port in Santiago. Other planned Chinese investment projects reportedly include pharmaceuticals as well as the tourism sector involving two hotels and a golf course. European Union. After two years of talks, the European Union (EU) and Cuba reached a Political Dialogue and Cooperation Agreement in 2016 covering political, trade, and development issues. The agreement was submitted to the European Parliament, which overwhelmingly endorsed the agreement in July 2017, welcoming it as a framework for relations and emphasizing the importance of the human rights dialogue between the EU and Cuba. Although the agreement will enter into force in full after it has been ratified in all EU member states, the provisional application of the agreement began in November 2017. The new cooperation agreement replaces the EU's 1996 Common Position on Cuba, which stated that the objective of EU relations with Cuba included encouraging "a process of transition to pluralist democracy and respect for human rights and fundamental freedoms." The position also had stipulated that full EU economic cooperation with Cuba would depend upon improvements in human rights and political freedom. Nevertheless, the new agreement states that a human rights dialogue will be established within the framework of the overall political dialogue and has numerous provisions related to democracy, human rights, and good governance. In October 2018, the EU and Cuba held their first human rights dialogue under the agreement, with the meeting addressing issues related to civil, political, economic, social and cultural rights, and multilateral cooperation. Venezuela . For more than 15 years, Venezuela has been a significant source of support for Cuba. Dating back to 2000 under populist President Hugo Chávez, Venezuela began providing subsidized oil and investment to Cuba. For its part, Cuba has sent thousands of professional personnel to Venezuela. Estimates of the number of Cuban personnel in Venezuela vary, but a 2014 Brookings study estimated that there were some 40,000 Cuban professionals in Venezuela, with 75% of those being healthcare workers. The roughly 30,000 healthcare personnel included doctors and nurses, while the balance of Cuban personnel in Venezuela reportedly included teachers, sports instructors, military advisers, and intelligence operatives. According to the Brookings study, various sources estimate that the number of Cuban military and intelligence advisers in Venezuela ranged from hundreds to thousands, coordinated by Cuba's military attaché in Venezuela. Some Cuban medical personnel in Venezuela allege that their services were used to secure votes for the Maduro regime. The extent to which the level of Cuban personnel in Venezuela has declined because of the drop in Venezuelan oil exports to Cuba and Venezuela's deepening economic crisis is uncertain. Since the death of Chávez in 2013, Cuba has been concerned about the future of Venezuelan financial support. Cuba's concerns have intensified since 2014 as Venezuela's mounting economic and political challenges have grown under the authoritarian regime of President Nicolás Maduro. As noted above, oil imports from Venezuela have declined, leading to Cuba's imposition of austerity measures and sluggish economic growth. Brazil . For many years, Cuba and Brazil had friendly relations. Brazil helped finance development of the port of Mariel, west of Havana, from 2009 to 2014, although beginning in 2018, Cuba has missed payments to Brazil's development bank on loans for the project. In 2013, Cuba began deploying thousands of doctors to rural Brazil in a program known as Mais Médicos , with Cuba earning hard currency for supplying the medical personnel. Relations have taken a turn for the worse under new right-wing populist Brazilian President Jair Bolsonaro, inaugurated in January 2019. Even before his inauguration, Bolsonaro espoused a more confrontational policy approach toward Cuba by warning that he may break diplomatic relations with Cuba and abolish the medical assistance program. Bolsonaro strongly criticized the medical program, maintaining that Cuban doctors should be able to receive 100% of the money Brazil pays Cuba for them (instead of the 25% they receive) and should be able to bring their families with them to Brazil. Cuba responded by ending the program and bringing its more than 8,000 medical personnel home by late December 2018. Although Bolsonaro and other critics have labeled the medical workers as "slave labor," others contend that the Cuban medical personnel understand the conditions they will be working in and sign contracts for the work. Cuba has a long history of providing medical personnel overseas. International and Regional Organizations. Cuba is an active participant in international forums, including the United Nations (U.N.) and has received support over the years from the United Nations Development Programme and the United Nations Educational, Scientific, and Cultural Organization, both of which have offices in Havana. Cuba is also a member of the U.N. Economic Commission for Latin America and the Caribbean (ECLAC, also known by its Spanish acronym, CEPAL), one of the five regional commissions of the U.N., and hosted ECLAC's 37 th session in May 2018. U.N. Secretary-General António Guterres attended the opening of the conference, and ECLAC's Executive Secretary reaffirmed the organization's commitment to help Cuba in its efforts toward achieving sustainable development. Since 1991, the U.N. General Assembly (UNGA) has approved a resolution annually criticizing the U.S. embargo and urging the United States to lift it. In 2016, for the first time, the United States abstained instead of voting against the resolution, but in 2017, the United States returned to opposing the resolution. On November 1, 2018, the UNGA again approved the resolution by a vote of 189-2, with Israel again joining the United States in opposing it. The United States also proposed eight amendments to the 2018 resolution criticizing Cuba's human rights record, but the amendments were defeated by wide margins. Among other international organizations, Cuba was a founding member of the World Trade Organization, but it is not a member of the International Monetary Fund, the World Bank, or the Inter-American Development Bank. Cuba is a member of the Community of Latin American and Caribbean States (CELAC), officially established in December 2011 to boost regional cooperation, but without the participation of the United States or Canada. Cuba was excluded from participation in the Organization of American States (OAS) in 1962 because of its identification with Marxism-Leninism. In 2009, however, the OAS overturned that policy in a move that eventually could lead to Cuba's reentry into the regional organization in accordance with the practices, purposes, and principles of the OAS. Although the Cuban government welcomed the OAS vote to overturn the 1962 resolution suspending Cuba's OAS participation, it asserted that it would not return to the OAS. U.S. Policy Toward Cuba Background on U.S.-Cuban Relations69 In the early 1960s, U.S.-Cuban relations deteriorated sharply when Fidel Castro began to build a repressive communist dictatorship and moved his country toward close relations with the Soviet Union. The often tense and hostile nature of the U.S.-Cuban relationship is illustrated by such events and actions as U.S. covert operations to overthrow the Castro government culminating in the ill-fated April 1961 Bay of Pigs invasion; the October 1962 missile crisis, in which the United States confronted the Soviet Union over its attempt to place offensive nuclear missiles in Cuba; Cuban support for guerrilla insurgencies and military support for revolutionary governments in Africa and the Western Hemisphere; the 1980 exodus of around 125,000 Cubans to the United States in the so-called Mariel boatlift; the 1994 exodus of more than 30,000 Cubans who were interdicted and housed at U.S. facilities in Guantanamo Bay, Cuba, and Panama; and the 1996 shootdown by Cuban fighter jets of two U.S. civilian planes operated by the Cuban-American group Brothers to the Rescue, which resulted in the deaths of four U.S. crew members. Beginning in the early 1960s, U.S. policy toward Cuba consisted largely of seeking to isolate the island nation through comprehensive economic sanctions, including an embargo on trade and financial transactions. President Kennedy proclaimed an embargo on trade between the United States and Cuba in February 1962, citing Section 620(a) of the Foreign Assistance Act of 1961 (FAA), which authorizes the President "to establish and maintain a total embargo upon all trade between the United States and Cuba." At the same time, the Treasury Department issued the Cuban Import Regulations to deny the importation into the United States of all goods imported from or through Cuba. The authority for the embargo was later expanded in March 1962 to include the Trading with the Enemy Act (TWEA). In July 1963, the Treasury Department revoked the Cuban Import Regulations and replaced them with the more comprehensive Cuban Assets Control Regulations (CACR)—31 C.F.R. Part 515—under the authority of TWEA and Section 620(a) of the FAA. The CACR, which include a prohibition on most financial transactions with Cuba and a freeze of Cuban government assets in the United States, remain the main body of Cuba embargo regulations and have been amended many times over the years to reflect changes in policy. They are administered by the Treasury Department's Office of Foreign Assets Control (OFAC) and prohibit financial transactions as well as trade transactions with Cuba. The CACR also require that all exports to Cuba be licensed or otherwise authorized by the Department of Commerce, Bureau of Industry and Security (BIS), under the provisions of the Export Administration Act of 1979, as amended ( P.L. 96-72 ; 50 U.S.C. Appendix 2405(j)). The Export Administration Regulations (EAR) are found at 15 C.F.R. Sections 730-774. Congress subsequently strengthened sanctions on Cuba with enactment of the Cuban Democracy Act of 1992 (CDA; P.L. 102-484 , Title XVII), the Cuban Liberty and Democratic Solidarity (LIBERTAD) Act of 1996 ( P.L. 104-114 ), and the Trade Sanctions Reform and Export Enhancement Act of 2000 (TSRA; P.L. 106-387 , Title IX). Among its provisions, the CDA prohibits U.S. foreign subsidiaries from engaging in trade with Cuba and prohibits entry into the United States for any seaborne vessel to load or unload freight if it has been involved in trade with Cuba within the previous 180 days unless licensed by the Treasury Department. The LIBERTAD Act, enacted in the aftermath of Cuba's shooting down two U.S. civilian planes in February 1996, combines a variety of measures to increase pressure on Cuba and provides for a plan to assist Cuba once it begins the transition to democracy. Most significantly, the act codified the Cuban embargo as permanent law, including all restrictions imposed by the executive branch under the CACR. This provision is noteworthy because of its long-lasting effect on U.S. policy options toward Cuba. The executive branch is prevented from lifting the economic embargo without congressional concurrence through legislation until certain democratic conditions set forth in the law are met, although the President retains broad authority to amend the regulations therein. Another significant sanction in Title III of the law holds any person or government that traffics in property confiscated by the Cuban government liable for monetary damages in U.S. federal court. Until recently, all Administrations, acting under provisions of the law, had suspended the implementation of Title III at six-month intervals, but in early March, the Trump Administration provided a limited opening for the right to file lawsuits. (For additional information, see section on " Property Claims and Title III of the LIBERTAD Act " below.) TSRA authorizes U.S. commercial agricultural exports to Cuba, but it also includes prohibitions on U.S. assistance and private financing and requires "payment of cash in advance" or third-country financing for the exports. The act also prohibits tourist travel to Cuba. In addition to these acts, Congress enacted numerous other provisions of law over the years that imposed sanctions on Cuba, including restrictions on trade, foreign aid, and support from international financial institutions. The State Department also designated the government of Cuba as a state sponsor of international terrorism in 1982 under Section 6(j) of the Export Administration Act and other laws because of the country's alleged ties to international terrorism, although as noted below, the Obama Administration rescinded Cuba's designation in 2015. Beyond sanctions, another component of U.S. policy has consisted of support measures for the Cuban people. This support includes U.S. private humanitarian donations, medical exports to Cuba under the terms of the CDA, U.S. government support for democracy-building efforts, and U.S.-sponsored radio and television broadcasting to Cuba. The enactment of TSRA by the 106 th Congress also led to the United States becoming one of Cuba's largest commercial suppliers of agricultural products. Authorization for purposeful travel to Cuba and cash remittances to Cuba has constituted an important means to support the Cuban people, although significant congressional debate has occurred over these issues for many years. Despite the poor state of U.S.-Cuban relations, several examples of bilateral cooperation took place over the years in areas of shared national interest. Three areas that stand out are alien migrant interdiction (with migration accords negotiated in 1994 and 1995), counternarcotics cooperation (with increased cooperation dating back to 1999), and cooperation on oil spill preparedness and prevention (since 2011). Obama Administration: Shift toward Engagement In December 2014, the Obama Administration initiated a major policy shift in U.S. policy toward Cuba, moving away from sanctions toward a policy of engagement and the normalization of relations. President Obama said that his Administration would "end an outdated approach that, for decades, has failed to advance our interests." He maintained that the United States would continue to raise concerns about democracy and human rights in Cuba but stated that "we can do more to support the Cuban people and promote our values through engagement." The policy change included three major steps: (1) the rescission of Cuba's designation as a state sponsor of international terrorism in May 2015; (2) the restoration of diplomatic relations in July 2015 (relations had been severed in January 1961 by the Eisenhower Administration); and (3) steps to increase travel, commerce, and the flow of information to Cuba. The third step required the Treasury and Commerce Departments to amend the CACR and EAR respectively; the two agencies issued five rounds of amendments to the regulations in 2015-2016 that eased restrictions on travel, remittances, trade, telecommunications, and banking and financial services. They also authorized certain U.S. companies or other entities to have a physical presence in Cuba, such as an office, retail outlet, or warehouse. After the restoration of relations, U.S. and Cuban officials negotiated numerous bilateral agreements, including in the following areas: marine protected areas (November 2015); environmental cooperation on a range of issues (November 2015); direct mail service (December 2015); civil aviation (February 2016); maritime issues related to hydrography and maritime navigation (February 2016); agriculture (March 2016); health cooperation (June 2016); counternarcotics cooperation (July 2016); federal air marshals (September 2016); cancer research (October 2016); seismology (December 2016); meteorology (December 2016); wildlife conservation (December 2016); animal and plant health (January 2017); oil spill preparedness and response (January 2017); law enforcement cooperation (January 2017); and search and rescue (January 2017). The United States and Cuba also signed a bilateral treaty in January 2017 delimiting their maritime boundary in the eastern Gulf of Mexico. Bilateral dialogues were held on all of these issues as well as on other issues including counterterrorism, claims (U.S. property, unsatisfied court judgments, and U.S. government claims), economic and regulatory issues, human rights, renewable energy and efficiency, trafficking in persons, and migration. President Obama visited Cuba in March 2016 with the goals of building on progress toward normalizing relations and expressing support for human rights. In a press conference with Raúl Castro, President Obama said that the United States would "continue to speak up on behalf of democracy, including the right of the Cuban people to decide their own future." During a speech that was televised to the Cuban nation, President Obama spoke out for advancing human rights, stating his belief that citizens should be free to speak their minds without fear and that the rule of law should not include arbitrary detentions. In October 2016, President Obama issued a presidential policy directive on the normalization of relations with Cuba. The directive set forth the Administration's vision for normalization of relations and laid out six medium-term objectives: (1) government-to-government interaction; (2) engagement and connectivity; (3) expanded commerce; (4) economic reform; (5) respect for universal human rights, fundamental freedoms, and democratic values; and (6) Cuba's integration into international and regional systems. In January 2017, the Obama Administration also announced another significant policy change toward Cuba. The Administration ended the so-called wet foot/dry foot policy, under which thousands of undocumented Cuban migrants had entered the United States since the mid-1990s. Pursuant to a 1995 bilateral migration accord, Cuban migrants intercepted at sea attempting to reach the United States were returned to Cuba, whereas those who successfully reached U.S. shore were generally permitted to stay in the United States. Under the 2017 change in policy, Cuban nationals who attempt to enter the United States illegally and do not qualify for humanitarian relief are now subject to removal. (For more, see " Migration Issues " below.) Trump Administration: Partial Rollback of Engagement and Increased Sanctions President Trump unveiled his Administration's policy on Cuba in June 2017. The policy partially rolls back some of the Obama Administration's efforts to normalize relations with Cuba, and also includes new sanctions. The President set forth his Administration's policy in a speech in Miami, FL, where he signed a national security presidential memorandum (NSPM) on Cuba replacing President Obama's October 2016 presidential policy directive that had laid out objectives for the normalization process. President Trump called for the Cuban government to end the abuse of dissidents, release political prisoners, stop jailing innocent people, and return U.S. fugitives from justice in Cuba. He stated that "any changes to the relationship between the United States and Cuba will depend on real progress toward these and other goals." Once Cuba takes concrete steps in these areas, President Trump said "we will be ready, willing and able to come to the table to negotiate that much better deal for Cubans, for Americans." The new policy leaves many of the Obama-era policy changes in place, including the reestablishment of diplomatic relations and a variety of eased sanctions to increase travel and commerce with Cuba. The new policy also keeps in place the Obama Administration's action ending the so-called wet foot/dry foot policy toward Cuban migrants, which, according to the NSPM, had "encouraged untold thousands of Cuban nationals to risk their lives to travel unlawfully to the United States." The most significant policy changes set forth in President Trump's NSPM include (1) restrictions on financial transactions with companies controlled by the Cuban military, intelligence, or security services or personnel and (2) the elimination of people-to-people educational travel by individuals. In November 2017, the Treasury and Commerce Departments issued amended regulations to implement the new policy. As expected, the Cuban government's reaction to President Trump's June 2017 speech announcing Cuba policy changes was critical, but the government also reiterated its willingness to continue a respectful and cooperative dialogue on issues of mutual interest and the negotiation of outstanding issues, although it maintained that Cuba would not make concessions to its sovereignty and independence. Restrictions on Transactions with the Cuban Military. Pursuant to the NSPM, the State Department was tasked with identifying entities controlled by the Cuban military, intelligence, or security services or personnel and publishing a list of those entities with which direct financial transactions would disproportionately benefit those services or personnel at the expense of the Cuban people or private enterprise in Cuba. The NSPM specifically identified the Grupo de Administración Empresarial S.A . (GAESA), a holding company of the Cuban military involved in most sectors of the Cuban economy, particularly the tourism sector. The State Department issued a list of "restricted entities" in November 2017 and updated the list with additional entries in November 2018 and March 2019. Currently, there are 210 entities on the list, including two ministries, five holding companies (including GAESA) and 47 of their subentities (including the Mariel Special Development Zone), 99 hotels (with 28 in Havana), two tourist agencies, five marinas, 10 stores in Old Havana, and 40 entities serving the defense and security sectors. The Treasury Department forbids financial transactions with those entities, with certain exceptions, including transactions related to air or sea operations supporting permissible travel, cargo, or trade; the sale of agricultural and medical commodities; direct telecommunications or internet access for the Cuban people; and authorized remittances. The new prohibitions limit U.S. economic engagement with Cuba, particularly in travel-related transactions and potential investment opportunities. Restrictions on People-to-People Travel. With regard to people-to-people educational travel, the Treasury Department amended the CACR to require that such travel take place under the auspices of an organization specializing in such travel, with travelers accompanied by a representative of the organization. Individuals are no longer authorized to engage in such travel on their own. The Obama Administration had authorized such individual travel in March 2016, which, combined with the beginning of regular commercial flights and cruise ship service, led to an increase in Americans visiting Cuba. With the new Treasury Department regulations issued, the level of U.S. travel to Cuba has fallen. (Also see " U.S. Travel to Cuba ," below.) Internet Task Force. Pursuant to the NSPM, in January 2018, the State Department announced the establishment of a Cuba Internet Task Force, composed of U.S. government and non-U.S. government representatives, to examine the technological challenges and opportunities for expanding internet access and independent media in Cuba. The task force held its first meeting in February 2018, with two subcommittees formed to develop recommendations—one to explore the role of media and freedom of information in Cuba and the other to explore internet access in Cuba. Continued Engagement in Some Areas. In a demonstration of continuity in policy between the Trump and Obama Administrations, the U.S. and Cuban governments have continued to engage on various bilateral issues through meetings and dialogues. The two countries have continued to hold semiannual migration talks, which, since 1995, have provided a forum to review and coordinate efforts to ensure safe, legal, and orderly migration between Cuba and the United States; talks were held in April and December 2017, and most recently in July 2018. The United States and Cuba also have continued to hold Bilateral Commission meetings that began under the Obama Administration in which the two governments review priorities and areas for engagement. Officials held a sixth Bilateral Commission meeting in September 2017 and a seventh meeting in June 2018. According to the State Department, at the June 2018 meeting, the two countries reviewed such areas for engagement as trafficking in persons, civil aviation safety, law enforcement matters, agriculture, maritime safety and search and rescue, certified claims, and environmental challenges. The State Department maintained that the United States reiterated the urgent need to identify the source of the "attacks" on U.S. diplomats and to ensure they cease (see discussion below), expressed continued concerns about the arbitrary detention of independent journalists and human rights defenders, and acknowledged Cuba's progress in repatriating Cubans with final removal orders while also emphasizing that Cuba needs to accept greater numbers of returnees. Cuba's Ministry of Foreign Affairs maintained the meeting provided an opportunity to review areas of exchange and cooperation, but it also criticized several aspects of U.S. policy, including the "intensification" of the U.S. embargo and what Cuba viewed as the "political manipulation of the alleged health cases" that became a "pretext" to reduce staff and therefore affect embassy operations in both countries. Both countries also have continued engagement on other bilateral issues. The U.S. Coast Guard and the Cuban Border Guard participated in professional exchanges in July 2017 and January 2018 covering a variety of topics, including search and rescue. The U.S. Departments of State, Justice, and Homeland Security participated in law enforcement dialogues with Cuban counterparts in September 2017 and July 2018; the 2018 dialogue included such topics as fugitives and the return of Cuban nationals with final orders of removal. Additional bilateral meetings and exchanges were held in 2018 on such topics as cybersecurity and cybercrime, counternarcotics efforts, and counterterrorism in January; anti-money laundering efforts and trafficking in persons in February; search and rescue in March; and agriculture and scientific cooperation related to environmental disaster in April. Health Injuries of U.S. Personnel in Havana. According to the Department of State, from November 2016 to May 2018, 26 U.S. Embassy community members suffered a series of unexplained injuries, including hearing loss and cognitive issues. The State Department maintains that the U.S. investigation has not reached a definitive conclusion regarding possible causes, sources, or technologies that might have been used. In response to the number of injuries, the State Department ordered the departure of nonemergency personnel from the U.S. Embassy in September 2017 to minimize the risk of their exposure to harm; embassy staff was reduced by about two-thirds. In October 2017, the State Department ordered the departure of 15 diplomats from the Cuban Embassy in Washington, DC. According to then-Secretary of State Rex Tillerson, the action was taken because of Cuba's failure to protect U.S. diplomats in Havana and to ensure equity in the impact on diplomatic operations. Cuba strongly denies responsibility for the injuries. The staff reduction at the U.S. Embassy has affected embassy operations, especially visa processing, and has made bilateral engagement more difficult. (For further background, see " U.S. Response to Health Injuries of U.S. Personnel in Havana " below.) "Troika of Tyranny." In a November 2018 address in Miami, FL, National Security Adviser John Bolton strongly criticized the Cuban government on human rights, stating that "we will only engage with a Cuban government that is willing to undertake necessary and tangible reforms—a government that respects the interests of the Cuban people." Bolton's speech, full of anti-communist political discourse reminiscent of the Cold War era, referred to Cuba, Venezuela, and Nicaragua as a "troika of tyranny" and 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." He referred to the three countries' leaders as "three stooges of socialism" and as "clownish pitiful figures." Bolton asserted that the Venezuelan regime's repression has been "enabled by the Cuban dictatorship." In 2019, as the political situation in Venezuela has deteriorated and the United States has ramped up sanctions on the Maduro regime, the Trump Administration has increased its criticism of Cuba's support for the regime. In a March 11, 2019, press briefing, Secretary of State Pompeo asserted that "Cuban military and intelligence services are deeply entrenched in the Venezuelan state", and provide physical protection and other support to President Maduro and those around him. Pompeo maintained that Cuba has trained Venezuela's secret police "torture tactics, domestic spying techniques, and mechanisms of repression that Cuban authorities have wielded against their own people for decades." Title III of the LIBERTAD Act. The Trump Administration ratcheted up U.S. sanctions on Cuba on March 4, 2019, when Secretary of State Pompeo, pursuant to Title III of the Cuban Liberty and Democratic Solidarity (LIBERTAD) Act of 1996 ( P.L. 104-114 ), allowed certain lawsuits to go forward against those trafficking in confiscated property in Cuba. Since 1996, pursuant to the provisions of Title III, all Administrations have suspended, at six-month intervals, the right to file such lawsuits. The next six-month suspension was due by February 1, 2019, but on January 16, Secretary Pompeo suspended the right to file lawsuits for an additional 45 days, maintaining that the extension would permit a careful review taking into account U.S. national interests and efforts to expedite a transition to democracy in Cuba. Then, on March 4, Secretary Pompeo partially suspended the right to file lawsuits for an additional 30 days (through April 17) but allowed lawsuits, beginning March 19, against an entity or subentity on the State Department's "Cuba Restricted List" controlled by the Cuban military, intelligence, or security services. Lawsuits can be brought by any U.S. national, including those who were not U.S. nationals at the time of the confiscation. However, lawsuits may not be brought against third-country foreign investors in Cuba. (For more, see " Property Claims and Title III of the LIBERTAD Act " below.) Debate on the Direction of U.S. Policy Over the years, although U.S. policymakers have agreed on the overall objectives of U.S. policy toward Cuba—to help bring democracy and respect for human rights to the island—there have been different schools of thought about how to achieve those objectives. Some have advocated a policy of keeping maximum pressure on the Cuban government until reforms are enacted, while continuing efforts to support the Cuban people. Others have argued for an approach, sometimes referred to as constructive engagement, that would lift some U.S. sanctions that they believe are hurting the Cuban people and would move toward engaging Cuba in dialogue. Still others have called for a swift normalization of U.S.-Cuban relations by lifting the U.S. embargo. In light of Fidel Castro's departure as head of government in 2006 and the gradual economic changes made by Raúl Castro, some observers had called for a reexamination of U.S. policy toward Cuba. In this new context, two broad policy approaches were advanced to contend with change in Cuba: an approach that called for maintaining the U.S. dual-track policy of isolating the Cuban government while providing support to the Cuban people and an approach aimed at influencing the attitudes of the Cuban government and Cuban society through increased contact and engagement. The Obama Administration's change of U.S. policy from isolation to engagement and movement toward the normalization of relations highlighted divisions in Congress over Cuba policy. Some Members of Congress lauded the Administration's actions as in the best interests of the United States and a better way to support change in Cuba, whereas other Members strongly criticized the President for not obtaining concessions from Cuba to advance human rights. Some Members vowed to oppose the Administration's efforts toward normalization, whereas others introduced legislation to normalize relations with Cuba by lifting the embargo in its entirety or in part by easing some aspects of it. The Trump Administration's policy of rolling back some of the Obama-era changes and introducing new sanctions on Cuba also has highlighted divisions in Congress over Cuba policy, with some Members supporting the President's action because of Cuba's lack of progress on human rights and others opposing it because of the potential negative effect on the Cuban people and U.S. business interests. Public opinion polls have shown a majority of Americans support normalizing relations with Cuba. Among the Cuban American community in South Florida, however, a 2018 poll by Florida International University showed an increase in those supporting a continuation of the U.S. embargo compared to a 2016 poll. In the 2018 poll, although a majority of Cuban Americans in South Florida supported diplomatic relations and unrestricted travel to Cuba by all Americans, 51% polled favored continuing the embargo and 49% opposed it. This contrasts with 2016, when 63% of Cuban Americans in South Florida favored ending the embargo and 37% supported it. In general, those who advocate easing U.S. sanctions on Cuba make several policy arguments. They assert that if the United States moderated its policy toward Cuba—through increased travel, trade, and dialogue—then the seeds of reform would be planted, which would stimulate forces for peaceful change on the island. They stress the importance to the United States of avoiding violent change in Cuba, with the prospect of a mass exodus to the United States. They argue that since the demise of Cuba's communist government does not appear imminent (despite more than 50 years of sanctions), the United States should espouse a more pragmatic approach in trying to bring about change in Cuba. Supporters of changing policy also point to broad international support for lifting the U.S. embargo, to the missed opportunities for U.S. businesses because of the unilateral nature of the embargo, and to the increased suffering of the Cuban people because of the embargo. Proponents of change also argue that the United States should be consistent in its policies with the world's few remaining communist governments, including China and Vietnam. On the other side, opponents of lifting U.S. sanctions maintain that the policy of isolating Cuba but reaching out to the Cuban people through measures of support is the best means for realizing political change in Cuba. They point out that the LIBERTAD Act sets forth the steps that Cuba must take for the United States to normalize relations. They argue that softening U.S. policy without concrete Cuban reforms boosts Cuba's communist regime, politically and economically, and facilitates its survival. Opponents of softening U.S. policy argue that the United States should stay the course in its commitment to democracy and human rights in Cuba and that sustained sanctions can work. Critics of loosening U.S. sanctions further argue that Cuba's failed economic policies, not the U.S. embargo, are the causes of Cuba's difficult living conditions. More recently, those supporting stronger sanctions on Cuba point to the Cuban government's strong support for the Maduro regime in Venezuela, particularly military advisers and intelligence assistance. Selected Issues in U.S.-Cuban Relations U.S. Travel to Cuba98 Restrictions on travel to Cuba have been a key and often contentious component of U.S. efforts to isolate Cuba's communist government for more than 50 years. The embargo regulations set forth in the CACR do not ban travel itself, but place restrictions on financial transactions related to Cuba. Numerous changes to the restrictions have occurred over time, and for five years, from 1977 until 1982, there were no restrictions on travel. Under the George W. Bush Administration, enforcement of U.S. restrictions on Cuba travel increased and restrictions on travel were tightened. Congress took legislative action in March 2009 to ease restrictions on family travel and on travel related to U.S. agricultural and medical sales to Cuba ( P.L. 111-8 , Sections 620 and 621 of Division D). In April 2009, the Obama Administration went further when the President announced that he was lifting all restrictions on family travel. In 2011, the Obama Administration further eased travel related to religious, journalistic and educational activities, including people-to-people travel exchanges, and allowed U.S. international airports to become eligible for licensed charter flights to and from Cuba. The Obama Administration's December 2014 shift in U.S. policy toward Cuba included an easing of U.S. restrictions on travel to Cuba. As part of the change in policy, the Treasury Department amended the CACR in 2015 to include general licenses for the 12 existing categories of permissible travel to Cuba set forth in the regulations (see text box above). Before the policy change, travelers under several of these categories had to apply for a specific license. Under the regulations, both travel agents and airlines are able to provide services for travel to Cuba without the need to obtain a specific license. Authorized travelers no longer have a per diem limit for expenditures, as in the past, and can bring back goods from Cuba as accompanied baggage for personal use, including alcohol and tobacco. In January 2016, the Treasury Department made additional changes to the travel regulations. Among the changes, authorization for travel and related transactions now include professional media or artistic productions in Cuba (movies, television, music recordings, and creation of artworks). Authorization for travel and other transactions for professional meetings, public performances, clinics, workshops, athletic and nonathletic competitions, and exhibitions now includes permission to organize these events, not just participate in them. In March 2016, the Treasury Department had amended the travel regulations to permit travel to Cuba for individual people-to-people educational travel, but as noted above, President Trump directed the Treasury Department in June 2017 to eliminate the authorization for such travel for individuals. As set forth in amended regulations issued in November 2017, people-to-people educational travel must take place under the auspices of an organization specializing in such travel, with travelers accompanied by a representative of the organization. Regular air service between the United States and Cuba began in November 2016 following the signing of a U.S.-Cuba bilateral arrangement earlier in that year permitting regularly scheduled air flights as opposed to charter flights. Cruise ship service to Cuba from the United States also began in 2016, and since then has expanded significantly with 10 companies now offering cruises. Travel to Cuba solely for tourist activities, however, remains prohibited. Section 910(b) of TSRA prohibits travel-related transaction for tourist activities, which are defined as any activity not expressly authorized in the 12 categories of travel in the CACR. U.S. Travelers to Cuba. According to Cuban government statistics, the number of U.S. travelers increased from 91,254 in 2014 to 619,523 in 2017. This figure is in addition to thousands of Cuban Americans who visit family in Cuba each year; in 2017, almost 454,000 Cubans living outside the country visited Cuba, the majority from the United States. The number of U.S. visitors began to slow in the latter half of 2017 in the aftermath of Hurricane Irma, which struck in September, the Trump Administration's tighter restrictions on people-to-people travel and restrictions on transactions with the Cuban military (which keeps a number of hotels off limits to U.S. visitors), and the U.S. travel warning issued in September 2017 related to the unexplained health injuries to U.S. diplomatic personnel in Cuba. In the first half of 2018, the number of U.S. visitors to Cuba, not including Cuban Americans, reportedly declined by 24% compared to the same period in 2017. By the end of 2018, however, U.S. travel to Cuba reportedly had recovered, with a growth of 1% over 2017. The recovery was spurred by a 48% increase in cruise ship arrivals (which bring in less revenue than land-based travelers). Another factor in the recovery in travel could be the August 2018 change in the U.S. travel advisory for Cuba from Level 3 (reconsider travel) to Level 2 (exercise increased caution). Some U.S. schools with academic exchange programs reportedly do not allow travel to a country with a Level 3 advisory, so the easing of the advisory to Level 2 allows schools to once again include Cuba as part of their exchange programs. U.S. Exports and Sanctions U.S. commercial medical exports to Cuba have been authorized since the early 1990s pursuant to the Cuban Democracy Act of 1992 (CDA), and commercial agricultural exports have been authorized since 2001 pursuant to the Trade Sanctions Reform and Export Enhancement Act of 2000 (TSRA), but with numerous restrictions and licensing requirements. For medical exports to Cuba, the CDA requires on-site verification that the exported item is to be used for the purpose for which it was intended and only for the use and benefit of the Cuban people. TSRA allows for one-year export licenses for selling agricultural commodities to Cuba, although no U.S. government assistance, foreign assistance, export assistance, credits, or credit guarantees are available to finance such exports. TSRA also denies exporters access to U.S. private commercial financing or credit; all transactions must be conducted in cash in advance or with financing from third countries. The 2018 farm bill, P.L. 115-334 ( H.R. 2 ) permits funding for two U.S. agricultural export promotion programs—the Market Access Program and the Foreign Market Development Cooperation Program—for U.S. agricultural products in Cuba. Regulatory changes made to the CACR and EAR in 2015-2016 include several actions designed to facilitate commercial exports to Cuba: U.S. financial institutions are permitted to open correspondent accounts at Cuban financial institutions to facilitate the processing of authorized transactions. U.S. private export financing is permitted for all authorized export trade to Cuba, except for agricultural goods exported pursuant to TSRA. The definition of the term cash in advance for payment for U.S. exports to Cuba was revised to specify that it means cash before transfer of title . The change means that payment can occur before an export shipment is offloaded in Cuba rather than before the shipment leaves a U.S. port. Commercial exports to Cuba of certain goods and services to empower Cuba's nascent private sector are authorized, including for certain building materials for private residential construction, goods for use by private-sector Cuban entrepreneurs, and agricultural equipment for small farmers. Licenses for certain categories of exports are included under a "general policy of approval." These categories include exports for civil aviation and commercial aircraft safety, telecommunications, U.S. news bureaus, human rights organizations and nongovernmental organizations, environmental protection of U.S. and international air quality, waters, and coastlines, and agricultural inputs (such as insecticides, pesticides, and herbicides) that fall outside the scope of those exports already allowed under TSRA. Licenses for exports that will be considered on a case-by-case basis include certain items exported to state-owned enterprises, agencies, and other organizations of the Cuban government that provide goods and services for the use and benefit of the Cuban people. In November 2017, however, the Commerce Department amended the EAR to stipulate that export licenses for exports to state-owned enterprises will generally be denied to export items for use by entities or subentities on the State Department's list of restricted entities associated with the Cuban military, police, intelligence, or security services. The commercial export of certain consumer communication devices, related software, applications, hardware, and services, and items for the establishment and update of communications-related systems is authorized; previously such exports were limited to donations. The export of items for telecommunications, including access to the internet, use of internet services, infrastructure creation, and upgrades, also is authorized. Companies exporting authorized goods to Cuba are authorized to have a physical presence in Cuba, such as an office, retail outlet, or warehouse. Persons subject to U.S. jurisdiction generally are authorized to enter into certain contingent contracts for transactions currently prohibited by the embargo. Certain consumer goods sold directly to eligible individuals in Cuba for their personal use generally are authorized. Cuba purchased about $6 billion in U.S. products from 2001 to 2018, largely agricultural products. For many of those years, the United States was Cuba's largest supplier of agricultural products. U.S. exports to Cuba rose from about $7 million in 2001 to a high of $712 million in 2008, far higher than in previous years. This increase was in part because of the rise in food prices and because of Cuba's increased food needs in the aftermath of several hurricanes and tropical storms that severely damaged the country's agricultural sector. U.S. exports to Cuba declined considerably from 2009 through 2011, rose again in 2012, and fell every year through 2015, when U.S. exports amounted to $180 million. Reversing that trend, U.S. exports to Cuba increased to $245 million in 2016 and $283 million in 2017. In 2018, U.S. exports to Cuba amounted to almost $276 million, about a 5% decrease from 2017. (See Figure 2 .) Looking at the composition of U.S. exports to Cuba from 2012 to 2018, the leading products were poultry, soybean oilcake and other solid residue, soybeans, corn, and soybean oil. Poultry has been the leading U.S. export to Cuba since 2012; in 2018, for example, it accounted for about 56% of U.S. exports. Beyond agricultural products, other categories of products that have increased over the past several years are parts for steam turbines, civilian aircraft engines and parts, pesticides, calcium phosphates, and electrical apparatus and parts for telephone lines. U.S. International Trade Commission (USTIC) Reports. The USITC has issued three studies since 2007 examining the effects of U.S. restrictions on trade with Cuba, with its most recent report issued in April 2016. According to the findings of its 2016 report, U.S. restrictions on trade and travel reportedly have shut U.S. suppliers out of a market in which they could be competitive on price, quality, and proximity. The most problematic U.S. restrictions cited are the inability to offer credit, travel to or invest in Cuba, and use funds sourced and administered by the U.S. government. Cuban nontariff measures and other factors also may limit U.S. exports to and investment in Cuba if U.S. restrictions are lifted, according to the report. These factors include Cuban government control of trade and distribution, legal limits on foreign investment and property ownership, and politically motivated decisionmaking regarding trade and investment. Absent U.S. restrictions, U.S. exports in several sectors likely would increase somewhat in the short term, with prospects for larger increases in the longer term, subject to changes in Cuban policy and economic growth. U.S. exports could increase further if Cuban import barriers were lowered. If U.S. restrictions were removed, U.S. agricultural and manufactured exports to Cuba could increase to almost $1.8 billion annually; if both U.S. restrictions were removed and Cuban barriers were lowered, U.S. exports could approach $2.2 billion annually. Legislative Initiatives . To date in the 116 th Congress, two bills have been introduced related to restrictions on exports to Cuba. S. 428 (Klobuchar) would repeal certain provisions in the CDA, the LIBERTAD Act, and TSRA as well as regulatory provisions in the CACR and EAR that restrict trade with Cuba. H.R. 1898 (Crawford) would modify the prohibition on U.S. assistance and financing for certain exports to Cuba under TSRA. Democracy and Human Rights Funding Since 1996, the United States has provided assistance—through the U.S. Agency for International Development (USAID), the State Department, and the National Endowment for Democracy (NED)—to increase the flow of information on democracy, human rights, and free enterprise to Cuba. USAID and State Department efforts are funded largely through Economic Support Funds (ESF) in the annual foreign operations appropriations bill. From FY1996 to FY2019, Congress appropriated some $364 million in funding for Cuba democracy efforts. In recent years, this funding included $20 million in each fiscal year from FY2014 through FY2019. For FY2018, the Trump Administration, as part of its attempt to cut foreign assistance levels, did not request any democracy and human rights assistance funding for Cuba, but Congress ultimately provided $20 million. For FY2019, the Trump Administration requested $10 million to provide democracy and civil society assistance for Cuba, but Congress again provided $20 million. Although USAID received the majority of this funding for many years, the State Department began to receive a portion of the funding in FY2004 and in recent years has been allocated more funding than USAID. The State Department generally has transferred a portion of the Cuba assistance that it administers to NED. USAID's Cuba program has supported a variety of U.S.-based nongovernmental organizations with the goals of promoting a rapid, peaceful transition to democracy, helping to develop civil society, and building solidarity with Cuba's human rights activists. NED is not a U.S. government agency but an independent nongovernmental organization that receives U.S. government funding. Its Cuba program is funded by the organization's regular appropriations by Congress as well as by funding from the State Department. According to information provided by NED on its website, its Cuba funding from FY2014 through FY2017 amounted to $15.9 million. FY2019 Appropriations. For FY2019, the Trump Administration requested $10 million for democracy and civil society assistance in support of the Administration's Cuba policy. In the 115 th Congress, the House Appropriations Committee's State Department and Foreign Operations appropriations bill, H.R. 6385 ( H.Rept. 115-829 ), would have provided $30 million to promote democracy and strengthen civil society in Cuba, with not less than $8 million for the National Endowment for Democracy. The report to the bill would have prohibited the obligation of funds for business promotion, economic reform, entrepreneurship, or any other assistance that was not democracy-building. It also stipulated that grants exceeding $1 million, or grants to be implemented over a period of 12 months, would be awarded only to organizations with experience promoting democracy inside Cuba. The Senate Appropriations version of the bill, S. 3108 , would have provided $15 million for democracy programs in Cuba. Since the 115 th Congress did not complete action on FY2019 appropriations, the task was left to the 116 th Congress, which in February 2019, enacted the Consolidated Appropriations Act, 2019 ( P.L. 116-6 , H.J.Res. 31 , conference report H.Rept. 116-9 ), which ultimately provided $20 million for Cuba democracy funding. FY2020 Appropr i ations. For 2020, the Trump Administration has requested $6 million for Cuba democracy funding, which would be a 70% cut from the $20 million amount provided annually since FY2014. Radio and TV Martí109 U.S.-government-sponsored radio and television broadcasting to Cuba—Radio and TV Martí—began in 1985 and 1990, respectively. Until October 1999, U.S.-government-funded international broadcasting programs had been a primary function of the United States Information Agency (USIA). When USIA was abolished and its functions merged into the Department of State at the beginning of FY2000, the Broadcasting Board of Governors (BBG) became an independent agency that included such entities as the Voice of America, Radio Free Europe/Radio Liberty, Radio Free Asia, and the Office of Cuba Broadcasting (OCB). In August 2018, the BBG officially changed its name to the U.S. Agency for Global Media (USAGM). Today, OCB, which has been headquartered in Miami, FL, since 1998, manages Radio and TV Martí and the Martínoticiaas.com website and its social media platforms on YouTube, Google, and Facebook. According to the BBG's 2019 Congressional Budget Justification , the Martís reach 11.1% of Cubans on a weekly basis with audio, video, and digital content delivered by radio, satellite TV, online, and on distinctly Cuban digital "packages" ( paquetes ). The largest audiences reportedly are for Radio Martí and TV Martí, with weekly audiences respectively reaching 8% and 6.8% of Cubans, while online content reaches a smaller audience of 5.3%. OCB also administers a shortwave transmitting station in Greenville, NC. Additional newer transmitters at Greenville reportedly have helped increase Radio Martí's presence in Cuba, and the increase in the number of frequencies has made it harder for the Cuban government to interfere with the radio broadcasts. Funding. From FY1984 through FY2019, Congress appropriated about $911 million for broadcasting to Cuba. In recent years, funding has amounted to some $27-$29 million in each fiscal year from FY2014 to FY2019. For FY2018, Congress provided $28.936 million for Cuba broadcasting, $5.28 million more than requested, in the Consolidated Appropriations Act, 2018 ( P.L. 115-141 ; explanatory statement, Division K). For FY2019, the Trump Administration requested $13.656 million for the OCB, $15.3 million less than the amount provided in FY2017. The rationale for the proposed cut was to find efficiencies between OCB and the Voice of America's Latin American division. Congress ultimately took final action on FY2019 appropriations in February 2019 by enacting the Consolidated Appropriations Act, 2019 ( P.L. 116-6 , H.J.Res. 31 , conference report H.Rept. 116-9 ) that provided $29.1 million for Cuba broadcasting. Concerns About TV Martí Program in 2018. In October 2018, media reports highlighted a disturbing TV Martí program originally aired in May 2018 (which remained on Radio and Television Martí's website) that referred to U.S. businessman and philanthropist George Soros as "the multimillionaire Jew of Hungarian origin" and as a "non-believing Jew of flexible morals." The program espoused a number of conspiracy theories about Soros, including that he was the architect of the 2008 financial crisis. Then-Senator Jeff Flake spoke out against the TV Martí program, which he referred to as "taxpayer-funded anti-Semitism." He sent a letter to John Lansing, chief executive officer (CEO) of the USAGM, asking for an investigation into the program, including its evolution from initial inception to final approval, who produced the program, and what review process was in place to ensure it met VOA journalistic standards. Flake also called for those approving anti-Semitic content to be removed from their positions immediately, asserting that "lack of action on this matter will further denigrate the United States as a credible voice overseas, the repercussion of which will be severe." OCB Director Tomás Regalado responded by pulling the original program and related shorter segments from the OCB's online website and acknowledging that the program "did not have the required balance." USAGM's CEO Lansing took further action by issuing a statement that the program about Soros "is inconsistent with our professional standards and ethics." He stated that those deemed responsible for the production would be immediately placed on administrative leave pending an investigation into their apparent misconduct. Lansing also directed "an immediate, full content audit to identify any patterns of unethical reporting at the network" and asked Regalado to "require ethics and standards refresher training for all OCB journalists. " Lansing wrote a letter of apology to Soros in November 2018 in which he said that the program "was based on extremely poor and unprofessional journalism," and "was utterly offensive in its anti-Semitism and clear bias." Lansing also stated in the letter that he had instructed OCB Director Regalado "to remove the offensive story from the TV Martí website and social media" and "to hire a full time 'standards and practices' editor to oversee all outgoing content with strict adherence to the highest professional standards of journalism." The audit of reporting at the network reportedly uncovered an earlier story about Soros that included anti-Semitic language as well as an anti-Muslim opinion piece published in September 2018, that were also removed from the website. At the end of February 2019, Lansing reported that one employee and three contractors had been terminated because of the anti-Semitic video segment, and that the agency had initiated the standard disciplinary process for four additional OCB employees. Lansing stated that USAGM commissioned a team of independent experts to conduct an objective third-party-audit of OCB's coverage in Spanish across all platform. He said that a final report is expected in three months and would be made public. The TV Martí program raised significant concerns about the OCB's adherence to broadcast standards and questions about the program's intended audience. TV Martí's authorizing legislation, the Television Broadcasting to Cuba Act ( P.L. 101-246 , Title II, Part D, 22 U.S.C. 1465bb ) has a provision stating that television broadcasting to Cuba "shall be in accordance with all Voice of America standards to ensure the broadcast of programs which are objective, accurate, balanced, and which present a variety of views." U.S. law sets forth the following principles for VOA broadcasts: (1) VOA will serve as a consistently reliable and authoritative source of news. VOA news will be accurate, objective, and comprehensive; (2) VOA will represent America, not any single segment of American society, and will therefore present a balanced and comprehensive projection of significant American thought and institutions; and (3) VOA will present the polices of the United States clearly and effectively and also will present responsible discussion and opinion on these policies. These VOA principles and broader U.S. international broadcasting standards and principles are set forth in 22 U.S.C. 6202 ( P.L. 103-236 , Title III, Section 303, and P.L. 103-415 ). U.S. Response to Health Injuries of U.S. Personnel in Havana As noted above, the State Department reported that 26 members of the U.S. diplomatic community in Havana suffered a series of unexplained health injuries, including hearing loss and cognitive issues, from November 2016 to May 2018. Twenty-four of the cases occurred from November 2016 to August 2017, and in June 2018, two new cases stemming from occurrences in May 2018 were confirmed after medical evaluations. According to the State Department, the U.S. government personnel suffered from "attacks of an unknown nature," at U.S. diplomatic residences and hotels where temporary duty staff were staying, with symptoms including "ear complaints, hearing loss, dizziness, headache, fatigue, cognitive issues, and difficulty sleeping." U.S. officials maintain that they do not know the mechanism used to cause the health injuries, the source, who is responsible, or the motive behind the alleged "attacks." In response to the health incidents, in September 2017, the U.S. Department of State ordered the departure of nonemergency personnel assigned to the U.S. Embassy in Havana, as well as their families, to minimize the risk of their exposure to harm. As a result, the embassy's U.S. staffing level, which numbered over 50, was reduced by about two-thirds. In March 2018, the State Department began a permanent staffing plan at the U.S. Embassy in Havana, operating it as an "unaccompanied post" without family members. The change took place because the temporary "ordered departure" status for the embassy had reached its maximum allowable days. According to the State Department, "the embassy will continue to operate with the minimum personnel necessary to perform core diplomatic and consular functions, similar to the level of emergency staffing maintained during ordered departure." The staff reduction at the U.S. Embassy in Havana has had implications for bilateral relations. Most visa processing at the U.S. Embassy in Havana has been suspended. Most Cubans applying for nonimmigrant visas must go to a U.S. embassy or consulate in another country, and applications and interviews for immigrant visas are currently being handled at the U.S. Embassy in Georgetown, Guyana. (For additional information, see " Migration Issues " below.) In addition to downsizing U.S. Embassy Havana operations, in October 2017, the State Department ordered the departure of 15 Cuban diplomats from the Cuban Embassy in Washington, DC. According to then-Secretary of State Rex Tillerson, the decision was made because of Cuba's failure to protect U.S. diplomats in Havana and to ensure equity in the impact on respective diplomatic operations. State Department officials maintained that the United States would need full assurances from the Cuban government that the "attacks" will not continue before contemplating the return of diplomatic personnel. The State Department initially issued a travel warning in September 2017 advising U.S. citizens to avoid travel to Cuba because of the potential risk of being subject to injury; in January 2018, when the State Department revamped its travel advisory system, it set the advisory for Cuba at Level 3, recommending that travelers reconsider travel to Cuba. By August 2018, however, the State Department eased its travel advisory to Level 2, recommending that travelers exercise increased caution. In May 2018, the State Department announced that a U.S. government employee serving in Guangzhou, China, experienced a health incident similar to that experienced by members of the U.S. diplomatic community in Havana. In response, Secretary of State Pompeo announced the establishment of a multiagency Health Incidents Response Task Force to serve as a coordinating body for State Department and interagency activities, including identification and treatment of affected personnel and family members abroad, investigation and risk mitigation, messaging, and diplomatic outreach. Since 2017, 14 Canadians diplomats and their family members in Havana also have experienced similar health symptoms such as dizziness, headaches, nausea, and difficulty concentrating, with the most recent case confirmed in January 2019 after medical testing. In April 2018, the Canadian government changed the designation of its embassy in Havana to an "unaccompanied post," similar to the status of the U.S. embassy, and in January 2019, the government announced that it would reduce by half its diplomatic staff in Havana. Cause of the Health Incidents Unknown. When the incidents were first made public by the State Department in August 2017, numerous press reports referred to them as being caused by some type of sonic device. Yet scientists and experts in acoustics have cast doubt on this possibility, arguing that the laws of physics render it unlikely that the use of ultrasound, which they see as the most plausible type of acoustic employed, could be effectively used to harm personnel. They add that some of the reported symptoms individuals have encountered would not have resulted from the use of such a device. Some point to other possible scenarios, such as personnel coming into contact with toxins that damage hearing, or even the spread of anxiety or other psychogenic contributors capable of triggering symptoms. Some scientists assert that data regarding the potential effects of an ultrasound weapon on human health is currently slim. An article in the Journal of the American Medical Association ( JAMA ), published in February 2018, reported that University of Pennsylvania physicians who evaluated individuals from the U.S. Embassy community in Havana maintained that the individuals "appeared to have sustained injury to widespread brain networks without an associated history of head trauma." The study, however, found no conclusive evidence of the cause of the brain injuries. An accompanying editorial in JAMA cautioned about drawing conclusions from the study, noting that the evaluations were conducted an average of 203 days after the onset of the symptoms and that it was unclear whether individuals who developed symptoms were aware of earlier reports by others. In August 2018, JAMA published several letters that raised additional questions concerning the February 2018 study, including one that asserted mass psychogenic illness could not be discounted; the study's authors, however, pushed back against the criticism, maintaining that a complex constellation of neurological symptoms was consistent across the cohort that was studied. A March 2018 University of Michigan report by three computer scientists concluded that the sounds recorded in Cuba could have been caused by two eavesdropping devices placed in close proximity to each other. The study concluded that the sounds could have been inadvertently produced without malicious intent. In December 2018, a group of doctors from the University of Miami and the University of Pittsburgh published a study maintaining that those diplomats exhibiting symptoms suffered from ear damage as opposed to brain injury. In January 2019, a group of biologists from the University of California Berkeley and the U.K's University of Lincoln issued a study on a recording of the alleged sounds heard by some U.S. Embassy employees that had been released by the Associated Press in October 2017. The study maintains that the sound matched the echoing call of a Caribbean cricket. Even though the cause of the health injuries to U.S. personnel in Cuba is unknown, there has been widespread speculation regarding potential responsibility. These include such possibilities as a rogue faction of Cuba's security services or a third country, such as Russia, with the apparent motivation of wanting to disrupt U.S.-Cuban relations. Some maintain that Cuba's strong security apparatus makes it unlikely that a third country would be involved without the Cuban government's acquiescence. Others stress that there has been no evidence implicating a third country and that it would be highly unusual for a rogue Cuban security faction to operate contrary to the interests of the Cuban government. Cuba's Response. The Cuban government denies responsibility for the injuries of U.S. personnel, maintaining that it would never allow its territory to be used for any action against accredited diplomats or their families. In the aftermath of the order expelling its diplomats, Cuba's Ministry of Foreign Affairs issued a statement strongly protesting the U.S. action, asserting that it was motivated by politics and arguing that ongoing investigations have reached no conclusion regarding the incidents or the causes of the health problems. The statement noted that Cuba had permitted U.S. investigators to visit Cuba and reiterated the government's willingness to continue cooperating on the issue. In September 2018, a delegation of Cuban scientists visited the United States to have meetings with the State Department, the National Academy of Sciences, and on Capitol Hill. The director of the Cuban Neuroscience Center, Dr. Mitchell Joseph Valdés-Sosa, maintains that there could be various reasons why the diplomats became sick (such as hypertension, stress, other preexisting conditions, and psychogenesis) but that Cuban scientists have not seen any credible evidence that some type of high-tech weapon was used. The Cuban delegation expressed disappointment that U.S. officials have not shared more medical and clinical data on the illnesses experienced by the U.S. diplomats. In November 2018, Dr. Valdés-Sosa coauthored a letter in Science magazine with a professor from the University of Pennsylvania's Department of Bioengineering maintaining that some "scientists have allowed speculation about the causes of these health issue to outpace the evidence" and that "there is insufficient evidence to guess about the cause of the sounds." Migration Issues145 In January 2017, the Obama Administration ended the so-called "wet foot/dry foot" policy under which thousands of undocumented Cuban migrants entered the United States since the mid-1990s. Under that policy, Cuban migrants interdicted at sea generally were returned to Cuba whereas those reaching U.S. land were allowed entrance into the United States and generally permitted to stay. Under the new policy, Cuban nationals who attempt to enter the United States illegally and do not qualify for humanitarian relief are now subject to removal. The Cuban government agreed to begin accepting the return of Cuban migrants who have been ordered removed. President Trump's NSPM on Cuba stated that the Administration would not reinstate the "wet foot/dry foot" policy, maintaining that the policy had "encouraged untold thousands of Cuban nationals to risk their lives to travel unlawfully to the United States." Background on the 1994 and 1995 Migration Accords . Cuba and the United States reached two migration accords in 1994 and 1995 designed to stem the mass exodus of Cubans attempting to reach the United States by boat. On the minds of U.S. policymakers was the 1980 Mariel boatlift, in which 125,000 Cubans fled to the United States with the approval of Cuban officials. In response to Fidel Castro's threat to unleash another Mariel, U.S. officials reiterated U.S. resolve not to allow another exodus. Amid escalating numbers of fleeing Cubans, in August 1994, President Clinton abruptly changed U.S. immigration policy, under which Cubans attempting to flee their homeland were allowed into the United States; he announced that the U.S. Coast Guard and Navy would take Cubans rescued at sea to the U.S. Naval Station at Guantanamo Bay, Cuba. Despite the change in policy, Cubans continued to flee in large numbers. As a result, in early September 1994, Cuba and the United States began talks that culminated in a bilateral agreement to stem the flow of Cubans fleeing to the United States by boat. In the agreement, the United States and Cuba agreed to facilitate safe, legal, and orderly Cuban migration to the United States, consistent with a 1984 migration agreement. The United States agreed to ensure that total legal Cuban migration to the United States would be a minimum of 20,000 each year, not including immediate relatives of U.S. citizens. In May 1995, the United States reached another accord with Cuba under which the United States would parole the more than 30,000 Cubans housed at Guantanamo into the United States but would intercept future Cuban migrants attempting to enter the United States by sea and return them to Cuba. In January 1996, the Department of Defense announced that the last of some 32,000 Cubans intercepted at sea and housed at Guantanamo had left the U.S. naval station, most having been paroled into the United States. Maritime Interdictions. Since the 1995 migration accord, the U.S. Coast Guard has interdicted thousands of Cubans at sea and returned them to their country. Until the change in U.S. policy toward Cuban migrants in January 2017, those Cubans who reached the U.S. shore were allowed to apply for permanent resident status in one year, pursuant to the Cuban Adjustment Act of 1966 (P.L. 89-732). In short, under the wet foot/dry foot policy, most interdictions resulted in a return to Cuba, even those in U.S. coastal waters, whereas those Cubans who touched shore were allowed to stay in the United States. Some had criticized this policy as encouraging Cubans to risk their lives to make it to the United States and as encouraging alien smuggling. Over the years, the number of Cubans interdicted at sea by the U.S. Coast Guard has fluctuated annually, influenced by several factors, including the economic situations in Cuba and the United States. From FY2010 through FY2016, the number of Cubans interdicted by the Coast Guard increased each year, from 422 in FY2010 to an all-time high of 5,230 in FY2016. The increase in the flow of maritime migrants in 2015 and 2016 was driven by concerns among Cubans that the favorable treatment granted to Cuban migrants would end. With the change in U.S. immigration policy toward Cuba in January 2017, the number of Cubans interdicted by the Coast Guard dropped to a trickle. For FY2017, the Coast Guard interdicted 2,109 Cubans, with the majority of these interdictions occurring before the policy change, and for FY2018, the Coast Guard interdicted 384 Cubans at sea. (See Figure 3 .) Arrival of Undocumented Cuban Migrants. Beginning around FY2013, according to the State Department, undocumented Cuban migrants began to favor land-based routes to enter the United States, especially via U.S. ports of entry from Mexico. Since that time and until the change in U.S. immigration policy in January 2017, the number of undocumented Cubans entering by land increased significantly, with a majority entering through the Southwest border. According to statistics from the Department of Homeland Security, the number of undocumented Cubans entering the United States both at U.S. ports of entry and between ports of entry rose from almost 8,170 in FY2010 to a high of 58,269 in FY2016. In FY2017, that number declined to 20,955, with the majority entering before the change in U.S. immigration policy. In FY2018, as of August 21, 2018, 6,044 undocumented Cubans arrived in the United States at or between ports of entry, about a 70% decline from FY2017. Cuban Medical Professional Parole Program. In January 2017, at the same time that it ended the "wet foot/dry foot policy," the Obama Administration announced that it was ending the special Cuban Medical Professional Parole (CMPP) program. Established in 2006 and administered by U.S. Citizenship and Immigration Services (USCIS) of the Department of Homeland Security (DHS), the CMPP program allowed Cuban medical professionals in third countries to be approved for entry into the United States. The program reportedly benefitted more than 8,000 Cuban medical professionals who defected from Cuba's medical missions in third countries. Some Members of Congress have called on the Trump Administration to reestablish the CMPP program. In the 116 th Congress, two resolutions, S.Res. 14 (Menendez) and H.Res. 136 (Sires), would express the sense of the Senate and House, respectively, that the CMPP program should be reestablished. They also call on the State Department to downgrade Cuba to Tier 3 status in its annual Trafficking in Persons (TIP) Report because of its treatment of Cuban medical professionals in the country's foreign medical missions and because the Cuban government has not criminalized most forms of forced labor. In its 2018 TIP report, the State Department included mixed information on the CMPP program. It noted that some participants in Cuba's foreign medical missions alleged that Cuban officials forced or coerced participation in the program, and that some observers alleged that Cuban authorities coerced some participants to remain in the program through various tactics, including the withholding of passports. On the other hand, the report also noted that the Cuban government and some of the program's participants maintained that postings were voluntary and well paid compared to jobs within Cuba. (Also see discussion of trafficking in persons in the " Human Rights " section above.) Effect of Downsizing of U.S. E mbassy . As noted above, most visa processing at the U.S. Embassy in Havana was suspended because of the U.S. Embassy staff reduction in 2017. USCIS suspended operations at its field office at the embassy in 2017, and then permanently closed its offices in Havana in December 2018. Most Cubans applying for nonimmigrant visas must go to a U.S. embassy or consulate in another country, and all applications and interviews for immigrant visas are currently being handled at the U.S. Embassy in Georgetown, Guyana. The suspension of most nonimmigrant visa processing in Havana has made it more difficult and expensive for Cubans visiting family in the United States and for Cuban cuentapropistas (private sector workers) traveling to the United States to bring back inputs for their businesses. In 2013, the United States had begun granting multiple entry visas, good for five years, for Cubans visiting the United States. As those visas expire, Cubans will need to travel to a third country to request a new visa if they want to visit the United States. In addition, the State Department announced that as of March 18, 2019, it would no longer issue multiple entry B2 visas (for tourism, family visit medical treatment, and similar travel purposes) for Cuban nationals, but instead would only issue single entry B2 visas for a stay of two months, with the possibility of a 30-day extension. The action will likely have a significant effect on family travel from Cuba and those traveling from Cuba to support their private sector businesses, and could also negatively affect U.S.-Cuban academic, cultural, and civil society engagement. The embassy staff reduction has negatively affected the United States' ability to meet its commitment under the 1994 bilateral migration accord to issue travel documents for 20,000 Cubans annually (not including immediate relatives). While the United States met its commitment in FY2017, the State Department issued travel documents for just 4,060 Cubans in FY2018 in categories under the migration accord. In past years, around 75% of the immigrant travel documents issued annually for Cuban nationals pursuant to the 1994 accord were issued under the Cuban Family Reunification Parole Program (CFRP), a program established in 2007 by USCIS to help the United States meet its annual obligation of travel documents. Since the embassy staff reduction, information posted on the website of the U.S. Embassy in Havana has stated that the State Department and DHS are determining arrangements for processing applications under the CFRP. Antidrug Cooperation Cuba is not a major producer or consumer of illicit drugs, but its location and extensive shoreline make it susceptible to narcotics-smuggling operations. Drugs that enter the Cuban market are largely the result of onshore wash-ups from smuggling by high-speed boats moving drugs from Jamaica to the Bahamas, Haiti, and the United States, or by small aircraft from clandestine airfields in Jamaica. For a number of years, Cuban officials have expressed concerns about the use of their waters and airspace for drug transit and about increased domestic drug use. The Cuban government has taken a number of measures to deal with the drug problem, including legislation to stiffen penalties for traffickers, increased training for counternarcotics personnel, and cooperation with a number of countries on antidrug efforts. Since 1999, Cuba's Operation Hatchet has focused on maritime and air interdiction and the recovery of narcotics washed up on Cuban shores. Since 2003, Cuba has aggressively pursued an internal enforcement and investigation program against its incipient drug market with an effective nationwide drug prevention and awareness campaign. Over the years, there have been varying levels of U.S.-Cuban cooperation on antidrug efforts. In 1996, Cuban authorities cooperated with the United States in the seizure of almost six metric tons of cocaine aboard the Miami-bound Limerick , a Honduran-flag ship. Cuba turned over the cocaine to the United States and cooperated fully in the investigation and subsequent prosecution of two defendants in the case in the United States. Cooperation has increased since 1999, when U.S. and Cuban officials met in Havana to discuss ways of improving antidrug cooperation. Cuba accepted an upgrading of the communications link between the Cuban Border Guard and the U.S. Coast Guard as well as the stationing of a U.S. Coast Guard drug interdiction specialist at the U.S. Interests Section in Havana. The Coast Guard official was posted to the U.S. Interests Section in September 2000. Since the reestablishment of diplomatic relations with Cuba in 2015, U.S. antidrug cooperation has increased further, with several dialogues and exchanges on counternarcotics issues. In December 2015, U.S. and Cuban officials held talks at the headquarters of the Drug Enforcement Administration (DEA) in Washington, DC, with delegations discussing ways to stop the illegal flow of narcotics and exploring ways to cooperate on the issue. In April 2016, Cuban security officials toured the U.S. Joint Interagency Task Force South (JIATF-South) based in Key West, FL. JIATF-South has responsibility for detecting and monitoring illicit drug trafficking in the region and for facilitating international and interagency interdiction efforts. At a July 2016 dialogue in Havana with U.S. officials from the State Department, DEA, the U.S. Coast Guard, and Immigration and Customs Enforcement/Homeland Security Investigations, Cuba and the United States signed a counternarcotics arrangement to facilitate cooperation and information sharing. Technical exchanges between the U.S. Coast Guard and Cuba's Border Guard on antidrug efforts and other areas of cooperation occur periodically. According to the State Department's 2019 International Narcotics Control Strategy Report (INCSR), issued in March 2019, Cuba has 40 bilateral agreements for antidrug cooperation with countries worldwide, including the 2016 U.S.-Cuban agreement noted above. The report also stated that Cuban authorities and the U.S. Coast Guard share tactical information related to vessels transiting through Cuban territorial waters suspected of trafficking and coordinate responses. In addition, as noted in the report, direct communications were established in July 2016 between the U.S. DEA and Cuban counterparts within the Ministry of Interior's National Anti-Drug Directorate. Since then, according to the INCSR, the DEA has received approximately 20 requests for information related to drug investigations in addition to cooperation leading to Cuba's arrest of a fugitive wanted in the United States. More broadly, the INCSR reports that Cuba has provided assistance to U.S. state and federal prosecutions by providing evidence and information, and has demonstrated a willingness to cooperate on law enforcement matters. The report noted that the United States and Cuba continue to hold bilateral discussion on law enforcement and drug control cooperation. Property Claims and Title III of the LIBERTAD Act An important issue in the process of normalizing relations is Cuba's compensation for the expropriation of thousands of properties of U.S. companies and citizens in Cuba dating back to the 1960s. The Foreign Claim Settlement Commission (FCSC), an independent agency within the Department of Justice, has certified 5,913 claims for expropriated U.S. properties in Cuba valued at $1.9 billion in two different claims programs; with accrued interest, the properties' value would be some $8 billion. In 1972, the FCSC certified 5,911 claims of U.S. citizens and companies that had their property confiscated by the Cuban government through April 1967, with 30 U.S. companies accounting for almost 60% of the claims. In 2006, the FCSC certified two additional claims in a second claims program covering property confiscated after April 1967. Many of the companies that originally filed claims have been bought and sold numerous times. There are a variety of potential alternatives for restitution or compensation schemes to resolve the outstanding claims, but resolving the issue likely would entail considerable negotiation and cooperation between the two governments. Although Cuba has maintained that it would negotiate compensation for the U.S. claims, it does not recognize the FCSC valuation of the claims or accrued interest. Instead, Cuba has emphasized using declared taxable value as an appraisal basis for expropriated U.S. properties, which would amount to almost $1 billion, instead of the $1.9 billion certified by the FCSC. Moreover, Cuba generally has maintained that any negotiation should consider losses that Cuba has accrued from U.S. economic sanctions. Cuba estimates cumulative damages of the U.S. embargo at $134.5 billion in current prices as of 2018. U.S. and Cuban officials held three meetings on claims issues between December 2015 and January 2017. The first meeting took place in December 2015 in Havana, with talks including discussions of the FCSC-certified claims of U.S. nationals, claims related to unsatisfied U.S. court judgments against Cuba (reportedly 10 U.S. state and federal judgments totaling about $2 billion), and some claims of the U.S. government. The Cuban delegation raised the issue of claims against the United States related to the U.S. embargo. A second claims meeting was held in July 2016, in Washington, DC. According to the State Department, the talks allowed for an exchange of views on historical claims-settlement practices and processes going forward. A third claims meeting was held in Havana in January 2017. As noted above, Title III of the LIBERTAD Act holds any person or government that traffics in property confiscated by the Cuban government liable for monetary damages in U.S. federal court. Until January 2019, pursuant to provisions of the law, all Administrations have suspended the right to file law suits at six-month intervals. For the suspension, the President (since 2013, the Secretary of State) must determine that it is necessary to the national interests of the United States and will expedite a transition to democracy in Cuba. In June 2018, Secretary of State Pompeo made a determination effective from August 1, 2018, through January 2019. On January, 16, 2019, however, Secretary Pompeo issued another determination suspending the right to file lawsuits for only an additional 45 days (as opposed to six months, as provided in the law), maintaining that the extension would permit a careful review that would include such factors as "the Cuban regime's brutal oppression of human rights and fundamental freedoms and its indefensible support for increasingly authoritarian and corrupt regimes in Venezuela and Nicaragua." Then, on March 4, 2019, Secretary Pompeo partially suspended the right to file lawsuits for an additional 30 days (through April 17) but allowed lawsuits, beginning March 19, against an entity or subentity on the State Department's "Cuba Restricted List" controlled by the Cuban military, intelligence, or security service. In its announcement, the State Department stated that they would continue to study the impact of the suspension on the human rights situation in Cuba. Lawsuits can be brought by any U.S. national, including those who were not U.S. nationals at the time of the confiscation. However, lawsuits may not be brought against third-country foreign investors in Cuba. State Department officials acknowledged that they engaged with allies in the European Union, Canada, and elsewhere, and that these countries' concerns were a factor in Secretary Pompeo's decision-making process. At this juncture, it is unclear how many lawsuits will go forward against entities on the "Cuba Restricted List." Looking ahead, some in the U.S. business community and foreign companies abroad that have invested in Cuba have concerns about the potential for Title III being fully implemented in the future. When the LIBERTAD Act was enacted in 1996, the intent of Title III was to prevent foreign investment in properties confiscated by the Cuban government. However, since some U.S. companies have entered into transactions or investment projects with Cuban companies in recent years as a result of the U.S. engagement process with Cuba, some could be susceptible to legal action if the Administration did not continue to suspend the right to file lawsuits. Fully lifting the suspension of the right to file lawsuits under Title III could have a significant effect on foreign companies conducting business in Cuba because of the potential risk emanating from such lawsuits. When the LIBERTAD Act was passed in 1996, several foreign governments strongly objected, and some (Canada, EU, and Mexico) enacted countermeasures to block enforcement of the U.S. sanctions. The EU also could revive a WTO dispute against the LIBERTAD Act, which it suspended in 1998 when it reached an understanding on the issue with the United States that included the presumption of continued suspension of Title III. Some observers also have expressed concerns about U.S. federal courts being flooded with lawsuits if Title III were fully allowed to be implemented. In addition to the claims of thousands of certified U.S. claimants, a 1996 report to Congress by the State Department required by the LIBERTAD Act estimated that there could be some 75,000 to 200,000 claims by Cuban Americans with the value running into the tens of billions of dollars. As defined in the LIBERTAD Act, however, the term trafficking does not include "transactions and uses of property incident to lawful travel to Cuba," the term property does not include "real property used for residential purposes" (unless the claim is a certified claim held by a U.S national), and there is a $50,000 threshold for the amount in controversy for the right to file a lawsuit under Title III. U.S. Fugitives from Justice An issue that had been mentioned for many years in the State Department's annual terrorism report was Cuba's harboring of fugitives wanted in the United States. The most recent mention of the issue was in the 2014 terrorism report (issued in April 2015), which stated that Cuba "does continue to harbor fugitives wanted to stand trial or to serve sentences in the United States for committing serious violations of U.S. criminal laws, and provides some of these individuals limited support, such as housing, food ration books, and medical care." With the resumption of diplomatic relations with Cuba, the United States have held several law enforcement dialogues that reportedly have included discussion of the issue of fugitives from justice. U.S. fugitives from justice in Cuba include convicted murderers and numerous hijackers, most of whom entered Cuba in the 1970s and early 1980s. For example, Joanne Chesimard, also known as Assata Shakur, was added to the Federal Bureau of Investigation's (FBI's) Most Wanted Terrorist list in May 2013. Chesimard was part of militant group known as the Black Liberation Army. In 1977, she was convicted for the 1973 murder of a New Jersey State Police officer and sentenced to life in prison. Chesimard escaped from prison in 1979 and, according to the FBI, lived underground before fleeing to Cuba in 1984. Another fugitive, William "Guillermo" Morales, who was a member of the Puerto Rican militant group known as the Armed Forces of National Liberation, reportedly has been in Cuba since 1988 after being imprisoned in Mexico for several years. In 1978, both of his hands were maimed by a bomb he was making. He was convicted in New York on weapons charges in 1979 and sentenced to 10 years in prison and 5 years' probation, but he escaped from prison the same year. In addition to Chesimard and other fugitives from the past, a number of U.S. fugitives from justice wanted for Medicare and other types of insurance fraud have fled to Cuba in recent years. Although the United States and Cuba have an extradition treaty in place dating to 1905, in practice the treaty has not been used. Instead, for more than a decade, Cuba has returned wanted fugitives to the United States on a case-by-case basis. For example, in 2011, U.S. Marshals picked up a husband and wife in Cuba who were wanted for a 2010 murder in New Jersey, and in April 2013, Cuba returned a Florida couple who allegedly had kidnapped their own children (who were in the custody of the mother's parents) and fled to Havana. In August 2018, Cuba arrested and returned to the United States a long-sought U.S. fugitive from justice wanted in connection with ecoterrorism who had stopped in Cuba on his way to Russia. In November 2018, Cuba returned to the United States a New Jersey man wanted on murder charges. In another case demonstrating U.S.-Cuban law enforcement cooperation, Cuba successfully prosecuted a Cuban national in February 2018 who had fled to Cuba after murdering a doctor in Florida in 2015—the main witness was a Palm Beach detective. Cuba generally, however, has refused to render to U.S. justice any fugitive judged by Cuba to be "political," such as Chesimard, who they believe could not receive a fair trial in the United States. Moreover, in the past Cuba has responded to U.S. extradition requests by stating that approval would be contingent upon the United States returning wanted Cuban criminals from the United States. In the 116 th Congress, H.Res. 92 (King) would call for the immediate extradition or rendering to the United States of convicted felons William Morales, Joanne Chesimard, and all other fugitives from justice who are receiving safe harbor in Cuba in order to escape prosecution or confinement for criminal offenses committed in the United States Outlook When Miguel Díaz-Canel succeeded Raúl Castro as president in April 2018, a leader from a new generation came to power—Díaz-Canel is 58 years old. Nevertheless, Raúl Castro, currently 87 years old, is continuing as first secretary of Cuba's Communist Party until 2021, and he headed the commission that drafted Cuba's new constitution approved by a public referendum in February 2019. Although the new constitution locks in some market-oriented economic reforms that have been introduced in recent years (private property, private sector, and foreign investment), it also ensures the state sector's dominance over the economy and the predominate role of the Communist Party in Cuba's political system. In late 2018, Díaz-Canel took actions that appeared to demonstrate his independence from the previous Castro government and his responsiveness to public concerns, but his government faces a difficult economic outlook, one that could become bleaker if oil supplies from Venezuela are cut. Looking ahead, President Díaz-Canel faces two major challenges—moving forward with economic reforms that produce results and responding to desires for greater freedom. President Trump's partial rollback of the Obama engagement policy and the introduction of new economic sanctions has limited opportunities for U.S. business engagement in Cuba and increased tensions in bilateral relations. The U.S. decision to downsize the diplomatic staff of the U.S. Embassy in Havana in response to unexplained injuries to U.S. diplomatic personnel in Cuba resulted in the suspension of most visa processing at the embassy and reduced other embassy operations, which has made bilateral engagement and existing areas of government-to-government cooperation more difficult. The Administration's decision in March 2019 to partially implement Title III of the LIBERTAD Act along with its use of strong Cold War-era political rhetoric toward Cuba has provoked a change in Cuba's own political rhetoric toward the United States. The current outlook for positive government-to-government engagement appears dim. Just as there were diverse opinions in the 115 th Congress over U.S. policy toward Cuba, debate over Cuba policy is likely to continue in the 116 th Congress, especially with regard to U.S. economic sanctions. The human rights situation likely will remain a key concern in the future, although there are diverse views regarding the best approach to influence the Cuban government. Appendix A. Legislative Initiatives in the 116 th  Congress Enacted Measures P.L. 116-6 ( H.J.Res. 31 ). Consolidated Appropriations Act, 2019. Introduced January 22, 2019. House passed (231-180) January 24; Senate passed, amended, by voice vote January 25. Conference report ( H.Rept. 116-9 ) filed February 13, 2019. House approved conference (300-128) February 14; Senate approved conference (83-16) February 14. Signed into law February 15, 2019. The conference report provided $20 million in Cuba democracy assistance ($10 million more than requested) and $29.1 million for Cuba broadcasting ($15.4 million more than requested). In Division F (State, Foreign Operations, and Related Programs), the measure continues two longstanding Cuba provisions: Section 7007 prohibits direct funding for the government of Cuba, including direct loans, credits, insurance, and guarantees of the Export-Import Bank or its agents; Section 7015(f) prohibits the obligation or expending of assistance for Cuba except through the regular notification procedures of the Committees on Appropriations. Bills H.R. 213 (Serrano). Baseball Diplomacy Act. The bill would waive certain prohibitions with respect to nationals of Cuba coming to the United States to play organized professional baseball. Introduced January 3, 2019; referred to the Committee on Foreign Affairs, and in addition to the Committee on the Judiciary. H.R. 1898 (Crawford). The bill would modify the prohibition on U.S. assistance and financing for certain exports to Cuba under TSRA. Introduced March 27, 2019; referred to the Committee on Foreign Affairs and in additional to the Committees on Financial Services and Agriculture. S. 428 (Klobuchar). Freedom to Export to Cuba Act of 2019. The bill would repeal or amend many provisions of law restricting trade and other relations with Cuba, including certain restrictions in the CDA, the LIBERTAD Act, and TSRA. Introduced February 7, 2019; referred to the Committee on Banking, Housing, and Urban Affairs. Resolutions H.Res. 92 (King). The resolution would call for the immediate extradition or rendering to the United States of convicted felons William Morales, Joanne Chesimard, and all other fugitives from justices who are receiving safe harbor in Cuba to escape prosecution or confinement for criminal offenses committed in the United States. Introduced January 30, 2019; referred to the Committee on Foreign Affairs. S.Res. 14 (Menendez)/ H.Res. 136 (Sires). Similar resolutions would affirm that Cuba's medical missions constitute human trafficking. The resolutions express the sense of each respective body that the State Department should downgrade Cuba to Tier 3 in its annual Trafficking in Persons Re port and should reestablish the Cuban Medical Professional Parole program. S.Res. 14 introduced January 10, 2019; referred to the Committee on Foreign Relations. H.Res. 136 introduced February 14; referred to the Committee on Foreign Affairs. Appendix B. Links to U.S. Government Reports U.S. Relations with Cuba, Fact Sheet , Department of State Date: February 8, 2019 Full Text: https://www.state.gov/r/pa/ei/bgn/2886.htm Congressional Budget Justificati on for Foreign Operations FY2019 , Appendix 2 , pp. 474-475, Department of State Date: March 14, 2018 Full Text: https://www.state.gov/documents/organization/279517.pdf Country Report s on Human Rights Practices fo r 2018 , Cuba , Department of State Date: March 13, 2019 Full Text: https://www.state.gov/documents/organization/289532.pdf Cuba web page, Department of State Link: https://www.state.gov/p/wha/ci/cu/index.htm Cuba web page, Department of Commerce, Bureau of Industry and Security Link: https://www.bis.doc.gov/index.php/policy-guidance/country-guidance/sanctioned-destinations/cuba Cuba web page, Department of Agriculture, Foreign Agricultural Service Link: https://www.fas.usda.gov/regions/cuba Cuba Sanctions web page, Department of the Treasury, Office of Foreign Assets Control Link: https://www.treasury.gov/resource-center/sanctions/Programs/Pages/cuba.aspx International R eligious Freedom Report for 2017 , Cuba , Department of State Date: May 29, 2018 Full Text: https://www.state.gov/documents/organization/281308.pdf International Narcotics Control Strategy Report 2019 , Volume I, Drug and Chemical Control, p. 146, Department of State Date: March 2019 Link: http://www.state.gov/documents/organization/290501.pdf International Narcotics Control Strategy Report 2018, Volume II , Money Laundering, pp. 85-87, Department of State Date: March 2018 Link: http://www.state.gov/documents/organization/278760.pdf Overview of Cuban Imports of Goods and Services and Effects of U.S. Restrictions , U.S. International Trade Commission, Publication 4597 Date: March 2016 Link: https://www.usitc.gov/sites/default/files/publications/332/pub4597_0.pdf Trafficking in Persons Report 2018 , Cuba, Department of State Date: June 2018 Link: https://www.state.gov/j/tip/rls/tiprpt/countries/2018/282640.htm

Political and economic developments in Cuba, a one-party authoritarian state with a poor human rights record, frequently have been the subject of intense congressional concern since the Cuban revolution in 1959. Current Cuban President Miguel Díaz-Canel succeeded Raúl Castro in April 2018, but Castro continues to head Cuba's Communist Party. Over the past decade, Cuba has implemented gradual market-oriented economic policy changes, although it has not taken enough action to foster sustainable economic growth. Most observers do not anticipate major policy changes under Díaz-Canel, at least in the short term; the president faces the enormous challenges of reforming the economy and responding to citizens' desires for greater freedom. U.S. Policy 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. economic sanctions. In 2014, however, the Obama Administration initiated a policy shift moving away from sanctions toward a policy of engagement. This included the restoration of diplomatic relations (July 2015), the rescission of Cuba's designation as a state sponsor of international terrorism (May 2015), and an increase in travel, commerce, and the flow of information to Cuba implemented through regulatory changes. President Trump unveiled a new policy toward Cuba in 2017 that increased sanctions and partially rolled back some of the Obama Administration's efforts to normalize relations. In 2017, the State Department reduced the staff of the U.S. Embassy by about two-thirds in response to unexplained injuries of members of the U.S. diplomatic community in Havana; 26 individuals have been affected. The reduction has affected embassy operations, especially visa processing, and has made bilateral engagement more difficult. The most significant Trump Administration policy changes include restrictions on transactions with over 200 entities controlled by the Cuban military, intelligence, and security services (on a "restricted list" maintained by the State Department) and the elimination of people-to-people educational travel for individuals (such travel with a group specializing in educational tours is still permitted). In March 2019, the Administration ratcheted up economic pressure on Cuba by allowing certain lawsuits to go forward against those entities on the "restricted list" for trafficking in confiscated property in Cuba. In light of increased U.S. sanctions against the regime of Nicolás Maduro in Venezuela, the Administration has increased its criticism of Cuba's military and intelligence support for the regime in Caracas. Legislative Activity in the 116th Congress In the Consolidated Appropriations Act, 2019 (P.L. 116-6, H.J.Res. 31) enacted in February 2019, Congress provided $20 million in Cuba democracy assistance ($10 million more than requested) and $29.1 million for Cuba broadcasting ($15.4 million more than requested). Several legislative initiatives on Cuba have been introduced in the 116th Congress: H.R. 213 would waive certain prohibitions to allows nationals of Cuba to come to the United States to play organized professional baseball; S. 428 would repeal or amend many provisions of law restricting trade and other relations with Cuba; and H.R. 1898 would authorize private financing for U.S. agricultural sales to Cuba. S.Res. 14 and H.Res. 136 would express the sense of the Senate and House, respectively, that Cuba's foreign medical missions constitute human trafficking; and H.Res. 92 would call for the extradition or rendering to the United States all fugitives from U.S. justice receiving safe harbor in Cuba. For more on legislative initiatives in the 116th Congress, see Appendix A.

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Introduction Beginning the summer 2013 through 2016, there were numerous reports in the media on sexual assault incidents in the U.S. armed services. In many cases, such reports were followed by questions on what actions were taken by the Department of Defense (DOD), the Obama Administration, and Congress to address the issue. This report lists a comprehensive chronology of official activities in response to incidents of military sexual assault, as well as legislative action on the issue. The report is divided into three sections: the DOD and the Obama Administration's actions, congressional action, and legislation in the 113 th (2013-2014) and 114 th (2015-2016) Congresses. Also included is a resources section with related articles, hearings, and reports. Information in this report was compiled from the official government websites of DOD, the Obama White House and Congress.gov for historical background and will not be updated. Actions by Department of Defense and the Obama Administration June 13, 2012 – DOD announced Army Major General Gary S. Patton as the new director of the Sexual Assault Prevention and Response Office (SAPRO). September 25, 2012 – As part of the DOD's efforts to confront the crime of sexual assault in the military, then Secretary of Defense Leon Panetta announced improvements to prospective commander and senior enlisted training and a review of the initial military training environment in every service. December 21, 2012 – DOD released key findings from the Academic Program Year (APY) 2011-2012 Report on Sexual Harassment and Violence at the United States Military Service Academies. According to this report, the overall prevalence rate of unwanted sexual contact increased in all three military academies. From 2011 to 2012, the Air Force Academy in Colorado showed the largest increase in reported sexual assaults from 33 to 52 incidents. Sexual assaults at the Naval Academy in Annapolis, MD, increased from 11 to 15, and were up at the U.S. Military Academy in West Point, NY, from 10 to 13. 2013 January 18, 2013 – DOD announced the release of the 2012 Workplace and Gender Relations Survey of Reserve Component Members . This report included rates of unwanted sexual contact, unwanted gender-related behaviors (i.e., sexual harassment and sexist behavior), and gender discriminatory behaviors and sex discrimination reported by survey respondents during the past 12 months. March 7, 2013 – Defense Secretary Chuck Hagel, in a letter responding to Members of Congress, wrote that an internal review was being conducted of a decision by a senior Air Force commander, Lt. Gen. Craig Franklin, to overturn the sexual assault conviction of an Air Force fighter pilot, Lt. Col. James Wilkerson. Colonel Wilkerson was found guilty in November 2012 of aggravated sexual assault and was sentenced to one year in military prison. Lt. General Franklin's decision to overturn the findings of the court-martial freed Colonel Wilkerson, and allowed him to be reinstated in the Air Force. In his letter, Hagel said that while General Franklin's decision could not be overturned, he had asked Pentagon lawyers and the Secretary of the Air Force to review the way in which General Franklin decided the case. He also said he wanted a review of whether the military should change the way it handles sexual assault cases. April 2, 2013 – Secretary Chuck Hagel stated in a message to all DOD personnel on Sexual Assault Awareness and Prevention Month that, "Together, we must work every day to instill a climate that does not tolerate or ignore sexist behavior, sexual harassment, or sexual assault. These have no place in the United States military and violate everything we stand for and the values we defend." April 8, 2013 – Secretary Hagel announced that DOD's Office of General Counsel will review Article 60 of the Uniform Code of Military Justice (UCMJ) after an Air Force officer's court-martial conviction for sexual assault was dismissed using the authority provided by Article 60. May 6, 2013 – The Office of the Secretary of Defense released a 24-page memorandum from Secretary Hagel to all heads of the military services regarding DOD's 2013 Sexual Assault Prevention and Response Strategy, and the release of the Annual Report on Sexual Assault in the Military 2012 (2 volumes). According to this report, in FY2012 (October 1, 2011, through September 30, 2012), the number of sexual assaults reported by members of the military rose 6% to 3,374. An anonymous survey of military personnel showed the number of service members who had experienced unwanted sexual contact could be as many as 26,000 but most never reported the incidents. That number is an increase over the 19,000 estimated assaults in 2011. These reports involved offenses ranging from abusive sexual contact to rape. May 7, 2013 – In a DOD press briefing, Defense Secretary Chuck Hagel and Major General Gary Patton, director of SAPRO, announced new series of actions to further DOD's sexual assault and prevention efforts. Hagel directed service chiefs to develop methods to hold all military commanders accountable for establishing command climates of dignity and respect in incorporating sexual assault prevention and victim care principles in their commands. May 7, 2013 – DOD announced the establishment of the Response Systems to Adult Sexual Assault Crimes Panel consisting of nine selected appointees. Secretary of Defense Hagel appointed five members to serve on the response systems panel, who joined four members appointed by the chairman and ranking member of the Senate Armed Services Committee, and the chairman and ranking member of the House Armed Services Committee. May 14, 2013 – The Army announced that an Army Sergeant First Class assigned to III Corps, Fort Hood, TX, was under investigation for pandering, abusive sexual contact, assault, and maltreatment of subordinates. May 15, 2013 – Returning from NATO meetings in Brussels, the Chairman of the Joint Chiefs of Staff, Army Gen. Martin E. Dempsey, told reporters that sexual assault in the Armed Forces constitutes a crisis in the military. He further stated that "We're losing the confidence of the women who serve that we can solve this problem, and that's a crisis." May 16, 2013 – At the White House, President Obama met with senior military leaders on the issue of sexual assault in the U.S. Armed Forces. The President stated that not only is it "shameful and disgraceful" but also "dangerous to our national security." May 17, 2013 – During a press briefing, Defense Secretary Hagel and Chairman of the Joint Chiefs of Staff Army Gen. Martin Dempsey discussed their meeting with President Obama, Vice President Biden, and senior enlisted and officer leadership in the U.S. military. Dempsey told the Armed Forces Press Service that he believes that the long wars in Iraq and Afghanistan may be factors in the growing incidents of sexual assault. He also stated that: "If a perpetrator shows up at a court-martial with a rack of ribbons and has four deployments and a Purple Heart, there is certainly a risk that we might be a little too forgiving of that particular crime." May 17, 2013 – In an interview, Air Force Chief of Staff, Gen. Mark Walsh, said that sexual assaults in his branch of the military typically involve alcohol use and can be traced to a lack of respect for women. "We have a problem with respect for women that leads to many of the situations that result in sexual assault in our Air Force," he told reporters in his Pentagon office. Walsh further stated that combatting the crisis is his top priority and that he reviews every reported case of sexual assault. May 22, 2013 – The Pentagon announced that DOD's sexual assault prevention staff would be exempt from furloughs. According to Pentagon spokeswoman, Cynthia O. Smith, "The full-time civilians working these programs and implementing policies will not be furloughed. This will ensure responsive victim care and ensure all the programs recently directed by Secretary Hagel are implemented swiftly and efficiently." May 24, 2013 – President Obama addressed graduates of the U.S. Naval Academy in Annapolis, MD, and noted in his commencement speech that the misconduct of some in the military can endanger U.S. forces and undermine U.S. efforts to achieve security and peace worldwide. He further stated that those who commit sexual assault are not only committing a crime, they also "threaten the trust and discipline that make our military strong." May 25, 2013 – In a commencement speech at the U.S. Military Academy at West Point, NY, Defense Secretary Chuck Hagel told graduates that they must be the generation of leaders that will commit to building a culture of respect for every member of the military. He stated that sexual harassment and sexual assault in the military "are a profound betrayal of sacred oaths and sacred trusts." He also quoted President Obama's remarks at the Naval Academy when he said, "these crimes have no place in the greatest military on earth." May 30, 2013 – Pentagon officials reaffirmed DOD's commitment to fighting sexual assault by launching the Safe HelpRoom at http://SafeHelpline.org , a Sexual Assault Support Service for the DOD community. This new service allows victims to participate in moderated group chat sessions to connect with and support one another in a secure online environment. The Safe HelpRoom is in response to a need for peer support services identified by users of DOD's Safe Helpline for sexual assault victims. June 6, 2013 – In a speech at the 2013 Joint Women's Leadership Symposium, Navy Adm. James A. Winnefeld Jr., vice chairman of the Joint Chiefs of Staff, said plans to combat and eliminate sexual assault include a greater investment in specially trained sexual assault investigators and a push for more psychological, medical, and legal assistance for victims. The vice chairman also said officials will examine the scientific roots of behavioral factors associated with potential predators, which will assist sexual assault prevention efforts. June 7, 2013 – The Pentagon released a statement that Maj. Gen. Michael T. Harrison was suspended of his duties as the Commanding General of United States Army Japan and I Corps for failing in his duties as a commander to report or investigate an allegation of sexual assault. June 7, 2013 – Air Force officials announced Maj. Gen. Margaret H. Woodward has been assigned to direct the Air Force Sexual Assault Prevention and Response Office to replace Lt. Col. Jeffrey Krusinski, the former chief of the Air Force Sexual Assault Prevention and Response Program. He was arrested and charged by Arlington County, VA, police for allegedly being drunk and groping a woman in a parking lot one mile from the Pentagon. In the previous year, Maj. Gen. Woodward led the investigation of Air Force training in the wake of a sexual assault scandal centered at Lackland Air Force Base, Texas. June 27, 2013 – Defense Secretary Hagel met in person with the Sexual Assault Response Systems Review Panel for the first time. According to the Pentagon, "the panel will conduct an independent review and assessment of the systems used to investigate, prosecute, and adjudicate crimes involving sexual assault and related offenses under the Uniform Code of Military Justice, and will develop recommendations to improve the effectiveness of those systems." DOD established the panel in accordance with the National Defense Authorization Act (NDAA) for Fiscal Year 2013 ( P.L. 112-239 , Section 576 (a)). Previously, Hagel held a teleconference with panel members. July 3, 2013 – The Chief of the National Guard Bureau, Army Gen. Frank J. Grass, launched a comprehensive campaign designed to assist National Guard units in combating sexual assault as part of a military-wide effort to protect victims and eradicate the crime from the ranks. July 9, 2013 – DOD Inspector General (IG) released its report, Joint Warfighting and Readiness Evaluation of the Military Criminal Investigative Organizations Sexual Assault Investigations . The report evaluated the Military Criminal Investigative Organizations' (MCIOs') sexual assault investigations in 2010 to determine whether they were adequately investigated. The report found most MCIO investigations (89%) met or exceeded the investigative standards and returned only cases with significant deficiencies (11%) to the MCIOs for corrective action. July 18, 2013 – The Air Force adopted two new measures to eliminate sexual assault from within the ranks, including requiring mandatory discharge for airmen, officer or enlisted, who commit sexual assault, and requiring the Air Force's most senior commanders to review actions taken on these cases. In addition, the Air Force Academy is reviewing the results of a survey on sexual assault taken on June 24, 2013. Suggestions from survey respondents ranged from involving faculty with character coaching to a complete revamping of how the Air Force Academy trains its freshmen. July 18, 2013 – Secretary of the Navy Ray Mabus announced additional resources for investigators and a new initiative designed to enhance accountability and transparency across the Navy. Mabus approved nearly $10 million to hire more than 50 additional Naval Criminal Investigative Service (NCIS) Family and Sexual Violence Program personnel to shorten investigation times, and directed the Navy and Marine Corps to regularly publish online the results of each service's courts- martial. July 18, 2013 – The Air Force announced that airmen who commit sexual assaults will be discharged, and senior commanders must review actions taken on sexual assault cases under new Air Force initiatives as of July 2, 2013. August 15, 2013 – Defense Secretary Hagel announced seven new anti-sexual assault initiatives in a memo detailing "... absolute and sustained commitment to providing a safe environment in which every service member and DOD civilian is free from the threat of sexual harassment and assault," he wrote in a statement. "Our success depends on a dynamic and responsive approach. We, therefore, must continually assess and strive to improve our prevention and response programs." October 3, 2013 – Air Force Col. Alan R. Metzler, the deputy director for SAPRO, emphasized that the first step to stopping sexual assault in the military is through prevention but when prevention fails, new measures to improve victims' confidence and combat underreporting were needed. Metzler outlined the DOD Sexual Assault Advocate Certification Program (D-SAACP) and the Defense Sexual Assault Incident Database (DSAID), two initiatives set to improve the advocacy services provided to victims of sexual assault. November 9, 2013 – Army Maj. Gen. Gary S. Patton, director of DOD's SAPRO, reported on DOD's recent prevention and awareness successes before the Response Systems to Adult Sexual Assault Crimes Panel. He testified that new DOD initiatives to combat sexual assault helped create a 46% jump in victims reporting compared to the previous year. December 20, 2013 – President Obama instructed Defense Secretary Hagel and Chairman Dempsey to continue their efforts to make substantial improvements with respect to sexual assault prevention and response, including to the military justice system. He also directed that they report back with a full-scale review of their progress, by December 1, 2014. 2014 January 10, 2014 – Army Maj. Gen. Jeffrey J. Snow, the new SAPRO chief announced the release of the Annual Report to Congress on Sexual Harassment and Violence at the Military Service Academies . The report covered the 2012-13 academic year, and found in 2013, reports of sexual assault decreased at the U.S. Military Academy at West Point, New York and the U.S. Air Force Academy in Colorado Springs, Colorado. The number of reported incidents went up at the U.S. Naval Academy in Annapolis, Maryland. January 30, 2014 – The independent Response Systems to Adult Sexual Assault Crimes Panel accepted a subcommittee recommendation that senior military commanders retain authority for referring these crimes to courts-martial. May 1, 2014 – DOD released the 2013 Annual Report on Sexual Assault in the Military . The report covered the period from Oct. 1, 2012, through Sept. 30, 2013, and revealed 5,061 reports of sexual assault in the Defense Department, a 50 percent jump from the previous year. More than 70 percent of all cases that the military had jurisdiction resulted in criminal charges. July 17, 2014 – DOD collaborated with the Justice Department's Office for Victims of Crime to develop a curriculum that expands on the skills learned in initial sexual assault response coordinator and sexual assault prevention and response victim advocate training. December 4, 2014 – Secretary Hagel released DOD's Report to the President of the United States on Sexual Assault Prevention and Response on its progress in addressing sexual assault in the military, and announced four directives to further strengthen the department's prevention and response program. According to this report, based on survey data, servicemembers experienced fewer sexual assaults in FY2014 than in FY2012, an estimated 19,000, down from 26,000. 2015 January 16, 2015 – Secretary Hagel at the Air Force Sexual Assault Prevention and Response Summit remarked that the fight to end sexual assault in the military must be "personal." He cited "encouraging progress" over the last year, but acknowledged more can be done, notably in areas such as social retaliation, which he said stems from the overall environment. February 11, 2015 – The annual report on sexual harassment and violence at the military service academies estimated that overall rates of unwanted sexual contact at the military service academies declined in Academic Program Year (APY) 2013-2014, decreased for both men and women, indicating that fewer sexual assaults occurred at the academies in APY 13-14 than in APY 11-12. February 19, 2015 – Health and criminal investigation experts spoke at the Army's Sexual Harassment/Assault Response Program Summit on the underreporting of male victims of sexual assault in the military due to factors such as shame and fear of being ostracized. March 26, 2015 – SAPRO head Army Maj. Gen. Jeffrey Snow monitored 50 initiatives put in place by past Defense secretaries Leon Panetta and Chuck Hagel. According to Snow, the most recent data, gathered last year, shows the past-year prevalence of sexual assault is down significantly, Snow said. Estimates indicate there were 6,000 to 7,000 fewer sexual assaults in 2014 than in 2012. May 1, 2015 – According to the 2014 RAND Military Workplace Stud y, "the percentage of active duty women who experienced unwanted sexual contact over the past year declined from 6.1% in 2012 to an estimated 4.3% in 2014. For active duty men, the estimated prevalence rate dropped from 1.2% in 2012 to 0.9% in 2014. Based on these rates, an estimated 18,900 service members experienced unwanted sexual contact in 2014, down from around 26,000 in 2012." May 22, 2015 – Defense Secretary Ash Carter announced Army Maj. Gen. Camille M. Nichols will assume duties as director of SAPRO effective June 8, 2015. 2016 January 8, 2016 – DOD announced the release of the Annual Report on Sexual Harassment and Violence at the Military Service Academies for A cademic P rogram Y ear 2014-2015 . Data in the report indicated the academies received 91 sexual assault reports during the academic year, an increase of 32 reports over the previous year. April 2 8 , 2016 – Defense Secretary Ash Carter announced a sexual assault retaliation prevention and response strategy aimed at how the department supports servicemembers who experience retaliation, while aligning prevention and response efforts across the services. May 5, 2016 – The annual report of the Defense Department's Sexual Assault Prevention and Response Program indicated that DOD's efforts are having an impact. In FY2015, service members made 6,083 reports of sexual assault – the same rate as the previous fiscal year, with four in 1,000 servicemembers reporting sexual assault despite a smaller active force size. In addition, 21 percent of those making restricted reports in fiscal 2015 chose to convert to unrestricted reports, enabling them to participate in the military justice process. September 19 , 2016 – The Naval Academy in Annapolis, MD, hosted an all-day training event to strengthen how military and civilian communities work together to support servicemembers who report sexual assault in a joint program between DOD and the Justice Department. October 19, 2016 – DOD released the 2016 Military Investigation and Justice Experience Survey that allowed servicemembers who have experienced sexual assault and elected to participate in the military justice process the opportunity to provide DOD with direct feedback on their experiences; and to improve the services and support servicemembers reporting sexual assault. December 15, 2016 – Defense Department officials announced the release of the "DOD Plan to Prevent and Respond to Sexual Assault of Military Men," designed to enhance outreach to military men and increase efforts to help them recover. Congressional Action and Legislation The following information was compiled using Congress.gov, Congressional Quarterly (CQ.com), House.gov, Senate.gov, and Roll Call. See the section "Resources" for a list of congressional hearings, reports and other documents. 113th Congress (2013-2014) January 23, 2013 – The House Armed Services Committee held a hearing on sexual misconduct at Lackland Air Force Base in San Antonio, TX. January 25, 2013 – H.R. 430 , Protect Our Military Trainees Act, was introduced. This legislation would have amended the Uniform Code of Military Justice to protect new members of the Armed Forces who are undergoing basic training from the sexual advances of the members of the Armed Forces responsible for their instruction. It also requires that violators be punished as a court-martial may direct. March 5, 2013 – H.R. 975 , the Servicemember Mental Health Review Act, was introduced. This bill would have amended Title 10, United States Code, to extend the duration of the Physical Disability Board of Review and to the expand the authority of such Board to review the separation of members of the Armed Forces on the basis of a mental condition not amounting to disability, including separation on the basis of a personality or adjustment disorder. This would have included a review of those victims who have suffered military sexual trauma. March 13, 2013 – S. 548 , Military Sexual Assault Prevention Act of 2013, was introduced, read twice, and referred to the Senate Armed Services Committee. This legislation aimed to amend Title 10, United States Code, and to improve capabilities of the Armed Forces to prevent and respond to sexual assault and sexual harassment in the Armed Forces. March 13, 2013 – Victims of sexual assault in the military testified before a Senate panel examining the military's handling of sexual assault cases and stated that the "military justice system is broken." They urged Congress to make changes in the law that would stem the rape, sexual assault, and sexual harassment that they said are pervasive in the service branches. Several male Navy veterans testified before the Senate Armed Service Committee's military personnel panel investigating sexual assaults in the military. One recounted that he was raped in 2000 by a higher-ranking petty officer aboard a submarine. He told the committee that he carries permanent shame not for the sexual assault but over how the Navy forced him to leave. He stated in his testimony, "I carry my discharge as an official and permanent symbol of shame, on top of the trauma of the physical attack, the retaliation and its aftermath." March 20, 2013 – S. 628 , Servicemember Mental Health Review Act, was introduced, read twice and referred to the Committee on Armed Services. Related to H.R. 975 , this bill would have amended Title 10, United States Code, to extend the duration of the Physical Disability Board of Review and to the expand the authority of such board to review the separation of members of the Armed Forces on the basis of a mental condition not amounting to disability, including separation on the basis of a personality or adjustment disorder. This would have included a review of those victims who may have suffered military sexual trauma. April 17, 2013 – H.R. 1593 , Sexual Assault Training Oversight and Prevention (STOP) Act, was introduced. This bill seeks to amend Title 10, United States Code, by establishing a Sexual Assault Oversight and Response Council and an enhanced Sexual Assault Oversight and Response Office "to improve the prevention of and response to sexual assault in the Armed Forces, and by requiring the appointment of a Director of Military Prosecutions for sexual-related offenses committed by a member of the Armed Forces." April 26, 2013 – A U.S. senator reportedly put a hold on the nomination of Air Force Lt. Gen. Susan Helms, nominated to serve as vice commander of the U.S. Space Command. Earlier in February 2012, Gen. Helms rejected the recommendation of legal counsel and overturned the conviction of an Air Force captain who had been found guilty of aggravated sexual assault of a female lieutenant. May 7, 2013 – S. 871 , Combating Military Sexual Assault Act of 2013, was introduced, read twice and referred to the Committee on Armed Services. This legislation would have aimed to provide any victim with a special military lawyer who would assist them throughout the process, prohibit sexual contact between instructors and trainees during and within 30 days of completion of basic training or its equivalent, and ensure that sexual assault response coordinators are available to help members of the National Guard and Reserve. May 7, 2013 – H.R. 1864 , to amend Title 10, United States Code, would have required an Inspector General investigation of allegations of retaliatory personnel actions taken in response to making protected communications regarding sexual assault, was introduced and referred to the House Armed Services Committee. This bill would have required the Inspector General of the Department of Defense (DOD), the Department of Homeland Security (DHS) with respect to the Coast Guard, or any of the military departments to investigate allegations of retaliatory personnel actions taken in response to making protected communications regarding alleged instances of rape, sexual assault, or other forms of sexual misconduct in violation of the Uniform Code of Military Justice. May 7, 2013 – At the Senate Armed Services Committee, Subcommittee on Personnel hearing Gen. Mark Welsh, the Air Force's Chief of Staff, told the committee that he and Air Force Secretary Michael Donley were "appalled" by the charges against Lt. Col. Jeffrey Krusinski, branch chief of the Air Force's Sexual Assault and Prevention Office. He was arrested and charged by Arlington County, VA, police for allegedly being drunk and groping a woman in a parking lot one mile from the Pentagon. "Sexual assault prevention and response efforts are critically important to us," Welsh said. "It is unacceptable that this occurs anywhere, at any time, in our Air Force." May 8, 2013 – H.R. 1867 , the Better Enforcement for Sexual Assault Free Environments (BE SAFE) Act of 2013, was introduced, read twice, and referred to the House Armed Services Committee. This bill would have amended Title 10, United States Code, "to require an Inspector General investigation of allegations of retaliatory personnel actions taken in response to making protected communications regarding sexual assault." This bill would ensure those found guilty of rape, sexual assault, sodomy, or an attempt to commit any of those crimes, are—at a minimum—dismissed or dishonorably discharged from the military. The five-year statute of limitations within the military's justice system for sexual assault cases would be eliminated, and legal assistance services available to victims would be expanded. May 8, 2013 – In a hearing of the Defense Subcommittee of the Senate Appropriations Committee, senators questioned the Air Force's top leaders over rising sexual assaults in the military. Some senators cited DOD statistics from the Annual Report on Sexual Assault in the Military 2012 on the number of incidents of sexual assaults the same week Lt. Col. Jeffrey Krusinski, Chief of the Air Force's Sexual Assault Prevention and Response Branch, was arrested and charged with sexual battery. May 9, 2013 – A hearing of the Defense Subcommittee of the House Appropriations Committee on the Air Force budget was held. Witnesses included Michael Donley, Secretary of the Air Force, and General Mark Welsh, Air Force Chief of Staff. Members of the committee questioned them on Defense Secretary Hagel's review of the decision by Lt. Gen. Craig Franklin to dismiss Lt. Col. James Wilkerson's sexual assault conviction. May 14, 2013 – H.Res. 213 , a resolution to establish the "Special Committee on Sexual Assault and Abuse in the Armed Forces" was introduced. A "Dear Colleague" memorandum urged support of this legislation referencing Gen. Martin Dempsey's denouncement of military sexual assault as a "crisis" and the need for Congress to address this problem in a "deeper, more comprehensive manner." This Special Committee would have included 19 members appointed by the Speaker and Minority Leader, as well as chairman and ranking members of the committees on Armed Services, Appropriations, Judiciary, and Oversight and Government Reform. May 14, 2013 – H.R. 1960 , a bill to authorize appropriations for FY2014 for military activities of the Department of Defense, for military construction, and for defense activities of the Department of Energy, to prescribe military personnel strengths for such fiscal year, and for other purposes, was introduced. The FY2014 NDAA addressed the issue of sexual assault in the military by establishing minimum sentencing guidelines for any service members found guilty of sexual assault as well as other provisions. May 15, 2013 – H.R. 1986 , Sexual Assault Nurse Examiner (SANE) Deployment Act, was introduced. This bill would have provided for the assignment of Sexual Assault Nurse Examiners-Adult/Adolescent to brigades and equivalent units of the Armed Forces. May 15, 2013 – H.R. 2002 , Combating Military Sexual Assault Act of 2013, was introduced and referred to the House Committee on Armed Services. This bill was related to S. 871 , and would have provided any sexual assault victim with a special military lawyer who would assist them throughout the process, prohibit sexual contact between instructors and trainees during and within 30 days of completion of basic training or its equivalent, and ensure that sexual assault response coordinators (SARCs) are available to help members of the National Guard and Reserve. May 16, 2013 – H.R. 2016 , Military Justice Improvement Act of 2013, was introduced and referred to the Committee on Armed Services. This bill would have required "a commanding officer who receives a report of a sexual-related offense involving a member in such officer's chain of command to act immediately upon such report by way of referral to the appropriate criminal investigative office or service." This bill was related to S. 538 , Military Sexual Assault Prevention Act of 2013, and S. 967 , Military Justice Improvement Act of 2013. May 16, 2013 – S. 967 , Military Justice Improvement Act of 2013, was introduced, read twice, and referred to the Committee on Armed Services. This bill would have required a commanding officer who receives a report of a sex-related offense involving a member in such officer's chain of command to act immediately upon such report by way of referral to the appropriate criminal investigative office or service. May 21, 2013 – S. 992 , a bill to provide for offices on sexual assault prevention and response under the Chiefs of Staff of the Armed Forces, to require reports on additional offices and selection of sexual assault prevention and response personnel, and for other purposes. This bill was read twice and referred to the Committee on Armed Services. May 22, 2013 – A House panel passed a number of changes in sexual assault prevention programs that limited commander discretion in reducing or dismissing rape and assault charges and expanded support services for victims. The House Armed Services Subcommittee on Military Personnel approved the personnel issues as part of H.R. 1960 , the FY2014 NDAA bill. May 22, 2013 – The Senate Appropriations Subcommittee on Defense held a hearing on the Army's FY 2014 Budget Request. Witnesses included Secretary of the Army, John McHugh and Chief of Staff of the Army, General Raymond T. Odierno. Army Secretary McHugh announced at this hearing that the service will soon require soldiers being considered for sexual assault prevention jobs to undergo behavioral-health evaluations as a way of screening out potential sex offenders from these high-profile positions. This was in response to a senator's question about the criteria for sexual assault prevention jobs. McHugh said that service record and availability are the only criteria commanders are using to fill these jobs since sexual-assault prevention positions do not fall under any military occupational specialty and lack career incentives. May 23, 2013 – S. 1032 , Better Enforcement for Sexual Assault Free Environments Act of 2013, was introduced, read twice and referred to the Committee on Armed Services. This bill would amend Title 10, United States Code, to make certain improvements in the Uniform Code of Military Justice related to sex-related offenses committed by members of the Armed Forces. June 4, 2013 – The uniformed chiefs of the Army, Navy, Air Force, Marine Corps, and Coast Guard appeared before a hearing of the Senate Armed Services Committee, Subcommittee on Military Personnel. These military leaders acknowledged that despite a "zero tolerance" for sexual abuse, they had neglected the "epidemic" in the ranks by not always monitoring subordinate commanders. Chairman of the Joint Chiefs of Staff, Army Gen. Martin Dempsey pointed to competing demands and pressures of fighting two wars in Iraq and Afghanistan, as a justification for lack of adequate monitoring. The Service Chiefs voiced support for legislative changes that would take tougher action against offenders and provide more support for victims of military sexual assault. They opposed a legislative proposal that would remove unit commanders' legal power to oversee major criminal cases and transfer that authority to uniformed prosecutors. The Army Chief of Staff, Gen. Ray Odierno, noted that taking away commanders' authority in matters of military justice would adversely impact discipline and that "we cannot, however, simply 'prosecute' our way out of this problem. At its heart, sexual assault is a discipline issue that requires a culture change." June 4, 2013 – S. 1092 was introduced, read twice, and referred to the Senate Armed Services Committee. This bill would have amended Title 10, United States Code, to require an Inspector General investigation of allegations of retaliatory personnel actions taken in response to making protected communications regarding sexual assault. June 6, 2013 –would allow victims of sexual assault to apply for a permanent change The House Armed Services Committee passed H.R. 1960 , the NDAA for FY2014, by a vote of 59-2. According to the Committee's Fact Sheet, "the FY14 NDAA of station or unit transfer, while authorizing the Secretary of Defense to inform commanders of their authority to remove or temporarily reassign service members who are the alleged perpetrators of sexual assault. It also requires the provision of victims' counsels, qualified and specially trained lawyers in each of the services, to be made available to provide legal assistance to the victims of sex-related offenses. The FY14 NDAA adds rape, sexual assault, or other sexual misconduct to the protected communications of service members with a Member of Congress or an Inspector General." June 14, 2013 – The House passed H.R. 1960 , the NDAA for FY2014 by a vote of 315 to 108 (Roll no. 244). This bill includes a provision protecting victims of sexual assault in the Armed Forces as protected communications under military whistle-blower laws, to shield victims against retaliatory actions. The measure seeks to encourage more victims to report assaults, rape and other forms of sexual misconduct. June 17, 2013 – H.R. 2397 , "Department of Defense Appropriations Act, 2014," was introduced and referred to the House Committee on Appropriations. It was reported as an original measure, H.Rept. 113-113 . Lawmakers wrote in this committee report that they were "outraged by the pervasive problem of sexual assault in the Armed Forces. Sexual assault is not just an issue in the military; it is an epidemic. To address it, the Committee believes that there must be a culture change at every level of the military, from the most senior leadership to the most junior ranks." Included was a measure that would provide $182 million for the Pentagon's Sexual Assault Prevention and Response Office (SAPRO) and for an expansion of a victim's counseling program. For FY2013, the programs received $95 million. The bill included $25 million that was not requested by the administration in a transfer account to expand assistance across the Defense Department. June 20, 2013 – S. 1197 , NDAA for Fiscal Year 2014, was introduced in the Senate. This bill would have authorized "appropriations for fiscal year 2014 for military activities of the Department of Defense, for military construction, and for defense activities of the Department of Energy, to prescribe military personnel strengths for such fiscal year, and for other purposes," and referred to the Committee on Armed Services. The original measure was reported to the Senate in Report No. 113-44 and placed on the Legislative Calendar under General Orders (Calendar No. 91). Included in this bill was Title V—Military Personnel Policy, Subtitle E—Sexual Assault Prevention and Response and Military Justice. June 27, 2013 – H.R. 1864 , a bill "To amend Title 10, United States Code, to require an Inspector General investigation of allegations of retaliatory personnel actions taken in response to making protected communications regarding sexual assault," was agreed to/passed in the House, 423-0 (Roll no. 294). July 18, 2013 – Army Gen. Martin E. Dempsey, the chairman of the Joint Chiefs of Staff, and Navy Adm. James A. Winnefeld Jr., the vice chairman, in a hearing before the Senate Armed Services Committee said that commanders should retain responsibility for prosecuting service members accused of sexual assault, and taking that authority away could harm good order and discipline. July 2 2 , 2013 – H.R. 2777 , Stop Pay for Violent Offenders Act, was introduced "to amend Title 10, United States Code, to authorize the Secretaries of the military departments to suspend the pay and allowances of a member of the Armed Forces who is held in confinement pending trial by court-martial or by civil authority for any sex-related offense or capital offense." July 24, 2013 – H.Amdt. 408 to H.R. 2397 , an amendment to provide funds to identify individuals who were separated from the military on the grounds of a disorder subsequent to reporting a sexual assault and, if appropriate, correcting their record. This amendment (A065) was agreed to by voice vote. July 24, 2013 – H.R. 2397 , "Department of Defense Appropriations Act, 2014," was passed/agreed to in House, 315 - 109 (Roll no. 414). October 22, 2013 – H.R. 3304 , the NDAA for FY2014, was introduced in the House. As introduced, the bill would have provided for a defense counsel interview of victim of an alleged sex-related offense in presence of trial counsel, counsel for the victim, or a Sexual Assault Victim Advocate, prohibition on service in the Armed Forces by individuals who have been convicted of certain sexual offenses, Coast Guard regulations regarding request for permanent change of station or unit transfer by victim of sexual assault, temporary administrative reassignment or removal of an active duty member accused of committing a sexual assault, Inspector General investigation of allegations of retaliatory personnel actions taken in response to making protected communications regarding sexual assault, compliance tracking of commanding officers in conducting organizational climate assessments for purposes of preventing and responding to sexual assaults, advancement of submittal deadline for report of independent panel on assessment of military response systems to sexual assault, retention of certain forms on sexual assault, timely access to Sexual Assault Response Coordinators by the National Guard and Reserves, and qualifications and selection of Department of Defense sexual assault prevention and response personnel and required availability of Sexual Assault Nurse Examiners. It also would establish commanding officer actions regarding sexual assault reports, an eight-day incident reporting requirement in response to unrestricted report of sexual assault in which the victim is a member of the Armed Forces, and curricula that addresses the prevention of sexual assault at the military service academies. December 26, 2013 – H.R. 3304 , the NDAA for FY2014 became P.L. 113-66 . As enacted, the bill included more than two dozen provisions to address an epidemic of sexual assault in the military in Title XVII—Sexual Assault Prevention and Response and Related Reforms, Subtitle A—Reform of Uniform Code of Military Justice. February 26, 2014 – Dr. Karen S. Guice, principal deputy assistant secretary of defense for health affairs, and other Defense Department officials testified before the Senate Armed Services Committee's personnel subcommittee on the relationship between military sexual assault survivors and the subsequent development of suicide and post-traumatic stress disorder. April 9, 2014 – H.R. 4435 , the Howard P. "Buck" McKeon National Defense Authorization Act for Fiscal Year 2015, was introduced in the House. The bill would have applied Title XVII of the National Defense Authorization Act for Fiscal Year 2014 ( P.L. 113-66 ; 127 Stat. 950) to the military service academies, consulted with victims of sexual assault regarding victims' preference for prosecution of offense by court-martial or civilian court, created a confidential review of characterization of terms of discharge for victims of sexual offenses, revised requirements relating to DOD policy on retention of evidence in a sexual assault case to allow return of personal property upon completion of related proceedings, required the DOD Inspector General to review separation of members who made unrestricted reports of sexual assault, and would have created a deadline for submission of report containing results of review of Office of Diversity Management and Equal Opportunity role in sexual harassment cases. Prior to passing in the House, the House Armed Services Committee rejected an amendment from Congresswoman Speier that would have removed the military chain of command from decisions to prosecute sexual assault cases and other major crimes, except offenses that are unique to the military. She offered an alternative proposal, which would have only removed commanding officers' prosecutorial discretion for instances of sexual assault, that was also rejected by a 28-34 vote. It was received in the Senate, read twice, and placed on Senate Legislative Calendar under General Orders. Calendar No. 425. June 2, 2014 — S. 2410 , the Carl Levin National Defense Authorization Act for Fiscal Year 2015, was introduced in the Senate. It was placed on Senate Legislative Calendar under General Orders. Calendar No. 402. The bill included measures on military justice such as enhancing sexual assault prevention and response, the application of P.L. 113-66 , Title XVII to military academies, and the collaboration between the Departments of Justice and Defense. December 19 , 2014 — H.R. 3979 , the Carl Levin and Howard P. "Buck" McKeon National Defense Authorization Act for Fiscal Year 2015, was signed as P.L. 113-291 . Subtitle D—Military Justice, Including Sexual Assault and Domestic Violence Prevention and Response addressed the following: modification of DOD policy on retention of evidence in a sexual assault cases to permit return of personal property upon completion of related proceedings; requirements relating to Sexual Assault Forensic Examiner; analysis and assessment of disposition of most serious offenses; a plan for limited use of certain information on sexual assaults in restricted reports by military criminal investigative organizations; the establishment of a Defense Advisory Committee on Investigation, Prosecution, and Defense of Sexual Assault in the Armed Forces; confidential review of the terms of discharge of sexual assault survivors; deadline for submission of report containing results of review of Office of Diversity Management and Equal Opportunity role in sexual harassment cases; and applied Title XVII of the NDAA for Fiscal Year 2014 ( P.L. 113-66 ; 127 Stat. 950) to the military service academies. 114th Congress (2015-2016) January 13, 2015 — S. 178 , the Justice for Victims of Trafficking Act of 2015 was introduced in the Senate. Title V of this bill "Military Sex Offender Reporting" stipulates that the Secretary of Defense shall provide the Attorney General information about sex offenders in the military to be included in the National Sex Offender Registry and the Dru Sjodin National Sex Offender Public Website. It became P.L. 114-22 on May 29, 2015. February 3, 2015 — H.R. 677 , American Heroes COLA Act of 2015, was introduced in the House, passed on February 9, and the next day was received in the Senate, read twice, and referred to the Committee on Veterans' Affairs. Section 6 proposed that veterans whose claims were being reviewed again in relation to a previously denied claim relating to military sexual trauma be given priority, among other claims. February 12, 2015 — H.R. 956 , the Military Track, Register and Alert Communities Act of 2015 (Military TRAC Act) was introduced in the House and referred to the House Armed Services Committee's Subcommittee on Military Personnel on November 23. This bill intended to require DOD to maintain a sex offender registry of individuals convicted of certain sex offenses under the Uniform Code of Military Justice or of other military offenses appropriate for sex offender registration purposes. April 13, 2015 — H.R. 1735 , the National Defense Authorization Act for Fiscal Year 2016, was introduced in the House. Subtitle D addressed military justice, including sexual assault and domestic violence prevention and response. April 24, 2015 — H.R. 2029 , the Consolidated Appropriations Act, 2016 was introduced in the House and later became P.L. 114-113 . Section 8057 specified that "$25,000,000 shall be for continued implementation and expansion of the Sexual Assault Special Victims' Counsel Program." May 14, 2015 — S. 1356 , the National Defense Authorization Act for Fiscal Year 2016 was introduced in the Senate and later became P.L. 114-92 on November 25, 2015. Subtitle D "Military Justice, Including Sexual Assault and Domestic Violence Prevention and Response" amended the Uniform Code of Military Justice, authorized Special Victims' Counsel for civilian DOD employees, required the DOD to develop a policy to standardize the training for Special Victims' Counsel, required the establishment of Defense Advisory Committee on Investigation, Prosecution, and Defense of Sexual Assault in the Armed Forces within 90 days, required the development of a plan to improve prevention and response to sexual assaults of male members of the Armed Forces, required the establishment of a strategy to prevent retaliation against Armed Forces members who report or intervene on behalf of sexual assault victims, and authorized the President to modify Rule 304(c) of the Military Rules of Evidence to conform to the rules governing the admissibility of the corroboration of admissions and confessions in the trial of criminal cases in the U.S. district courts. June 11, 2015 — S. 1558 , Department of Defense Appropriations Act, 2016, was introduced in the Senate. The bill would have required specified O&M funds to be used for continued implementation and expansion of the Sexual Assault Prevention and Response Program. June 11, 2015 — S. 1567 , a bill to amend Title 10, United States Code, to provide for a review of the characterization or terms of discharge from the Armed Forces of individuals with mental health disorders alleged to affect terms of discharge, was introduced in the Senate. The bill proposed to address medical evidence reviews for former members applying for relief from the terms of their discharge due to military sexual trauma among other conditions. June 11, 2015 — S.Amdt. 1578 to S.Amdt. 1463 in H.R. 1735 , National Defense Authorization Act for Fiscal Year 2016, was proposed in the Senate and later considered and defeated on June 16. This bill was intended to reform procedures for determinations to proceed to trial by court-martial for certain offenses under the Uniform Code of Military Justice. It did not achieve 60 votes in the Senate by Yea-Nay Vote. The final vote was 50 - 49. April 12, 2016 — H.R. 4909 , the NDAA for FY2017, was introduced in the House where it passed on May 18. On May 26, it was received in the Senate, read twice, and placed on Senate Legislative Calendar under General Orders. Calendar No. 502. April 18, 2016 — H.R. 4991 , the Prevent Retaliation and Open up Transparency to Expand Care for Troops (PROTECT) Act of 2016, was introduced in the House and later referred to the House Armed Services' Subcommittee on Military Personnel. The bill intended to amend the Uniform Code of Military Justice to establish the offense of retaliation with provisions that would permit any person intent on retaliating against anyone for reporting or planning to report a criminal offense to be punished as a court-martial may direct. May 18, 2016 — S. 2943 , the National Defense Authorization Act for Fiscal Year 2017, was introduced in the Senate and became P.L. 114-328 on December 23. Subtitle D specified requirements for the review by a discharge review board of claims by former members asserting post-traumatic stress disorder (PTSD) or traumatic brain injury (TBI) in connection with combat or sexual trauma. Subtitle E "Military Justice and Legal Assistance Matters" required an annual report on sexual assault and response efforts, required Sexual Assault Prevention and Response Office to establish evaluation metrics and best practices in the prevention of and response to retaliation, and modified the definition of sexual harassment for the purposes of investigations of complaints of harassment by commanding officers. Title XXXV "Maritime Matters" established requirements for policies and training regarding sexual harassment and sexual assault prevention and response at the U.S. Merchant Marine Academy and required the Inspector General of the Department of Transportation to submit a report to Congress about the sexual harassment and sexual assault prevention and response program at the U.S. Merchant Marine Academy. Title LIV "Court-Martial Jurisdiction" specified the sexual offenses over which general courts-martial have exclusive jurisdiction. Title LX "Punitive Articles" created a new section of the Uniform Code of Military Justice addressing accountability for sexual misconduct committed by recruiters and trainers during the various phases within the recruiting and basic military training environments, revised the definition of ''sexual act'' with respect to the offenses of rape and sexual assault. May 19, 2016 — H.R. 5293 , Department of Defense Appropriations Act, 2017, was introduced in the House, passed on June 16, received in the Senate the next day, where it received a motion to proceed to consideration. The bill would have required O&M funds to be used for continued implementation and expansion of the Sexual Assault Prevention and Response (SAPR) Program. May 26, 2016 — S. 3000 , Department of Defense Appropriations Act, 2017, was introduced in the Senate and placed on Senate Legislative Calendar under General Orders. Calendar No. 500. The Senate Committee on Appropriations, Subcommittee on Department of Defense held several hearings prior from February-April. The bill would have required specified O&M funds to be used for continued implementation and expansion of the SAPR Program. Selected Resources Government Sources Department of Defense DOD Directive No. 6495.01. "Sexual Assault Prevention and Response (SAPR) Program," January 23, 2012, Incorporating Change 3, April 11, 2017, at http://www.esd.whs.mil/Portals/54/Documents/DD/issuances/dodd/649501p.pdf DOD Directive No. 6495.02. "Sexual Assault Prevention and Response (SAPR) Program Procedures," March 28, 2013, Incorporating Change 3, May 24, 2017, at https://www.esd.whs.mil/Portals/54/Documents/DD/issuances/dodi/649502p.pdf DOD Inspector General (IG). E valuation of the Military Criminal Investigative Organizations Sexual Assault Investigations, DODIG-2013-091, July 9, 2013, 104 p . at http://www.dodig.mil/reports.html/Article/1118941/evaluation-of-the-military-criminal-investigative-organizations-sexual-assault/ Sexual Assault Prevention and Response Office (SAPRO) at https://www.sapr.mil/ Includes the full text of DOD Annual Reports, FY2004 - FY2016, and reports on Sexual Harassment and Violence at the U.S. Military Service Academies, Academic Program Years (APY) 2005-2018. Non-DOD Reports "Final 2014–2015 Academic Program Year Annual Report on Sexual Harassment and Sexual Assault at the United States Merchant Marine Academy," Maritime Administration, undetermined date, at https://www.marad.dot.gov/wp-content/uploads/pdf/Final-2014-2015-SASH-Report.pdf "Department of Transportation U.S. Merchant Marine Academy Culture Audit, Deliverable 4. Final Report," U.S. Merchant Marine Academy, December 2016, at https://cms.dot.gov/sites/dot.gov/files/docs/mission/civil-rights/263966/dot-usmma-report.pdf "Sexual Assault Prevention and Response (SAPR) Program," United States Coast Guard, LMI, December 2016, at https://media.defense.gov/2017/Mar/29/2001723560/-1/-1/0/CIM_1754_10E.PDF "Preliminary 2015-2016 Academic Year Biennial Survey and Report on Sexual Harassment and Sexual Assault at the United States Merchant Marine Academy," Maritime Administration, January 12, 2017, at https://www.marad.dot.gov/wp-content/uploads/pdf/Preliminary-2015-2016-SASH-Report.pdf Government Accountability Office (GAO) Military Justice: Oversight and Better Collaboration Needed for Sexual Assault Investigations and Adjudications , GAO-11-579, Jun 22, 2011, 42 p. http://www.gao.gov/products/GAO-11-579 Preventing Sexual Harassment: DOD Needs Greater Leadership Commitment and an Oversight Framework , GAO-11-809, Sep 21, 2011, 47 p. http://www.gao.gov/assets/590/585344.pdf Prior GAO Work on DOD's Actions to Prevent and Respond to Sexual Assault in the Military , GAO-12-571R, Mar 30, 2012, 40 p. http://www.gao.gov/assets/590/589780.pdf DOD Has Taken Steps to Meet the Health Needs of Deployed Servicewomen, but Actions Are Needed to Enhance Care for Sexual Assault Victims, GAO-13-182, January 29, 2013, 40 p. http://www.gao.gov/assets/660/651624.pdf Military Personnel: Actions Needed to Address Sexual Assaults of Male Servicemembers, Report to the Committee on Armed Services , GAO-15-284, March 19, 2015, 86 p. http://www.gao.gov/products/GAO-15-284 Sexual Assault: Actions Needed to Improve DOD's Prevention Strategy and to Help Ensure It Is Effectively Implemented, GAO-16-61, November 4, 2015, 59 p. http://www.gao.gov/products/GAO-16-61 DOD and Coast Guard: Actions Needed to Increase Oversight and Management Information on Hazing Incidents Involving Servicemembers, GAO-16-226, Feb 9, 2016, 74 p. http://www.gao.gov/products/GAO-16-226 Selected Articles, Studies and Reports The following news sources are listed in chronological order to make it easier to follow the numerous incidents of wide-spread misconduct reported in the media. Military.com has ongoing news on military sexual assault at http://www.military.com/topics/sexual-assault . 2012 Montgomery, Nancy. "Johnson Found Guilty of Last Two Counts; Awaits Sentencing." Stars and Stripes , June 13, 2012, at http://www.stripes.com/news/johnson-found-guilty-of-last-two-counts-awaits-sentencing-1.180204 Carroll, Chris. "Air Force has Identified 31 Alleged Victims in Lackland Sex Abuse Scandal," Stars and Stripes, June 28, 2012, at http://www.stripes.com/news/air-force-has-identified-31-alleged-victims-in-lackland-sex-abuse-scandal-1.181597 Dao, James. "Instructor for Air Force Is Convicted in Sex Assaults," New York Times , July 20, 2012, at http://www.nytimes.com/2012/07/21/us/lackland-air-force-base-instructor-guilty-of-sex-assaults.html?pagewanted=all&_r=0 Blansett, Susan and Hoffman, Michael. "Sexual Assault Cases Flood Military Courts," Military.com, August 13, 2012, at http://www.military.com/daily-news/2012/08/13/sex-assault-cases-flood-military-courts.html 2013 Risen, James. "Honor Betrayed: Attacked at 19 by an Air Force Trainer, and Speaking Out," New York Times , February 26, 2013, at http://www.nytimes.com/2013/02/27/us/former-air-force-recruit-speaks-out-about-rape-by-her-sergeant-at-lackland.html?pagewanted=all Mulrine, Anne. "Seeking the Sex-Assault Solution," Air Force Magazine , April 2013, at http://www.airforcemag.com/MagazineArchive/Pages/2013/April%202013/0413solution.aspx "5 Former Lackland Commanders Disciplined," Military.com, May 2, 2013, at http://www.military.com/daily-news/2013/05/02/5-former-lackland-commanders-disciplined.html Kime, Patricia. "Lawmakers Act Fast with New Legislation on Military Sexual Assault." Army Times , May 7, 2013. Shapira, Ian. "July Trial Set for Jeffrey Krusinski, Air Force Officer Accused of Sexual Battery." Washington Post , May 9, 2013, at https://www.washingtonpost.com/local/july-trial-set-for-air-force-officer-accused-of-sexual-battery/2013/05/09/8a21eb92-b8d9-11e2-92f3-f291801936b8_story.html?utm_term=.e0d4951e6573 Steinhauer, Jennifer. "Lawmakers, at White House, Discuss Sex Abuse in Military." New York Times , May 9, 2013, at http://www.nytimes.com/2013/05/10/us/politics/lawmakers-huddle-at-white-house-on-sex-abuse-in-military.html?_r=0 Whitlock, Craig. "Pentagon Grapples with Sex Crimes by Military Recruiters," Washington Post , May 12, 2013, at http://articles.washingtonpost.com/2013-05-12/world/39210853_1_military-recruiters-sexual-abuse-army-reserve Sisk, Richard. "Assault Prevention NCO Investigated for Sex Crimes." Military.com, May 15, 2013, at http://www.military.com/daily-news/2013/05/15/assault-prevention-nco-investigated-for-sex-crimes.html Whitlock, Craig. "Some in Congress want Changes in Military Law as a Result of Sex Crimes," Washington Post , May 15, 2013, at http://www.washingtonpost.com/world/national-security/some-in-congress-want-changes-in-military-law-as-result-of-sex-crimes/2013/05/15/672a2a8a-bd8b-11e2-a31d-a41b2414d001_story.html Sisk, Richard. "Sex Assault Crisis Pushes Senate to Overhaul UCMJ," Military.com, May 16, 2013, at http://www.military.com/daily-news/2013/05/16/sex-assault-crisis-pushes-senate-to-overhaul-ucmj.html Tilghman, Andrew. "Dempsey: DOD May Have Become 'Too Forgiving' of Sexual Assault," Army Times , May 17, 2013. Brady, Gen. Roger Brady (ret.). "Commentary: Telling Truths about Sexual Assault is Risky," Air Force Times , May. 21, 2013. Salcedo, Michele. "Senator: Fire Commanders Allowing Sex Assault," Army Times, May 26, 2013. Tucker, Eric. "More Details Released on Annapolis Sex Assault Investigation: Allegations Made Against Three Football Players," Navy Times , May 30, 2013. Lardner, Richard. "Brass Seeks to Temper Military Justice Overhaul," Associated Press, June 3, 2013, at http://www.military.com/daily-news/2013/06/03/brass-seeks-to-temper-military-justice-overhaul.html Cassata, Donna and Richard Lardner. "Sexual Assaults Force Changes to Military Justice," Associated Press, June 4, 2013, at http://www.military.com/daily-news/2013/06/04/sexual-assaults-force-changes-to-military-justice.html Zengerle, Patricia. "U.S. Lawmakers Act to Limit Military Authority in Sex Assault Cases," Reuters, June 5, 2013, at http://www.reuters.com/article/2013/06/05/us-usa-military-sexassault-congress-idUSBRE9541IG20130605 Cassata, Donna and Richard Lardner. " House OKs 2-Yr Jail Term for Military Sex Assault ," Associated Press, June 14, 2013, at http://www.military.com/daily-news/2013/06/14/house-oks-2-year-jail-term-for-military-sex-assault.html Montgomery, Nancy. " After 2 decades of sexual assault in military, no real change in message ," Stars and Stripes , July 7, 2013, at https://www.stripes.com/news/after-2-decades-of-sexual-assault-in-military-no-real-change-in-message-1.229091 Steinhauer, Jennifer. "Complex Fight in Senate over Curbing Military Sex Assaults," New York Times , June 14, 2013, at http://www.nytimes.com/2013/06/15/us/politics/in-senate-complex-fight-over-curbing-sexual-military-assaults.html?pagewanted=all Dao, James. "In Debate over Military Sexual Assault, Men Are Overlooked Victims," New York Times , June 23, 2013, at http://www.nytimes.com/2013/06/24/us/in-debate-over-military-sexual-assault-men-are-overlooked-victims.html?pagewanted=all&_r=0 Sisk, Richard. "Military Tries to Sever Booze, Sex Assault Link," Military.com, July 8, 2013, at http://www.military.com/daily-news/2013/07/08/military-tries-to-sever-booze-sex-assault-link.html Watson, Julie. "Military Works to Change Culture to Combat Rape," Associated Press, July 15, 2013, at http://www.military.com/daily-news/2013/07/15/military-works-to-change-culture-to-combat-rape.html Olson, Wyatt. "IG Review Finds Deficiencies in Sex Assault Cases," Stars and Stripes, July 16, 2013, at http://www.military.com/daily-news/2013/07/16/ig-review-finds-deficiencies-in-sex-assault-cases.html Shanker, Thom. "New Support for Military in Sex Cases," New York Times , July 24, 2013, at http://www.nytimes.com/2013/07/25/us/politics/new-support-for-military-in-sex-cases.html Taranto, James. "A Strange Sort of Justice at West Point," The Wall Street Journal, July 26, 2013, at https://www.wsj.com/articles/a-strange-sort-of-justice-at-west-point-1376453937 Cassata, Donna, "Senator Targets Military Law over Sexual Assault," Associated Press, July 29, 2013, at http://www.military.com/daily-news/2013/07/29/senator-targets-military-law-over-sexual-assault.html?comp=7000023317843&rank=3 Groer, Annie. " Military brass claim progress in pursuing sexual assault cases ," Washington Post, August 1, 2013, at https://www.washingtonpost.com/blogs/she-the-people/wp/2013/08/01/military-brass-claim-progress-in-pursing-sexual-assault-cases/?utm_term=.72e55e7e218c Jennifer Koons. "Sexual Assault in the Military: Can the Pentagon stem the rise in incidents?" CQ Researcher , vol. 23, no. 29 (A ugust 9, 2013 ), p p. 693-716 . Laird, Lorelei. " Military lawyers confront changes as sexual assault becomes big news ," ABA (American Bar Association) Journal , September 2013, at http://www.abajournal.com/magazine/article/military_lawyers_confront_changes_as_sexual_assault_becomes_big_news/ Jelinek, Pauline. " Pentagon: Reports of Sexual Assault Up 46 Percent ," Associated Press, November 8, 2013, at http://www.military.com/daily-news/2013/11/08/pentagon-reports-of-sexual-assault-up-46-percent.html Matthews, Michael F. " The Untold Story of Military Sexual Assault ," The New York Times, November 24, 2013, at http://www.nytimes.com/2013/11/25/opinion/the-untold-story-of-military-sexual-assault.html " Men Sexually Assaulted in the Military Speak Out ," Baltimore Sun, December 20, 2013, at http://www.military.com/daily-news/2013/12/20/men-sexually-assaulted-in-the-military-speak-out.html 2014 Kageyama, Yuri and Richard Lardner. "Documents Reveal Chaotic Military Sex-Abuse Record," Associated Press, February 10, 2014, at http://www.military.com/daily-news/2014/02/10/documents-reveal-chaotic-military-sex-abuse-record.html Montgomery, Nancy. "AF Program Rare Bright Spot in Sex Assault Fight," Stars and Stripes , February 27, 2014, at http://www.military.com/daily-news/2014/02/27/air-force-program-rare-bright-spot-in-sex-assault-fight.html Cox, Matthew. "Alcohol Policies Reviewed as Sex Assault Rises," Military.com, May 1, 2014, at http://www.military.com/daily-news/2014/05/01/alcohol-policies-reviewed-as-sex-assault-rises.html Burns, Robert. "Army Knocks 2-Star Down to 1-Star Rank," Associated Press, August 27, 2014, at http://www.military.com/daily-news/2014/08/27/army-knocks-2-star-down-to-1-star-rank.html Milham, Matt. "Army: It's Good News That Sexual Assault Reports Are Up," Stars and Stripes , September 26, 2014, at http://www.military.com/daily-news/2014/09/26/army-its-good-news-that-sexual-assault-reports-are-up.html Draper, Robert. The Military's Rough Justice on Sexual Assault," New York Times , November 26, 2014, at https://www.nytimes.com/2014/11/30/magazine/the-militarys-rough-justice-on-sexual-assault.html Sisk, Richard. "Sexual Assault Reports Increase 8%, Pentagon Cites Progress," Military.com, December 4, 2014, at http://www.military.com/daily-news/2014/12/04/sexual-assault-reports-increase-8-pentagon-cites-progress.html Baldor, Lolita C. "Male Military Sex Assault Victims Slow to Complain," Associated Press, December 9, 2014, at http://www.military.com/daily-news/2014/12/09/male-military-sex-assault-victims-slow-to-complain.html 2015 Roulo, Claudette. "Sexual Assault Rates Decrease at Military Service Academies," DOD News, Defense Media Activity, February 11, 2015, at http://archive.defense.gov/news/newsarticle.aspx?id=128158 Pellerin, Cheryl. "DOD Honors Sexual Assault Response Coordinators," DOD News, April 23, 2015, at https://www.defense.gov/News/Article/Article/604510/ Rowe, Major Derek. "General courts-martial for sexual assault: How do they work?" Air Force News , April 28, 2015, at http://www.af.mil/News/Commentaries/Display/Article/586763/general-courts-martial-for-sexual-assault-how-do-they-work/ Sisk, Richard. "Military Sexual Assault Reports Increased 11 Percent Last Year," Military.com, May 1, 2015, at http://www.military.com/daily-news/2015/05/01/military-sexual-assault-reports-increased-11-percent-last-year.html Johnson, Lieutenant General Michelle D., U.S. Air Force Academy superintendent; Vice Admiral Walter E. "Ted" Carter Jr., superintendent, U.S. Naval Academy; Lieutenant General Robert L. Caslen, superintendent, U.S. Military Academy; Rear Admiral James A. Helis, superintendent, U.S. Merchant Marine Academy; Rear Admiral Sandra L. Stosz, superintendent, U.S. Coast Guard Academy. "Lessons to Share: The five superintendents of federal service academies discuss how their institutions -- which faced scrutiny over sexual assault before many other colleges attracted such attention -- have responded to the issue," Inside Higher Ed, May 7, 2015, at https://www.insidehighered.com/views/2015/05/07/essay-how-federal-service-academics-prevent-and-punish-sexual-assault Tilghman, Andrew. "Military sexual assault claims: 1 in 20 lead to jail time," Military Times, May 13, 2015, at https://www.militarytimes.com/2015/05/13/military-sexual-assault-claims-1-in-20-lead-to-jail-time/ Schogol, Jeff. "Defense seeks dismissal of sexual assault case transferred to Washington," Air Force Times, October 17, 2015, at https://www.airforcetimes.com/news/your-air-force/2015/10/17/defense-seeks-dismissal-of-sexual-assault-case-transferred-to-washington/ Whitlock, Craig. "In the war against sexual assault, the Army keeps shooting itself in the foot," Washington Post, December 19, 2015, at https://www.washingtonpost.com/news/checkpoint/wp/2015/12/19/in-the-war-against-sexual-assault-the-army-keeps-shooting-itself-in-the-foot/?utm_term=.d856136e939b Defense Media Activity. "Defense Department Proposes UCMJ Changes," DOD News, December 28, 2015, at https://www.defense.gov/News/Article/Article/638108/defense-department-proposes-ucmj-changes/ Losey, Stephen. "USAF launches new strategy to curb sexual assault," Air Force Times, December 30, 2015, at https://www.airforcetimes.com/news/your-air-force/2015/12/30/usaf-launches-new-strategy-to-curb-sexual-assault/ 2016 Kime, Patricia. "Sexual assault reporting rises at U.S. service academies," Military Times , January 8, 2016, at https://www.militarytimes.com/news/your-military/2016/01/08/sexual-assault-reporting-rises-at-u-s-service-academies/ Larter, David B. "Navy sex assault victims may be eligible for early separation," Navy Times, January 20, 2016, at https://www.navytimes.com/news/your-navy/2016/01/20/navy-sex-assault-victims-may-be-eligible-for-early-separation/ Cox, John Woodrow. "Why sex assault reports have spiked at the Naval Academy, West Point and the Air Force Academy, Washington Post , March 11, 2016, at https://www.washingtonpost.com/news/checkpoint/wp/2016/03/11/why-sex-assault-reports-have-spiked-at-the-naval-academy-west-point-and-the-air-force-academy/?utm_term=.a5e15f2f16f1 Whitlock, Craig, Thomas Gibbons-Neff. "Military bringing more charges against officers for sexual assault," Washington Post, March 20, 2016, at https://www.stripes.com/news/us/military-bringing-more-charges-against-of%EF%AC%81cers-for-sexual-assault-1.400140#.WeTFNOFRXUc Lardner, Richard. "Pentagon misled lawmakers on military sexual assault cases," Associated Press , April 18, 2016, at https://apnews.com/23aed8a571f64a9d9c81271f0c6ae2fa/pentagon-misled-lawmakers-military-sexual-assault-cases Kheel, Rebecca. "Senators ask Obama to investigate whether Pentagon misled Congress," The Hill, April 19, 2016, at http://thehill.com/policy/defense/276832-senators-ask-obama-to-investigate-pentagons-sexual-assault-comments Secretary of the Air Force Public Affairs. "Air Force report on sexual assault highlights program's progress," Air Force News , May 05, 2016, at http://www.af.mil/News/Article-Display/Article/752653/air-force-report-on-sexual-assault-highlights-programs-progress/ Tilghman, Andrew. "Military sex assault: Just 4 percent of complaints result in convictions," Military Times , May 5, 2016, at https://www.militarytimes.com/veterans/2016/05/05/military-sex-assault-just-4-percent-of-complaints-result-in-convictions/ Montgomery, Nancy. "US Military Court Addresses 'Incapable of Consent' to Sex Issue," Stars and Stripes , May 18, 2016, at http://www.military.com/daily-news/2016/05/18/us-military-court-addresses-incapable-of-consent-to-sex-issue.html Losey, Stephen. "Military must do right by wrongly-discharged sexual assault victims, advocates say," Air Force Times , May 19, 2016, at https://www.airforcetimes.com/news/your-air-force/2016/05/19/military-must-do-right-by-wrongly-discharged-sexual-assault-victims-advocates-say/ Lyle, Amaani. "DoD Safe Helpline Offers Specialized Support to Sexual Assault Victims," DOD News, July 15, 2016, at https://dod.defense.gov/News/Article/Article/841166/dod-safe-helpline-offers-specialized-support-to-sexual-assault-victims/ Rein, Lisa. "Merchant Marine Academy under fire for sexual assault allegations," Stars and Stripes, August 12, 2016, at https://www.stripes.com/news/us/merchant-marine-academy-under-fire-for-sexual-assault-allegations-1.423595 Lyle, Amaani. "DoD Unveils Plan to Broaden Sexual Assault Support to Men," DOD News, Defense Media Activity, December 15, 2016, at https://www.defense.gov/News/Article/Article/1030795/dod-unveils-plan-to-broaden-sexual-assault-support-to-men/ Scholarly Journals, Reports and Studies (non-government) The following sources are listed in alphabetical order by author. Burgess, Ann W., Donna M. Slattery, and Patricia A. Herlihy. "Military Sexual Trauma: A Silent Syndrome." Journal of Psychosocial Nursing & Mental Health Services 51, no. 2 (2013): 20-6. D'Ambrosio-Woodward, Tricia. "Military Sexual Assault: A Comparative Legal Analysis of the 2012 Department of Defense Report on Sexual Assault in the Military: What It Tells Us, What It Doesn't Tell Us, and How Inconsistent Statistic Gathering Inhibits Winning the 'Invisible War.'" Wisconsin Journal of Law, Gender & Society 29, no. 2 (2014): 173-211. Farris, Coreen, Terry L. Schell and Terri Tanielian. Physical and Psychological Health Following Military Sexual Assault: Recommendations for Care, Research, and Policy . Santa Monica, CA: RAND Corporation, 2013. http://www.rand.org/pubs/occasional_papers/OP382 Firestone, Juanita M., J. M. Miller, and Richard Harris. "Implications for Criminal Justice from the 2002 and 2006 Department of Defense Gender Relations and Sexual Harassment Surveys." American Journal of Criminal Justice : AJCJ 37, no. 3 (2012): 432-451. Gibson, Carolyn J., Kristen E. Gray, Jodie G. Katon, Tracy L. Simpson, and Keren Lehavot. "Sexual Assault, Sexual Harassment, and Physical Victimization during Military Service across Age Cohorts of Women Veterans." Women's Health Issues 26, no. 2 (2016): 225-231. Harrell, Margaret C., Laura Werber, Marisa Adelson, Sarah J. Gaillot, Charlotte Lynch and Amanda Pomeroy. A Compendium of Sexual Assault Research . Santa Monica, CA: RAND Corporation, 2009. http://www.rand.org/pubs/technical_reports/TR617 Holland, Kathryn, Rabelo, Verónica, and Cortina, Lilia. Sexual Assault Training in the Military: Evaluating Efforts to End the 'Invisible War.' American Journal of Community Psychology 54, no. 3/4 (2014): 289-303. Morral, Andrew R., Kristie Gore, and Terry L. Schell. Sexual Assault and Sexual Harassment in the U.S. Military, Volume 1. Design of the 2014 RAND Military Workplace Study . Santa Monica, CA: RAND Corporation, National Defense Research Institute, 2014. https://www.rand.org/pubs/research_briefs/RB9841.html Morral, Andrew R., Kristie Gore, and Terry L. Schell. Sexual Assault and Sexual Harassment in the U.S. military: Volume 2. Estimates for Department of Defense Service members from the 2014 RAND Military Workplace Study . Santa Monica, CA: RAND Corporation, National Defense Research Institute, 2015. https://www.rand.org/pubs/research_reports/RR870z2-1.html O'Brien, Carol, Jessica Keith, and Lisa Shoemaker. "Don't Tell: Military Culture and Male Rape." Psychological Services 12, no. 4 (2015): 357-365. Stander, Valeria A. and Cynthia J. Thomsen. "Sexual Harassment and Assault in the U.S. Military: A Review of Policy and Research Trends." AMSUS Military Medicine (Association of Military Surgeons of the United States) 181, no. 1S (2016): 20-27. House and Senate Hearings This chronological list of hearings was compiled from Congress.gov and CQ.com. U.S. Congress, House Armed Services Committee, A Review of Sexual Misconduct by Basic Training Instructors at Lackland Air Force Base , 113 th Cong., 1 st sess., January 23, 2013, H.A.S.C. No. 113-2 (Washington, DC: GPO, 2013). U.S. Congress, House Appropriations Committee, Subcommittee on Defense, Department of Defense Appropriations for 2014 , Part 1, 113th Cong., 1 st sess., February 26, 2013 (Washington, DC: GPO, 2013). U.S. Congress, Senate Armed Services Committee, Subcommittee on Personnel, Testimony on Sexual Assault in the Military, 113 th Cong., 1 st sess., March 13, 2013, S. Hrg. 113-303 (Washington, DC: GPO, 2013). U.S. Congress, Senate Appropriations Committee, Subcommittee on Defense, Department of Defense Appropriations for Fiscal Year 2014 , 113th Cong., 1 st sess., April 17, 2013 (Washington, DC: GPO, 2013). U.S. Congress, House Appropriations Committee, Subcommittee on Defense, Department of Defense Appropriations for 2014, Part 2 , 113th Cong., 1 st sess., April 24, 2013 (Washington, DC: GPO, 2013). U.S. Congress, Senate Appropriations Committee, Subcommittee on Defense, Department of Defense Appropriations for Fiscal Year 2014 , 113th Cong., 1 st sess., April 24, 2013 (Washington, DC: GPO, 2013). U.S. Congress, House Appropriations Committee, Subcommittee on Defense, President Obama's Fiscal 2014 Budget Proposal for the U.S. Navy and Marine Corps , 113 th Cong., 1 st sess., May 7, 2013 (Washington, DC: GPO, 2013). U.S. Congress, Senate Armed Services Committee, D epartment of Defense Authorization for Appropriations for Fiscal Year 2014 and the Future Years Defense Program , 113 th Cong., 1 st sess., May 7, 2013 (Washington, DC: GPO, 2013). U.S. Congress, House Appropriations Committee, Subcommittee on Defense, President Obama's Fiscal 2014 Budget Proposal for the U.S. Army , 113 th Cong., 1 st sess., May 8, 2013. (Washington, DC: GPO, 2013). U.S. Congress, Senate Appropriations Committee, Subcommittee on Defense, President Obama's Fiscal 2014 Budget Proposal for the U.S. Air Force , 113 th Cong., 1 st sess., May 8, 2013 (Washington, DC: GPO, 2013). U.S. Congress, House Appropriations Committee, Subcommittee on Defense, President Obama's Fiscal 2014 Budget Proposal for the U.S. Air Force , 113 th Cong., 1 st sess., May 9, 2013 (Washington, DC: GPO, 2013). U.S. Congress, Senate Appropriations Committee, Subcommittee on Defense, Department of Defense Appropriations for Fiscal Year 2014 , 113th Cong., 1 st sess., May 22, 2013 (Washington, DC: GPO, 2013). U.S. Congress, Senate Armed Services Committee, Pending Legislation Regarding Sexual Assaults in the Military , 113 th Cong., 1 st sess., June 4, 2013, S. Hrg. 113–320 (Washington, DC: GPO, 2013). U.S. Congress, Senate Armed Services Committee, Subcommittee on Personnel, Markup of the National Defense Authorization Act for Fiscal Year 2014 , 113 th Cong., 1 st sess., June 11, 2013 (Washington, DC: GPO, 2013). U.S. Congress, Senate Appropriations Committee, Subcommittee on Defense, Department of Defense Appropriations for Fiscal Year 2014 , 113th Cong., 1 st sess., June 11, 2013 (Washington, DC: GPO, 2013). U.S. Congress, House Armed Services Committee, Subcommittee on Military Personnel, Women in Service Review s , 113 th Cong., 1 st sess., July 24, 2013, H.A.S.C. No. 113–50 (Washington, DC: GPO, 2013). U.S. Congress , Senate Armed Services Committee, Subcommittee on Personnel, The Relationships Between Military Sexual Assault, Post-Traumatic Stress Disorder and Suicide, and on Department of Defense and Department of Veterans Affairs Medical Treatment and Management of Victims of Sexual Trauma , 113 th Cong., 2 nd sess., February 26, 2014, S. Hrg. 113-480 (Washington, DC: GPO, 2013) . U.S. Congress, Armed Services Committee , Fiscal Year 2015 National Defense Authorization Budget Request from the Department of Defense , 113 th Cong., 2 nd sess., March 6 , 2014 (Washington, DC: GPO, 2014). U.S. Congress, House Armed Services Committee, Fiscal Year 2015 National Defense Authorization Budget Request from the Department of the Navy , 113 th Cong., 2 nd sess., March 12 , 2014 (Washington, DC: GPO, 2014). U.S. Congress, House Appropriations Committee, Subcommittee on Defense, Department of Defense Appropriations for 2015, Part 1 , 113 th Cong., 2 nd sess., March 13, 2014 (Washington, DC: GPO, 2014). U.S. Congress, House Armed Services Committee , Fiscal Year 2015 National Defense Authorization Budget Request from the Department of the Air Force , 113 th Cong ., 2 nd sess., March 14, 2014 (Washington, DC: GPO, 2014). U.S. Congress, House Armed Services Committee , Fiscal Year 2015 National Defense Authorization Budget Request from the Department of the Army , 113 th Cong., 2 nd sess., March 25 , 2014 (Washington, DC: GPO, 2014). U.S. Congress, Senate Appropriations Committee, Subcommittee on Defense , Department of Defense Appropriations for 2015 , 113th Cong., 2 nd sess., March 26 , 2014 (Washington, DC: GPO, 2014). U.S. Congress, House Appropriations Committee, Subcommittee , Department of Defense Appropriations for 2015 , Part 2, 113 th Cong., 2 nd sess., April 2, 2014, (Washington, DC: GPO, 2014). U.S. Congress, Senate Appropriations Committee, Subcommittee on Defense , Department of Defense Appropriations for 2015 , 113th Cong., 2 nd sess., April 2 , 2014 (Washington, DC: GPO, 2014). U.S. Congress, House Armed Services Committee , National Defense Priorities from the Members for the Fiscal Year 2015 National Defense Authorization Act , 113 th Cong ., 2 nd sess., April 9 , 2014 (Washington, DC: GPO, 2014). U.S. Congress, Senate Appropriations Committee, Subcommittee on Defense, Department of Defense Appropriations for Fiscal Year 2015 , 113th Cong., 2 nd sess., April 9, 2014 (Washington, DC: GPO, 2014). U.S. Congress, Senate Appropriations Committee, Subcommittee on Defense, Department of Defense Appropriations for Fiscal Year 2015 , 113th Cong., 2 nd sess., April 30, 2014 (Washington, DC: GPO, 2014). U.S. Congress, Senate Appropriations Committee, Subcommittee on Defense , Department of Defense Appropriations for 2015 , 113th Cong., 2 nd sess., June 18 , 2014 (Washington, DC: GPO, 2014). 114th Congress U.S. Congress, Senate Armed Services Committee , Department of Defense Authorization for Appropriations for Fiscal Year 2016 and the Future Years Defense Program , Part 1 , 114th Cong., 1 st sess., March 3 , 10 , 12 , 18 , 19, 26, April 4, 30 , 2015 (Washington, DC: GPO, 2015). U.S. Congress, Senate Armed Services , Department of Defense Authorization for Appropriations for Fiscal Year 2016 and the Future Years Defense Program , Part 7 Strategic Forces, 114 th Cong., 1 st sess., March 4, 25, April 15, 22, 29 , 2015 (Washington, DC: GPO, 2015). U.S. Congress, Senate Armed Services Committee, Department of Defense Authorization for Appropriations for Fiscal Year 2016 and the Future Years Defense Program , Part 3 Readiness and Management Support, 114 th Cong., 1 st sess., March 11, 25, April 22, 2015 (Washington, DC: GPO, 2015). U.S. Congress, Senate Armed Services Committee, The Current State of Readiness of U.S. Forces in Review of the Defense Authorization Request for Fiscal Year 2016 and the Future Years Defense Program , 114 th Cong., 1 st sess., March 25, 2015 (Washington, DC: GPO, 2015). U.S. Congress, Senate Armed Services Committee, Department of Defense Authorization for Appropriations for Fiscal Year 2017 and the Future Years Defense Program , Part 1 , 114 th Cong., 2 nd sess., February 11, 23, March 3, 10, 15, 17, April 5, 7, 26, 2016 (Washington, DC: GPO, 2016). U.S. Congress, House Armed Services Committee, The Fiscal Year 2017 Na tional Defense Authorization Budget Request from the Department of Defense , 114 th Cong., 2 nd sess., March 22, 2016 (Washington, DC: GPO, 2016). U.S. Congress, Senate Armed Services Committee, Subcommittee on Strategic Forces, The Current State of Research, Diagnosis, and Treatment for Post-Traumatic Stress Disorder and Traumatic Brain Injury , 114 th Cong., 2 nd sess., April 20, 2016 (Washington, DC: GPO, 2016). House and Senate Reports 113th Congress U.S. Congress, House Committee on Armed Services, National Defense Authorization Act for Fiscal Year 2014 on H.R.1960 with Additional and Dissenting Views, 113 th Cong., 1 st sess., H. Rept. 113-102 (Washington, DC: GPO, 2013). U.S. Congress, House Committee on Appropriations, Department of Defense Appropriations Bill, 2014 to Accompany H.R. 2397 together with Additional Views, 113 th Cong., 1 st sess., H. Rept. 113-113 (Washington, DC: GPO, 2013). U.S. Congress, Senate Committee on Armed Services, National Defense Authorization Act for Fiscal Year 2014 to accompany S. 1197, 113 th Cong., 1 st sess., S. Rept. 113-44 (Washington, DC: GPO, 2013). U.S. Congress, Senate Committee on Appropriations, Department of Defense Appropriations Bill, 2014 to accompany S.1429, 113 th Cong., 1 st sess., S. Rept. 113-85 (Washington, DC: GPO, 2013). U.S. Congress, House Committee on Armed Services, First Annual Report on the Activities of the Committee on Armed Services for the One Hundred Thirteenth Congress , 113 th Cong., 1 st sess., H. Rept. 113-309 (Washington, DC: GPO, 2013). U.S. Congress, House Committee on Armed Services, Howard P. "Buck" McKeon National Defense Authorization Act for Fiscal Year 2015 to accompany H.R.4435, 113 th Cong, 2 nd sess., H. Rept. 113-446 (Washington, DC: GPO, 2014). U.S. Congress, House Committee on Armed Services, Howard P. "Buck" McKeon National Defense Authorization Act for Fiscal Year 2015 supplemental report to accompany H.R.4435, 113 th Cong. 2 nd sess., H. Rept. 113-446 part 2 (Washington, DC: GPO, 2014). U.S. Congress, Senate Committee on Armed Services, Carl Levin National Defense Authorization Act for Fiscal Year 2015 to accompany S.2410, 113 th Cong, 2 nd sess., S. Rept. 113-176 (Washington, DC: GPO, 2014). U.S. Congress, House Committee on Appropriations, Department of Defense Appropriations Bill, 2015 to accompany H.R.4870, 113 th Cong., 2 nd sess., H. Rept. 113-473 (Washington, DC: GPO, 2014). U.S. Congress, Senate Committee on Appropriations, Department of Defense Appropriations Bill, 2015 to accompany H.R.4870, 113 th Cong., 2 nd sess., S. Rept. 113-211 (Washington, DC: GPO, 2014). 114th Congress U.S. Congress, House Committee on Armed Service, National Defense Authorization Act for Fiscal Year 2016 to accompany H.R.1735, 114 th Cong., 1 st sess., H. Rept. 114-102 (Washington, DC: GPO, 2015). U.S. Congress, Senate Committee on Armed Services, National Defense Authorization Act for Fiscal Year 2016 to accompany S.1376, 114 th Cong., 1 st sess., S. Rept. 114-49 (Washington, DC: GPO, 2015). U.S. Congress, House Committee on Appropriations, Department of Defense Appropriations Bill, 2016 to accompany H.R.2685, 114 th Cong., 1 st sess., H. Rept. 114-139 (Washington, DC: GPO, 2015). U.S. Congress, Senate Committee on Appropriations, Department of Defense Appropriations Bill, 2016 to accompany S.1558, 114 th Cong., 1 st sess., S. Rept. 114-63 (Washington, DC: GPO, 2015). U.S. Congress, House Conference Report, National Defense Authorization Act for Fiscal Year 2016 to accompany H.R.1735, 114 th Cong., 1 st sess., H. Rept. 114-270 (Washington, DC: GPO, 2015). U.S. Congress, House Committee on Armed Services, National Defense Authorization Act for Fiscal Year 2017 on H.R.4909, 114 th Cong., 2 nd sess., H. Rept. 114-537 (Washington, DC: GPO, 2016). U.S. Congress, Committee on Armed Services, National Defense Authorization Act for Fiscal Year 2017 to accompany S.2943, 114 th Cong, 2 nd sess., S. Rept. 114-255 (Washington, DC: GPO, 2016). U.S. Congress, House Committee on Appropriations, Department of Defense Appropriations Bill, 2017 to accompany H.R.5293, 114 th Cong., 2 nd sess., H. Rept. 114-577 (Washington, DC: GPO, 2016). U.S. Congress, Senate Committee on Appropriations, Department of Defense Appropriations Bill, 2017 to accompany S.3000, 114 th Cong., 2 nd sess., S. Rept. 114-263 (Washington, DC: GPO, 2016). U.S. Congress, House Conference Report, National Defense Authorization Act for Fiscal Year 2017 to accompany S. 2943, 114 th Cong, 2 nd sess., H. Rept. 114-840 (Washington, DC: GPO, 2016).

This report focuses on previous activity in Congress regarding high profile incidents of sexual assault in the military during the summer 2013 through 2016. Included are separate sections on the official responses related to these incidents by the Department of Defense (DOD), the Obama Administration, and Congress including legislation during the 113th (2013-2014) Congress and 114th Congress (2015-2016). The last section is a resource guide for sources in this report and related materials on sexual assault and prevention during this period. This report will not be updated and supersedes CRS Report R43168, Military Sexual Assault: Chronology of Activity in Congress and Related Resources. For current information regarding Congress and issues on sexual assault in the military, see CRS Report R44944, Military Sexual Assault: A Framework for Congressional Oversight, by Kristy N. Kamarck and Barbara Salazar Torreon. For legislative initiatives in the 115th Congress, see CRS Report R44923, FY2018 National Defense Authorization Act: Selected Military Personnel Issues, by Kristy N. Kamarck, Lawrence Kapp, and Barbara Salazar Torreon and CRS Report R45343, FY2019 National Defense Authorization Act: Selected Military Personnel Issues, by Bryce H. P. Mendez et al.

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Introduction Since the onset of the nation's civil war and ensuing military coup d'état in 1962, Burma's military, or Tatmadaw, and its associated security forces, such as the Border Guard Police and the Myanmar Police Force, have been repeatedly accused of committing murder, rape, and torture against the nation's various ethnic minorities. Between 1990 and 2008, Congress passed legislation imposing various sanctions on Burma in part due to the serious human rights violations committed by and/or authorized by the Tatmadaw. Such allegations of intentional, pervasive, and systematic abuses arose again following the forced displacement of over 700,000 Rohingya from Burma's Rakhine State in late 2017, as well as the Tatmadaw's renewed offensive against ethnic armed groups in Kachin, Karen, and Shan States (see map in the Appendix ). The Trump Administration has described that Tatmadaw's assault on the Rohingya as "ethnic cleansing" and has applied "limited targeted sanctions" on five Tatmadaw officers and two military units. On December 13, 2018, the House of Representatives passed H.Res. 1091 (116 th Congress) by a vote of 394-1, stating "the atrocities committed against the Rohingya by the Burmese military and security forces since August 2017 constitute crimes against humanity and genocide" and calling on the Secretary of State to "determine, based on available evidence, whether the actions by the Burmese military in northern Rakhine State in 2017 constitute crimes against humanity, genocide, or other crimes under international law." Various organizations—including the United Nations Independent International Fact-Finding Mission in Myanmar (UNFFM), multiple human rights organizations, and the press—have conducted investigations into allegations that Burmese security forces committed serious human rights violations in Burma's seven ethnic states since the Tatmadaw transferred power to a mixed civilian/military government in 2011. These organizations have released at least 17 reports documenting evidence that appears to support some of these allegations, and implicates specific Burmese security personnel and units as being responsible for the abuses. In addition to concluding that Burmese security forces were responsible for serious human rights violations, at least two of these reports maintain that the violations were intentional, premeditated, and systemic. Certain Burmese officers and units also appear in more than one report, and in some cases, are identified as being responsible for human rights violations in more than one ethnic state and/or at different times. The reports vary in their conclusions on the severity of the abuses. Some conclude that certain violations may constitute genocide; in other cases, some describe possible war crimes or crimes against humanity. This report compiles a list—in tabular form—of the Burmese security personnel and units that have been identified as responsible for serious human rights violations by one or more the following reports: 1. Amnesty International, "All the Civilians Suffer: Conflict, Displacement, and Abuse in Northern Myanmar," June 2017; 2. Amnesty International, "We Will Destroy Everything: Military Responsibility for Crimes Against Humanity in Rakhine State, Myanmar," June 2018; 3. Fortify Rights, "They Gave Them Long Swords: Preparations for Genocide and Crimes Against Humanity against Rohingya Muslims in Rakhine State, Myanmar," July 2018; 4. Human Rights Watch, "All My Body Was Pain: Sexual Violence against Rohingya Women and Girls in Burma," November 2017; 5. Human Rights Watch, "Massacre by the River: Burmese Army Crimes against Humanity in Tula Toli," December 2017; 6. Kachin Women's Association in Thailand, "A Far Cry from Peace: Ongoing Burma Army Offensives and Abuses in Northern Burma under the NLD Government," November 2016; 7. Kachin Women's Association in Thailand, "State Terror in the Kachin Hills: Burma Army Attacks against Civilians in Northern Burma," November 16, 2017; 8. Karen Human Rights Group, "Ongoing Militarisation in Southeast Myanmar," October 2016; 9. Legal Aid Network and Kachin Women's Association in Thailand, "Justice Delayed, Justice Denied: Seeking Truth about Sexual Violence and War Crime Case in Burma," January 2016; 10. Network for Human Rights Documentation—Burma, "Report on the Human Rights Situation in Burma, January–December 2017," March 2018; 11. Physicians for Human Rights, "Please Tell the World What They Have Done to Us: The Chut Pyin Massacre: Forensic Evidence of Violence against the Rohingya in Myanmar," July 2018; 12. Refugees International, "Suffering in Shadows: Aid Restrictions and Reductions Endanger Displaced Persons in Northern Myanmar," December 2017; 13. Simon Lewis, Zeba Siddiqui, Clare Baldwin, and Andrew R.C. Marshall, "Tip of the Spear," Reuters, June 26, 2018; 14. Ta'ang Women's Organization, "Trained to Torture: Systematic War Crimes by the Burma Army in Ta'ang Areas of Northern Shan State (March 2011–March 2016)," June 2016; 15. United Nations Fact-Finding Mission on Myanmar, "Report of the Independent International Fact-Finding Mission on Myanmar" (Advanced Unedited Version), August 24, 2018; 16. Women's League of Burma, "If They Had Hope, They Would Speak: The On-going Use of State-Sponsored Sexual Violence in Burma's Ethnic Communities," November 2014; and 17. Women's League of Burma, "Long Way to Go: Continuing Violations of Human Rights and Discrimination Against Ethnic Women in Burma," July 2016. CRS did not independently confirm the veracity of the findings in these reports. The UNFFM report recommends that the United Nations Security Council (UNSC) refer the human rights abuse allegations to the International Criminal Court (ICC) for investigation and possible prosecution. The report specifically identifies six Burmese military leaders—Commander-in-Chief Senior General Min Aung Hlaing; Deputy Commander-in-Chief Vice Senior General Soe Win; Commander, Bureau of Special Operations-3, Lieutenant General Aung Kyaw Zaw; Commander, Western Regional Military Command, Major General Maung Maung Soe; Commander, 33 rd Light Infantry Division, Brigadier General Aung Aung; and Commander, 99 th Light Infantry Division, Brigadier General Than Oo—as warranting investigation and possible prosecution by the ICC. The UNFFM also calls for the creation of an independent, impartial mechanism to collect, consolidate, preserve and analyse evidence of violations of international humanitarian law and human rights violations and abuses and to prepare files to facilitate and expedite fair and independent criminal proceedings in national, regional or international courts or tribunals. In addition, the UNFFM recommends the UNSC "should adopt targeted individual sanctions, including travel bans and asset freezes, against those who appear most responsible for serious crimes under international law" and impose an arms embargo on Burma. The Department of State has conducted a preliminary investigation into alleged human rights abuses in Rakhine State. According to an article in Politico , there was sharp disagreement within the State Department on whether to categorize the Tatmadaw's attacks on the Rohingya as genocide or crimes against humanity. On August 28, 2018, then-U.S. Ambassador to the United Nations Nikki Haley presented to the U.N Security Council some of the details of a then unreleased version of the State Department's report. She stated, "The results are consistent with the recently-released UN independent international fact-finding mission on Burma." Among the details Haley mentioned were the following: The investigation involved interviews with 1,024 Rohingya refugees in camps in Bangladesh's Cox's Bazar region; 82% of the refugees witnessed the killing of a Rohingya; 51% witnessed sexual violence; and 20% witnessed violence against 100 or more people; and Burmese military and security forces were the perpetrators "of the overwhelming majority of these crimes." On September 24, 2018, the State Department posted online a 20-page publication entitled Documentation of Atrocities in Northern Rakhine State . The State Department issued no press release or statement regarding the release of the summary. According to the publication's executive summary, "the vast majority of Rohingya refugees experienced or directly witnessed extreme violence and the destruction of their homes." The summary also concluded "that the recent violence in northern Rakhine State was extreme, large-scale, widespread, and seemingly geared toward both terrorizing the population and driving out the Rohingya residents." The publication is generally consistent with Ambassador Haley's statement before the UNSC, but did not indicate if the State Department considers the atrocities to be genocide, crimes against humanity, and/or war crimes. On July 30, 2018, President Win Myint appointed former Philippine Deputy Foreign Minister Rosario Manalo; former Japanese Ambassador to the U.N. Kenzo Oshima; the chief coordinator of the Union Enterprise for Humanitarian Assistance, Resettlement and Development in Rakhine, Aung Tun Thet; and the former chair of Myanmar's Constitutional Tribunal, Mya Thein, to head the Independent Commission of Enquiry (ICOE), which "will investigate the allegations of human rights violations and related issues, following the terrorist attacks by ARSA." President Win Myint's announcement did not indicate any deadline for the commission to complete its investigation. Deputy Commander-in-Chief Vice Senior General Soe Win reportedly said, "the military is on standby to offer full cooperation with the commission." The ICOE visited Rakhine State on December 21, 2018, as part of its investigation. Manalo reportedly stated during the visit, "We are gathering the truth. Fake news should not be believed. Everything should be based on evidence." The ICOE also set a deadline of January 31, 2019, for people to submit evidence of the commission of human rights abuses. Since Burma's security forces began its "clearance operations" in August 2017, Commander-in-Chief Senior General Min Aung Hlaing has repeatedly denied that his troops committed human rights abuses in Rakhine State, or elsewhere in Burma. On February 15, 2019, Min Aung Hlaing told Asahi Shimbun that "there is no certain proof that the national army was involved in the persecution" of Rohingya." He also said that such accusations "hurts the nation's dignity." Besides the United States, Australia, Canada, and the European Union have imposed sanctions on Burmese military or security officers responsible for human rights violations in Burma (see Table 1 ). The European Union placed sanctions on seven Burmese security officers on June 25, 2018, and another seven officers on December 21, 2018. On June 25, 2018, Canada placed sanctions on the same seven officers as the EU. On October 5, 2018, Australia placed financial sanctions of five Burmese security officers. Three people appear on all four lists—Lt. General Aung Kyaw Zaw, Major General Khin Maung Soe, and Major General Maung Maung Soe. Two officers, Brigadier General Aung Aung and Brigadier General Than Oo, have been sanctioned by Australia, Canada, and the EU, but not the United States. Burmese Security Force Officers and Units Allegedly Responsible for Human Rights Violations The following tables list the names of Burmese security force officers ( Table 2 ) and units ( Table 3 ) that have been identified in one or more of the reports mentioned above as being responsible for human rights violations in Burma since 2011. For purposes of this report, the "types of responsibility" include the following: Authorization —Authorized and/or ordered other security personnel to commit human rights abuses on Burmese civilians; Commission —Committed the human rights abuses and/or took no action to prevent the commission of human rights abuses; and Cover-up —Became aware of credible allegations that security personnel under their command had committed or were committing human rights violations, but took no action to stop the further commission of human rights violations; attempted to conceal alleged human rights violations by Burmese security personnel; and/or tried to prevent or undermine investigations or prosecutions of alleged human rights violations by Burmese personnel. With regard to the type of human rights violation committed, this report classifies them into six categories Arbit rary arrest —includes the arrest and/or detention of civilians without discernible evidence that the civilians had committed some crime; Attacks on civilians —includes intentional assaults of civilians and attacks conducted with a disregard for the potential of causing harm to civilians; Extrajudicial killing —includes the intentional killing of civilians and the killing of civilians during military attacks conducted with a disregard for the potential of causing harm to civilians; Forced labor —includes forcing civilians to carry military equipment or supplies, to serve as "human shields" for military units, and/or to use civilians as human "landmine detectors"; Sexual violence —includes rape, attempted rape, and other forms of sexual assault; and Torture —includes torture and/or the physical abuse of civilians. While the military personnel and units listed in the tables have not been proven to be responsible for human rights abuses, their identification in one or more of the reports listed above may indicate that there is reason for further investigation of the allegations. Information in the tables suggests certain patterns about the human rights abuse allegations, including the following: Pervasive and systemi c abuse by Tatmadaw — Table 3 includes more than 100 military units, including 3 Regional Operations Commands, 6 infantry divisions, and more than 90 infantry battalions, indicating that alleged human rights abuse is not limited to a few "troubled" units; Geographically pervasive —The reports link certain military units with similar human rights abuses in all of Burma's ethnic minority states—Chin, Kachin, Karen (Kayin), Karenni (Kayah), Mon, Rakhine, and Shan; "Trouble d " units —The reports repeatedly implicate certain units in abuses, including the following: Infantry Division 33 —This unit is identified in six reports, involving a variety of alleged abuses in the States of Kachin, Rakhine and Shan; Infantry Division 99 —This unit is also identified in six reports, involving a variety of alleged abuses in the States of Kachin, Rakhine, and Shan; and Infantry Battalions 324, 502, 503 and 567 —These units were identified in three different reports as committing a variety of human rights abuses. Accountability Options The extensive list of reports alleging that Burma's security forces have committed genocide, crimes against humanity, and/or war crimes has reinforced calls for some form of accountability mechanism to investigate and possibly prosecute the perpetrators of the alleged abuses. Many of the reports and various human rights organizations have proposed various accountability mechanisms, including referral to the International Criminal Court (ICC), the creation of an ad hoc international criminal tribunal, the imposition of U.N. sanctions, and the enactment of bilateral restrictions on relations with the Burmese government and/or the Burmese military. Referral to International Criminal Court (ICC) The Rome Statute of the International Criminal Court, which entered into force on July 1, 2002, established the procedures by which cases can be referred to the ICC's Prosecutor for investigation and possible prosecution. Bangladesh (see below) is a party to the Rome Statute; Burma is not. Article 13(b) states the ICC may exercise jurisdiction if "one or more of such crimes appears to have been committed is referred to the Prosecutor by the Security Council acting under Chapter VII of the Charter of the United Nations." To date, the Security Council has referred one case under Article 13(b), that of the situation in Darfur, Sudan, in 2005. Under Article 27 of the U.N. Charter, nonprocedural decisions of the UNSC, including a referral of a case to the ICC, "shall be made by an affirmative vote of nine members including the concurring votes of the permanent members." The five permanent members of the UNSC are China, France, Russia, the United Kingdom, and the United States; the current 10 nonpermanent members are Bolivia, Cote d'Ivoire, Equatorial Guinea, Ethiopia, Kazakhstan, Kuwait, the Netherlands, Peru, Poland, and Sweden. Many observers expect China, and possibly Russia, to veto any proposed referral to the ICC. When asked if the United Kingdom would support a referral to the ICC during his visit to Burma in late September 2018, the U.K.'s Foreign Secretary Jeremy Hunt indicated that his government was considering "a number of different options." France has not issued any public statement on a possible UNSC resolution to refer the case to the ICC. The Trump Administration's position on the possible referral to the ICC is uncertain. In her August 25, 2018, statement to the UNSC, Ambassador Haley said, "Here in the Security Council, we must hold those responsible for violence to account." She also commended Kuwait, the Netherlands, Peru, and the United Kingdom for working "to keep the Security Council's focus on the atrocities in Burma." National Security Advisor John Bolton, however, gave a speech on September 10, 2018, stating the Administration's policy toward the ICC, in which he said, "We will not cooperate with the ICC. We will provide no assistance to the ICC. We will not join the ICC. We will let the ICC die on its own. After all, for all intents and purposes, the ICC is already dead to us." Bolton did not make any reference the Burma situation. In April 2018, ICC Prosecutor Fatou Bensouda asked the ICC Pre-Trial Chamber to determine whether the Court may exercise jurisdiction over the forced deportation of Rohingya from Burma into Bangladesh, which the Prosecutor argued constituted a crime against humanity. The Prosecutor argued that because forced deportation of Rohingya occurred partially on the territory of Bangladesh (a state party to the Rome Statute), the Court may exercise jurisdiction over the crimes. On September 6, 2018, the Pre-Trial Chamber agreed, deciding that the ICC Prosecutor can begin a preliminary investigation into the situation in Bangladesh, opening the possibility of prosecuting Burmese officials. On September 18, 2018, ICC Prosecutor Bensouda announced that she was initiating the preliminary investigation, which will also take into account "a number of alleged coercive acts" that resulted in the forced displacement, including killings, sexual violence, enforced disappearances, and the destruction of property. Her office is to also consider if other crimes under Article 7 of the Rome Statute ("Crimes Against Humanity") may be applicable. A preliminary examination team from the ICC is scheduled to visit Bangladesh in March 2019. Bangladesh Prime Minister Sheikh Hasina has said that her government will cooperate with the ICC team. Burma rejected the Pre-Trial Chamber's decision, and has stated it will not assist the ICC investigation. Creation of Ad Hoc International Criminal Tribunal (ICT) A possible alternative to the ICC could be the creation of an ad hoc International Criminal Tribunal (ICT) to investigate and potentially prosecute perpetrators of human rights abuses in Burma. Such a tribunal was established by the UNSC on May 25, 1993, "for the sole purpose of prosecuting persons responsible for serious violations of international humanitarian law committed in the territory of the former Yugoslavia between 1 January 1991 and a date to be determined by the Security Council upon the restoration of peace." The UNSC established another ICT on November 8, 1994, "for the sole purpose of prosecuting persons responsible for genocide and other serious violations of international humanitarian law committed in the territory of Rwanda and Rwandan citizens responsible for genocide and other such violations committed in the territory of neighbouring States, between 1 January 1994 and 31 December 1994." In addition, the UNSC previously has established Special Courts in Cambodia, East Timor, Lebanon, and Sierra Leone to adjudicate cases of alleged human rights violations in those four nations. In general, the UNSC has stipulated the scope of the International Criminal Tribunal or Special Court, including the time period to be considered. The Special Courts were set up with the support of the government of the nation in question, whereas the two ICTs were created when the government of the nation in question was unable or unwilling to undertake the criminal proceedings. Preservation of Evidence On September 28, 2018, the U.N. Human Rights Council (UNHRC) approved a resolution that establishes an "ongoing independent mechanism to collect, consolidate, preserve and analyse evidence of the most serious international crimes and violations of international law committed in Myanmar since 2011" by a vote of 35 in favor, 3 opposed, and 7 abstentions. The three nations voting against the proposal were Burundi, China, and the Philippines. Japan was one of the seven nations that abstained. The UNHRC resolution instructs the mechanism to Prepare files in order to facilitate and expedite fair and independent criminal proceedings, in accordance with international law standards, in national, regional or international courts or tribunals that have or may in the future have jurisdiction over these crimes, in accordance with international law. The mechanism also is to have access to the information collected by the UNFFM, be able to continue to collect evidence, and be provided the capacity to document and verify relevant information and evidence. The UNHRC requested that U.N. Secretary-General Antonio Guterres appoint "the staff of the mechanism as expeditiously as possible" and "allocate the resources necessary for the implementation of the present resolution." The resolution also extended the mandate of the UNFFM "until the new mechanism is operational." The UNFFM had recommended the creation of "an independent, impartial mechanism to collect, consolidate, preserve and analyze evidence of violations of international humanitarian law and human rights violations and abuses and to prepare files to facilitate and expedite fair and independent criminal proceedings in national, regional or international courts or tribunals." It also stated the mechanism "could resemble the 'International, Impartial and Independent Mechanism [IIIM] to Assist in the Investigation and Prosecution of Persons Responsible for the Most Serious Crimes under International Law Committed in the Syrian Arab Republic since March 2011,' created by United Nations General Assembly resolution 71/248," which was adopted in December 2016. Various human rights organizations have also expressed support for the creation of such a mechanism. In December 2018, the U.N. General Assembly approved $26.7 million to fund the "independent, impartial mechanism." The Trump Administration has not indicated its position on the establishment of an "independent, impartial mechanism" for Rakhine State, but it has demonstrated its support for the IIIM. In February 2018, Ambassador Haley stated the following: The United States has also announced that we will contribute to the International, Impartial, and Independent Mechanism on international crimes committed in Syria—the IIIM. The United States strongly supports the IIIM as a valuable tool to hold the Assad regime accountable for its atrocities, including its repeated and ongoing use of chemical weapons. In FY2018, the United States provided nearly $350,000 in support of the IIIM. The 116 th Congress appropriated funds in the Consolidated Appropriations Act, 2019 ( P.L. 116-6 ) for investigation and documentation of alleged human rights violations in Burma, but not explicitly for an "independent, impartial mechanism." Section 7043(a) included the following provisions: Bilateral Economic Assistance.—… (B) USES.—Funds appropriated under title III of this Act for assistance for Burma—… (vi) shall be made available for programs to investigate and document allegations of ethnic cleansing and other gross violations of human rights committed against the Rohingya people in Rakhine state: Provided , That such funds shall be in addition to funds otherwise made available for such purposes; (vii) shall be made available for programs to investigate and document allegations of gross violations of human rights committed in Burma, particularly in areas of conflict. The House committee report that accompanied the act ( H.Rept. 116-9 ) allocated $3.0 million out of the $82.7 million Economic Support Fund for Burma for "Documentation of human rights violations against Rohingya," and $0.75 million for "Documentation of human rights violations in Burma." The report further stipulated that funds made available for programs to investigate and document allegations of ethnic cleansing and other gross violations of human rights committed against the Rohingya people in Rakhine state shall be made available for civil society organizations in Bangladesh and Burma. Prior to the obligation of any such funds, the Assistant Secretary for DRL shall ensure the establishment of a standard documentation format and documentation procedures for use by such organizations, and shall identify an appropriate repository for such information. It also specified that funds made available for programs to investigate and document allegations of gross violations of human rights committed in Burma shall be made available for civil society and international organizations, including those in countries bordering Burma. U.N. Sanctions The UNFFM and various human rights organizations have recommended that the UNSC impose sanctions on Burma independent of any ICC or ad hoc international tribunal prosecution. Among the possible U.N. sanctions proposed are a global arms embargo; travel bans and the freezing of assets of senior Burmese government and military officials; and a prohibition of trade and/or investment with businesses owned or controlled by the Burmese military, its senior officers, or their families. The UNSC has imposed sanctions in response to human rights violations, among other factors, in other countries, including the Central African Republic, Haiti, Rwanda, South Africa, South Sudan, Sudan, and the former Yugoslavia. The UNSC sanctions have included, in some cases, arms embargoes, travel bans, and the freezing of assets. Bilateral Sanctions on Burma Another accountability option that has been suggested is for individual nations to impose appropriate sanctions on Burma. The United States currently has some restrictions on relations with Burma, and the Trump Administration has announced some additional restrictions in response to the alleged human rights abuses in Rakhine State, including the imposition of visa and economic restrictions on five Burmese military officers and two military units under the authority of the Global Magnitsky Act (see above). The Trump Administration could potentially sanction additional individuals and units it determines are responsible for serious human rights violations under the authority of the Global Magnitsky Act. If the Trump Administration were to determine that the alleged human rights abuses that occurred in Rakhine State or elsewhere in Burma constituted genocide, then the United States has the authority to prosecute alleged offenders under the provisions of the Human Rights Enforcement Act of 2009 ( P.L. 111-122 ; 18 U.S.C. 1091). The act criminalizes the act of genocide and subjects the offender to a possible death sentence, life in prison, and a fine of "not more than $1,000,000." The act grants U.S. jurisdiction to the case under certain conditions, including if "the alleged offender is present in the United States," regardless of where the offense was committed. The United States is a party to the Convention on the Prevention and Punishment of the Crime of Genocide. Article V of the convention states the following: The Contracting Parties undertake to enact, in accordance with their respective Constitutions, the necessary legislation to give effect to the provisions of the present Convention, and, in particular, to provide effective penalties for persons guilty of genocide or any of the other acts enumerated in article III. Article VII requires that "(t)he Contracting Parties pledge themselves in such cases to grant extradition in accordance with their laws and treaties in force." Bangladesh, Burma, and the United States are parties to the Convention. Prior to the events in Rakhine State, the United States had maintained several types of restrictions on relations with Burma, including restrictions on the issuance of visas to Burmese government and military officials; limits on bilateral and multilateral economic assistance; and prohibition on the sale of U.S. military equipment. In addition, Section 7043(a)(1)(C) of the Consolidated Appropriations Act, 2019 ( P.L. 116-6 ) stated that FY2019 bilateral economic assistance (i) may not be made available to any individual or organization if the Secretary of State has credible information that such individual or organization has committed a gross violation of human rights, including against Rohingya and other minority groups, or that advocates violence against ethnic or religious groups or individuals in Burma; and (ii) may not be made available to any organization or entity controlled by the armed forces of Burma. Other restrictions on relations are currently being waived under the authority of presidential executive orders or presidential determinations. These include a general ban on the import of goods from Burma; a ban on the import of Burmese jadeite and rubies, and products containing Burmese jadeite and rubies; a ban on the import of goods from certain Burmese companies; the "freezing" of the assets of certain Burmese nationals; a prohibition on providing financial services to certain Burmese nationals; restrictions on U.S. investments in Burma; restrictions on bilateral assistance to Burma; and restrictions on U.S. support for multilateral assistance to Burma. In addition, former President George H.W. Bush suspended Burma's benefits under the U.S. Generalized Systems of Preferences (GSP) program on April 13, 1989, as part of Presidential Proclamation 5955. Former President Obama restored Burma's GSP benefits on September 14, 2016, via Presidential Proclamation 9492. Any of these waived past restrictions, including the suspension of GSP benefits, could be reinstated by President Trump without the involvement of Congress. Options for Congress Congress has various options on how it may respond to the alleged human rights violations in Burma. Legislation has been introduced to modify U.S. policy in Burma, in part to address the alleged human rights abuses. Resolutions have also been introduced expressing congressional views on events in Burma, and calling for changes in U.S. policy. Over the last few years, Congress has also included Burma-related provisions in pending appropriation legislation to shape U.S. policy in Burma. Congress has also demonstrated its ongoing interest in Burma, and the importance of U.S. policy in Burma, by holding several hearings to learn more about developments in Burma and discuss policy options. Several congressional delegations have traveled to Bangladesh and Burma to directly investigate the situation and express to Burma's leaders the importance of the human rights violations allegations to Congress. Whatever additional actions or measures, if any, Congress takes to address the alleged human rights violations in Burma will likely be influenced by other elements of bilateral relations, as well as regional concerns such as China's growing influence in Southeast Asia. Some Members of Congress and the Trump Administration view Burma as undergoing a fragile and difficult transition from an oppressive military dictatorship to a potentially democratic, civilian-run federated state, and are concerned that imposing additional restrictions on relations with Burma could undermine that transition. Other Members of Congress and Administration officials see the human rights abuses in Kachin, Karen, Rakhine, and Shan States as proof that the Tatmadaw's leaders have no intention of permitting such a transition to occur. Legislation In the 115 th Congress, two bills were introduced pertaining to U.S. policy in Burma with provisions related to the alleged human rights violations—the Burma Unified through Rigorous Military Accountability (BURMA) Act of 2018 ( H.R. 5819 ) and the Burma Human Rights and Freedom Act of 2018 ( S. 2060 ). Both bills would have imposed a visa ban on senior military officers involved in human rights abuses in Burma, placed new restrictions on security assistance and military cooperation, and required U.S. opposition to international financial institution (IFI) loans to Burma if the project involves an enterprise owned or directly or indirectly controlled by the military of Burma. S. 2060 also would have required the President to review Burma's eligibility for the Generalized System of Preferences (GSP) program. The House Committee on Foreign Affairs, on May 17, 2018, ordered H.R. 5819 to be reported favorably out of committee, with an amendment in the nature of a substitute, and agreed to seek consideration under suspension of the rules. The Senate Committee on Foreign Relations reported S. 2060 favorably out of committee on February 12, 2018, with an amendment in the nature of a substitute, but the bill never received floor action by the Senate. Resolutions Ten separate resolutions in the House or Senate pertaining to Burma were introduced during the 115 th Congress; one passed. In the 116 th Congress, one Burma-related resolution has been introduced, S.Res. 34 , that resolves that the Senate (among other things): condemns the violence and displacement inflicted on Burma's Rohingya and other ethnic minorities; and urges the Secretary of State to make a determination whether the actions by the Myanmar military constitute crimes against humanity or genocide and to work with interagency partners to impose targeted sanctions on Myanmar military officials, to include Senior General Min Aung Hlaing, responsible for these heinous acts through existing authorities. Appropriations Provisions As previously described, the 116 th Congress included provisions in the Consolidated Appropriations Act, 2019 ( P.L. 116-6 ) placing restrictions on the provision of bilateral economic assistance, international security assistance, and multilateral assistance to Burma. Similar provisions could be included in the appropriations legislation for the Department of Defense and the Department of State for FY2020. Hearings Since September 2017, Congress has held several hearings on Burma, including the following: A House Committee on Foreign Affairs hearing on September 26, 2018, entitled, "Genocide Against the Burmese Rohingya." A House Committee on Foreign Affairs hearing on October 4, 2017, entitled, "The Rohingya Crisis: U.S. Response to the Tragedy in Burma." A House Committee on Foreign Affairs Subcommittee on Asia and the Pacific hearing on September 27, 2017, entitled, "Burma's Brutal Campaign Against the Rohingya." A Senate Committee on Foreign Relations hearing on October 24, 2017, entitled, "Assessing U.S. Policy Towards Burma: Geopolitical, Economic, and Humanitarian Considerations." A Tom Lantos Human Rights Commission hearing on July 25, 2018, entitled, "Victims' Rights in Burma." At all of these hearings, most of the Members of Congress present indicated that they view the acts of Burma's security forces in Rakhine State and elsewhere in Burma as either genocide or crimes against humanity. Many also stated that the Trump Administration's response to date has been inadequate given the severity of the human rights abuses. Congressional Delegations Congress may also consider sending congressional delegations and staff delegations to Bangladesh and Burma to investigate the alleged human rights violations and ascertain the views of the alleged victims on what forms of accountability should be pursued. These delegations could also meet with Burmese government officials and Burmese military leaders to hear their perspectives of the human rights allegations, and to express the delegation's opinion on what measures the Burmese government and military should make to investigate and possibly prosecute those individuals, military units, and organizations that have been accused of committing genocide, crimes against humanity, and war crimes in Burma. Appendix. Map of Burma

At least 17 different reports by United Nations (U.N.) entities and independent human rights organizations have been released containing allegations that certain Burmese security force officers and units committed serious human rights violations dating back to 2011. These reports name nearly 40 individuals and over 100 security units as responsible for such gross human rights violations as murder, torture, rape and other forms of sexual violence, and forced labor. Some of these individuals, including Commander-in-Chief Senior General Min Aung Hlaing, were identified in four or more of the reports. Similarly, some of the security units, in particular Infantry Division 33 and Infantry Division 99, were cited by six or more of the reports. The reports suggest that the commission of human rights abuses by Burma's security forces is pervasive, systematic, and endemic. CRS did not independently verify the credibility of these reports. The Trump Administration has labeled the alleged human rights violations as "ethnic cleansing" and has imposed "limited targeted sanctions" on five Burmese military officers and two military units it considers responsible for serious human rights violations against the Rohingya in Burma's Rakhine State. In August 2018, the State Department released a report summarizing the results of a survey of Rohingya refugees in Bangladesh that concluded that "the vast majority of Rohingya refugees experienced or directly witnessed extreme violence and the destruction of their homes." The report also stated "that the recent violence in northern Rakhine State was extreme, large-scale, widespread, and seemingly geared toward both terrorizing the population and driving out the Rohingya residents." The report, however, did not indicate if the violence constituted genocide, crimes against humanity, and/or war crimes. Some Members of Congress and other observers view this response as too limited, and have called on the Trump Administration to take stronger action given the severity of the human rights abuses. The 116th Congress appropriated $3.75 million in the Consolidated Appropriations Act, 2019 (P.L. 116-6) for the documentation of human rights violations against Rohingya and others in Burma. Congress has also placed restrictions and requirements on relations with Burma in previous appropriations legislation to address human rights issues. Many of the reports advocate for some form of accountability for the reported human rights violations, including by calling for the U.N. Security Council to refer the alleged human rights violations in Burma to the International Criminal Court (ICC) or an ad hoc international criminal tribunal for investigation and possible prosecution. China and possibly Russia are likely to oppose an ICC referral, and recent statements by President Trump and National Security Advisor John Bolton suggest the United States may also oppose such a referral. The ICC's Pre-Trial Chamber had previously ruled that the ICC's Prosecutor can begin a preliminary investigation of the war crime of forced deportation of the country's Rohingya ethnic minority into neighboring Bangladesh. In the interim, the United Nations Independent International Fact-Finding Mission on Myanmar (UNFFM) has recommended that an independent international mechanism (IIM) be established to collect and preserve evidence of alleged acts of genocide, crimes against humanity, and war crimes committed in Burma since 2011. The U.N. Human Rights Council has approved the formation of an IIM, and has urged U.N. Secretary-General Antonio Guterres to appoint "the staff of the mechanism as expeditiously as possible." In addition to these measures to support some form of future criminal action against the alleged perpetrators, the UNFFM and others have expressed support for U.N. sanctions against the Burmese military and others considered responsible for the abuses. Some of the reports also call on individual nations to impose sanctions on Burma's military and its government.

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T he Congressional Review Act (CRA) allows Congress to review certain types of federal agency actions that fall under the statutory category of "rules." Enacted in 1996 as part of the Small Business Regulatory Enforcement Fairness Act, the CRA requires agencies to report the issuance of "rules" to Congress and provides Congress with special procedures under which to consider legislation to overturn those rules. A joint resolution of disapproval will become effective once both houses of Congress pass a joint resolution and it is signed by the President, or if Congress overrides the President's veto. For an agency's action to be eligible for review under the CRA, it must qualify as a "rule" as defined by the statute. The class of rules covered by the CRA is broader than the category of rules that are subject to the Administrative Procedure Act's (APA's) notice-and-comment requirements. As such, some agency actions, such as guidance documents, that are not subject to notice-and-comment rulemaking procedures may still be considered rules under the CRA and thus could be overturned using the CRA's procedures. The 115 th Congress used the CRA to pass, for the first time, a resolution of disapproval overturning an agency guidance document that had not been promulgated through notice-and-comment procedures. The resolution was signed into law by the President on May 21, 2018. In all of the previous instances in which the CRA was used to overturn agency actions, the disapproved actions were regulations that had been adopted through APA rulemaking processes. Congress's use of the CRA in this instance raised questions about the scope of the CRA and Congress's ability to use the CRA to overturn agency actions that were not promulgated through APA notice-and-comment procedures. Under the CRA, the expedited procedures for considering legislation to overturn rules become available only when agencies submit their rules to Congress. In many cases in which agencies take actions that meet the legal definition of a "rule" but have not gone through notice-and-comment rulemaking procedures, however, agencies fail to submit those rules. Thus, questions have arisen as to how Members can use the CRA's procedures to overturn agency actions when an agency does not submit the action to Congress. This report first describes what types of agency actions can be overturned using the CRA by providing a close examination and discussion of the statutory definition of "rule." The report then explains how Members can use the CRA to overturn agency rules that have not been submitted to Congress. Overview of the CRA Under the CRA, before a rule can take effect, an agency must submit to both houses of Congress and the Government Accountability Office (GAO) a report containing a copy of the rule and information on the rule, including a summary of the rule, a designation of whether the rule is "major," and the proposed effective date of the rule. For most rules determined to be "major," the agency must allow for an additional period to elapse before the rule can take effect—primarily to give Congress additional time to consider taking action on the most economically impactful rules—and GAO must write a report on each major rule to the House and Senate committees of jurisdiction within 15 days. The report is to contain GAO's assessment of the agency's compliance with various procedural steps in the rulemaking process. After a rule is received by Congress, Members have the opportunity to use expedited procedures to overturn the rule. A Member must submit the resolution of disapproval and Congress must take action on it within certain time periods specified in the CRA to take advantage of the expedited procedures, which exist primarily in the Senate. Those expedited, or "fast track," procedures include the following: a Senate committee can be discharged from the further consideration of a CRA joint resolution disapproving the rule by a petition signed by at least 30 Senators; any Senator may make a nondebatable motion to proceed to consider the disapproval resolution, and the motion to proceed requires a simple majority for adoption; and if the motion to proceed is successful, the CRA disapproval resolution would be subject to up to 10 hours of debate, and then voted upon. No amendments are permitted and the disapproval resolution requires a simple majority to pass. If both houses pass the joint resolution, it is sent to the President for signature or veto. If the President were to veto the resolution, Congress could vote to override the veto under normal veto override procedures. If a joint resolution of disapproval is submitted and acted upon within the CRA-specified deadlines and signed by the President (or if Congress overrides the President's veto), the CRA states that the "rule shall not take effect (or continue)." In other words, if part or all of the rule had already taken effect, the rule would be deemed not to have had any effect at any time. If a rule is disapproved, the status quo that was in place prior to the issuance of the rule would be reinstated. In addition, when a joint resolution of disapproval is enacted, the CRA provides that a rule may not be issued in "substantially the same form" as the disapproved rule unless it is specifically authorized by a subsequent law. The CRA does not define what would constitute a rule that is "substantially the same" as a nullified rule. Types of Agency Actions Covered by the CRA The CRA governs "rules" promulgated by a "federal agency," using the definition of "agency" provided in the APA. That APA definition broadly defines an agency as "each authority of the Government of the United States, ... but does not include ... Congress; ... the courts of the United States; ... courts martial and military commissions." Accordingly, the CRA generally covers rules issued by most executive branch entities. In the context of the APA, however, courts have held that this definition excludes actions of the President. The more difficult interpretive issue is what types of agency actions should be considered "rules" under the CRA. The CRA adopts a broad definition of the word "rule" from the APA, but then creates three exceptions to that definition. This APA definition of "rule" encompasses a wide range of agency action, including certain agency statements that are not subject to the notice-and-comment rulemaking requirements outlined elsewhere in the APA: "[R]ule" means the whole or a part of an agency statement of general or particular applicability and future effect designed to implement, interpret, or prescribe law or policy or describing the organization, procedure, or practice requirements of an agency and includes the approval or prescription for the future of rates, wages, corporate or financial structures or reorganizations thereof, prices, facilities, appliances, services or allowances therefor or of valuations, costs, or accounting, or practices bearing on any of the foregoing[.] The CRA narrows this definition by providing that the term "rule" does not include (A) any rule of particular applicability, including a rule that approves or prescribes for the future rates, wages, prices, services, or allowances therefor, corporate or financial structures, reorganizations, mergers, or acquisitions thereof, or accounting practices or disclosures bearing on any of the foregoing; (B) any rule relating to agency management or personnel; or (C) any rule of agency organization, procedure, or practice that does not substantially affect the rights or obligations of non-agency parties. Determining whether any particular agency action is a rule subject to the CRA therefore entails a two-part inquiry: first, asking whether the statement qualifies as a rule under the APA definition and, second, asking whether the statement falls within any of the exceptions noted above to the CRA's definition of rule. These two steps are illustrated below in Figure 1 . This section of the report walks through the two elements of this inquiry in more detail. First, while the APA's definition of "rule" is expansive, courts have held that "Congress did not intend that the ... definition ... be construed so broadly that every agency action" should be encompassed under this provision. As a preliminary matter, courts have distinguished agency rulemaking actions from adjudicatory and investigatory functions. And under the statutory text, to qualify as a rule, an agency statement must meet three requirements: it must be "of general ... applicability," have "future effect," and be "designed to implement, interpret, or prescribe law or policy." Second, even if an agency statement does qualify as an APA "rule," the CRA expressly exempts three categories of rules from its provisions: rules "of particular applicability," rules "relating to agency management or personnel," and "any rule of agency organization, procedure, or practice that does not substantially affect the rights or obligations of non-agency parties." Both inquiries are heavily fact specific, and require looking beyond a document's label to the substance of the agency's action. Determining Whether an Agency Action Is an APA Rule The CRA defines the word "rule" by incorporating in part the APA's definition of that term. Although there is very little case law interpreting the meaning of "rule" under the CRA, cases interpreting the APA's definition of "rule" may provide persuasive authority for interpreting the CRA because the CRA explicitly relies on that provision as the basis for its own definition of the term "rule." The APA provides a general framework governing most agency action—not only agency rulemaking, but also administrative adjudications. The APA accordingly distinguishes different types of agency actions, separating rules from orders and investigatory acts. These distinctions may also be relevant when deciding whether an agency action is a rule subject to the CRA. Differentiating "Rules," "Orders," and "Investigative Acts" under the APA The APA distinguishes a "rule" from an "order," defining an "order" as "the whole or a part of a final disposition, whether affirmative, negative, injunctive, or declaratory in form, of an agency in a matter other than rule making but including licensing." Orders are the product of agency adjudication, in contrast to rules, which result from rulemaking. To determine whether an agency action is a rule or an order in the context of the APA, courts look beyond the document's label to the substance of the action. One federal court of appeals described the distinction between rulemaking and adjudication as follows: First, adjudications resolve disputes among specific individuals in specific cases, whereas rulemaking affects the rights of broad classes of unspecified individuals.... Second, because adjudications involve concrete disputes, they have an immediate effect on specific individuals (those involved in the dispute). Rulemaking, in contrast, is prospective, and has a definitive effect on individuals only after the rule subsequently is applied. Courts have also distinguished rules from agency investigations. A separate provision of the APA addresses an agency's authority to compel the submission of information and perform "investigative act[s] or demand[s]." When agencies conduct investigative actions such as requiring regulated parties to submit informational reports, courts have held that they are not subject to the APA's rulemaking requirements. However, courts have also noted that some actions related to investigations may qualify as rules. For instance, in one case, a federal court of appeals observed that the procedures governing an agency's decision to investigate "are separate from and precede the agency's ultimate act," concluding that the procedures at issue constituted a rule. "Rules" under the APA An agency statement will qualify as a "rule" under the APA definition if it (1) is "of general or particular applicability," (2) has "future effect," and (3) is "designed to implement, interpret, or prescribe law or policy." With regard to the first requirement, as the U.S. Court of Appeals for the District of Columbia Circuit (D.C. Circuit) has noted, most agency statements will be "of general or particular applicability" and will fulfill this condition. The second requirement—that a rule be "of ... future effect" —is the subject of some ambiguity. Courts have largely agreed that this requirement is likely intended to distinguish agency rulemaking from agency adjudication. Courts often differentiate rules and orders by noting that orders are retrospective, while rules have "future effect." Rules operate prospectively, in the sense that they are intended to "inform the future conduct" of those subject to the rules. Additionally, courts have sometimes said that the "future effect" requirement excludes any agency statements that do not "bind the agency." Thus, for example, in a concurring opinion in a 1988 Supreme Court case, Justice Scalia suggested that the "future effect" requirement must be read to mean "that rules have legal consequences only for the future." He argued that the only way to distinguish rules from orders—which can have both future and past legal consequences—was to define rules as having only prospective operation. Judge Silberman of the D.C. Circuit, concurring in an opinion from that court, drew on Justice Scalia's interpretation of this requirement to argue that it would be unreasonable to conclude that every single agency statement with future effect is a rule under the APA. Instead, he argued that only agency statements that "seek to authoritatively answer an underlying policy or legal issue" should be considered rules. These opinions raise several unanswered questions, which could suggest some hesitation before reading the phrase "future effect" in the APA definition of a rule to mean "binding." First, these cases do not fully explain what it means for an agency statement to be binding or address the case law suggesting that the term "future effect" merely pertains to the prospective nature of the statement. Second, and perhaps more critical, this case law reading "future effect" to mean that APA "rules" must bind the agency does not explain how to distinguish this requirement from the separate inquiry into whether an agency action is subject to notice-and-comment rulemaking procedures. As discussed in more detail below, some (but not all) APA "rules" must go through procedures commonly known as notice-and-comment rulemaking. To distinguish so-called "legislative" rules that are subject to notice-and-comment procedures from "interpretive" rules, which are not, courts generally ask whether the rule has "the force of law" —or stated another way, whether the rule is "legally binding." Arguably, then, this "legal effect" test for notice-and-comment rulemaking may be equivalent to asking whether a rule binds an agency. However, the "future effect" inquiry tests whether an agency action is a "rule" under 5 U.S.C. §551(4), and the "legal effect" inquiry tests whether such a rule is subject to the notice-and-comment procedures outlined in 5 U.S.C. §553. Because the tests are tied to two distinct statutory provisions, they arguably should not both turn on whether a rule is legally binding. This is especially true where courts have generally held that interpretive rules may not be subject to notice-and-comment but are nonetheless "rules" within the meaning of the APA. The fact that Congress expressly exempted "interpretative rules" from the rulemaking procedures applicable to "rules" may itself suggest that such agency actions are rules—otherwise, the exemption would be unnecessary. The third requirement for an agency action to be considered an APA rule is that it must be "designed to implement, interpret, or prescribe law or policy." The D.C. Circuit has held that agency documents that merely state an "established interpretation" and "tread no new ground" do not "implement, interpret, or prescribe law or policy" and therefore are not rules. Similarly, an agency statement is not a rule if it "does not change any law or official policy presently in effect." Thus, courts have concluded that "educational" documents that merely "reprint[]" or "restate" existing law are not rules under the APA. The D.C. Circuit has also held that an agency's budget request is not a rule. Notice-and-Comment Rulemaking and Guidance Documents The APA outlines specific rulemaking procedures that agencies must follow when they formulate, amend, or repeal a rule. The APA generally requires publication in the Federal Register and institutes procedural requirements that are often referred to as notice-and-comment rulemaking. Under notice-and-comment rulemaking, agencies must notify the public of a proposed rule and then provide a meaningful opportunity for public comment on that rule. However, not all agency acts that qualify as "rules" under the APA definition are required to comply with the APA's rulemaking procedures. In particular, the APA provides that notice and comment is not required for "interpretative rules, general statements of policy, or rules of agency organization, procedure, or practice." Additionally, the APA's rulemaking procedures do not, in relevant part, apply to "matter[s] relating to agency management or personnel." Therefore, agency statements such as guidance documents or procedural rules may not be required to undergo notice-and-comment rulemaking, but may still be APA "rules." Courts frequently hold that agency's guidance documents are exempt from APA notice-and-comment rulemaking requirements because those documents are properly classified either as interpretative rules or as general policy statements. Interpretive rules merely explain or clarify preexisting legal obligations without themselves "purport[ing] to impose new obligations or prohibitions," while general policy statements simply describe how an agency "will exercise its broad enforcement discretion" without binding the agency. But as mentioned above, the critical factor distinguishing both interpretive rules and general policy statements from "legislative" rules that must be promulgated through notice-and-comment procedures is "whether the agency action binds private parties or the agency itself with the 'force of law,'" or whether the rule "has legal effect." General policy statements ordinarily are not legally binding, and accordingly are not "substantive" rules required to undergo notice-and-comment rulemaking procedures. It should be noted that some cases from the D.C. Circuit have suggested that general policy statements are not "rules" at all under the APA definition. For example, in one case, the D.C. Circuit said that the "primary distinction between a substantive rule—really any rule—and a general statement of policy, then, turns on whether an agency intends to bind itself to a particular legal position." As discussed above, courts have also sometimes held that where an agency statement does not "bind" an agency, it has no "future effect" and therefore cannot qualify as an APA "rule." This "binding effect" requirement has clear parallels to these cases holding that general policy statements are not rules because they do not bind the agency. However, these latter decisions do not explicitly ground this characterization of general policy statements in the text of the APA requiring rules to have "future effect." Accordingly, it is not clear how these two inquiries interrelate. Other cases have characterized general policy statements as APA rules, notwithstanding the fact that such a statement may not be legally binding in a future administrative proceeding. CRA Incorporation of APA Definition of "Rule" The CRA incorporates the APA definition of "rule" by reference, and, consequently, should likely be read to incorporate judicial constructions of that definition. Thus, for example, although the CRA does not itself reference agency "orders," some courts have nonetheless imported the APA's distinction between rules and orders when interpreting the CRA. Accordingly, if an agency acts through an order or investigatory act, rather than a rule, the requirements of the CRA likely will not apply. In recent years, some commentators have discussed using the CRA to revoke agencies' guidance documents, raising the question of which guidance documents qualify as CRA "rules." As a preliminary matter, it is important to note that "guidance document" is not a defined term under either the CRA or the APA. Even if an agency has characterized a statement as a guidance document rather than a rule, it still may qualify as a "rule" under the CRA. Instead, the relevant question is whether any agency statement labeled as guidance—which could include, for example, actions such as memoranda, letters, or agency bulletins—falls within the statutory definition of "rule" and, if so, whether it is nonetheless exempt from the CRA under any of the exceptions to that definition. As discussed above, agency statements labeled as guidance are frequently exempt from the APA's notice-and-comment rulemaking procedures because they fall within the exceptions for interpretive rules or general policy statements. However, while the CRA adopts the APA's definition of rule, the CRA's exceptions to that definition are not identical to the APA's exemptions from its notice-and-comment procedures. Notably, the CRA does not exclude from its definition of rule either general policy statements or interpretative rules. Instead, the category of agency "rules" subject to the requirements of the CRA appears to encompass most "rules" that must go through the APA's notice-and-comment rulemaking procedures, along with some that do not. Consequently, agency guidance documents that are exempt from the APA's notice-and-comment procedural requirements may nonetheless be subject to the CRA, if they do not fall within one of the CRA's exceptions. But the effect of a disapproval resolution in such a case may be limited because such guidance documents generally lack legal effect in the first place. The post-enactment legislative history of the CRA indicates that the CRA was intended to encompass some agency statements that would not be subject to the APA's notice-and-comment rulemaking requirements. Following the enactment of the CRA in 1996, the law's sponsors inserted into the Congressional Record a statement in which they asserted that the law would cover a wide swath of agency actions: The committees intend this chapter to be interpreted broadly with regard to the type and scope of rules that are subject to congressional review. The term "rule" in subsection 804(3) begins with the definition of a "rule" in subsection 551(4) and excludes three subsets of rules that are modeled on APA sections 551 and 553. This definition of a rule does not turn on whether a given agency must normally comply with the notice-and-comment provisions of the APA.... The definition of "rule" in subsection 551(4) covers a wide spectrum of activities. This statement suggests that Congress intended the CRA to reach a broad range of agency activities, including agency policy statements, interpretive rules, and certain rules of agency organization, despite the fact that those actions are not subject to the APA's requirements for notice and comment. However, as discussed above, there is some ambiguity regarding whether certain non-binding statements are rules at all. If general policy statements or other non-binding agency actions are not "rules" under the APA definition, then arguably, they are not rules under the CRA. But importantly, GAO has concluded that general policy statements should be considered "rules" under the CRA. As discussed in more detail below, GAO's resolution of this issue may stand as the last word on the matter, given the role that GAO has come to play in advising Congress on which agency actions are subject to the CRA. CRA Exceptions Even if an agency action is a "rule" within the APA definition, it will not be subject to the CRA if it falls within one of the three exceptions to the CRA's definition of a "rule." The CRA incorporates the APA definition of rule, but exempts from that definition any rules "of particular applicability," rules "relating to agency management or personnel," and "any rule of agency organization, procedure, or practice that does not substantially affect the rights or obligations of non-agency parties." Some of these exemptions track language in the APA, and accordingly, cases interpreting those APA provisions may be useful to interpret the CRA exceptions. Additionally, the CRA does not "apply to rules that concern monetary policy proposed or implemented by the Board of Governors of the Federal Reserve System or the Federal Open Market Committee." The CRA also contains a partial exception for rules where an agency has, "for good cause," dispensed with notice-and-comment rulemaking procedures, as well as for rules related to "a regulatory program for a commercial, recreational, or subsistence activity related to hunting, fishing, or camping ." However, this section does not exempt rules from the CRA procedures entirely; it merely allows the agency to determine when the rule shall take effect, notwithstanding the CRA's requirements. Rules of Particular Applicability While the APA's definition of "rule" includes agency statements "of general or particular applicability," the CRA expressly exempts "any rule of particular applicability." Courts have said that this language refers to "legislative-type promulgations" that are "directed to" specifically named parties. In opinions from GAO analyzing whether various agency actions fall within the particular-applicability exception, GAO has stated that to be generally applicable, the CRA does not require a rule to "generally apply to the population as a whole." Instead, "all that is required is a finding" that a rule "has general applicability within its intended range, regardless of the magnitude of that range." For example, in one case, GAO concluded that an agency decision adopting and implementing a plan to counter decreased river flows in a certain river basin was not a matter of particular applicability. Although the decision applied to a specific geographic area, it would, in the view of GAO, nonetheless "have significant economic and environmental impact throughout several major watersheds in the nation's largest state." The CRA gives examples of some types of rules of particular applicability by specifying that this exemption includes any "rule that approves or prescribes for the future rates, wages, prices, services, or allowances therefor, corporate or financial structures, reorganizations, mergers, or acquisitions thereof, or accounting practices or disclosures bearing on any of the foregoing." Moreover, the post-enactment statement for the record written by the CRA's sponsors maintained that "IRS private letter rulings and Customs Service letter rulings are classic examples of rules of particular applicability." Under the APA, courts have also held, for example, that agency actions designating specific sites as covered by environmental laws are rules of "particular applicability." Rules Relating to Agency Management or Personnel The second CRA exemption excludes "any rule relating to agency management or personnel." The APA contains a similar exemption from its general rulemaking requirements. Within the context of the APA, courts have concluded that this exemption covers agency statements such as policies for hiring employees. A rule will not fall within this exemption solely because it is "directed at government personnel." Instead, courts have viewed this APA exception to cover internal matters that do not substantially affect parties outside an agency. Notwithstanding the general presumption of courts that where Congress adopts language from another statute, it also intends to incorporate any settled judicial interpretations of that same language, it is unclear whether this substantial-effect requirement developed by courts in the context of the APA should be read into the CRA. The CRA's second exemption, for "any rule relating to agency management or personnel," does not expressly mention a rule's effect on third parties. By contrast, the CRA's third exemption does. This distinction in language could be read to mean that Congress intentionally chose to create a substantial-effect requirement for the third exception while omitting this limitation from the second one, so that the CRA's second exception excludes "any rule relating to agency management or personnel" regardless of its impact on third parties. On this view, this difference in phrasing would displace the ordinary presumption that Congress incorporates case law interpreting similar statutory provisions. This interpretation of the second exemption could mean that the CRA's exception for rules relating to agency management or personnel may be interpreted more broadly than the APA exception. However, it is also possible that Congress chose not to include the substantial-effect requirement in this second exception because "prior judicial interpretation" of the identical phrases in the APA made such language unnecessary. Congress may have added a substantial-effect requirement to the third exception in order to settle some ambiguity in the cases interpreting the parallel provision of the APA, as described below. Rules of Agency Organization, Procedure, or Practice Finally, the CRA exempts "any rule of agency organization, procedure, or practice that does not substantially affect the rights or obligations of non-agency parties." The APA also excludes "rules of agency organization, procedure, or practice" from notice-and-comment rulemaking procedures. Courts have held that this APA exception includes actions like agency decisions relating to how regulated entities must go about satisfying investigative requirements. Unlike the CRA, the APA does not explicitly limit this exception to those rules that do not "substantially affect the rights or obligations of non-agency parties." Nonetheless, because courts have read such a limitation into the APA exemption, the case law defining this requirement may be relevant to determine the scope of this CRA exemption. However, in the cases interpreting this parallel APA exclusion, the impact of a rule on a third party is not the only factor courts use to distinguish between substantive rules, which are required to go through notice-and-comment procedures, and procedural rules, which are not. Instead, courts have engaged in two kinds of inquiries. The first is the "substantial impact test," which asks whether the agency action substantially impacts the regulated industry. However, the D.C. Circuit has noted that even rules best characterized as procedural measures may have a significant effect on regulated parties, and, accordingly, has held that "a rule with a 'substantial impact' upon the persons subject to it is not necessarily a substantive rule." Consequently, the D.C. Circuit has also asked whether the rule "encodes a substantive value judgment." Nonetheless, because the text of the CRA expressly excludes rules "of agency organization, procedure, or practice" that do not "substantially affect the rights or obligations of non-agency parties," the CRA appears to mandate the use of something akin to the substantial impact test to determine whether a rule falls within this exception. In fact, one of the sponsors of the CRA emphasized prior to its passage that to determine whether a rule should be excluded under this provision, "the focus ... is not on the type of rule but on its effect on the rights or obligations of nonagency parties." He went on to say that the exclusion covered only rules "with a truly minor, incidental effect on nonagency parties." GAO has sometimes drawn on the APA case law described above in its own opinions analyzing whether various actions fall within the purview of the CRA. However, because the substantial-impact test and the substantive-value-judgment test were developed in the context of the APA to test whether rules "implicate the policy interests animating notice-and-comment rulemaking," these judicially created tests might not be directly applicable to determine whether an agency statement is subject to the CRA. CRA Requirement for Submission of Rules The CRA requires that agencies submit actions that fall within the CRA's definition of a rule to both houses of Congress and to GAO before the actions may take effect. Thus, the submission requirement applies generally to rules that are promulgated through APA notice-and-comment procedures, as well as to other types of agency statements, as discussed above. Specifically, Section 801(a)(1)(A) of the CRA requires the agency to submit a report containing a copy of the rule to each house of Congress and the Comptroller General; a concise general statement relating to the rule, including whether it is a major rule; and the proposed effective date of the rule. The agency is also required to submit additional information pertaining to any cost-benefit analysis the agency conducted, along with information on the agency's actions resulting from other regulatory impact analysis requirements, including the Regulatory Flexibility Act and the Unfunded Mandates Reform Act. For major rules, after receiving this information, GAO is then required to assess the agency's compliance with these additional informational requirements and include its assessment in the major rule report. The report is required to be submitted to the House and Senate committees of jurisdiction within 15 calendar days of the submission of the rule or its publication in the Federal Register , whichever date is later. The "report" that agencies are required to submit along with the rule, in practice, is a two-page form on which they provide the information required under Section 801(a)(1)(A) and, for major rules, most of the information required to be included in GAO's major rule report. In FY1999 appropriations legislation, Congress required the Office of Management and Budget (OMB) to provide agencies with a standard form to use to meet this reporting requirement. OMB issued the form in March 1999 as part of a larger guidance to agencies on compliance with the CRA. A copy of the form is provided in Appendix A of this report. When final rules are submitted to Congress, notice of each chamber's receipt and referral appears in the respective House and Senate sections of the daily Congressional Record devoted to "Executive Communications." Notice of each chamber's receipt is also entered into a database that can be searched using Congress.gov. When the rule is submitted to GAO, a record of its receipt at GAO is noted in a database on GAO's website as well. Once the rule is received in Congress and published in the Federal Register , the time periods during which the CRA's expedited procedures are available begin, and Members can use the procedures to consider a resolution of disapproval. Thus, submission of rules to Congress under the CRA is critical because the receipt of the rule in Congress triggers the CRA's expedited procedures for introduction and consideration of a joint resolution disapproving the rule. In other words, if an agency fails to submit a rule to Congress, the House and Senate are unable to avail themselves of the special "fast track" procedures to consider a joint resolution striking down the rule. Agency Compliance with Submission Requirement Following enactment of the CRA in 1996, some Members of Congress and others raised concerns over agencies not submitting their rules on several occasions. At a hearing on the CRA in 1997, one year after its enactment, witnesses noted that agencies were not in full compliance with the submission requirement. It was also noted at the hearing, however, that it appeared agencies were seeking "in good faith" to comply with the statute. At a hearing in 1998 on implementation of the CRA, GAO's general counsel testified that agencies were often not sending their rules to GAO or Congress. Also in 1998, to further improve agency compliance with the CRA, Congress required OMB to issue guidance on certain provisions of the CRA, specifically including the submission requirement in 5 U.S.C. §801(a)(1). To meet this requirement, then-OMB Director Jacob J. Lew issued a memorandum for agencies in March 1999. The Lew memorandum provided information such as where agencies should send their rules in the House and Senate, including the addresses of the Office of the President of the Senate and the Speaker of the House, the offices in each chamber that receive the rules; what information the agencies should include with the rule; and an explanation of what types of rules are required to be submitted. Because agencies were initially inconsistent about fulfilling the submission requirement, GAO began to monitor agencies' compliance with the submission requirement by comparing the final rules that were published in the Federal Register with rules that were submitted to GAO. This was not a role that was required under the CRA; rather, GAO conducted these reviews voluntarily. As then-GAO general counsel Robert Murphy testified in 1998, GAO conducted a review to determine whether all final rules covered by the Congressional Review Act and published in the Register were filed with the Congress and the GAO. We performed this review both to verify the accuracy of our own data base and to ascertain the degree of agency compliance with the statute. We were concerned that regulated entities may have been led to believe that rules published in the Federal Register were effective, when, in fact, they were not unless filed in accordance with the statute. After its review of agency compliance with the submission requirement, in November 1997, GAO submitted to OMB's Office of Information and Regulatory Affairs (OIRA) a list of the rules that had been published in the Federal Register but had not been submitted to GAO. According to GAO, OIRA distributed this list to affected agencies; GAO then followed up again with the agencies that had rules that remained un-submitted in February 1998. GAO stated in its March 1998 testimony that "In our view, OIRA should have played a more proactive role in assuring that the agencies were both aware of the statutory filing requirements and were complying with them." GAO continued to conduct similar reviews regularly, comparing the list of rules that agencies submitted to GAO against rules that were published in the Federal Register . Until 2012, GAO periodically sent letters to OIRA regarding rules that it had not received. In March 2012, GAO notified OIRA that, due to constraints on its resources, it would no longer be sending lists of rules not received. Instead, GAO decided to continue to track only major rules not received, not all final rules, as they had previously done. Submission of Notice-and-Comment Rules vs. Other Types of Documents In general, although there have been exceptions noted by GAO, agencies appear to be fairly comprehensive in submitting rules to Congress and GAO when those rules have been promulgated through an APA rulemaking process. GAO's federal rules database lists thousands of such rules each year. In the case of rules that are not subject to notice-and-comment procedures, however, agencies often do not fulfill the submission requirement, and tracking compliance for these types of agency actions is more difficult. Although GAO has voluntarily tracked agency compliance with the submission requirement, its methodology for doing so did not result in a complete list of agency actions that should have been submitted. GAO's point of reference was to compare regulations that were published in the Federal Register against regulations it received pursuant to the CRA. Most rules that are required to be published in the Federal Register are indeed subject to the CRA, making this a potentially helpful method of identifying rules that were not submitted. However, many of the other agency actions that are not subject to notice-and-comment requirements are not generally published in the Federal Registe r and are also not submitted to GAO. Therefore, using this method, many rules that should have been submitted likely were undetected by GAO and thus not included in the lists of un-submitted rules it sent to OIRA and to the agencies. It is precisely this issue that led to Members requesting GAO's opinion on individual agency actions that were of specific interest to them and were not submitted to Congress (nor, in most cases, published in the Federal Register ). The higher incidence of noncompliance with the CRA's submission requirement for agency actions that were conducted outside the notice-and-comment rulemaking process is likely due in large part to the practical difficulty of submitting the substantial number of agency statements that qualify as rules under the CRA. The CRA's submission requirement could potentially include a wide variety of items such as FAQs posted on agency websites, press releases, bulletins, information memoranda, and statements made by agency officials. In congressional testimony in 1997, one administrative law scholar argued that agencies "annually take tens of thousands of actions" that would fall under the CRA's definition of rule, and that Were agencies to comply fully with [the CRA's] requirement that all these matters be filed with Congress as a condition of their effectiveness (as it appears, thus far, they are not doing), Congress and the GAO would be swamped with filings. Burying Congress in paper might even seem a useful means of diverting attention from larger, controversial matters; haystacks can be useful for concealing needles. No one believes many, if any, of these rules will be the subjects of resolutions of disapproval. Yet for them even simple accompanying documents to permit data analysis and tracking, such as GAO has been proposing, would impose significant aggregate costs, well beyond their possible benefit. In addition, it seems possible that many agencies are unaware of the breadth of the CRA's coverage. Reading through various agencies' responses to the GAO opinions discussed below suggests that many agencies appear to be aware that notice-and-comment rules are generally covered by the CRA, but they may be unaware that many other types of actions are covered. For example, in an opinion it issued in 2012 regarding an action taken by the Department of Health and Human Services, GAO stated that "We requested the views of the General Counsel of HHS on whether the July 12 Information Memorandum is a rule for purposes of the CRA by letter dated August 3, 2012. HHS responded on August 31, 2012, stating that the Information Memorandum was issued as a non-binding guidance document, and that HHS contends that guidance documents do not need to be submitted pursuant to the CRA." GAO concluded, however, "We cannot agree with HHS's conclusion that guidance documents are not rules for the purposes of the CRA and HHS cites no support for this position." GAO's Role in Determining Whether an Agency Action is Covered by the CRA Because submission of rules is key to Congress's ability to use the CRA, if an agency does not submit a rule to Congress, this could potentially frustrate Congress's ability to review rules under the act. To avoid Congress being denied its opportunity for review of rules in this way, however, the Senate appears to have developed a practice that allows it to employ the CRA's review mechanism even when an agency does not submit a rule for review. That practice has involved seeking an opinion from GAO on whether an agency action should have been submitted under the CRA (i.e., whether the action is covered by the CRA's definition of "rule"). In several instances since the enactment of the CRA in 1996, Members of Congress sought an opinion from GAO as to whether certain agency actions were covered by the CRA, despite the agency not having undertaken notice-and-comment rulemaking or having submitted the action to Congress. GAO has issued 21 opinions of this type as of March 5, 2019. In many of these opinions, GAO has defined the term "rule" as used in the CRA expansively. In 11 of the 21 opinions, GAO opined that the agency statement in question was a rule under the CRA that should have been submitted to the House and Senate for review. These opinions are summarized below in this report and are listed in a table in Appendix B . In recent years, the Senate has considered publication in the Congressional Record of a GAO opinion classifying an agency action as a rule as the trigger date for the initiation period to submit a disapproval resolution and for the action period during which such a joint resolution qualifies for expedited consideration in the Senate. Thus, the question of whether Congress may use the CRA's expedited parliamentary disapproval mechanism generally hinges upon the nature of GAO's opinion in such cases. By allowing the GAO opinion to serve as a substitute for the actual submission of a rule, the Senate can still avail itself of the CRA's expedited procedures to overturn rules. Origin of GAO's Role In responding to these requests from Members for opinions on whether certain agency actions are covered, GAO has played an important role in determining the applicability of the CRA, although the specific role that GAO has played in this regard is not explicitly outlined in the statute. But a review of the history of the early implementation of the CRA, and a consideration of GAO's other activities under the CRA, suggests that the role GAO currently plays with regard to determining whether a specific agency action is a "rule" is linked to other activities GAO has engaged in regarding the CRA. As has been noted, GAO's primary statutory requirement under the CRA is to provide a report to the committees of jurisdiction on each major rule, and to include in the report information about the agency's compliance with various steps of the rulemaking process for each major rule. For non-major rules, soon after the CRA was enacted, GAO voluntarily created an online database of rules submitted to it under the CRA, suggesting that it was willing to go beyond what was required of it by the statute to facilitate implementation. As GAO's general counsel explained in congressional testimony in 1998, "Although the law is silent as to GAO's role relating to the nonmajor rules, we believe that basic information about the rules should be collected in a manner that can be of use to Congress and the public. To do this, we have established a database that gathers basic information about the 15-20 rules we receive on the average each day." The database can be used to search for rules by elements such as the title, issuing agency, date of publication, type of rule (major or non-major), and effective date. The website also contains links to each of GAO's major rule reports. Perhaps most notably, however, GAO's determination of whether agency actions are considered "rules" under the CRA appears to be closely linked to its monitoring of agency compliance with the submission requirement as discussed above. The question of whether an agency action is a rule under the CRA is also a question of whether it should be submitted; arguably, then, GAO is addressing a very similar question in its opinions on whether certain agency actions are covered as it was in its initial reports to OIRA on agency compliance with the submission requirement. A discussion of GAO's role in a congressional hearing on the Tongass Land Management Plan in 1997 provides some evidence of the voluntary and, initially, ad hoc nature of GAO's role in this regard. One of the issues that was addressed at the hearing was whether the plan should be considered a rule under the CRA; GAO's general counsel was invited to testify at the hearing. Six days before the hearing, GAO issued its second opinion on the applicability of the CRA, in which it stated that the Tongass Land Management Plan should have been submitted as a rule under the CRA. Former Senator Larry Craig, who had requested the opinion, asked GAO's general counsel at the hearing about GAO's role: It is our understanding of your testimony and our own reading of the Regulatory Flexibility Act that the General Accounting Office has been given the role of advising Congress and perhaps agencies on whether their policy decisions constitute rules. It is our understanding that the GAO's independent opinion is generally given considerable weight by the agencies. Is this also the GAO's understanding of its role? In response, GAO's general counsel, Robert Murphy, stated that the CRA does not provide any identification of who is to decide what a rule is, unlike the issue of whether a rule is a major rule or not, which, as [OIRA Administrator] Ms. Katzen pointed out, has been assigned to her. So in that sense, I cannot say that GAO has a special role under the statute for making that determination. The decision, the opinion, that we issued last week on the question [of whether the Tongass Land Management Plan was a rule under the CRA] was done in our role as adviser to the Congress in response to the request of three chairmen of congressional committees. Thus, GAO acknowledged that its opinion was provided not pursuant to any specific provision of the statute, but in a more general, advisory capacity. In the years following, Members continued to request GAO opinions advising Congress on the matter of whether an agency action should have been submitted. Congressional Response to GAO Opinions Since 1996 Although GAO has issued 21 opinions on the applicability of the CRA since 1996, Congress's response to those opinions has varied over time. Initially, the GAO opinions finding that the agency actions in question were rules under the CRA did not lead to the introduction of joint resolutions of disapproval—Members appear not to have introduced any joint resolutions of disapproval following a GAO opinion until 2008. In 2008, GAO issued an opinion stating that a letter from the Centers for Medicare & Medicaid Services to state health officials concerning the State Children's Health Insurance Program was a rule for the purposes of the CRA; in response, Senator John D. Rockefeller introduced S.J.Res. 44 to disapprove the guidance provided in the letter. According to a press release from the Committee on Finance at the time, however, the committee did not take further action on the resolution of disapproval because it had missed the window during which the action would have been required to be taken under the CRA to use its expedited procedures. The first time either chamber took action on a resolution of disapproval introduced following a GAO opinion was in 2012, when the House passed H.J.Res. 118 (112 th Congress), a resolution of disapproval that would have overturned an information memorandum issued by the Department of Health and Human Services relating to the implementation of the Temporary Assistance for Needy Families (TANF) program. The first time the Senate took action on such a resolution of disapproval was on April 18, 2018, when it passed S.J.Res. 57 , overturning guidance from the Bureau of Consumer Financial Protection (CFPB) pertaining to indirect auto lending and the Equal Credit Opportunity Act. The House passed S.J.Res. 57 on May 8, 2018, and the President signed it into law on May 21, 2018. Consequences of GAO Opinions Standing alone, a GAO opinion deciding whether an agency action is a "rule" covered by the CRA does not have legal effect. As discussed, GAO's role in determining whether actions are subject to the CRA is not provided for in the CRA, and its opinions are, in essence, advisory. The opinions do not have any immediate effect other than advising Congress as to whether GAO considers an agency action to meet the definition of "rule" under the CRA. As a matter of course, however, it appears that the Senate has chosen to treat the GAO opinions as dispositive on the issue. In several cases, individual Senators have stated that once a GAO opinion determining that an agency action is a rule is published in the Congressional Record , the time periods under the CRA commence and the agency action in question becomes subject to the CRA disapproval mechanism. The enactment in May 2018 of a joint resolution of disapproval that was introduced following a GAO opinion regarding a 2013 CFPB bulletin that had not been submitted by the agency further indicates that Congress, in at least some cases, is willing to consider the GAO opinion as a substitute for the agency's submission of a rule to Congress. GAO described this practice in November 2018 in one of its opinions relating to the applicability of the CRA: "Congress has opted to treat the receipt of a GAO opinion concluding that an agency action is a rule as triggering the statutory provisions that otherwise would have been triggered by the agency's submission. Thus, Congress has used GAO opinions to cure the impediment created by the agency's failure to submit the rule, protecting its review and oversight authorities." In sum, GAO opinions facilitate congressional review of rules that were not—but should have been—submitted under the CRA. A CRA provision barring judicial review makes it unlikely that a GAO opinion or any other congressional determination stating that a rule is subject to the CRA would be subject to challenge in court. This provision states that "[n]o determination, finding, action, or omission under this chapter shall be subject to judicial review." Accordingly, most courts have refused to review any claims arguing that an agency action should have been submitted to Congress as a rule under the CRA. As a result, the question of whether an agency action is subject to the CRA and its fast-track procedures will likely be settled in the political arena rather than in the courts, and, if Congress continues to treat GAO opinions as determinative, those opinions likely will be the final word on the issue. The provision barring judicial review may mean that one other critical aspect of the CRA may be addressed outside of the courts and through GAO opinions: whether a rule has taken effect. As discussed previously, the CRA states that agencies must submit covered rules to Congress and the Comptroller General "before a rule can take effect," suggesting that a rule may not become operative until the report required by the CRA is submitted to Congress. Indeed, the post-enactment statement inserted into the Congressional Record by the CRA's sponsors stated that, barring two exceptions listed in the CRA, "any covered rule not submitted to Congress and the Comptroller General will … not [take] effect until it is submitted pursuant to subsection 801(a)(1)(A)." However, courts have refused to adjudicate claims arguing that various rules are not in effect because an agency has failed to submit the rules to Congress. Accordingly, it is unlikely that a court would be willing to enforce this provision and declare that a rule lacks effect because it was not submitted to Congress. If an agency has not submitted a disputed action to Congress, it is possible that this inaction was the result of the agency's view that the rule was not subject to the CRA. A GAO opinion stating that an agency action does constitute a rule, while not itself rendering a rule ineffective, may be the first indication to the agency that the rule did not "take effect" because the agency did not fulfill the CRA submission requirement. But in the context of agency rules that inherently lack legal effect, the determination that they lack "effect" under the CRA may not have much practical impact. In the context of rulemaking, to "take effect" usually means that something has become legally effective. As noted, however, the CRA encompasses some non-legislative rules that inherently lack legal effect. The fact that the CRA requires agencies to submit some agency statements that lack legal effect suggests that the term "effect," as used in the CRA's submission requirement, means something other than legal effect. While reviewing notice-and-comment rulemakings, some courts have held that the CRA suspends a rule's operation notwithstanding the fact that a rule may technically have become effective. With respect to rules such as general policy statements that generally lack legal force, however, even if an agency failed to comply with the CRA's submission requirement and erroneously regarded the rule as being operative, it is less likely that the operation of the statement had a discernible and independent effect on the agency's actions. Summary of GAO Opinions This section briefly summarizes each of the 21 GAO opinions to date on whether certain agency actions were rules and, thus, eligible for disapproval under the CRA. When GAO appeared to consider one or more of the CRA exceptions to the definition of "rule" as fundamental to its analysis, the summaries identify which exception GAO focused on in its opinion. The opinions are listed in chronological order by the date on which GAO issued the opinion. For a more concise summary of each of these opinions, see the table in Appendix B . Department of Agriculture Memorandum Concerning the Emergency Salvage Timber Sale Program220 The Emergency Sale Timber Program was enacted as part of the Emergency Supplemental Appropriations and Rescissions Act of 1995. The program was intended to "increase the sales of salvage timber in order to remove diseased and damaged trees and improve the health and ecosystems of federally owned forests." On July 2, 1996, the Secretary of Agriculture sent a memorandum entitled "Revised Direction for Emergency Timber Salvage Sales Conducted Under Section 2001(b) of P.L. 104-19 " to the Chief of the Forest Service, containing "clarifications in policy" for the program. GAO concluded that the memorandum was a rule under the CRA because some of its contents "clearly are of general applicability and future effect in interpreting section 2001 of P.L. 104-19 " and because, contrary to the argument the Department of Agriculture made to GAO when GAO requested its views on the matter, the memorandum "does not fall within the agency procedure or practice exclusion [in 5 U.S.C. §804(3)(C)]." U.S. Forest Service Tongass National Forest Land and Resource Management Plan224 On May 23, 2007, the Department of Agriculture's Forest Service issued the Tongass National Forest Land and Resource Management Plan, which "sets forth the management direction for the Tongass Forest and the desired condition of the Forest to be attained through Forest-wide multiple-use goals and objectives." GAO concluded that the plan was a rule under the CRA and was not excepted under 5 U.S.C. §804(3) because "decisions made in the Plan substantially affect non-agency parties and are, therefore, not 'agency procedures.'" American Heritage River Initiative, Created by Executive Order 13061227 President William Clinton signed Executive Order 13061 on September 11, 1997, announcing policies related to the American Heritage River Initiative (AHRI). The AHRI was intended to support American communities' efforts to restore and protect their rivers; the President was to designate, by proclamation, 10 rivers that would take part in the program. GAO concluded that Executive Order 13061 was not a rule under the CRA because the President is not an "agency" for the purposes of the CRA (or, for that matter, under the APA). As such, actions taken by the President are not subject to the CRA. Environmental Protection Agency "Interim Guidance for Investigating Title VI Administrative Complaints Challenging Permits"230 On February 5, 1998, the Environmental Protection Agency (EPA) issued its "Interim Guidance for Investigating Title VI Administrative Complaints Challenging Permits." According to EPA, the intent of the guidance was to update EPA's procedural and policy framework regarding complaints alleging discrimination in the environmental permitting context. GAO concluded that "considered as a whole, the Interim Guidance clearly affects the rights of non-agency parties" and thus was a rule under the CRA and not exempt under 5 U.S.C. §804(3). Farm Credit Administration National Charter Initiative232 On May 3, 2000, the Farm Credit Administration (FCA) issued a booklet entitled "National Charters," and then the FCA published the booklet in the Federal Register on July 20, 2000. The booklet "provide[d] guidance on the national charter application process and the national charter territory. Specifically, the Booklet explain[ed] how a direct lender association can apply for a national charter; what the territory of a national charter will be; and what conditions the FCA will impose in connection with granting a national charter." GAO concluded that "we find that the Booklet, while labeled a statement of policy by the FCA, in actuality, meets the requirements of a legislative rule—which should have been issued using informal rulemaking procedures, including notice and comment." GAO then concluded that the booklet constituted a rule under the CRA and was not exempt under 5 U.S.C. §804(3) because the policies established in the booklet would have an effect on non-agency parties, and because statements made within the booklet clearly indicate that "the FCA recognizes the effect of the Booklet and national charters on other parties." Department of the Interior Record of Decision "Trinity River Mainstem Fishery Restoration"237 The Trinity River Record of Decision (ROD) was issued in December 2000 and documented the Department of the Interior's selection of the actions that it deemed necessary to "restore and maintain the anadromous fish in the Trinity River." The ROD identified the department's selected courses of action for addressing the decreased river flows in the Trinity River Basin. GAO concluded that the ROD was a "rule" under the CRA because "its essential purpose is to set policy for the future," it was not a rule of agency procedure or practice under 5 U.S.C. §804(3), and "it will have broad effect on both rivers' ecosystems and potentially significant economic effect within the Sacramento and Trinity River basins." Department of Veterans Affairs Memorandum Regarding the VA's Marketing Activities to Enroll New Veterans in the VA Health Care System240 On July 18, 2002, the Department of Veterans Affairs (VA) issued a memorandum to network directors regarding the VA's marketing activities to enroll new veterans in the VA health care system. Specifically, the memorandum directed the network directors to no longer engage in trying to enroll new veterans through the use of certain types of activities, such as health fairs, veteran open houses, and enrollment displays at VSO meetings. GAO concluded that the memorandum was not a rule under the CRA because it "is clearly excluded from the coverage of the CRA by one of the enumerated exceptions found in 5 U.S.C. §804(3)"—specifically, GAO considered the memorandum to be a statement of agency procedure or practice that did not affect the rights or obligations of non-agency parties. Rather, the memorandum governed internal agency procedures and did not affect the ability of veterans to enroll in the VA health care system. Department of Veterans Affairs Memorandum Terminating Vendee Loan Program243 On January 23, 2003, the VA issued a memorandum terminating the Vendee Loan Program, a program that allowed the VA to make loans for the sale of foreclosed VA-loan-guaranteed property. In the memorandum, which was addressed to all directors and loan guarantee officers, the VA Secretary announced that it would no longer finance the sale of acquired properties. GAO concluded that the memorandum was not a rule under the CRA because it was a rule relating to agency management (i.e., excepted under 5 U.S.C. §804(3)(B)) or a rule of agency organization, procedure, or practice that does not substantially affect the rights or obligations of non-agency parties (i.e., excepted under 5 U.S.C. §804(3)(C)). GAO noted that "this is the type of management decision left to the discretion of the Secretary of VA in order to maintain the effective functioning and long-term stability of the program," and that "since the vendee loans were a purely discretionary method for VA to use to dispose of foreclosed properties, the change in the agency's 'organization' or 'practice' does not affect any party's right or obligation." Center for Medicare & Medicaid Services Letter on the State Children's Health Insurance Program245 On August 17, 2007, the Centers for Medicare & Medicaid Services issued a letter to state health officials concerning the State Children's Health Insurance Program (SCHIP). The letter "purports to clarify the statutory and regulatory requirements concerning prevention of crowd out for states wishing to provide SCHIP coverage to children with effective family incomes in excess of 250 percent of the federal poverty level (FPL) and identifies a number of particular measures that these states should adopt." GAO concluded that the letter was a rule for the purposes of the CRA because it was a "statement of general applicability and future effect designed to implement, interpret, or prescribe law or policy with regard to the SCHIP program," and because GAO did "not believe that the August 17 letter comes within any of the exceptions to the definition of rule contained in the Review Act." Department of Health and Human Services Information Memorandum Concerning the Temporary Assistance to Needy Families Program249 On July 12, 2012, the Department of Health and Human Services' Administration for Children and Families issued an information memorandum concerning the Temporary Assistance for Needy Families (TANF) program. The memorandum notified states that HHS was willing to exercise waiver authority over some of the program's work requirements. GAO concluded that the information memorandum was a rule for the purposes of the CRA because it was a "statement of general applicability and future effect, designed to implement, interpret, or prescribe law or policy with regard to TANF," and it did not fall within any of the three exceptions to the definition of a rule. As GAO stated, the memorandum applied to states and therefore was of general applicability, rather than particular applicability; it applied to the states and not agency management or personnel; and it established "the criteria by which states may apply for waivers from certain requirements of the TANF program. These criteria affect the obligations of the states, which are non-agency parties." Environmental Protection Agency Proposed Rule on Standards of Performance for Greenhouse Gas Emissions from New Stationary Sources: Electric Utility Generating Units253 On January 8, 2014, the Environmental Protection Agency issued a proposed rule entitled "Standards of Performance for Greenhouse Gas Emissions from New Stationary Sources: Electric Utility Generating Units." The proposed rule was intended to establish "standards for fossil fuel-fired electric steam generating units (utility boilers and Integrated Gasification Combined Cycle (IGCC) units) and for natural gas-fired stationary combustion turbines." GAO concluded that the proposed rule in question was not an action that was covered by the CRA, because the CRA was intended to apply only to final rules: "The issuance of a proposed rule is an interim step in the rulemaking process intended to satisfy APA's notice requirement, and, as such, is not a triggering event for CRA purposes." Furthermore, GAO stated "the precedent provided in our prior opinions underscores that proposed rules are not rules for CRA purposes, and GAO has no role with respect to them." Office of the Comptroller of the Currency, Federal Reserve Board, and Federal Deposit Insurance Corporation Interagency Guidance on Leveraged Lending258 On March 22, 2013, the Office of the Comptroller of the Currency, Board of Governors of the Federal Reserve System, and Federal Deposit Insurance Corporation, issued interagency guidance on leveraged lending. The guidance "outline[d] for agency-supervised institutions high-level principles related to safe-and-sound leveraged lending activities, including underwriting considerations, assessing and documenting enterprise value, risk management expectations for credits awaiting distribution, stress-testing expectations, pipeline portfolio management, and risk management expectations for exposures held by the institution." GAO concluded that the leveraged-lending guidance was a rule under the CRA because it was a general statement of policy that had future effect and because GAO could "readily conclude that the guidance does not fall within any of the three exceptions in the CRA." GAO's opinion, which was issued on October 19, 2017, was silent on the matter of the timing of its opinion relative to the guidance, which was issued in 2013. U.S. Forest Service 2016 Amendment to the Tongass Land and Resource Management Plan262 On December 9, 2016, the U.S. Department of Agriculture's Forest Service approved an amendment to the Tongass Land and Resource Management Plan. The plan identified the uses that may occur in each area of the forest. The Forest Service is required under the National Forest Management Act of 1976 to update forest plans at least every 15 years and potentially more frequently. GAO concluded that the amendment to the plan was a rule under the CRA because the amendment "has a substantial impact on the regulated community such that it is a substantive rather than a procedural rule for purposes of CRA." As such, the plan could not be considered to fall within the exception in 5 U.S.C. §804(3)(C), despite the argument presented by USDA when GAO asked the agency its views on the matter. Bureau of Land Management Eastern Interior Resource Management Plan266 On December 30, 2016, the Department of the Interior's Bureau of Land Management issued its resource management plan for four areas in Alaska: the Draanjik Planning Area, the Fortymile Planning Area, the Steese Planning Area, and the White Mountains Planning Area. Land management plans such as these are intended to provide specific information for the use of public lands and are required under the Federal Land Policy and Management Act of 1976. GAO concluded that the plan was a rule under the CRA because it was of general applicability, had future effect, and was designed to implement, interpret, or prescribe law or policy, and because it did not fit into any of the three exceptions. Of particular relevance appeared to be the exception in 5 U.S.C. §804(3)(C): "Because the Eastern Interior Plan designates uses by nonagency parties that may take place in the four areas it governs, it is not a rule of agency organization, procedure or practice." Consumer Financial Protection Bureau Bulletin on Indirect Auto Lending and Compliance with the Equal Credit Opportunity Act270 On March 21, 2013, the Consumer Financial Protection Bureau issued a bulletin on "Indirect Auto Lending and Compliance with the Equal Credit Opportunity Act." The bulletin "provide[d] guidance about indirect auto lenders' compliance with the fair lending requirements of the Equal Credit Opportunity Act (ECOA) and its implementing regulation, Regulation B." GAO concluded that the bulletin was a rule under the CRA because it "is a statement of general applicability, since it applies to all indirect auto lenders; it has future effect; and it is designed to prescribe the Bureau's policy in enforcing fair lending laws," and because the bulletin "does not fall within any of the [CRA's] exceptions." GAO's opinion, which was issued on October 19, 2017, was silent on the matter of the timing of its opinion relative to the bulletin, which was issued in 2013. U.S. Agency for International Development Fact Sheet on Global Health Assistance and Revisions to Standard Provisions for U.S. Nongovernmental Organizations275 On January 23, 2017, President Donald J. Trump released a presidential memorandum establishing his Administration's policy on global health assistance funding, often referred to as the "Mexico City Policy." The policy prohibited assistance to foreign nongovernmental organizations and other entities that perform or promote abortion as a method of family planning. To implement this policy, the Department of State issued a fact sheet entitled "Protecting Life in Global Health Assistance" on May 15, 2017, and the U.S. Agency for International Development (USAID) issued revisions to its "Standard Provisions for U.S. Nongovernmental Organizations" on March 2, 2017. GAO concluded that the two agency actions in question were not rules for the purposes of the CRA because, although the fact sheets were issued by federal agencies, they were merely implementing a decision of the President, under a statute that specifically granted broad policymaking authority to the President. GAO based this decision on a 1989 D.C. Circuit case, DKT Memorial Fund v. Agency for International Development , which held that agency actions implementing the decision of President Ronald Reagan to establish the Mexico City Policy were not reviewable under the APA. The court held that the disputed decision involved "not a rulemaking by an agency, but rather a policy-making at the highest level by the executive branch," concluding that it did not have authority under the APA "to review the wisdom of policy decisions of the President" where the relevant statute granted the President broad discretion in the area of foreign affairs. GAO determined that in accordance with this precedent, the agency actions implementing President Trump's policy decision were not subject to the CRA. Internal Revenue Service Statement on Health Care Reporting Requirements282 In guidance for the 2018 tax filing season, IRS announced on its website that it "would not accept electronically filed individual income tax returns where the taxpayer does not meet ACA reporting requirements, specifically to report full-year health coverage, claim a coverage exemption, or report a shared responsibility payment (known as 'silent returns')." GAO concluded that the agency statement was not a rule under the CRA because it "is a rule of agency procedure or practice that does not substantially affect taxpayers' rights or obligations," thus falling into the exception in 5 U.S.C. §804(3)(C). In effect, according to GAO, the "statement changes the timing of IRS compliance measures, but it does not change IRS's basis for assessing taxpayers' compliance with existing law—namely, the requirement to file a complete tax return and to meet ACA reporting requirements." Social Security Administration Hearings, Appeals, and Litigation Law Manual286 The Social Security Administration's (SSA) Hearings, Appeals, and Litigation Law Manual (HALLEX) describes how SSA will process and adjudicate claims for disability benefits under the Social Security Act. Two sections of the manual stated a policy under which an SSA adjudicator could not rely on information from the Internet, including from social media networks, in deciding a claim for benefits (with two exceptions). GAO concluded that these two sections of HALLEX were not rules under the CRA because they were merely "procedures that govern the use of evidence from the Internet during those proceedings" and they "do not impose new burdens on claimants or alter claimants' rights or obligations during the SSA appeal process." Thus, GAO concluded that "the HALLEX sections are procedural rules that meet the [5 U.S.C. §804(3)(C)] exception." Internal Revenue Service Revenue Procedure 2018-38290 On July 26, 2018, the IRS issued Revenue Procedure 2018-38, which "modifies the information certain tax-exempt entities are required to report to IRS on their annual returns." On July 30, 2018, the IRS submitted Revenue Procedure 2018-38 to Congress under the CRA. On September 7, 2018, then-Senator Orrin Hatch submitted a request to GAO seeking its opinion on whether the revenue procedure was covered by the CRA's definition of "rule." The IRS had apparently made the determination, despite having submitted the document under the CRA, that the document was not covered by the CRA. Rather, the IRS argued that it had submitted the rule "out of an abundance of caution" and to "allow Congress to decide whether it is a rule by consulting GAO." The circumstances surrounding this GAO opinion were somewhat unique, because the IRS had already submitted the revenue procedure to Congress under the CRA by the time the question was raised as to whether the revenue procedure was covered by the definition of "rule." This appeared to be the first time that GAO had considered the application of the CRA when an agency submitted a rule and later made the argument that the rule was not covered. In its opinion, GAO primarily addressed the issue of whether the submission of the rule was sufficient to trigger the CRA's timelines rather than whether the revenue procedure met the statutory definition of "rule." GAO stated in its opinion that the purpose of the GAO opinions is "to cure the impediment created by the agency's failure to submit the rule, protecting [Congress's] review and oversight authorities," and, therefore, because the IRS had already submitted the rule, a GAO opinion on the CRA's applicability would be unnecessary. Furthermore, GAO confirmed that the IRS revenue procedure was available for congressional review under the CRA because the IRS had already submitted it: "IRS's submission triggered Congress's review and oversight powers under CRA, starting with the transmittal of the rule to the committees of jurisdiction." GAO also stated, "As Congress is not deprived of exercising its powers under CRA, there is no impediment to those powers that a GAO opinion might cure. We, therefore, take no position on whether the revenue procedure is a rule otherwise." Department of Justice Memorandum to Federal Prosecutors on Zero-Tolerance Policy297 On April 6, 2018, the Attorney General issued a memorandum directing federal prosecutors to adopt a zero-tolerance policy for illegal border crossings at the southwestern border of the United States. GAO concluded that the April 2018 memorandum was not a rule under the CRA because it was a rule of agency organization, procedure, or practice, and it did not change individuals' rights or obligations: "The rights and obligations in question are prescribed by existing immigration laws and remain unchanged by the agency's internal enforcement procedures at issue here." Thus, GAO concluded that the memorandum was covered by the exception in 5 U.S.C. §804(3)(C). Department of Commerce Memorandum Regarding a Citizenship Question on the 2020 Census300 In March 2018, the Secretary of Commerce issued a memorandum to the Under Secretary of Commerce for Economic Affairs justifying the Secretary's decision to add a citizenship question to the 2020 census. According to GAO, the memorandum "described a December 12, 2017 request from the Department of Justice (DOJ) that the Census Bureau include a citizenship question on the 2020 census" and directed the Under Secretary to include such a question. Soon after the Secretary issued the memorandum, pursuant to statutory requirements, the Census Bureau delivered a report to Congress containing its planned questions for the 2020 census, including the citizenship question. GAO concluded that the memorandum was not a rule under the CRA, stating that "it was direction from a supervisor to a subordinate in conjunction with the statutory process whereby the Secretary informs Congress of the questions that will be on the census.… As such, the memorandum does not meet CRA's definition of a rule because it was not designed to implement, interpret, or prescribe law or policy." Because the memorandum did not meet the definition of "rule" under section 551 of the APA, GAO did not discuss whether the memorandum would have been covered by any of the exceptions. Appendix A. Submission Form for Rules Under the CRA Appendix B. Summary of GAO Opinions

The Congressional Review Act (CRA) allows Congress to review certain types of federal agency actions that fall under the statutory category of "rules." The CRA requires that agencies report their rules to Congress and provides special procedures under which Congress can consider legislation to overturn those rules. A joint resolution of disapproval will become effective once both houses of Congress pass a joint resolution and it is signed by the President, or if Congress overrides the President's veto. The CRA generally adopts a broad definition of the word "rule" from the Administrative Procedure Act (APA), defining a rule as "the whole or a part of an agency statement of general or particular applicability and future effect designed to implement, interpret, or prescribe law or policy or describing the organization, procedure, or practice requirements of an agency." The CRA, however, provides three exceptions to this broad definition: any rule of particular applicability, including a rule that approves or prescribes for the future rates, wages, prices, services, or allowances therefor, corporate or financial structures, reorganizations, mergers, or acquisitions thereof, or accounting practices or disclosures bearing on any of the foregoing; any rule relating to agency management or personnel; or any rule of agency organization, procedure, or practice that does not substantially affect the rights or obligations of non-agency parties. The class of rules the CRA covers is broader than the category of rules that are subject to the APA's notice-and-comment requirements. As such, some agency actions, such as guidance documents, that are not subject to notice-and-comment rulemaking procedures may still be considered rules under the CRA and thus could be overturned using the CRA's procedures. The effect of Congress disapproving a rule that is not subject to notice-and-comment rulemaking may be subject to debate, given that such rules are generally viewed to lack any legal effect in the first place. Nonetheless, the CRA does encompass some such rules, as highlighted by the recent enactment of a CRA resolution overturning a bulletin from the Consumer Financial Protection Bureau that was not subject to the notice-and-comment procedures. Even if an agency action falls under the CRA's definition of "rule," however, the expedited procedures for considering legislation to overturn the rule only become available when the agency submits the rule to Congress. In many cases in which agencies take actions that fall under the scope of a "rule" but have not gone through notice-and-comment rulemaking procedures, agencies fail to submit those rules. Thus, questions have arisen as to how Members can avail themselves of the CRA's special fast-track procedures if the agency has not submitted the action to Congress. To protect its prerogative to review agency rules under the CRA, Congress and the Government Accountability Office (GAO) have developed an ad hoc process in which Members can request that GAO provide a formal legal opinion on whether a particular agency action qualifies as a rule under the CRA. If GAO concludes that the action in question falls within the CRA's definition of "rule," Congress has treated the publication of the GAO opinion in the Congressional Record as constructive submission of the rule. In other words, an affirmative opinion from GAO can allow Congress to use the CRA procedures to consider legislation overturning an agency action despite the agency not submitting that action to Congress.

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Introduction As the trials of Sheldon Silver and Dean Skelos illustrate, corruption among high-profile public officials continues to be a concern in the United States. Likewise, recent examples abound of powerful executives in the private sector abusing positions of trust for personal gain. Faced with this reality, Congress has shown consistent interest in policing public- and private-sector corruption, enacting a number of criminal provisions aimed at holding corrupt officials accountable for their actions under federal law. However, one of federal prosecutors' most potent existing tools for combating such corruption—18 U.S.C. § 1346, which defines the crimes of mail and wire fraud as including so-called "honest services" fraud—has been a source of contention between the courts and Congress for years. While Congress has manifested its intent that the mail and wire fraud statutes should broadly cover the self-interested actions of federal, state, local, and private-sector officials, the Supreme Court and lower federal courts have repeatedly limited the scope of 18 U.S.C. § 1346 out of concern that a broad construction would render the statute unconstitutionally vague (and, with respect to state and local officials, potentially raise federalism concerns). This report thus provides an overview of the still-developing federal crime of honest services fraud and highlights certain legal issues that Congress may consider if it seeks to address the scope of the crime legislatively. Chapter 63 of Title 18 of the U.S. Code broadly criminalizes the use of the mails or wires in furtherance of "any scheme or artifice to defraud," or "for obtaining money or property by means of false or fraudulent pretenses, representations, or promises." A core category of conduct reached by these mail and wire fraud statutes concerns misrepresentations or omissions that would deprive a victim of his or her money or property. In such cases, "the victim's loss of money or property supplie[s] the defendant's gain, with one the mirror image of the other." A straightforward example is the filing of an insurance claim for a car accident that never happened in order to obtain a payout from the insurance company. Yet 18 U.S.C. § 1346 establishes that the term "scheme or artifice to defraud" as used in Chapter 63 also "includes a scheme or artifice to deprive another of the intangible right of honest services." This provision was enacted in the late 1980s, in response to the U.S. Supreme Court's holding in McNally v. United States that the mail fraud statute was "limited in scope" to only "the protection of property rights." Section 1346 abrogates McNally 's holding, codifying the understanding of some of the lower federal courts that the mail and wire fraud statutes extend to conduct that deprives a person or group of the right to have another act in accordance with some externally imposed duty or obligation, regardless of whether the victim so deprived has suffered or would suffer a pecuniary harm. Recognizing that this lower court understanding in fact evinced "considerable disarray" as to the kinds of schemes that would qualify as "honest services" fraud, however, the Supreme Court subsequently read a limiting principle into Section 1346 in Skilling v. United States in order to avoid invalidating the statute as unconstitutionally vague. After Skilling , mail and wire fraud prosecutions under an honest services theory may extend only to "offenders who, in violation of a fiduciary duty, participate[] in bribery or kickback schemes." The conversation between the Court and Congress regarding the scope of honest services fraud and its culmination in Skilling have presented more questions that lower courts have been tasked with answering, including the sources of fiduciary duties and the types of conduct that qualify as bribery and kickback schemes. This report provides an overview of the mail and wire fraud statutes and the pre- Skilling development of the "honest services" theory of fraud. The report then examines the theory's codification in 18 U.S.C. § 1346 and subsequent limitation in Skilling , and surveys post- Skilling judicial elaboration of the requirements for honest services fraud. Finally, this report briefly addresses some issues Congress may consider if it seeks to alter the scope of honest services fraud through legislation. Overview of Mail and Wire Fraud Statutes15 18 U.S.C. § 1341 prohibits use of the mails (including the United States Postal Service and "any private or commercial interstate carrier") for the purpose of executing "any scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises." 18 U.S.C. § 1343 likewise prohibits transmissions "by means of wire, radio, or television communication in interstate or foreign commerce" for the purpose of executing such schemes or artifices. These federal crimes, commonly known as "mail fraud" and "wire fraud," encompass multiple forms of fraudulent conduct using jurisdictional hooks that reach practically all forms of communication. Because the two statutes (save for the medium used in connection with the offense) essentially mirror each other, interpretations and analyses of one statute will typically apply to the other. To secure a mail or wire fraud conviction, the government must prove beyond a reasonable doubt four elements, each of which is discussed in more detail below: 1. a scheme to defraud involving a material deception; 2. foreseeable use of the mail, a private commercial carrier, or a wire or radio communication in furtherance of said scheme; and 3. intent to defraud another of 4. money, property, or honest services. Scheme to Defraud The requisite "scheme to defraud" has been framed broadly, sometimes as broadly as "a departure from fundamental honesty, moral uprightness and candid dealings in the general life of the community." Generally, what the scheme to defraud element contemplates is conduct reasonably calculated to deceive. Because the mail and wire fraud statutes criminalize the "scheme" to defraud, and not the fraud itself, the government need not prove that the scheme was successful. However, the Supreme Court has established that the deception contemplated by a scheme to defraud must be "material," that is, the misrepresentation or concealment at issue must have "a natural tendency to influence, or [be] capable of influencing," the person "to [whom] it was addressed." Use of Mail or Wire The second element of mail or wire fraud requires proof that the defendant used or caused to be used the U.S. mail; any private or commercial interstate carrier; or a "wire, radio, or television communication in interstate or foreign commerce." The defendant need not have personally dispatched the offending mail or communication, so long as use of the mails or wires could reasonably be foreseen. The statutory text contemplates use of the mails or wires "for the purpose of executing" the scheme or artifice to defraud, which courts typically frame as use "in furtherance of" the fraudulent scheme. The mailing or wire communication does not have to be "inherently criminal" or "essential" to the scheme in order to qualify —rather, it must only be "part of the execution of the scheme as conceived by the perpetrator at the time." As a result, illicit conduct under the statutes can include mailings or transmissions "designed to lull the victims into a false sense of security," postpone an investigation by authorities, or otherwise conceal the fraud. Intent The government must also prove that the defendant in a mail or wire fraud prosecution had the intent to defraud, meaning "the specific intent to deceive or cheat, usually for the purpose of getting financial gain for one's self or causing financial loss to another." A person who merely expresses an opinion or, in good faith, makes a statement of fact that turns out to be inaccurate cannot have the specific intent to defraud. However, deliberate disregard for (or conscious avoidance of) the truth is no defense, nor is the belief that a victim will be unharmed. The government may prove intent through circumstantial evidence, such as evidence that the defendant attempted to conceal his activity or profited from the fraudulent endeavor. Money, Property, or Honest Services The final element of mail or wire fraud focuses on the object of the fraud. It is clear that the mail and wire fraud statutes contemplate schemes aimed at obtaining victims' money or property. In addition to tangible property, the statutes apply to intangible interests, such as confidential business information, that have "long been recognized as property." If an interest lacks value in the hands of the ostensible victim, however, it is not protected by the statutes as "property." Beyond money or property, 18 U.S.C. § 1346 establishes that a scheme or artifice to defraud includes "a scheme or artifice to deprive another of the intangible right of honest services." It is the history and interpretation of this provision that are the focus of this report. Development of "Honest Services" Theory of Fraud Origins The original mail fraud statute was enacted in 1872 and merely prohibited "any scheme or artifice to defraud." Congress amended the statute in 1909 to add the second clause, "or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises." Mirroring this language, the wire fraud statute became law in 1952. Though the legislative history of the mail fraud provision, and the inclusion of the "obtaining money or property" clause, arguably suggest that Congress initially contemplated only frauds involving money or property, lower federal courts by the 1980s had interpreted the mail and wire fraud statutes to cover deprivations of intangible rights. "Most" of these cases involved public officials who "made governmental decisions with the objective of benefitting themselves or promoting their own interests, instead of fulfilling their legal commitment to provide the citizens of the State or local government with their loyal service and honest government." Regardless of whether the betrayed party (the citizenry) was or would be financially harmed, under this theory, the violation lay in the deprivation of that party's intangible right to the official's "honest services." This is not to say that the doctrine extended only to public officials, however—courts came to recognize that a private employee could also be guilty of mail or wire fraud for breaching a fiduciary duty to the employer. So-called "honest services" fraud often arose in the context of an official's or employee's receipt of a bribe or kickback in exchange for some veritable benefit. Yet the doctrine was not limited to bribery and kickback schemes; other forms of self-dealing, such as concealing material conflicts of interest, also gave rise to honest services mail and wire fraud prosecutions. Neither were the intangible rights protected by the mail and wire fraud statutes confined to honest services. Rather, courts broadly applied the statutes to deprivations of other intangible rights like the right to privacy and the right to honest elections. While the fluid scope of liability under the mail and wire fraud statutes caused some to worry that the federal courts were effectively "develop[ing] a common law crime of unethical conduct," federal prosecutors appeared to view the flexibility and expansive reach of the statutes as a benefit. Then, in 1987, the Supreme Court's decision in McNally v. United States "stopped the development of the intangible-rights doctrine in its tracks." McNally v. United States and Congressional Response McNally involved a scheme among public officials and a private individual in Kentucky to funnel kickbacks received from an insurance company, which the defendants had given an agency contract, to companies owned and controlled by them. The defendants were convicted of mail fraud on the theory that the officials deprived the citizens of Kentucky of "their intangible rights to honest and impartial government" by misusing their offices "for private gain." The Supreme Court reversed, however, examining the text and legislative history of the mail fraud statute to conclude that the provision was "limited in scope to the protection of property rights." In the Court's view, a broader reading would "leave [the statute's] outer boundaries ambiguous and involve[] the Federal Government in setting standards of disclosure and good government for local and state officials." In other words, the Court's decision was driven by two constitutional concerns that have underlain much of the subsequent commentary on the scope of the honest services doctrine: first, a criminal statute may violate the Due Process Clauses of the Fifth and Fourteenth Amendments if it is so vague that "ordinary people can[not] understand what conduct is prohibited." Thus, by alluding to the potentially "ambiguous" "outer boundaries" of the mail fraud statute, the Court was signaling that, if not construed more narrowly, the statute could be considered unconstitutionally vague. Second, courts are hesitant to read federal criminal statutes in a way that intrudes on areas of traditionally state-exclusive interest in light of the Constitution's reservation to the states of powers not expressly given to the federal government. This concept of federalism inherent in the Constitution has animated the Court's hesitancy to involve the federal government in policing the ethicality of state and local officials. Ultimately, the Court in McNally declined to adopt a reading of the mail fraud statute that would risk contravening the constitutional principles described above absent a decision by Congress to "speak more clearly than it has." Within a short time, however, Congress had accepted the Court's invitation to speak by passing legislation, now codified at 18 U.S.C. § 1346, which clarified that "the term 'scheme or artifice to defraud' includes a scheme or artifice to deprive another of the intangible right of honest services." There is some indication in the legislative history that this provision was intended to "overturn the McNally decision" in full, "reinstat[ing] all of the pre- McNally case law pertaining to the mail and wire fraud statutes without change." Nonetheless, it is doubtful that Section 1346 restored all pre- McNally case law, as the "intangible rights" that courts had viewed the mail and wire fraud statutes to cover were not necessarily limited to honest services. As noted above, cases prior to McNally had recognized that deprivations of other intangible rights like the right to privacy and the right to honest elections could be covered. Thus, by limiting 18 U.S.C. § 1346 to the "right of honest services," "Congress amended the law to cover [only] one of the 'intangible rights' that lower courts had protected under § 1341 prior to McNally ." Honest Services Fraud After Enactment of 18 U.S.C. § 1346 Following the enactment of 18 U.S.C. § 1346, the lower federal courts continued to apply the mail and wire fraud statutes to a range of fraudulent conduct on the part of both public officials and private parties implicating the deprivation of an intangible right of honest services. "[T]ypical[]" cases involved "either bribery . . . or [the] failure to disclose a conflict of interest, resulting in personal gain." In light of Section 1346's expansive language and the federalism and overbreadth concerns voiced by the Supreme Court in McNally , however, courts recognized that some "limiting principle" was needed in cases implicating an honest services theory of fraud. Yet beyond general pronouncements that Section 1346 "does not encompass every instance of official misconduct" and is "not violated by every breach of contract, breach of duty, conflict of interest, or misstatement made in the course of dealing," the lower courts failed to reach a consensus on what the substance and scope of an effective limiting principle should be. For example, some courts recognized a limitation that to be guilty of mail or wire fraud on an honest services theory, a defendant must have participated in a scheme involving conduct that violated or would violate state law. These courts expressed concern that leaving federal judges free to define the duties and breaches that would constitute a violation of the mail and wire fraud statutes would amount to unmoored federal imposition of "an ethical regime for state employees." However, several other courts rejected the state-law limitation as inconsistent with the intent of the statute. Taking a different tack, a few courts imposed a "foreseeable harm" requirement in honest services cases. As the U.S. Court of Appeals for the Sixth Circuit enunciated the limitation, conviction for honest services fraud in these jurisdictions required proof that the defendant "foresaw or reasonably should have foreseen that [the victim] might suffer an economic harm as a result of the breach" of fiduciary duty. In Frost , for instance, the Sixth Circuit applied the foreseeable harm limitation to conclude that university professors committed honest services fraud by entering into a scheme with their students to submit plagiarized dissertations, as they could have "reasonably contemplated" that the breach of their duty to the university would cause it to "suffer a concrete business harm by unwittingly conferring an undeserved advanced degree" on each student. Courts recognizing the foreseeable harm requirement appeared to apply it only in private-sector cases, where the "meaning of the 'intangible right of honest services' has different implications" given that "a strict duty of loyalty ordinarily is not part of" commercial and employment relationships. On occasion, however, the requirement was stated broadly enough to potentially encompass public-sector cases, as well. According to the Fourth and Sixth Circuits, the merits of the foreseeable harm requirement were twofold: (1) it kept "the focus of the analysis on employee intent rather than employer response," and (2) it "limit[ed] the scope of § 1346 to serious harms." Yet as with the state-law limitation, multiple other courts refused to apply the foreseeable harm limitation, rejecting it as "something of an ipse dixit designed simply to limit the scope of section 1346." A competing, and less stringent, alternative to the court-created "foreseeable harm" requirement was the "materiality test," which merely emphasized the inherent constraint that a misrepresentation must have "the natural tendency to influence or [be] capable of influencing" the employer to change its behavior. In the view of courts employing this test, it allowed honest services fraud to encompass "some cases of non-economic, yet serious, harm in the private sphere." Proponents of the more stringent foreseeable harm requirement, however, pointed out that although the materiality test was "similar in many respects," it might apply too broadly to cases where an employer "overreacted to an insignificant fraud" or "changed [its] business practices to avoid the mere appearance of impropriety." In still another variation, the Seventh Circuit established the limiting principle that a scheme participant must have misused his position for private gain . One panel in the circuit viewed the limitation as "cabin[ing] zealous prosecutors by insuring that not every violation of a fiduciary duty becomes a federal crime" and reducing "the risk of creating federal common law crimes." Nevertheless, given the Seventh Circuit's acknowledgment that its private gain limitation was created out of expediency, other circuits denounced it as "substituting one ambiguous standard for another" or as an attempt "to judicially legislate by adding an element to honest services fraud which the text and the structure of the fraud statutes do not justify." Finally, at least two courts appeared to reject any reliance on judicially crafted special tests or limiting principles in honest services cases, concluding instead that existing elements—such as the requirement that the defendant possessed a specific intent to defraud—were sufficient to cabin Section 1346's breadth. These courts did, however, acknowledge that the existence of one or more of the elements required in other circuits, such as private gain, could "bolster a showing of deceptive intent," among other things. In 2009, Justice Scalia dissented from the denial of certiorari in an honest services case, arguing that the lack of a "coherent limiting principle" to "separate[] the criminal breaches, conflicts and misstatements from the obnoxious but lawful ones" invited "abuse by headline-grabbing prosecutors in pursuit of local officials, state legislators, and corporate CEOs who engage in any manner of unappealing or ethically questionable conduct." The following year, the Supreme Court granted certiorari in three cases that seemed poised to settle the various disagreements among the federal appellate courts over the requirements for honest services fraud. First, in United States v. Weyhrauch , a state legislator had voted on a bill regarding taxation of oil production while failing to disclose a prospective interest in an oil field services company that had taken an active stance on the legislation. The Supreme Court agreed to review whether, in such a circumstance, the state-law limitation (i.e., that the defendant must have violated a duty imposed by state law) should apply. Second, in United States v. Black , corporate executives allegedly transferred millions of dollars from a subsidiary to themselves through fraudulent non-compete agreements. The appellate court affirmed the defendants' convictions for honest services fraud, in part, on the ground that the government was not required to prove that the scheme sought to financially harm the company, presenting the Supreme Court with an opportunity to address the so-called "foreseeable harm" limitation. Third, in United States v. Skilling , a former executive of the energy-trading and utilities company Enron was convicted of participating in a conspiracy to boost the company's stock price by misstating the company's financial situation. The Fifth Circuit affirmed, and the defendant then argued in part in his petition for certiorari that the appellate court should have applied the Seventh Circuit's "private gain" requirement to save Section 1346 from unconstitutional vagueness, giving the Supreme Court occasion to consider the merits of that limitation. Ultimately, the Supreme Court did not expressly endorse any of the limiting principles propagated by the courts of appeals and presented for review in Weyhrauch , Black , and Skilling . However, the Court did use Skilling as a vehicle to drastically limit the scope of honest services fraud in another way. United States v. Skilling As noted above, Jeffrey Skilling, the one-time CEO of Enron, was convicted of (among other things) wire fraud on the theory that he deprived the company and its shareholders of his honest services by manipulating financial results and making false and misleading statements about the company's performance in order to "prop up Enron's short-run stock prices." On appeal, the Fifth Circuit upheld Skilling's honest services fraud conviction, rejecting Skilling's argument that his conduct could not fall within the meaning of Section 1346 because it "was in the corporate interest and therefore was not self-dealing." Skilling then argued to the Supreme Court that the statute should be struck down as unconstitutionally vague. The Supreme Court agreed with Skilling that Section 1346, as written, could raise "due process concerns underlying the vagueness doctrine" given the breadth of its language. However, the Court declined to strike down the statute as irremediably vague, opting instead to construe it narrowly in a way that avoided the problem. The Court began by "survey[ing]" the "body of pre- McNally honest-services" case law, a corpus that, in the Court's view, Section 1346 was clearly intended "to refer to and incorporate." The Court's survey yielded two conclusions: (1) that "honest-services decisions preceding McNally were not models of clarity or consistency"; and (2) that despite the inconsistency, the honest services doctrine encompassed a "solid core" of cases "involving offenders who, in violation of a fiduciary duty, participated in bribery or kickback schemes." Therefore, to steer clear of a "vagueness shoal," the Supreme Court read Section 1346 as being limited only to this "core" of bribery and kickback cases. Regarding the precise definitions of bribery and kickbacks, the Court cited to existing federal bribery statutes and the definition of "kickback" contained in Title 41 of the U.S. Code, opining that Section 1346 would "draw[] content not only from the pre- McNally case law, but also from [these] federal statutes proscribing—and defining—similar crimes." The Court also clarified that its holding would not render Section 1346 "superfluous" in light of its now-substantial overlap with these "similar crimes"—as an example, the Court noted that 18 U.S.C. § 201, the "principal federal bribery statute," applies only to federal public officials, meaning that Section 1346 would continue to reach "state and local corruption and . . . private-sector fraud" that "might otherwise go unpunished." Significantly, the Court in Skilling rejected the argument, advanced by the government, that Section 1346 should be construed to extend as well to "undisclosed self-dealing by a public official or private employee—i.e., the taking of official action by the employee that furthers his own undisclosed financial interests while purporting to act in the interests of those to whom he owes a fiduciary duty." Although courts prior to Skilling had recognized bribery and undisclosed conflicts of interest as the two "typical[]" scenarios giving rise to honest services fraud prosecutions, the Supreme Court viewed an undisclosed self-dealing or conflict-of-interest category of honest services fraud as "amorphous" given that lower courts had "reached no consensus on which schemes qualified." The Court thus refused to adopt the government's "less constrained construction," that is, one that would include undisclosed self-dealing, "absent Congress' clear instruction otherwise." In a footnote, the Court went on to provide guidance to Congress should it decide "to take up the enterprise of criminalizing" such conduct, noting that legislation "would have to employ standards of sufficient definiteness and specificity to overcome due process concerns." In the Court's view, the formulation proposed by the government—a prohibition on the "taking of official action by the employee," with the specific intent to deceive, "that furthers his own [material] undisclosed financial interests while purporting to act in the interests of those to whom he owes a fiduciary duty"—would "leave[] many questions unanswered," including (1) how significant the conflicting interest would have to be, (2) the extent to which official action would have to further the interest, and (3) what (and to whom) information should be conveyed in order for disclosure to be adequate. Justice Scalia wrote separately in Skilling to make clear that he viewed Section 1346 as unconstitutionally vague and did not find the Court's limiting construction sufficient to address his concerns. Specifically, Justice Scalia pointed out that (1) not a single court's version of the pre- McNally honest services doctrine limited it only to bribery and kickbacks, rendering the Court's supposition that it was respecting the intent of Congress dubious; and (2) even limited to bribery and kickbacks in breach of a fiduciary duty, Section 1346 (and the majority opinion) left the nature, content, and source of the requisite duty hopelessly unclear and subject to conflicting conceptualizations by the lower courts. On this latter point, the majority addressed Justice Scalia's critique by maintaining in a footnote that "debates" over "the source and scope of fiduciary duties" were "rare in bribe and kickback cases," with the existence of a fiduciary relationship usually being "beyond dispute." The Court also provided several "examples" of such relationships: (1) the relationship between a public official and the public at large, (2) the relationship between an employee and his employer, and (3) the relationship between a union official and union members. In light of the Supreme Court's decision in Skilling , the two other honest services cases in which the Court granted certiorari— Weyhrauch and Black —proved to be anticlimactic. Weyhrauch , which had presented the Court with an opportunity to pass on the "state-law" limitation, was simply vacated and remanded for further consideration in light of Skilling ; and the Court in Black —a case involving the "foreseeable harm" limitation—cursorily ruled that the jury instructions in the case were incorrect because they did not reflect Skilling 's construction of Section 1346, that is, that honest services fraud encompasses only participation in a bribery or kickback scheme in violation of a fiduciary duty. Honest Services Fraud After Skilling The Supreme Court's decision in Skilling makes clear that honest services mail or wire fraud must involve "offenders who, in violation of a fiduciary duty, participate[] in bribery or kickback schemes." In light of that holding, lower courts in recent years have had to reconsider the (1) vitality of the "limiting principles" they adopted prior to Skilling , (2) source and scope of fiduciary duties, and (3) definition and application of the terms "bribery" and "kickbacks." Status of Lower-Court Limiting Principles Given that the Supreme Court in Skilling neither explicitly endorsed nor rejected any of the Section 1346 "limiting principles" developed by the lower courts, the decision's impact on the disputes among the courts of appeals was not immediately clear. Indeed, one of Justice Scalia's complaints was the Court's failure to address the "fundamental indeterminacy" of the requisite fiduciary obligation, including its source and application to private-sector and public-official defendants. That said, the opinion in Skilling offered some clues as to the continuing vitality of the limiting principles discussed above. First, by limiting honest services fraud to schemes involving bribery or kickbacks, Skilling appeared to indirectly validate the Seventh Circuit's "private gain" limitation, as any bribe or kickback would necessarily seem to constitute such a gain. The Seventh Circuit, which was the only circuit to have squarely adopted the private gain limitation prior to Skilling , recognized as much in a 2014 opinion, noting that its "general approach" of "focus[ing] on the defendant's benefit from the fraud . . . was vindicated" in Skilling (though "[n]ow, only bribery or kickbacks, rather than any private gain whatsoever, can be used to show honest-services fraud"). Thus, after Skilling , actual or contemplated private gain appears to be a necessary but not sufficient condition for imposition of criminal liability on an honest services fraud theory. Second, dictum from Skilling may be read as calling into question the "foreseeable harm" limitation adopted by some circuits. In describing the development of the honest services theory of fraud, the Court in Skilling explained that the theory targets corruption where "the betrayed party [has] suffered no deprivation of money or property," noting that "[e]ven if the scheme occasion[s] a money or property gain for the betrayed party, . . . actionable harm [lies] in the denial of that party's right to the offender's 'honest services.'" The opinion used as an example a mayor who accepts a bribe from a third party in exchange for awarding that party a city contract, where "the contract terms [are] the same as any that could have been negotiated at arm's length." Based on this dictum, at least one district court after Skilling has, in a case involving a public official, rejected the argument that honest services fraud requires "an actual or intended economic loss to the victim." Of course, as described above, the circuits that recognized a foreseeable harm limitation prior to Skilling mostly applied it only in private-sector cases, leading a different post- Skilling district court to "follow the clear precedent from the Fourth Circuit . . . and apply the reasonably foreseeable harm test in the context of . . . [an] alleged private-sector honest-services offense." By contrast, the Seventh Circuit has held that the government need not show "actual or intended tangible harm" in either public- or private-sector cases, while the Ninth Circuit in a post- Skilling decision has rejected a foreseeable-economic-loss requirement for public officials but left for "another day" the question of whether "economic damages need be shown" in private-sector cases. Finally, with respect to the "state law" limitation adopted by the Third and Fifth Circuits—that is, the requirement that a defendant must have violated some affirmative duty recognized under state law—one might read the Skilling Court's brief discussion of "the source and scope of fiduciary duties" as calling the limitation into question. In dismissing Justice Scalia's concerns regarding the indeterminacy of such duties, the majority in Skilling averred that the existence of a fiduciary relationship was "usually beyond dispute" in bribe and kickback cases, citing several examples of public and private duties arising from "specific relationship[s] between two parties." This apparent endorsement of a broad conception of fiduciary relationships in the context of honest services fraud would seem to be inconsistent with a requirement that any breach of duty be grounded in positive state law. Nevertheless, and perhaps bearing out Justice Scalia's concerns, the source and scope of fiduciary duties have, as discussed below, continued to be a source of considerable confusion among lower courts following Skilling . Fiduciary Duty The courts of appeals have recognized that under Skilling , honest services fraud requires the existence and breach of a "fiduciary duty." Yet the details of the requirement implicate, as one district court recently put it, "a troubling analysis that has divided federal courts throughout the country." The analysis focuses on at least "three discrete questions: [W]hat types of relationships potentially give rise to the requisite fiduciary duty?; [W]hat are the permissible legal sources of the fiduciary duty?; and [W]hat is the nature or scope of the fiduciary duty, such that a defendant's breach of this obligation would satisfy the fiduciary duty requirement of honest services fraud?" With respect to the first question, a logical starting point is the Skilling footnote that provides three "examples" of fiduciary relationships that lower courts had previously found to be "beyond dispute": "public official-public, employee-employer, and union official-union members." Courts have recognized that this footnote does not "represent an exhaustive list of the fiduciary relationships that can support an honest-services fraud prosecution," meaning that other relationships sharing similar characteristics, "such as attorney-client, doctor-patient, or stockbroker-customer," may also be included. And one appellate court has determined that the term "fiduciary" may encompass even "informal" relationships of trust where "one party acts for the benefit of another and induces the trusting party to relax the care and vigilance which it would ordinarily exercise." Not all courts agree with this broader conception of a fiduciary relationship, however. Regarding the second question, courts have turned to "a smorgasbord of sources" to find the requisite fiduciary duty, and appear to be divided into three general camps: "those that permit the fiduciary duty to be derived from various sources, including state, federal, and common law; those that require the fiduciary duty to be derived from state law; and those that require the fiduciary duty to be derived from federal law." Among the courts that look to "various sources," state law is apparently a sufficient, but not necessary, basis for a fiduciary duty, and decisions may also rely on sources as disparate as common-law agency principles or merely "inherent" duties arising from the relationship at issue. Indeed, some courts have seemingly treated the existence of the relationship as synonymous with the existence of a fiduciary duty without analyzing the source of the duty at all. It is also unclear to what extent courts that rely on multifarious sources can be distinguished from the courts that purport to apply a federal standard, as in both circumstances the court may end up relying on common-law principles that are not grounded in positive law. With respect to those courts that require a state-law duty, post- Skilling jurisprudence is somewhat muddled. In a 2012 decision, one Fifth Circuit panel announced that Skilling did not "obviate the requirement that a state official, when prosecuted under § 1346, owe a state-law duty." However, that decision, as well as an earlier Fifth Circuit opinion on which it relied, may have conflated the notion of a state-law duty with a question discussed in more detail below: whether bribery and kickbacks may be defined under state law. And one district court in the Fifth Circuit has subsequently relied on the same precedent to conclude that "[t]here is no requirement that the actions taken by [the defendants] in exchange for the payments and kickbacks be a violation of state law." The legal basis for the relationship that must exist and the obligation that relationship creates thus remain unclear. Regarding the third question—the nature and scope of the requisite fiduciary duty—the outcome will likely depend on what source of authority is relied upon and how it is framed. As noted above, some courts have treated the existence of an employment relationship, for example, in the context of a bribe or kickback scheme as a conclusive indication that a fiduciary duty has been breached in a way that constitutes honest services fraud, while other courts have focused more specifically on the "type of fiduciary duty" at issue and whether it "falls within the core" of the term as applied in honest services cases. Definitions of Bribery and Kickbacks As noted above, the Supreme Court in Skilling indicated that the prohibition on bribes and kickbacks should "draw[] content not only from the pre- McNally case law, but also from federal statutes proscribing—and defining—similar crimes." The Court then cited 18 U.S.C. § 201(b), which criminalizes bribery of federal public officials; 18 U.S.C. § 666(a)(2), which criminalizes bribery in programs receiving federal funds; and 41 U.S.C. § 8701(2), which defines the term "kickback" for purposes of the statutory provisions prohibiting kickbacks in connection with public contracts. Relying on this portion of the Supreme Court's opinion, courts after Skilling have tended to look to the federal anti-bribery and anti-kickback statutes cited by the Court to "give substance to the prohibition on honest-services fraud," though some courts have also relied on state-law definitions of bribery or simply on prior honest services case law. In general, bribery requires a quid pro quo , meaning a specific intent to "give or receive something of value in exchange for an official act." This requirement distinguishes a bribe from a "gratuity," which "may constitute merely a reward for some future act that the public official will take (and may already have determined to take), or for a past act that he has already taken." Thus, although the text of the federal bribery statutes appears to criminalize it, payment or receipt of a mere gratuity does not constitute honest services fraud. The quid pro quo required for bribery need not be explicit in most cases, though in light of the First Amendment concerns that arise when an alleged bribe is a political contribution, an explicit quid pro quo may be required under those circumstances. The person offering a bribe also need not "spell out which payments control which particular official acts" —rather, proof of a "stream of benefits" coinciding with a pattern of official acts is sufficient. Additionally, there is no requirement that a bribe payor and payee come to a meeting of the minds. One who offers a bribe may be convicted of honest services fraud even if the offer is rejected, and one who intends to accept a bribe may be convicted even absent proof that the payor had the requisite intent. There does appear to be some disagreement, however, as to whether a bribe recipient may be prosecuted for honest services fraud when he has no intent to take official action but falsely suggests to the payor that he will do so. In 2016, the Supreme Court narrowly construed the scope of conduct that may be considered an "official act" supporting bribery, thus potentially narrowing the scope of honest services fraud once again as well. In McDonnell v. United States , the former governor of Virginia was charged with honest services fraud, among other things, for accepting benefits from a nutritional supplement company in exchange for his influence in organizing university studies of the company's product. Importantly, the parties agreed that "bribery" for purposes of honest services fraud should be defined by reference to 18 U.S.C. §§ 201(b)(1)(A) and (b)(2)(A), which require an intent to influence or a promise to be influenced in the performance of an "official act." Of course, the parties disputed the definition of "official act" and whether it encompassed the defendant's conduct. The McDonnell Court ultimately construed the term "official act" narrowly. According to the Court, for there to be an official act, there must be some concrete "question, matter, cause, suit, proceeding or controversy" that involves "a formal exercise of governmental power . . . similar in nature to a lawsuit before a court, a determination before an agency, or a hearing before a committee." Additionally, the defendant must at least agree to "make a decision or take an action" on that question, matter, cause, suit, proceeding, or controversy, which "may include using his official position to exert pressure on" or advise another to perform an official act. Simply "setting up a meeting, talking to another official, or organizing an event (or agreeing to do so)—without more"—is not enough. The Court's decision in McDonnell to construe the term "official act" narrowly was animated by the same constitutional concerns that undergirded its prior decisions imposing limitations on honest services fraud prosecutions—namely, that a broader construction could leave the scope of criminal liability unclear and impinge on the states' authority to "regulate the permissible scope of interactions between state officials and their constituents." Following McDonnell , there has been some speculation that the "stream of benefits" theory of bribery—that is, that specific payments need not be linked to particular official acts—is dead. However, at least one court has held to the contrary. Furthermore, because the parties in McDonnell agreed that bribery should be defined by reference to Sections 201(b)(1)(A) and (b)(2)(A), the Court had no occasion to consider whether an "official act" (as it defined the term) must always underlie public-sector honest services fraud based on bribery. Thus, to the extent courts look to provisions beyond (b)(1)(A) and (b)(2)(A) to give content to the bribery requirement in honest services cases, McDonnell arguably would have no impact. That said, it does seem that McDonnell could potentially cabin the scope of honest services fraud liability in at least some cases where liability is premised on the definition of bribery found in Section 201. For instance, in the high-profile prosecution of Sheldon Silver, the former speaker of the New York State Assembly, the Second Circuit vacated Silver's conviction on honest services charges because the jury instructions broadly captured conduct "such as arranging meetings or hosting events with constituents" that would be considered lawful after McDonnell . Though it appears that honest services fraud prosecutions since 2010 have largely focused on bribery, a few cases have involved kickback schemes. "A kickback scheme typically involves an employee's steering business of his employer to a third party in exchange for a share of the third party's profits on that business." The defendant need not directly receive the profits, however—a kickback scheme may involve one who "directs the third party to share its profits with an entity designated by the [defendant] in which [he] has an interest" or with "others loyal to the defendant." Some federal prosecutors appear to have addressed the limitations imposed in Skilling and McDonnell by reframing cases that might previously have been brought on an honest services theory as traditional "money or property" wire fraud. Specifically, at least one circuit has favorably referenced a theory of intangible property that encompasses a "right to control" one's assets, which may permit prosecutors to use the mail and wire fraud statutes to reach some conflict-of-interest cases that can no longer be tried on an honest services theory. Potential Options for Congress On more than one occasion since 2010, Congress has considered legislation that would expand honest services fraud to include certain categories of conduct that 18 U.S.C. § 1346 no longer encompasses under the Supreme Court's interpretations of the statute. For instance, the Senate and House considered bills in the 112th Congress that would have restored undisclosed self-dealing as a basis for honest services fraud prosecution in public-, but not private-sector, cases. The legislation would have expanded the definition of "scheme to defraud" to include a scheme by a "public official"—meaning a federal, state, or local officer, employee, or agent—to (1) perform an official act that, at least in material part, furthers his own or certain relatives' or associates' financial interests; and (2) conceal or knowingly fail to disclose "material information" about the interest required to be disclosed "by any Federal, State, or local statute, rule, regulation, or charter applicable to the public official." In short, it appears that the legislation would have expanded the scope of honest services fraud liability in public-sector cases, beyond the bribery and kickback schemes contemplated in Skilling , to include one additional category of conduct: failure to disclose a material financial conflict of interest. Additionally, though the bills were considered prior to the Supreme Court's decision in McDonnell , it appears that at least one version would have established a slightly broader definition of an "official act" than the one the Court subsequently announced. Ultimately, the bills introduced in the 112th Congress did not become law, nor has any other legislation purporting to reexpand the scope of honest services fraud become law as of this writing. Nevertheless, some commentators have continued to lament what they view as the Supreme Court's blunting of a previously sharp weapon to combat public corruption, arguing that the decisions in Skilling and McDonnell placed too little weight on "the interests of citizens in honest government" and urging Congress to find a legislative fix. Other observers, however, have suggested that the deleterious impact of the decisions is overstated, pointing out that federal prosecutors still have multiple legal avenues through which to combat corruption in the public sphere. In any event, should Congress revisit and reconsider the scope of 18 U.S.C. § 1346, understanding the vagueness and federalism concerns that have animated the Supreme Court's repeated limiting constructions of the statute may be beneficial to preventing further judicial limitations. One place to start would be the Skilling Court's identification of some questions that must be answered if Congress seeks to "take up the enterprise of criminalizing undisclosed self-dealing . . . ." These questions include (1) how "direct or significant" a conflicting financial interest must be; (2) the extent to which an "official" act or action must further the conflicting financial interest in order to constitute fraud; and (3) to whom a disclosure must be made, and what information it must contain, for a conflicted official to avoid criminal liability. Answering these questions in any proposed legislation may go a long way toward achieving the "definiteness and specificity" needed to potentially avoid the vagueness and federalism concerns that the Court has repeatedly articulated.

As the trials of Sheldon Silver and Dean Skelos illustrate, corruption among high-profile public officials continues to be a concern in the United States. Likewise, recent examples abound of powerful executives in the private sector abusing positions of trust for personal gain. Faced with this reality, Congress has shown consistent interest in policing public- and private-sector corruption, enacting a number of criminal provisions aimed at holding corrupt officials accountable for their actions under federal law. However, one of federal prosecutors' most potent existing tools for combating such corruption—18 U.S.C. § 1346, which defines the crimes of mail and wire fraud as including so-called "honest services" fraud—has been a source of contention between the courts and Congress for years. 18 U.S.C. § 1346 defines the term "scheme or artifice to defraud," as used in the general statutes prohibiting use of the mails or wires to commit fraud, to include a scheme or artifice to deprive another of the intangible right of honest services. Congress enacted this provision in the late 1980s in response to the U.S. Supreme Court's holding in McNally v. United States that the mail fraud statute was limited in scope to only the protection of tangible property rights. The McNally decision was grounded in concerns that a broader construction of the statute could leave its outer boundaries ambiguous and unjustifiably involve the federal government in setting standards for good government at the local level. Nevertheless, Section 1346 abrogates McNally's holding, codifying the understanding of some of the lower federal courts that the mail and wire fraud statutes extend to conduct that deprives a person or group of the right to have another act in accordance with some externally imposed duty or obligation, regardless of whether the victim so deprived has suffered or would suffer a pecuniary harm. Recognizing that this lower court understanding in fact evinced considerable disarray as to the kinds of schemes that would qualify as honest services fraud, however, the Supreme Court subsequently read a limiting principle into Section 1346 in Skilling v. United States in order to avoid invalidating the statute as unconstitutionally vague. After Skilling, mail and wire fraud prosecutions under an honest services theory may extend only to those who, in violation of a fiduciary duty, participate in bribery or kickback schemes. Notably, the Skilling decision withdrew from the reach of Section 1346 a significant category of cases that had been prosecuted as honest services fraud up to that point: cases involving more general financial self-dealing or conflicts of interest, where no bribes or kickbacks are given. Congress has considered legislation on more than one occasion that would reinstate the self-dealing category of honest services fraud rejected in Skilling, though the law remains unchanged as of this writing. The conversation between the Court and Congress regarding the scope of honest services fraud and its culmination in Skilling have presented more questions that lower courts have been tasked with answering, including the source of the requisite fiduciary duty and the conduct that qualifies as bribery or kickbacks. Courts have looked to a variety of sources to give content to the fiduciary duty requirement, including federal, state, and common law. Likewise, in fleshing out the contours of the bribery or kickbacks called for in Skilling, lower courts have relied on anti-bribery and anti-kickback provisions found in federal statutes. In the recent case of McDonnell v. United States, the Supreme Court limited the reach of one of those statutes—18 U.S.C. § 201, which makes it a crime to offer or solicit anything of value to influence an "official act"—by construing the term "official act" narrowly. Nevertheless, alternate routes appear to be available to prosecute bribery schemes involving conduct that may be beyond the scope of McDonnell. Should Congress seek to alter the scope of honest services fraud, it will likely need to be attuned to the concerns that federal courts interpreting 18 U.S.C. § 1346 have voiced over the years. Chief among these have been the concerns that—as written—the statute has the potential to sweep too broadly and regulate ethically dubious conduct of state and local officials in a way that conflicts with the Constitution.

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Introduction Whistleblowing is "the act of reporting waste, fraud, abuse and corruption in a lawful manner to those who can correct the wrongdoing." Intelligence Community (IC) whistleblowers are those employees or contractors working in any of the 17 elements of the IC who reasonably believe there has been a violation of law, rule, or regulation; gross mismanagement; waste of resources; abuse of authority; or a substantial danger to public health and safety. The essential distinction between whistleblowers generally and those in the IC (or those who otherwise have security clearances) is the concern for protecting classified information that may be involved in an IC-related incident or complaint. The IC has recognized that whistleblowing can save taxpayers' dollars, help ensure an ethical and safe working environment, and enable timely responses for corrective action. Whistleblowing protections for employees and contractors in the IC are extended only to those who make a lawful disclosure. They do not cover disclosures that do not conform to statutes and directives prescribing reporting procedures intended to protect classified information, such as leaking to the media or a foreign government. The whistleblower protections do not apply to a difference of opinion over policy, strategy, analysis, or priorities for intelligence funding or collection unless there is a reasonable concern over legality or constitutionality. Whistleblowing protections also do not protect against legitimate adverse personnel or security clearance eligibility decisions if the agency can demonstrate that it would have taken the same action in the absence of a protected disclosure. Congress and the executive branch have defined in statute and directives procedures for IC whistleblowers to make protected disclosures that also provide for the security of classified information. The Director of National Intelligence (DNI) whistleblowing policy and guidance is publicly available and specifically addresses whistleblower process and protections for IC contractors, members of the Armed Forces, and federal employees. There are differing opinions, however, on whether the IC's internal processes have the transparency necessary to ensure adequate protections against reprisal, and whether protections for IC contractors are sufficient. IC whistleblower protections have evolved in response to perceptions of gaps that many believed left whistleblowers vulnerable to reprisal. The first whistleblower legislation specific to the IC was the Intelligence Community Whistleblower Protection Act (ICWPA) of 1998. It was limited to specifying a process for an IC whistleblower to make a complaint but offered no specific protections. The Intelligence Authorization Act for Fiscal Year 2010 included provisions for protecting IC whistleblowers, though these were general and subject to different standards of implementation. Presidential Policy Directive (PPD)-19, signed in 2012, provided the first specific protections in response to perceptions that IC whistleblowers remained vulnerable to reprisal actions for making a complaint. The Intelligence Authorization Act for Fiscal Year 2014 codified the PPD-19 provisions and Intelligence Community Directive (ICD)-120 established a PPD-19 implementation policy. For members of the Armed Forces assigned to elements of the IC, 10 U.S.C. §1034 provides whistleblower protections. Department of Defense (DOD) implementing guidance for Section 1034 can be found in DOD Directive 7050.06, Military Whistleblower Protection . In January 2018, Congress passed P.L. 115-118 . Section 110 amended the National Security Act of 1947 and the Intelligence Reform and Terrorism Prevention Act of 2004 to include provisions to address perceived gaps in protections for IC contractors. Intelligence Community Whistleblower Protection Act (ICWPA) of 1998 The Intelligence Community Whistleblower Protection Act of 1998 (ICWPA) was intended to assist whistleblowers in the IC who are specifically excluded from the Whistleblower Protection Act of 1989. It should be noted that the ICWPA makes no explicit mention of members of the Armed Forces assigned to an IC element. It amended previous acts of Congress—the Central Intelligence Agency Act of 1949 and the Inspector General Act of 1978—to enable an IC government employee or contractor "who intends to report to Congress a complaint or information with respect to an urgent concern" to report to the Inspector General (IG) of the employee's or contractor's IC agency. Congress noted that the absence of this provision in law previously "may have impaired the flow of information needed by the intelligence committees to carry out oversight responsibilities." Consequently, the ICWPA defines formal processes for submitting complaints that ensure the protection of classified information that may be involved: It requires the IG to report within 14 days all credible complaints to the Director of the CIA or to the head of the establishment who, in turn, is required to report the complaint to the congressional intelligence committees within 7 days. In the event the IG does not report the complaint or reports it inaccurately, the employee or contractor has the right to submit the complaint to Congress directly. This may be done (1) after the employee has provided notice to the IG, and (2) after the employee has obtained from the IG procedures for protecting classified information when contacting the congressional intelligence committees. Although the ICWPA provides a process for IC whistleblowers—employees and contractors—to securely report complaints to Congress via the relevant IC agency IG, it offers no specific provisions for protecting whistleblowers from reprisal or punishment. Intelligence Authorization Act (IAA) for Fiscal Year 2010 The IAA for FY2010 ( P.L. 111-259 ) included the first general provisions for protection of whistleblowers as part of legislation that established the Office of the Inspector General of the Intelligence Community (OIGIC), headed by the Inspector General of the Intelligence Community (IGIC). Section 405(a)(1) of the IAA for FY2010 added a new Section 103H to the National Security Act of 1947. Section 103H(g) permitted lawful disclosures to the IGIC, but lacked the specificity of later whistleblower protection legislation and directives: (3) The Inspector General [of the Intelligence Community] is authorized to receive and investigate, pursuant to subsection (h), complaints or information from any person concerning the existence of an activity within the authorities and responsibilities of the Director of National Intelligence constituting a violation of laws, rules, or regulations, or mismanagement, gross waste of funds, abuse of authority, or a substantial and specific danger to the public health and safety. Once such complaint or information has been received from an employee of the intelligence community— (A) the Inspector General shall not disclose the identity of the employee without the consent of the employee, unless the Inspector General determines that such disclosure is unavoidable during the course of the investigation or the disclosure is made to an official of the Department of Justice responsible for determining whether a prosecution should be undertaken; and (B) no action constituting a reprisal, or threat of reprisal, for making such complaint or disclosing such information to the Inspector General may be taken by any employee in a position to take such actions, unless the complaint was made or the information was disclosed with the knowledge that it was false or with willful disregard for its truth or falsity. Section 405 does cover contractors in addition to federal employees of IC elements: The Inspector General [of the IC] shall have access to any employee, or any employee of a contractor, of any element of the intelligence community needed for the performance of the duties of the Inspector General." An employee of an element of the intelligence community, an employee assigned or detailed to an element of the intelligence community, or an employee of a contractor to the intelligence community who intends to report to Congress a complaint or information with respect to an urgent concern may report such complaint or information to the Inspector General. Section 425(d) of the IAA for FY2010 also amended the Central Intelligence Agency Act of 1949 clarifying existing protections against reprisals against CIA employees who make lawful disclosures to the CIA Inspector General. Presidential Policy Directive (PPD)-19 PPD-19, Protecting Whistleblowers with Access to Classified Information , signed by President Obama on October 10, 2012, provided the first executive branch protections for IC whistleblowers. PPD-19 specifically protects some employees in the IC (it specifically excludes members of the Armed Forces) with access to classified information, from personnel actions taken in reprisal for making a lawful disclosure. PPD-19 defines a protected disclosure in part as follows: a disclosure of information by the employee to a supervisor in the employee's direct chain of command up to and including the head of the employing agency, to the Inspector General of the employing agency or Intelligence Community Element, to the Director of National Intelligence, to the Inspector General of the Intelligence Community, or to an employee designated by any of the above officials for the purpose of receiving such disclosures, that the employee reasonably believes evidences (i) a violation of any law, rule, or regulation; or (ii) gross mismanagement, a gross waste of funds, an abuse of authority, or a substantial and specific danger to public health or safety. PPD-19 prohibits reprisals (1) that could affect a whistleblower's eligibility for access to classified information; or (2) involve a personnel action against the IC employee making a protected disclosure. PPD-19 requires IC elements to certify to the DNI a process for IC employees to seek a review of personnel actions the employee believes are in reprisal for making a lawful disclosure. The review process also must provide for the security of classified information involved in a disclosure. As part of the review process, PPD-19 requires the IC element Inspector General to determine whether a personnel action was in reprisal for a lawful disclosure. The IG makes recommendations for corrective action in the event of a determination that a violation took place. The agency head "shall carefully consider the findings of and actions recommended by the agency Inspector General." The agency head does not have to accept an IG's recommendation for corrective action. IC agencies also have to certify to the DNI that the agency has a review process that permits employees to appeal actions involving eligibility for access to classified information that are alleged to be in violation of prohibitions against retaliation for making lawful disclosures. PPD-19 allows for a whistleblower to request an external review by an IG panel chaired by the IGIC if the employee has exhausted the agency review process. In the event the panel decides in the employee's favor, the agency must consider but does not have to accept the panel's recommendation for corrective action. It requires the IGIC to report annually to the congressional intelligence committees the IG determinations and recommendations and IC element head responses to the determinations and recommendations. PDD-19 requires the executive branch to provide training to employees with access to classified information (not including contractors or members of the Armed Forces) regarding protections for whistleblowers. Title VI of the Intelligence Authorization Act (IAA) for Fiscal Year 2014 Title VI of the FY2014 IAA ( P.L. 113-126 ) codified provisions of PPD-19 and provided the first expansive statutory protections for IC whistleblowers against personnel or security clearance actions made in reprisal for protected disclosures. Section 601 of Title VI protected IC whistleblowers from any personnel action made in retaliation for a lawful disclosure. This includes a lawful disclosure to the Director of National Intelligence (or any employees designated by the DNI for such purpose), the Inspector General of the Intelligence Community, the head of the employing agency (or an employee designated by the head of that agency for such purpose), the appropriate inspector general of the employing agency, and a congressional intelligence committee, or a member of a congressional intelligence committee. Section 601 of Title VI made no specific mention of protections for contractors, however. A lawful disclosure is defined in the legislation as a disclosure that an IC employee whistleblower reasonably believes is a violation of "Federal law, rule or regulation ... or mismanagement, a gross waste of funds, an abuse of authority, or substantial and specific danger to public health and safety." Section 602 of Title VI provided protections against retaliatory revocation of the security clearance of a covered government employee whistleblower for making a lawful disclosure . Section 602 also requires the development of appeal policies and procedures for any decision affecting a whistleblower's security clearance that the whistleblower alleges is in reprisal for having made a protected disclosure. This provision also enabled the whistleblower to retain his/her current employment status in the government, pending the outcome of the appeal. Section 602 of Title VI did not permit judicial review, nor does it permit a private right of action. Section 602 of Title VI does not make any mention of contractors. Intelligence Community Directive (ICD)-120 First signed in 2014, and updated on April 29, 2016, ICD-120, Intelligence Community Whistleblower Protection , provides IC implementing guidance for PPD-19. ICD-120 provisions include the following: Protections against reprisal involving a personnel action against the IC employee making a protected disclosure. ICD-120 excludes members of the Armed Forces, and makes no reference to contractors. Protections from reprisal for a protected disclosure that could affect an IC whistleblower's eligibility for access to classified information. This provision includes contractors and members of the Armed Forces. A requirement for each IC element to have a review process to permit appeals for any decision involving a security clearance allegedly in retribution for making a lawful disclosure. The provision allows the whistleblower to maintain his/her employment status while a decision is pending. Provision for an employee alleging a reprisal who has exhausted the internal agency review process to request an External Review Panel chaired by the IGIC. A requirement for IC-wide communications and training on whistleblower protections. Whistleblower Protections for Members of the Armed Forces Assigned to the IC Section 1034 of Title 10 U. S. Code provides protections against personnel actions taken in retaliation for protected communications by members of the Armed Forces. The Office of the DNI cites this statute as applicable to members of the Armed Forces assigned to the IC elements. Section 1034—unlike the ICWPA, which makes no mention of applicability to the Armed Forces—does not provide a process for making a protected communication that also protects classified information. Section 1034 allows members of the Armed Forces to communicate with a Member or Members of Congress; an Inspector General; a member of the DOD audit, inspection, investigation, or law enforcement organization; any person or organization in the chain of command; a court-martial proceeding; or any other organization designated pursuant to regulations or other established administrative procedures for such communications; or testimony, or otherwise participating in or assisting in an investigation or proceeding involving Congress or an Inspector General; specifies prohibited personnel actions in reprisal for a member of the Armed Forces making a protected communication; enables the DOD to take action to mitigate hardship for an Armed Forces member following a preliminary finding concerning an alleged reprisal for a protected communication; requires the inspector general conducting an investigation into a protected communication to provide periodic updates to Congress, the whistleblower, the Secretary of Defense, and the relevant service; and requires the DOD Inspector General to prescribe uniform standards for (1) investigations of allegations of prohibited personnel actions, and (2) training for staffs of Inspectors General on the conduct of such investigations. Legislation to Address Perceived Gaps in Protections for IC Contractors Coverage of contractors in existing IC whistleblower protection legislation is inconsistent. The ICWPA of 1998, which provides for a process for reporting a whistleblower complaint, does cover contractors, as do protections in Section 405 of the IAA for FY2010, and Title VI of the IAA of 2014. However, PPD-19 and ICD-120 do not mention contractors. There have been three subsequent efforts in Congress to address the gap in perceived coverage, culminating on January 19, 2018, when Congress passed P.L. 115-118 , an amendment to the Foreign Intelligence Surveillance Act of 1978, which included Section 110 provisions to address perceived gaps in protections for IC contractors. S. 2002, 115th Congress, Ensuring Protections for IC Contractor Whistleblowers Act of 2017 Senator McCaskill introduced S. 2002 on October 24, 2017. It was referred to the Senate Select Committee on Intelligence (SSCI) and no further action was taken. S. 2002 would have provided protections for IC employees—to include applicants, former employees, contractors, personal services contractors, and subcontractors—from being "discharged, demoted, or otherwise discriminated against" as a consequence of making a protected disclosure. It also included provisions for a process for making a complaint. S. 794, 114th Congress, A Bill to Extend Whistleblower Protections for Defense Contractor Employees of Contractors of the Elements of the IC On March 18, 2015, Senator McCaskill introduced S. 794 . It was referred to the SSCI and no further action was taken. The bill would have amended Section 2409 of Title 10 U.S. Code by extending protections for contractor employees on a contract with DOD or other federal agencies to contractor employees on a contract with an IC element who comply with an existing lawful process for making a whistleblower complaint, to include protection of classified information that is part of a court action. Section 110 of P.L. 115-118, Whistleblower Protections for Contractors of the Intelligence Community On January 19, 2018, Congress passed P.L. 115-118 , an amendment to the Federal Intelligence Surveillance Act of 1978. Section 110 amended Section 1104 of the National Security Act of 1947 by providing protections for IC contractor whistleblowers. Section 110 amended existing whistleblower protections to enable IC contractors to make lawful disclosures to the head of the contracting agency (or an employee designated by the head of that agency for such purpose), or to the appropriate inspector general of the contracting agency, as well as to the DNI, IGIC, and the congressional intelligence committees (or members of the committees). These protections are similar to those for IC employees under Title VI of the IAA for FY2014 ( P.L. 113-126 ). That legislation, however, included no provisions for contractors. Section 110 provides unambiguous protections for IC contractors making a lawful complaint against any retaliatory personnel action involving an appointment, promotion/demotion, disciplinary or corrective action, detail, transfer or reassignment, suspension, termination, reinstatement, performance evaluation, decisions concerning pay, benefits, awards, education, or training. The protections extend to lawful complaints involving, a violation of any Federal law, rule or regulation (including with respect to evidence of another employee or contractor employee accessing or sharing classified information without authorization); or gross mismanagement, a gross waste of funds, an abuse of authority, or a substantial and specific danger to public health or safety. These protections extend to contractors of the FBI—including contractors of the IC element of FBI, the Intelligence Branch—similar to the protections for IC employees and contractors under the Section 3234 of Title 50, U.S. Code, as amended. Section 110 also amended Section 3341(j) of Title 50, U.S. Code, to include protections for IC contractors who make lawful whistleblower disclosures against retaliatory revocation of their security clearances . Resources to Enhance Whistleblower Investigations H.Amdt. 894 , 113 th Congress, to the DOD Appropriations Act for Fiscal Year 2015 ( H.R. 4870 ), was agreed by a voice vote on June 18, 2014, redirecting $2 million dollars to fund the IC Whistleblower and Source Protection Directorate. This directorate exists within the OIGIC. The funds, which augmented the Intelligence Community Management Account, were to support the hiring of investigators and support staff to provide the IGIC greater ability to investigate fraud, waste, and abuse. Although it does not provide protections for whistleblowers per se, the measure addressed an underfunded capability in order to enable responsive follow-up on whistleblower complaints.

Whistleblowing is "the act of reporting waste, fraud, abuse and corruption in a lawful manner to those who can correct the wrongdoing." Intelligence community (IC) whistleblowers are those employees or contractors working in any of the 17 elements of the IC who reasonably believe there has been a violation of law, rule, or regulation; gross mismanagement; waste of resources; abuse of authority; or a substantial danger to public health and safety. The IC has publicly recognized the importance of whistleblowing, and supports protections for whistleblowers who conform to guidelines to protect classified information. The Director of National Intelligence (DNI) whistleblowing policy and guidance is publicly available and specifically addresses the process for making protected disclosures and whistleblower protections for IC contractors, members of the Armed Forces, and federal employees. There are differing opinions, however, on whether the IC's internal processes have the transparency necessary to ensure adequate protections against reprisal, and whether protections for IC contractors are sufficient. IC whistleblower protections have evolved in response to perceptions of gaps that many believed left whistleblowers vulnerable to reprisal. The first whistleblower legislation specific to the IC was limited to specifying a process for IC whistleblowers to make a complaint but offered no specific protections. Subsequent legislation included only general provisions for protecting IC whistleblowers with no additional guidance on standards for implementation. Presidential Policy Directive (PPD)-19, signed in 2012, provided the first specific protections against reprisal actions for making a complaint. The Intelligence Authorization Act for Fiscal Year 2014 codified these provisions, which were further supported with IC implementation policy. Separate legislation under Title 10 of the U.S. Code, along with DOD implementing guidance, provides protections for members of the Armed Forces, including those assigned to elements of the IC. In early 2018, Congress passed legislation to address perceived gaps in protections for IC contractors.

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Introduction A range of federal incentives supports the development and deployment of alternatives to conventional fuels and engines in transportation. These incentives include tax deductions and credits for vehicle purchases and the installation of refueling systems, federal grants for conversion of older vehicles to newer technologies, mandates for the use of biofuels, and incentives for manufacturers to produce alternative fuel vehicles. Some of these incentives have expired in recent years when their authorizations expired. Many of the policy choices presented for alternative fuel and advanced vehicle technologies originated as a response to the nation's interest in reducing petroleum imports, a goal first articulated at the time of the two oil embargoes imposed by the Organization of Petroleum Exporting Countries (OPEC) in the 1970s. While President Richard Nixon is often cited as the first President to call for "energy independence," successive Presidents and Congresses have made efforts to reduce petroleum import dependence as well. As shown in Figure 1 , since peaking in 2005, net U.S. oil imports have fallen by 70%. Factors in this reversal include the last recession, which reduced domestic demand, followed by a rise in the supply of U.S. oil and oil alternatives due to increased private sector investment and federal incentives, some of which are cited in this report. In addition, the United States has become a net exporter of petroleum products (while it remains a net importer of crude oil). With declining U.S. import dependence, reliance on petroleum and petroleum products may be less of a factor in promoting alternative fuels and alternative fuel vehicles in the future. In addition to concerns over petroleum import dependence, other factors also have driven policy on alternative fuels and advanced vehicle technologies. Federal incentives do not reflect a single, comprehensive strategy but rather an aggregative approach to a range of discrete public policy issues, including improving environmental quality, expanding domestic manufacturing, and promoting agriculture and rural development. Factors Behind Alternative Fuels and Technologies Incentives While a reliance on foreign sources of petroleum was an overriding concern for much of the past 40 years, other factors, such as rural development, promotion of domestic manufacturing, and environmental concerns, have also shaped congressional interest in alternative fuels and technologies. A variety of programs affecting the development and commercialization of alternative fuels and technologies have been proposed and enacted, each with its own benefits and drawbacks. (This report does not evaluate the effectiveness of alternative fuel programs and incentives.) Alternative fuels programs can be generally classified into six categories: expanding domestic ethanol production; establishing other alternative fuels; encouraging the purchase of nonpetroleum vehicles; reducing fuel consumption and greenhouse gas emissions; supporting U.S. vehicle manufacturing; and funding U.S. highways. Developing Domestic Ethanol Production Ethanol has been seen as a homegrown alternative to imported oil. A number of programs were put in place to encourage its domestic development (instead of importing from other ethanol producers, such as Brazil). To spur establishment of this domestic industry, Congress has enacted a number of laws, which are beneficial to states that have a large concentration of corn growers (corn being the raw material feedstock in most U.S. ethanol). Many of the incentives for ethanol production have been included in farm-related legislation and appropriations acts and hence have been administered by the U.S. Department of Agriculture (USDA), or in tax provisions administered by the Internal Revenue Service (IRS). The volumetric ethanol excise tax credit (VEETC) provided a tax credit to gasoline suppliers who blended ethanol with gasoline. The small ethanol producer tax credit provided a limited additional credit for small ethanol producers. Both credits expired at the end of 2011. Since 2005, petroleum refiners and importers have been required to supply biofuels as a share of their gasoline and diesel supply. This mandate, the Renewable Fuel Standard (RFS), has been an impetus for expanded production and use of ethanol and other biofuels. Establishing Other New Alternative Fuels In addition to ethanol, Congress has sought to spur development of other alternative fuels, such as biodiesel, cellulosic biofuel, hydrogen, liquefied petroleum gas (LPG), compressed natural gas (CNG), and liquefied natural gas (LNG). Some of these fuels have been supported through tax credits (such as the biodiesel tax credit), federal mandates (mainly the RFS), and R&D programs (such as the Biomass Research and Development Initiative, which provides grants for new technologies leading to the commercialization of biofuels). Encouraging the Purchase of Nonpetroleum Vehicles Congress has enacted laws which seek to boost consumer adoption by providing tax credits for the purchase of some vehicles that consume far less petroleum than conventional vehicles, or that do not consume petroleum at all. These tax credit programs generally are limited in duration as a way to encourage early adopters to take a risk on new kinds of vehicles. The proponents contend that once a significant number of such new cars and trucks are on the road, additional buyers would be attracted to them, the increased volume would result in lower prices, and the tax credits would no longer be needed. Currently, a credit is available for the purchase of plug-in electric vehicles. Expired credits include incentives for hybrid vehicles, fuel cell vehicles, advanced lean burn technology vehicles, and certain alternative fuel vehicles. Congress has also enacted tax credits to spur the expansion of infrastructure to fuel such vehicles, although these credits have likewise expired. Reducing Fuel Consumption and Vehicle Emissions Several agencies, including the Environmental Protection Agency (EPA) and the Department of Transportation (DOT), have been mandated by statute to address concerns over fuel consumption and vehicle emissions through programs for alternative fuels. The most significant and long-standing program to reduce vehicle fuel consumption is the Corporate Average Fuel Economy (CAFE) program administered by DOT. Under CAFE, each manufacturer's fleet must meet specific miles-per-gallon standards for passenger vehicles and light trucks. If a manufacturer fails to do so, it is subject to financial penalties. Manufacturers can accrue credits toward meeting CAFE standards for the production and sale of certain types of alternative fuel vehicles. A joint rulemaking process between DOT and EPA links future CAFE standards with greenhouse gas (GHG) standards promulgated under EPA's Clean Air Act authority. DOT also established the Congestion Mitigation and Air Quality Improvement Program (CMAQ) to fund programs that intended to reduce emissions in urban areas that exceed certain air quality standards. At EPA, the Diesel Emission Reduction Act (DERA) was implemented with a goal of reducing diesel emissions by funding and implementing new technologies. In addition, EPA's RFS mandates the use of renewable fuels for transportation. Under the RFS, some classes of biofuels must achieve GHG emission reductions relative to gasoline. Supporting U.S. Motor Vehicle Manufacturing The Department of Energy (DOE), in partnership with U.S. automakers, federal labs, and academic institutions, has funded and overseen research and development programs on vehicle electrification for decades, in particular research focused on how to produce economical batteries that extend electric vehicle range. These R&D programs were supplemented in the American Recovery and Reinvestment Act (ARRA; P.L. 111-5 ) to include grants to U.S.-based companies for facilities to manufacture advanced battery systems, component manufacturers, and software designers to boost domestic production and international competitiveness. The Advanced Technology Vehicles Manufacturing (ATVM) loan program at DOE, established by the Energy Independence and Security Act of 2007 ( P.L. 110-140 ), has supported manufacturing plant investments to enable the development of technologies to reduce petroleum consumption, including the manufacture of electric and hybrid vehicles, although no new loans have been approved since 2011. Highway Funding and Fuels Taxes As described below (see " Motor Fuel Excise Taxes "), one of the earliest fuels-related federal programs is the motor vehicle fuels excise tax first passed in the Highway Revenue Act of 1956 to fund construction and maintenance of the interstate highway system. Originally, only gasoline and diesel were taxed, but as newer fuels became available (such as ethanol and compressed natural gas), they were added to the federal revenue program, but often at lower tax rates than gasoline or diesel. Lower tax burdens for some fuels or vehicles may effectively incentivize those choices over conventional options. However, lower tax burdens for these vehicles and fuels could compromise federal highway revenue. The vehicles responsible for lower tax revenues include traditional internal combustion engine vehicles with higher mileage per gallon as well as new technology electric and hybrid cars. Structure and Content of the Report The federal tax incentives and programs discussed in this report aim to support the development and deployment of alternative fuels. There is no central coordination of how these incentives interact. In general, they are independently administered by separate federal agencies, including five agencies: Department of the Treasury, DOE, DOT, EPA, and USDA. This report focuses strictly on programs that directly support alternative fuels or advanced vehicles. It does not address more general programs (e.g., general manufacturing loans, rural development loans), or programs that have been authorized but never funded. The programs are presented by agency, starting with those that generally address the above factors, followed by those that are fuel- or technology-specific. Programs that expired or were repealed on or after December 31, 2017, are included in Appendix A , Recently Expired or Repealed Programs. Congress may explore whether to reinstate these expired programs or establish similar programs. Appendix B contains four tables: 1. a summary of the programs discussed in the body of the report, listed by agency ( Table B-1 ); 2. a listing of programs and incentives for alternative fuels, by fuel type ( Table B-2 ); 3. a listing of programs and incentives for advanced technology vehicles, by vehicle type ( Table B-3 ); and 4. a listing of recently expired programs by agency ( Table B-4 ). Current Federal Incentives Department of the Treasury Idle Reduction Equipment Tax Exemption6 Motor Fuel Excise Taxes10 Plug-In Electric Drive Vehicle Credit15 Department of Energy Advanced Technology Vehicles Manufacturing Loan Program (ATVM) Bioenergy Technologies Program (formerly the Biomass and Biorefinery Systems R&D Program) Clean Cities Program Hydrogen and Fuel Cell Technologies Program Vehicle Technologies Program (VTP) Department of Transportation Congestion Mitigation and Air Quality Improvement Program Corporate Average Fuel Economy Program Alternative Fuel Vehicle Credits Low or No Emission Vehicle Program Environmental Protection Agency National Clean Diesel Campaign Renewable Fuel Standard Department of Agriculture19 Bioenergy Program for Advanced Biofuels20 Biomass Crop Assistance Program (BCAP; §9011)21 Biomass Research and Development (BRDI)22 Biorefinery, Renewable Chemical, and Biobased Product Manufacturing Assistance Program (formerly the Biorefinery Assistance Program)24 Rural Energy for America Program (REAP) Grants and Loans25 Appendix A. Recently Expired or Repealed Programs Alternative Fuel Refueling Property Credit Alternative Motor Vehicle Credit Biodiesel or Renewable Diesel Income Tax Credit Biodiesel or Renewable Diesel Mixture Tax Credit Incentives for Alternative Fuel and Alternative Fuel Mixtures Plug-In Electric Vehicle Credit (Two- or Three-Wheeled) Repowering Assistance Program Second Generation Biofuel Producer Credit (previously the Credit for Production of Cellulosic and Algae-Based Biofuel) Small Agri-Biodiesel Producer Credit Special Depreciation Allowance for Second Generation (Cellulosic and Algae-Based) Biofuel Plant Property Appendix B. Summary Tables Appendix B contains four tables Table B-1 provides a summary of the programs discussed in the body of the report, listed by agency; Table B-2 lists programs and incentives for alternative fuels, by fuel type; Table B-3 lists programs and incentives for advanced technology vehicles, by vehicle type; and Table B-4 lists programs by agency that have expired or were repealed since December 31, 2017.

A wide array of federal incentives supports the development and deployment of alternatives to conventional fuels and engines in transportation. These incentives include tax deductions and credits for vehicle purchases and the installation of refueling systems, federal grants for conversion of older vehicles to newer technologies, mandates for the use of biofuels, and incentives for manufacturers to produce alternative fuel vehicles. The current array of incentives for alternative fuels and related technologies does not reflect a single, comprehensive strategy, but rather an aggregative approach to a range of discrete public policy issues, including goals of reducing petroleum consumption and import dependence, improving environmental quality, expanding domestic manufacturing, and promoting agriculture and rural development. Current federal programs are administered by five key agencies: Department of the Treasury (Treasury), Department of Energy (DOE), Department of Transportation (DOT), Environmental Protection Agency (EPA), and the U.S. Department of Agriculture (USDA). The incentives and programs described in this report are organized by the responsible agency. Treasury (through the Internal Revenue Service, IRS) administers tax credits and deductions for alternative fuel and advanced technology vehicle purchases, expansion of alternative fuel refueling infrastructure, and incentives for the production and/or distribution of alternative fuels. Many of these incentives have expired in recent years. DOE (mainly through the Office of Energy Efficiency and Renewable Energy, EERE) administers research and development (R&D) programs for advanced fuels and transportation technology, grant programs to deploy alternative fuels and vehicles, and a loan program to promote domestic manufacturing of high-efficiency vehicles. DOT (mainly through the Federal Highway Administration, FHWA, and Federal Transit Administration, FTA) administers grant programs to deploy "clean fuel" buses and other alternative fuel vehicles. DOT (through the National Highway Traffic Safety Administration, NHTSA) also administers federal Corporate Average Fuel Economy (CAFE) standards, which include incentives for production of alternative fuel vehicles. EPA (mainly through the Office of Transportation and Air Quality, OTAQ) administers the Renewable Fuel Standard, which mandates the use of biofuels in transportation. EPA also administers grant programs to replace older diesel engines with newer technology. USDA (mainly through the Rural Business-Cooperative Service, RBS) administers grant, loan, and loan guarantee programs to expand agricultural production of biofuel feedstocks, conduct R&D on biofuels and bioenergy, and establish and expand facilities to produce biofuels, bioenergy, and bioproducts.

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Introduction 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, widespread concerns about the federal debt, recent and projected federal budget deficits, and federal budget caps have driven difficult 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. Increases in the budget caps for FY2018 and FY2019 reduced some of the pressure affecting these decisions, but the concerns remain and the caps for FY2020 have not been increased. The U.S. government supports a broad range of scientific and engineering R&D. Its purposes include specific concerns such as 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 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—overall, 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 FY2020 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 FY2020 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 99% 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. The President's FY2020 Budget Request On March 11, 2019, President Trump released his proposed FY2020 budget. He provided additional details the following week. Completion of the FY2019 budget process on February 15, 2019, more than four months after the start of FY2019, as well as a government shutdown, led to both a delay in the scheduled release of the President's FY2020 budget request, and the use by the Office of Management and Budget of a mix of estimated continuing appropriations act FY2019 funding levels (generally, for agencies whose FY2019 appropriations were enacted after the start of FY2019) and enacted FY2019 funding levels (generally, for agencies whose appropriations were enacted prior to the start of FY2019). As a result, the aggregate (total) FY2019 R&D funding levels for all agencies in the Analytical Perspectives addendum to the President's FY2020 budget are estimated "using FY 2019 enacted appropriations where available and annualized Continuing Resolution [levels] for agencies without enacted appropriations prior to Feb. 15, 2019." With enactment of the remaining FY2019 appropriations acts in the Consolidated Appropriations Act, 2019 (P.L. 116-6), the Administration's estimated aggregate R&D funding level no longer accurately reflects total enacted FY2019 R&D funding. OMB has not issued a document with comprehensive R&D figures for each agency or in aggregate. Therefore, the analysis of government-wide R&D funding in this report, as well as of some of the individual agency analyses, compares the President's request for FY2020 to the FY2018 actual level. As information about the agencies' FY2019 R&D levels becomes available, the agency sections of this report will be updated to reflect that information and to make comparisons to the President's FY2020 request. President Trump is proposing approximately $134.1 billion for R&D for FY2020, a decrease of $1.7 billion (1.2%) below the FY2018 level of $135.8 billion. Adjusted for inflation, the President's FY2020 R&D request represents a constant-dollar decrease of 5.2% from the FY2018 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 FY2020 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. Federal R&D Funding Perspectives 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. Federal R&D by Agency 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 FY2018 (actual), FY2019 (enacted, for selected agencies), and FY2020 (request). Enacted data for FY2019 is provided only for agencies whose FY2019 appropriations process was completed before the FY2020 budget request was finalized. Under the request, eight federal agencies would receive more than 97% of total federal R&D funding in FY2020: the Department of Defense, 44.3%; Department of Health and Human Services (HHS), primarily the National Institutes of Health (NIH), 25.1%; Department of Energy (DOE), 11.0%; National Aeronautics and Space Administration, 8.4%; National Science Foundation (NSF), 4.3%; Department of Agriculture (USDA), 1.8%; Department of Commerce (DOC), 1.3%; 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 three federal agencies would see their R&D funding decrease under the President's FY2020 request compared to FY2018. The only agencies with increased R&D funding in FY2020 relative to the FY2018 level would be DOD (up $7.077 billion, 13.5%), VA (up $39 million, 3.0%), and DOT (up $33 million, 3.2%). The agencies with largest R&D funding declines in the FY2020 request compared to FY2018 (as measured in dollars) would occur in the budgets of HHS (down $3.249 billion, 8.8%), DOE (down $2.764 billion, 15.8%), NSF (down $567 million, 29.7%), and NASA (down $475 million, 4.0%). Among agencies for which FY2019 enacted funding is shown in the President's budget, FY2020 R&D funding would increase only for DOD (up $3.631 billion, 6.5%). HHS R&D funding would decline by $4.954 billion (12.8%). DOE R&D funding would decline by $3.075 billion (17.3%). VA R&D funding would decline by $17 million (1.3%). Department of Education R&D funding would decline by $34 million (13.2%). See Table 1 . Federal R&D by Character of Work, Facilities, and Equipment Federal R&D funding can also be examined by the character of work it supports—basic research, applied research, or development—and by funding provided for construction of R&D facilities and acquisition of major R&D equipment. (See Table 2 .) President Trump's FY2020 request includes $35.164 billion for basic research, down $1.452 billion (4.0%) from FY2018; $40.707 billion for applied research, down $4.264 billion (10.5%); $59.108 billion for development, up $4.543 billion (8.3%); and $3.382 billion for facilities and equipment, down $495 million (12.8%). Federal Role in U.S. R&D by Character of Work 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/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 2017. Business funded 30% of U.S. basic research in 2017, with state governments, universities, and other nonprofit organizations funding the remaining 29%. For U.S. applied research, business is the primary funder, accounting for an estimated 55% in 2017, while the federal government accounted for an estimated 33%. State governments, universities, and other nonprofit organizations funded the remaining 12%. Business also provides the vast majority of U.S. funding for development. Business accounted for 85% of development funding in 2017, while the federal government provided 13%. State governments, universities, and other nonprofit organizations funded the remaining 2% (see Figure 1 ). Federal R&D by Agency and Character of Work Combined 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 FY2020 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 among basic research, applied research, development, and facilities and equipment). In the President's FY2020 budget request, the Department of Health and Human Services, primarily NIH, would account for nearly half (47.7%) of all federal funding for basic research. HHS would also be the largest federal funder of applied research, accounting for about 45.6% of all federally funded applied research in the President's FY2020 budget request. DOD would be the primary federal funder of development, accounting for 87.4% of total federal development funding in the President's FY2020 budget request. DOE would be the primary federal funder of facilities and equipment, accounting for 50.5% of total federal facilities and equipment funding in the President's FY2020 budget request. Multiagency R&D Initiatives 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—for 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 FY2020 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. Networking and Information Technology Research and Development Program (NITRD) 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. In FY2019, 21 agencies are NITRD members; nonmember agencies also participate in NITRD activities. 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 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 August 2018 and related to the FY2019 budget request. President Trump requested $5,277.6 million for NITRD research in FY2019. In FY2017, NITRD funding was $5,126.4 million. The President's FY2020 budget does not identify aggregate funding levels for NITRD for FY2018 (actual), FY2019 (estimate), or FY2020 (request). The FY2020 NSF budget request includes $1.20 billion in NITRD funding for FY2020, a decrease of $98.2 million (7.6%) from FY2018 (actual). 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 . U.S. Global Change Research Program (USGCRP) 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 FY2018, 13 departments and agencies participated in the USGCRP. 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 the President's annual budget proposal or each agency's budget justification to Congress. 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 to Congress. Some, but not all, participating agencies provide the required information in their budget justifications. In addition, in almost each of the past 17 years, language in appropriations laws has 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 … including an accounting of funding by agency…." The President's most recent report was submitted in January 2017 for the FY2017 request. This section will be updated when the USGCRP updates its budget information. The President's FY2020 budget does not identify aggregate funding levels for USGCRP for FY2018 (actual), FY2019 (estimate), or the FY2020 (request). Without budget reports pursuant to the GCRP Act or appropriations laws, the budget authority or expenditures publicly reported by agencies is generally insufficient to independently build a complete and consistent estimate of funding for the USGCRP. Below are results of CRS research for selected agencies, which incompletely represent federal funding in recent years thats support the USGCRP. The President's FY2020 budget does not identify aggregate funding levels for USGCRP for FY2018 (actual), FY2019 (estimate), or the FY2020 (request). Without budget reports pursuant to the GCRP Act or appropriations laws, the budget authority or expenditures publicly reported by agencies is generally insufficient to independently build a complete and consistent estimate of funding for the USGCRP. Table 5 presents results of CRS research for selected agencies, which incompletely represent federal funding in recent years that supports the USGCRP. 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 also can be obtained at http://www.globalchange.gov . National Nanotechnology Initiative (NNI) 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 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). In FY2019, the President's request included NNI funding for 16 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 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 2018. President Trump requested $1,395.6 million for NNI research in FY2019. In FY2017, NNI funding was $1,552.3 million. The President's FY2020 budget does not identify aggregate funding levels for NNI for FY2018 (actual), FY2019 (enacted), or FY2020 (request). The NSF budget request includes $389 million in NNI funding for FY2020, $179 million (31.4%) less than in FY2018. 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 also can be obtained at http://www.nano.gov . American Artificial Intelligence Initiative In February 2019, President Trump signed Executive Order 13859 establishing an American Artificial Intelligence Initiative to accelerate national leadership in artificial intelligence (AI). Among other things, the EO directs the heads of implementing agencies that perform or fund R&D to consider AI as an agency R&D priority, in accordance with their missions and consistent with applicable law. In particular, the EO directs the Secretaries of Defense, Commerce, Health and Human Services, and Energy, the Administrator of the National Aeronautics and Space Administration, and the Director of the National Science Foundation to prioritize the allocation of high-performance computing resources for AI-related applications through increased assignment of discretionary funding and any other appropriate mechanisms. According to Analytical Perspectives, the President's FY2020 budget would provide approximately $850 million for this initiative to the Department of Energy, National Institutes of Health, National Institute of Standards and Technology, and National Science Foundation. National Quantum Initiative In December 2018, President Trump signed the National Quantum Initiative Act (P.L. 115-368) establishing a National Quantum Initiative with the stated purpose of ensuring "the continued leadership of the United States in quantum information science [QIS] and its technology applications." The act requires the establishment of a 10-year plan to accelerate the development of QIS and technology applications. According to Analytical Perspectives , the President's FY2020 budget includes approximately $430 million for this initiative at DOD, DOE, NIST, and NSF. Other Initiatives A number of presidential initiatives without statutory foundations were in operation at the end of the Obama Administration, but have not been addressed explicitly in President Trump's FY2018, FY2019, or FY2020 budgets. Two of these are part of the Advanced Manufacturing Partnership (AMP): the National Robotics Initiative (NRI) and Manufacturing USA (formerly known as the National Network for Manufacturing Innovation or NNMI). According to Analytical Perspectives , the President's FY2020 budget prioritizes R&D aimed at advances in manufacturing and the integration of those advances into the domestic supply chain to reduce U.S. reliance on foreign sources of critical products. Budget priorities include intelligent manufacturing systems, materials and processing technologies, advances in semiconductor design and fabrication, and innovations in food and agricultural manufacturing. Other initiatives include the Cancer Moonshot, the Brain Research through Advancing Innovative Neurotechnologies (BRAIN) Initiative, the Precision Medicine Initiative (PMI), the Materials Genome Initiative (MGI), and an effort to double federal funding for clean energy R&D. Some of the activities of these initiatives are discussed in agency budget justifications and the agency analyses later in this report. FY2020 Appropriations Status The remainder of this report provides a more in-depth analysis of R&D in 12 federal departments and agencies that, in aggregate, receive nearly 99% of total federal R&D funding. Agencies are presented in order of the size of their FY2020 R&D budget requests, with the largest presented first. Annual appropriations for these agencies are provided through 9 of the 12 regular appropriations bills. For each agency covered in this report, Table 7 shows the corresponding regular appropriations bill that provides primary funding for the agency, including its R&D activities. Because of the way that agencies report budget data to Congress, it can be difficult to identify the portion that is R&D. Consequently, R&D data presented in the agency analyses in this report may differ from R&D data in the President's budget or otherwise provided by OMB. Funding for R&D is often included in appropriations line items that also include non-R&D activities; therefore, in such cases, it may not be possible to identify precisely how much of the funding provided in appropriations laws is allocated to R&D specifically. In general, R&D funding levels are known only after departments and agencies allocate their appropriations to specific activities and report those figures. As of the date of this report, the House had completed action on none of the 12 regular appropriations bills for FY2020; the Senate had completed action on none of the bills. None of the 12 had been enacted as law. This report will be updated as Congress takes additional actions to complete the FY2020 appropriations process. In addition to this report, CRS produces individual reports on each of the appropriations bills. These reports can be accessed via the CRS website at http://www.crs.gov/iap/appropriations . Also, the status of each appropriations bill is available on the CRS web page, Status Table of Appropriations , available at http://www.crs.gov/AppropriationsStatusTable/Index . Department of Defense21 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 8 .) 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 FY2020 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 FY2020 OCO request is divided into three requirement categories—direct war, enduring, and OCO for base. For purposes of this report, these categories of OCO funding requests will be 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 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 FY2020, the Trump Administration is requesting $104.294 billion for DOD's Title IV RDT&E PEs (base plus OCO), $8.334 billion (8.7%) above the enacted FY2019 level. (See Table 8 .) In addition, the request includes $732.3 million in RDT&E through the Defense Health Program (DHP; down $1.447 billion, 66.4% from FY2019), $875.9 million in RDT&E through the Chemical Agents and Munitions Destruction program (down $10.8 million, 1.2% from FY2019), and $3.0 million for the Inspector General for RDT&E-related activities (down $1.0 million, 25.4% from FY2019). The FY2020 budget included no RDT&E funding via the National Defense Sealift Fund, the same as the FY2019 enacted level. RDT&E funding can be analyzed in different ways. RDT&E funding can be characterized organizationally. Each of 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 program (S&T) and represent the more research-oriented part of the RDT&E program. Budget activities 6.4 and 6.5 focus on the development of specific weapon systems or components 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. Many congressional policymakers are particularly interested in DOD S&T program funding since these funds support the development of new technologies and the underlying science. 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 FY2020 request for Title IV S&T funding (base plus OCO) is $14.135 billion, $1.524 billion (9.7%) below the FY2019 enacted level. Within the S&T program, basic research (6.1) receives special attention, particularly by the nation's universities. DOD is not a large supporter of basic research when compared to NIH or NSF. However, over half of DOD's basic research budget is spent at universities. The Trump Administration is requesting $2.320 billion for DOD basic research for FY2020, $208.4 million (8.2%) below the FY2019 enacted level. DOD is a substantial source of federal funds for university R&D in certain fields, such as aerospace, aeronautical, and astronautical engineering (40%); electrical, electronic, and communications engineering (39%); mechanical engineering (28%); computer and information sciences (28%); and materials science (25%). Department of Health and Human Services 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, an HHS agency that accounts for nearly 97% of total HHS R&D funding. Other HHS agencies that provide funding for 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. National Institutes of Health29 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). 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. The ICs focus on particular diseases (e.g., National Cancer Institute), areas of human health and development (e.g., National Institute on Aging), or scientific research fields or support (e.g., National Center for Advancing Translational Sciences). Each IC plans and manages its own research programs in coordination with OD. As shown in Table 9 , 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, P.L. 114-255), and an intramural Buildings and Facilities account. The other three centers, which perform centralized support services, are funded through the other ICs. NIH supports and conducts a wide range of basic and clinical research, research training, and health information dissemination across all fields of biomedical and behavioral sciences. 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. 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 has received mandatory funding of $150 million annually provided in the Public Health Service Act (PHSA), Section 330B, for a special program on type 1 diabetes research. Some funding is also transferred to NIH pursuant to the "PHS Evaluation Tap" Transfer authority. The total funding available for NIH activities, taking account of add-ons and PHS tap transfers, is known as the NIH program level. President Trump's FY2020 budget request would provide NIH a total program level of $34.368 billion, a decrease of $4.941 billion (12.6%) compared with FY2019 enacted levels. The proposed FY2020 program level total would include $33.410 billion provided through LHHS appropriations (including the full amount authorized by the 21 st Century Cures Act); $741 million from the PHS evaluation transfer; $66.581 million provided through Interior/Environment appropriations for Superfund-related activities; and $150 million in proposed funding for the mandatory type 1 diabetes program. Under the FY2020 budget proposal, all existing ICs and budget activity lines, except for Buildings and Facilities, would receive a decrease compared to FY2019 enacted levels (see Table 9 ). The Buildings and Facilities appropriation of $200 million would not change from FY2019 to FY2020. Additionally, the FY2020 Budget Request proposes consolidating the Agency for Healthcare Research and Quality into NIH, forming a 28 th IC—the National Institute for Research on Safety and Quality (NIRSQ). The creation of a new NIH institute would require an amendment to PHSA 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 request, NISRQ would receive $256 million in funding for FY2020. The main funding mechanism NIH uses to support extramural research is research project grants (RPGs), which are competitive, peer-reviewed, and largely investigator-initiated. Historically, over 50% of the NIH budget is used to support RPGs, which include salaries for investigators and research staff. The FY2020 budget proposes to reduce the average cost of RPGs by capping the percentage of an investigator's salary that can be paid with grant funds to 90%. The FY2020 Trump budget proposal includes $150 million in mandatory funding for research on type 1 diabetes authorized under the PHS Act Section 330B within the budget of the National Institute of Diabetes and Digestive and Kidney Diseases (NIDDK). For this proposal, Congress and the President would need to enact legislation to extend the special diabetes program funding, because under current law, no new funding will be available for this program after September 30, 2019. Additionally, the FY2020 program level request includes $741 million in funding transferred to NIH by the PHS evaluation tap. Discretionary funding for certain programs at NIH and other HHS agencies that are authorized under the PHS Act can be subject to an assessment under Section 241 of the PHS Act (42 U.S.C. §238j). This provision authorizes the Secretary to use a portion of eligible appropriations to study the effectiveness of federal health programs and to identify improvements. 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 FY2019) and have also 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. The FY2020 NIH budget request also includes $492 million made available through the 21 st Century Cures Act (see text box below; hereinafter referred to as "The Cures Act"). The Cures Act ( P.L. 114-255 ) specifies that $149 million is for the Precision Medicine Initiative, $140 million is for the BRAIN Initiative, $195 million is for cancer research, and $8 million is for research on regenerative medicine for FY2020. The President's FY2020 budget identifies several research priorities for NIH in the coming year. The overview below outlines some of these priority themes in the budget request. 1. Confronting the Opioids Crisis The request includes $1.3 billion designated for opioids and pain research across NIH, with $500 million of the total for the Helping to End Addiction Long-Term (HEAL) initiative. The HEAL Initiative, launched in April 2018, aims to accelerate the development of new medications and devices to treat opioid addiction. In addition, NIH plans to support research on neonatal abstinence syndrome, chronic pain, and other opioids-related issues. 2. Pediatric Research The FY2020 request proposes $50 million in designated funding for a pediatric cancer initiative. The initiative, designed to complement existing pediatric cancer research, would aggregate data on pediatric cancer cases and coordinate existing datasets to create a "comprehensive, shared resource to support research on childhood cancer in all its forms." The request also designates $15 million for the Institutional Development Award (IDeA) States Pediatric Clinical Trials Network to support pediatric clinical studies, such as on the "dosing, safety, and efficacy of drugs that are commonly prescribed to children." 3. Supporting the Next Generation of Researchers The request would provide $100 million in dedicated funding for the Next Generation Researchers Initiative, which aims to support new and early stage scientists in attaining their first NIH grants. Through the program, NIH ICs are to create funding pathways and other strategies targeted at new and early-stage scientists, and would be required to collect data and evaluate their outcomes. 4. Ending the HIV Epidemic As a part of a proposed HHS wide plan, "Ending the HIV Epidemic: A Plan for America," the FY2020 request designates $6 million in funding to Centers for AIDS Research to collect data and inform HHS on best practices for the initiative. The goal for the plan is to reduce new infections by 75% in the next 5 years, and by 90% in the next 10 years. 5. New Technologies and Biomedical Research NIH plans to continue to support biomedical innovations using new technologies, including for diagnosis, monitoring, and treatment. An example includes a smartphone-based system for people with diabetes to monitor blood glucose levels. NIH also aims to accelerate scientific discovery through new data science methods. In June 2018, NIH released a Strategic Plan for Data Science, with an agency-wide plan for increasing and improving its use of large biomedical datasets. In addition, NIH plans to convene a new working group on artificial intelligence, machine learning, and biomedical research. Along with the above priorities, the President's budget request identifies ongoing support related to precision medicine, universal flu vaccine, and NIH buildings and facilities. Department of Energy53 The Department of Energy (DOE) 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 FY2020 budget request for DOE includes about $12.783 billion for R&D and related activities, including programs in three broad categories: science, national security, and energy. This request is 18.6% less than the enacted FY2019 amount of $15.712 billion. (See Table 10 for details.) The request for the DOE Office of Science is $5.546 billion, a decrease of 15.8% from the FY2019 appropriation of $6.585 billion. Funding would decrease for each of the office's six major research programs. In Basic Energy Sciences, almost half the proposed decrease would result from the approaching end of construction on the Linac Coherent Light Source II (no funding requested for FY2020, down from $129 million in FY2019). Funding for Biological and Environmental Research would decrease by $211 million (29.9%), with reductions concentrated in the Earth and Environmental Systems Sciences subprogram. In Advanced Scientific Computing Research, the Office of Science Exascale Computing Project would receive $189 million, down 18.9% from $233 million in FY2019. Funding for Fusion Energy Sciences would decrease by $161 million (28.6%), including a $25 million (18.9%) decrease in the U.S. contribution to construction of the International Thermonuclear Experimental Reactor (ITER), a fusion energy demonstration and research facility in France. The request for DOE national security R&D is $4.925 billion, an increase of 11.8% from $4.406 billion in FY2019. Funding for Weapons Activities RDT&E would increase 37.9%, including an increase of $123 million for Advanced Simulation and Computing and an increase of $95 million (190.3%) for Enhanced Capabilities for Subcritical Experiments. In Defense Nuclear Nonproliferation R&D, reactor conversion activities would transfer to a non-R&D account; excluding this accounting change, funding for the remaining program would increase by 3.8%. Funding for the Naval Reactors program would decrease by 7.8% overall, with increases for operations, infrastructure, and technology development offset by previously planned decreases in funding for construction and two major multiyear projects. The request for DOE energy R&D is $2.313 billion, a decrease of 51.0% from $4.721 billion in FY2019. Many of the proposed reductions in this category are similar to the Administration's FY2019 budget proposals. Funding for energy efficiency and renewable energy R&D would decrease by 66.3%, with reductions in all major research areas and a shift in emphasis toward early-stage R&D rather than later-stage development and deployment. Funding for fossil energy R&D would decrease by 24.1%, with reductions focused particularly on coal carbon capture and storage ($69 million, down from $199 million in FY2019) and natural gas technologies ($11 million, down from $51 million in FY2019). The request for fuel cycle R&D is $90 million (down from $264 million in FY2019), and nuclear energy would decrease by 37.9%, with no funding requested for the Integrated University Program ($5 million in FY2019) or the Supercritical Transformational Electric Power (STEP) R&D initiative ($5 million in FY2019). 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. National Aeronautics and Space Administration55 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 is requesting about $17.845 billion for NASA R&D in FY2020. This is 0.1% less than FY2019 funding of about $17.865 billion. For a breakdown of these amounts, see Table 11 . 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 FY2020 request for Science is $6.304 billion, a decrease of 8.7% from FY2019. Within this total, funding for Earth Science would decrease by $151 million (7.8%); funding for Planetary Science would decrease by $136 million (4.9%); and funding for Astrophysics would decrease by $347 million (29.1%). The request for Earth Science includes no funding for the Pre-Aerosol, Clouds, and Ocean Ecosystem (PACE) mission or the Climate Absolute Radiance and Refractivity Observatory (CLARREO) Pathfinder mission. PACE and CLARREO Pathfinder were also proposed for termination in the FY2018 and FY2019 budgets but were funded by Congress. The request for Planetary Science includes $593 million for a mission to Jupiter's moon Europa, but in contrast to prior congressional direction, the mission would launch on a commercial rocket and would not include a lander. The Planetary Science request also includes $210 million for the Lunar Discovery and Exploration program, initiated in FY2019, to fund public-private partnerships for research using commercial lunar landers. The request for Astrophysics does not include funding for the Wide Field Infrared Space Telescope (WFIRST, $312 million in FY2019). The proposed increase of $48 million for the James Webb Space Telescope (JWST) would provide $155 million more for JWST in FY2020 than was projected in the FY2019 budget; this change reflects previously announced cost increases and schedule delays. The FY2020 request for Aeronautics is $667 million, a decrease of 8.0% from FY2019. The request includes $104 million for the Low Boom Flight Demonstrator program, intended to demonstrate quiet supersonic flight. The FY2020 request for Exploration Technology (currently Space Technology) is $1.014 billion, an increase of 9.4% from FY2019. The request proposes $119 million for a mostly new Lunar Surface Innovation Initiative. It proposes $45 million for a restructured In-Space Robotic Servicing program, down from $180 million for the RESTORE-L robotic servicing mission in FY2019. The FY2020 request for Deep Space Exploration Systems (currently Exploration) is $5.022 billion, a decrease of 0.6% from FY2019. This account funds development of the Orion Multipurpose Crew Vehicle and the Space Launch System (SLS) heavy-lift rocket, the capsule and launch vehicle mandated by the NASA Authorization Act of 2010 for future human exploration beyond Earth orbit. The first test flight of SLS carrying Orion but no crew (known as EM-1) is now expected no earlier than June 2020. The first flight of Orion and the SLS with a crew on board (known as EM-2) is expected by April 2023. Funding for Orion, the SLS, and related ground systems (collectively known as Exploration Systems Development) would decrease by $651 million (15.9%). The account also funds Exploration R&D, which would increase by $622 million (64.9%). The request for Exploration R&D includes $821 million for a platform in lunar orbit (known as the Gateway) to serve as a test bed for deep space human exploration capabilities. In the LEO and Spaceflight Operations account (currently Space Operations), the request for Commercial Crew is $102 million, a decrease of 41.1% from FY2019; the request for the ISS is $1.458 billion; and the request for Commercial LEO Development, a new program in FY2019, is $150 million (an increase of 275.0%). The reduction in Commercial Crew funding reflects the expected transition of commercial crew activities from development to operations: the first post-certification crewed flight to the ISS is planned for late FY2019. The Commercial LEO Development program is intended to stimulate a commercial space economy in low Earth orbit, including the commercial provision of NASA's requirements for research and technology demonstration after the proposed end of direct ISS funding in 2025. National Science Foundation57 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 mathematics and computer science. It is also responsible for significant shares of the federal science, technology, engineering, and mathematics (STEM) education program portfolio and federal STEM student aid and support. 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. Because final FY2019 funding was not available at the time the FY2020 budget request was prepared, requested R&D funding is compared to the FY2018 actual funding. FY2019 funding levels, enacted February 15, 2019, are included for reference. These amounts are available only at the account level; FY2019 R&D breakouts and subaccount funding amounts are not yet available for comparison. 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 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 FY2018 actual and FY2020 requested levels are reported by account, including amounts for R&D conduct and physical assets where applicable, in Table 12 . Overall . The Administration is requesting $7.07 billion for the NSF in FY2020, $1.01 billion (12.5%) less than the FY2019 enacted amount, and $752 million (9.6%) less than the FY2018 actual amount. The request would decrease budget authority in three accounts relative to the FY2018 enacted level: RRA by $717.4 million (11.2%), EHR by $80.4 million (8.9%), and NSB by $200,000 (4.7%). The request would increase budget authority for the MREFC account by $36.9 million (19.8%) and provide slight increases to the AOAM (2.6%, $8.4 million) and OIG (1.7%, $260,000) accounts. Overall, NSF estimates that, under the FY2020 request, agency-wide funding rates (i.e., the percentage of submitted proposals that are successfully awarded funding) would decrease slightly from 24% to 23%, with 1,317 fewer new competitive awards, compared to FY2018. As a proportion of NSF's total funding, R&D activities account for approximately 81%. For FY2020, $5.72 billion is requested for R&D activities, a 10% decrease from FY2018 actual funding for R&D of $6.36 billion. The total request includes $5.22 billion (91%) for the conduct of R&D, and $506 million (9%) for R&D facilities and major equipment. Of funding requested for the conduct of R&D, 87% is requested for basic research, and 13% for applied research. Overall funding for R&D facilities and major equipment supports not only the construction and acquisition phases, funded through MREFC ($223 million requested), but also the planning, design, and postconstruction operations and maintenance, funded through RRA ($282 million requested). Research . The Administration seeks $5.66 billion for RRA in FY2020, an $857 million (13.1%) decrease compared to the FY2019 enacted funding, and a $717 million (11.2%) decrease compared to FY2018 actual funding. Compared to the FY2018 actual levels, the FY2020 request includes decreases for 8 of the 10 RRA subaccounts. The largest percentage decrease would go to the Office of Polar Programs (19.6%, $98.3 million decrease). The largest percentage increase would go to the U.S. Arctic Research Commission account (6.3%, $90,000 increase). The FY2020 request also includes $151 million for the RRA Established Program to Stimulate Competitive Research (EPSCoR) program, a $19.4 million (11.3%) decrease compared to FY2018 actual funding. Within the RRA account, the FY2020 request includes $5.08 billion for R&D, a decrease of $634 million (11.1%) compared to the FY2018 actual amount. Of this amount, the majority ($4.80 billion, 94%) is requested for the conduct of research, including $4.38 billion for basic research and $417 million for applied research. Education . The FY2020 request for the EHR account is $86.5 million (9.5%) less than the FY2019 enacted amount and $80.4 million (8.9%) less than the FY2018 actual level. By program division, the Division of Human Resource Development would receive an increase of $15.6 million (9.6%) over the FY2018 actual level. The divisions of research on learning in formal and informal settings, graduate education, and undergraduate education would receive decreases of 20.4% ($182 million requested), 5.5% ($244 million requested), and 13.8% ($219 million requested), respectively. EHR programs of particular interest to congressional policymakers include the Graduate Research Fellowship Program (GRFP) and National Research Traineeship (NRT) programs. The FY2020 request for GRFP is $257 million, a reduction of $27.9 million (9.8%) from the FY2018 actual level. The FY2020 request for NRT is $49.5 million, a $4.3 million (8.0%) decrease from FY2018. Within EHR, requested funding for R&D is $420 million, which is $37.7 million (8.2%) less than the FY2018 actual funding amount and accounts for approximately 7.3% of the agency's total R&D request. All of the requested funding would support the conduct of R&D, including $150 million for basic research and $270 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 Administration is seeking $223 million for MREFC in FY2020, $36.9 million (19.8%) more than the FY2018 enacted amount, and $72.5 million (24.5%) less than the FY2018 actual amount. Requested MREFC funding would support continued construction of the Large Synoptic Survey Telescope (LSST, $46.3 million requested, 5.1% decrease from FY2019 enacted) and Antarctic Infrastructure Modernization for Science (AIMS, $97.9 million requested, 5.6% decrease from FY2019 enacted). The request includes $33.0 million for upgrades to the Large Hadron Collider in Switzerland, which would represent the first year of a five-year project. Additionally, $45.0 million is requested for Mid-scale Research Infrastructure projects in the $20 million to $70 million range; this is a new funding line-item in the MREFC account meant to manage support for upgrades to major facilities and stand-alone projects in this range as a portfolio. Other initiatives . The FY2019 NSF budget request includes funding for three multiagency initiatives. This funding is included in multiple NSF appropriations accounts, and R&D amounts are not separately provided. The National Nanotechnology Initiative would receive $389 million, $179 million (31.4%) less than in FY2018. The Networking and Information Technology Research and Development program would receive $1.20 billion, a decrease of $98.2 million (7.6%). The U.S. Global Change Research Program would receive $224 million, $30.0 million (11.8%) less than in FY2018. Department of Agriculture62 The U.S. Department of Agriculture (USDA) was created in 1862, in part to support agricultural research in an expanding, agriculturally dependent country. Today, USDA conducts intramural research at federal facilities with federally employed scientists and supports external research at universities and other facilities through competitive grants and formula-based funding. The breadth of contemporary USDA research spans traditional agricultural production techniques, organic and sustainable agriculture, bioenergy, nutrition 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. Four agencies carry out USDA's intramural research and education activities, grouped together into the Research, Education, and Economics (REE) mission area. The agencies involved are the Agricultural Research Service (ARS), National Institute of Food and Agriculture (NIFA), National Agricultural Statistics Service (NASS), and Economic Research Service (ERS). The FY2019 enacted appropriation ( P.L. 116-6 ) provides a total of $3,424.1 million in discretionary spending for the four agencies. The Administration is requesting a total of $2,868.7 million for the four agencies in FY2020, a 16.2% reduction ($555.4 million). Most of that year-over-year reduction (78%) is attributable to the reduced request for ARS salaries and expenses and the ARS buildings and facilities account (see Table 13 ). The remainder of the year-over-year reduction comes from decreases in certain research and education, extension, and integrated activities in NIFA, as well as in NASS and ERS. 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 farm bill. USDA's FY2019 enacted discretionary appropriations and the Administration's FY2020 request for the four research agencies are discussed below. Agricultural Research Service The Agricultural Research Service is USDA's in-house basic and applied research agency. It operates approximately 90 laboratories nationwide with about 6,600 employees. 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, one of the department's primary information repositories for food, agriculture, and natural resource sciences. For FY2019, P.L. 116-6 provides $1,303.3 billion for ARS salaries and expenses and $381.2 million for buildings and facilities. The Administration is requesting $1,203.5 billion for ARS salaries and expenses for FY2020, a decrease of $99.8 million (7.6%) from the FY2019 appropriation. For FY2020, the request for the buildings and facilities account is $50.0 million ( Table 13 ). ARS will assume ownership of the National Bio and Agro-Defense Facility (NBAF) in FY2019 from the Department of Homeland Security (DHS). The FY2019 enacted bill provides $10.6 million to address one-time costs associated with the transfer of the science program from the Plum Island Animal Disease Center to NBAF, and $42.0 million to address stand-up activities and other initial costs to operate and maintain the new facility. NBAF is expected to be fully operational by December 31, 2022. From the total salaries and expenses appropriation for FY2020, the Administration is requesting $13.1 million for NBAF. The FY2019 enacted bill provides an additional $5.0 million for ARS to increase research efforts on foreign animal diseases, and an additional $2.0 million to expand research on resilient dryland farming. FY2019 conference report language ( H.Rept. 116-9 ) criticized ARS for not reporting a single specific negative finding by Animal and Plant Health Inspection Service (APHIS) inspections of ARS research facilities that use animals as research subjects. The report noted that numerous violations had been found involving death and serious health issues of animal subjects, and directed ARS to submit a report within 60 days of enactment covering all violations found by APHIS and the actions taken to prevent them from recurring. P.L. 116-9 does not support the Administration's request to terminate or redirect various ARS research programs, or the closure of ARS research locations. National Institute of Food and Agriculture The National Institute of Food and Agriculture (NIFA) provides federal funding for research, education, and extension projects conducted in partnership with State Agricultural Experiment Stations, the State Cooperative Extension System, land grant universities, colleges, and other research and education institutions, as well as individual researchers. These partnerships include the 1862 land-grant institutions, 1890 historically black colleges and universities (HBCUs) established by the Morrill Acts, the 1994 tribal land-grant colleges, and Hispanic-serving institutions. Federal funds enhance research capacity at universities and institutions through statutory formula funding, competitive awards, and grants. For FY2019, P.L. 116-6 provides $1,471.3 billion in discretionary spending for NIFA activities. The Administration's FY2020 request for NIFA is $1,391.7 billion, a reduction of $79.6 million (5.4%) from FY2019 ( Table 13 ). The enacted bill provides $259.0 million to support Hatch Act formula funding for 1862 land grant university research and education activities. For FY2020, the Administration is requesting $243.2 million for Hatch Act funding, a 6.1% reduction. For Evans-Allen formula funding to the 19 HBCUs, the FY2019 bill provides $58.0 million for research and $19.3 million for education grants. The Administration requests $53.8 million in Evans-Allen funding for FY2020 (7.2% reduction from FY2019), and $18.7 million for education grants. For research grants to the 1994 Tribal institutions, and for education grants to Alaska Native and Native Hawaiian-Serving institutions, the FY2019 appropriation provides $3.8 and $3.2 million, respectively. For FY2020, the Administration requests $3.4 million for the 1994 Tribal institutions, and $0 for education grants to the Alaska Native and Native Hawaiian-Serving institutions. For McIntire-Stennis cooperative forestry research support, P.L. 116-6 provides $36.0 million for FY2019. The Administration is requesting $28.9 million for FY2020, approximately 20% less than FY2019. The FY2019 appropriation also provides $37.0 million for the Sustainable Agriculture Research and Education program. The Administration requests a reduction of $18.0 million (48.6%) for the program in FY2020. The FY2019 enacted bill provides $415.0 million for the Agriculture and Food Research Initiative (AFRI)—USDA's flagship competitive research grants program. The Administration is requesting $500.0 million for the program in FY2020, a 20.5% increase over FY2019. This budget item currently represents about 30% of the total NIFA discretionary budget. For Cooperative Extension support at 1862 land grant universities under the Smith-Lever Act, Sections (b) and (c) formula funding for FY2019, the enacted appropriation provides a total of $315.0 million for these extension activities. The Administration requests $299.4 million for these programs in FY2020. The Smith-Lever Sections (b) and (c) programs include extension services at the HBCUs and the 1994 Tribal colleges, faculty improvement grants to HBCUs, and women and minorities in STEM fields, among other programs. P.L. 116-6 provides $86.6 million for Smith-Lever 3(d) activities, including food and nutrition education, new technologies for agricultural extension, and children, youth, and families at risk. For FY2020, the Administration is requesting $58.1 million for Smith-Lever Section 3(d) funding, $55.1 million of which would support the Expanded Food and Nutrition Education Program, and $3.0 million would support Federally-Recognized Tribes Extension Program for programs on American Indian Reservations and Tribal jurisdictions. The Administration is requesting $0 funding in FY2020 for other Smith-Lever Section 3(d) programs. National Agricultural Statistics Service 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. For FY2019, P.L. 116-6 provides $174.5 million to NASS, of which up to $45.3 million is reserved to support the 2017 Census of Agriculture. The enacted bill also provides $600,000 for the Geospatial Improvement Initiative and an increase of $500,000 for the Floriculture Crops Report. The Administration is requesting $163.0 million for NASS in FY2020, and up to $45.3 million to support the 2017 Census. Results of the 2017 Census of Agriculture were released on April 11, 2019. Economic Research Service 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. ERS is one of 13 "principal statistical agencies" of the Federal Statistical System of the United States. For FY2019, P.L. 116-6 provides $86.8 million for ERS activities. The Administration has requested $60.5 million for ERS in FY2020, a 30.3% decrease. Department of Commerce 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). National Institute of Standards and Technology67 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 $686.8 million for NIST in FY2020, a decrease of $298.7 million (30.3%) from the FY2019 enacted appropriation of $985.5 million. (See Table 14 .) 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 FY2020 request includes $611.7 million for R&D, standards coordination, and related services in the STRS account, a decrease of $112.8 million (15.6%) from the FY2019 level. The FY2020 request would provide $15.2 million for the ITS account, down $139.8 million (90.2%) from FY2019. Within the ITS account, the request would provide no funding for the Manufacturing Extension Partnership (MEP) program, a reduction of $140.0 million from FY2019; MEP centers in each state would be required to become entirely self-supporting. In his FY2019 request, President Trump proposed ending federal funding for MEP; in his FY2018 request, the President sought $6.0 million "for an orderly shutdown of the program." The request provides $15.2 million provided for Manufacturing USA (also referred to as the National Network for Manufacturing Innovation or NNMI), slightly higher than the FY2019 level of $15.0 million. Of these funds, approximately $10 million would be for continued support of the NIST-sponsored National Institute for Innovation in Manufacturing Biopharmaceuticals (NIIMBL), with the balance (approximately $5 million) to be used for coordination of the Manufacturing USA network. The President is requesting $59.9 million for the NIST CRF account for FY2020, down $46.1 million (43.5%) from the FY2019 enacted level. National Oceanic and Atmospheric Administration73 The National Oceanic and Atmospheric Administration (NOAA) conducts scientific research in areas such as ecosystems, climate, 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 by six line offices that reflect its diverse mission: 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 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 including (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 five-year R&D plan. The most recent five-year 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. One of the main challenges identified in the NOAA R&D plan is the need to integrate the diverse perspectives and professional expertise required by the agency's mission. The plan states that "holistically understanding the earth system is not only understanding its individual components, but understanding and interpreting the way each of the components interact and behave as an integrated composite that is more than the sum of its parts." For FY2020, President Trump requested $651.1 million in R&D funding for NOAA, a decrease of $286.9 million (30.6%) below the FY2019 enacted level of $938.0 million. For FY2019, Congress enacted $540.3 million for research (57.6% of total R&D funding), $162.5 million for development (17.3%), and $235.2 million for R&D equipment (25.1%). The enacted FY2019 total R&D amount was 17.0% of NOAA's total discretionary budget authority of $5.509 billion. In FY2020, the President is requesting $352.3 million for research (54.1% of total R&D funding), $106.3 million for development (16.3%), and $192.6 million for R&D equipment (29.6%). The President's request for total R&D is 14.1% of NOAA's total discretionary budget authority request of $4.622 billion. Table 15 provides R&D funding levels for FY2019 enacted and the Administration's FY2020 request for each NOAA office. OAR accounts for the majority of R&D in most years. The President is requesting $335.1 million for OAR R&D in FY2020, a decrease of $196.2 million (36.9%) below the FY2019 enacted funding level of $531.4 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 NOAA laboratories and cooperative research institutes. NOAA supports 16 cooperative research institutes and 10 NOAA laboratories in OAR's three research areas. The President's FY2020 request would fund the cooperative institutes and laboratories at $169.6 million, $13.1 million (7.2%) less than the FY2019 enacted funding level of $182.8 million. Among other R&D activities, the President's FY2019 request would also reduce funding to the National Sea Grant College Program. 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. The President's FY2020 request would terminate federal support of the National Sea Grant College Program and its related Marine Aquaculture Research program. In FY2019, Congress appropriated $68.0 million to the National Sea Grant College Program and $12.0 million to the Marine Aquaculture Research program. Department of the Interior88 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. Because final FY2019 funding was not available at the time the FY2020 budget was prepared, requested R&D funding is compared to the FY2018 actual funding. The Administration is requesting $12.6 billion in net discretionary funding for DOI in FY2020. Of that amount, $757 million is requested for R&D funding, $148 million (16.3%) below the FY2018 actual level of $905 million. Of the President's FY2020 DOI R&D funding request, 8.9% is for basic research, 73.3% is for applied research, and 17.8% is for development. 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. U.S. Geological Survey The USGS accounts for approximately two-thirds of all DOI R&D funding. A single appropriations account, Surveys, Investigations, and Research (SIR), provides all USGS funding. USGS R&D is conducted under seven SIR activity/program areas: Ecosystems; Land Resources; Energy, Minerals, and Environmental Health; Natural Hazards; Water Resources; Core Science Systems; and Science Support. The President's total FY2020 budget request for USGS is $984 million. Of this amount, $481 million would be for R&D, a decrease of $119 million (19.8%) from the FY2018 enacted level of $600 million. Other DOI Components The President's FY2020 request also includes R&D funding for the following DOI components: Bureau of Reclamation (BOR): $84.0 million in applied research and development funding for FY2020, down $26.4 million (23.9%) from FY2018. Bureau of Ocean Energy Management (BOEM): $100.4 million in applied research and development funding for FY2020, up $22.1 million (28.2%) from FY2018—the only component that would receive an increase in R&D funding. Fish and Wildlife Service (FWS): $15.5 million in applied research for FY2020, down $17.2 million (52.5%) from FY2018. National Park Service (NPS): $25.9 million in applied research and development for FY2020, down $1.1 million (4.2%) from FY2018. Bureau of Safety and Environmental Enforcement (BSEE): $24.5 million in applied research for FY2020, down $2.2 million (8.2%) from FY2018. Bureau of Land Management (BLM): $19.0 million in applied research and development for FY2020, down $1.9 million (9.0%) from FY2018. Bureau of Indian Affairs (BIA): $5.0 million in applied research for FY2020, equal to the actual amount from FY2018. Wildland Fire Management (WFM): No funding requested for R&D for FY2020, down $3.0 million (100.0%) from FY2018. Office of Surface Mining Reclamation and Enforcement (OSMRE): $1.5 million in applied research for FY2020, up $970,000 (190%) from FY2018. Table 16 summarizes FY2018 actual R&D funding and the President's FY2020 R&D funding request for DOI components. Department of Veterans Affairs96 The Department of Veterans Affairs (VA) 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 $1.4 billion for VA R&D in FY2020, an increase of $12 million (1%) from FY2019. (See Table 17 .) VA R&D is funded through two accounts—the 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 Medical Care Support account provides administrative and other support for VA researchers and R&D projects, including infrastructure maintenance. The FY2020 request includes $762 million for VA's Medical and Prosthetic Research account, a decrease of $17 million (2%), and $648 million in funding for research supported by the agency's Medical Care Support account, an increase of $29 million (5%). According to the President's request, FY2020 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 "transforming VA data into a national resource" by reducing the time and effort needed to appropriately access, properly understand, and effectively use VA data for research. Clinical priorities for VA R&D in FY2020 include efforts to treat veterans at risk of suicide and research to address chronic pain and opioid addiction, posttraumatic stress disorder, traumatic brain injury, and Gulf War illness. 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 FY2020 budget request, these additional R&D resources are estimated at $570 million in FY2020. 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 17 summarizes R&D program funding for VA in the Medical and Prosthetic Research and the Medical Care Support accounts. Table 18 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 18 total to more than the appropriation or request for VA R&D. Department of Transportation98 The Department of Transportation (DOT) 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. 114-94 ) 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 the 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. The Administration is requesting $1.089 billion for DOT R&D activities and facilities in FY2020, a decrease of $5.8 million (0.5%) from FY2019. (See Table 19 .) Three DOT agencies—the Federal Aviation Administration (FAA), the Federal Highway Administration (FHWA), and the National Highway Traffic Safety Administration (NHTSA)—would account for over 90% of DOT R&D under the FY2020 request. Federal Aviation Administration The President's FY2020 request of $512.3 million for R&D activities and facilities at FAA would be an increase of $10.4 million (2.1%) from FY2019. The request includes $120 million for the agency's Research, Engineering, and Development (RE&D) account, a reduction of $71.1 million (37.2%) from FY2019. 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. Federal Highway Administration According to the President's budget request FHWA's contributions to researching and implementing transformative innovations and technologies are changing the way roads, bridges, and other facilities are planned, designed, built, managed, and maintained across the country to be more responsive to current and future needs. The President's request of $420 million for R&D activities and facilities at FHWA would be an increase of $39 million (10.2%) from FY2019. The request includes $125 million for FHWA's Highway Research and Development program, which seeks to improve safety, enhance the design and construction of transportation infrastructure, provide data and analysis for decision-making, and reduce congestion. The program supports highway research in such areas as the impact of automated driving systems, infrastructure durability, resilience, and environmental sustainability, and the factors that contribute to death and injury related to roadway design, construction, and maintenance. The request also includes $100 million for research to facilitate the development of a connected, integrated, and automated transportation system under the agency's Intelligent Transportation Systems program. National Highway Traffic Safety Administration The President is requesting $62.1 million in R&D and R&D facilities funding in FY2020 for NHTSA, $13.8 million (18.2%) below FY2019. 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. Other DOT Components R&D activities are also supported by several other DOT components or agencies (see Table 19 ). The President's FY2020 request includes DOT R&D and R&D facilities funding for the Federal Railroad Administration (FRA), totaling $23.1 million, $21.6 million (48.3%) below the FY2019 level of $44.6 million; the Federal Transit Administration (FTA), totaling $28 million, $2 million (6.7%) below the FY2019 level of $30 million; the Pipeline and Hazardous Materials Safety Administration (PHMSA), totaling $21.5 million, $3 million (12.1%) below the FY2019 level of $24.5 million; the Office of the Secretary (OST), totaling $13.1 million, $14.8 million (53.2%) below the FY2019 level of $27.9 million; and the Federal Motor Carrier Safety Administration (FMCSA), totaling $9.1 million, the same amount as FY2019. Department of Homeland Security100 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 FY2020 budget request for DHS includes $438 million for activities identified as R&D. This would be a reduction of 31.6% from $640 million in FY2019. The total includes $303 million for the S&T Directorate and smaller amounts for six other DHS components. See Table 20 . 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 FY2020 request of $303 million for the S&T Directorate R&D account is a decrease of 40.7% from $511 million in FY2019. The request includes no funding for cybersecurity R&D ($89.1 million in FY2019), which would instead be conducted in the Cybersecurity Infrastructure Security Agency ($31 million for R&D in the FY2020 request, up from $13 million in FY2019). The remaining thrust areas in the S&T Directorate's Research, Development, and Innovation budget line would all decrease, by amounts ranging from 12.1% (Counter Terrorist) to 40.4% (Border Security). Funding for University Centers of Excellence would decrease from $37 million in FY2019 to $18 million in FY2020. In addition to its R&D account, the S&T Directorate receives funding for laboratory facilities and other R&D-related expenses through its Operations and Support account (not shown in the table). In this account, the FY2020 request for Laboratory Facilities is $116 million, down 4.9% from $122 million in FY2019. The Laboratory Facilities request includes no funding for the National Urban Security Technology Laboratory, which the Administration proposes to close, or for the National Bio and Agro-Defense Facility (NBAF), which the S&T Directorate is building using previously appropriated funds but will transfer to the USDA once it becomes operational. Requested funding in Laboratory Facilities for the National Biodefense Analysis and Countermeasures Center (NBACC) is $29 million, the same as in FY2019. The request for R&D in the Countering Weapons of Mass Destruction Office is $68 million, down from $83 million in FY2019. Environmental Protection Agency101 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 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 FY2019 budget request, the FY2020 request proposes reductions and eliminations of funding for FY2020 across a number of EPA programs and activities. The President's FY2020 request includes a total of $6.07 billion for EPA, $2.78 billion (31%) less than the total $8.85 billion FY2019 enacted appropriations for EPA (after rescissions) provided in Titles II and IV of Division E of the Consolidated Appropriations Act, FY2019 ( P.L. 116-6 ), and $123.4 million (2%) less than the FY2019 request of $6.19 billion for EPA. The reductions proposed in the FY2020 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 FY2020 request proposes funding reductions below FY2019 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 FY2020 budget request. Including a $17.8 million transfer from the Superfund account, the President's FY2020 budget request proposes $480.8 million for EPA's S&T account, $241.1 million (33.4%) less than the FY2019 enacted $722.0 million which includes a $15.5 million transfer and $11.3 million account specific rescissions. The FY2020 request would provide an increase (3.1%) compared to the FY2019 request of $466.4 million, which includes a $17.4 million transfer. The President's FY2020 request proposes a rescission for EPA but does not specify a rescission within the S&T or other appropriations accounts. This accounting difference does not allow for direct comparisons of funding within EPA's S&T account including specific rescissions. Table 21 at the end of this section includes the President's FY2020 request for program areas and activities within EPA's S&T account as presented in EPA's FY20 20 Congressional Budget Justification compared to the FY2019 enacted appropriations as reported in the Conference Report ( H.Rept. 116-9 ) accompanying the FY2019 consolidated appropriations that includes the Department of Interior, Environment, and Related Agencies appropriations. Consistent with other recent House and Senate Appropriations Committee reports and explanatory statements, the conference report H.Rept. 116-9 accompanying the FY2019 enacted appropriations did not specify funding for all subprogram areas reported in EPA's budget justification. S&T subprogram areas not reported in congressional reports and statements are noted in the Table 21 as "NR" (not reported). Additionally, the President's FY2018, FY2019, and FY2020 requests and EPA's 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. During House and Senate Committee hearings regarding the President's FY2020 budget request for EPA, Members generally did not support a number of the proposed reductions and eliminations of funding for EPA, including proposed reductions in funding for scientific research programs. Reductions proposed in the FY2020 budget request below the FY2019 enacted levels were distributed across EPA operational functions and activities as well as grants for states, tribes, and local governments. As shown in Table 21 , with few exceptions the requested FY2020 amount for the S&T account for individual EPA program area and activity line items would be less than the FY2019 enacted appropriations. The FY2020 request did not propose to completely eliminate funding for the broader program areas; however, eliminations (no funding is requested for FY2020) are proposed for line-item activities below the program areas as indicated in Table 21 . 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 programs. 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 FY2020 included the proposed elimination of funding for the Science to Achieve Results (STAR) program. P.L. 116-6 included $5.0 million for Research: National Priorities within the S&T account for FY2019, an increase compared to $4.1 million included for FY2018. As in the previous Administration's fiscal year requests, the President's FY2020 budget request did not include funding for Research: National Priorities. In addition to clarifying certain funding allocations within the S&T account and consistent with the prior fiscal year appropriations committee reports and explanatory statements, H.Rept. 116-9 provided additional guidance for certain program areas and activities within the S&T account for FY2019. Topics expressly referenced included Alternative Testing; Computational Toxicology; Enhanced Aquifer Use; Integrated Risk Information System (IRIS); Nanomaterials Research; Innovative Research Partnerships; Intramural Animal Testing; Science to Achieve Results (STAR) Grants; Harmful Algal Blooms; Water Distribution Systems; and Water Security Test Beds. The size and structure of the agency's workforce, as was the case during consideration for the FY2018 and FY2019 appropriations, has been a topic of debate during congressional committee hearings regarding EPA's FY2020 appropriations. Workforce reshaping was introduced in the FY2018 request and described as agency-wide organizational restructuring, "reprioritization of agency activities," and reallocation of resources. The FY2020 request for the Operations and Administration program area within the S&T account includes $6.0 million for agency workforce reshaping and efforts to improve the management of EPA's laboratories. As with the FY2018 enacted appropriations, P.L. 116-6 did not fund the President's FY2019 request for EPA workforce reshaping for FY2019. EPA's reported proposed reorganizing strategies, potentially impacting certain aspects of EPA's Office of Research Development (ORD) and the operations of the EPA Office of the Science Advisor (OSA), as well as current EPA laboratories including the National Exposure Research Laboratory (NERL), the National Health and Environmental Effects Research Laboratory (NHEERL), and the National Risk Management Research Laboratory (NRMRL), have also been of interest to some Members of Congress. 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.

President Trump's budget request for FY2020 includes approximately $134.1 billion for research and development (R&D). Several FY2019 appropriations bills had not been enacted at the time the President's FY2020 budget was prepared; therefore, the President's budget included the FY2018 actual funding levels, 2019 annualized continuing resolution (CR) levels, and the FY2020 request levels. On February 15, 2019, Congress enacted the Consolidated Appropriations Act, 2019 (P.L. 116-6). This act included each of the remaining appropriations acts, completing the FY2019 appropriations process. The act also rendered the CR levels identified in the budget no longer relevant, though for some agencies the exact amount of R&D funding in the act remained uncertain. The analysis of government-wide R&D funding in this report compares the President's request for FY2020 to the FY2018 level. For agencies for which the FY2019 R&D funding levels are known, individual agency analyses in this report compare the FY2020 request to FY2019 enacted levels. For agencies for which the FY2019 R&D funding levels remain unknown, individual agency analyses in this report compare the FY2020 request to FY2018 actual levels; when the FY2019 levels become available, these sections will be updated to compare the FY2020 request to FY2019 enacted amounts. As of the date of this report, the House had not completed action on any of the 12 regular appropriations bills for FY2020; nor had the Senate. In FY2018, OMB adopted a change to the definition of development, applying a more narrow treatment 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. Under the new definition of R&D (applied to both FY2018 and FY2020 figures), President Trump is requesting approximately $134.1 billion for R&D for FY2020, a decrease of $1.7 billion (1.2%) from the FY2018 level. Adjusted for inflation, the President's FY2020 R&D request represents a decrease of 5.1% below the FY2018 level. Funding for R&D is concentrated in a few departments and agencies. In FY2018, eight federal agencies received 96.3% of total federal R&D funding, with the Department of Defense (DOD, 38.6%) and the Department of Health and Human Services (HHS, 27.2%) combined accounting for nearly two-thirds of all federal R&D funding. The same eight agencies account for 97.2% of the FY2020 request, with DOD accounting for 44.3% and HHS for 25.1% Under the President's FY2020 budget request, most federal agencies would see their R&D funding decline. The primary exception is the Department of Defense. DOD's requested R&D funding for FY2020 is $7.1 billion (13.5%) above the FY2018 level. The Departments of Transportation and Veterans Affairs would see small increases in R&D funding. Among the agencies with the largest proposed reductions in R&D funding in the FY2020 budget compared to the FY2018 actual levels are the Department of Energy ($2.8 billion, 15.8%), the National Science Foundation ($567 million, 9.0%), and National Aeronautics and Space Administration ($475 million, 4.0%). The President's FY2020 budget request would reduce funding for basic research by $1.5 billion (4.0%), applied research by $4.3 billion (10.5%), and facilities and equipment by $0.5 billion (12.8%), while increasing funding for development by $4.5 billion (8.3%). President Trump's FY2020 budget is largely silent on funding levels for multiagency R&D initiatives. However, some activities supporting these initiatives are discussed in agency budget justifications and are reported in the agency analyses in this report. 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.

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T he Financial Services and General Government (FSGG) appropriations bill includes funding for the Department of the Treasury (Title I), the Executive Office of the President (EOP; Title II), the judiciary (Title III), the District of Columbia (Title IV), and more than two dozen independent agencies (Title V). The bill typically funds mandatory retirement accounts in Title VI, which also contains additional general provisions applying to the funding provided to agencies through the FSGG bill. Title VII typically contains general provisions applying government-wide. The FSGG bill has also often contained provisions relating to the U.S. policy toward Cuba. The House and Senate FSGG bills fund the same agencies, with one exception. The Commodity Futures Trading Commission (CFTC) is funded through the Agriculture appropriations bill in the House and the FSGG bill in the Senate. Where the CFTC is funded upon enactment depends on which chamber originated the law, which typically alternates annually. Thus, the enacted amounts for the CFTC typically are in the Agriculture appropriations bill one year and FSGG the following year. This structure has existed in its current form since the 2007 reorganization of the House and Senate Committees on Appropriations. Although financial services are a major focus of the bill, the FSGG appropriations bill does not include funding for many financial regulatory agencies, which are instead funded outside of the appropriations process. It is not uncommon for legislative provisions addressing various financial regulatory issues to be included in titles at the end of the bill. Administration and Congressional Action 115th Congress President Trump submitted his FY2019 budget request on February 12, 2018. The request included a total of $49.1 billion for agencies funded through the FSGG appropriations bill, including $282 million for the CFTC. This total included a proposed legislative provision on government-wide transfer authority in Section 737, which was estimated at $3 billion by the appropriations committees. 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 beeen $45.7 billion, with another $255 million for the CFTC included in the Agriculture appropriations bill ( H.R. 5961 , H.Rept. 115-706 ). The combined total of $45.9 billion would have been about $3.2 billion below the President's FY2019 request, with the largest differences in the funding for the General Services Administration (GSA) and in language relating to government-wide transfers that was requested by the President but not included in the legislation (Section 737). 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 $45.9 billion, about $3.2 billion below the President's FY2019 request, with the largest differences in the funding for the GSA and in the government-wide transfers requested language (Section 737). 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. 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. 116th Congress The House of Representatives passed two consolidated appropriations bills in January 2019. H.R. 21 —which contained six full FY2019 appropriations bills, including FSGG provisions nearly identical to those passed by the Senate in the 115 th Congress—passed on January 3, 2019. H.R. 21 would have provided a total of $45.9 billion for the FSGG agencies, with the CFTC funding included with FSGG funding in Division B, 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 $46.0 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, the House and the Senate agreed to a conference report ( H.Rept. 116-9 ) on H.J.Res 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 , but located in Division D. The primary substantive differences were in the Department of the Treasury Forfeiture Fund and in funding for GSA. The President signed the resolution on February 15, 2019, enacting it into law as P.L. 116-6 . P.L. 116-6 included $45.7 billion in FSGG funding, including 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 $3.4 billion less than the President's request, with most of the difference coming from the Section 737 transfer authority, which was not included by Congress. Other notable differences included the funding for the GSA and the Executive Office of the President. Table 1 below reflects the status of FSGG appropriations measures at key points in the appropriations process across the 115 th and 116 th Congresses. 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 . Financial Regulatory Agencies and FSGG Appropriations Although financial services are a focus of the FSGG bill, the bill does not actually include funding for the regulation of much of the financial services industry. Financial services as an industry is often subdivided into banking, insurance, and securities. Federal regulation of the banking industry is divided among the Federal Reserve, the Federal Deposit Insurance Corporation (FDIC), the Office of Comptroller of the Currency (OCC), and the Bureau of Consumer Financial Protection (generally known as the Consumer Financial Protection Bureau, or CFPB). In addition, credit unions, which operate similarly to many banks, are regulated by the National Credit Union Administration (NCUA). None of these agencies receives its primary funding through the appropriations process, with only the FDIC inspector general and a small NCUA-operated program currently funded in the FSGG bill. Insurance is generally regulated at the state level, with some Federal Reserve oversight at the holding company level. There is a relatively small Federal Insurance Office (FIO) inside the Treasury, which is funded through the Departmental Offices account, but FIO has no regulatory authority. Federal securities regulation is divided between the Securities and Exchange Commission (SEC) and the CFTC, both of which are funded through appropriations. The CFTC funding is a relatively straightforward appropriation from the general fund, whereas the SEC funding is provided by the FSGG bill, but then offset through fees collected by the SEC. Although funding for many financial regulatory agencies may not be provided by the FSGG bill, legislative provisions affecting financial regulation in general and some of these agencies specifically have often been included in FSGG bills. In the 115 th Congress, H.R. 6258 and H.R. 6147 as passed by the House included many provisions, particularly in Title IX, that would have amended the 2010 Dodd-Frank Act and other statutes relating to the regulation of financial institutions and the authority and funding of financial regulators. Many of these provisions were included in other legislation, notably H.R. 10 , which passed the House on June 8, 2017, and S. 488 as amended by the House, which passed the House on July 17, 2018, though neither of these bills were enacted in the 115 th Congress. Of particular interest from the appropriations perspective, H.R. 6258 and H.R. 6147 as passed by the House would have brought the CFPB under the FSGG bill instead of receiving funding from outside of the appropriations process, as is currently the case. S. 3107 and H.R. 6147 as passed by the Senate did not include similar provisions affecting the CFPB or other aspects of financial regulation as in Title IX of the House bills. In the 116 th Congress, the bills passed by the House ( H.R. 21 and H.R. 648 ) did not include financial regulatory provisions similar to those in the 115 th Congress House-passed bill, and neither did the enacted P.L. 116-6 . Committee Structure and Scope The House and Senate Committees on Appropriations reorganized their subcommittee structures in early 2007. Each chamber created a new Financial Services and General Government Subcommittee. In the House, the FSGG Subcommittee's jurisdiction is primarily composed of agencies that had been under the jurisdiction of the Subcommittee on Transportation, Treasury, Housing and Urban Development, the Judiciary, the District of Columbia, and Independent Agencies, commonly referred to as TTHUD. In addition, the House FSGG Subcommittee was assigned four independent agencies that had been under the jurisdiction of the Science, State, Justice, Commerce, and Related Agencies Subcommittee: the Federal Communications Commission (FCC), the Federal Trade Commission (FTC), the SEC, and the Small Business Administration (SBA). In the Senate, the new FSGG Subcommittee's jurisdiction is a combination of agencies from the jurisdiction of three previously existing subcommittees. Most of the agencies that had been under the jurisdiction of the Transportation, Treasury, the Judiciary, and Housing and Urban Development, and Related Agencies Subcommittee were assigned to the FSGG subcommittee. In addition, the District of Columbia, which had its own subcommittee in the 109 th Congress, was placed under the purview of the FSGG Subcommittee, as were four independent agencies that had been under the jurisdiction of the Commerce, Justice, Science, and Related Agencies Subcommittee: the FCC, FTC, SEC, and SBA. As a result of this reorganization, the House and Senate FSGG Subcommittees have nearly identical jurisdictions, except that the CFTC is under the jurisdiction of the FSGG Subcommittee in the Senate and the Agriculture Subcommittee in the House. CRS FSGG Appropriations Experts Table 4 below lists various departments and agencies funded through FSGG appropriations and the CRS experts' names pertaining to these departments and agencies.

The Financial Services and General Government (FSGG) appropriations bill includes funding for the Department of the Treasury, the Executive Office of the President (EOP), the judiciary, the District of Columbia, and more than two dozen independent agencies. The House and Senate FSGG bills fund the same agencies, with one exception. The Commodity Futures Trading Commission (CFTC) is usually funded through the Agriculture appropriations bill in the House and the FSGG bill in the Senate. President Trump submitted his FY2019 budget request on February 12, 2018. The request included a total of $49.1 billion for agencies funded through the FSGG appropriations bill, including $282 million for the CFTC. The $49.1 billion figure includes $3 billion for a legislative provision on government-wide transfers (Section 737). The 115th Congress 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 $45.9 billion for the FSGG agencies, while the Senate-passed H.R. 6147 would have provided $45.7 billion. In both cases, the largest differences compared to the President's request were in the funding for the General Services Administration (GSA), the funding for the Executive Office of the President, and the absence of the Section 737 provision on government-wide transfers in both bills. No full-year FY2019 FSGG bill was enacted prior to the end of FY2018. The FSGG agencies were provided continuing appropriations until December 7, 2018, in P.L. 115-245 and until December 21, 2018, in P.L. 115-298. No final bill was enacted, and funding for FSGG agencies, along with much of the rest of the government, lapsed on December 22, 2018. No further appropriations occurred prior to the 116th Congress. In the 116th Congress, the House of Representatives passed H.R. 21, which contained six full FY2019 appropriations bills, including FSGG provisions nearly identical to those passed by the Senate in the 115th Congress on January 3, 2019. On January 23, 2019, the House passed H.R. 648, also containing six appropriations bills, which was reportedly based on a potential conference report from the 115th Congress and would have provided $46.0 billion for FSGG appropriations. (Neither of these bills provided full-year funding for the Department of Homeland Security.) The Senate did not act on either of these bills. On February 14, 2019, both the House and the Senate passed 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, including 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. The law provides $45.7 billion in the FSGG appropriations portion (Division D), which includes the funding for the CFTC. This is $3.4 billion less than the President's request, with the bulk of this due to the absence of the Section 737 transfer authority in P.L. 116-6. Other notable differences include the funding for GSA and the Executive Office of the President. Although financial services are a major focus of the FSGG appropriations bills, these bills do not include funding for many financial regulatory agencies, which are funded outside of the appropriations process. The FSGG bills have, however, often contained additional legislative provisions relating to such agencies, as is the case with H.R. 6258/H.R. 6147 in the 115th Congress, whose Title IX contained language from a number of different bills relating to financial regulation. P.L. 116-6 did not contain this language.

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Introduction The 116 th Congress may conduct oversight and deliberate on authorizations and appropriations legislation related to water resource development, management, and protection. Demands on available water supplies have heightened local and regional water-use conflicts throughout the country, particularly in the West and Southeast. Development pressures, droughts and floods, and concerns about changing hydrology fro m land-use change and climate change engender nonfederal interest in federal financial and technical assistance for water resource science and projects. There is interest in new water resource infrastructure (e.g., storm surge gates, water storage) and new kinds of projects (e.g., groundwater recharge projects, nature-based flood risk reduction). In addition, there is interest in reinvestment in aging water resource infrastructure and in improved management of available supplies through water science, monitoring, and operational changes. Water resource policy questions relevant to the 116 th Congress include the following: What will be the federal role in maintaining the performance and safety of existing water resource infrastructure? Under what conditions and how should the federal government be involved in planning and constructing water resource projects? How may federal and nonfederal water resource science, observation, and monitoring be performed and used to inform water resource management and project design and operation? Congress historically has played a role in water resources through authorization of and appropriations for regional and site-specific projects and activities. Some of the projects are for facilitating navigation and expanding water supplies for irrigation and other uses. Other projects are aimed at reducing flood and drought losses and restoring aquatic ecosystems. Congress principally has directed either the Bureau of Reclamation (Reclamation) in the Department of the Interior (DOI) or the U.S. Army Corps of Engineers (USACE) in the Department of Defense to plan and construct the existing stock of large federal water resource projects. Historically, Reclamation constructed projects in the 17 arid states west of the Mississippi River; these projects were designed principally to provide reliable supplies of water for irrigation and some municipal and industrial uses. USACE constructs projects nationwide that primarily seek to improve navigation, reduce flood damages, and restore aquatic ecosystems. For more on the federal water resource infrastructure, see the Appendix . In addition, Congress authorizes and funds selected water resource science and monitoring activities at multiple federal agencies. DOI's U.S. Geological Survey (USGS) has a prominent role in federal water resource science and observation (e.g., streamgages, groundwater information, and other water resource data). In addition to USACE, Reclamation, and USGS, other federal agencies have water-related programs and activities; these other agencies are largely beyond the scope of this report. This report also does not address municipal water systems, municipal wastewater infrastructure, or environmental protections, such as water quality and wetlands regulations. This report first discusses some broad categories of water resource topics relevant to the 116 th Congress—projects and activities of USACE, western water and Reclamation, Indian water rights settlements, international waters shared with Canada and Mexico, and water resource science at USGS. The report next covers the following crosscutting topics: funding and financing aging and new water resource projects, changing from federal infrastructure projects to federal partnerships, protecting and restoring the environment, flood resilience and natural and nature-based infrastructure, and recharging groundwater. Projects and Activities of the U.S. Army Corps of Engineers Congress generally authorizes USACE water resource activities and makes changes to the agency's policies in an omnibus authorization bill. Congress typically appropriates funds for USACE activities in annual Energy and Water Development appropriations acts ($7 billion in FY2019). At times, Congress uses supplemental appropriations bills to fund USACE emergency activities. Supplemental appropriations for USACE response and recovery for coastal and riverine floods surpassed $17 billion during the 115 th Congress. The 116 th Congress may consider questions raised about this supplemental spending/appropriations. For example, how do trends in annual and supplemental appropriations amounts, processes, and requirements influence the effective, efficient, and accountable use of federal funding provided to USACE? For a more detailed discussion of USACE annual and supplemental appropriations and related policy questions, see CRS Report R45326, Army Corps of Engineers Annual and Supplemental Appropriations: Issues for Congress , by Nicole T. Carter. An omnibus USACE authorization bill (typically titled a Water Resources Development Act and called WRDA) usually is considered biennially. The most recent omnibus USACE authorization acts are America's Water Infrastructure Act (AWIA; P.L. 115-270 ), enacted in October 2018; the Water Infrastructure Improvements for the Nation Act (WIIN Act; P.L. 114-322 ), enacted in December 2016; and the Water Resources Reform and Development Act of 2014 (WRRDA 2014; P.L. 113-121 ), enacted in June 2014. The 116 th Congress may follow the tradition of biennial consideration of legislation that authorizes USACE studies and projects. Some USACE-related issues that the 116 th Congress may address include the following: Funding and financing issues, such as the use of the Harbor Maintenance Trust Fund, investments in projects to deepen coastal harbors, USACE budgeting priorities, and oversight of USACE efforts to implement public-private partnerships and to develop alternative financing opportunities. Project operations topics, such as USACE policies on pricing for water storage; updates to operation manuals for USACE projects; recreational policies (including firearms regulations) at USACE projects and associated lands; and security of USACE facilities, including cybersecurity. Decisionmaking and planning practices, such as USACE tribal consultation policies and practices; inclusion of nonstructural alternatives, including nature-based measures; consideration of future hydrologic conditions; and approvals for modification to USACE projects. A persistent challenge for USACE is how to manage its $96 billion (according to a USACE estimate in early 2018) in authorized construction activities that are eligible for federal appropriations, often referred to as its construction backlog . For FY2019, annual USACE construction appropriations total $2.18 billion. Policymakers may consider whether—and, if so, how—to advance projects in the backlog. In addition, USACE currently is studying multiple projects that are larger in scale than most past USACE projects. These include the Coastal Texas Protection and Restoration feasibility study for a project with an estimated cost between $23 billion and $32 billion. Other studies of large-scale projects include the Great Lakes and Mississippi River Interbasin Study to control aquatic nuisance species (principally the Asian carp) and the New York/New Jersey Harbor and Tributaries study to reduce coastal storm risk for New York City and nearby areas. Given the scale of federal and nonfederal investments that would be needed to construct these USACE projects and other projects in the current construction backlog, policymakers and project sponsors are exploring options for construction financing and contracting and for sharing costs and responsibilities among project sponsors and beneficiaries. Western Water and the Bureau of Reclamation Since the early 1900s, Reclamation has constructed and operated a variety of multipurpose water projects in the 17 states west of the Mississippi River. These projects include the California Central Valley Project (CVP) and major dams on the Colorado River (e.g., Hoover Dam) and Columbia River (e.g., Grand Coulee Dam) systems, among others. This water storage and conveyance infrastructure historically was important for regional development and remains important today. Water supplies from these projects have been used primarily for irrigation; however, some municipalities also receive water from Reclamation projects. Many of the largest facilities produce hydropower and provide other benefits, such as flood damage reduction, recreation, and water for fish and wildlife purposes. However, the operations of some facilities are also controversial for the effects on the environment. Over time, Reclamation's historical focus on building new projects has shifted to new mission areas. Construction authorizations for Reclamation slowed during the 1970s and 1980s. In 1987, Reclamation announced a new mission recognizing the agency's transition from a water resource development and construction organization to one primarily occupied with managing water resources in an environmentally and economically sound manner. Since then, increased population; prolonged drought; fiscal constraints; and water demands for fish and wildlife, recreation, and scenic enjoyment have resulted in increased pressure to alter the operation of many Reclamation projects. Alterations to operations, project deliveries, and allocations often have been controversial because of potential impacts on water rights, contractual obligations, and local economies. Previous Congresses have expressed interest in both the management and operations of individual Reclamation projects and the broader policies and procedures that guide the agency's activities. In recent years, Congress has expanded Reclamation's authorities and increased its funding support for alternative technologies to increase water supplies in the West. These technologies include water recycling and reuse, aquifer storage and recovery, and desalination, among others. Some support expanded authority and funding for these programs as critical to future efforts to address water shortages in the West. Others prefer that the agency focus its priorities on more traditional mission areas, including new and expanded water storage construction projects and maintenance of existing infrastructure. In contrast to USACE, there is no tradition of a regularly scheduled authorization vehicle (e.g., a WRDA) for Reclamation projects. Instead, Congress generally has considered Reclamation projects individually. However, occasionally individual project authorizations are rolled into an omnibus bill. Reclamation project authorizations have slowed considerably over time, in part due to the onset of congressional earmark moratoria beginning in the 112 th Congress. Several Reclamation-related water project and management issues may be the subject of legislation or oversight during the 116 th Congress. Such issues may include, for example, the status of new and proposed water storage projects; dam safety issues at existing federal reclamation projects; and efforts to address the agency's aging infrastructure and transition projects to nonfederal ownership. In addition, Congress may address drought mitigation assistance, planning, and preparedness through oversight hearings and legislation (e.g., Energy and Water Development appropriations), especially if dry conditions persist or intensify in the Colorado River basin and in other western states. Ongoing issues associated with the CVP and Reclamation's operation of pumps in the San Francisco Bay/San Joaquin and Sacramento Rivers' Delta (Bay-Delta), including the pumps' effects on water users and on threatened and endangered species, have been particularly controversial in recent years. Provisions enacted in 2016 under Title II, Subtitle J, of the WIIN Act addressed some of these controversies. The bill also authorized a new process and structure for authorizing Reclamation water storage projects. Many of the WIIN Act's Reclamation authorities are scheduled to sunset at the end of 2020; thus, the 116 th Congress may discuss these authorities in its oversight capacity and/or propose them for reauthorization or modification. Other river basins generating regular congressional interest include the Colorado River, Columbia River, Klamath River (California and Oregon), and Rio Grande River basins. Indian Water Rights Settlements In the second half of the 19 th century, the federal government pursued a policy of confining Indian tribes to reservations. The federal statutes and treaties reserving land for Indian reservations typically did not address the water needs of these reservations, a fact that has given rise to questions and disputes regarding Indian reserved water rights. Tribes have pursued quantification of their water rights through both litigation and negotiated settlements with the federal government and other stakeholders. Over the last 50 years, negotiated settlements have been the preferred course for most tribes, because they are often less lengthy and costly than litigation. The 116 th Congress may consider under what circumstances (if any) Congress should approve new Indian water rights settlements and whether Congress should fund (and in some cases amend) existing settlements. Some support the resolution of Indian water rights settlements as a mutually beneficial means to resolve long-standing legal issues, provide certainty of water deliveries, and reduce the federal government's liability. Others may argue against authorization and funding of new settlements, either broadly (e.g., on the principle that new settlements are overly expensive or unjustified) or with regard to specific individual settlements and activities. After Indian water rights settlements are negotiated, federal action is necessary for their approval and implementation. As of 2018, 36 Indian water rights settlements had been federally approved, with total costs in excess of $5.8 billion. Of these, 32 settlements were approved and enacted by Congress and 4 were administratively approved by the U.S. Departments of Justice and the Interior. After approval, any federal projects associated with approved Indian water rights settlements generally have been implemented by Reclamation or the Bureau of Indian Affairs (both within the Department of the Interior), pursuant to congressional directions. Congress has appropriated discretionary and mandatory funding (and, in some cases, both) for these activities, including in recent appropriations bills. One of the primary mandatory funding mechanisms for Indian water rights settlements, the Reclamation Water Settlements Fund, is currently authorized to provide $120 million per year in appropriations for qualifying tribal water settlement projects through FY2029. The 115 th Congress considered but did not enact legislation proposing congressional approval of new settlement agreements. The primary challenge facing new settlements is the availability of federal funds to implement ongoing and future agreements that require federal resources (not all settlements require these resources). Indian water rights settlements often involve the construction of major new water infrastructure to allow tribal communities to access water to which they hold rights, and obtaining federal funding for these projects can be difficult. Some settlements also are controversial for their potential to affect existing water rights and allocations. For more on Indian water rights settlements, see CRS Report R44148, Indian Water Rights Settlements , by Charles V. Stern. Waters Shared with Canada and Mexico United States and Canada Great Lakes Federal, state, provincial, local, and tribal governments in the United States and Canada have sought to work together to address environmental challenges and restore the Great Lakes ecosystem. In 2012, the United States and Canada amended the Great Lakes Water Quality Agreement (GLWQA), a commitment originally signed in 1972 that provides a framework for identifying binational priorities and implementing actions that improve water quality. The revised agreement is intended to help the United States and Canada better anticipate and prevent ecological harm. It includes new provisions to address aquatic invasive species; habitat degradation and the effects of climate change; and continued threats to people's health and the environment, such as harmful algae, toxic chemicals, and discharge from vessels. The United States and Canada both have provided funding to advance the goals of the GLWQA. In 2016, for example, Congress authorized appropriations of $300 million annually from FY2017 to FY2021 for the Great Lakes Restoration Initiative under Title IV of the WIIN Act. Although the Trump Administration sought to eliminate funding for the initiative in FY2018, Congress appropriated $300 million to continue restoration efforts in the Consolidated Appropriations Act, 2018 ( P.L. 115-141 ). The Trump Administration requested $30 million for Great Lakes restoration in FY2019. The International Joint Commission, a binational organization established by the 1909 Boundary Waters Treaty to investigate and recommend solutions to transboundary water issues, issued the First Triennial Assessment of Progress on Great Lakes Water Quality in November 2017. The report found that the United States and Canada had made progress toward meeting many of the GLWQA's objectives, including accelerated restoration of contaminated areas of concern, development of binational habitat conservation strategies, the absence of newly introduced aquatic invasive species (such as Asian carp), and comprehensive reporting on groundwater science. It also identified significant challenges, such as the increase in harmful algal blooms in Lake Erie, the slow pace in addressing chemicals of mutual concern, the spread of previously introduced invasive species, and insufficient investments in infrastructure to prevent the discharge of untreated or insufficiently treated waste into the Great Lakes. In addition to the ongoing challenges identified in the 2017 report, Congress has expressed concerns about a proposed deep geologic repository for nuclear waste by the Bruce nuclear power facility in Kincardine, Ontario. The proposed site, located about 1 kilometer inland from Lake Huron, would hold low- to mid-level waste materials currently being stored above ground in warehouses. The explanatory statement accompanying the Consolidated Appropriations Act, 2018, directed the U.S. Secretary of State to submit a report to the Committees on Appropriations detailing the actions taken to date, and planned for the future, to engage the government of Canada to jointly refer the proposed repository to the International Joint Commission for research and study. It further directed the Secretary to report on the diplomatic and legal steps the Department of State plans to take to address concerns about the protection of the Great Lakes water basin and to review alternatives for the proposed repository that will not risk the health, safety, and economic security of residents of the Great Lakes basin. Columbia River Treaty The Columbia River crosses the boundary between southwest Canada and the northwest United States. The Columbia River Treaty (CRT) 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 CRT resulted from more than 20 years of negotiations between the two countries, both of which ratified the treaty in 1961. Implementation began in 1964. The CRT has no specific end date, and most of its provisions continue indefinitely in the absence of action by the United States or Canada, with the exception of certain flood control operations that will change after 2024. Beginning in September 2024, either nation can terminate most CRT provisions with at least 10 years' written notice (i.e., as early as 2014). To date, neither country has given notice of termination, but both countries have indicated a preliminary interest in modifying the CRT. Future operation of USACE facilities on the Columbia River and its tributaries is central to CRT discussions. USACE and the Bonneville Power Administration (BPA, a self-funded entity within the U.S. Department of Energy that markets the hydropower from the federal facilities in the U.S. portion of the basin), in their joint role as the U.S. Entity overseeing the CRT, undertook a review of the CRT from 2009 to 2013. Based on studies and stakeholder input, USACE and BPA provided a regional recommendation to the U.S. Department of State in December 2013. The recommendation was to continue the treaty after 2024, with modifications. For its part, the Canadian entity overseeing the CRT (the Province of British Columbia) released in March 2013 a recommendation to continue the CRT with modifications "within the Treaty framework." The U.S. Department of State finalized its negotiating parameters and authorized talks with Canada in October 2016. Negotiations began in May 2018; four rounds of negotiation had concluded by the end of 2018. 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 advice and consent role. In addition, both houses of Congress may weigh in on CRT review and negotiation activities through their oversight roles. For more information on the CRT, see CRS Report R43287, Columbia River Treaty Review , by Charles V. Stern. United States and Mexico Colorado River and Rio Grande The United States and Mexico share the waters of multiple rivers, including the Colorado River and the Rio Grande. These shared surface waters are important to many border community economies and water supplies. In 1944, the United States and Mexico entered into the Treaty on Utilization of Waters of the Colorado and Tijuana Rivers and of the Rio Grande (hereinafter 1944 Water Treaty) to establish the International Boundary and Water Commission (IBWC) to oversee the U.S.-Mexico border and water treaties. Congress has been involved in recent U.S.-Mexico water sharing issues primarily through oversight. This involvement includes oversight of IBWC's actions to manage the Colorado River's water and infrastructure to improve water availability during drought and to restore and protect riverine ecosystems. Hydrologic conditions and U.S. state and congressional action on a drought contingency plan for the three U.S. Colorado River lower basin states (California, Arizona, and Nevada) may shape what actions are taken under an agreement with Mexico. The agreement is Minute 323, "Extension of Cooperative Measures and Adoption of a Binational Water Scarcity Contingency Plan in the Colorado River Basin," which is in effect from September 2017 through December 2026. For Congress, binational Colorado River oversight topics may encompass Minute 323 implementation and operations and deliveries during shortage conditions. On multiple occasions since 1994, Mexico has not met its Rio Grande water delivery obligations to the United States within the five-year period prescribed by the 1944 Water Treaty. Since 2014, Congress has directed the U.S. Department of State to report annually on Mexico's deliveries and on efforts to improve Mexico's treaty compliance. The IBWC is working to identify opportunities to improve the predictability and reliability of Mexico's water deliveries to the United States. For more information on binational Rio Grande and Colorado River water sharing, see CRS Report R45430, Sharing the Colorado River and the Rio Grande: Cooperation and Conflict with Mexico , by Nicole T. Carter, Stephen P. Mulligan, and Charles V. Stern. Water Resource Science at the U.S. Geological Survey The USGS has conducted water resource science since 1889. It is a primary agency for conducting large- and small-scale studies of water resources throughout the country, addressing both water quality and water quantity. These activities assist decisionmakers and federal agencies in managing water resources at all levels of government. The USGS is divided into seven mission areas, including the Water Resources Mission Area (also referred to as the USGS water mission). The USGS water mission covers scientific activities that involve collecting, assessing, and disseminating hydrological data and analysis and research on hydrological systems. The USGS water mission focuses on several water-related conditions, such as streamflow, groundwater, water quality, and water use and availability. The agency's current scientific plan for the USGS water mission centers on several focus areas. The focus areas include collection and dissemination of water data and monitoring for the country, flood inundation science and information, and modeling linkages between human activities and the water cycle, among others. The implementation and operation of streamgages by the USGS is a perennial issue for Congress. The USGS, under its Water Resources Mission Area, makes publicly available real-time monitoring data from approximately 8,200 streamgages, 1,900 water quality-sampling stations, and 1,800 groundwater observation wells across the nation. These observations support disaster responses by the Federal Emergency Management Agency, water infrastructure operations by USACE and Reclamation, flood forecasting by the National Oceanic and Atmospheric Association's (NOAA's) National Water Service, and drinking water and ecosystem management by state and federal regulatory agencies (e.g., U.S. Environmental Protection Agency). Over the years, the demand for streamgages has exceeded the available resources. Some streamgages in the program are implemented and operated with cooperative partners. USGS has the authority to match the cost of a streamgage by up to 50%; however, in practice, the cooperative partners' cost share is often greater than 50%. Relying on cooperative partners to maintain or expand observations is a persistent challenge for USGS. Congress traditionally has focused its attention on the National Streamflow Information subprogram and the Cooperative Water subprogram under the Water Resources Mission Area, both of which fund streamgages throughout the nation. The 116 th Congress may conduct oversight of USGS water observation programs and their funding. The 116 th Congress also may address the recommendations in the 2018 report by the National Academy of Sciences (NAS) on how the USGS water mission area may address expected challenges over the next 25 years. Many recommendations focused on water data collection, delivery, standards, and incorporation into comprehensive models. The NAS report also highlighted potential integration of advanced observation capabilities and data informatics and recommended that USGS develop a robust water accounting system that incorporates human activities affecting water. Funding and Financing Aging and New Water Resource Projects U.S. water infrastructure is aging; the majority of the nation's dams, locks, and levees are more than 50 years old. Failure of these structures could have significant effects on local communities as well as regional and national impacts. Major capital investments for the repair and rehabilitation of these facilities would cost billions of dollars. To date, no comprehensive federal funding solutions for aging water resource infrastructure have been enacted. Some propose funding mechanisms that might be more conducive to major capital investments than the current available funding options, such as the authorization or modification of loan programs for some water resource infrastructure types or the inclusion of water resource infrastructure among the eligible recipients of funding from an infrastructure bank or broad infrastructure initiative. Other proposals include using revenues from project beneficiaries (e.g., hydropower revenues, increased user fees) to fund project repairs and upgrades, or de-authorizing and/or transferring projects to nonfederal entities, such as state or local governments. Still others think Congress requires more uniform information on the extent of this issue before it considers major funding solutions. In the 115 th Congress, proposed legislation would have required increased reporting by Reclamation on the agency's aging infrastructure backlog ( H.R. 660 , Bureau of Reclamation Transparency Act , which passed the House ). (See also discussion below on " Changing from Federal Infrastructure Projects to Federal Partnerships .") Changing from Federal Infrastructure Projects to Federal Partnerships Some stakeholders have expressed frustration with the pace of authorization and federal funding of water resource projects, which has resulted in some local sponsors pursuing projects with limited federal support or with expectations of future federal reimbursement or credit. Language authorizing increased nonfederal contributions to Reclamation project costs (as well as federal contributions to nonfederal projects) was enacted in Section 4007 of the WIIN Act. Congress in WRRDA 2014, the WIIN Act, and AWIA expanded nonfederal entities' ability to use their funds to advance USACE projects and to receive up-front or be reimbursed for the federal portion of project study and construction costs. Such new partnership models present opportunities for advancing projects more quickly than the status quo, but they also raise concerns regarding federal oversight in planning decisions and the use of federal funds. Other related questions include what the appropriate federal amount of investment and use of these new authorities should be and whether these authorities allow nonfederal sponsors to exert influence over the use of limited federal water resource infrastructure funds. The 113 th Congress initiated another approach through the authorization of Title X of WRRDA 2014, the Water Infrastructure Finance and Innovation Act (WIFIA). The title authorized a pilot program, to be administered by USACE and the Environmental Protection Agency (EPA), for loans and loan guarantees for certain flood damage reduction, public water supply, and wastewater projects. WIFIA was modeled after a similar program that assists transportation projects, the Transportation Infrastructure Finance and Innovation Act, or TIFIA, program. To date, only the EPA portion of the WIFIA program is operational. Although the WIIN Act and AWIA amended and extended the EPA's WIFIA authority, no similar legislative changes were made to the USACE WIFIA program. In FY2019, USACE continues to develop its policies to implement its WIFIA authority. Protecting and Restoring the Environment The 116 th Congress may engage in discussions of how threatened and endangered species designations and related critical habitat and environmental mitigation requirements affect water resource project construction and operations. The 116 th Congress also may choose to engage in other environmental topics related to water resources, such as habitat restoration and aquatic species conservation in the Sacramento and San Joaquin Rivers' Delta, the reduction of harmful algal blooms associated with federal water resource projects, and opportunities for public-private partnerships for conservation and restoration of estuaries and rivers. The 116 th Congress may consider the status and priority of federal efforts to restore large-scale aquatic ecosystems that have been altered or impaired by development, habitat loss, and federal water resource projects. Congress has authorized restoration activities in the Everglades, Great Lakes, Gulf Coast, and elsewhere. Other restoration efforts that may receive attention include the Bay-Delta, Chesapeake Bay, Salton Sea, Klamath Basin, and elsewhere. Numerous issues pertaining to these ecosystems have emerged. For example, Congress might consider legislation to authorize a framework for governance and a comprehensive restoration plan for the Salton Sea; it also may conduct oversight over the implementation of restoration activities in the Everglades and Gulf Coast region. Funding for existing and newly authorized restoration initiatives could face challenges in the 116 th Congress as decisionmakers evaluate investment priorities. Congress may look at the funding and performance of existing restoration efforts. Decisionmakers also may evaluate restoration initiatives on how well they balance demands for water resources and species' conservation needs. Flood Resilience and Natural and Nature-Based Infrastructure The 116 th Congress may consider responses to flood disasters, including improving flood resilience, which is the ability to adapt to, withstand, and rapidly recover from floods. In the United States, flood-related responsibilities are shared between the federal and state governments. Congress has established various federal programs that may be available to assist U.S. state, local, and territorial entities and tribes in reducing flood risks, including structural and nonstructural measures. States and local governments have significant discretion in land use and development decisions (e.g., building codes, subdivision ordinances). Congress has been and may continue to be concerned about the nation's and the federal government's financial exposure to flood losses, as well as the economic, social, and public health impacts on individuals and communities. Congress may consider the costs and benefits of protecting and restoring natural features that provide flood control and erosion benefits. Natural features, such as coral reefs, mangroves, dune systems, coastal wetlands, and the like, can dampen wave energy, slow erosion, and absorb floodwaters, among other benefits. Congress has established several programs across a number of agencies to conserve and restore these types of areas. For example, the Coastal Barrier Resources Act ( P.L. 97-348 ) established the Coastal Barrier Resources System in coastal areas with low development. The program aims not only to limit future federal expenditures and protect habitat but also to preserve naturally dynamic areas that may absorb flooding and erosion impacts. Approaches that mimic nature and are "nature-based" are used as part of flood management and risk reduction. These features sometimes are referred to as living shorelines or green infrastructure . Some local, state, and federal agencies and programs support nature-based infrastructure, especially if there are multiple benefits (e.g., erosion reduction, habitat restoration, and water quality benefits). Federal agencies such as the Fish and Wildlife Service, NOAA, USACE, and EPA may be involved in the restoration, protection, or construction of these nature-based features. The WIIN Act required USACE to consider "natural features" and "nature-based features" in addition to structural and nonstructural measures when studying the feasibility of flood risk management, hurricane and storm damage reduction, and ecosystem restoration projects. Interest in the nation's infrastructure and changes in environmental conditions (e.g., hydrologic conditions associated with a changing climate) may prompt the 116 th Congress to examine the implementation and funding of nature-based infrastructure, and protection of natural features that reduce flood risk. Recharging Groundwater Groundwater, the water in aquifers accessible by wells, is a critical component of the U.S. water supply. It is important for both domestic and agricultural water needs, among other uses. Nearly half of the nation's population uses groundwater to meet daily needs; in 2015, about 149 million people (46% of the nation's population) relied on groundwater for their domestic indoor and outdoor water supply. The greatest volume of groundwater used every day is for agriculture, specifically for irrigation. In 2015, irrigation accounted for 69% of the total fresh groundwater withdrawals in the United States. Congress generally has deferred management of U.S. groundwater resources to the states, and there is little indication that this practice will change. However, Congress, various states, and other stakeholders recently have focused on the potential for using surface water to recharge aquifers and the ability to recover the stored groundwater when needed. Some see aquifer recharge, storage, and recovery as a replacement or complement to surface water reservoirs, and there is interest in how federal agencies can support these efforts. In the congressional context, there is interest in the potential for federal efforts to facilitate state, local, and private groundwater management efforts (e.g., management of federal reservoir releases to allow for groundwater recharge by local utilities). Although Congress has authorized aquifer storage, recharge, and/or recovery for some individual projects, general congressional guidance in this area has been limited. Under the WIIN Act, Congress provided general authority for Reclamation to support new and enhanced federal and state surface and groundwater storage projects under certain, limited circumstances. A connection between federal water projects and groundwater enhancement already exists in Arizona, as part of the Central Arizona Project, and is implemented via state law. More recently, California enacted three groundwater laws known collectively as the Sustainable Groundwater Management Act (SGMA), which directed the California Department of Water Resources to identify water available for replenishing groundwater in the state. Because the California Central Valley Project is integral to the water supply and delivery infrastructure of the state, that project is also recognized as part of the surface water resources potentially important for recharging aquifers as the SGMA is implemented. Other western states with significant Reclamation water infrastructure also may look to enhance their sources of water for aquifer recharge by using water from federal projects. A number of bills introduced in the 115 th Congress would have addressed groundwater recharge, storage, and recovery in various ways. Whereas some bills addressed the concept broadly, others attempted to facilitate and, in some cases, add requirements for groundwater storage projects in specific locations. Similar legislation may be introduced in the 116 th Congress, particularly if drought trends continue in the western United States and more groundwater is pumped in lieu of surface water supplies, potentially leading to the broad and long-term drawdown of aquifers. Conclusion Many factors shape the water resource issues before the 116 th Congress. These factors include demand for reliable water supplies; hydrologic conditions, such as droughts, floods, and effects of climate change; issues regarding safety and performance of existing infrastructure, and interests and concerns about alternative financing and public-private partnerships. The 116 th Congress may consider some measures proposed but not enacted in the 115 th Congress, as well as new legislative proposals. In the water resource area, legislative activity often is specific to the federal water resource management agencies or to water use by particular sectors, including energy, agriculture, navigation, recreation, and municipal and industrial use. Occasionally, Congress takes up broader water resource policy issues, such as coordination of federal water resource activities, programs, science, and research. Congress and other decisionmakers often make water resource decisions within a complicated context. These decisions may involve existing federal infrastructure and their beneficiaries, multiple or conflicting objectives, various legal decisions, multiple environmental and natural resource statutes, and long-established institutional mechanisms (e.g., water rights and contractual obligations). These decisions also occur within a federalist framework in which water resource responsibilities are shared with state, local, and tribal governments and the private sector. Broad water resource questions for the 116 th Congress described herein include the following: For existing water resource facilities, including aging dams, levees, and navigation channels, what will be the federal role and level of investment in maintaining performance and safety? For planning and construction of new or expanded water resource projects, what will be the circumstances, conditions, and nature of federal involvement? For water resource project design and operations, how may federal and nonfederal science, observation, and monitoring be used to improve performance? Appendix. Federal Water Resource Infrastructure Most of the large dams and water diversion structures in the United States were built by, or with the assistance of, the Bureau of Reclamation (Reclamation) or the U.S. Army Corps of Engineers (USACE). The two agencies' projects differed in that Reclamation projects historically were designed principally to provide reliable supplies of water for irrigation and some municipal and industrial uses. USACE projects have been planned primarily to improve navigation and reduce flood damages; power generation, water supply, and recreation often have been included as secondary or incidental benefits. Reclamation currently manages hundreds of dams and reservoirs in the 17 arid states west of the Mississippi River. These projects provide water to approximately 10 million acres of farmland and 31 million people. Reclamation also operates 58 power plants capable of producing 40 billion kilowatt-hours of electricity annually (enough for approximately 3.5 million homes), which generate more than $1 billion in revenues annually. USACE operates nationwide, and its activities are diverse. USACE has constructed thousands of flood damage reduction and navigation projects throughout the country, involving nearly 12,000 miles of commercially active waterways and nearly 1,000 harbors and including 702 dam and reservoir projects (with 75 hydroelectric plants generating 68 billion kilowatt-hours annually). USACE is responsible for maintaining these projects. Additionally, USACE constructed, usually with nonfederal participation, roughly 9,000 miles of the estimated 100,000 miles of the nation's levees, but the agency operates and maintains only 900 miles. The remaining levees are operated by nonfederal entities, often local governments or special districts. The number of federal water resource construction activities decreased during the last decades of the 20 th century, marking the end of earlier expansionist policies that had supported large federal up-front investments in dams and hydropower facilities, navigation locks and channels, irrigation diversions, and flood control levees, as well as basin-wide planning and development efforts. Fiscal constraints, changes in national priorities and local needs, few remaining prime construction locations, and environmental and species impacts of the construction and operation of federal projects all contributed to this shift.

The 116th Congress may conduct oversight and deliberate on authorization and funding of water resource development, management, and protection. Congress engages in authorization and appropriations for water resource projects and activities of the U.S. Army Corps of Engineers (USACE) and the Bureau of Reclamation (Reclamation). USACE constructs projects nationwide, primarily to improve navigation, reduce flood damage, and restore aquatic ecosystems. Reclamation constructs projects in the 17 arid states west of the Mississippi River; these projects primarily provide water supply benefits, often to agricultural irrigation users. The 116th Congress, like earlier Congresses, also may consider Indian water rights settlements and may evaluate the focus of and funding for the water resource science activities of the U.S. Geological Survey (USGS). Development pressures, droughts and floods, and concerns about changing hydrology from land-use change and climate change have engendered nonfederal interest in federal financial and technical assistance for water resource science and projects. Stakeholders are interested in a range of water resource issues, including new water resource infrastructure (e.g., storm surge gates, water storage) and new kinds of projects (e.g., groundwater recharge, nature-based flood risk reduction); reinvestment in aging water resource infrastructure and use of water science and real-time monitoring and forecasting to improve infrastructure operations; funding and financing of projects, and whether and how to shift from federally led projects to federal partnerships with state and/or local entities; and activities to protect and restore aquatic ecosystems and enhance flood resilience (including the use of nature-based approaches). Some topics arise within the context of specific agencies. USACE-related topics for the 116th Congress may include funding and financing issues, such as use of the Harbor Maintenance Trust Fund; the status of investments in projects to deepen coastal harbors; USACE budgeting priorities; and oversight of USACE efforts to implement public-private partnerships and develop alternative financing opportunities. Some Reclamation-related water project and management issues during the 116th Congress may include the status of proposed new and augmented water storage projects, as well as efforts to address the agency's aging infrastructure and transition certain qualifying projects to nonfederal ownership. Congress also may address Reclamation drought mitigation activities in the Colorado River basin and other areas. In addition, Congress may explore ongoing issues associated with Reclamation's project operations in California and other areas. It may address how these issues affect water deliveries to irrigation districts and municipalities and threatened and endangered species, among others. Some topics are international in character. Regarding freshwater bodies shared with Canada, potential topics for the 116th Congress include federal funding for activities supporting Great Lakes restoration and negotiations (and any resulting agreements) with Canada to modify the Columbia River Treaty. Potential topics related to Mexico include oversight of a binational agreement on water sharing during dry conditions in the Colorado River basin and Mexico's deliveries to the United States in the Rio Grande basin. Crosscutting topics (i.e., topics relevant to multiple agencies and programs) also are part of congressional water resource deliberations. For example, the 116th Congress may consider the status and priority of new and ongoing federal efforts to restore large-scale aquatic ecosystems that have been altered or impaired by changes to their natural conditions (e.g., Florida Everglades, Chesapeake Bay). Congress may explore the funding and performance of existing restoration efforts, including what changes (if any) may be necessary to improve project delivery and evaluation. The 116th Congress may consider its guidance to multiple federal agencies on how to respond to flood hazards, including efforts related to enhancing the resilience of infrastructure and communities to flooding. There is interest in developing and evaluating approaches that protect natural elements that reduce flood risk (e.g., natural dunes) or are "nature-based" in comprehensive flood risk management (e.g., constructed dunes). Congress also may consider legislation and oversight on USACE supplemental appropriations for response to and recovery from floods.

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Introduction 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 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. For almost as long as NATO has been in existence, it also has faced criticism. One chief concern of critics in the United States, including some Members of Congress, has been that European allies' reliance on U.S. security guarantees have fostered an imbalanced and unsustainable "burdensharing" arrangement by which the United States carries an unfair share of the responsibility for ensuring European security. President Donald Trump has amplified these concerns, and his assertions that NATO is a "bad deal" have caused some analysts and policymakers to reassess the costs and benefits to the United States of its long-standing leadership of the alliance. Although successive U.S. presidents have called on the allies to increase defense spending, none has done so as stridently as President Trump. He is also the first U.S. president to publicly suggest that the United States could modify its commitment to NATO should the allies fail to meet agreed defense spending targets. Trump Administration officials stress that the United States remains committed to NATO, as articulated in the Administration's National Security and Defense Strategies. They highlight the Administration's successful efforts in 2017 and 2018 to substantially increase funding for the U.S. force presence in Europe. President Trump's supporters, including some Members of Congress, also argue that Trump's forceful statements have succeeded in securing defense spending increases across the alliance that were not forthcoming under his predecessors. Nevertheless, many supporters of NATO, including some allied governments, continue to question the President's commitment to the alliance and worry that his condemnations could damage NATO cohesion and credibility. In the face of these concerns, Congress has demonstrated significant bipartisan support for NATO and U.S. leadership of the alliance. In January 2019, following reports that the President has considered seeking to withdraw the United States from NATO, the House of Representatives passed legislation reaffirming U.S. support for the alliance and limiting the President's authority to withdraw ( H.R. 676 , passed by a vote of 357-22); similar legislation has been introduced in the Senate (S.J.Res. 4). Many analysts view the bipartisan, House-Senate invitation to NATO Secretary General Jens Stoltenberg to address a joint session of Congress on April 3, 2019, as an additional sign of continued congressional support. At the same time, Congress continues to assess NATO's utility and value to the United States and some Members are concerned about several key challenges that continue to face the alliance, including burdensharing, managing relations with Russia, and divergent threat perceptions within the alliance. This report provides context for ongoing discussions about NATO's value to the United States and the extent to which NATO serves U.S. strategic interests. A historical overview focuses on the perceived benefits to the United States of NATO membership from NATO's founding to the present day. Sections on burdensharing and Russia address key challenges facing the alliance. The report concludes with a discussion of U.S. policy and considerations for Congress. An appendix provides data on defense spending by NATO members. Historical Context: NATO's Evolution4 Broadly speaking, NATO has evolved through four phases since its inception in 1949: t he Cold War era between 1949 and 1991; t he post-Cold War transformation of the 1990s , marked by the start of NATO enlargement to former Warsaw Pact countries and debates over "out-of-area" military operations prompted by wars in the Western Balkans; t he post-September 11, 2001 , focus on crisis management and stabilizing Afghanistan; and s ince 2014, a renewed focus on deterring Russia and heightened concern about threats emanating from the Middle East and North Africa. NATO's current Strategic Concept, adopted in 2010, articulates three broad activities for NATO: collective defense, crisis management, and cooperative security. The far-reaching nature of these priorities reflects both the increasingly complex global security environment and the diverse range of threat perceptions inherent in an alliance of 29 members. Some observers express concern that NATO may lack the collective political will and the requisite military capacities to fulfill these objectives, which in turn could lead to an erosion of political and public support for the alliance. Others counter that despite such concerns, NATO's capacity to enhance security for its member states remains unparalleled and that the alliance has demonstrated flexibility in adapting to meet a wide range of evolving security threats. The Cold War: Defending Against the Soviet Union In the aftermath of World War II, the United States designed NATO to provide a framework for coordinating U.S., Canadian, and West European defense against the threat from the Soviet Union and the Warsaw Pact. NATO's foundational mutual defense clause—enshrined in Article 5 of NATO's founding North Atlantic Treaty—sought to prevent both further Soviet expansion and the U.S.S.R's ability to fracture the alliance (see text box). An additional objective was to bind the formerly warring European states (including France, the UK, Italy, and, crucially, West Germany) in a security arrangement that could prevent the outbreak of future hostilities among them. As NATO's first Secretary General, Lord Ismay reportedly quipped, NATO was created "to keep the Soviet Union out, the Americans in, and the Germans down." Throughout the Cold War, U.S. leaders assessed that the strategic benefits of defending Western Europe from an expansionist Soviet Union, building interoperable European militaries, and preventing renewed hostilities among Western European states outweighed the cost of maintaining a vast U.S. military presence in Europe that included more than 400,000 U.S. troops as well as U.S. nuclear weapons. For European allies, the benefits of the U.S. security umbrella were perceived largely as outweighing the costs of hosting U.S. military facilities, fulfilling defense and other requirements determined by the United States, and a loss of strategic autonomy. The 1990s: Enlargement, the "Peace Dividend," and "Out-of-Area" Operations With the fall of the Berlin Wall in 1989, the subsequent reunification of Germany, and the collapse of the Soviet Union, some in NATO questioned whether or in what form NATO should continue to exist. The United States and other allied leaders determined that the alliance could still play an important role in fulfilling shared security objectives beyond Cold War territorial defense. Chiefly, the allies agreed to a new nonconfrontational posture based on a drawdown of military forces and pursuit of partnership with former adversaries in the Warsaw Pact. A focus on spreading peace, stability, and democracy throughout Europe led to the accession of 10 new member states in 1999 and 2004 (see Figure 1 ). Although NATO and Russia took the first steps toward partnership during this period, leaders in Moscow remained uneasy with NATO and would later characterize NATO enlargement towards Russian borders as a major security threat. The wars in the Western Balkans in the 1990s spurred debate within NATO about so-called "out of area" operations. During the Cold War, NATO's military posture had been limited to defending allied territory. The United States and other allies now argued that to remain relevant, NATO must be prepared to confront security threats outside of alliance territory—"out of area or out of business" became NATO's de facto mantra. NATO's military intervention in the Western Balkans—beginning in Bosnia in 1995—was a first step in this direction and a monumental one for Germany, which had been constitutionally barred from deploying its forces abroad since World War II. At the behest of the United States, NATO's 1999 Strategic Concept articulated a broader definition of security and identified new security threats, including terrorism, ethnic conflict, human rights abuses, political instability, and the spread of nuclear, biological, and chemical weapons. At the same time, the changed European security environment and the so-called "peace dividend" marked the beginning of reductions in European defense spending and military capabilities that created tensions in later years. The United States also embarked on a sharp reduction of U.S. forces in Europe. Terrorist Attacks of September 11, 2001: NATO in Afghanistan The September 11, 2001, terrorist attacks on the United States were another pivotal moment in NATO's evolution. For the first and only time, the allies invoked NATO's Article 5 mutual defense clause and offered military assistance to the United States in responding to the attacks. Over the next 13 years, Canada and the European allies would join the United States to lead military operations in Afghanistan in what became by far the longest and most expansive operation in NATO history. As of March 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. Many analysts viewed the significant allied support of the United States following 9/11 as a powerful testament of NATO's enduring strength. The extent of European support could be considered especially remarkable given that many European publics were opposed to, or at best skeptical of, the war in Afghanistan and did not view the Taliban or Al Qaeda as imminent threats to Europe. Canada and the European allies also took on greater responsibilities in Afghanistan despite U.S. reluctance to involve NATO in initial military operations, and despite an acrimonious split between many European governments and the George W. Bush Administration over the U.S.-led war in Iraq. Many analysts point out that the United States only turned to NATO to take on a greater burden in Afghanistan after having launched military operations against Iraq in 2003. They argue that the United States would have been severely challenged to carry out both missions simultaneously without NATO support in Afghanistan. Despite the unprecedented show of solidarity following the September 11 attacks, NATO operations in Afghanistan also exposed significant disparities in allied military capabilities and in allies' willingness to engage in combat operations. U.S. officials, including many Members of Congress, consistently criticized the European allies, and especially Germany, for shortfalls in capabilities and for national "caveats" that limited the scope of allied military engagement. The United States led a renewed push for the allies to increase defense spending and develop military capabilities to better respond to the new security environment, including "out-of-area" stabilization and counter-insurgency operations. The allies first adopted, albeit informally, the 2% of GDP defense spending guideline at NATO's 2006 summit in Prague. Back to the Future: Russia's Annexation of Crimea and Renewed Deterrence Russia's annexation of Crimea in 2014 and subsequent invasion of eastern Ukraine upended NATO's post-Cold War transformation into a more globally oriented security organization. Since 2014, the alliance has taken major steps to strengthen its territorial defense capabilities and deter Russia. NATO's renewed focus on collective defense and deterrence has created some tensions within the alliance, particularly between those member states that perceive Russia as an acute threat and those that favor engagement with Russia over confrontation. In addition, heightened fears about instability in the Middle East and North Africa have exposed differences between those allies more concerned about security threats from NATO's south and those that continue to prioritize deterring and managing Russia. Reflecting the broadening security priorities of its member states, NATO has launched a range of initiatives, including a more robust military presence in its eastern member states and counterterrorism efforts in the Middle East and North Africa. NATO has established an Enhanced Forward Presence (EFP) of about 4,500 troops in the three Baltic States and Poland, increased military exercises and training activities in Central and Eastern Europe, and created new NATO command structures in six Central and Eastern European countries. As part of broader efforts to confront terrorist threats posed by instability in the Middle East and North Africa, NATO has launched a training mission in Iraq. The allies remain heavily invested in seeking to bring long-term stability to Afghanistan, including through a train-and-assist mission of about 17,000 (8,500 non-U.S.) soldiers. NATO continues to maintain a security force of 3,800 troops in Kosovo and also is seeking to develop more robust cyber defense capabilities and address the need to more effectively confront so-called hybrid warfare. Most analysts agree, however, that while NATO has never been more engaged in such a broad range of security efforts, its activities continue to expose significant shortfalls, both in its deterrent posture and in broader crisis management efforts. The Burdensharing Debate Since NATO's creation in 1949, the United States has been viewed as the unrivaled leader of the alliance. The United States continues to be the world's preeminent military power and U.S. defense spending long has been significantly higher than those of any other NATO ally. As early as the 1950s, however, U.S. political and military leaders—including some Members of Congress—expressed concern about European dependence on the U.S. security umbrella in Europe and the longer-term political and military implications of this dependence. To promote a more equitable sharing of the transatlantic security burden, Members of Congress and other U.S. leaders have focused most often on seeking to compel European allies to increase their national defense budgets in order to take on a greater share of the security burden. In the 1980s, for example, the U.S. Congress enacted legislation that would place a cap on U.S. force strength in Europe if the allies did not meet a target to grow national defense budgets annually by a rate of 3% higher than inflation. More recently, the allies have agreed to ensure that national defense budgets reach at least 2% of GDP by 2024 (discussed in more detail below). Analysts on both sides of the Atlantic have argued, however, that a relatively narrow focus on defense inputs (i.e., the size of defense budgets) could be wasted if not 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. NATO Secretary General Jens Stoltenberg also has emphasized a broader approach to measuring contributions to the alliance, using a metric of "cash, capabilities, and contributions." Others add that such a broader assessment of allied contributions would be more appropriate given NATO's wide-ranging strategic objectives, some of which may require capabilities beyond the military sphere. Cash: National Defense Budgets, the 2% Guideline, and NATO's Common Fund NATO members contribute financially to the alliance in various ways. The most fundamental way is by funding, in members' individual national defense budgets, the development of military capabilities that could support NATO missions and the deployment of their respective armed forces. NATO member states also fund NATO's annual budget of about $2. 6 billion by contributing to NATO's so-called "common funds ." National contributions to the common funds pay 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 United Kingdom (UK; 10%). In 2006, NATO members agreed informally to aim to spend at least 2% of gross domestic product (GDP) on national defense budgets annually and to devote at least 20% of national defense expenditure to procuring new equipment and related research and development. These targets were formalized at NATO's 2014 Wales Summit, when the allies pledged to " halt any decline in defence expenditure" and to "aim to move towards the 2% guideline within a decade. " The 2% and 20% spending targets are intended to guide national defense spending by individual NATO members; they do not refer to contributions made directly to NATO nor would all defense spending increases necessarily be devoted solely to meet NATO goals. For example, although the United States spends about 3.4% of GDP on defense, a relatively small portion of this spending goes to NATO and European security as the U.S. defense budget supports U.S. military engagements throughout the world. Most analysts agree that the 2% spending figure "does not represent any type of critical threshold or 'tipping point' in terms of defens e capabilities, " and NATO does not impose sanctions on countries that fail to meet the target. However, the target is considered politically and symbolically important. U.S. and NATO officials say they are encouraged by a steady rise in defense spending since the 2014 Wales Summit (See Figure 2 ). Whereas three allies met the 2% guideline in 2014, NATO estimates that seven allies met the target in 2018 (see Table A-1 ). Sixteen allies have submitted plans to meet the 2% and 20% targets by 2024. President Trump and others continue to criticize those NATO members perceived to be reluctant to achieve defense spending targets, however. This includes Europe's largest economy, Germany, which currently spends about 1.25% of GDP on defense and does not plan to reach 2% of GDP by 2024. According to NATO defense spending figures, if every ally were to meet the 2% benchmark, the aggregate sum of NATO members' national defense budgets would increase by about $100 billion (from about $988 billion). Although most analysts agree that such an increase could benefit the alliance significantly, many stress that how additional resources are invested is equally, if not more, important . Critics note, for example, that 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 procurement and modernization. Capabilities: The 20% Guideline NATO proponents point out that despite long-standing criticisms of European defense spending levels, the forces of key European allies still rank among the most capable militaries in the world; this assessment remains particularly true for the UK and France, which rank sixth and seventh, respectively in global defense expenditure (Germany ranks ninth). In 2018, total defense spending by European allies is expected to amount to about $282 billion (compared to about $685 billion for the United States), funding close to 1.8 million military personnel (compared to 1.3 million U.S. military personnel). Critics contend that defense spending in Europe is often inefficient, with disproportionately high personnel costs coming at the expense of much-needed research, development, and procurement and what they view as a considerable amount of duplication. They point to significant, long-standing shortfalls in key military capabilities, including strategic air- and sealift; air-to-air refueling; and intelligence, surveillance, and reconnaissance (ISR). NATO military planners also have sought to address so-called readiness shortfalls by urging allies to shorten the time it would take to mobilize and deploy forces. With respect to duplication, NATO officials lament that taken together, European countries have 17 different types of main battle tanks, 13 different types of air-to-air missiles, and 29 different types of naval frigates. In an effort to address these concerns, in 2014, the allies adopted the aforementioned guideline calling for 20% of member states' national defense budgets to be allocated to the procurement of new equipment and related research and development, considered to be a key indicator of the pace of military modernization. NATO leaders say they are encouraged by allied progress toward achieving this target: whereas four allies met the 20% target in 2013, 16 allies met the target in 2018 (see Table A-1 ). NATO officials have long sought to ensure that the national defense spending priorities of member states reflect the broader strategic priorities of the alliance. As these priorities have shifted, so too have its capabilities requirements. To this end, the alliance conducts a Defense Planning Process in order to harmonize national and NATO defense planning efforts to provide the required forces and capabilities in the most efficient way. These planning efforts also reflect the fact that among the NATO members only the United States, France, and the UK aspire to develop the full range of military capabilities necessary to maintain a global military footprint. In light of this reality, NATO and U.S. leaders have promoted defense cooperation initiatives, including the pooling and sharing of national resources and joint acquisition of shared capabilities, aimed at stretching existing defense resources further. Analysts argue that the European defense industry remains fractured and compartmentalized along national lines; many believe that European defense efforts would benefit from a more cooperative consolidation of defense-industrial production and procurement as well as more transatlantic defense industrial cooperation. Progress on these fronts have been limited, however, with critics charging that national governments often remain more committed to protecting domestic constituencies than making substantive progress in joint capabilities development. Shifting strategic priorities present an additional challenge to long-term defense planning. In the two decades following the end of the Cold War, NATO defense planners promoted military modernization plans aimed at moving away from the large, heavily armored forces that were required for Cold War territorial defense to smaller, more agile forces that could be deployed across the globe. Some allies eliminated capabilities such as tanks (the Netherlands) and submarines (Denmark) that were thought to be outdated and unnecessary. Renewed concerns about Russian aggression have caused some analysts and policymakers to question those decisions, and have prompted reevaluations of capabilities targets in many European countries. Contributions to NATO Missions Allied contributions to NATO operations are another key factor often considered when assessing burdensharing dynamics in the alliance. 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. Many in Europe and Canada view their contributions to NATO operations 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. Some analysts also point out that to meet the costs of maintaining continuous deployments to Afghanistan, many member states delayed needed defense modernization efforts. Ongoing contributions often cited by European allies include the following: Afghanistan . More than 100,000 troops from Canada and European NATO members have served in the country since 2001, when U.S.-led military operations commenced. At the height of NATO-led operations in the country, over 40,000 non-U.S. allies and partner country personnel were deployed to the mission. As of March 2019, Canada and the European allies had suffered approximately 1,050 of the 3,561 of coalition fatalities suffered in Afghanistan. Since 2007, non-U.S. allies and NATO partners have committed more than $2.6 billion to the Afghan National Army Trust Fund. As of February 2019, approximately 8,500 of the 17,000 troops deployed to NATO's follow-on train-and-assist mission in Afghanistan are from European NATO member states or NATO partner countries (including 1,300 from Germany, 1,100 from the UK, and 895 from Italy). NATO deterrence and collective defense efforts . Since 2014, European allies and Canada have contributed forces and capabilities to bolster deterrence and collective defense initiatives. This includes leading three of the four battlegroups of NATO's Enhanced Forward Presence in Poland and the Baltic States, commanding NATO's Baltic Air Policing Mission, contributing to NATO's standing naval forces in the Baltic and Black Seas, AWACS patrols over Eastern Europe, command of the NATO Response Force and Very High Readiness Joint Task Force, and hosting new NATO command and control facilities in Central and Eastern Europe. Kosovo . Since 1999, tens of thousands of non-U.S. allies have contributed to NATO's Kosovo Force (KFOR) to maintain security and stability in Kosovo. As of February 2019, non-U.S. allies and NATO partner countries contributed about 3,000 of the 3,500 KFOR troops. NATO operations also have exposed 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 ISR. In some cases, the United States has filled more basic shortfalls, in munitions for example. NATO's 2011 military intervention in Libya, Operation Unified Protector (OUP), highlighted these shortfalls. Although OUP was the first NATO mission in which the United States did not lead military operations, the six allies carrying out NATO airstrikes—Belgium, Canada, Denmark, France, Norway, and the UK—faced munition and other shortfalls relatively early on. Then-Secretary of Defense Robert Gates encapsulated U.S. frustration when he stated, "the mightiest military alliance in history is only 11 weeks into an operation against a poorly armed regime in a sparsely populated country – yet many allies are beginning to run short of munitions, requiring the U.S., once more, to make up the difference." Managing Relations with Russia Russia's annexation of Crimea and subsequent invasion of Eastern Ukraine in 2014 prompted a sweeping reassessment of NATO's post-Cold War efforts to build a cooperative relationship with Moscow. In the words of then-NATO Deputy Secretary General Alexander Vershbow, "For 20 years, the security of the Euro-Atlantic region has been based on the premise that we do not face an adversary to our east. That premise is now in doubt." Since 2014, Russia also has increased its military activities in northern Europe, particularly through reportedly deploying nuclear-capable missiles to Kaliningrad, enhancing its air patrolling activities close to allied airspace, and increasing its naval presence in the Baltic Sea, the Arctic Ocean, and the North Sea. In response to Russian aggression in Ukraine, NATO has moved to implement what its leadership characterized as the greatest reinforcement of NATO's collective defense since the end of the Cold War. Although the allies have continued to support and contribute to NATO deterrence initiatives, some express concern about the effectiveness and sustainability of these efforts. Many analysts, including 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 a more robust allied military presence in the region to "make it plain that crossing NATO's borders is not an option." Others, including leaders in Western European countries like Germany and Italy, have stressed the importance of a dual-track approach to Russia that complements deterrence with dialogue. For these allies, efforts to rebuild cooperative relations with Moscow may be given as much attention as efforts to deter Russia. Accordingly, NATO continues to resist calls to permanently deploy troops in countries that joined after the collapse of the Soviet Union due to concerns in these member states that this would violate the terms of the 1997 NATO-Russia Founding Act; NATO's Enhanced Forward Presence has been referred to as "continuous," but rotational. Former German Foreign Minister (and current German President) Frank-Walter Steinmeier encapsulated concerns about NATO's deterrence posture in 2016 when he likened a military exercise of NATO member states and partner countries taking place in Poland to "saber-rattling and war cries." He added, "whoever believes that a symbolic tank parade on the alliance's eastern border will bring security, is mistaken." NATO and U.S. officials subsequently rebutted Steinmeier's comments. Discussions over NATO's strategic posture could continue to be marked by these divergent views over the threat posed by Russia and by debate over the appropriate role for NATO in addressing the wide-ranging security challenges emanating from the Middle East and North Africa (MENA). On threats from the MENA region, several allies are reluctant to endorse a bigger role for NATO in issues—such as terrorism and migration—on which the European Union (EU) has traditionally taken the lead. Furthermore, many analysts contend that significant budgetary and political constraints facing many allied governments could limit NATO's capacity to deter Russia while addressing security threats to NATO's south. U.S. Policy: Shifting U.S. Priorities and the Benefits and Costs of NATO Membership Since NATO's founding, successive U.S. Administrations have viewed U.S. membership in, and leadership of, NATO as a key pillar of U.S. national security strategy. As outlined above, throughout NATO's evolution, U.S. leadership has given the United States a strong voice in formulating strategic objectives for NATO that align with U.S. national security objectives. U.S. military objectives in Europe also have shifted over time, especially since the end of the Cold War. Today, about 74,000 U.S. military service members, including two Brigade Combat Teams (BCTs), are stationed in Europe, compared to more than 400,000 troops at the height of the Cold War. Throughout the 1990s and 2000s, United States European Command (EUCOM) shifted its activities in Europe to non-warfighting missions, including building defense capacity and capability in former Warsaw Pact states and logistically supporting other U.S. combatant commands. Events in recent years, particularly Russia's actions in Ukraine since 2014 and increased military activities near NATO borders, have tested the strategic assumptions underpinning EUCOM's posture. While President Trump has criticized NATO, his Administration's National Security Strategy and National Defense Strategy both identify European security and stability as key U.S. national security interests and emphasize the U.S. commitment to NATO and Article 5. Administration officials and many Members of Congress underscore that the Administration has requested significant increases in funding for U.S. military deployments in Europe under the European Deterrence Initiative (EDI, previously known as the European Reassurance Initiative, or ERI). Proponents of NATO argue that U.S. membership in and leadership of NATO brings a range of important benefits to the United States. These include, but are not limited to, the following: Peace, stability, conflict prevention, and deterrence . Many analysts believe that NATO has played a vital role in keeping the peace in Europe for the last 70 years and preventing a repeat of the two World Wars of the first half of the 20 th century. NATO proponents add that a divided NATO with a less committed United States could benefit Russia's widely acknowledged efforts to undermine NATO and the EU. Treaty-based defense and security support from 28 allies, including many of t he world's most advanced militaries , including a nuclear deterrent and missile defense systems based in Europe. Despite the criticisms of European defense spending trends, non-U.S. allies still possess significant military capabilities, which they have deployed in support of U.S. security objectives. An u nrivaled platform for constructing and operating international military coalitions. Through its history, NATO has developed an integrated command structure to carry out collective defense and crisis management operations that is unprecedented in terms of size, scale, and complexity. This includes advancing allied interoperability by designing command and control systems, holding multinational training exercises, and creating policies for standardizing equipment amongst its members. U.S. military bases in strategically important locations. U.S. leadership of NATO has allowed the United States to station U.S. forces in Europe at bases that enable quicker air, sea, and land access to other locations of strategic importance, including the Middle East and Africa. Economic stability. The EU, which includes 22 NATO allies, is the United States' largest trade and investment partner. By promoting security and stability in Europe, NATO helps protect this extensive economic relationship that accounts for 46% of global GDP. Nevertheless, questions about the value of NATO to the United States have led some to reassess the benefits and costs of U.S. membership. Critics of NATO highlight a number of costs incurred by the United States—both qualitative and quantitative—due to its leadership of NATO. These include the following: Loss of autonomy. Whether at the strategic or the operational level, forging agreement with 28 other governments is undoubtedly more difficult than maintaining full national control. Analysts note, for example, that U.S. military planners' negative experience working with European counterparts during the NATO intervention in Kosovo in 1999 (European allies' reportedly rejected bombing targets proposed by U.S. commanders) was a key factor behind the U.S. decision to conduct initial military operations in Afghanistan outside the NATO command structure. Some have argued that ad hoc coalitions of like-minded allies under unified U.S. command could be more desirable than working within established NATO structures. Heightened risks to U.S. forces. Some critics argue that the Article 5 commitment to defend a NATO ally in the event of an attack could draw the United States into a conflict that it might otherwise avoid. Others note that Article 5 commits an ally to respond to an attack by "taking such action as it deems necessary." Continued European dependence. Some critics contend that European allies' dependence on the U.S. security guarantee limits their incentive to invest in defense capabilities that would make them more capable partners for the United States. At the same time, President Trump's criticisms of NATO and individual allies have caused some in Europe to question the United States' continued reliance as a security partner. Provoking Russia . Some critics of NATO argue that NATO's post-Cold War enlargement to include former members of the Warsaw Pact and the Baltic states represented an unnecessary and counter-productive provocation of Russia and ensured long-term rivalry between Russia and "the West." A negative b udgetary impact. U.S membership in NATO carries with it certain financial commitments, including annual contributions to NATO's Common Fund (about $570 million in 2018). The U.S. missile defense capability in Europe is also under NATO command, and the United States contributes an estimated $800 million annually to additional NATO capabilities such as Allied Ground Surveillance and strategic airlift. Although the United States could potentially reduce its military footprint in Europe, analysts point out that without a reduction in overall U.S. force structure, the Department of Defense would still cover the costs of redeployed personnel. Additionally, as noted above, U.S. military bases in Europe offer strategic and logistical advantages beyond enabling U.S. commitments to NATO. Considerations for Congress Congress was instrumental in creating NATO in 1949 and has played a critical role in shaping U.S. policy toward the alliance ever since. While many Members of Congress have criticized specific developments within NATO—regarding burdensharing, for example—Congress as a whole has consistently demonstrated strong bipartisan support for active U.S. leadership of and support for NATO. This support has manifested itself through an array of congressional action including financial support through the authorization and appropriations processes and legislation enabling NATO enlargement and NATO military operations and deterrence efforts. Congress also has been at the forefront of the burdensharing debate within NATO since the alliance's inception and has often called on U.S. Administrations to do more to secure increased allied commitments to NATO. Congressional support for NATO has traditionally served to buttress broader U.S. policy toward the alliance. During the Trump Administration, however, demonstrations of congressional support for NATO have at times been viewed more as an effort to reassure allies about the U.S. commitment to NATO after President Trump's criticisms of the alliance. Trump Administration officials stress that the Administration remains strongly committed to NATO and to European security (as articulated in the National Security and Defense strategies), and Congress has supported the Administration's requests to increase funding for key U.S. defense activities in Europe such as the European Deterrence Initiative. Nevertheless, 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. This includes legislation passed by the House in January 2019 ( H.R. 676 , see below) seeking to limit the president's ability to unilaterally withdraw from NATO; similar legislation has been introduced in the Senate (S.J.Res. 4). Some analysts portrayed House Speaker Nancy Pelosi and Senate Majority Leader Mitch McConnell's joint invitation to NATO Secretary General Jens 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 the Congress. Examples of legislation in support of NATO passed in Congress since 2017 include the following: H.Res. 397 (115 th Congress) , Solemnly reaffirming the commitment of the United States to NATO's principle of collective defense as enumerated in Article 5 of the North Atlantic Treaty. Passed by the House by a vote of 423-4 on June 27, 2017. H.R. 5515 / P.L. 115-232 (115 th Congress) , John S. McCain National Defense Authorization Act for FY2019 . After the Senate agreed to go to conference with the House on H.R. 5515 , Senator Reed (RI) made a motion to instruct conferees to reaffirm the commitment of the United States to NATO. The Senate agreed to the motion by a vote of 97-2. H.Res. 256 (115 th Congress) , Expressing support for NATO and the countries of Central and Eastern Europe. Passed by the House by unanimous consent on July 11, 2018. H.R. 676 (116 th Congress) , NATO Support Act . Passed by the House by a vote of 357-22 on January 22, 2019. The bill prohibits the appropriation or use of funds to withdraw the United States from NATO. Although Congress has expressed consistent bipartisan 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 on the impact President Trump is having 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. They point out that NATO Secretary General Jens Stoltenberg has acknowledged that President Trump "is having an impact" in securing $41 billion of additional defense spending by European allies and Canada since 2016. Others in Congress counter that President Trump's admonition of U.S. allies and his questioning of NATO's utility has damaged essential relationships and undermined NATO's credibility and cohesion. They contend that doubts about the U.S. commitment to NATO could embolden adversaries, including Russia, and ultimately weaken the commitment of other allies to the alliance. Some analysts argue that European allies who feel belittled by the U.S. president might be less likely to support future NATO operations advocated by the United States. Critics also tend to downplay President Trump's role in securing recent defense spending increases by NATO allies. They argue that Russian aggression in Europe has been a greater factor behind rising defense budgets, particularly in Central and Eastern Europe. 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. Congressional consideration of EDI could enable further examination of U.S. force posture in Europe and the U.S. capacity and willingness to uphold its collective defense commitments. Deliberations could also highlight longer-standing concerns about European contributions to NATO security and defense measures. In light of these considerations, Members of Congress could focus on several key questions regarding NATO's future. These might include the following: addressing the strategic value of NATO to the United States and the leadership role of the United States 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 Middle East and North Africa, 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; 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. Appendix. Additional Defense Spending Information

On April 4, 2019, foreign ministers from the 29 member states of the North Atlantic Treaty Organization (NATO) are to gather in Washington, DC, to mark the 70th anniversary of the North Atlantic Treaty (also known as the Washington Treaty). NATO Secretary General Jens Stoltenberg is to address a joint session of Congress on April 3, 2019, the first ever to do so. Congress was instrumental in creating NATO in 1949 and has played a critical role in shaping U.S. policy toward the alliance ever since. A key goal of the 70th anniversary meeting will be to highlight NATO's past successes and present a unified vision for its future. The United States was the driving proponent of NATO's creation 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 29 members. Successive U.S. Administrations have viewed U.S. leadership of NATO as a cornerstone of U.S. national security strategy. Proponents of NATO cite numerous benefits to the United States, including peace, stability, conflict prevention, and deterrence in Europe; treaty-based defense and security support from 28 allies, including many of the world's most advanced militaries; an unrivaled platform for constructing and operating international military coalitions; U.S. military bases in strategically important locations; and economic stability in the world's largest trade and investment marketplace. On the other hand, NATO's critics argue that European reliance on U.S. security guarantees have fostered an imbalanced and unsustainable "burdensharing" arrangement by which the United States carries an unfair share of the responsibility for ensuring European security. Critics cite the following costs to the United States of its leadership of NATO: loss of autonomy; heightened risks to U.S. forces; continued European military dependence on the United States; provoking Russia; and a negative budgetary impact. The anniversary meeting comes at a tense time for NATO, as the allies have struggled to present a unified response to vocal criticism from U.S. President Donald Trump. President Trump has admonished European allies for failing to meet agreed NATO defense spending targets and 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 Trump. The President's criticisms have provoked mixed reactions in the United States, with NATO supporters, including many Members of Congress, reaffirming the U.S. commitment to NATO, and others reevaluating the costs and benefits of long-standing U.S. leadership of the alliance. Trump Administration officials stress that they remain committed to NATO and to upholding European security. They underscore that Congress has supported the Administration's requests to increase funding for U.S. defense activities in Europe such as the European Deterrence Initiative. President Trump's supporters also argue that his forceful statements have succeeded in securing defense spending increases by European allies that were not forthcoming under his predecessors. While many Members of Congress have criticized specific developments within NATO—regarding burdensharing, for example—Congress as a whole has demonstrated consistent bipartisan support for NATO. During the Trump Administration, congressional support has at times been viewed 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 (H.Res. 397; H.R. 5515/P.L. 115-232; H.Res. 256), including legislation passed by the House in January 2019 (H.R. 676) seeking to limit the president's ability to withdraw from NATO unilaterally (similar legislation, S.J.Res. 4, has been introduced in the Senate). Some analysts portrayed the bipartisan House-Senate invitation to Secretary General Stoltenberg to address a joint session as an additional demonstration of NATO's importance to the Congress.

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Introduction This report provides background information and potential oversight issues for Congress on war-related and other international emergency or contingency-designated funding since FY2001. Since the terrorist attacks of September 11, 2001, Congress has appropriated approximately $2 trillion in discretionary budget authority designated for emergencies or OCO/GWOT in support of the broad U.S. government response to the 9/11 attacks and for other related international affairs activities. This figure includes $1.8 trillion for the Department of Defense (DOD), $154 billion for the Department of State and U.S. Agency for International Development (USAID), and $3 billion for the Department of Homeland Security (DHS) and Coast Guard (see Figure 1 ). This CRS report is meant to serve as a reference on certain funding designated as emergency requirement s or for Overseas Contingency Ope rations/Global War on Terrorism (OCO/GWOT), as well as related budgetary and policy issues. It does not provide an estimate of war costs within the OCO/GWOT account (all of which may not be for activities associated with war or defense) or such costs in the DOD base budget or other agency funding (which may be related to war activities, such as the cost of health care for combat veterans). For additional information on the FY2019 budget and related issues, see CRS Report R45202, The Federal Budget: Overview and Issues for FY2019 and Beyond , by [author name scrubbed]; CRS In Focus IF10942, FY2019 National Defense Authorization Act: An Overview of H.R. 5515 , by [author name scrubbed] and [author name scrubbed]; and CRS Report R45168, Department of State, Foreign Operations and Related Programs: FY2019 Budget and Appropriations , by [author name scrubbed], [author name scrubbed], and [author name scrubbed]. For additional information on the Budget Control Act as amended, see CRS Report R44874, The Budget Control Act: Frequently Asked Questions , by [author name scrubbed] and [author name scrubbed], and CRS Report R44039, The Defense Budget and the Budget Control Act: Frequently Asked Questions , by [author name scrubbed]. For additional information on U.S. policy in Afghanistan and the Middle East, see CRS Report R45122, Afghanistan: Background and U.S. Policy , by [author name scrubbed], CRS Report R45096, Iraq: Issues in the 115th Congress , by [author name scrubbed], and CRS Report RL33487, Armed Conflict in Syria: Overview and U.S. Response , coordinated by [author name scrubbed]. Background Increase in War-Related Appropriations after 9/11 Congress may consider one or more supplemental appropriations bills (colloquially called supplementals) for a fiscal year to provide funding for unforeseen needs (such as a response to a national security threat or a natural disaster), or to increase appropriations for other activities that have already been funded. Supplemental appropriations measures generally provide additional funding for selected activities over and above the amount provided through annual or continuing appropriations. Throughout the 20 th century, Congress relied on supplemental appropriations to fund war-related activities, particularly in the period immediately following the start of hostilities. For example, in 1951, a year after the start of the Korean War, Congress approved DOD supplemental appropriations totaling $32.8 billion ($268 billion in constant FY2019 dollars). In 1952, DOD supplemental appropriations totaled just $1.4 billion ($11 billion in constant FY2019), as the base budget incorporated costs related to the war effort. A similar pattern occurred, to varying degrees, during the Vietnam War and 1990-1991 Gulf War. During the post-9/11 conflicts, primarily conducted in Afghanistan and Iraq but also in other countries, Congress has, for an extended period and to a much greater degree than in previous conflicts in the 20 th century, appropriated supplemental and specially designated funding over and above the base DOD budget—that is, funding for planned or regularly occurring costs to man, train, and equip the military force. Since FY2001, DOD funding designated for OCO/GWOT has averaged 17% of the department's total budget authority (see Figure 2 ). By comparison, during the conflict in Vietnam—the only other to last more than a decade—DOD funding designated for non-base activities averaged 6% of the department's total budget authority. Supplemental appropriations can provide flexibility for policymakers to address demands that arise after funding has been appropriated. However, that flexibility has caused some to question whether supplementals should only be used to respond to unforeseen events, or whether they should also provide funding for activities that could reasonably be covered in regular appropriations acts. Shift from Emergency Supplementals to Contingency Funding Congress used supplemental appropriations to provide funds for defense and foreign affairs activities related to operations in Afghanistan and Iraq following 9/11, and each subsequent fiscal year through FY2010. Initially understood as reflecting needs that were not anticipated during the regular appropriations cycle, supplemental appropriations were generally enacted as requested, and almost always designated as emergency requirements. Beginning in FY2004, DOD received some of its war-related funding in its regular annual appropriations; these funds were designated as emergency. When funding needs for war and non-war-related activities were higher than anticipated, the Bush Administration submitted supplemental requests. In the FY2011 appropriations cycle, the Obama Administration moved away from submitting supplemental appropriations requests to Congress for war-related activities and used the regular budget and appropriation process to fund operations. This approach implied that while the funds might be war-related, they largely supported predictable ongoing activities rather than unanticipated needs. In concert with this change in budgetary approach, the Obama Administration began formally using the term Overseas Contingency Op erations in place of the Bush Administration's term Global War on Terror . Both the Obama and Trump Administrations requested that OCO funding be designated in a manner that would effectively exempt such funding from the BCA limits on discretionary defense spending. Currently, there is no overall procedural or statutory limit on the amount of emergency or OCO/GWOT-designated spending that may be appropriated on an annual basis. Both Congress and the President have roles in determining how much emergency or OCO/GWOT spending is provided to federal agencies each fiscal year. Such spending must be designated as such within the President's budget request for congressional consideration. The President must separately designate the spending after Congress enacts appropriations for it to be available for expenditure. Designation of Funding as Emergency or OCO/GWOT The emergency funding designation predated the OCO/GWOT designation. Through definitions statutorily established by the Balanced Budget and Emergency Deficit Control Act of 1985 (BBEDCA; P.L. 99-177 ), spending designated as emergency requirements is for "unanticipated" purposes, such as those that are "sudden ... urgent ... unforeseen ... and temporary." The BBEDCA does not further specify the types of activities that are eligible for that designation. Thus, any discretionary funding designated by Congress and the President as being for an emergency is effectively exempted from certain statutory and procedural budget enforcement mechanisms, such as the BCA limits on discretionary spending. Debate of what should constitute OCO/GWOT or emergency activities and expenses has shifted over time, reflecting differing viewpoints about the extent, nature, and duration of U.S. military operations in Afghanistan, Iraq, Syria, and elsewhere. Over the years, both Congress and the President have at times adopted more, and at times less, expansive definitions of such designations to accommodate the strategic, budgetary, and political needs of the moment. Prior to February 2009, U.S. operations in response to the 9/11 attacks were collectively referred to as the Global War on Terror , or GWOT. Between September 2001 and February 2009, there was no separate budgetary designation for GWOT funds—instead, funding associated with those operations was designated as an emergency requirement. The term OCO was not applied to the post-9/11 military operations in Iraq and Afghanistan until 2009. In February 2009, the Obama Administration released A New Era of Responsibili ty: Renewing America's Promise , a presidential fiscal policy document. That document did not mention or reference GWOT; instead, it used the term OCO in reference to ongoing military operations in Iraq and Afghanistan. The first request for emergency funding for OCO—not GWOT—was delivered to Congress in April 2009. Since the FY2010 budget cycle, DOD has requested both base budget and OCO funding as part of its annual budget submission to Congress. Beginning with the National Defense Authorization Act for Fiscal Year 2010 (NDAA; P.L. 111-84 ), the annual defense authorization bills have referenced the authorization of additional appropriations for OCO rather than the names of U.S. military operations conducted primarily in Afghanistan and Iraq. In 2011, the BCA ( P.L. 112-125 ) amended the BBEDCA to create the Overseas Contingency Ope rations/Global War on Terrorism designation, which provided Congress and the President with an alternate way to exempt funding from the BCA caps without using the emergency designation. Beginning with the Consolidated Appropriations Act, 2012 ( P.L. 112-74 ), annual appropriations bills have referenced the OCO/GWOT designation. The foreign affairs agencies began formally requesting OCO/GWOT funding in FY2012, distinguishing between what is referred to as enduring, ongoing or base costs versus any extraordinary, temporary costs of the State Department and USAID in supporting ongoing U.S. operations and policies in Iraq, Afghanistan, and Pakistan. Congress, having used OCO/GWOT exemption for DOD, adopted this approach for foreign affairs, though its uses for State, Foreign Operations, and Related Programs (SFOPS) activities have never been permanently defined in statute. For the first foreign affairs OCO/GWOT appropriation, in FY2012, funds were provided for a wide range of recipient countries beyond the countries in the President's request, including Yemen, Somalia, Kenya, and the Philippines. In addition to country-specific uses, OCO/GWOT-designated funds were also appropriated for the Global Security Contingency Fund. OCO and the Budget Control Act (BCA) All budgetary legislation is subject to a set of enforcement procedures associated with the Congressional Budget Act of 1974 ( P.L. 93-344 ), as well as other rules, such as those imposed by the Budget Control Act of 2011 ( P.L. 112-125 ) as amended. Those rules provide mechanisms to enforce both procedural and statutory limits on discretionary spending. The Budget Control Act of 201121 Enacted on August 2, 2011, the BCA as amended sets limits on defense and nondefense spending. 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, 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 . Sequestration automatically cancels previously enacted appropriations (a form of budget authority) by an amount necessary to reach prespecified levels. The BCA effectively exempted certain types of discretionary spending from the statutory limits, including funding designated for OCO/GWOT. As a result, Congress and the President have designated funding for OCO to support activities that, in previous times, had been funded within the base budget. This was done, in part, as a response to the discretionary spending limits enacted by the BCA. By designating funding for OCO for certain activities not directly related to contingency operations, Congress and the President can effectively continue to increase topline defense, foreign affairs, and other related discretionary spending without triggering sequestration. Congress has repeatedly amended the legislation to raise the spending limits (thus lowering its deficit-reduction effect by corresponding amounts). Congress has passed four bills that revised the automatic spending caps initially established by the BCA, including the following: American Taxpayer Relief Act of 2012 (ATRA; P.L. 112-240 ); Bipartisan Budget Act of 2013 (BBA 2013; P.L. 113-67 ); Bipartisan Budget Act of 2015 (BBA 2015; P.L. 114-74 ); and Bipartisan Budget Act of 2018 (BBA 2018; P.L. 115-123 ). The Bipartisan Budget Act of 2018 On February 9, 2018, three days before President Donald Trump submitted his FY2019 budget request, Congress passed the Bipartisan Budget Act of 2018 (BBA 2018, P.L. 115-123 ). The act raised the discretionary spending limits set by the BCA from $1.069 trillion for FY2017 to $1.208 trillion for FY2018 and to $1.244 trillion for FY2019. The BBA 2018 increased FY2019 discretionary defense funding levels (excluding OCO) by the largest amounts to date—$85 billion, from $562 billion to $647 billion, and nondefense funding (including SFOPS) by $68 billion, from $529 billion to $597 billion. It did not change discretionary spending limits for FY2020 and FY2021. OCO Funds for Non-War DOD Activities DOD documents indicate the department in recent years has used OCO funding for activities viewed as unrelated to war. For example, the department's FY2019 budget request estimates $358 billion in OCO funding from FY2015 through FY2019. Of that amount, DOD categorizes $68 billion (19%) for activities unrelated to operations in Afghanistan, Iraq, and Syria. These activities are described as "EDI/Non-War," referring in part to the European Deterrence Initiative, and "Base-to-OCO," referring to OCO funding used for base-budget requirements. Similarly, a DOD Cost of War report from June 2018 shows $1.8 trillion in war-related appropriations from FY2001 through FY2018 for operations primarily conducted in Afghanistan, Iraq, and Syria. Of that total, DOD categorizes $219 billion (12%) as other than "war funds." These funds are described as "Classified," "Modularity," "Fuel (non-war)," "Noble Eagle (Base)," and "Non-War." International affairs agencies also began increasing the share of their budgets designated for OCO, and applying the designation to an increasing range of activities apparently unrelated to conflicts. OCO as a share of the international affairs budget grew from about 21% in FY2012 to nearly 35% in FY2017. Unlike DOD, however, the State Department and USAID have not specified whether any OCO-designated funds are considered part of the agencies' base budgets. Previous Proposal to Move OCO Funding to Base Budget According to a DOD budget document from FY2016, the Obama Administration planned to "transition all enduring costs currently funded in the OCO budget to the base budget beginning in 2017 and ending by 2020." The plan was to describe "which OCO costs should endure as the United States shifts from major combat operations, how the Administration will budget for the uncertainty surrounding unforeseen future crises, and the implications for the base budgets of DOD, the Intelligence Community, and State/OIP. This transition will not be possible if the sequester-level discretionary spending caps remain in place." The BCA remained in effect and OCO funding was used for base-budget requirements. OCO: Safety Valve, Slush Fund, or Practical Solution? Some defense officials and policymakers say OCO funding enables a flexible and timely response to an emergency or contingency and provides a political and fiscal safety valve to the BCA caps and threat of sequestration. They say if OCO funding were not used in such a manner and discretionary spending limits remained in place, DOD and other federal agencies would be forced to cut base budgets and revise strategic priorities. For example, former Defense Secretary Jim Mattis has said if Congress allows the FY2020 and FY2021 defense spending caps to take effect, the 2018 National Defense Strategy, which calls for the United States to bolster its military advantage against potential competitors such as Russia and China, "is not sustainable." Critics, including Acting White House Chief of Staff Mick Mulvaney, have described the OCO account as a "slush fund" for military and foreign affairs spending unrelated to contingency operations. Mulvaney, former director of the White House Office of Management and Budget (OMB), has described the use of OCO funding for base budget requirements as "budget gimmicks." Critics argue what was once generally restricted to a fund for replacing combat losses of equipment, resupplying expended munitions, transporting troops to and through war zones, and distributing foreign aid to frontline states has "ballooned into an ambiguous part of the budget to which government financiers increasingly turn to pay for other, at times unrelated, costs." OMB criteria for OCO funding include the combat losses of ground vehicles, aircraft, and other equipment; replenishment of munitions expended in combat operations; facilities and infrastructure in the theater of operations; transport of personnel, equipment, and supplies to and from the theater; among other items and activities. Determining which activities are directly related, tangentially related, or unrelated to war operations is often a point of debate. Some have questioned the use of OCO funding to purchase F-35 fighter jets: "It is jumping the shark.... There's no pretense that it has anything to do with the region." Others have argued it makes sense for the military to use OCO funding to purchase new aircraft to replace planes used in current conflicts and no longer in production: "What are the conditions that are making the combatant commanders and those with train/equip authority to say, 'We need more of this?'" GWOT/OCO Appropriations by Agency, FY2001-FY2019 Congress has appropriated approximately $2 trillion in discretionary budget authority for war-related and other international emergency or contingency-designated activities since 9/11. This figure is a CRS estimate of funding designated for emergencies or OCO/GWOT in support of the broad U.S. government response to the 9/11 attacks, as well as other foreign affairs activities, from FY2001 through FY2019. This includes $1.8 trillion for DOD, $154 billion for the Department of State and USAID, and $3 billion for DHS and the Coast Guard (see Table 1 ). These figures do not include emergency-designated funding appropriated in this period for domestic programs, such as disaster response. DOD OCO/GWOT Funding as a Share of the DOD Budget From FY2001 through FY2009, DOD received $1.8 trillion in appropriations for OCO/GWOT, or approximately 17% of the department's total discretionary budget authority of $10.8 trillion during the period. The department's OCO/GWOT funding peaked in FY2008 both in terms of nominal dollars, at $186.9 billion, and as a share of its discretionary budget, at 28.1% (see Figure 3 ), after the Bush Administration surged additional U.S. military personnel to Iraq. The department's OCO funding also increased as a share of its discretionary spending from FY2009 to FY2010 following the Obama Administration's deployment of more U.S. military personnel to Afghanistan, and again in FY2017 following enactment of legislation in response to the Trump Administration's request for additional appropriations. In FY2019, the department's OCO/GWOT funding totaled $68.8 billion, or 10% of its discretionary spending. OCO, Base Budget Comparisons by Appropriations Title, Military Service In terms of appropriations titles, more than two-thirds of OCO/GWOT funding since FY2001 has been for Operation and Maintenance (O&M)—nearly double the percentage of base budget funding for O&M over the same period (see Figure 4 ). O&M funds pay for the operating costs of the military such as fuel, maintenance to repair facilities and equipment, and the mobilization of forces. DOD describes "war-related operational costs" as operations, training, overseas facilities and base support, equipment maintenance, communications, and replacement of combat losses and enhancements. In terms of the military services, more than half (55%) of OCO/GWOT funding since FY2001 has gone to the Army—more than double the percentage of base budget funding for the service during this period (see Figure 5 ). Emergency appropriations were initially provided as general "defense-wide" appropriations. Beginning in FY2003, as operations evolved and planning developed, allocations increased and were specifically provided for the services. Trends in OCO Funding and Troop Levels OCO funding for DOD has not decreased at the same rate as the number of U.S. troops in Afghanistan, Iraq, and Syria has decreased. For example, the number of U.S. military personnel in Afghanistan, Iraq, and Syria decreased from a peak of 187,000 personnel in FY2008 (including 148,000 in Iraq and 39,000 in Afghanistan) to an assumed level of nearly 18,000 personnel in FY2019 (including 11,958 personnel in Afghanistan and 5,765 personnel in Iraq and Syria)—a decline of approximately 169,000 personnel (90%). Meanwhile, OCO funding decreased from a peak of $187 billion in FY2008 to $69 billion in FY2019—a decline of approximately $118 billion (63%). While the number of U.S. forces in Afghanistan, Iraq, and Syria has decreased since FY2009, the number of U.S. troops deployed or stationed elsewhere to support those personnel has fallen by a lesser degree and, in recent years, remained relatively steady. For example, the number of support forces—that is, personnel from units and forces operating outside of Afghanistan, Iraq, Syria, and other countries (including those stationed in the continental United States or otherwise mobilized) decreased from 112,000 personnel in FY2009 to an assumed level of 76,073 personnel in FY2019—a decline of 35,927 personnel (32%). In addition, when these support forces are combined with in-country force levels, the total force level decreases by a percentage more similar to the OCO budget, from 297,000 personnel in FY2009 to an assumed level of 93,796 personnel in FY2019—a decline of 203,204 personnel (68%) (see Figure 6 ). Some of these support forces serve in U.S. Central Command's area of responsibility, which includes 20 countries in West Asia, North Africa, and Central Asia, and whose forward headquarters is based in Al Udeid Air Base in Qatar. According to DOD, the reason OCO funding has not fallen in proportion to the number of U.S. troops in Afghanistan, Iraq, and Syria is "due to the fixed, and often inelastic, costs of infrastructure, support requirements, and in-theater presence to support contingency operations." For example, in FY2019, the department requested $20 billion in OCO funding for "in-theater support"—nearly 30% of the OCO request and more than any other functional category. However, some analysts have noted the U.S. military's fixed costs in Afghanistan remained relatively stable at roughly $7 billion a year from FY2005 through FY2013 until after the BCA went into effect—and have since increased to roughly $32 billion a year, suggesting "that roughly $25 billion in 'enduring' or base budget costs migrated into the Afghanistan budget, effectively circumventing the budget caps. The actual funding needed for operations in Afghanistan is roughly $20 billion in FY2019." DOD Criteria for Contingency Operations Title 10, Section 101, of the United States Code, defines a contingency operation as any Secretary of Defense-designated military operation "in which members of the armed forces are or may become involved in military actions, operations, or hostilities against an enemy of the United States or against an opposing military force." Since the 1990s NATO intervention in the Balkans, DOD Financial Management Regulations (FMR) have defined contingency operations costs as those expenses necessary to cover incremental costs "that would not have been incurred had the contingency operation not been supported." Such incremental costs would not include, for example, base pay for troops or planned equipment modernization, as those expenditures are normal peacetime needs of the DOD. In September 2010, the Office of Management and Budget (OMB), in collaboration with DOD, issued criteria for the department to use in making war/overseas contingency operations funding requests (see Appendix A ). In January 2017, the Government Accountability Office (GAO) concluded the criteria for deciding whether items belong in the base budget or OCO funding "are outdated and do not address the full scope of activities" in the budget request. "For example, they do not address geographic areas such as Syria and Libya, where DOD has begun military operations; DOD's deterrence and counterterrorism initiatives; or requests for OCO funding to support requirements not related to ongoing contingency operations" it states. Section 1524 of the National Defense Authorization Act for Fiscal Year 2018 ( P.L. 115-91 ), directed the Secretary of Defense to "update the guidelines regarding the budget items that may be covered by overseas contingency operations accounts." Costs of Major DOD Contingency Operations Congress has enacted legislation directing DOD to compile reports on the costs of certain contingency operations. Section 1266 of the National Defense Authorization Act for Fiscal Year 2018 ( P.L. 115-91 ) directs the Secretary of Defense to submit the Department of Defense Supplemental and Cost of War Execution report, known as the Cost of War report, on a quarterly basis to the congressional defense committees and the GAO: "Not later than 45 days after the end of each fiscal year quarter, the Secretary of Defense shall submit to the congressional defense committees and the Comptroller General of the United States the Department of Defense Supplemental and Cost of War Execution report for such fiscal year quarter." The conference report accompanying the Department of Defense and Labor, Health and Human Services, and Education Appropriations Act, 2019 and Continuing Appropriations Act, 2019 ( P.L. 115-245 ) requires DOD to report incremental costs for operations in Afghanistan, Iraq, and other countries in the U.S. Central Command area of responsibility and directs: the Secretary of Defense to continue to report incremental costs for all named operations in the Central Command Area of Responsibility on a quarterly basis and to submit, also on a quarterly basis, commitment, obligation, and expenditure data for the Afghanistan Security Forces Fund, the Counter-Islamic State of Iraq and Syria Train and Equip Fund, and for all security cooperation programs funded under the Defense Security Cooperation Agency in the Operation and Maintenance, Defense-Wide Account. DOD's June 2018 Cost of War report to Congress details $1.5 trillion in obligations associated with certain contingency operations from FY2001 through FY2018. That figure includes $757.1 billion for those conducted primarily in Iraq—Operation Iraqi Freedom (OIF), Operation New Dawn (OND), and Operation Inherent Resolve (OIR); $727.7 billion for those conducted primarily in Afghanistan—Operation Enduring Freedom (OEF) and Operation Freedom's Sentinel (OFS); and $27.8 billion for those conducted primarily in the United States (see Table 2 and Figure 7 ). Limitations to Cost of War Data DOD's quarterly Cost of War reports are intended to provide Congress, GAO, and other stakeholders insight into the how the department obligates war-related appropriations. The reports include base and OCO obligations related to war activities, as well as obligation data broken down by certain major operations, service, component, agency, and appropriation. However, as GAO has noted, "the proportion of OCO appropriations not associated with specific operations identified in the statutory Cost of War reporting requirement has trended upward" in part because the criteria DOD uses for making OCO funding requests is outdated and not always used. More recently, the June 2018 Cost of War report does not appear to reference three recently classified overseas contingency operations targeting militants affiliated with al-Qaeda and the Islamic State of Iraq and Syria (ISIS): Operation Yukon Journey in the Middle East, Northwest Africa Counterterrorism, and East Africa Counterterrorism. Some observers have noted other limitations to Cost of War reports, such as incomplete accounting of costs, limited distribution of the documents and underlying data, and formatting that makes it difficult to reconcile the data with information contained in budget justification documents. State/USAID Between FY2001 and FY2018, Congress appropriated a total of $154 billion in OCO funds for State Department and USAID. For FY2018 (the most recent full-year appropriations for foreign affairs agencies), OCO funding amounted to 22% of the total appropriations for State Department, Foreign Operations and Related Programs appropriation. The Obama Administration's FY2012 International Affairs budget request was the first to include a request for OCO funds for "extraordinary and temporary costs of operations in Iraq, Afghanistan, and Pakistan." At the time, the Administration indicated that the use of this designation was intended to provide a transparent, whole-of-government approach to the exceptional war-related costs incurred in those three countries, thus better aligning the associated military and civilian costs. This first foreign affairs OCO request identified the significant resource demands placed on the State Department as a result of the transitions from military-led to civilian-led missions in Iraq and Afghanistan, as well as the importance of a stable Pakistan for the U.S. effort in Afghanistan. The FY2012 foreign affairs OCO request included: for Iraq, funding for the U.S. Embassy in Baghdad, consulates throughout Iraq, security costs in light of the then-planned U.S. military withdrawal, a then-planned civilian-led Police Development and Criminal Justice Program, military and development assistance in Iraq, and oversight of U.S. foreign assistance through the Special Inspector General for Iraq Reconstruction; for Afghanistan, funding to strengthen the Afghan government and build institutional capacity, support State/USAID and other U.S. government agency civilians deployed in Afghanistan, provide short-term economic assistance to address counterinsurgency and stabilization efforts, and provide oversight of U.S. foreign assistance programs in Afghanistan through the Office of the Special Inspector General for Afghanistan Reconstruction; and for Pakistan, funding to support U.S. diplomatic presence and diplomatic security in Pakistan, provide Pakistan Counterinsurgency Capability Funds (PCCF) to train and equip Pakistani forces to eliminate insurgent sanctuaries and promote stability and security in neighboring Afghanistan and the region. In subsequent years, the Administration designated certain State Department activities in Syria and other peacekeeping activities as OCO, and Congress accepted and broadened this expanded use of OCO in annual appropriations. In the FY2017 budget request, the Administration further broadened its use of State OCO funds, applying the designation to funds for countering Russian aggression, counterterrorism, humanitarian assistance, and aid to Africa. In addition to OCO funds requested through the normal appropriations process, the Administration in recent years requested emergency supplemental funding (designated as OCO) to support State/USAID efforts in countering the Islamic State and to respond to global health threats such as the Ebola and Zika viruses. For FY2019, the Trump Administration requested no OCO/GWOT funding for the Department of State and USAID, although the FY2019 House and Senate SFOPS bills ( H.R. 6385 and S. 3108 , 115 th Congress) would have appropriated approximately $8 billion in OCO-designated funding for various priorities. The estimated $154.1 billion in emergency and OCO/GWOT appropriations enacted to date for State/USAID includes major non-war-related programs, such as aid for the 2004 tsunami along Indian Ocean coasts, 2010 earthquake in Haiti, 2013 Ebola outbreak in West Africa, and 2015 worldwide outbreak of the Zika virus; as well as diplomatic operations (e.g., paying staff, providing security, and building and maintaining embassies). OCO/GWOT has also funded a variety of foreign aid programs, ranging from the Economic Support Fund to counter-narcotics in Afghanistan, Pakistan, and Iraq, among other activities in other countries. Figure 8 depicts the emergency or OCO appropriations for foreign affairs activities. Since 2012, when the OCO designation was first used for foreign affairs, more OCO funds have been appropriated than were requested each year, and those have also been authorized to be used in additional countries. DHS (USCG)60 Since January 2002, approximately $3 billion of post-9/11 emergency and OCO-designated funding has been provided to the U.S. Coast Guard (USCG) for its traditional homeland security missions and for USCG operations in support of U.S. Navy activities. This funding has been provided at various times as either an appropriation to the Coast Guard's operating expenses accounts, or as a transfer from Navy accounts to the Coast Guard. Open-source information on the use of those funds has varied. One FY2009 supplemental appropriations request included funding as a transfer, with the intent of funding "Coast Guard operations in support of OIF and OEF, as well as other classified activities." The FY2017 OCO request for annual appropriations for Navy Operations and Maintenance included $163 million for Coast Guard operational support for the deployment of patrol boats to the Northern Arabian Gulf and a port security unit to Guantanamo Bay, among other pay and equipment expenses. FY2019 OCO Funding President's FY2019 OCO Request Budget Deal Prompts OCO-to-Base Shift The Trump Administration initially requested a total of $89 billion in OCO funding for FY2019. All the funding was requested by DOD. In an amendment to the budget after Congress raised the BCA 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 the funding, in effect, shifting that amount into the DOD base budget request. In a statement on the budget amendment, Mulvaney said the request fixes "long-time budget gimmicks" in which OCO funding has 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. OCO Funding by Operation Of the revised amount of $69 billion requested for DOD OCO funding in FY2019: $46.3 billion (67%) was for Operation Freedom's Sentinel (OFS) in Afghanistan and related missions; $13 billion (22%) for Operation Inherent Resolve (OIR) in Iraq and Syria and related missions; $4.8 billion (9%) for the European Deterrence Initiative (EDI) to boost the U.S. military presence in eastern Europe to deter Russian military aggression; and $0.9 billion (1%) for security cooperation (see Figure 9 ). The FY2019 OCO budget assumes a total force level (average annual troop strength) of 93,796 personnel. That figure includes: 11,958 primarily in Afghanistan (OFS); 5,765 primarily in Iraq and Syria (OIR); 59,463 for in-theater support; and 16,610 primarily in the continental United States (CONUS) or otherwise mobilized (see Figure 10 ). The number of personnel actually in-country or in-theater at any given time may exceed or fall below those assumed levels. The FY2019 force level assumes an increase of 3,153 personnel (3.5%) from the FY2018 assumed level, all of which is assumed for in-theater support. (For analysis of troop level and budget trends, see the section, " Trends in OCO Funding and Troop Levels ," earlier in this report.) As previously discussed, DOD acknowledges "OCO funding has not declined at the same rate as the in-country troop strength … due to the fixed, and often inelastic, costs of infrastructure, support requirements, and in-theater presence to support contingency operations." The departments lists the following as OCO cost drivers: In-theater support, including infrastructure costs like command, control, communications, computers, and intelligence (C4I) and base operations for U.S. Central Command (CENTCOM) locations; Persistent demand for combat support such as intelligence, surveillance, and reconnaissance (ISR) assets used to enhance force protection; Equipment reset, which lags troop level changes and procurement of contingency-focused assets like munitions, unmanned aerial vehicles and force protection capabilities that may not be linked directly to in-country operations; and International programs and deterrence activities, which are linked to U.S. engagement in contingency operations and support U.S. interests but are not directly proportional to U.S. troop presence. OCO Funding by Functional Category DOD also breaks down the FY2019 OCO budget request by functional category (see Table 3 ). By this measure, the largest portion of OCO funding was $20 billion for in-theater support, followed by operations and force protection (including the incremental cost of military operations in Afghanistan, Iraq, Syria, and other countries), at $14.7 billion; and unspecified classified programs, at $9.9 billion. According to the Congressional Budget Office (CBO), approximately $47 billion (68%) of the FY2019 OCO budget request consists of enduring activities—that is, "those that would probably continue in the absence of overseas conflicts"—that could be funded in the DOD base budget. CBO associates enduring activities with the following DOD functional categories: in-theater support, classified programs, equipment reset and readiness, European Deterrence Initiative, security cooperation, and joint improvised-threat defeat. Differing OCO Projections Executive Branch budget documents for FY2019 show differing projections for how much OCO would be apportioned over the Future Years Defense Program (also known as the FYDP, pronounced "fiddip," the five-year period from FY2019 through FY2023). For example, Table 1-11 in DOD's National Defense Budget Estimates for FY2019, citing OMB data, projects five-year OCO funding at $359 billion. However, Table 1-9 of the same document puts the figure at $149 billion after assuming a higher amount of OCO funding shifting into the base budget. According to OMB, the President's initial FY2019 budget request projected increasing caps on defense discretionary base budget authority by $84 billion (15%) to $660 billion in FY2020 and by $87 billion (15%) to $677 billion in FY2021. It also projected defense funding for Overseas Contingency Operations (OCO) totaling $73 billion in FY2020 and $66 billion in FY2021. Thus, projected defense discretionary funding would total $733 billion in FY2020 and $743 billion in FY2021. FY2019 DOD budget documents show the same defense discretionary topline for FY2020 and FY2021. But they list an "Outyears Placeholder for OCO" of $20 billion in fiscal years FY2020-FY2023, and an "OCO to Base" amount of $53 billion in FY2020 and $45.8 billion in each year from FY2021-FY2023. The documents do not break down what accounts or activities are included in these amounts. The emergence of any new contingencies or conflicts would likely change DOD assumptions about OCO needs. Congressional Action on the FY2019 OCO Request and Appropriations Congress has appropriated a total of $68.8 billion for DOD OCO funding in FY2019, including the following amounts: $67.9 billion in defense funds provided in 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 Congress passed on September 26, 2018; and $921 million in defense funds provided in the Energy and Water, Legislative Branch, and Military Construction and Veterans Affairs Appropriations Act, 2019 ( P.L. 115-244 ), which Congress passed on September, 21, 2018. For the Department of State and USAID, as well as the Department of Homeland Security and U.S. Coast Guard, FY2019 OCO levels have not yet been determined. They remain at prorated FY2018 levels because of continuing resolutions (CR) to fund certain agencies through December 21, 2018. The FY2019 House and Senate SFOPS bills ( H.R. 6385 and S. 3108 , 115 th Congress) would have appropriated approximately $8 billion in OCO-designated funding for various priorities. The House committee-reported version of the Homeland Security appropriations bill ( H.R. 6776 , 115 th Congress) would not have appropriated any OCO/GWOT funding for the Coast Guard, while the Senate committee-reported version of the bill ( S. 3109 , 115 th Congress) would have appropriated $165 million for OCO/GWOT funding for the Coast Guard. Issues for Congress How Could the BCA Affect Future OCO Levels? Any decision by the 116 th Congress to change discretionary defense and nondefense spending limits that remain in effect for FY2020 and FY2021 under the Budget Control Act (BCA; P.L. 112-25 ) could impact future OCO funding levels. Lawmakers may consider the following questions: Will Congress keep the BCA as is and rely on OCO funding that is not subject to the caps to meet agency requirements? Will Congress repeal the BCA and use less OCO funding? Will Congress amend the BCA limits for future years and continue to use OCO funding, as it has in the past? Will Congress significantly reduce DOD and international affairs funding to stay within the BCA caps and not use OCO funding? In a November 2018 report, the National Defense Strategy Commission, a bipartisan panel created by Congress, issued recommendations related to OCO and the BCA. Recommendation No. 24 states, "Congress should eliminate the final two years of caps under the BCA." Recommendation 29 states, "To better prepare for major-power competition, Congress should gradually integrate OCO spending back into the base Pentagon budget. This also requires a dollar-for-dollar increase in the BCA spending caps, should they remain in force, so that this transfer does not result in an overall spending cut." Will Congress Continue to Use OCO for State/USAID? Both House and Senate FY2019 committee-reported appropriations bills from the 115 th Congress included about $8 billion in OCO funding for State/USAID. It remains to be seen if the 116 th Congress will pass this OCO level as requested or extend the continuing resolution. How Much Would Defense Spending Caps Increase under the Administration's Budget Plans? Congress could enact legislation to authorize and appropriate a level of base and OCO spending to meet current or revised discretionary defense spending caps in any number of ways. In FY2019 budget documents from OMB and DOD, the Trump Administration projected increasing defense spending in FY2020 and FY2021 beyond the statutory limits of the Budget Control Act of 2011 ( P.L. 112-25 ), but by differing amounts based on differing OCO projections. These figures serve as possible scenarios or options for Congress to consider. FY2020 Projections According to OMB budget documents, the President's initial FY2019 budget request projected $733 billion in defense discretionary spending in FY2020, including a base budget of $660 billion (which assumes an $84 billion, or 15%, increase in the BCA defense cap—or repeal of the legislation altogether) and an OCO defense budget of $73 billion (see Figure 11 ). According to DOD budget documents, the President's revised FY2019 budget request projected $733 billion in defense discretionary spending in FY2020, including a base budget of $713 billion (which assumes a $137 billion, or 24%, increase in the BCA defense cap—what would be the largest increase to the BCA defense caps yet—or repeal of the legislation altogether) and an OCO budget of $20 billion. Alternatively, assuming no change in the cap and congressional support for the Administration's projected $733 billion topline in FY2020, Congress could keep the BCA defense cap unchanged at $576 billion and designate an additional $157 billion for OCO. FY2021 Projections According to OMB budget documents, the President's initial FY2019 budget request projected $743 billion in defense discretionary spending in FY2021, including a base budget of $677 billion (which assumes an $87 billion, or 15%, increase in the BCA defense cap—or repeal of the legislation altogether) and an OCO budget of $66 billion (see Figure 11 ). According to DOD budget documents, the President's revised FY2019 budget request projected $743 billion in defense discretionary spending in FY2021, including a base budget of $723 billion (which assumes a $133 billion, or 23%, increase in the BCA defense cap—or repeal of the legislation altogether) and an OCO budget of $20 billion. Alternatively, assuming no change in the cap and congressional support for the Administration's projected $743 billion topline in FY2020, Congress could keep the BCA defense cap unchanged at $590 billion and designate an additional $153 billion for OCO. Flat FYDP? As previously discussed, these figures would change with different toplines for the national defense budget function (050). Former Defense Secretary Jim Mattis and the National Defense Strategy Commission have recommended that Congress increase the defense budget between 3% and 5% a year above inflation ("real growth") to meet U.S. strategic goals. President Donald Trump has said the discretionary defense spending request would total $700 billion in FY2020, a decrease of 2% in nominal terms from FY2019. Trump said, "We know what the budget—the new budget is for the Defense Department. It will probably be $700 billion." However, some media outlets have since reported that the President intends to request a discretionary defense budget of $750 billion in FY2020. Senator James Inhofe, chairman of the Senate Armed Services Committee, and Representative Mac Thornberry, ranking member of the House Armed Services Committees in the 116 th Congress, have argued, "Any cut in the defense budget would be a senseless step backward." Thornberry has also said transferring recurring OCO costs into the regular budget "makes sense … it makes for more predictable budgeting, but it's all about what happens on the topline." Representative Adam Smith, chairman of the House Armed Services Committee in the 116 th Congress, has said of the defense budget: "I think the number is too high, and it's certainly not going to be there in the future … We've got a debt, we've got a deficit, we've got infrastructure problems, we've got healthcare, education—there's a whole lot that is necessary to make our country safe, secure, and prosperous." Acting Defense Secretary Patrick Shanahan has talked about a flat topline for national defense: "When you look at the $700 billion, it's not just for one year drop down, [or] a phase, it's a drop and then held constant" over the FYDP. Under Secretary of Defense (Comptroller)/Chief Financial Officer David Norquist, who is also performing the duties of the Deputy Secretary of Defense, at one time was reportedly preparing two budgets for FY2020—one assuming $733 billion for national defense and another assuming $700 billion. An analyst has noted "returning enduring OCO costs to the base budget, particularly a vast majority of those enduring costs over a short period as DOD has outlined, could significantly complicate an agreement between congressional Democrats and Republicans to increase both the defense and nondefense BCA budget caps for FY2020 and FY2021." How Much OCO Funding Could Shift to the DOD Base Budget? As analyst noted, "OCO has become an even less-defined pot of money … Congress needs to properly question the DOD budget planners on the future of OCO." In a January 2017 report, GAO concluded, "Without a reliable estimate of DOD's enduring OCO costs, decision makers will not have a complete picture of the department's future funding needs or be able to make informed choices and trade-offs in budget formulation and decision making." The department states it has not fully estimated those costs in part because of the BCA. In a response to GAO, DOD wrote, "Developing reliable estimates of enduring OCO costs is an important first step to any future effort to transition enduring OCO costs to the base budget. In the context of such an effort, the Department would consider developing and reporting formal estimates of those costs. However, until there is sufficient relief from the budgetary caps established in the Budget Control Act of 2011, the Department will need OCO to finance counterterrorism operations, in particular [OFS] and [OIR]." In an October 2018 report, the Congressional Budget Office estimated OCO funding for DOD enduring activities—that is, those that would probably continue in the absence of overseas conflicts—totaled more than $50 billion a year (in 2019 dollars) from 2006 to 2018—and are projected to total about $47 billion a year starting in FY2020. This figure appears to be consistent with projections published by DOD. According to the department's FY2019 budget documents, DOD projected $53 billion for "OCO to Base" in FY2020 and $45.8 billion for "OCO to Base" for FY2021 through FY2023. How Does OCO Funding Affect Defense Planning? Some analysts have concluded: Uncertainty created by current reliance on OCO, particularly to fund base budget needs, could be detrimental to national security on three levels: (a) by undermining budget controls and contributing thereby to larger deficits, (b) by generating insecurity in the defense workforce and in defense suppliers, and (c) by creating long-term uncertainty in defense planning. The alternative, transitioning longer-term OCO expenses to the base budget, could be achieved through a combination of increased budget caps, targeted cuts in inefficient Defense programs, and increased revenues. For example, a potential enduring activity in the OCO budget is the European Deterrence Initiative (EDI). It was previously known as the European Reassurance Initiative (ERI), an effort that began in June 2014 to increase the number of U.S. military personnel and prepositioned equipment in Central and Eastern Europe intended in part to reassure NATO allies after Russia's military seized Crimea. As some analysts have noted, "Because it is in the OCO part of the budget request, EDI funding does not include a projection for how much funding will be allocated in future years, which can create uncertainty in the minds of allies and adversaries alike about the U.S. military's commitment to the program." On the other hand, some contend that it is precisely EDI's flexibility that allows the commander of European Command to quickly respond to changing security and posture needs in Europe, and ensure that monies intended for European deterrence will not be redirected to other DOD priorities. In its November 2018 report, the National Defense Strategy Commission quoted the late military strategist Bernard Brodie, who wrote "strategy wears a dollar sign." The panel concluded that relying on OCO funding to increase the defense budget "is not the way to provide adequate and stable resources" for the type of great power competition outlined in the Secretary of Defense's 2018 National Defense Strategy (NDS), which calls for the United States to bolster its competitive military advantage relative to threats posed by China and Russia: Because of budgetary constraints imposed by the BCA, lawmakers and the Department of Defense have increasingly relied upon the overseas contingency operations (OCO) fund to pay for warfighting operations in the greater Middle East, as well as other activities and initiatives. Yet this approach to resourcing has produced problems and distortions of its own. For one thing, the amount of money devoted to OCO since the BCA was enacted no longer corresponds to warfighting operations in the greater Middle East. Furthermore, such operations are no longer a top priority as articulated in the NDS. Finally, reorienting the military toward high-end competition and conflict will require new capabilities beyond the current program of record. OCO is not the way to provide adequate and stable resources for such a long-term endeavor, given its lack of predictability and the limitations on what OCO funds can be used to buy." Appendix A. Statutes, Guidance, and Regulations The designation of funding as emergency requirements or for Overseas Contingency Operations/Global War on Terrorism (OCO/GWOT) is governed by several statues as well as Office of Management and Budget (OMB) guidance and the Department of Defense (DOD) Financial Management Regulation (FMR). The Balanced Budget and Emergency Deficit Control Act (BBEDCA) of 1985 BBEDCA, as amended, includes the statutory definitions of emergency and unanticipated as they relate to budget enforcement through sequestration. The act also allows for appropriations to be designated by Congress and the President as emergency requirements or for Overseas Contingency Operations/Global War on Terrorism . Such appropriations are effectively exempt from the statutory discretionary spending limits. Title 10, United States Code—Armed Forces 10 U.S.C. 101—Definitions Section 101 provides definitions of terms applicable to Title 10. While it does not define overseas contingency operations, it does include a definition of a contingency operations . Administration and Internal Guidance In addition to statutory requirements, the DOD and the Department of State are subject to guidance on OCO spending from the Administration. In October 2006 , under the Bush Administration, then-Deputy Secretary of Defense Gordon England directed the services to break with long-standing DOD regulatory policies and expand their request for supplemental funding to reflect incremental costs related to the "longer war on terror." There was no specific definition for the "longer war on terror," now one of the core missions of the DOD. In February 2009, at the beginning of the Obama Administration, the Office of Management and Budget (OMB) issued updated budget guidance that required DOD to move some OCO costs back into the base budget. However, within six months of issuing the new criteria, officials waived restrictions related to pay and that would have prohibited end-strength growth. In a letter from OMB to the then-Under Secretary of Defense (Comptroller) Robert Hale, the agency characterized its 2009 criteria as "very successful" for delineating base and OCO spending but stated, "This update clarifies language, eliminates areas of confusion and provides guidance for areas previously unanticipated." GAO subsequently reported that the revised guidance significantly changed the criteria used to build the fiscal year 2010 OCO funding request by: specifying stricter definitions for repair and procurement of equipment; limiting applicability of OCO funds for RDT&E; excluding pay and allowances for end-strength above the level requested in the budget; excluding enduring family support initiatives; and excluding base realignment and closures (BRAC) amounts. OMB again revised its guidance in September 2010 following a number of GAO reports that had concluded DOD reporting on OCO costs was of "questionable reliability," due in part to imprecisely defined financial management regulations related to OCO spending. (as of September 9, 2010) Source: Letter from Steven M. Kosiak, Associate Director for Defense and Foreign Affairs, OMB, to Robert Hale, Under Secretary of Defense, Comptroller, "Revised War Funding Criteria," September 9, 2010. DOD Financial Management Regulations DOD incorporated the September 2010 OMB criteria for war costs into the Financial Management Regulation. Table 1 includes the general cost categories DOD uses in accounting for costs of contingency operations. Appendix B. Transfer Authorities, Special Purpose Accounts In addition to the supplemental appropriations and emergency or OCO/GWOT designation, the Department of Defense and the Department of State also have the authority to shift funds from one budget account to another in response to operational needs. For DOD, these transfers (sometimes called reprogramings ) are statutorily authorized by 10 U.S.C. 2214—Transfer of funds: procedures and limitations. This authority allows the Secretary of Defense to reallocate funds for higher priority items, based on unforeseen military requirements, after receiving written approval from the four congressional defense committees. DOD may also reprogram funds within an account from one activity to another, as long as the general purpose for the use of those funds remains unchanged. Specific limits to transfer or reprogramming authorities have also been added to these general authorities through provisions in annual defense authorization and appropriation acts. The FY2019 defense appropriations bill sets the base budget transfer cap at $4 billion and the OCO transfer cap at $2 billion. The Department of State's OCO transfer authority has been provided in appropriations acts and has specifically authorized the Administration to transfer OCO funds only to other OCO funds within Title VIII SFOPS appropriations, not between OCO and base accounts. The transfer authority is capped, specified by account, and requires regular congressional notification procedures. Overseas Contingency Operations Transfer Fund (OCOTF) The OCOTF was established for DOD in FY1997 as a no year transfer account (meaning amounts are available until expended) in order to provide additional flexibility to meet operational requirements. Transfers from the OCOTF are processed using existing reprogramming procedures. A quarterly report is submitted to the congressional oversight committees, documenting all transfers from the OCOTF to DOD components base budget accounts. Beginning in FY2002, funds to support Southwest Asia, Kosovo, and Bosnia contingency requirements were appropriated directly to DOD components' Operation and Maintenance (O&M) and Military Personnel accounts rather than to the OCOTF for later disbursement. FY2014 was the last year the Administration requested a direct appropriation to the OCOTF. Contingency Operations Funded in the DOD Base Budget As first mandated by section 8091 of the Department of Defense Appropriations Act, 2008 ( P.L. 110-116 ), Congress has required DOD to provide separate annual budget justification documents detailing the costs of U.S. armed forces' participation in all named contingency operations where the total cost of the operation exceeds $100 million or is staffed by more than 1,000 U.S. military personnel. Funding for certain DOD contingency operations has been moved to the base budget request, and is no longer designated as emergency or OCO/GWOT requirements. This movement of funding from the OCO request to the base budget request typically occurs as the operational activities of an enduring contingency operation evolve over time and DOD determines that certain elements of the associated military operations have become stable enough to be planned, financed, and executed within the base budget. For example, funding for Operation Noble Eagle, which provides fighter aircraft on 24/7 alert at several U.S. military bases, was moved from the GWOT request to the base budget request in 2005. Contingency operations and other activities funded wholly or in part through DOD's base budget have included: NATO Operations in the Balkans . The U.S. Army and U.S. Air Force provide support to the North Atlantic Treaty Organization-led operations in the Balkans region. Most U.S. forces are deployed to Kosovo in support of the NATO-led Kosovo Force (KFOR). A small number of U.S. personnel are deployed to the NATO headquarters in Sarajevo in Bosnia and Herzegovina; Joint Task Force - Bravo . U.S. forces support this task force, which operates from Soto Cano Air Base in Honduras and supports joint, combined, and interagency exercises and operations in Central America to counter the influence of transnational organized crime; carry out humanitarian assistance and disaster relief; and build military capacity with regional partners and allied nations to promote regional cooperation and security; Operation Juniper Shield. Previously known as Operation Enduring Freedom-Trans Sahara (OEF-TS), this operation supports efforts to defeat violent extremist organizations in East Africa. This operation also provides military-to-military engagement with partner African countries, as well as readiness for crisis response and evacuation of U.S. military, diplomatic, and civilian personnel; Operation Noble Eagle . This operation funds the continuing efforts to defend the United States from airborne attacks, maintain the sovereignty of the United States airspace, and defend critical U.S. facilities from potentially hostile threats or unconventional attacks; Operation Enduring Freedom- Horn of Africa . This operation was established to support efforts to defeat violent extremist organizations in East Africa; provide military-to-military engagement with partner African countries, as well as readiness for crisis response and evacuation of U.S. military, diplomatic, and civilian personnel throughout East Africa; Operation Enduring Freedom- Caribbean and Central America . A U.S. regional military operation initiated in 2008, under the operational control of Special Operations Command-South, this operation was established to focus on counterterrorism to support DOD's overall military objectives and the larger fight against terrorism. Operation Observant Compass . This operation was established to support the deployment of approximately 100 U.S. military personnel assisting the Ugandan People's Defense Force and neighboring partner African countries in countering the Lord's Resistance Army operations. Operation Spartan Shield. This operation was established to support ongoing U.S. Central Command missions. Other Congressionally Authorized Funds or Programs Through the OCO authorization and appropriation process, Congress has created numerous funds and programs that are designed to finance specific overseas contingency operations-related activities that do not fit into traditional budgetary accounts. Many of these funds and programs are supplied with amounts that are available until expended—however, authorization for the specified fund or program has an expiration date, thereby requiring further congressional action for reauthorization of affected funds or programs. Congress has also provided increased transfer authority to provide greater flexibility for U.S. government activities in situations that are typically unpredictable. Examples of these types of congressionally authorized OCO programs or funds have included: Afghan istan Security Forces Fund (ASFF) and Counter-ISIS Train and Equip Fund (CTEF) . These funds were established to provide funding and support for the training, equipping, and expansion of selected military and security forces in support of U.S. objectives; Counterterrorism Partnership s Fund . This fund was established to provide funding and support to partner nations engaged in counterterrorism and crisis response activities; Command er's Emergency Response Program. This program was established to support infrastructure improvements, such as road repair and construction and enable military commanders on the ground to respond to urgent humanitarian relief and reconstruction needs by undertaking activities that will immediately aid local populations and assist U.S. forces in maintaining security gains; Joint Improvised Explosive Device (IEDs) Defeat Fund . This fund was established to coordinate and focus all counter-IED efforts, including ongoing research and development, throughout DOD. Due to the enduring nature of the threat, DOD began moving associated funding to the base budget in FY2010; Mine Resistant Ambush Protected Vehicle (MRAP) Fund . This fund was intended to expedite the procurement and deployment of MRAPs to Iraq and Afghanistan; European Deterrence Initiative (EDI) . Initially the European Reassurance Initiative (ERI), this effort was established to provide funding and support to NATO allies and partners to "reassure allies of the U.S. commitment to their security and territorial integrity as members of the NATO Alliance, provide near-term flexibility and responsiveness to the evolving concerns of our allies and partners in Europe, especially Central and Eastern Europe, and help increase the capability and readiness of U.S. allies and partners;" Global Security Contingency Fund . This fund was established to provide funding for the Department of State and the Department of Defense "to facilitate an interagency approach to confronting security challenges;" Complex Crise s Fund . This fund was established to provide funding through the State Department and USAID "to help prevent crises and promote recovery in post-conflict situations during unforeseen political, social, or economic challenges that threaten regional security;" Migration and Refugee Assistance Fund . This fund was established to provide funding to respond to refugee crises in Africa, the Near East, South and Central Asia, and Europe and Eurasia; and Ukraine Security Assistance Initiative . This initiative was established to provide assistance, including training, equipment, lethal weapons, of a defensive nature; logistics support; supplies and services; sustainment; and intelligence support to the military and national security forces of Ukraine. Acknowledgements This is an update to a report originally co-authored by [author name scrubbed], former CRS Specialist in Defense Readiness and Infrastructure. It references research previously compiled by [author name scrubbed], former CRS Specialist in U.S. Defense Policy and Budget; Christopher Mann, Analyst in Defense Policy and Trade; [author name scrubbed], Analyst in U.S. Defense Acquisition Policy; [author name scrubbed], CRS Specialist on Congress and the Legislative Process; and [author name scrubbed], CRS Analyst in Public Finance. [author name scrubbed], Research Assistant, helped compile the graphics.

Congressional interest in Overseas Contingency Operation (OCO) funding has continued as Members debate ways of funding priorities without breaching discretionary spending limits set in law. Since the terrorist attacks of September 11, 2001, Congress has appropriated approximately $2 trillion in discretionary budget authority designated as emergency requirements or for Overseas Contingency Operations/Global War on Terrorism (OCO/GWOT) in support of the broad U.S. government response to the 9/11 attacks and for other related international affairs activities. This figure amounts to approximately 9.4% of total discretionary spending during this period. Congress has used supplemental appropriation acts or designated funding for emergency requirements or OCO/GWOT—or both—in statute. These funds are not subject to limits on discretionary spending in congressional budget resolutions or to the statutory discretionary spending limits established by the Budget Control Act of 2011 (BCA; P.L. 112-125). The Balanced Budget and Emergency Deficit Control Act of 1985 (BBEDCA; P.L. 99-177) allows emergency funding to be excluded from budget control limits. The BCA added the OCO/GWOT designation to the BBEDCA exemption, thereby providing Congress and the President with an alternate way to exclude funding from the BCA spending limits. While there is no overall statutory limit on the amount of emergency or OCO/GWOT spending, both Congress and the President have fundamental roles in determining how much of the spending to provide each fiscal year. Congress must designate any such funding in statute on an account-by-account basis. The President is also required to designate it as such after it is appropriated to be available for expenditure. Debate over what should constitute OCO/GWOT or emergency activities and expenses has shifted over time, reflecting differing viewpoints about the extent, nature, and duration of U.S. military operations in Afghanistan, Iraq, Syria, and elsewhere. Funding designated for OCO/GWOT has also been used to fund base-budget requirements of the DOD and State Department and to prevent or respond to crises abroad, including armed conflict, as well as human-caused and natural disasters. Some defense officials and policymakers argue OCO funding allows for flexible response to contingencies, and provides a "safety valve" to the spending caps and threat of sequestration—the automatic cancellation of budget authority largely through across-the-board reductions of nonexempt programs and activities—under the BCA. Critics, however, have described OCO/GWOT as a loophole or "gimmick"—morphing from an account for replacing combat losses of equipment, resupplying expended munitions, and transporting troops through war zones, to a "slush fund" for activities unrelated to contingency operations. Congress appropriated approximately $103 billion for OCO in FY2017 (8.5% of all discretionary appropriations), $78 billion for OCO in FY2018 (5.5% of all discretionary appropriations), and $68.8 billion for OCO so far in FY2019. Discretionary appropriations for FY2019 are not yet final; a continuing resolution expired December 21, 2018. Following passage of the Bipartisan Budget Act of 2018 (P.L. 115-123), which raised discretionary budget caps for defense and foreign affairs agencies in FY2018 and FY2019, the Administration proposed shifting some OCO funding into the base, or regular, budget. Although Congress has generally not followed Administration requests for reduced funding for foreign affairs and domestic activities and has increased funding for defense, the President has asked cabinet secretaries to propose spending cuts of 5% in FY2020. Such proposals, if requested in a budget submission, may create difficult choices for Congress in FY2020 and FY2021—the final two years of the BCA discretionary spending limits. Congress's decisions on OCO/GWOT designations will affect how much agency funding is available for military operations and foreign affairs activities overseas, how much is subject to the BCA caps, and how much is incorporated into regular budgets and long-term budget projections.

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Introduction This report provides background information and issues for Congress on the John Lewis (TAO-205) class oiler shipbuilding program, a program to build a new class of 20 fleet oilers for the Navy. The Navy's proposed FY2020 budget requests the procurement of the fifth and sixth ships in the program. Issues for Congress regarding the TAO-205 program include the following: whether to approve, reject, or modify the Navy's FY2020 procurement funding request for the program; the number of oilers the Navy will require in coming years to support its operations; and whether to encourage or direct the Navy to build TAO-205s with more ship self-defense equipment than currently planned by the Navy. Decisions that Congress makes regarding the program could affect Navy capabilities and funding requirements and the U.S. shipbuilding industrial base. For an overview of the strategic and budgetary context in which the TAO-205 program and other Navy shipbuilding programs may be considered, see CRS Report RL32665, Navy Force Structure and Shipbuilding Plans: Background and Issues for Congress , by Ronald O'Rourke. Background Navy Fleet Oilers Role of Fleet Oilers The primary role of Navy fleet oilers is to transfer fuel to Navy surface ships that are operating at sea, so as to extend the operating endurance of these surface ships and their embarked aircraft. Fleet oilers also provide other surface ships with lubricants, fresh water, and small amounts of dry cargo. Fleet oilers transfer fuel and other supplies to other surface ships in operations called underway replenishments (UNREPs). During an UNREP, an oiler steams next to the receiving ship and transfers fuel by hose (see Figure 1 , Figure 2 , and Figure 3 ). Oilers are one kind of Navy UNREP ship; other Navy UNREP ships include ammunition ships, dry cargo ships, and multiproduct replenishment ships. The Navy's UNREP ships are known more formally as the Navy's combat logistics force (CLF). Most of the Navy's CLF ships are operated by the Military Sealift Command (MSC). Navy oilers carry the designation TAO (sometimes written as T-AO). The T means that the ships are operated by MSC with a mostly civilian crew; the A means it is an auxiliary ship of some kind; and the O means that it is, specifically, an oiler. Although the role of fleet oilers might not be considered as glamorous as that of other Navy ships, fleet oilers are critical to the Navy's ability to operate in forward-deployed areas around the world on a sustained basis. The U.S. Navy's ability to perform UNREP operations in a safe and efficient manner on a routine basis is a skill that many other navies lack. An absence of fleet oilers would significantly complicate the Navy's ability to operate at sea on a sustained basis in areas such as the Western Pacific or the Indian Ocean/Persian Gulf region. The Navy states that the ability to rearm, refuel and re-provision our ships at sea, independent of any restrictions placed on it by a foreign country, is critical to the Navy's ability to project warfighting power from the sea. As the lifeline of resupply to Navy operating forces underway, the ships of the Navy's Combat Logistic Force (CLF) enable Carrier Strike Groups and Amphibious Ready Groups to operate forward and remain on station during peacetime and war, with minimal reliance on host nation support. Existing Henry J. Kaiser (TAO-187) Class Oilers The Navy's existing force of fleet oilers consists of 15 Henry J. Kaiser (TAO-187) class ships ( Figure 4 ). These ships were procured between FY1982 and FY1989 and entered service between 1986 and 1996. They have an expected service life of 35 years; the first ship in the class will reach that age in 2021. The ships are about 677 feet long and have a full load displacement of about 41,000 tons, including about 26,500 tons of fuel and other cargo. The ships were built by Avondale Shipyards of New Orleans, LA, a shipyard that eventually became part of the shipbuilding firm Huntington Ingalls Industries (HII). HII subsequently wound down Navy shipbuilding operations at Avondale, and the facility no longer builds ships. (HII continues to operate two other shipyards that build Navy ships.) TAO-205 Program Program Name The TAO-205 class program was originally called the TAO(X) program, with the (X) meaning that the exact design of the ship had not yet been determined. On January 6, 2015, then-Secretary of the Navy Ray Mabus announced that ships in the class will be named for "people who fought for civil rights and human rights," and that the first ship in the class, TAO-205, which was procured in FY2016, will be named for Representative John Lewis. The class consequently is now known as the John Lewis (TAO-205) class. Quantity As part of its goal for achieving a fleet of 355 ships, the Navy wants to procure a total of 20 TAO-205 class ships. The required number of oilers largely depends on the numbers and types of other surface ships (and their embarked aircraft) to be refueled, and the projected operational patterns for these ships and aircraft. Schedule The first TAO-205 class ship was procured in FY2016, the second in FY2018, and the third and fourth in FY2019. The Navy's FY2020 five-year (FY2020-FY2023) shipbuilding plan calls for procuring the next seven ships in the class in annual quantities of 2-1-1-2-1. The Navy's FY2020 30-year (FY2020-FY2049) shipbuilding plan calls for procuring the remaining nine ships in the program at a rate of one per year starting in FY2025. The first TAO-205 is scheduled for delivery in November 2020. Funding Table 1 shows procurement funding for the TAO-205 program in the Navy's FY2020 budget submission. The Navy's FY2020 budget submission estimates the total procurement cost of the 20 planned TAO-205s at $12,196.1 million (i.e., about 12.2 billion) in then-year dollars, or an average of $609.8 million each. Since the figure of $12,196.1 million is in then-year dollars, it incorporates estimated annual inflation rates for TAO-205s to be procured out to FY2033. Ship Design and Capabilities The TAO-205 class design ( Figure 5 ) will have capabilities similar to those of the Kaiser-class ships, and will rely on existing technologies rather than new technologies. To guard against oil spills, TAO-205s are to be double-hulled, like modern commercial oil tankers, with a space between the two hulls to protect the inner hull against events that puncture the outer hull. (The final Kaiser-class ships are double-hulled, but earlier ships in the class are single-hulled.) Builder TAO-205s are being built by General Dynamics/National Steel and Shipbuilding Company (GD/NASSCO) of San Diego, CA, a shipyard that builds Navy auxiliaries and DOD sealift ships. Combined Solicitation Limited to Two Builders8 On June 25, 2015, the Navy, as part of its acquisition strategy for TAO-205 program, issued a combined solicitation consisting of separate Requests for Proposals (RFPs) for the detailed design and construction (DD&C) of the first six TAO-205s; the DD&C in FY2017 (and also procurement of long lead-time materials in FY2016) for an amphibious assault ship called LHA-8 that the Navy procured in FY2017; and contract design support for the LPD-17 Flight II program (previously called the LX[R] program), a program to procure a new class of 13 amphibious ships. The Navy limited bidding in this combined solicitation to two bidders—Ingalls Shipbuilding of Huntington Ingalls Industries (HII/Ingalls) and GD/NASSCO—on the grounds that these are the only two shipbuilders that have the capability to build both TAO-205s and LHA-8. Under the Navy's plan for the combined solicitation, one of these two yards was to be awarded the DD&C contract for the first six TAO-205s, the other yard was to be awarded the DD&C contract (and procurement of long lead-time materials) for LHA-8, and the shipyard with the lowest combined evaluated price was to receive a higher profit on its DD&C contract and was to be awarded the majority of the LPD-17 Flight II contract design engineering man-hours. Block Buy Contract Awarded to GD/NASSCO On June 30, 2016, the Navy announced its awards in the above-described combined solicitation, awarding a fixed price incentive block buy contract for the DD&C of the first six TAO-205s to GD/NASSCO. (The Navy awarded the contract for the DD&C of LHA-8 to HII/Ingalls. HII/Ingalls was also awarded the majority of the LPD-17 Flight II contract design engineering man-hours.) The Navy was granted authority for using a block buy contract to procure the first six TAO-205s by Section 127 of the FY2016 National Defense Authorization Act ( S. 1356 / P.L. 114-92 of November 25, 2015). It was earlier estimated that the block buy contract would reduce the procurement cost of the second through sixth TAO-205s by an average of about $45 million each, compared to costs under the standard or default DOD approach of annual contracting. The Navy states that about $35 million of the $45 million in per-ship savings will come from using advance procurement (AP) funding for batch-ordering TAO-205 components. The Navy states that this use of AP funding could have occurred under annual contracting, and that the savings that are intrinsic to the block buy contract are thus about $10 million per ship. U.S. Content Requirement for Certain Components Section 8117 of the FY2019 Appropriations Act (Division A of H.R. 6157 / P.L. 115-245 of September 28, 2018) states the following: Sec. 8117. None of the funds provided in this Act for the TAO Fleet Oiler program shall be used to award a new contract that provides for the acquisition of the following components unless those components are manufactured in the United States: Auxiliary equipment (including pumps) for shipboard services; propulsion equipment (including engines, reduction gears, and propellers); shipboard cranes; and spreaders for shipboard cranes. May 2019 GAO Report The Appendix presents the Government Accountability Office's (GAO's) assessment of the TAO-205 class program from GAO's annual report surveying DOD major acquisition programs. FY2020 Procurement Funding Request The Navy's proposed FY2020 budget requests the procurement of the 5th and 6th ships in the program. The Navy estimates the combined procurement cost of the two ships at $1,056.3 million, or an average of $528.1 million each. The two ships have received $75.0 million in prior-year advance procurement (AP) funding, and the Navy's proposed FY2020 budget requests the remaining $981.2 million in procurement funding needed to complete the two ships' estimated combined procurement cost. The Navy's proposed FY2020 budget also requests $73.0 million in AP funding for TAO-205s to be procured in future fiscal years, and $3.7 million in cost-to-complete procurement funding to cover cost growth on TAO-205s procured in prior fiscal years, bringing the total FY2020 procurement funding request for the TAO-205 program (aside from outfitting and post-delivery costs) to $1,057.9 million. Issues for Congress FY2020 Procurement Funding One issue for Congress is whether to approve, reject, or modify the Navy's FY2020 procurement funding request for the TAO-205 program. In assessing this issue, Congress may consider, among other things, whether the Navy has accurately priced the work that it is requesting to fund in FY2020. Required Number of Oilers Another issue for Congress concerns the number of oilers the Navy will require in coming years to support its operations. The Navy is implementing a new operational concept, called Distributed Maritime Operations (DMO), that could lead to the development of a fleet with larger numbers of individually smaller ships, and to more-widely dispersed Navy operations. DMO could affect requirements for Navy logistics, including oilers. The Navy states that Recapitalizing the auxiliary and sealift fleet in support of DMO has become a top priority. The initial reviews of the requirements to support this operational maritime concept indicate potential growth across the five lines of effort: refuel, rearm, resupply, repair, and revive. Coincident is the review of the level of effort needed to distribute logistics into a contested maritime environment following safe transfer by the logistics fleet—smaller, faster, multi-mission transports likely resident within the future battle force. The work to fully flesh out the requirement is ongoing, but the aggregate is expected to be no less than the current requirement, reinforcing the urgency to recapitalize the current fleet. An August 2017 GAO report states the following: The readiness of the surge sealift and combat logistics fleets has trended downward since 2012. For example, GAO found that mission-limiting equipment casualties—incidents of degraded or out-of-service equipment—have increased over the past 5 years, and maintenance periods are running longer than planned, indicating declining materiel readiness across both fleets.... The Navy has not assessed the effects of widely distributed operations, which could affect the required number and type of combat logistics ships. The Navy released its new operational concept of more widely distributed operations—ships traveling farther distances and operating more days to support a more distributed fleet—in 2017. The Navy has not assessed the effects that implementing this concept will have on the required number and type of combat logistics ships. These effects could be exacerbated in the event that the Navy is less able to rely on in-port refueling—which has comprised about 30 percent of all refuelings over the past 3 years—placing greater demand on the combat logistics fleet. Given the fleet's dependence on the combat logistics force, waiting until 2019 or 2020 to conduct an assessment, as planned, could result in poor investment decisions as the Navy continues to build and modernize its fleet. Furthermore, without assessing the effects of widely distributed operations on logistics force requirements and modifying its force structure plans accordingly, the Navy risks being unprepared to provide required fuel and other supplies. TAO-205 Ship Self-Defense Equipment Another issue for Congress is whether to encourage or direct the Navy to build TAO-205s with more ship self-defense equipment than currently planned by the Navy. The issue relates to how changes in the international security environment might affect how the Navy operates and equips its underway replenishment ships. During the Cold War, the Navy procured underway replenishment ships to support a two-stage approach to underway replenishment in which single-product "shuttle" ships (such as oilers, ammunition ships, and dry stores ships) would take their supplies from secure ports to relatively safe midocean areas, where they would then transfer them to multiproduct "station" ships called TAOEs and AORs. The TAOEs and AORs would then travel to Navy carrier strike groups operating in higher-threat areas and transfer their combined supplies to the carrier strike group ships. As a result, single-product shuttle ships were equipped with lesser amounts of ship self-defense equipment, and TAOEs and AORs were equipped with greater amounts of such equipment. When the Cold War ended and transitioned to the post-Cold War era, threats to U.S. Navy ships operating at sea were substantially reduced. As a consequence, the amount of ship self-defense equipment on the TAOEs and AORs was reduced, and a single-stage approach to underway replenishment, in which oilers and dry stores ships took supplies from secure ports all the way to carrier strike group ships, was sometimes used. Now that the post-Cold War era has transitioned to a new strategic environment featuring renewed great power competition with countries like China and Russia, and a consequent renewal of potential threats to U.S. Navy ships operating at sea, the question is whether TAO-205s should be equipped with lesser amounts of ship self-defense equipment, like oilers were during both the Cold War and post-Cold War eras, or with greater amounts of ship self-defense equipment, like TAOEs and AORs were during the Cold War. Building TAO-205s with more ship self-defense equipment than currently planned by the Navy could increase TAO-205 procurement costs by tens of millions of dollars per ship, depending on the amount of additional ship self-defense equipment. Section 1026 of the FY2016 National Defense Authorization Act ( S. 1356 / P.L. 114-92 of November 25, 2015) required an independent assessment of the Navy's combat logistics force ships. The report was delivered to Congress in February 2016. A copy of the report was posted by the media outlet Politico on March 11, 2016. The report states the following: The T-AO(X) will only have a limited capability to defeat a submarine launched torpedo attack and no capability to defeat a missile attack. When delivered, the TAO(X) will have: —[the] NIXIE Torpedo Countermeasure System [for decoying certain types of torpedoes] —[the] Advanced Degaussing System (Anti-Mine) [for reducing the ship's magnetic signature, so as to reduce the likelihood of attack by magnetically fused mines] When required, the T-AO(X) will also have ability to embark Navy Expeditionary Combat Command Expeditionary Security Teams (EST). The ESTs will embark with several crew served weapons and are designed to provide limited self-defense against a small boat attack. The T-AO(X) will have Space, Weight, Power and Cooling (SWAP-C) margins for future installations of the following systems: —[the] Close In Weapon System (CIWS) or SeaRAM (Rolling Airframe Missile) [for defense against missile attack] —[the] Anti-Torpedo Torpedo Defense System (ATTDS) [for destroying torpedoes] Even after the installation of a CIWS or ATTDS, if the T-AO(X) was to operate in anything other than a benign environment, the ship will require both air and surface escorts. The decision to rely on [other] Fleet assets to provide force protection [i.e., defense against attacks] for the T-AO(X) was validated by the JROC [in June 2015]. Legislative Activity for FY2020 Summary of Congressional Action on FY2020 Funding Table 2 summarizes congressional action on the Navy's request for FY2020 procurement funding for the TAO-205 program. Appendix. May 2019 GAO Report A May 2019 GAO report—the 2019 edition of GAO's annual report surveying DOD major acquisition programs—stated the following regarding the TAO-205 program: Technology Maturity and Design Stability The Navy has matured all Lewis class critical technologies and stabilized the ships' design. In 2014, the Navy identified three critical technologies for the Lewis class, all of which involved a new system for transferring cargo at sea. Prior to initiating detail design activities in June 2016, the Navy completed prototype tests of the critical technologies and found that they were fully mature—an approach consistent with shipbuilding best practices. In 2017, the Navy removed one critical technology—the Heavy e-STREAM cargo delivery system—from the Lewis class design. The Navy had intended to use this system to deliver F-35 Lightning II power modules. The Navy subsequently decided to deliver these by air, which precluded any need for the Heavy system. Lead ship construction began in September 2018 with 95 percent of the ship's total design effort complete. Program officials stated that this figure meant that 100 percent of the ship's basic and functional design were by then complete—an approach consistent with best practices. Throughout detail design and now into construction, the Navy has not changed the Lewis class program's performance requirements. The Navy also leveraged commercial vessel designs to minimize design and construction risks. The Lewis class features a modern double-hull construction, an environmental-based design standard for commercial tankers, to ensure the ships can dock at ports-of-call. This design was included in the final three Kaiser class oilers. Production Readiness The program office has largely kept to its construction schedule to date for the first ship, but a flooding incident at a NASSCO graving dock in July 2018 has affected the delivery of future ships. The program office stated that this incident has not affected current ship fabrication activities. However, the dock's unavailability while repairs are planned and implemented has disrupted the contractor's schedule for future ships. According to the program office, the incident has resulted in some delays to certain delivery dates for ships two through six. Other Program Issues As part of the Navy's plan to expand the fleet, the Navy concluded that it would need an additional three Lewis class ships. The Navy's budget request for fiscal year 2019 increased its planned one-ship-per-year buy to two for fiscal years 2019, 2021, and 2023. The Congress provided appropriations for the additional fiscal year 2019 ship in support of the Navy's request. To account for the additional ships in fiscal years 2019 and 2021, the Navy plans to add two more ships to the low-rate initial production phase. Subsequently, program officials stated that they plan to compete a new contract for the remaining 12 ships using the construction knowledge gained from efforts under the existing contract. Program Office Comments We provided a draft of this assessment to the program office for review and comment. The program office provided technical comments, which we incorporated where appropriate. The program office stated that it continues to follow GAO shipbuilding best practices and has leveraged commercial vessel design practices to minimize risk. The program office also stated that it is currently revising its acquisition baseline to reflect the update in total quantities to 20 ships. In addition, the program office noted that, in fiscal year 2019, it fully funded the third and fourth ships and funded advance procurement for the fifth ship.

The Navy began procuring John Lewis (TAO-205) class oilers in FY2016, and a total of four have been procured through FY2019, including two in FY2019. The first six ships are being procured under a block buy contract that was authorized by Section 127 of the FY2016 National Defense Authorization Act (S. 1356/P.L. 114-92 of November 25, 2015). The Navy wants to procure a total of 20 TAO-205s. The Navy's proposed FY2020 budget requests the procurement of the fifth and sixth ships in the program. The Navy estimates the combined procurement cost of the two ships at $1,056.3 million, or an average of $528.1 million each. The two ships have received $75.0 million in prior-year advance procurement (AP) funding, and the Navy's proposed FY2020 budget requests the remaining $981.2 million in procurement funding needed to complete the two ships' estimated combined procurement cost. The Navy's proposed FY2020 budget also requests $73.0 million in AP funding for TAO-205s to be procured in future fiscal years, and $3.7 million in cost-to-complete procurement funding to cover cost growth on TAO-205s procured in prior fiscal years, bringing the total FY2020 procurement funding request for the TAO-205 program (aside from outfitting and post-delivery costs) to $1,057.9 million. Issues for Congress include the following: whether to approve, reject, or modify the Navy's FY2020 procurement funding request for the TAO-205 program; the number of oilers the Navy will require in coming years to support its operations; and whether to encourage or direct the Navy to build TAO-205s with more ship self-defense equipment than currently planned by the Navy.

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Introduction The Transportation Infrastructure Finance and Innovation Act (TIFIA) program provides long-term, low-interest loans and other types of credit assistance for the construction of surface transportation projects. The TIFIA prog ram, administered by the Build America Bureau of the Department of Transportation (DOT), was reauthorized most recently in the Fixing America's Surface Transportation (FAST) Act ( P.L. 114-94 ) from FY2016 through FY2020. Direct funding for the TIFIA program to make loans is authorized at $300 million for each of FY2019 and FY2020, but state departments of transportation can also use federal-aid highway grant money, both formula and discretionary, to subsidize much larger loans. The primary goal of the TIFIA program, historically, has been to enable the construction of large-scale surface transportation projects by providing low-interest, long-term financing to complement state, local, and private investment. The TIFIA program has been one of the main ways in which the federal government has encouraged the development of public-private partnerships (P3s) and private financing in surface transportation often backed by new, but sometimes uncertain, revenue sources such as highway tolls, other types of user charges, and incremental real estate taxes. Since its enactment in 1998 as part of the Transportation Equity Act for the 21 st Century (TEA-21; P.L. 105-178 ) through FY2018, the TIFIA program has provided assistance of $32 billion to 74 projects with a total cost of about $117 billion (in FY2018 inflation-adjusted dollars). Congress has used the TIFIA program as a model for other initiatives, notably the Water Infrastructure Finance and Innovation Act (WIFIA) program, administered by the Environmental Protection Agency and the Army Corps of Engineers. Several recent proposals would expand TIFIA assistance. For example, the Trump Administration's $200 billion infrastructure plan, based on leveraging state, local, and private resources, proposed adding several billion dollars of budget authority for TIFIA and expanding eligibility to ports and airports. The experience of TIFIA over the past decade shows, however, that there are limits to financing projects in this way. These limits include the number of projects that can take advantage of credit assistance, the difficulties of developing revenue mechanisms to service loans, the typical need for grant funding to make up a portion of the capital, and the difficulties of attracting private investment to risky projects, particularly those for which demand is uncertain or hard to predict. Program Overview Credit assistance provided by the TIFIA program can be in the form of loans, loan guarantees, and lines of credit. To date, all TIFIA assistance except one loan guarantee has been in the form of loans. Loans and loan guarantees can be provided up to a maximum of 49% of project costs; lines of credit can be for an amount up to a maximum of 33% of project costs. Despite the higher limit established in law, DOT has generally limited loans and loan guarantees to no more than 33% of project costs, so as "to ensure that the DOT shares the credit risk with other participants." Projects eligible for TIFIA assistance include highways and bridges, public transportation, transit-oriented development, intercity passenger bus and rail, intermodal connectors, intermodal freight facilities, and the capitalization of a rural projects fund. Eligible applicants for TIFIA assistance include state and local governments, railroad companies (including Amtrak), transit agencies, and private entities. Surface transportation projects are not evaluated for TIFIA assistance based on their projected benefits and costs. Instead, projects are assessed on creditworthiness, the ability of borrowers to repay their loans, and a number of other eligibility criteria. To be judged creditworthy, a project's senior debt obligations and the borrower's ability to repay the federal credit instrument must receive investment-grade ratings from at least one, but typically two, nationally recognized credit rating agencies. Generally, a project must cost $50 million or more to be eligible for assistance, but the threshold is $15 million for intelligent transportation system projects and $10 million for transit-oriented development projects, rural projects, and local projects. Another requirement is that loans must be repaid with a dedicated revenue stream, typically a project-related user fee, such as a toll, but sometimes dedicated tax revenue. The attractiveness of TIFIA financing is its low cost, its flexibility, and its long duration, features that are hard to match in the private capital market. Federal credit assistance provides funds at a low fixed rate, the Treasury rate for a similar maturity; for rural infrastructure projects, federal assistance is provided at half the Treasury rate. Loans are available for up to 35 years from the date of substantial completion of a project. Repayments can be deferred for up to five years after substantial completion, and amortization can be flexible. In some circumstances, TIFIA can reduce the transaction costs of borrowing, which for tax-exempt bonds typically include underwriter fees, bond counsel expenses, and the cost of borrowing funds before they are needed (known as "negative carry"). The Riverside County Transportation Commission in California is using TIFIA financing to build the I-15 Tolled Express Lanes Project, and has estimated that using traditional bond financing in lieu of a $150 million TIFIA loan would have cost an additional $25 million for the $471 million project. The characteristics of TIFIA financing can make it easier for project sponsors to attract the less patient and less flexible capital that is typically offered in the private market. This is especially important for projects like new toll roads, for which usage and revenue may take several years to grow to cover debt repayment. TIFIA financing is available with a senior or subordinate lien, but is typically used as subordinate debt, meaning it is in line to be repaid after the project's operational expenses and senior debt obligations. However, the TIFIA statute includes a provision which requires that in the event of a project bankruptcy, the federal government will be made equal with senior debt holders. This is referred to as the "springing lien," and has led some to ask whether TIFIA financing is truly subordinate. The springing lien issue notwithstanding, TIFIA financing is generally thought to reduce project risk, thereby helping to secure private financing at rates lower than would otherwise be available. Financing projects instead of relying on pay-as-you go funding can mean such projects can be constructed years earlier than otherwise. TIFIA, therefore, is a means to accelerate project delivery and the benefits that flow from new infrastructure. Because of its advantages in terms of cost and flexibility, TIFIA may increase the number of projects that can be financed and thus provided on an accelerated schedule. In its 2016 report to Congress, DOT cited the example of managed lanes on U.S. 36 connecting Boulder and Denver, CO, a project it says was delivered 20 years earlier than anticipated because of TIFIA assistance. Credit Assistance Process Applications for credit assistance to DOT are accepted at any time. Formal acceptance into the program for evaluation follows a letter of interest from the project sponsor in a format prescribed by DOT. However, DOT recommends that project sponsors contact DOT much earlier for technical assistance to discuss and develop an application. This can involve an emerging project agreement between DOT and the project sponsor. Acceptance into the TIFIA program requires a fee of $250,000 that is used to cover the costs of DOT's outside financial and legal advice. Additional amounts may be necessary if DOT's costs exceed $250,000. DOT notes that fees for a single project are typically between $400,000 and $700,000. For projects with estimated costs of less than $75 million, DOT is permitted to draw on federal funds to cover its costs, up to a total of $2 million annually, rather than charging fees to prospective borrowers. Prior to submitting a formal application for credit assistance, DOT will review the letter of interest, the independent financial analysis, and any other supporting material. A key element of this review is an analysis of the creditworthiness of the project sponsor and the quality of the revenue pledged to repay the federal government. DOT also requires an oral presentation by the project sponsor. If these are satisfactory, DOT will invite the project sponsor to submit a formal application. The statute requires DOT to determine within 30 days whether the application is complete or whether additional material needs to be submitted. Within 60 days of that determination, DOT must inform the applicant whether the application has been approved or not. DOT staff make a recommendation to the DOT Council on Credit and Finance, with the Secretary of Transportation making the final decision. In addition to the regular credit assistance process, the FAST Act required DOT to create an expedited application process for low-risk projects. These are defined as projects requesting $100 million or less in credit assistance, with a dedicated revenue stream unrelated to project performance (e.g., a dedicated sales tax) and standard loan terms. Like highway and public transportation projects that receive federal grants, projects financed under TIFIA are subject to laws and regulations concerning planning requirements; review and mitigation of environmental effects; the use of domestic iron, steel, and manufactured goods; and payment of prevailing wages. For example, projects must comply with the requirements of the National Environmental Policy Act of 1969 (NEPA) regarding the effects of the project on the human and natural environment. Typically, the NEPA analysis must be well advanced before a letter of interest is submitted. A TIFIA loan or other credit assistance will not be made until a final NEPA decision has been issued. The process for securing assistance has been praised for being predictable, but it has also been criticized for being slow and bureaucratic. For example, an official of Transurban, an Australia-based operator of toll roads, told Congress that the company did not pursue a TIFIA loan for the I-395 high occupancy toll (HOT) lanes in Virginia, in part because of the slowness of the approval process. There has also been criticism that the TIFIA program office has become more risk-averse, favoring low-risk projects that might be able to obtain financing from conventional sources. Subsidy Cost Credit programs like TIFIA are governed by the Federal Credit Reform Act (FCRA) of 1990. Under FCRA, the cost to the federal government of a credit program is the administrative cost plus the subsidy cost of the credit assistance. According to FCRA, the subsidy cost is "the estimated long-term cost to the government of a direct loan or a loan guarantee ... calculated on a net present value basis." The subsidy cost estimate takes into account potential losses to the government resulting from loan defaults. Budget authority is typically provided to cover subsidy and administrative costs of a credit program. Costs of the TIFIA program are met by funding from the Highway Trust Fund (HTF) authorized by the FAST Act. When a loan is made, the subsidy cost amount is taken from the available budget authority and added to money borrowed from the Treasury to make the loan. When the principal and interest are repaid by the borrower, money is transferred back to the Treasury. Budgeting for credit programs is done for a cohort of loans, which is a group of loans funded by one fiscal year's appropriation. If the subsidy cost estimate proves correct, the cost to the government, outside of the budget authority already provided, will be zero. The amount of credit assistance available to borrowers from an amount of budget authority is determined by the subsidy rate after administrative costs are subtracted. The subsidy rate is the subsidy cost as a percentage of the dollars disbursed. As an example, if administrative costs are ignored, for every $100 of budget authority at a subsidy rate of 10%, the federal government can loan out $1,000 because it expects to eventually receive back $900 calculated in today's dollars. The budget authority covers the subsidy cost, which in this case is $100. As the subsidy rate declines, the government can provide more credit assistance because it expects a greater amount to be repaid by borrowers. With a subsidy rate of 5%, the TIFIA program could lend $2,000 for every $100 of budget authority ($100/5% = $2,000). Forecasts of the cost of credit assistance necessarily rely on estimates of the interest rate (a Treasury bond with the same maturity as the loan), the repayment of loans, and the rate of defaults. Because conditions can change, agencies must reestimate the subsidy rate periodically, generally annually, for outstanding loans and loan guarantees. These reestimates appear in the Federal Credit Supplement published in the President's annual budget submission. Estimates and reestimates of the TIFIA subsidy rate are done by DOT in cooperation with the Office of Management and Budget (OMB). The subsidy rate and its reestimation provide information about the level of risk being undertaken by DOT and the subsequent performance of TIFIA-assisted projects. A single subsidy rate is calculated for all loans originated in a given fiscal year. The original subsidy rate for TIFIA loans originated in fiscal years with loans still outstanding ranges from 15.16% to 3.36%. The subsidy rate for FY2019 is estimated to be 6.3%. Current reestimates of these original subsidy rates range from -8.06% to 46.12%. The subsidy rate is negative when the government expects to receive repayments greater than the amount of loans, on a net present value basis. The increased (+) or decreased (-) cost to the government of these reestimates is reflected in the net lifetime reestimate amount ( Table 1 ). Based on the subsidy rate, the cost to the government has been approximately 7 cents for every dollar financed, according to DOT. However, the Congressional Budget Office (CBO) notes that this does not take into account the market value of the financial risk to which taxpayers are exposed by federal credit programs such as TIFIA. CBO estimates that including this financial risk the TIFIA program costs 33 cents for every dollar financed. Program Funding The FAST Act authorized $275 million for the TIFIA program in each of FY2016 and FY2017, $285 million in FY2018, and $300 million in each of FY2019 and FY2020. These amounts are much lower than those authorized in the Moving Ahead for Progress in the 21 st Century Act (MAP-21; P.L. 112-141 ), which greatly enlarged the TIFIA program ( Figure 1 ). Seen in isolation, this reduced DOT's capacity to issue loans by approximately $7.25 billion in FY2016, assuming a 10% subsidy rate and excluding administrative costs. However, the FAST Act also allows states to use funds from three other highway programs to pay for the subsidy and administrative costs of credit assistance: the discretionary Nationally Significant Freight and Highway Projects Program, known as INFRA grants; the formula National Highway Performance Program; and the formula Surface Transportation Block Grant Program. This use of grant funds has the potential to increase TIFIA financing much above the direct authorization, but at the discretion of state departments of transportation. Payment of the TIFIA subsidy cost has also been allowed as part of the Better Utilizing Investments to Leverage Development (BUILD) Transportation Discretionary Grants program (formerly TIGER program). Although direct funding for the TIFIA program was reduced in the FAST Act, DOT has not been limited in providing credit assistance. Funding for the TIFIA program is available until expended, and thus unused money accumulates from year to year. Unobligated budget authority in the TIFIA program was $1.65 billion at the end of FY2018, according to DOT. This amount has accumulated despite a clawback provision in MAP-21 that reduced TIFIA's budget authority by $640 million. The clawback provision was subsequently abolished in the FAST Act, presumably because of the reduction in the TIFIA program's authorization. Projects Financed Except for one loan guarantee, every credit agreement under the TIFIA program to date has been a loan. Through FY2018, TIFIA had provided loans worth about $32 billion (in FY2018 inflation-adjusted dollars). The overall cost of the 74 projects supported by TIFIA loans is estimated to be $117 billion (FY2018 dollars). The average project cost is about $1.5 billion and the average loan amount $430 million (both in FY2018 dollars). Consequently, the average TIFIA share of project costs has been about 28%. Over the 20-year history of the program, the average number of loans has been about four per year, worth about $1.6 billion (FY2018 dollars). The enlargement of the TIFIA program in FY2013 led to an increase in lending, but much of that occurred in a single year, FY2014 ( Figure 2 ). About two-thirds of TIFIA loans have gone to highway and highway bridge projects and another quarter to public transportation. Two loans (3%) have gone to railroad projects and another five (7%) to other surface transportation projects, including a combined parking and public transportation facility at O'Hare International Airport in Chicago. TIFIA assistance has been geographically limited, with projects in 21 states, the District of Columbia, and Puerto Rico receiving financing. Ten states account for about 80% of the 74 projects supported. These are California, Texas, Virginia, Colorado, Florida, Illinois, Washington, New York, North Carolina, and Maryland. User charges, including highway tolls, are the revenue pledge most often made by borrowers, accounting for half of the projects. Various taxes, particularly sales taxes, and general revenues make up most of the other half of project revenue pledges. At the time of DOT's most recent report to Congress on TIFIA, issued in August 2016, 86% of TIFIA loans were performing as expected, 8% were exceeding expectations, and 6% were performing below expectations. Through FY2018, two TIFIA-assisted projects have gone into bankruptcy, the South Bay Expressway toll road project in San Diego, CA, and the SH-130 toll road project (segments 5 and 6) near Austin, TX. The San Diego Association of Governments bought the South Bay Expressway project after it went bankrupt, and, according to DOT, "repaid all outstanding TIFIA indebtedness." According to the DOT, the SH-130 TIFIA loan was converted to 34% ownership of the new company that will operate the toll road until 2062, a payment to the government of $15 million, and remaining debt of $87 million. It is uncertain whether the federal government will eventually receive payment equal to the amount of principal and interest that were originally payable on the $430 million TIFIA loan. The TIFIA program is the federal government's main tool for encouraging the establishment of public-private partnerships (P3s) and the investment of private capital in surface transportation. The low cost of borrowing, term length, and repayment flexibility can lower financial risk for private investors. P3s offer several advantages over traditional procurement methods, including additional capital, private management expertise, and risk transfer. By encouraging private finance and insisting on creditworthiness standards, the program relies, in part, on market discipline to stimulate projects with favorable benefits versus costs. Although the TIFIA program has supported the creation of P3s and leveraged private capital for transportation projects, government involvement remains more important in TIFIA-supported projects. According to one analysis of the TIFIA program through 2016, about one-third of TIFIA-supported projects (23 projects) were developed as P3s and the other two-thirds were governmentally procured. The 23 P3 projects had total project costs of $33 billion, of which 29% came from government grants, 28% TIFIA loans, 28% other debt, 13% private equity, and 1% other capital. TIFIA was initially designed to support large and very costly projects for which grant funding was unlikely to be enough. Despite this, there have been complaints that relatively few projects can take advantage of the program. Most typical highway and public transportation projects cost much less than the TIFIA thresholds for eligibility and have no obvious revenue stream to generate a repayment mechanism. Modifications to the TIFIA program, such as lower cost thresholds, lower interest rates for rural projects, and waived fees for smaller projects, have sought to make financing more accessible. However, to date, the size of TIFIA-supported projects does not appear to have declined. The smallest project since the passage of MAP-21 in July 2012, for example, is the U.S. 36 Managed Lane/Bus Rapid Transit Project between Boulder and Denver, CO, which had a total cost of $175 million. But this is phase 2 of a project that totaled almost $500 million. Moreover, there have been no TIFIA loans to rural project funds. Issues for Congress Funding In addition to the use of direct program funding, TIFIA assistance can be obtained by using other federal-aid highway funds, both discretionary and formula, and discretionary BUILD program (formerly TIGER program) funds. There have been a few BUILD program-funded TIFIA loans, but to date no states have traded formula grant funding for a larger loan. At the moment, states do not have to make that trade because the TIFIA program is not in danger of running out of budget authority. DOT calculated that unobligated budget authority in the TIFIA program at the end of FY2018 was $1.65 billion. This amount of end of fiscal year unobligated budget authority is much higher now than it was in FY2012, but the level has stabilized over the past few years ( Table 2 ). If the TIFIA program does exhaust its direct funding in the future, an unanswered question is whether states will choose to use grant funding to pay the subsidy and administrative costs of a loan. A similar option, the capitalization of a state infrastructure bank with grant funds, has largely gone unused, partly because states have planned to commit these funds to traditional projects years in advance. Congress could increase the lending capacity of the TIFIA program by authorizing and appropriating additional funding. However, there may not be enough suitable projects to make use of significantly greater budget authority, even if eligibility is expanded beyond surface transportation to include port, aviation, and economic development projects. To date, the greatest value of loans issued in any year has been about $8 billion. The average since the expansion of the program in FY2013 has been about $3.5 billion (in FY2018 dollars). More applications for credit assistance might result from lowering the fees and other costs associated with federal support. One option is to reduce the fees for projects of $75 million or more. All else equal, however, this would increase the administrative costs of the program and reduce its lending capacity. Another option is to increase the threshold below which one credit agency rating is needed rather than two on the senior debt and the federal credit instrument. Currently, the threshold is $75 million, but S. 3631 (115 th Congress) proposed to increase it to $150 million. Calculation of Subsidy Cost The calculation of the TIFIA program's subsidy cost has generally been conservative. To date, two TIFIA-financed projects have gone bankrupt, and, according to DOT, 6% of loans were underperforming in 2016. A less conservative calculation by DOT and OMB could allow DOT to lend a greater amount with the same amount of budget authority. It does appear that the federal government has adjusted its subsidy cost estimates downward over the past few years in recognition of DOT's loss experience under the TIFIA program. However, the lack of defaults may be due to the types of projects being assisted and the generally favorable economic conditions. An enlarged TIFIA program might mean assisting more risky projects, leading to a higher subsidy rate, all else being equal. The 20-year experience of the TIFIA program, furthermore, is possibly less informative than it appears. The share of loans that have been fully repaid is about 15%. Many of the projects that have received assistance are permitted to defer interest and principal payments and have very long amortization schedules, so there is still a great deal of uncertainty as to how they will perform over the long term. For example, the I-495 high occupancy toll (HOT) lanes project in Northern Virginia received credit assistance in 2007 and the lanes opened in 2012, but interest payments did not begin until 2017. Principal repayments are not scheduled to begin until 2032, and are to continue until loan maturity in 2047. Ultimately, decisions about the level of risk that the TIFIA program is willing to take are made by DOT's Credit Council and the Secretary of Transportation within the limits of the program's statutory requirements. However, a critic of TIFIA's decisions on risk has suggested developing "an underlying risk framework and underwriting standards within which loans can be negotiated," and "creating a federal advisory committee to evaluate industry trends and periodically assess the effectiveness of TIFIA's risk framework in meeting its policy objectives." Federal Share MAP-21 greatly enlarged the TIFIA program and at the same time raised the maximum federal share from 33% to 49% of eligible project costs. However, DOT announced after the statutory change that it would typically provide up to 33% and would provide amounts between 33% and 49% only in exceptional circumstances. To date, no project has received more than 33%. TIFIA appears to be maximizing its leveraging of nonfederal resources, but it may be limiting the projects that could use a larger share of TIFIA assistance. For example, the American Public Transportation Association has argued that an increased federal share "would enable TIFIA credit assistance to meaningfully support certain projects with large public benefits that may be difficult to finance conventionally without federal credit support, while still ensuring other investors share in project costs and risks." Federal Share for Major Public Transportation Capital Projects By statute, the Secretary of Transportation may consider a TIFIA loan as part of the nonfederal share for federally funded highway and public transportation projects if the loan is repaid from nonfederal funds. For major public transportation capital projects seeking funding from the federal Capital Investment Grant (CIG) program (also known as "New Starts"), the Trump Administration has decided that it "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 separate from the Federal funding sources." In the CIG program, the maximum federal share of a project is 80%, although the share of funding permissible from the CIG program alone is lower. If projects seeking CIG grant funding receive unfavorable ratings because they are also proposing to use large TIFIA loans, then CIG project sponsors are more likely to request smaller TIFIA loans or perhaps to seek alternatives to TIFIA program financing. Low ratings on transit projects drawing on TIFIA loans could also stop them from moving forward. An option for Congress, such as H.R. 731 (116 th Congress), is to require TIFIA loans to be considered part of the nonfederal share of surface transportation projects. Speed of Administrative Decisionmaking Some project sponsors have stated that the process for obtaining TIFIA assistance led them not to seek TIFIA loans. A number of proposals have been suggested to speed up approvals, such as regular and more frequent DOT credit council meetings, increased administrative spending to more quickly assess applications, regular publication of information on the time it takes to reach application milestones, and changes to the Letter of Interest process to provide greater schedule certainty. The FAST Act required DOT to expedite projects thought to be lower-risk—those requesting $100 million or less in credit assistance with a dedicated revenue stream unrelated to project performance and standard loan terms—but it is not clear what effect this could have, as only two projects have received TIFIA loans of less than $100 million since the passage of the FAST Act. S. 3631 (115 th Congress) proposed additional criteria for expedited loans for public agency borrowers. Other options, though possibly more controversial, would be to expedite reviews with experienced sponsors or to prioritize the evaluation of certain projects, such as those with national benefits or that involve significant private capital, over others. Broadening Eligible Uses of TIFIA Loans The Trump Administration has proposed broadening the eligibility of TIFIA assistance from highways and public transportation to ports and airports. S. 3647 (115 th Congress) would have allowed $10 million in TIFIA program funds to pay the subsidy costs of credit assistance to airport-related projects. One reason TIFIA eligibility has been limited to surface transportation projects is that funding for the program comes from the Highway Trust Fund (HTF), which traditionally has been supported by revenues from highway users. Now that the HTF has relied heavily on general Treasury funds for a decade, Congress may want to revisit this limitation. If TIFIA were to begin making loans to a broader set of projects, DOT likely would need to bring in expertise to provide analysis and advice on these new sectors. Another option for broadening eligibility is to create a new entity such as a national infrastructure bank. Such proposals in the 115 th Congress include the National Infrastructure Development Bank Act of 2017 ( H.R. 547 ), the Partnership to Build America Act of 2017 ( H.R. 1669 ), and the Building and Renewing Infrastructure for Development and Growth in Employment (BRIDGE) Act ( S. 1168 ). Most proposals include a wide range of infrastructure projects, including transportation, water, energy, and telecommunications infrastructure. One purported advantage of a national infrastructure bank over other loan programs, such as TIFIA, is that it would have more independence in its operation, such as in project selection, and have greater expertise at its disposal. Most infrastructure bank proposals assume the bank would improve the allocation of public resources by funding projects with the highest economic returns regardless of infrastructure system or type. Selection of the projects with the highest returns, however, might conflict with the traditional desire of Congress to ensure funding for various types of projects. In the extreme case, major transportation projects might not be funded if the bank were to exhaust its lending authority on water or energy projects offering higher returns. The limitations of a national infrastructure bank include its duplication of existing programs like TIFIA. Most legislative proposals for infrastructure banks do not address this duplication, leading to questions about how each would run in parallel. Would a national infrastructure bank avoid current TIFIA-type projects or would it "compete" with the TIFIA program to finance these projects? The addition of a national infrastructure bank seems unlikely to increase the number of surface transportation projects involving major credit assistance without other substantial changes in the way such projects are typically funded and financed.

The Transportation Infrastructure Finance and Innovation Act (TIFIA) program, administered by the Department of Transportation's Build America Bureau, provides long-term, low-interest loans and other types of credit assistance for the construction of surface transportation projects (23 U.S.C. §601 et seq.). The TIFIA program was reauthorized from FY2016 through FY2020 in the Fixing America's Surface Transportation (FAST) Act (P.L. 114-94). Direct funding for the TIFIA program is authorized at $300 million for each of FY2019 and FY2020. Additionally, state departments of transportation can use other federal-aid highway grant money, both formula and discretionary, to subsidize much larger loans. To date, states have not had to use other grant funding to subsidize credit assistance because the TIFIA program has a relatively large unexpended funding balance. The primary goal of the TIFIA program, historically, has been to enable the construction of large-scale surface transportation projects by providing financing to complement state, local, and private investment. The TIFIA program has been one of the main ways in which the federal government has encouraged the development of public-private partnerships (P3s) and private financing in surface transportation often backed by new, but sometimes uncertain, revenue sources such as highway tolls, other types of user charges, and incremental real estate taxes. To be eligible for TIFIA assistance, a project sponsor must be deemed creditworthy, that is, a good risk for repaying its debts, and must have a dedicated source of revenue for repayment. Project sponsors, therefore, are required to develop a funding mechanism, whether this is a new user fee or tax or the repurposing of existing fees and taxes. Changes to the TIFIA program have sought to make TIFIA assistance more accessible to less costly projects, but so far every TIFIA-supported project has cost $175 million or more. Financing projects instead of relying on pay-as-you go funding from taxes and other existing revenues can mean such projects can be constructed years earlier. TIFIA, therefore, is a means to accelerate project delivery and the benefits that flow from new infrastructure. The TIFIA program is also a relatively low-cost way for the federal government to support surface transportation projects because it relies on loans, not grants, and the TIFIA assistance is typically one-third or less of project costs. Another advantage from the federal point of view is that a relatively small amount of budget authority can be leveraged into a large amount of loan capacity. Because the government expects its loans to be repaid, an appropriation need only cover administrative costs and the subsidy cost of credit assistance. Program funding of $300 million can support approximately $4 billion in TIFIA loans. Since its enactment in 1998, the TIFIA program has provided assistance of $32 billion to 74 projects with a total cost of about $117 billion (in FY2018 inflation-adjusted dollars). All but one TIFIA credit agreement has been a loan; the exception is a loan guarantee. The average TIFIA-supported project cost is $1.5 billion, and the average TIFIA loan is $430 million (both in FY2018 dollars). About two-thirds of TIFIA loans have gone to highway and highway bridge projects, and another quarter to public transportation. TIFIA has supported at least one project in 21 states, the District of Columbia, and Puerto Rico, but the top 10 states account for about 80% of the 74 projects supported. The TIFIA program is likely to be considered in the 116th Congress during the reauthorization of the surface transportation programs. Program funding is one issue that may be discussed, because some stakeholders would like more budget authority despite a relatively large unexpended balance and the existing authority of states to use grant funding to pay the subsidy cost of credit assistance. Criticisms of the program and its implementation include the often slow decisionmaking process, the program's increasing risk aversion, and the limitation of the federal share of project costs to 33%, despite a statutory limit of 49%. Because of the relatively large unexpended balance, Congress might considered broadening the use of TIFIA assistance to nonsurface transportation and nontransportation infrastructure. Another option might be to create a national infrastructure bank, a federal infrastructure financing entity largely independent of other executive branch agencies, to take the place of TIFIA and other federal infrastructure credit assistance programs.

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T he Second Amendment states that "[a] well-regulated Militia, being necessary to the security of a free State, the right of the people to keep and bear arms, shall not be infringed." Before the Supreme Court's 2008 opinion in District of Columbia v. Heller, the right generally had been understood by federal courts to be intertwined with military or militia use. That understanding was formed with little Supreme Court guidance: Before Heller, the Supreme Court had barely opined on the scope of the Second Amendment, making its last substantive remarks on the right in its 1939 ruling in United States v. Miller. In Miller, the Supreme Court evaluated a criminal law banning possession of a certain type of firearm, asking whether it bore a "reasonable relationship to the preservation or efficiency of a well regulated militia" such that it garnered Second Amendment protection. This passage spawned a longstanding debate over whether the Second Amendment provides an individual right to keep and bear arms versus a collective right belonging to the states to maintain militias, with the vast majority of the courts embracing the collective right theory. Indeed, before the Heller litigation began only one circuit court—the Fifth Circuit in United States v. Emerson —had concluded that the Second Amendment protects an individual's right to keep and bear arms. The Supreme Court's landmark 5-4 decision in Heller upturned the earlier majority view with its holding that the Second Amendment guarantees an individual right to possess firearms for historically lawful purposes, such as self-defense in the home. But in Heller the Court did not define the full scope of that right, leaving lower courts to fill in the gaps. Indeed, the Court has said little on the matter, most notably by holding that the Second Amendment right is incorporated through the Fourteenth Amendment to apply to the states in McDonald v. City of Chicago . Beyond McDonald, the Court has largely declined to grant certiorari to the numerous Second Amendment cases percolating in the lower federal courts with one exception: In Caetano v. Massachusetts, the Supreme Court—in a single, two page ruling—granted a petition for certiorari and issued an unsigned, per curiam opinion vacating the decision of the Massachusetts Supreme Court that had upheld a state law prohibiting the possession of stun guns. But the Court's opinion did little to clarify Second Amendment jurisprudence, principally noting that the state court opinion directly conflicted with Heller without discussing the matter in further detail. During the October 2019 term, however, the Supreme Court will review a Second Amendment challenge to a New York City firearm licensing provision in New York State Rifle & Pistol Association, Inc. v. City of New York , giving the Court another opportunity to elaborate on the scope of the individual right to keep and bear arms. Accordingly, this report evaluates how the lower federal courts have interpreted Heller and the Second Amendment through challenges to various federal, state, and local firearm laws. In particular, this report focuses on federal appellate decisions, including what categories of persons, firearms, and places may be subject to government firearm regulation, and how federal, state, and local governments may regulate those categories. These appellate decisions include challenges to provisions of the Gun Control Act —the primary federal law regulating the transfer and possession of firearms in interstate commerce—as well as state and local laws that provide further restrictions on the possession and sale of firearms, including assault weapon bans, concealed carry restrictions, and firearm licensing schemes, among others. This report is not intended to provide a comprehensive analysis of every Second Amendment issue brought in federal court since Heller, but highlights notable challenges to firearm laws that may be of interest to Congress. District of Columbia v. Heller Before Heller, the District of Columbia had a web of regulations governing the ownership and use of firearms that, taken together, amounted to a near-total ban on handguns in the District. One law generally barred the registration of most handguns. Another law required persons with registered firearms to keep them "unloaded and either disassembled or secured by a trigger lock, gun safe, locked box, or other secure device." And a third law prohibited persons within the District of Columbia from carrying (openly or concealed, in the home or elsewhere) an unlicensed firearm. In 2003, six D.C. residents challenged those three measures as unconstitutional under the Second Amendment, arguing that the Constitution provides an individual right to bear arms. In particular, the residents contended that the Second Amendment provides individuals a right to possess "functional firearms" that are "readily accessible to be used . . . for self-defense in the home." Parker v. District of Columbia: Heller in the District Court In Parker v. District of Columbia, the district court was tasked with gleaning the meaning of the right provided by the Second Amendment. The last word from the Supreme Court on this right was in its 1939 ruling, United States v. Miller. Miller involved a challenge to a federal indictment for unlawfully transporting in interstate commerce an unregistered double barrel 12-gauge shotgun with a barrel less than 18 inches in length, as had been prohibited by the National Firearms Act of 1934. A district court had dismissed the indictment after concluding that the challenged criminal provision infringed the defendant's Second Amendment rights. The Supreme Court, on direct appeal, reversed that ruling: In the absence of any evidence tending to show that possession or use of a 'shotgun having a barrel of less than eighteen inches in length' at this time has some reasonable relationship to the preservation or efficiency of a well regulated militia, we cannot say that the Second Amendment guarantees the right to keep and bear such an instrument. In reaching that conclusion, the Court emphasized that the Second Amendment must be interpreted in the context in which it was enacted: "[w]ith [the] obvious purpose to assure the continuation and render possible the effectiveness of" Congress's power to "provide for organizing, arming, and disciplining, the Militia." Relying on the Supreme Court's guidance in Miller, the district court in Parker rejected the plaintiffs' contention that the Second Amendment provides an individual right to bear arms unrelated to militia use. The court additionally noted that this conclusion matched those of every other federal circuit court to have considered the issue except for one recent Fifth Circuit decision. Accordingly, the district court dismissed the lawsuit for failing to state a claim for relief under the Second Amendment, reasoning that it "would be in error to overlook sixty-five years of unchanged Supreme Court precedent and the deluge of circuit case law rejecting an individual right to bear arms not in conjunction with service in the Militia." Parker v. District of Columbia: Heller in the D.C. Circuit Court of Appeals The D.C.-resident plaintiffs appealed to the D.C. Circuit, and a divided 3-judge panel reversed the district court's ruling. The crux of the debate at the circuit court centered on whether the court should adopt the "collective right" versus "individual right" theory of the Second Amendment. Framed this way, the D.C. Circuit, unlike the district court, perceived the issue before it as one of first impression, opining that Miller actually addressed the kinds of "arms" that the Second Amendment protects. Under the collective right theory advanced by the District of Columbia (District), the Second Amendment protects only the right of states to maintain and arm their militias. Accordingly, the District argued that the Second Amendment's prefatory clause—"[a] well regulated Militia, being necessary to the security of a free State"—announces the Amendment's sole purpose: to protect state militias from federal intrusion, and limiting the right to keep and bear arms to military uses. Under the individual right theory, advanced by the plaintiffs, the Second Amendment guarantees individuals a right to keep and bear arms for personal use. Pointing to a different part of the Amendment's text, the plaintiffs argued that its operative clause—" the right of the people to keep and bear Arms shall not be infringed"—signals an individual right. The D.C. Circuit rejected the collective right theory advanced by the District, reasoning that Supreme Court precedent interpreting the meaning of "the people," as used in the Bill of Rights, required the court to conclude that "the people," as used in the Second Amendment, refers to individual persons, and thus the Amendment protects an individual right. The court additionally noted that, because founding era-like militias no longer exist, the argument put forth by the District would render the Second Amendment a "dead letter." Having established that the Second Amendment protects an individual right to keep and bear arms, the court next addressed the scope of that right by examining the lawful, private purposes for which founding-era persons owned and used firearms. The court concluded that the right encompasses firearm uses pre-existing the Constitution, such as hunting and self-defense against private misconduct or a tyrannical government. And though the right could be subject to "reasonable restrictions," the court noted that the Constitution would not tolerate laws, like the District's, that amount to a "virtual prohibition" on handgun possession. One judge dissented on the ground that the District is not a state within the meaning of its use in the Second Amendment, and thus its protections—whatever they may be—do not reach it. District of Columbia v. Heller: Supreme Court's Ruling The challenge made its way to the Supreme Court, which, in a 5-4 decision authored by Justice Scalia, affirmed the D.C. Circuit's conclusion that the Second Amendment provides an individual right to keep and bear arms for lawful purposes. The majority arrived at this conclusion after undertaking an extensive analysis of the founding-era meaning of the words in the Second Amendment's prefatory and operative clauses. Applying that interpretation to the challenged D.C. firearm laws, the Court concluded that the District's functional ban on handgun possession in the home and the requirement that lawful firearms in the home be rendered inoperable were unconstitutional. Majority Opinion Textual Analysis The majority analyzed the Second Amendment's two clauses and concluded that the prefatory clause, indeed, announces the Amendment's purpose. And though there must be some link between the stated purpose and the command in the operative clause, the Court concluded that "the prefatory clause does not limit . . . the scope of the operative clause." Accordingly, the Court assessed the meaning of the Second Amendment's two clauses. Beginning with the operative clause, the Supreme Court first concluded that the phrase the "right of the people," as used in the Bill of Rights, universally communicates an individual right, and thus the Second Amendment protects a right that is "exercised individually and belongs to all Americans." Next, the Court turned to the meaning of "to keep and bear arms." "Arms," the Court said, has the same meaning now as it did during the eighteenth century: "any thing that a man wears for his defence, or takes into his hands, or use[s] in wrath to cast at or strike another," including weapons not specifically designed for military use. The Court then turned to the full phrase "keep and bear arms." To "keep arms," as understood during the founding period, the Court said, was a "common way of referring to possessing arms, for militiamen and everyone else. " And "bearing arms," during the founding period as well as currently, the Court said, means to carry weapons for the purpose of confrontation; but even so, the Court added, the phrase does not "connote[] participation in a structured military organization." Taken together, the Court concluded that the Second Amendment "guarantee[s] the individual right to possess and carry weapons in case of confrontation." The Court added that its textual analysis was supported by the Amendment's historical background, which was relevant to its analysis because, the Court reasoned, the Second Amendment was "widely understood" to have codified a pre-existing individual right to keep and bear arms. Turning back to the prefatory clause, the Supreme Court majority concluded that the term "well-regulated militia" does not refer to state or congressionally regulated military forces as described in the Constitution's Militia Clause; rather, the Second Amendment's usage refers to all "able-bodied men" who are "capable of acting in concert for the common defense." And the security of a free "state," the Court opined, does not refer to the security of each of the several states, but rather the security of the country as a whole. Coming full circle to the Court's initial declaration that the two clauses must "fit" together, the majority concluded that the two clauses fit "perfectly" in light of the historical context showing that "tyrants had eliminated a militia consisting of all the able-bodied men . . . by taking away the people's arms." Thus, the Court announced, the reason for the Second Amendment's codification was "to prevent elimination of the militia," which "might be necessary to oppose an oppressive military force if the constitutional order broke down." But the reason for codification, the Court clarified, does not define the entire scope of the right the Second Amendment guarantees. This is so because, the Court explained, the Second Amendment codified a pre-existing right that included using firearms for self-defense and hunting, and thus the pre-existing right also informs the meaning of the Second Amendment. Squaring Heller with Miller The Supreme Court majority added that its conclusion was not foreclosed by its earlier ruling in Miller , which, as discussed above, had largely been viewed by the lower federal courts as advancing the collective right theory. Like the D.C. Circuit, the Supreme Court concluded that Miller addressed only the type of weapons eligible for Second Amendment protection. Furthermore, in the Court's view, the fact that Miller assessed a type of unlawfully possessed weapon supported its conclusion that the Second Amendment protects an individual right, noting that "it would have been odd to examine the character of the weapon rather than simply note that the two crooks were not militiamen." Nor, the Court added, did Miller "purport to be a thorough examination of the Second Amendment," and thus, the Court reasoned, it cannot be read to mean more than "say[ing] only that the Second Amendment does not protect those weapons not typically possessed by law-abiding citizens for lawful purposes, such as short-barreled shotguns." Scope of the Right After announcing that the Second Amendment protects an individual's right to possess firearms, the Supreme Court explained that, "[l]ike most rights, the right secured by the Second Amendment is not unlimited." Nevertheless, the Court left for another day an analysis of the full scope of the right. The Court did clarify, however, that "nothing in our opinion should be taken to cast doubt on longstanding prohibitions on the possession of firearms by felons and the mentally ill, or laws forbidding the carrying of firearms in sensitive places such as schools and government buildings, or laws imposing conditions and qualifications on the commercial sale of firearms," among other "presumptively lawful" regulations. And as for the kind of weapons that may obtain Second Amendment protection, the Court noted that Miller limits Second Amendment coverage to weapons "in common use at the time" that the reviewing court is examining a particular firearm, which, the Court added, "is fairly supported by the historical tradition of prohibiting the carrying of dangerous and unusual weapons." Second Amendment Analysis of D.C.'s Firearms Regulations Finally, the Supreme Court applied the Second Amendment, as newly interpreted, to the contested D.C. firearm regulations—which amounted to a near-total handgun ban—and concluded that they were unconstitutional. First, the Court declared that possessing weapons for self-defense is "central to the Second Amendment right," yet the District's handgun ban prohibits "an entire class of 'arms' that is overwhelmingly chosen by American society for that lawful purpose." Moreover, the handgun prohibition extended into the home, where, the Court added, "the need for defense of self, family, and property is most acute." Additionally, the requirement that firearms in the home be kept inoperable is unconstitutional because, the Court concluded, that requirement "makes it impossible for citizens to use them for the core lawful purpose of self-defense." Thus, the Court ruled, the District's handgun ban could not survive under any level of scrutiny that a court typically would apply to a constitutional challenge of an enumerated right. Dissent: Justice Stevens Justice Stevens, joined by Justices Souter, Ginsburg, and Breyer, dissented. Justice Stevens did not directly quarrel with the majority's conclusion that the Second Amendment provides an individual right, asserting that it "protects a right that can be enforced by individuals." But he disagreed with the majority's interpretation of the scope of the right, contending that neither the text nor history of the Amendment supports "limiting any legislature's authority to regulate private civilian uses of firearms" or "that the Framers of the Amendment intended to enshrine the common-law right of self-defense in the Constitution." Additionally, he characterized the majority's interpretation of Miller as a "dramatic upheaval in the law." In his view, Miller interpreted the Second Amendment as "protect[ing] the right to keep and bear arms for certain military purposes" and not "curtail[ing] the Legislature's power to regulate the nonmilitary use and ownership of weapons." This interpretation, Justice Stevens added, "is both the most natural reading of the Amendment's text and the interpretation most faithful to the history of its adaptation." Dissent: Justice Breyer Justice Breyer, joined by Justices Stevens, Souter, and Ginsburg, authored another dissent. Although agreeing with Justice Stevens that the Second Amendment protects only militia-related firearm uses, in his dissent he argued that the District's laws were constitutional even under the majority's conclusion that the Second Amendment protects firearm possession in the home for self-defense. He began by assessing the appropriate level of scrutiny under which Second Amendment challenges should be analyzed. Justice Breyer suggested an interest-balancing inquiry in which a court would evaluate "the interests protected by the Second Amendment on one side and the governmental public-safety concerns on the other, the only question being whether the regulation at issue impermissibly burdens the former in the course of advancing the latter." In making that evaluation, Justice Breyer would ask "how the statute seeks to further the governmental interests that it serves, how the statute burdens the interests that the Second Amendment seeks to protect, and whether there are practical less burdensome ways of furthering those interests." Applying those questions to the challenged D.C. laws, Justice Breyer concluded that (1) the laws sought to further compelling public-safety interests; (2) the D.C. restrictions minimally burdened the Second Amendment's purpose to preserve a "well regulated Militia" and burdened "to some degree" an interest in self-defense; and (3) there were no reasonable but less restrictive alternatives to reducing the number of handguns in the District. Thus, in Justice Breyer's view, the District's gun laws were constitutional. He also anticipated that the majority's decision would "encourage legal challenges to gun regulation throughout the Nation." The majority did not seem to voice disagreement with this prediction, but noted that "since this case represents this Court's first in-depth examination of the Second Amendment, one should not expect it to clarify the entire field." Indeed, after Heller a series of challenges to federal and state firearms laws occurred . Second Amendment Incorporation Because Heller involved a challenged to a D.C. law, and because the District is generally not viewed as a state for purposes of constitutional law, a question beyond the scope of Heller was whether the Second Amendment applies to the states. Initially, the Bill of Rights was thought solely to restrict the power of the federal government. Only after the Fourteenth Amendment's adoption did the Supreme Court contemplate whether the Bill of Rights applies to the states. Section One of the Fourteenth Amendment declares that "[n]o state shall make or enforce any law which shall abridge the privileges or immunities of the Unites States; nor shall any state deprive any person of life, liberty, or property, without due process of law." During the nineteenth and twentieth centuries, several theories were advanced, with varying results, concerning whether the Fourteenth Amendment requires states to comply with the Bill of Rights. The theory that eventually achieved the greatest success was selective incorporation through the Fourteenth Amendment's Due Process Clause. Under the doctrine of selective incorporation, courts address whether the Due Process Clause of the Fourteenth Amendment fully incorporates a particular provision (and not an amendment as a whole) in the Bill of Rights and thus applies to the states. To do so, courts evaluate whether the particular provision is "fundamental to our scheme of ordered liberty" as well as "deeply rooted in this Nation's history and tradition." Most provisions of the Bill of Rights have been incorporated under this theory. And most recently in McDonald v. City of Chicago, the Supreme Court addressed whether the Second Amendment applies to the states. McDonald v. City of Chicago After Heller several firearms associations, along with residents of the City of Chicago and its neighboring suburb of Oak Park, Illinois, brought Second Amendment challenges to ordinances banning handgun possession in those municipalities. The lawsuits were dismissed in the federal district court on the ground that the Supreme Court had yet to apply the Second Amendment to the states. The Seventh Circuit affirmed, reasoning that century-old Supreme Court precedent had long ago announced that the Second Amendment does not apply to the states. The Supreme Court reversed in a 4-1-4 ruling authored by Justice Alito, concluding that "the Framers and ratifiers of the Fourteenth Amendment counted the right to keep and bear arms among those fundamental rights necessary to our system of ordered liberty." Thus, the Court held that the Second Amendment is applicable to the states through the Due Process Clause of the Fourteenth Amendment. The plurality first noted that Heller makes "unmistakabl[e]" that the basic right to self-defense is a "central component" of the Second Amendment and "deeply rooted in this Nation's history and tradition." The Court reiterated much of the information recited in Heller about the founders' relationship to arms, including the fear many held—based on King George III's attempts to disarm the colonists—that the newly created federal government, too, would disarm the people to impose its will. And even though the initial perceived threat of disarmament had dissipated by the 1850s, the plurality asserted that, still, "the right to keep and bear arms was highly valued for purposes of self-defense." The Court also pointed to congressional debate in 1868 of the Fourteenth Amendment, during which Senators had referred to the right to keep and bear arms as a "fundamental right deserving of protection." In his concurring opinion, Justice Thomas said that he would have construed the Second Amendment to be applicable to the states via the Privileges or Immunities Clause of the Fourteenth Amendment because, in his view, "the right to keep and bear arms is guaranteed by the Fourteenth Amendment as a privilege of American citizenship." But his opinion, nevertheless, provided the crucial fifth vote to hold that the Second Amendment applies to the states. Dissenting Opinions Justice Breyer dissented (joined by Justices Ginsburg and Sotomayor), contending that "nothing in the Second Amendment's text, history, or underlying rationale . . . warrant[s] characterizing it as 'fundamental' insofar as it seeks to protect the keeping and bearing of arms for private self-defense purposes." Additionally, he asserted that the Constitution provides no authority for "transferring ultimate regulatory authority over the private uses of firearms from democratically elected legislators to courts or from the States to the Federal Government." Justice Stevens authored another dissenting opinion, arguing that the question before the Court was not whether the Second Amendment, as a whole, applies to the states, but rather whether the Fourteenth Amendment requires that the liberty interest asserted—"the right to possess a functional, personal firearm, including a handgun, within the home"—be enforceable against the states. In his view, the Second Amendment is not enforceable against the states, particularly because the Amendment is a "federalism provision" that is "directed at preserving the autonomy of the sovereign States, and its logic therefore resists incorporation by a federal court against the states." Federal Circuit Courts' Post-Heller Approach to Second Amendment Analysis After Heller and McDonald , lawsuits were brought nationwide challenging on Second Amendment grounds various federal, state, and local firearms regulations. Heller did not define the full scope of the right protected by the Second Amendment, but the main take away may be summed up as follows: The Second Amendment protects the right of law-abiding citizens to possess weapons for lawful purposes, notably, self-defense in the home. With this minimal guidance from the Supreme Court, the circuit courts largely have been applying a two-step inquiry, drawn from the discussion in Heller , to determine whether a particular law is constitutional. First, courts ask whether the challenged law burdens conduct protected by the Second Amendment. If it does not, the inquiry ends, as the law does not implicate the Second Amendment. But if the challenged law does burden conduct protected by the Second Amendment, courts next ask whether, under some type of means-end scrutiny (described in more detail below), the law is constitutional under that standard of review. The Seventh Circuit stands out among the circuit courts of appeal for, at times, taking a somewhat different approach in the two-step analysis. In recent cases the court has declined, at step two, to dig "deeply into the 'levels of scrutiny' quagmire." Instead, the court evaluates "the strength of the government's justification for restricting or regulating the exercise of Second Amendment rights." When the firearm restriction implicates core Second Amendment rights, the Seventh Circuit has suggested that the government must make a "rigorous showing" that may resemble something close to strict scrutiny. For less severe burdens, the court requires the government to make a "strong showing" that a firearm regulation bears a "substantial relation" to an important governmental objective—a standard that resembles the intermediate scrutiny standard of review. It is also worth noting that, although the D.C. Circuit has applied the two-step approach when evaluating firearm legislation, the newest member of the Supreme Court bench—Justice Kavanaugh—advocated for a different approach while serving as a judge on the D.C. Circuit, arguing that: "In my view," he stated, " Heller and McDonald leave little doubt that courts are to assess gun bans and regulations based on text, history, and tradition, not by a balancing test such as strict or intermediate scrutiny." Step One: Scope of Second Amendment Protection The first question in the two-part framework asks whether the challenged law targets conduct within the scope of the Second Amendment's protections. In making this determination, the reviewing courts typically engage in a textual and historical inquiry into the original meaning of the right, as the Supreme Court majority did in Heller. Yet, even after concluding that the challenged regulation does not burden protected activity, courts, at times, have applied step two out of an "abundance of caution," given the lack of guidance from the Supreme Court as to how courts should analyze Second Amendment claims. "Longstanding" and "Presumptively Lawful" Regulations For certain types of firearms regulations, some courts ask under step one whether the challenged regulation is "longstanding" and "presumptively lawful" and, if the answer is in the affirmative, the inquiry ends. This analysis derives from the passage in Heller in which the Supreme Court announced that "nothing in our opinion should be taken to cast doubt on longstanding prohibitions" that the Court considered to be "presumptively lawful," on the possession of weapons by certain categories of persons and in certain "sensitive places," as well as restrictions on possessing and selling certain types of weapons. In particular, the Court mentioned that such laws include those prohibiting felons and the mentally ill from possessing weapons; forbidding firearms from being carried in schools and government buildings; and imposing conditions on the commercial sale of firearms. This list was not meant to be exhaustive, and the Court did not elaborate further. Some scholars have dubbed this passage Heller 's "safe harbor," intimating that restrictions similar to those listed in Heller would be found constitutional. Dissimilarly, at least one circuit court has said that if a firearms regulation is "longstanding," it is not automatically constitutional but, rather, "enjoy[s] more deferential treatment" at step two. Whether at step one or two, the federal courts have grappled with what makes a particular firearm restriction "longstanding" and "presumptively lawful." Laws aligning neatly with those specifically recited by the Heller majority have been upheld, in some courts, as falling into Heller's safe harbor. For laws falling outside those specified in Heller, the courts have generally found that a regulation can be longstanding even without a "precise founding-era analogue." This is so because laws that the Supreme Court cited as "longstanding" in Heller, like laws barring felons and the mentally ill from possessing firearms, were not statutorily prohibited until the mid-twentieth century. Conversely, other courts have observed the "relative futility of 'pars[ing] these passages of Heller as if they contain an answer'" to whether certain gun prohibitions are valid. Additionally, one circuit court has criticized placing regulations into the so-called "safe harbor" because, in its view, that approach is too similar to rational-basis review, which Heller rejected. Additionally, the circuit courts have been attempting to decipher why the Supreme Court designated certain firearms restrictions as presumptively lawful. Some courts have interpreted Heller 's discussion of presumptively lawful "longstanding prohibitions" on certain firearms to mean that such firearms are outside the scope of the Second Amendment. Others presume, subject to rebuttal, that a longstanding regulation is unprotected by the Second Amendment and thus lawful. Yet another interpretation that has been offered is that longstanding regulations are lawful not because they are outside the scope of the Second Amendment, but because, despite burdening protected activity, they would survive analysis under any standard of scrutiny. So unlike the first two interpretations, which inquire into whether a regulation is presumptively lawful, under this latter view, the inquiry would take place during step two. Step Two: Applicable Standard of Review At step two, most courts analyze the challenged regulation under a particular level of scrutiny. Typically, constitutional claims are evaluated under rational basis, intermediate, or strict scrutiny. Rational basis review is the most deferential to legislatures, with courts asking whether a statute is rationally related to a legitimate government purpose. Under strict scrutiny—the most exacting standard of review—the government must show that the regulation furthers a compelling governmental interest and is narrowly tailored to serve that interest. In between those two is intermediate scrutiny, in which a court asks whether (1) the regulation furthers a substantial or important governmental interest; (2) there is a reasonable or substantial fit between the asserted interest and the challenged law; and (3) the restriction is no greater than necessary to further that interest. Under this method, "the fit needs to be reasonable," but "a perfect fit is not required." Heller provided little guidance on how courts ought to review Second Amendment claims. The Supreme Court majority seemed to reject rational basis, as well as Justice Breyer's proposed interest-balancing inquiry, as adequate analytical tools. In the majority opinion, though, the Court made numerous comparisons between the rights secured by the First and Second Amendments. Accordingly, to determine the applicable level of scrutiny, courts have looked to First Amendment jurisprudence for guidance. The Supreme Court's First Amendment jurisprudence applies strict scrutiny to laws that regulate the content of a message. But if a law regulates only the time, place, or manner of how a message is conveyed, that law is subject to intermediate scrutiny. As in that context, in Second Amendment challenges courts typically will "consider the nature of the conduct being regulated and the degree to which the challenged law burdens the right." Thus, "[a] less severe regulation—a regulation that does not encroach on the core of the Second Amendment—requires a less demanding means-end showing." In that case, courts apply a form of intermediate scrutiny to Second Amendment challenges. For instance, in United States v. Masciandaro, the Fourth Circuit drew a line between firearm possession in the home versus outside the home, concluding that strict scrutiny would apply to the former and intermediate scrutiny to the latter: We assume that any law that would burden the "fundamental," core right of self-defense in the home by a law-abiding citizen would be subject to strict scrutiny. But, as we move outside the home, firearm rights have always been more limited, because public safety interests often outweigh individual interests in self-defense. Borrowing further from First Amendment jurisprudence, several courts have asked whether a firearm law regulates only the "time, place, and manner" in which a person may exercise Second Amendment rights. If so, intermediate scrutiny would be warranted. Finally, based on Heller, most courts have viewed rational-basis review as "off the table," leaving strict and intermediate scrutiny—the two categories of heightened scrutiny—for the courts to choose from. Post-Heller Rulings on the Constitutionality of Federal and State Firearm Regulations Heller largely left unresolved much of the "who, what, where, when, and why" of Second Amendment protections. The Supreme Court did make clear, however, that the Second Amendment (1) applies to law-abiding citizens who seek to use firearms for lawful purposes, particularly for self-defense in the home; and (2) does not protect dangerous and unusual weapons. Since Heller and McDonald, the lower courts have been attempting to apply Heller in various Second Amendment challenges to federal, state, and local firearm laws. This section of the report highlights cases that have examined what classes of persons, weapons, and places are protected by the Second Amendment, as well as the manner in which such categories may be permissibly regulated. Concerning federal regulations, most challenges stem from provisions of the Gun Control Act of 1968, as amended, which places limitations on the commercial sale and possession of firearms in interstate commerce. The challenged state laws and regulations vary; this report highlights challenges to state assault weapon bans, concealed carry restrictions, firearm licensing schemes, and the commercial sale of arms, among others. What Categories of Persons May Be Subject to Firearm Regulations? Age Restrictions Federal laws imposing age restrictions on gun possession and purchasing have survived judicial challenges. For instance, it is unlawful under 18 U.S.C. § 922(x)(2)(A) for juveniles (statutorily defined as persons under 18) to possess a handgun (subject to several exceptions). Shortly after Heller, a 17-year-old convicted under § 922(x) challenged his conviction in the First Circuit, arguing that the statute violated his rights under the Second Amendment. In particular, he argued that his interest in self-defense is "just as strong" as that of an adult and that the statute—enacted in 1994—cannot be viewed as "longstanding." But the First Circuit in United States v. Rene E. disagreed, concluding that there has been a "longstanding tradition of prohibiting juveniles from both receiving and possessing handguns," with age-based gun restrictions being in place under federal law since 1968 and restrictions on juvenile possession of guns dating back more than a century at the state level. Thus, the court concluded that the federal ban on juvenile possession of handguns fell within Heller's safe harbor for longstanding restrictions on firearm possession. Another provision in the Gun Control Act (and corresponding regulations) makes it unlawful for firearm dealers to sell handguns to persons under 21 years old. The law was challenged in National Rifle Association v. ATF by persons between 18 and 21 years old who argued that it unconstitutionally burdened their right to keep and bear arms under the Second Amendment. In its ruling, the Fifth Circuit commented that it was "inclined to uphold" the law and regulation under step one as a longstanding restriction outside the scope of the Second Amendment after finding historical support for similar firearm restrictions. Nevertheless, in an "abundance of caution," the court proceeded to step two of the two-part test formed after Heller . At step two, the court applied intermediate scrutiny, concluding that the age-based restriction does not burden the Second Amendment's core protections of law-abiding, responsible citizens, because "Congress found that persons under 21 tend to be relatively irresponsible and can be prone to violent crime, especially when they have easy access to handguns." Nor does the restriction prevent 18- to 21-year-olds from possessing handguns for self-defense in the home because, the court added, these persons may lawfully acquire handguns from responsible parents or guardians. Ultimately, the court concluded that the laws survived intermediate scrutiny because the government showed a nexus between the firearm restriction and the government's interest in keeping guns out of the hands of young persons. In doing so, the court gave particular attention to Congress's findings after a multi-year investigation that there was a causal relationship between the easy availability of firearms to persons under 21 and a rise in crime. Felons Under 18 U.S.C. § 922(g)(1), the Gun Control Act makes it is a criminal offense for a felon to possess a firearm. After Heller, the federal circuit courts have unanimously concluded that § 922(g)(1) does not violate the Second Amendment. In upholding § 922(g)(1), some courts have relied on the passage in Heller in which the Supreme Court announced that "nothing in our opinion should be taken to cast doubt on longstanding prohibitions on the possession of firearms by felons." For example, in United States v. Vongxay , the Ninth Circuit rejected an argument that this proclamation in Heller was mere dicta that the court need not follow and upheld the challenged provision as constitutional. Other courts, like the D.C. Circuit, have opined that "history and tradition support the disarmament of those who were not (or could not be) virtuous members of the community," and thus all felons are excluded from the Second Amendment. Yet some courts have opined, however, that the Supreme Court, "by describing the felon disarmament ban as 'presumptively lawful,'" meant that even if a facial challenge were to fail, the presumption could be rebutted in an as-applied challenge. For example, the Third Circuit sitting en banc in Binderup v. Attorney General United States of America held that a person could rebut the presumption in an as-applied challenge to § 922(g)(1) if that person could sufficiently distinguish himself (and the crime of conviction) from the "traditional justifications" for excluding convicted felons from possessing firearms. The Fourth Circuit held more narrowly in Hamilton v. Pallozzi that generally, a felony conviction "removes one from the class of 'law-abiding, responsible citizens,' for the purposes of the Second Amendment," unless the person receives a pardon or the law defining the felony at issue is found unconstitutional or otherwise unlawful. Still, the court left open the possibility that the presumption could be rebutted for persons convicted of certain crimes labeled as misdemeanors but falling under the scope of § 922(g)(1) because of the potential term of imprisonment accompanying that misdemeanor. In contrast, other courts have cautioned that "the highly-individualized approach" of as-applied challenges "raises serious institutional and administrative concerns." One court even held that an indictment under § 922(g)(1) was constitutional even as applied to a person who was not a felon forbidden from possessing a firearm, but who was charged with aiding and abetting a felon to possess a firearm in violation of that provision. In United States v. Huet, the defendant was indicted under § 922(g)(1) and argued that the indictment was based solely on the government's evidence that she possessed a rifle in her home, which she shared with a convicted felon. The district court dismissed the indictment on the ground that it would permit "'the total elimination of the [Second Amendment] right of a sane, non-felonious citizen to possess a firearm, in her home, simply because her paramour is a felon.'" The Third Circuit disagreed, concluding that "a properly-brought aiding and abetting charge does not burden conduct protected by the Second Amendment." Ultimately, the Third Circuit concluded that the indictment's dismissal was premature because the government must be allowed to further develop the evidentiary record to show that the defendant did more than merely possess a weapon in a home shared with a convicted felon, but actually aided and abetted that felon in possessing the firearm himself. If that was the case, the defendant's conduct would be beyond the scope of the Second Amendment given Heller's comment that "the Second Amendment does not afford citizens a right to carry arms for 'any purpose.'" And aiding and abetting a convicted felon in possessing a firearm, the court concluded, is not a protected right. Misdemeanants of Domestic Violence A 1996 amendment to the Gun Control Act, commonly referred to as the Lautenberg Amendment and codified at 18 U.S.C. § 922(g)(9), prohibits persons convicted of a misdemeanor crime of domestic violence from possessing firearms. Thus far, reviewing courts have uniformly upheld the provision against Second Amendment challenges. Several circuits have employed intermediate scrutiny to evaluate § 922(g)(9) and, in doing so, concluded that the firearm restriction is constitutional. For instance, in United States v. Staten, the Fourth Circuit concluded that there is a reasonable fit between § 922(g)(9) and a substantial governmental interest—reducing domestic gun violence—because the government had established that domestic violence in the United States is a serious problem with high rates of recidivism, and, additionally, the "use of firearms in connection with domestic violence is all too common." Another circuit court, however, concluded that § 922(g)(9) is a presumptively lawful prohibition on the possession of firearms that need not be evaluated under a particular level of scrutiny. In doing so, the Eleventh Circuit in United States v. White reasoned that § 922(g)(9) was passed, in part, because Congress had recognized that domestic violence with firearms had not been remedied by "longstanding felon-in-possession laws," and thus the court "s[aw] no reason to exclude § 922(g)(9) from the list of longstanding prohibitions on which Heller does not cast doubt." Additionally, the Seventh Circuit sitting en banc and using its unique approach upheld § 922(g)(9) as constitutional after concluding that the government made a "strong showing" that § 922(g)(9) is substantially related to an important governmental objective. In particular, the court observed that § 922(g)(9) satisfied the government's objective of keeping firearms out of the hands of persons likely to continue to use violence (as the government had found of misdemeanants of domestic violence). In addition, studies presented showed high recidivism rates for domestic abusers and an increased risk of homicide with the presence of a firearm in the home of a convicted domestic abuser. Persons Subject to a Domestic Violence Protective Order Similarly, 18 U.S.C. § 922(g)(8), which prohibits persons subject to certain domestic violence protective orders from possessing firearms, has survived post- Heller Second Amendment challenges. For instance, in United States v. Chapman, the Fourth Circuit, applying intermediate scrutiny, assumed without deciding that a person subject to a qualifying domestic violence restraining order fell within the Second Amendment's protections and concluded that § 922(g)(8) does not unconstitutionally burden those protections. Intermediate scrutiny was appropriate because, the court reasoned, a person subject to a domestic violence restraining order is not entitled to the benefit of the "core right identified in Heller —the right of a law-abiding, responsible citizen to possess and carry a weapon for self-defense." In applying intermediate scrutiny the Fourth Circuit concluded that the government established a reasonable fit between § 922(g)(8) and the government's substantial interest in reducing domestic gun violence. In particular, the court noted that § 922(g)(8) (among other things) "by its own terms, explicitly prohibits the use, attempted use, or threatened use of physical force against [an] intimate partner or child that would reasonable be expected to cause bodily injury." Additionally, the court observed that § 922(g)(8)'s "prohibitory sweep [is] exceedingly narrow" because the provision applies only to restraining orders currently in force. Using a different approach, but reaching the same ultimate result, the Eighth Circuit in United States v. Bena concluded at step one of its analysis that § 922(g)(8) is constitutional on its face, reasoning that "[i]nsofar as § 922(g)(8) prohibits possession of firearms by those who are found to represent a 'credible threat to the physical safety of [an] intimate partner or child . . . it is consistent with a common-law tradition that the right to bear arms is limited to peaceable or virtuous citizens." Additionally, in an as-applied challenge, the Fourth Circuit in United States v. Mahin upheld the conviction of a person subject to a domestic violence protective order who had been found in violation of § 922(g)(8) by renting a firearm at a shooting range. The court rejected the defendant's argument that possessing a firearm "for a limited period of time in the controlled environment of a commercial shooting range" is conduct that "must be exempted from prosecution" and is not the kind of conduct § 922(g)(8)'s seeks to criminalize. Instead, the court reasoned that the defendant, "possessed the power . . . to leave the premises and use [a firearm] against those that sought the protections of the protective order." The court did not find it relevant that the defendant did not actually leave the shooting range with the handgun and incite violence, because the intermediate scrutiny standard of review applicable to the challenged restriction, in the court's view, "has never been held to require a perfect end-means fit." Accordingly, the court concluded that "[i]t is sufficient that § 922(g)(8) rests on an established link between domestic abuse, recidivism, and gun violence and applies to persons already individually adjudged in prior protective order to pose a future threat of abuse." Unlawful Drug Users and Addicts 18 U.S.C. § 922(g)(3), which criminalizes the possession of firearms by persons who unlawfully use or are addicted to any controlled substance, has been upheld as constitutional by several circuit courts. In particular, circuit courts of appeals have upheld § 922(g)(3) under the Second Amendment because the ban prohibits conduct similar to those listed in Heller as presumptively lawful, namely felons and the mentally ill. For instance, the Ninth Circuit in United States v. Dugan noted that habitual drug users, like felons and the mentally ill, "more likely will have difficulty exercising self-control, particularly when they are under the influence of controlled substances." Other circuits, however, have required the government to put forth evidence demonstrating a reasonable connection between § 922(g)(3) and an important governmental interest. For instance, in United States v. Carter the Fourth Circuit initially vacated the conviction of a person convicted under § 922(g)(3) for possessing a firearm while unlawfully using marijuana, and the court remanded the case to the district court for the parties to develop the record and make arguments as to whether the conviction withstood intermediate scrutiny. In evaluating the defendant's argument, the circuit court assumed without deciding that the defendant maintains Second Amendment protection notwithstanding his drug use. And the court found on the record before it that the government had not demonstrated a connection between drug use and violence and thus had not shown a reasonable fit between § 922(g)(3) and its goal of keeping guns out of the hands of irresponsible and dangerous persons. Unlike in other cases, the government had not provided any studies, empirical data, or legislative findings to support the restriction, and instead it had argued that "the fit was a matter of common sense." However, the court noted that the government's burden on remand "should not be difficult to satisfy," given that evidence of danger of mixing drugs and guns was, in the court's view, "abundantly available." And on remand, the government indeed presented numerous studies showing a correlation between violent crime and drug use, which the Fourth Circuit ultimately found to substantiate the government's contention that "disarming drug users reasonably serves the important governmental interest of protecting the community from gun violence." Aliens Another provision of the Gun Control Act, 18 U.S.C. § 922(g)(5), prohibits unlawfully present aliens and most categories of nonimmigrant visa holders from possessing firearms. In determining whether the Second Amendment covers non-U.S. citizens, courts have looked to whether such persons come within the ambit of "the people" as used in the text of Second Amendment. This inquiry has produced a circuit split. Some courts that have considered the issue have concluded that "the people" does not encompass unlawfully present aliens. For instance, the Fifth Circuit in United States v. Portillo-Munoz recounted that the Supreme Court in Heller noted that "the people" include "law-abiding, responsible citizens" and "all members of the political community." Because unlawfully present aliens fit neither description, the court concluded that they are granted no rights by the Second Amendment. Moreover, to bolster its conclusion that the restriction in § 922(g)(5) is constitutional, the court added that "Congress has the authority to make laws governing the conduct of aliens that would be unconstitutional if made to apply to citizens." However, a number of circuit courts, while ultimately holding § 922(g)(5) to be constitutional, have opined that "the people," as used in the Second Amendment, could include some unlawfully present aliens. For example, in United States v. Meza-Rodriguez, the Seventh Circuit analyzed § 922(g)(5) as applied to an alien who was brought the United States as a young child. In determining whether the defendant was protected by the Second Amendment, the court analyzed the meaning of "the people." Like the Fifth Circuit, the Seventh Circuit found that Heller links Second Amendment rights to law-abiding citizens, which, as someone who entered the country illegally, Meza-Rodriguez technically is not. But the court also concluded that the Supreme Court was not defining "the people" when making that connection in Heller . Accordingly, the Seventh Circuit relied on the Supreme Court's earlier opinion in United States v. Verdugo-Urquidez, which opined that "the people," for the purposes of protection under the First, Second, and Fourth Amendments, "refers to a class of persons who are part of a national community or who have otherwise developed sufficient connection with this country to be considered part of that community." The defendant in Meza-Rodriguez met that standard because, the Seventh Circuit concluded, he had "extensive ties" with the United States, including his 20-year residency beginning as a child, attendance at U.S. public schools, and close family relationships with persons in the United States. Nevertheless, the court held that § 922(g)(5) is constitutional, reasoning that the government made a strong showing that its interest in "prohibiting persons who are difficult to track and have an interest in eluding law enforcement" supports the firearm ban. Additionally, the Tenth Circuit in United States v. Huitron-Guizar assumed that unlawfully present aliens, like the defendant—who also had been in the United States for decades and was brought to the country as a young child—could assert a Second Amendment right, noting that "we hesitate to infer from Heller a rule that the right to bear arms is categorically inapplicable to non-citizens." Applying intermediate scrutiny to § 922(g)(5), the court concluded that the law is constitutional, deferring to Congress's "constitutional power to distinguish between citizens and non-citizens, or between lawful and unlawful aliens, and to ensure safety and order." Ultimately, the court found a substantial fit between the government's interests in crime control and public safety, and its desire to keep firearms out of the hands of those it deems as "irresponsible or dangerous." What Categories of Firearms May Be Subject to Government Regulation? Assault Weapons and High-Capacity Magazines Several state "assault weapon" bans have been upheld in federal court, including those in the District of Columbia, New York, Connecticut, and Maryland. The Second and D.C. Circuits, in reviewing those laws, applied intermediate scrutiny and based their decisions on the specific evidence presented to tie the bans to the asserted state interests. And most recently, the Fourth Circuit, sitting en banc, concluded that the types of assault weapons banned in Maryland do not garner Second Amendment protection. After Heller , the District of Columbia revised its gun laws by enacting the Firearms Registration Amendment Act of 2008 (FRA). The FRA, among other things, banned assault weapons (including, as relevant here, semiautomatic rifles) and large-capacity magazines capable of holding more than 10 rounds of ammunition. In evaluating the ban's constitutionality, the D.C. Circuit assumed that semiautomatic rifles and high-capacity magazines garner Second Amendment protection but, after applying intermediate scrutiny, concluded that the provision was constitutional. The court chose intermediate scrutiny because the law, in the court's view, did not substantially burden the Second Amendment because it did not completely ban handgun possession—described in Heller as the "quintessential self-defense weapon." Nor, the court added, did the District's law prevent a person from having a different, "suitable and commonly used weapon" (e.g., handguns, non-automatic long guns) for self-defense in the home or hunting. Next, the D.C. Circuit concluded that the ban survived intermediate scrutiny because the record evidence substantiated the District's assertion that the ban was substantially related to protecting police officers and crime control. For example, evidence submitted "suggest[ed that] assault weapons are preferred by criminals and place law enforcement 'at particular risk . . . because of their high firepower.'" And "the risk 'posed by military-style assault weapons," according to the circuit court, is "'increased significantly if they can be equipped with high-capacity ammunition magazines' because, 'by permitting a shooter to fire more than ten rounds without reloading, they greatly increase the firepower of mass shooters.'" The Second Circuit took a similar approach when analyzing assault weapon bans in New York and Connecticut, enacted after the shooting at Sandy Hook Elementary School in Newtown, Connecticut. In New York State Rifle & Pistol Association v. Cuomo, the Second Circuit, applying intermediate scrutiny, upheld provisions banning assault weapons—defined as semiautomatic weapons with certain enumerated features—and large-capacity magazines capable of holding more than 10 rounds of ammunition, declaring that the dangers posed by such weapons "are manifest and incontrovertible." However, the court struck down one provision in each state's law. New York's law also had a "load limit" that banned the possession of a firearm loaded with more than seven rounds of ammunition. The court struck it down on the grounds that the ban "is entirely untethered from the stated rationale of reducing the number of assault weapons and large capacity magazines," and New York "failed to present evidence that the mere existence of this load limit will convince any would-be malefactors to load magazines capable of holding ten rounds with only the permissible seven." And Connecticut's law specifically banned one non-semiautomatic weapon; the court concluded that it did not pass constitutional muster under intermediate scrutiny given the state's failure to argue how the ban related to a substantial government interest. Taking a different approach, the Seventh Circuit in Friedman v. City of Highland Park evaluated the constitutionality of a Chicago suburb's assault weapon ban without applying a particular level of scrutiny to assess the ban's constitutionality, but rather, by asking "whether [the] regulation bans weapons that were common at the time of ratification or those that have 'some reasonable relationship to the preservation of a well regulation militia,' and whether law-abiding citizens retain adequate means of self-defense." The court noted that features of the banned firearms were not available at ratification but are now commonly used for military and police purposes and, thus, "bear a relation to the preservation and effectiveness of state militias." Still, because states are in charge of militias, the court reasoned, state governments (and other units of local government) ought to have the authority to decide when civilians may have military-grade firearms in order to have them ready for when the militia is called to duty. The court also noted that other firearms, including long guns, pistols, and revolvers, were still available for self-defense. Accordingly, the Seventh Circuit concluded that the assault weapons ban fell within the limits established by Heller and thus was constitutional. In 2015, the Supreme Court denied granting a petition for a writ of certiorari over the dissent of Justices Thomas and Scalia. In his dissent, Justice Thomas argued that the Seventh Circuit (and other circuits holding similarly) "upheld categorical bans on firearms that millions of Americans own for lawful purposes" and suggested that those bans ran afoul of Heller and McDonald. Lower courts have continued to review the constitutionality of assault weapon bans. Recently, the Fourth Circuit, sitting en banc in Kolbe v. Hogan, held that the Second Amendment does not protect the assault weapons and large-capacity magazines that Maryland had made unlawful. In so holding, the court relied on a passage in Heller stating that "'weapons that are most useful in military service—M-16 rifles and the like—may be banned' without infringement upon the Second Amendment." The court viewed Heller as drawing a line "between weapons that are most useful in military service," which garner no Second Amendment protection, and "those that are not." And "[b]ecause the banned assault weapons and large-capacity magazines are 'like' 'M-16 rifles'—'weapons that are most useful in military service,'" the court continued, "they are among those arms that the Second Amendment does not shield." For instance, the court reasoned that, although the M-16 is a fully automatic weapon, whereas the firearms banned by the challenge state law—the AR-15 and similar rifles—are semi automatic, the two types of firearms have nearly identical rates of fire and thus share "the military features . . . that make the M16 a devastating and lethal weapon of war." The court similarly concluded that large-capacity magazines, by "enabl[ing] a shooter to hit multiple human targets very rapidly [and] contribut[ing] to the unique function of any assault weapon to deliver extraordinary firepower" are likewise "most useful in military service." Additionally, the court held in the alternative that if the banned weapons garner any Second Amendment protection, the ban should be reviewed under intermediate scrutiny and, under that standard, the ban is lawful. Ammunition At least one circuit court has found that ammunition, although not explicitly mentioned in the Second Amendment, is constitutionally protected because "the right to possess firearms for protection implies a corresponding right to obtain the bullets necessary to use them." In the Ninth Circuit's view, "without bullets, the right to bear arms would be meaningless." Even with that understanding, though, the Ninth Circuit in Jackson v. City & County of San Francisco upheld a San Francisco ordinance banning the sale of ammunition with no sporting purpose that is designed to expand or fragment upon impact. The court concluded that banning a certain type of ammunition does not substantially burden the Second Amendment right to use firearms for self-defense because the restriction burdens only the manner in which that right is exercised, and thus ought to be reviewed under intermediate scrutiny. The court ultimately concluded the ordinance substantially fit San Francisco's important interest in reducing the likelihood that shooting victims in the city will die from their injuries, noting that the city legislature, in enacting the legislation, had relied on evidence showing that hollow-point bullets are more lethal than regular bullets. The Third Circuit, in Association of New Jersey & Pistol Clubs, Inc. v. Attorney General of New Jersey , went a step further to hold that firearm magazines, which attach to certain firearms to feed the ammunition, are "arms" within the meaning of the Second Amendment. "Because magazines feed ammunition into certain guns, and ammunition is necessary for such a gun to function as intended," the court concluded, "magazines are 'arms' within the meaning of the Second Amendment ." After assuming without deciding that magazines are covered by the Second Amendment, the court applied intermediate scrutiny to New Jersey's ban of large-capacity magazines capable of holding more than 10 rounds of ammunition. The Third Circuit upheld that ban, concluding that it "reasonably fits" New Jersey's interest in promoting public safety. Further, the court opined that the New Jersey law does not burden more conduct than reasonably necessary given that the law does not disarm individuals or limit the number of firearms, magazines, or ammunition a person may lawfully possess. Where May Firearms Be Subject to Governmental Regulation? Firearms Outside the Home Post -Heller , courts have disagreed about the extent to which the Second Amendment protects the right to carry firearms outside the home. For instance, the Ninth Circuit has opined that the Second Amendment "gurantee[s] some right to self-defense in public," and that right includes openly carrying a firearm in public but not carrying a concealed firearm. First, in Peruta v. County of San Diego , the en banc Ninth Circuit concluded that the Second Amendment "does not extend to the carrying of concealed firearms in public by members of the general public." In reaching this conclusion, the court engaged in a historical analysis to determine whether the Second Amendment codified a pre-existing right to carry a concealed weapon in public, including examining jurisprudence following the ratification of the Second and Fourteenth Amendments. Based on the Supreme Court's ruling a few decades after the Fourteenth Amendment's ratification, in which the Court announced that "the right of the people to keep and bear arms . . . is not infringed by laws prohibiting the carrying of concealed weapons," plus state court rulings in the years following the Fourteenth Amendment's ratification concluding similarly, the Ninth Circuit held that the Second Amendment "does not include, in any degree, the right of a member of the general public to carry concealed firearms." In Young v Hawaii, the Ninth Circuit analyzed the question left open in Peruta : whether the Second Amendment encompasses the right to carry a firearm openly in public. Young analyzed a Hawaii statute that enabled open-carry permits to be granted, as relevant here, only to persons "engaged in the protection of life and property." Again, the Ninth Circuit examined the text and historical understanding of the Second Amendment before concluding that "the right to bear arms must include, at the least, the right to carry a firearm openly for self-defense." Further, the court concluded that this right is a "core" Second Amendment right, given that " Heller and McDonald describe the core purpose of the Second Amendment as self-defense," and "much of Heller 's reasoning implied a core purpose of self-defense not limited to the home." Yet, the court concluded, Hawaii's law, which restricted open carry to persons whose work involves protecting life or property, limited open carry "to a small and insulated subset of small of law-abiding citizens." And because the Second Amendment protects all law-abiding citizens, the court found that Hawaii's law—which foreclosed most law-abiding Hawaiians from openly carrying a handgun in public—"amounts to a destruction" of a core Second Amendment right and cannot stand under any level of scrutiny. Additionally, Illinois had banned persons (subject to certain exceptions) from carrying uncased, immediately accessible (i.e., ready to use) firearms outside the home, until the Seventh Circuit struck down that law in Moore v. Madigan , holding that it conflicted with Heller's interpretation of the Second Amendment. The circuit court declined "to engage in another round of historical analysis to determine whether eighteenth-century America understood the Second Amendment to include a right to bear guns outside the home," reasoning that "[t]he Supreme Court has decided that the amendment confers a right to bear arms for self-defense, which is as important outside the home as inside." And the Seventh Circuit concluded that Illinois had not met its burden of showing more than a rational basis for how its "uniquely sweeping ban" justified its interest of increasing public safety. The First Circuit similarly concluded in Gould v. Morgan that the Second Amendment extends to carrying firearms in public, but, in contrast to the Ninth Circuit, ruled that such activity is not core to the Second Amendment. The court so concluded when reviewing—and upholding—a Massachusetts licensing scheme for carrying firearms in public, as it had been implemented by Boston and its suburb, Brookline. Massachusetts requires a license to carry a firearm in public. Local licensing authorities "may issue" a license, as relevant here, to persons with "good reason to fear injury to the applicant or the applicant's property or for any other reason, including the carrying of firearms for use in sport or target practice only." The litigants challenged Boston and Brookline's similar, respective policies that require an applicant to identify "a need above and beyond a generalized desire to be safe" in order to establish "good reason to fear injury." Applicants who cannot so establish may still receive one of several types of restricted licenses that allow the license holder to carry a firearm when engaged in a specified activity, such as for employment, hunting, target practice, and sport. The First Circuit first concluded that the Second Amendment protects public carrying of firearms. The court reasoned, for example, that it would have been "peculiar" for the Supreme Court to describe the Second Amendment right to be "most acute" in the home if the right was limited to the home. Still, the First Circuit opined that the right to carry firearms in public is not a core Second Amendment right, again harking back to Heller 's pronouncement that "the need for defense of self, family, and property is most acute" thus "elevat[ing] above all other interests the . . . defense of hearth and home." Because public carrying of firearms is not core Second Amendment activity, the First Circuit applied intermediate scrutiny to Boston and Brookline's licensing schemes. The court concluded that the fit between the governments' asserted public-safety interests and their "good reason to fear injury" requirement for an unrestricted license "is close enough to pass intermediate scrutiny." The court reasoned that the localities, in "[s]triving to strike a balance" between protecting Second Amendment rights and advancing public safety, did not burden more conduct than reasonably necessary. For instance, the court recounted that the localities offer and grant various restricted licenses, and thus did not completely ban the right to carry firearms in public. In this vein, the First Circuit distinguished Boston and Brookline's licensing regimes from those struck down by the Ninth Circuit in Young and the Seventh Circuit in Moore . "Good Cause" Requirements for Concealed Carry Licenses Some states and localities have enacted measures requiring a person seeking a concealed carry license to demonstrate "good cause" for needing one. The courts that have reviewed such measures have produced divergent rulings on the extent to which the ability to carry a concealed firearm is protected by the Second Amendment and what level of scrutiny should be applied to such laws. For instance, in Kachalsky v. County of Westchester , the Second Circuit considered a challenge by persons who were denied an unrestricted concealed carry license under New York law. According to the state's concealed carry requirements, an applicant must demonstrate "proper cause" to obtain a concealed carry license—a restriction that had been construed by the New York state courts to require an applicant seeking an unrestricted concealed carry license for self-defense purposes to "demonstrate a special need for self-protection distinguishable from that of the general community or of persons engaged in the same profession." The plaintiffs in Kachalsky argued that the concealed carry law is unconstitutional by preventing them from "carry[ing] weapons in public to defend themselves from dangerous confrontation." But the Second Circuit rejected that contention. Assuming that the Second Amendment applied and employing intermediate scrutiny on account of the gun restriction affecting activities outside the home, Kachalsky held that the New York statute was substantially related to the government's interests in public safety and crime prevention. And requiring persons to show an objective threat to personal safety before obtaining a concealed carry license, the court reasoned, is consistent with the right to bear arms, particularly given that "there is no right to engage in self-defense with a firearm until the objective circumstances justify the use of deadly force." California has a somewhat similar law as that upheld in Kachalsky : An officer "may" issue a concealed carry licenses to applicants who have demonstrated good moral character and good cause for the license. But when two California counties' policies for determining good cause were challenged under the Second Amendment, the Ninth Circuit, sitting en banc in Peruta v. County of San Diego , as mentioned above, concluded that the Second Amendment "does not extend to the carrying of concealed firearms in public by members of the general public." Accordingly, because concealed carry is not encompassed by the Second Amendment, the Ninth Circuit held that California's good-cause requirement withstood constitutional scrutiny. Breaking with the Second and Ninth Circuits, the D.C. Circuit in Wrenn v. District of Columbia held that the right of law-abiding citizens to carry a concealed firearm in public (i.e., "concealed carry") is a core component of the Second Amendment and struck down the District's good-cause concealed carry regime. The District of Columbia's framework regulating concealed carry authorized the Chief of the Metropolitan Police Department to issue a concealed carry license to a person who, as relevant here, has "good reason to fear injury to his or her person or property" or "any other proper reason for carrying a pistol." Demonstrating the requisite fear "at a minimum require[s] a showing of a special need for self-protection distinguishable from the general community as supported by evidence of specific threats or previous attacks that demonstrate a special danger to the applicant's life." Other "proper reasons" where a concealed carry license could be granted included employment requiring handling cash or other valuables to be transported by the applicant. In striking down the District's law, the D.C. Circuit first held that the core right in the Second Amendment for law-abiding citizens to keep and bear arms for self-defense extends beyond the home. But instead of choosing a level of scrutiny under which to analyze the law, the court ruled that the District's law effectively is a "total ban" on the exercise of that core right and thus is per se unconstitutional. In particular, the court reasoned that the District's law "destroys the ordinarily situated citizen's" self-defense needs by requiring law-abiding citizens to demonstrate a need for self-protection that is "distinguishable" from other law-abiding members of the community. Thus, the court concluded that it "needn't pause to apply tiers of scrutiny, as if strong showings of public benefits could save this destruction of so many commonly situated D.C. residents' constitutional right to bear common arms for self-defense in any fashion at all." After the D.C. Circuit declined the District's request to rehear the case en banc, the District announced that it would not seek Supreme Court review, thus leaving the circuit split intact. Storage Requirements For handguns to be kept in a residence in San Francisco, California the law requires that those handguns, when not on the person, be stored in a locked container or disabled with a trigger lock. The Ninth Circuit evaluated this requirement in Jackson v. City and County of San Francisco . The circuit court found that, although the law implicates the core of the Second Amendment right by imposing restrictions on the use of handguns in the home, unlike the former D.C. law evaluated in Heller requiring handguns to be made completely inoperable, the burden in San Francisco's law was not substantial, and thus intermediate scrutiny was warranted. The court appeared to distinguish San Francisco's law from D.C.'s former law by noting that firearms kept in modern gun safes may be quickly opened and retrieved for use. Moreover, the court noted that, although the law makes it more difficult for residents to use handguns for self-defense in the home by having to retrieve the firearm from a locked container or remove a trigger lock, the requirement still burdens only the manner in which persons exercise their Second Amendment right. Thus, the court concluded that a higher level of scrutiny was unwarranted. Under intermediate scrutiny, the Ninth Circuit concluded that there was a reasonable fit between the regulation and the city's substantial interest in reducing the number of gun-related injuries and deaths from unlocked handguns in the home. On appeal to the Supreme Court, the Court denied certiorari in Jackson over the dissent of Justices Thomas, who was joined by Justice Scalia. Justice Thomas described Jackson as "in serious tension with Heller " by prohibiting San Francisco residents from keeping their handguns "'operable for the purpose of immediate self-defense,' when not carried on their person." Justice Thomas added that such a burden on a core Second Amendment right "is significant," stating that "nothing in our decision in Heller suggested that a law must rise to the level of the absolute prohibition at issue in that case to constitute a 'substantial burden' on the core of the Second Amendment right." Government Property Challenges brought against firearm prohibitions on federal property raise the question of whether such prohibitions fall into Heller's safe harbor for "sensitive places." For instance, by regulation, firearms are prohibited on U.S. postal property. In Bonidy v. U.S. Postal Service, a Colorado resident with a concealed carry permit challenged the regulation as unconstitutional under the Second Amendment as applied to him because it forbade him from carrying his firearm into his local post office, as well as storing it in his car in the post office's parking lot while picking up his mail. The Tenth Circuit rejected his claims, concluding that the restrictions did not implicate the Second Amendment because they concerned locations that were on government property. In doing so, the court relied on the passage in Heller that carrying firearms in sensitive places like government buildings are presumptively lawful. According to the circuit court, that language applies "with the same force" to the parking lot adjacent to a government post office because "the parking lot should be considered as a single unit with the postal building." Yet noting that the restriction's application to the parking lot question presented a closer question than the restriction's application to the postal building, the Tenth Circuit alternatively concluded that, even assuming that Second Amendment rights applied there, the regulation survived intermediate scrutiny. Ultimately, the Tenth Circuit concluded that the regulation was substantially related to the government's important interest in providing a safe environment for its employees and visitors. And despite the challenger's contention that the regulation is over-inclusive because his post office is open to the public at all times yet "relatively unsecured," the court concluded that the U.S. Postal Service "is not required to tailor its safety regulations to the unique circumstances of each customer, or to craft different rules for each of its more than 31,000 post offices, or to fashion one set of rules for parking lots and another for its buildings." In another case involving government property, a federal circuit court concluded that a former Department of the Interior regulation prohibiting persons from possessing a loaded weapon in vehicles on national park grounds was constitutional after applying intermediate scrutiny. The issue was brought to the Fourth Circuit in United States v. Masciandaro when a defendant convicted under the regulation contended that it violated his rights under the Second Amendment because he carried a handgun for self-defense when he slept in his car in national parks. The government argued that national parks are the kind of "sensitive place[s]" envisioned by Heller where firearm bans would be presumptively lawful. The Fourth Circuit declined to evaluate that argument, concluding, instead, that regardless of a national park's status as a "sensitive place," the regulation survived intermediate scrutiny. Under that analysis, the court ruled that the government has a substantial interest in providing safety to national park visitors, and the regulation was a narrow prohibition that was "reasonably adapted" to the government's interest. Furthermore, the court reasoned that loaded firearms concealed in vehicles are more dangerous, as they can fire accidentally or provide an opportunity for an assailant to flee. How May the Government Regulate Firearms Sales? Interstate Acquisition of Firearms The Gun Control Act invokes Congress's power to regulate interstate commerce as a jurisdictional hook to regulate the sale and possession of firearms and ammunition. Accordingly, the statutory scheme for who may possess and sell firearms, and how and where they may be acquired and possessed, are tethered to interstate commerce. As for firearm sales, two Gun Control Act provisions generally forbid direct handgun sales by a federally licensed firearms dealer to anyone who is not a resident in the state where the holder of the federal firearms license (FFL) is located. 18 U.S.C. § 922(a)(3) bars anyone except a licensed firearms importer, manufacturer, dealer, or collector from transporting into or receiving in the state where he resides a firearm that was purchased or obtained in a different state; in other words, a non-licensed person is prohibited from transporting across state lines firearms acquired outside of his state of residence. Similarly, 18 U.S.C. § 922(b)(3) prohibits, subject to exception, federally licensed importers, manufacturers, dealers, or collectors from selling or delivering any firearm to a person who is not a resident of the state in which the licensee's business is located. Thus, under these two provisions, for someone to acquire a handgun from another state, that person must have the firearms transferred from an FFL holder in the other state to an FFL holder in the state of residence. When analyzing a facial challenge to § 922(a)(3), the Second Circuit in United States v. Decastro concluded that § 922(a)(3) only minimally burdens the ability of acquire a firearm and is therefore permissible. Notably, in reaching this conclusion the Second Circuit did not apply heightened scrutiny. Instead, the court looked to First Amendment jurisprudence, which allows for content-neutral time, place, or manner regulations of free speech. In the court's view, "[b]y analogy, [a] law that regulates the availability of firearms is not a substantial burden on the right to keep and bear arms if adequate alternative remain for law-abiding citizens to acquire a firearm for self-defense." Accordingly, for the defendant's facial challenge to prevail, he would have to show that '"no set of circumstances exist under which the [statute] would be valid, i.e., that the law is unconstitutional in all of its applications,' or at least that it lacks a 'plainly legitimate sweep.'" And the defendant could not prevail because, the court concluded, the statute has a plainly legitimate sweep by helping states enforce their own gun laws. Nor would the federal prohibition on the interstate transfer of firearms be rendered unconstitutional in the event that some state laws governing firearm sales were found to be unconstitutional because the federal restriction contains no provision that facially "sanctions, compels, or encourages states" to burden the Second Amendment. Later, the Fifth Circuit in Mance v. Sessions addressed a Second Amendment challenge to 18 U.S.C. § 922(b)(3) and concluded that the statute withstood strict scrutiny. In doing so, the court assumed without deciding that the Second Amendment protects against residency restrictions on the purchase of firearms and that strict scrutiny would be applied to any such restriction. The court concluded that the interstate sale restriction was narrowly tailored to prevent the circumvention of the many differing handgun laws throughout the nation. The court concluded that it would be unreasonable for the federal government to require licensed dealers to maintain up-to-date mastery of the handgun laws within all fifty states the District of Columbia—a necessary requirement were the government to authorize the direct interstate sale of handguns from a licensed dealer to a non-licensed person. Further, Section 922(b)(3) is the least restrictive means of ensuring that state handgun laws are not evaded because, the court concluded, a qualified non-licensed person may have the desired out-of-state handgun transferred to an in-state licensed dealer after only a de minimis delay. Commercial Sale of Firearms So far one federal court of appeals—the Ninth Circuit—has engaged in an in-depth analysis of whether the Second Amendment includes a right to sell commercial firearms. Overturning a 3-judge panel of the Ninth Circuit, an 11-judge en banc panel concluded in Teixeira v. County of Alameda that there is no independent Second Amendment right to sell firearms. At issue in Teixeira was an ordinance in Alameda County, California, requiring businesses seeking to sell firearms to obtain a permit. A permit would not be granted if, as relevant here, the business would be within 500 feet of a residentially zoned district. After Alameda County denied a permit on that ground to applicants seeking to open a retail firearms store, the applicants challenged the zoning ordinance under the Second Amendment. The en banc Ninth Circuit concluded that "the Second Amendment does not confer a freestanding right, wholly detached from any customer's ability to acquire firearms, upon a proprietor of a commercial establishment to sell firearms." The court reasoned that regulations on firearms sales fall into Heller 's safe harbor for "presumptively lawful" regulations "imposing conditions and qualifications on the commercial sale of arms." Still, the court viewed Heller 's safe harbor language as "sufficiently opaque" to warrant a full textual and historical review of the Second Amendment's applicability to the commercial sale of arms. This review led the court to the same conclusion: The Second Amendment, as written, "did not encompass a freestanding right to engage in firearms commerce divorced from the citizenry's ability to obtain and use guns." But the right to acquire firearms, the Ninth Circuit clarified, is protected. The court reasoned that "the core Second Amendment right to keep and bear arms for self-defense wouldn't mean much without the ability to acquire arms." And though the court concluded that firearms dealers may assert that right on behalf of their potential customers, in this case, the permit applicants did not allege that the zoning permit denial interfered with the ability of Alameda County residents to acquire firearms. The court explained that evidence established that, without the gun store that the partners sought to open, "Alameda County residents may freely purchase firearms within the County," given that County was already home to 10 gun stores, including one that stood 600 feet away from the proposed site of the new store. And, the court continued, "gun buyers have no right to have a gun store in a particular location, at least as long as their access is not meaningfully constrained." Accordingly, the court declined to determine the precise scope of the right to acquire firearms and the appropriate level of review to analyze claims of a deprivation of that right. After Teixeira , the Ninth Circuit was tasked with evaluating under the Second Amendment a California law regulating the types of handguns that may be sold within the state. Several California residents challenged in Pena v. Lindley provisions of the state's Unsafe Handgun Act (UHA), which, subject to exception, limits the commercial sale of new handgun models to those that (1) stamp microscopically the handgun's make, model, and serial number onto each fired shell casing, (2) have a chamber load indicator, and (3) have a magazine disconnect mechanism. The Ninth Circuit assumed without deciding that the UHA provisions burdened protected Second Amendment conduct and applied intermediate scrutiny, reasoning that the restrictions would not burden core Second Amendment rights. The court explained, for instance, that there was no evidence that the new required features interfered with the functionality of any handguns and that "all of the plaintiffs admit that they are able to buy an operable handgun suitable for self-defense—just not the exact gun they want." Applying intermediate scrutiny, the court concluded that the requirements for a chamber load indicator and magazine disconnect mechanism reasonably fit the state's substantial public-safety interest in preventing accidental firearm discharges. Next, the court concluded that California had established a reasonable fit between the microstamping requirement, which limits the availability of untraceable bullets, and the state's substantial governmental interest in public safety and crime prevention. And in doing so, the court, invoking the reasoning in Teixeira , emphasized the law's application to the commercial sale of firearms, explaining that the ban applies only to manufacturers, importers, and dealers but does not punish individuals for possessing firearms made without the required features. Waiting Periods California has a 10-day waiting period for most firearm purchases, meaning that a firearm cannot be delivered to a prospective purchaser until 10 days have passed, even after the completion of the required background check. The Ninth Circuit upheld the law under the Second Amendment when it was challenged as applied to certain Californians who previously had been vetted to qualify to purchase and possess a firearm under California law (referred to by the court as "subsequent purchasers"). The court assumed that the California waiting-period laws fell within the Second Amendment's ambit and applied intermediate scrutiny, explaining that the law places only a small burden on the exercise of Second Amendment rights by requiring prospective purchasers to wait the incremental period between the completion of the background check and the end of the cooling-off period before acquiring a firearm. In applying intermediate scrutiny, the court concluded that there was a reasonable fit between the government's legitimate, stated objective of promoting safety and reducing gun violence, and applying the cooling-off period to subsequent purchasers. The court pointed to studies showing that "a cooling-off period may prevent or reduce impulsive acts of gun violence or self-harm" for all purchasers, including subsequent purchasers. Accordingly, the Ninth Circuit upheld California's waiting period as applied to subsequent purchasers. How May the Government Regulate Firearm Ownership Through Registration and Licensing Schemes? License to Possess Firearms The Supreme Court is set to review during the October 2019 term whether New York City's (NYC's) "premise license" scheme passes muster under the Second Amendment. In New York State, it is a crime to possess or carry a handgun without a license. The license at issue in the lawsuit—a "premises license"—authorizes the license holder to possess a handgun in the licensee's home. The NYC Police Commissioner, by delegation, issues handgun licenses to NYC residents. A NYC premise license authorizes the license holder to keep a handgun only at the address specified on the license. The licensee may remove the handgun from that address only for two purposes: (1) to transport the handgun to and from an authorized shooting range within the City "[t]o maintain proficiency in the use of the handgun," and (2) to transport the handgun to and from areas designated by the New York State Fish and Wildlife Law for authorized hunting, so long as the permit holder has received a hunting amendment to the premises license. In both situations, the transported handgun must be unloaded, in a locked container, and held separately from any ammunition. Three NYC residents (and the organizational plaintiff, New York State Rifle & Pistol Association) challenged the constitutionality of NYC's premises licensing scheme. Each plaintiff seeks to take a premises licensed handgun to shooting ranges outside of the City, and one plaintiff wants to take his handgun to a second home elsewhere in New York. As relevant here, the plaintiffs contend that the premises license restriction on transporting firearms outside of one's residence, with its limited exceptions, violates the Second Amendment. In particular, the plaintiffs argue that the City's premises license scheme deprives them of their Second Amendment right to self-defense in a home other than the NYC home attached to the license, and the corollary right to develop competency in the use of the licensed handgun. The District Court for the Southern District of New York found no Second Amendment violation, and the Second Circuit affirmed. The Second Circuit assumed that the Second Amendment protects activity restricted by the premises license and determined the provision ought to be evaluated under intermediate scrutiny. In doing so, the court considered "how close the law comes to the core of the Second Amendment right" and "the severity of the law's burden on that right." Citing Heller , the court opined that a statute implicates "core" Second Amendment activity when it interferes with the ability to protect in the home oneself and one's family and property. But the court concluded that the premises license law "imposes no direct restriction at all on the right of the Plaintiffs, or of any other eligible New Yorker, to obtain a handgun and maintain it at their residences for self-protection," given that the law is designed to authorize handgun possession in one's home. Nor, the court added, does "the City's regulatory scheme impose[] any undue burden, expense, or difficulty that impedes their ability to possess a handgun for self-protection" because no evidence was presented showing that the law impacted a NYC resident's ability to acquire a second handgun for a second home, or that associated costs with doing so "would be so high as to be exclusionary or prohibitive." Next, the court "assume[d] that the ability to obtain firearms training and engage in firearm practice is sufficiently close to core Second Amendment concerns that regulations that sharply restrict that ability to obtain such training could impose substantial burdens on core Second Amendment rights." Given the existence of seven authorized firing ranges within City limits, however, the court concluded that the "[p]laintiffs have sufficient opportunities to train with their firearms." Finally, the Second Circuit concluded that the premises license scheme survived intermediate scrutiny. The City argued that "limiting the geographic range in which firearms can be carried allows the City to promote public safety by better regulating and minimizing the instances of unlicensed transport of firearms on city streets." The court concluded that there was a substantial fit between the licensing regime and the City's important interests in public safety and crime prevention, and observed that plaintiffs presented a "dearth of evidence" to support their contention that the licensing regime imposed a substantial burden on their protected rights. At this stage in the proceedings, the plaintiffs—now the petitioners—reiterate that NYC's premises license law imposes a severe burden on their Second Amendment right to keep a handgun in the home for self-defense and to enhance the safe and effective use of their handguns. Plaintiffs characterize as "nonsensical" the City's asserted public safety interest because, in their view, the City is proliferating "both the number and the transportation of handguns within [C]ity limits" in two ways: (1) by requiring handguns to be carried within the City (to shooting ranges) when they could be transported outside of the City, and (2) by requiring handguns to sit unattended in vacant homes when a City resident is at a second home. NYC objects, contending first that evidence "explained the need to be able to effectively monitor and enforce the limits on the transport of handguns by individuals who have only a premises license, and not a carry license," which the City could not effectively do in the past when premises license holders could transport handguns to shooting ranges outside of NYC. NYC also argues that forcing NYC residents to leave handguns in vacant homes would create a public-safety risk only if premises license holders are not safely storing their handguns. Notably, to answer whether NYC's premise licensing scheme comports with the Second Amendment, the Supreme Court likely will have to determine how Second Amendment claims should be evaluated. As this report highlights, the lower courts have generally adopted a two-part framework for evaluating Second Amendment claims. However, some dissenting judges, including now-Justice Kavanaugh while he served on the D.C. Circuit, have advocated for a different approach—one that would analyze the Second Amendment's text, history, and tradition, rather than apply a balancing test like strict or intermediate scrutiny. These dissenting opinions potentially could be invoked in further briefing in this case in an effort to persuade a majority of Justices to adopt a "history and tradition" approach to analyzing Second Amendment claims. Furthermore, the Court may also resolve the split among the circuit courts about what constitutes "core" Second Amendment activity. Firearm Registration Requirements Washington D.C.'s 2008 FRA (discussed above) also required firearm owners to register their firearms (limited to no more than one pistol in a 30-day period) and, in doing so, submit each pistol to be registered for ballistics identification. Applicants were required, among other things, to renew each registration in person every three years, have vision qualifying for a driver's license, submit to being fingerprinted and photographed, submit to a background check every six years, and attend a specified amount of firearms training or safety instruction. These requirements applied to long guns in addition to handguns. The new registration requirements were challenged as unconstitutional. The D.C. Circuit concluded that the "mere registration" of a handgun, alone, is a presumptively lawful, longstanding regulation "deeply enough rooted in our history to support the presumption that a registration requirement is constitutional." But as applied to long guns, the court concluded, registration is novel. As for some of D.C.'s particular registration requirements listed above (as well as all of the requirements as applied to long guns), the court concluded that those must be evaluated under intermediate scrutiny to determine their constitutionality because they do not severely limit the exercise of Second Amendment rights. The D.C. Circuit concluded, however, that the District had not demonstrated a "tight fit" between the registration requirements and its asserted interests of protecting police officers and crime control. The court stated that the District must "present some meaningful evidence, not mere assertions, to justify its predictive judgments" about reducing firearms-related crimes, and the circuit court therefore remanded the case to the district court for the parties to have the opportunity to further develop the record. After this ruling, the District revised its firearms laws by enacting the Firearms Amendment Act of 2012 (FAA), removing some, but not all, of the contested registration requirements for handguns and keeping basic registration requirements for long guns, along with many other generally applicable requirements for persons registering firearms. Those requirements came before the D.C. Circuit again in a third round of Heller v. District of Columbia. First, the court concluded that the burden from the basic registration requirements as applied to long guns was de minimis and thus did not implicate the Second Amendment. The other requirements were met with different results. The court ruled that the District's asserted interests in protecting police officers and promoting public safety were substantial, but the circuit court concluded that only the interest in promoting public safety reasonably fit with some, but not all, of the contested regulations. Those that reasonably fit the public-safety interest, in the court's view, included the requirements to appear in person and be photographed and fingerprinted; the $13 fee to register the firearm, along with the $35 fee for fingerprinting; and the requirement that applicants satisfy a safety and training course requirement. Those that did not survive scrutiny included (1) the requirement to bring the firearm to registration; (2) the requirement to renew registration every three years; (3) the requirement to have knowledge of local gun laws; and (4) the prohibition on registering more than one pistol in a 30-day period. These divergent results were a product of the relative strength of the District's evidence, as determined by the D.C. Circuit, in attempting to show a fit between the District's asserted interests and the registration requirements. Licensing Fees In Kwong v. Bloomberg , the Second Circuit reviewed a New York law requiring residents to obtain a license to possess a handgun, along with an implementing New York City measure that imposed a licensing fee of $340 for a three-year permit. The plaintiffs argued that the licensing fee imposed an unconstitutional burden on the exercise of their Second Amendment rights. In upholding the fee, the Second Circuit found it "difficult to say that the licensing fee, which amounts to just over $100 per year, is anything more than a marginal, incremental or even appreciable restraint on one's Second Amendment's rights"—and thus would not implicate heightened scrutiny—but refrained from so holding because, in its view, New York City's law also survived under intermediate scrutiny. The court reasoned that the regulation serves New York City's important interest in recouping the costs incurred in operating its licensing scheme, which is designed to promote public safety and reduce gun violence. Conclusion Although the circuit courts of appeals have taken various approaches in evaluating Second Amendment challenges, the results tend to share similar outcomes. Accordingly, without further guidance—for now—from the Supreme Court, Congress may find the circuit court rulings instructive should the legislature seek to enact measures that would add or modify the categories of persons or weapons subject to firearm regulations. However, any new (and past) firearms measures will need to comport with whatever guidance, if any, the Supreme Court offers when it issues a ruling in New York State Rifle & Pistol Association, Inc. v. City of New York . Almost all federal courts reviewing Second Amendment challenges post- Heller have adopted a two-step approach to evaluating Second Amendment challenges. First, courts ask whether the regulated person, firearm, or place comes within the scope of the Second Amendment's protections. If not, the law does not run afoul of the Second Amendment. If, on the other hand, the challenged law does implicate the Second Amendment, courts must next decide the appropriate level of scrutiny—rational basis, intermediate, or strict scrutiny—to employ in determining whether the law passes constitutional muster. In deciding which level to choose, courts generally ask whether the challenged law burdens core Second Amendment conduct, like the ability to use a firearm for self-defense in the home. If a law substantially burdens core Second Amendment activity, courts typically will apply strict scrutiny. Otherwise, courts will apply intermediate scrutiny. In addition, sometimes circuit courts have taken a different approach by asking whether the challenged regulation is "presumptively lawful" as envisioned by Heller . Further, some courts have deemed rational-basis review as "off the table" based on the majority's comments in Heller. All told, most firearm laws have been reviewed under intermediate scrutiny, where the courts require a reasonable fit between the challenged law and a substantial or important governmental interest asserted as the basis for the law. Based on these various approaches, it appears that the government can justify a firearm regulation in a number of ways. First, at step one, the government can show that the regulation is a longstanding, presumptively lawful regulation. The government typically can do this by tying the regulation to those restrictions identified in Heller as presumptively lawful. In some cases, a challenged restriction might not be among those listed in Heller as presumptively lawful. However, given the Heller Court's admonishment that the list was not intended to be exhaustive, later courts have concluded that a challenged law is presumptively lawful by analogizing it to restrictions identified in Heller as presumptively permissible. In other cases, the government can show that a firearm regulation is presumptively lawful by proving that a restricted person is not a lawful, responsible citizen and thus outside the scope of the Second Amendment. Additionally, the government can make a historical showing that the firearm regulation is longstanding and thus lawful. Second, if the inquiry proceeds to the second step, the government must show that the regulation is substantially related to an important governmental interest. The cases show that the success of a law under this inquiry will depend on the evidence that the government puts forth. The courts will not take mere assertions by the government but require meaningful evidence, like legislative findings, empirical evidence, and academic studies. Based on the courts' admonishments, future legislation to regulate firearms may face a greater chance of survival in the courts if that legislation evidences a clear fit between the government's interest and the regulation. Looking ahead, the seats of two of the Justices critical to the outcomes in Heller and McDonald , Justices Scalia and Kennedy, have been filled by Justices Gorsuch and Kavanaugh respectively. During Justice Gorsuch's tenure on the Tenth Circuit, he never had the opportunity to explore the scope of Heller and the Second Amendment. But since joining the Court, he joined Justice Thomas in dissenting from the denial of certiorari in Peruta v. County of San Diego (involving California's good-cause requirement for a concealed carry license), in which Justice Thomas opined that the Second Amendment's text, history, and jurisprudence "strongly suggest" that the Amendment includes the right to carry a firearm in public "in some manner." Conversely, while on the D.C. Circuit, Justice Kavanaugh wrote at length about Heller 's meaning in his dissenting opinion in Heller v. District of Columbia ( Heller II ), a ruling that evaluated several provisions of a comprehensive firearm scheme that the District of Columbia had enacted in the wake of the Supreme Court's more-famous Heller opinion. Unlike the majority of federal appellate courts, he did not appear to believe that Second Amendment claims should be evaluated under a particular level of constitutional scrutiny. Rather, he would have considered the Second Amendment's text, history, and tradition. Accordingly, these two new arrivals on the Court may help shape post- Heller Second Amendment jurisprudence. Indeed, the Court's consideration of New York State Rifle & Pistol Association, Inc. this upcoming October 2019 term will likely clarify the framework that should be employed when evaluating Second Amendment claims. Further, the grant of certiorari appears to signal a willingness of the Court to further develop its Second Amendment jurisprudence.

The Second Amendment states that "[a] well-regulated Militia, being necessary to the security of a free State, the right of the people to keep and bear arms, shall not be infringed." Before the Supreme Court's 2008 opinion in District of Columbia v. Heller, the Second Amendment had received little Supreme Court attention and had been largely interpreted, at least by the lower federal courts, to be intertwined with military or militia use. Still, there had been ample debate in the lower federal courts and political discussion over whether the Second Amendment provides an individual right to keep and bear arms, versus a collective right belonging to the states to maintain militias. Pre-Heller, the vast majority of lower federal courts had embraced the collective right theory. In Heller, though, the Supreme Court adopted the individual right theory, holding that the Second Amendment protects an individual right for law-abiding citizens to keep and bear arms for lawful purposes including, most notably, self-defense in the home. Two years later in McDonald v. City of Chicago, the Court held that the Second Amendment applies to the states via selective incorporation through the Fourteenth Amendment. After Heller and McDonald, numerous challenges were brought on Second Amendment grounds to various federal, state, and local firearm laws and regulations. Because Heller neither purported to define the full scope of the Second Amendment, nor suggested a standard of review for evaluating Second Amendment claims, the lower federal courts have been tasked with doing so in the Second Amendment challenges brought before them. These challenges include allegations that provisions of the Gun Control Act of 1968, as amended, as well as various state and local firearm laws (e.g., "assault weapon" bans, concealed carry regulations, firearm licensing schemes) are unconstitutional. The analyses in these cases may provide useful guideposts for Congress should it seek to enact further firearm regulations. Generally, the courts have adopted a two-step framework for evaluating Second Amendment challenges. First, courts ask whether the regulated person, firearm, or place comes within the scope of the Second Amendment's protections. If not, the law does not implicate the Second Amendment. But if so, the court next employs the appropriate level of judicial scrutiny—rational basis, intermediate, or strict scrutiny—to assess whether the law passes constitutional muster. In deciding what level of scrutiny is warranted, courts generally ask whether the challenged law burdens core Second Amendment conduct, like the ability to use a firearm for self-defense in the home. If a law substantially burdens core Second Amendment activity, courts typically will apply strict scrutiny. Otherwise, courts generally will apply intermediate scrutiny. Most challenged laws have been reviewed for intermediate scrutiny, where a court asks whether a law is substantially related to an important governmental interest. And typically, the viability of a firearm restriction will depend on what evidence the government puts forth to justify the law. Yet sometimes courts take a different or modified approach from that described above and ask whether a challenged regulation falls within a category deemed "presumptively lawful" by Heller. If the law falls within such a category, a court does not need to apply a particular level of scrutiny in reviewing the restriction because the law does not facially violate the Second Amendment. In early 2019, the Supreme Court granted certiorari in New York State Rifle & Pistol Association, Inc. v. City of New York. The Court is set to review a portion of New York City's firearm licensing scheme that the U.S. Court of Appeals for the Second Circuit upheld as valid. In doing so, the Court may clarify the scope of the right protected in the Second Amendment. Importantly, to make this substantive ruling, the Court likely will have to answer a question that it has eluded since Heller: Under what framework should Second Amendment challenges be evaluated?

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A t the beginning of each Congress, the House of Representatives must adopt rules to govern its proceedings. The House does this by readopting the rules of the previous Congress along with any changes that will apply in the new Congress. On January 3, 2019, the House considered and adopted H.Res. 5 , a resolution providing for the consideration of H.Res. 6 , including separate votes on each of the three titles comprising H.Res. 6 . Title I, the standing rules for the House of Representatives for the 116 th Congress, was adopted by a vote of 234-197 on January 3, 2019. In addition to the standing rules, H.Res. 6 includes several additional provisions, called separate orders, that also govern proceedings in the House. A number of the provisions adopted both as part of the standing rules of the House and as separate orders might affect the consideration of budgetary legislation. In many cases, these provisions are similar to provisions adopted in previous Congresses. This report provides information on changes to both the standing rules and separate orders that might affect the consideration of budgetary legislation in the House of Representatives during the 116 th Congress. Rules Change Related to Authorizations The 104 th Congress (1995-1996) added a provision to clause 2(d) of House Rule X that required that each standing committee adopt (by February 15 of the first session of a Congress) its own oversight plan for the Congress. H.Res. 5 (115 th Congress) added language specifically requesting that committees review authorizations for programs or agencies within their jurisdiction. This language was dropped from Rule X for the 116 th Congress. Rules Change Related to Budget Estimates A provision was added to House rules in the 105 th Congress that authorized the chair of the Committee on Ways and Means to request the Joint Committee on Taxation to prepare a dynamic estimate of revenue changes proposed in a measure designated by the majority leader as major tax legislation. In the 108 th Congress, this provision was modified to establish a point of order against the consideration of a measure reported from the Committee on Ways and Means to amend the Internal Revenue Code of 1986 unless the report included a macroeconomic impact analysis (often referred to as "dynamic scoring") or an explanation of why such an analysis was not calculable. In the 114 th Congress, this provision was supplanted by a requirement that any budgetary estimates provided by the Congressional Budget Office (CBO) include, to the extent practicable, a macroeconomic impact analysis as well as a requirement that any estimate provided to CBO by the Joint Committee on Taxation also include a macroeconomic impact analysis. This language was dropped from Rule XIII for the 116 th Congress. Rule Change Related to the Passage of Certain Revenue Legislation A provision was added to House rules in the 104 th Congress that required the vote of a three-fifths majority to approve a federal income tax rate increase. In the 105 th Congress, this provision was modified to clarify its application. This language was dropped from Rule XXI for the 116 th Congress. In addition, a requirement in House Rule XX to automatically order the yeas and nays for a vote of the House on such measures was also dropped for the 116 th Congress. Rule Change Related to the Consideration of Public Debt Legislation3 A limit on the public debt is fixed by law and may be changed or suspended by enactment of a bill or joint resolution. A former rule of the House (known as the ''Gephardt rule'' after Representative Richard Gephardt of Missouri) provided for a measure to amend the debt to automatically be engrossed and deemed to have been passed by the House by the same vote as the adoption by the House of a conference report on a concurrent resolution on the budget setting forth a level of the public debt different from the existing statutory limit, 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. This rule was first added to the standing rules of the House as Rule XLIX by P.L. 96-78 , although it was renumbered as Rule XXVIII as part of the recodification of House rules in the 106 th Congress. In several instances in the 104 th -106 th Congresses the rule was suspended so that it did not provide for the automatic engrossment of legislation based on changes in the public debt in concurrent resolutions. The rule was repealed in the 107 th Congress, reinstated in the 108 th Congress, and repealed again in the 112 th Congress. H.Res. 6 established a similar requirement as House Rule XXVIII. This new language 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 setting forth a level of the public debt different from the existing statutory limit. Rather than a specific level of debt, 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. Rule Changes Related to the Consideration of Revenue and Direct Spending Legislation The "PAYGO" Rule6 H.Res. 6 reestablished a PAYGO requirement in the House, which had been in effect during the 110 th and 111 th Congresses. The new PAYGO rule (Rule XXI, clause 10) prohibits the consideration of direct spending or revenue legislation that is projected to increase or cause a 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 or (2) the 11-year period consisting of the current year, the budget year, and the ensuing nine fiscal years following the budget year. The rule applies to any bill, joint resolution, amendment, motion, or conference report that affects direct spending or revenues. The House PAYGO rule replaced the House CUTGO rule that was adopted by the House at beginning of the 112 th Congress and was in effect though the end of the 115 th Congress. The CUTGO rule prohibited the consideration of any legislation that would have the net effect of increasing direct spending over the same two time periods noted above. Under the House PAYGO rule, one or more provisions in a measure may be exempted from the rule by being designating as an "emergency." Section (c) of the rule states that the exemption may apply to any legislative text designated as an emergency within a bill or joint resolution, an amendment made in order as original text by a resolution reported from the House Committee on Rules, a conference report, or an amendment between the Houses. The exemption does not apply to other amendments even if the amendment includes an emergency designation. The House PAYGO rule also provides flexibility by allowing two measures that have been combined to "offset" one another so long as their net effect would comply with the rule. Specifically, Section (b) of the rule states that in the event that a resolution reported from the House Committee on Rules directs the Clerk of the House to add legislative text (that has already passed the House) as new matter to another piece of legislation, the legislative provisions can be evaluated together for compliance with the rule. Prohibiting Consideration of Legislation Causing a Long-Term Increase in Spending Language prohibiting House consideration of legislation that would cause a long-term increase in spending was previously adopted by the House as a separate order in the 112 th and 115 th Congresses and adopted in budget resolutions in the 113 th Congress ( H.Con.Res. 96 ) and 114 th Congress ( S.Con.Res. 11 ). This language generally required CBO to estimate whether certain legislation would cause a net increase in spending in excess of $5 billion in any of the four 10-year periods beginning with the fiscal year 10 years after the current fiscal year and also prohibited the House from considering legislation that would cause such an increase. This language was not included in H.Res. 6 . Rule Changes Related to the Consideration of Appropriations Legislation Limiting Advance Appropriations Although budget authority for most federal programs is provided through annual appropriations actions that allow those funds to be obligated during the ensuing fiscal year, funding for certain programs is provided with a different period of availability. The term advance appropriations is applied to funds that will become available for obligation one or more fiscal years after the budget year covered by the appropriations act. In recent years the House has adopted limits on the level of advance appropriations that may be provided as well as the programs or activities for which it may be provided. In some instances, these limits have been established in a budget resolution, as in S.Con.Res. 13 (111 th Congress) and S.Con.Res. 11 (114 th Congress). In other instances, the House has adopted the limit as a separate order as part of the resolution adopting the chamber's rules, as in H.Res. 5 (112 th Congress) and H.Res. 5 (115 th Congress). In the 116 th Congress, a separate order prohibits advance appropriations that exceed (1) $28,852,000,000 for FY2020 in new budget authority for programs or activities identified in a list submitted to the Congressional Record by the chair of the Budget Committee under the heading "Accounts Identified for Advance Appropriations" and (2) $75,550,600,000 for FY2020 in new budget authority for programs and activities identified under the heading "Veterans Accounts Identified for Advance Appropriations." Advance appropriation is defined in the provision to apply to funding provided in FY2019 appropriations acts that are to become available in any fiscal year following FY2019. Enforcing Spending Limits A point of order under Section 302(f) of the Congressional Budget Act prohibits the consideration of measures or amendments that would cause the measure to exceed an allocation made pursuant to Section 302(a) or, in the case of appropriations bills, a suballocation pursuant to Section 302(b). In addition, as a consequence of this point of order, Members may offer amendments to increase the amount of budget authority in an appropriations bill only if it included budget authority less than the level of the applicable 302(b) suballocation, or if it was accompanied by one (or more) provisions that could serve as an offset. This point of order was previously supplemented by a separate order—first adopted during the 109 th Congress (2005-2006) as a freestanding resolution ( H.Res. 248 )—providing that a motion that the Committee of the Whole rise and report an appropriations bill to the House is not in order if the bill, as amended, exceeds the applicable 302(b) suballocation. This provision was adopted as a separate order for the 110 th -115 th Congresses, but it is not applicable for the 116 th Congress. The House also previously supplemented enforcement of 302(b) suballocations through language prohibiting amendments to general appropriations bills that would result in a net increase in the level of budget authority in the bill. This did not, however, prohibit amendments that would increase budget authority for an item in the bill if the amendment also included an equal or greater offset. This prohibition was adopted as a separate order in the 112 th , 113 th , and 114 th Congresses and as part of House Rule XXI for the 115 th Congress, but it is not applicable for the 116 th Congress. Requiring a Spending Reduction Account This provision was previously included as a standing order for the 112 th -115 th Congresses. The order required that any general appropriations bill include a spending reduction account. This "account" was a provision in the last section of the bill to function as a temporary deposit box into which amendments could transfer budget authority and not be available as an offset for further amendments during consideration of that bill. This language was not included in   H.Res. 6 . Allowing Certain Legislative Amendments: The Holman Rule Although congressional rules establish a general division of responsibility under which questions of policy are kept separate from questions of funding, House rules provide for exceptions in certain circumstances. One such circumstance allows for the inclusion of legislative language in general appropriations bills or amendments thereto for "germane provisions that retrench expenditures by the reduction of amounts of money covered by the bill." This exception appears in clause 2(b) of House Rule XXI and is known as the "Holman rule" (after Representative William Holman of Indiana, who first proposed the exception in 1876). In the 115 th Congress the House adopted a special order to provide that retrenchments of expenditures by a reduction of amounts of money covered by the bill shall be construed as applying to any provision or amendment that retrenches expenditures by— (1) the reduction of amounts of money in the bill; (2) the reduction of the number and salary of the officers of the United States; or (3) the reduction of the compensation of any person paid out of the Treasury of the United States. This language was initially adopted in H.Res. 5 (115 th Congress) to apply to the first session of the 115 th Congress. Its applicability was extended to the second session of the 115 th Congress by H.Res. 787 (115 th Congress), but this language is not applicable in the 116 th Congress .

On January 3, 2019, the House adopted Title I of H.Res. 6 , the standing rules for the House of Representatives for the 116 th Congress. In addition to the standing rules, H.Res. 6 included a separate order related to the consideration of appropriations bills. This report provides information on changes to both the standing rules and separate orders that might affect the consideration of budgetary legislation in the House of Representatives. These include the following: Deleting language in Rule X added in the 115 th Congress providing for committees to include a review of authorizations for programs or agencies within their jurisdiction in their oversight plans. Deleting language in Rule XIII, previously adopted in the 114 th and 115 th Congresses, requiring that any budgetary estimates provided by the Congressional Budget Office (CBO) include, to the extent practicable, a macroeconomic impact analysis (often referred to as "dynamic scoring") as well as a requirement that any estimate provided to CBO by the Joint Committee on Taxation also include a macroeconomic impact analysis. Deleting language added to Rule XXI in the 104 th Congress requiring the vote of a three-fifths majority to approve a federal income tax rate increase as well as a requirement in Rule XX to automatically order the yeas and nays for a vote of the House on such measures. Establishing new language as Rule XXVIII providing for certain measures concerning the debt limit to automatically be engrossed and deemed to have been passed by the House. This measure would suspend the debt limit through the end of the budget year in the concurrent resolution on the budget (but not through the period covered by any outyears beyond the budget year). The engrossed measure would then be transmitted to the Senate for further action. This rule is similar to language that was previously part of House rules from the 96 th -107 th Congresses (known as the "Gephardt Rule"). Reestablishing a PAYGO requirement in the House, which had previously been in effect during the 110 th and 111 th Congresses. This PAYGO rule (Rule XXI, clause 10) replaces the CUTGO rule that was a part of Rule XXI between the 112 th and 115 th Congresses. The new rule prohibits the consideration of direct spending or revenue legislation that is projected to increase or cause a 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 or (2) the 11-year period consisting of the current year, the budget year, and the ensuing nine fiscal years following the budget year. The rule applies to any bill, joint resolution, amendment, motion, or conference report that affects direct spending or revenues. H.Res. 6 also included a separate order establishing a limit on advance appropriations, defined as applying to funding provided in FY2019 appropriations acts that are to become available in any fiscal year following FY2019. In addition, several separate orders from previous congresses are not included in H.Res. 6 for the 116 th Congress. These include language prohibiting House consideration of measures estimated by CBO as causing a net increase in spending in excess of $5 billion in any of the four 10-year periods beginning with the fiscal year 10 years after the current fiscal year, two points of order that previously supplemented the point of order in Section 302(f) of the Congressional Budget Act of 1974 as a means for enforcing 302(b) suballocations, language requiring that appropriations bills include a spending reduction account, and language allowing certain legislative amendments in appropriations bills (known as the "Holman Rule").

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Introduction Congress has demonstrated renewed interest in Mexico, a top trade partner and energy supplier with which the United States shares a nearly 2,000-mile border and strong cultural, familial, and historical ties (see Figure 1 ). Economically, the United States and Mexico are interdependent, and Congress closely followed efforts to renegotiate NAFTA, which began in August 2017, and ultimately resulted in a proposed United States-Mexico-Canada Agreement (USMCA) signed in November 2018. Similarly, security conditions in Mexico and the Mexican governments' ability to manage U.S.-bound migration flows affect U.S. national security, particularly at the Southwest border. Five months into his six-year term, Mexican President Andrés Manuel López Obrador enjoys an approval ratings of 78%, even as his government is struggling to address rising insecurity and sluggish growth. Discontent with Mexico's traditional parties and voters' desire for change led them to elect López Obrador president with 53% of the vote. Some fear that López Obrador, whose National Regeneration Movement (MORENA) coalition captured legislative majorities in both chambers of the Congress, will reverse the reforms enacted in 2013-2014. Others predict that pressure from business groups, civil society, and some legislators and governors may constrain López Obrador's populist tendencies. This report provides an overview of political and economic conditions in Mexico, followed by assessments of selected issues of congressional interest in Mexico: security and foreign aid, extraditions, human rights, trade, migration, energy, education, environment, and water issues. Background Over the past two decades, Mexico has transitioned from a centralized political system dominated by the Institutional Revolutionary Party (PRI), which controlled the presidency from 1929-2000, to a true multiparty democracy. Since the 1990s, presidential power has become more balanced with that of Mexico's Congress and Supreme Court. Partially as a result of these new constraints on executive power, the country's first two presidents from the conservative National Action Party (PAN)—Vicente Fox (2000-2006) and Felipe Calderón (2006-2012)—struggled to enact some of the reforms designed to address Mexico's economic and security challenges. The Calderón government pursued an aggressive anticrime strategy and increased security cooperation with the United States. Mexico arrested and extradited many drug kingpins, but some 60,000 people died due to organized crime-related violence. Mexico's security challenges overshadowed some of the government's achievements, including its economic stewardship during the global financial crisis, health care expansion, and efforts on climate change. In 2012, the PRI regained control of the presidency 12 years after ceding it to the PAN with a victory by Enrique Peña Nieto over López Obrador of the leftist Democratic Revolutionary Party (PRD). López Obrador then left the PRD and founded the MORENA party. Voters viewed the PRI as best equipped to reduce violence and hasten economic growth, despite concerns about its reputation for corruption. In 2013, Peña Nieto shepherded structural reforms through a fragmented legislature by forming a "Pact for Mexico" agreement among the PRI, PAN, and PRD. The reforms addressed a range of issues, including education, energy, telecommunications, access to finance, and politics (see Table A-1 in the Appendix ). The energy reform led to foreign oil and gas companies committing to invest $160 billion in the country. Despite that early success, Peña Nieto left office with extremely low approval ratings (20% in November 2018) after presiding over a term that ended with record levels of homicides, moderate economic growth (averaging 2% annually), and pervasive corruption and impunity. Peña Nieto's approval rating plummeted after his government botched an investigation into the disappearance of 43 students in Ayotzinapa, Guerrero in September 2014. Reports that surfaced in 2014 of how Peña Nieto, his wife, and his foreign minister benefitted from ties to a firm that won lucrative government contracts, further damaged the administration's reputation. In 2017, reports emerged that the Peña Nieto government used spyware to monitor its critics, including journalists. López Obrador Administration July 1, 2018, Election7 On July 1, 2018, Andrés Manuel López Obrador and his MORENA coalition dominated Mexico's presidential and legislative elections. Originally from the southern state of Tabasco, López Obrador is a 65-year-old former mayor of Mexico City (2000-2005) who ran for president in the past two elections. After his loss in 2012, he left the center-left Democratic Revolutionary Party (PRD) and established MORENA. MORENA, a leftist party, ran in coalition with the socially conservative Social Encounter Party (PES) and the leftist Labor Party (PT). López Obrador won 53.2% of the presidential vote, more than 30 percentage points ahead of his nearest rival, Ricardo Anaya, of the PAN/PRD/Citizen's Movement (MC) alliance who garnered 22.3% of the vote. López Obrador won in 31 of 32 states (see Figure 2 ). The PRI-led coalition candidate, José Antonio Meade, won 16.4% of the vote followed by Jaime Rodríguez, Mexico's first independent presidential candidate, with 5.2%. Andrés Manuel López Obrador's victory signaled a significant change in Mexico's political development. López Obrador won in 31 of 32 states, demonstrating that he had broadened his support from his base in southern Mexico.The presidential election results have prompted soul-searching within the traditional parties and shown the limits of independent candidates. Anaya's defeat provoked internal struggles within the PAN. Meade's performance demonstrated voters' deep frustration with the PRI. In addition to the presidential contest, all 128 seats in the Mexican senate and 500 seats in the chamber of deputies were up for election. Senators serve for six years, and deputies serve for three. Beginning this cycle, both senators and deputies will be eligible to run for reelection for a maximum of 12 years in office. MORENA's coalition won solid majorities in the Senate and the Chamber which convened on September 1, 2018. As of April 2019, the ruling coalition controls 70 of 128 seats in the Senate and 316 of 500 seats in the Chamber. The MORENA coalition lacks the two-thirds majority it needs to make constitutional changes or overturn reforms passed in 2013. The PAN is the second-largest party in each chamber. Mexican voters gave López Obrador and MORENA a mandate to change the course of Mexico's domestic policies. Nevertheless, López Obrador's legislative coalition may face opposition if it seeks to enact policies that would shift the balance of power between federal and state offices. López Obrador proposed having a federal representative in each state to liaise with his office and to oversee distribution of all federal funds, but governors opposed this proposal. As shown in Figure 3 , MORENA and allied parties control four of 32 governorships, including that of Mexico City. President López Obrador: Priorities and Early Actions In 2018, López Obrador promised to bring about change by governing differently than recent PRI and PAN administrations. He focused on addressing voters' concerns about corruption, poverty and inequality, and escalating crime and violence.Although some of his advisers endorse progressive social policies, López Obrador personally has opposed abortion and gay marriage. López Obrador has set high expectations for his government and promised many things to many different constituencies, some of which appear to conflict with each other. Upon taking office, López Obrador pledged to bring about a "fourth transformation" that would make Mexico a more just and peaceful society, but observers question whether his ambitious goals are attainable, given existing fiscal constraints. As an example, he has promised to govern austerely but has started a number of new social programs. His finance minister has promised that existing contracts with private energy companies will be respected, but his energy minister has halted new auctions and is seeking to rebuild the heavily indebted state oil company ( Petróleos de México or Pemex). President López Obrador's distinct brand of politics has given him broad support. López Obrador has dominated the news cycle by convening daily, early morning press conferences. His decision to cut his own salary and public sector salaries generally have prompted high-level resignations among senior bureaucrats, but proven popular with the public. His government has started a new youth scholarship program and pensions for the elderly, while also promising to create jobs with infrastructure investments (including a new oil refinery and a railroad in the Yucatán) in southern Mexico regardless of their feasibility. Voters have given the government the benefit of the doubt even when its policies have caused inconveniences, such as fuel shortages that occurred after security forces closed some oil pipelines in an effort to combat theft. Investors have been critical of some of the administration's early actions. Many expressed concern after López Obrador cancelled a $13 billion airport project already underway after voters in a MORENA-led referendum rejected its location. Investors were somewhat assuaged, however, after the administration unveiled a relatively austere budget in late 2018 and then decided to allow energy contracts signed during Peña Nieto's presidency to proceed while halting new ones. With López Obrador's support, the Congress has enacted reforms to strengthen the protection of labor rights and workers' salaries, in part to comply with its domestic commitments related to the USMCA. On the other hand, it is unclear whether legislators' revisions will water down, or completely undo, education reforms passed in 2013 that were deemed a step forward toward raising education standards by many, but have been opposed by unions and ordered repealed by López Obrador. Critics maintain that President López Obrador has shunned reputable media outlets that have questioned his policies and cut funding for entities that could provide checks on his presidential power. He has dismissed data collected on organized crime-related violence by media outlets as "fake news" even as government data corroborate their findings that violence is escalating. His government has cut the budget for the national anticorruption commission, newly independent prosecutor general's office, and several regulatory agencies. Security Conditions Endemic violence, much of which is related to organized crime, has become an intractable problem in Mexico (see Figure 4 ). Organized crime-related violence has been fueled by U.S. drug demand, as well as bulk cash smuggling and weapons smuggling from the United States. Organized crime-related homicides in Mexico rose slightly in 2015 and significantly in 2016. In 2017, total homicides and organized crime-related homicides reached record levels. During Mexico's 2018 campaign, more than 150 politicians reportedly were killed. The homicide rate reached record levels in 2018 and rose even higher during the first three months of 2019 as fighting among criminal organizations intensified. Infighting among criminal groups has intensified since the rise of the Jalisco New Generation, or CJNG, cartel, a group that shot down a police helicopter in 2016. The January 2017 extradition of Joaquín "El Chapo" Guzmán prompted succession battles within the Sinaloa Cartel and emboldened the CJNG and other groups to challenge Sinaloa's dominance. Crime groups are competing to supply surging U.S. demand for heroin and other opioids. Mexico's criminal organizations also are fragmenting and diversifying away from drug trafficking, furthering their expansion into activities such as oil theft, alien smuggling, kidnapping, and human trafficking. Although much of the crime—particularly extortion—disproportionately affects localities and small businesses, fuel theft has become a national security threat, costing Mexico as much as $1 billion a year and fueling violent conflicts between the army and suspected thieves. Many assert that the Peña Nieto administration maintained Calderón's reactive approach of deploying federal forces—including the military—to areas in which crime surges rather than proactively strengthening institutions to deter criminality. These deployments led to a swift increase in human rights abuses committed by security forces (military and police) against civilians (see " Human Rights " below). High-value targeting of top criminal leaders also continued. As of August 2018, security forces had killed or detained at least 110 of 122 high-value targets identified as priorities by the Peña Nieto government; nine of those individuals received sentences. In August 2018, the Mexican government and the U.S. Drug Enforcement Administration (DEA) announced a new bilateral effort to arrest the leader of the CJNG. Even as many groups have developed into multifaceted illicit enterprises, government efforts to seize criminal assets have been modest and attempts to prosecute money laundering cases have had "significant shortcomings." With violence reaching historic levels during the first quarter of 2019 and high-profile massacres occurring, President López Obrador is under increasing pressure to refine his security strategy. As a candidate, López Obrador emphasized anticorruption initiatives, social investments, human rights, drug policy reform, and transitional justice for nonviolent criminals. In line with those priorities, Mexico's security strategy for 2018-2024 includes a focus on addressing the socioeconomic drivers of violent crime. The administration has launched a program to provide scholarships to youth to attend university or to complete internships. Allies in the Mexican Congress are moving toward decriminalizing marijuana production and distribution. At the same time, President López Obrador has backed constitutional reforms to allow military involvement in public security to continue for five more years, despite a 2018 Supreme Court ruling that prolonged military involvement in public security violated the constitution. He secured congressional approval of a new 80,000-strong National Guard (composed of military police, federal police, and new recruits) to combat crime, a move that surprised many in the human rights community. After criticism from human rights groups, the Congress modified López Obrador's original proposal to ensure the National Guard will be under civilian command. Corruption, Impunity, and Human Rights Abuses Corruption and the Rule of Law Corruption is an issue at all levels of government in Mexico: 84% of Mexicans identify corruption as among the most pressing challenge facing the country. In Mexico, the costs of corruption reportedly reach as much as 5% of gross domestic product each year. Mexico fell 33 places in Transparency International's Corruption Perceptions Index from 2012 to 2018. At least 14 current or former governors (many from the PRI) are under investigation for corruption, including collusion with organized crime groups that resulted in violent deaths. A credible case against the chair of Peña Nieto's 2012 campaign (and former head of Pemex) for receiving $10.5 million in bribes from Odebrecht, a Brazilian construction firm, stalled after the prosecutor investigating the case was fired. Even though López Obrador has called for progress and transparency in anticorruption cases, his government has not unsealed information on investigations related to the Odebrecht case. New Criminal Justice System. By the mid-2000s, most Mexican legal experts had concluded that reforming Mexico's corrupt and inefficient criminal justice system was crucial for combating criminality and strengthening the rule of law. In June 2008, Mexico implemented constitutional reforms mandating that by 2016, trial procedures at the federal and state level had to move from a closed-door process based on written arguments presented to a judge to an adversarial public trial system with oral arguments and the presumption of innocence. These changes aimed to help make a new criminal justice system that would be more transparent, impartial, and efficient (through the use of alternative means of dispute settlement). Federal changes followed advances made in early adopters of the new system, including states such as Chihuahua. Under Peña Nieto, Mexico technically met the June 2016 deadline for adopting the new system, with states that have received technical assistance from the United States showing, on average, better results than others. Nevertheless, s problems in implementation occurred and public opinion turned against the system as many criminals were released by judges due to flawed investigations by police and/or weak cases presented by prosecutors. On average, fewer than 20% of homicides have been successfully prosecuted, suggesting persistently high levels of impunity. According to the World Justice Project, the new system has produced better courtroom infrastructure, more capable judges, and faster case resolution than the old system, but additional training for police and prosecutors is needed. It is unclear whether López Obrador will dedicate the resources necessary to strengthen the system. Reforming the Attorney General's Office. Analysts who study Mexico's legal system highlight the inefficiency of the attorney general's office (PGR). For years, the PGR's efficiency has suffered because of limited resources, corruption, and a lack of political will to resolve high-profile cases, including those involving high-level corruption or emblematic human rights abuses. Three attorneys general resigned from 2012 to 2017; the last one stepped down over allegations of corruption. Many civil society groups that pushed for the new criminal justice system in the mid-2000s also lobbied the Mexican Congress to create an independent prosecutor's office to replace the PGR. Under constitutional reforms adopted in 2014, Mexico's Senate would appoint an independent individual to lead the new prosecutor general's office. President Andrés Manuel López Obrador downplayed the importance of the new office during his presidential campaign, but Mexico's Congress established the office after he was inaugurated in December 2018. In January 2019, Mexico's Senate named Dr. Alejandro Gertz Manero, a 79-year old associate and former security advisor to López Obrador, as Prosecutor General. Gertz Manero's nomination and subsequent appointment has raised concerns about his capacity to remain independent, given his ties to the president. Many wonder if he will take up cases against the president and his administration. Gertz Manero is to serve a nine-year term. Making Electoral Fraud and Corruption Grave Crimes. In December 2018, López Obrador proposed constitutional changes that would expand the list of grave crimes for which judges must mandate pretrial detention to include corruption and electoral fraud. The proposal passed the Senate in December and the lower chamber in February 2019. Critics, such as the UN High Commissioner for Human Rights (OHCHR), noted that the change violates the presumption of innocence, an international human right under the UN's Universal Declaration of Human Rights. Increasing pretrial detention also goes against one of the stated goals of the NCJS. The president, however, welcomed the outcome. National Anticorruption System. In July 2016, Mexico's Congress approved legislation to fully implement the national anticorruption system (NAS) created by a constitutional reform in April 2015. The legislation reflected several of the proposals put forth by Mexican civil society groups. It gave the NAS investigative and prosecutorial powers and a civilian board of directors; increased administrative and criminal penalties for corruption; and required three declarations (taxes, assets, and conflicts of interest) from public officials and contractors. During the Peña Nieto government, federal implementation of the NAS lagged and state-level implementation varied significantly. In December 2017, members of the system's civilian board of directors maintained that the government had thwarted its efforts by denying requests for information. Although he campaigned on an anticorruption platform, President López Obrador has questioned the necessity of the NAS. Since taking office, López Obrador has not prioritized implementing the system. Nevertheless, Prosecutor General Gertz Manero named a special anticorruption prosecutor in February 2019. The 18 judges required to hear corruption cases are still to be named. In addition, many states have not fulfilled the constitutional requirements for establishing a local NAS. Human Rights Criminal groups, sometimes in collusion with public officials, as well as state actors (military, police, prosecutors, and migration officials), have continued to commit serious human rights violations against civilians, including extrajudicial killings. The vast majority of those abuses have gone unpunished, whether prosecuted in the military or civilian justice systems. The government also continues to receive criticism for not adequately protecting journalists and human rights defenders, migrants, and other vulnerable groups. For years, human rights groups and U.S. State Department Country Reports on Human Rights Practices have chronicled cases of Mexican security officials' involvement in extrajudicial killings, "enforced disappearances," and torture. In October 2018, the outgoing Peña Nieto government estimated that more than 37,000 people who had gone missing since 2006 remained unaccounted for. States on the U.S.-Mexico border (Tamaulipas, Nuevo León, and Sonora) have among the highest rates of disappearances. The National Human Rights Commission estimates that "more than 3,900 bodies have been found in over 1,300 clandestine graves since 2007." In 2017, the Mexican Congress enacted a law against torture. After an April 2019 visit to Mexico, the U.N. Committee against Torture welcomed the passage of the 2017 law, but stated that torture by state agents occurred in a " generalized manner " in Mexico and found the use of torture to be "endemic" in detention centers. They also maintained that impunity for the crime of torture must be addressed: 4.6% of investigations into torture claims resulted in convictions. During a recent visit to Mexico, Michelle Bachelet, the United Nations High Commissioner for Human Rights recognized President López Obrador's efforts to put human rights at the center of his government. Bachelet highlighted the President's willingness to "unveil the truth, provide justice, give reparations to victims and guarantee the nonrepetition" of human rights violations. She commended the creation of the Presidential Commission for Truth and Access to Justice for the Ayotzinapa case and acknowledged the government's broader commitment to search for the disappeared. The commissioner welcomed the government's presentation of the Plan for the Implementation of the General Law on Disappearances (approved in 2017), the reestablishment of the National Search System, and the announcement of plans to create a Single Information System and a National Institute for Forensic Identification. In recent years, international observers have expressed alarm as Mexico has become one of the most dangerous countries for journalists to work outside of a war zone. From 2000 to 2018, some 120 journalists and media workers were killed in Mexico and many more have been threatened or attacked, according to Article 19 (an international media rights organization). A more conservative estimate from the Committee to Protect Journalists (CPJ) is that 41 journalists have been killed in Mexico since 2000. In addition, Mexico ranks among the top 10 countries globally with the highest rates of unsolved journalist murders as a percentage of population in CPJ's Global Impunity Index . Mexico is also a dangerous country for human rights defenders. During the first three months of the López Obrador government, at least 17 journalists and human rights defenders were killed, at least one of whom was receiving government protection. Although López Obrador has been critical of some media outlets and reporters, his government has pledged to improve the mechanism intended to protect human rights defenders and journalists. Foreign Policy President Peña Nieto prioritized promoting trade and investment in Mexico as a core goal of his administration's foreign policy. During his term, Mexico began to participate in U.N. peacekeeping efforts and spoke out in the Organization of American States on the deterioration of democracy in Venezuela, a departure for a country with a history of nonintervention. Peña Nieto hosted Chinese Premier Xi Jinping for a state visit to Mexico, visited China twice, and in September 2017 described the relationship as a "comprehensive strategic partnership." The Peña Nieto government negotiated and signed the proposed Trans-Pacific Partnership (TPP) trade agreement with other Asia-Pacific countries (and the United States and Canada). Even after President Trump withdrew the United States from the TPP agreement, Mexico and the 10 other signatories of the TPP concluded their own trade agreement, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). Mexico also prioritized economic integration efforts with the pro-trade Pacific Alliance countries of Chile, Colombia, and Peru and focused on expanding markets for those governments. In contrast to his predecessor, President López Obrador generally has maintained that the best foreign policy is a strong domestic policy. His foreign minister, Marcelo Ebrard (former mayor of Mexico City), is leading a return to Mexico's traditional, noninterventionist approach to foreign policy (the so-called Estrada doctrine ). Many analysts predict, however, that Mexico may continue to engage on global issues that it deems important. López Obrador reversed the active role that Mexico had been playing during the Peña Nieto government in seeking to address the crises in Venezuela. Mexico has not recognized Juan Guaidó as Interim President of Venezuela despite pressure from the United States and others to do so. As of January 2019, U.N. agencies estimated that some 39,000 Venezuelan migrants and refugees were sheltering in Mexico. Despite these changes, Mexico continues to participate in the Pacific Alliance, promote its exports and seek new trade partners, and support investment in the Northern Triangle countries (Guatemala, El Salvador, and Honduras). The Mexican government has long maintained that the best way to stop illegal immigration from Central America is to address the insecurity and lack of opportunity there. Nevertheless, fiscal limitations limit the Mexican government's ability to support Central American efforts to address those challenges. Economic and Social Conditions67 Mexico has transitioned from a closed, state-led economy to an open market economy that has entered into free trade agreements with 46 countries. The transition began in the late 1980s and accelerated after Mexico entered into NAFTA in 1994. Since NAFTA, Mexico has increasingly become an export-oriented economy, with the value of exports equaling more than 38% of Mexico's gross domestic product (GDP) in 2016, up from 10% of GDP 20 years prior. Mexico remains a U.S. crude oil supplier, but its top exports to the United States are automobiles and auto parts, computer equipment, and other manufactured goods. Reports have estimated that 40% of the content of those exports contain U.S. value added content. Despite attempts to diversify its economic ties and build its domestic economy, Mexico remains heavily dependent on the United States as an export market (roughly 80% of Mexico's exports in 2018 were U.S.-bound) and as a source of remittances, tourism revenues, and investment. Studies estimate that a U.S. withdrawal from NAFTA, could cost Mexico more than 950,000 low-skilled jobs and lower its GDP growth by 0.9%. In recent years, remittances have replaced oil exports as Mexico's largest source of foreign exchange. According to Mexico's central bank, remittances reached a record $33.0 billion in 2018. Mexico remained the leading U.S. international travel destination in 2017 (the most recent year calculated by the U.S. Department of Commerce). U.S. travel warnings regarding violence in resort areas such as Playa del Carmen, Los Cabos, and Cancún could result in declining arrivals. The Mexican economy grew by 2% in 2018, but growth may decline to 1.6% in 2019, due, in part, to lower projected private investment. Mexico's Central Bank has also cited slowing investment, gasoline shortages, and strikes as reasons for revising its growth forecast for 2019 downward to a range of 1.1% to 2.1% for 2019. Some observers believe that investor sentiment and the country's growth prospects could worsen if López Obrador continues to promote government intervention in the economy and to rely on popular referendums to make economic decisions. Economic conditions in Mexico tend to follow economic patterns in the United States. When the U.S. economy is expanding, as it is now, the Mexican economy tends to grow. However, when the U.S. economy stagnates or contracts, the Mexican economy also tends to contract, often to a greater degree. The negative impact of protectionist U.S. trade policies and a projected U.S. economic slowdown in 2020 could hurt Mexico's growth prospects. President Trump has threatened to close the U.S.-Mexico border in response to his concerns about illegal immigration and illicit drug flows. Closing the border could have immediate and serious economic consequences. As an example, the U.S. auto industry stated that U.S. auto production would stop after a week due to the deep interdependence of the North American auto industry. Sound macroeconomic policies, a strong banking system, and structural reforms backed by a flexible line of credit with the International Monetary Fund (IMF) have helped Mexico weather recent economic volatility. Nevertheless, the IMF has recommended additional steps to deal with potential external shocks. These steps include improving tax collection, reducing informality, reforming public administration, and improving governance. Factors Affecting Economic Growth Over the past 30 years, Mexico has recorded a somewhat low average economic growth rate of 2.6%. Some factors—such as plentiful natural resources, a young labor force, and proximity to markets in the United States—have been counted on to help Mexico's economy grow faster in the future. Most economists maintain that those factors could be bolstered over the medium to long term by continued implementation of some of the reforms described in Table A-1 . At the same time, continued insecurity and corruption, a relatively weak regulatory framework, and challenges in its education system may hinder Mexico's future industrial competitiveness. Corruption costs Mexico as much as $53 billion a year (5% of GDP). A lack of transparency in government spending and procurement, as well as confusing regulations and red tape, has likely discouraged some investment. Deficiencies in the education system, including a lack of access to vocational education, have led to firms having difficulty finding skilled labor. Another factor affecting the economy is the price of oil. Because oil revenues make up a large, if lessening, part of the country's budget (32% of government revenue in 2017), low oil prices since 2014 and a financial crisis within Pemex have proved challenging. The Peña Nieto government raised other taxes to recoup lost revenue from oil, but the López Obrador administration has pledged to make budget cuts in order to maintain fiscal targets. Many analysts predict that Mexico will have to combine efforts to implement its economic reforms with other actions to boost growth. A 2018 report by the Organisation for Economic Co-operation and Development suggests that Mexico will need to enact complementary reforms to address issues such as corruption, weak governance, and lack of judicial enforcement to achieve its full economic growth potential. Combating Poverty and Inequality Mexico has long had relatively high poverty rates for its level of economic development (43.6% in 2016), particularly in rural regions in southern Mexico and among indigenous populations. Some assert that conditions in indigenous communities have not measurably improved since the Zapatistas launched an uprising for indigenous rights in 1994. Traditionally, those employed in subsistence agriculture or small, informal businesses tend to be among the poorest citizens. Many households rely on remittances to pay for food, clothing, health care, and other basic necessities. Mexico also experiences relatively high income inequality. According to the 2014 Global Wealth Report published by Credit Suisse, 64% of Mexico's wealth is concentrated in 10% of the population. Mexico is among the 25 most unequal countries in the world included in the Standardized World Income Inequality Database. According to a 2015 report by Oxfam Mexico, this inequality is due in part to the country's regressive tax system, oligopolies that dominate particular industries, a relatively low minimum wage, and a lack of targeting in some social programs. Economists have maintained that reducing informality is crucial for addressing income inequality and poverty, while also expanding Mexico's low tax base. The 2013-2014 reforms sought to boost formal-sector employment and productivity, particularly among the small- and medium-sized enterprises (SMEs) that employ some 60% of Mexican workers, mostly in the informal sector. Although productivity in Mexico's large companies (many of which produce internationally traded goods) increased by 5.8% per year between 1999 and 2009, productivity in small businesses fell by 6.5% per year over the same period. To address that discrepancy, the financial reform aimed to increase access to credit for SMEs and the fiscal reform sought to incentivize SMEs' participation in the formal (tax-paying) economy by offering insurance, retirement savings accounts, and home loans to those that register with the national tax agency. The Peña Nieto administration sought to complement economic reforms with social programs, but corruption within the Secretariat for Social Development likely siphoned significant funding away from some of those programs. It expanded access to federal pensions, started a national anti-hunger program, and increased funding for the country's conditional cash transfer program. Peña Nieto renamed that program Prospera (Prosperity) and redesigned it to encourage its beneficiaries to engage in productive projects. In addition to corruption, some of Peña Nieto's programs, namely the anti-hunger initiative, were criticized for a lack of efficacy. Despite his avowed commitment to austerity, López Obrador has endorsed state-led economic development and promised to rebuild Mexico's domestic market as part of his National Development Plan 2018-2024, which he presented on May 1, 2019. In addition to revitalizing Pemex, the president has promised to build a "Maya Train" to connect five states in the southeast and facilitate tourism (see Figure 5 ). In December 2018, López Obrador announced a plan to invest some $25 billion in southern Mexico to accompany an estimated $4.8 billion in potential U.S. public and private investments to promote job growth, infrastructure, and development in that region, including jobs for Central American migrants. López Obrador's pledges related to social programs include (1) doubling monthly payments to the elderly; (2) providing regular financial assistance to a million disabled people; (3) giving a monthly payment to students in 10 th to 12 th grades to lower the dropout rate, and (4) offering paid apprenticeships for 2.3 million young people. While some of these programs have already gotten underway, their ultimate scale and impacts will take time to evaluate. Some observers are concerned about his plan to decouple monthly support to families provided through the program formerly known as Prospera with requirements that children attend school and receive regular health checkup. U.S. Relations and Issues for Congress Mexican-U.S. relations generally have grown closer over the past two decades. Common interests in encouraging trade flows and energy production, combating illicit flows (of people, weapons, drugs, and currency), and managing environmental resources have been cultivated over many years. A range of bilateral talks, mechanisms, and institutions have helped the Mexican and U.S. federal governments—as well as stakeholders in border states, the private sector, and nongovernmental organizations—find common ground on difficult issues, such as migration and water management. U.S. policy changes that run counter to Mexican interests in one of those areas could trigger responses from the Mexican government on other areas where the United States benefits from Mexico's cooperation, such as combating illegal migration. Despite predictions to the contrary, U.S.-Mexico relations under the López Obrador administration have thus far remained friendly. Nevertheless, tensions have emerged over several key issues, including trade disputes and tariffs, immigration and border security issues, and Mexico's decision to remain neutral in the crisis in Venezuela. The new government has generally accommodated U.S. migration and border security policies, but has protested recent policies that have resulted in extended border delays. President López Obrador has also urged the U.S. Congress to consider the USMCA. Security Cooperation: Transnational Crime and Counternarcotics Mexico is a significant source and transit country for heroin, marijuana, and synthetic drugs (such as methamphetamine) destined for the United States. It is also a major transit country for cocaine produced in the Andean region. Mexican-sourced heroin now accounts for nearly 90% of the total weight of U.S.-seized heroin analyzed in the U.S. Drug Enforcement Administration's (DEA's) Heroin Signature Program. In addition to Mexico serving as a transshipment point for Chinese fentanyl (a powerful synthetic opioid), the DEA suspects labs in Mexico may use precursor chemicals smuggled over the border from the United States to produce fentanyl. Mexican drug trafficking organizations pose the greatest crime threat to the United States, according to the DEA's 2018 National Drug Threat Assessment . These organizations engage in drug trafficking, money laundering, and other violent crimes. They traffic heroin, methamphetamine, cocaine, marijuana, and, increasingly, the powerful synthetic opioid fentanyl. Mexico is a long-time recipient of U.S. counterdrug assistance, but cooperation was limited between the mid-1980s and mid-2000s due to U.S. distrust of Mexican officials and Mexican sensitivity about U.S. involvement in the country's internal affairs. Close cooperation resumed in 2007, when Mexican President Felipe Calderón requested U.S. assistance to combat drug trafficking organizations, and worked with President George W. Bush to develop the Mérida Initiative. While initial U.S. funding for the initiative focused heavily on training and equipping Mexican security forces, U.S. assistance shifted over time to place more emphasis on strengthening Mexican institutions. In 2011, the U.S. and Mexican governments agreed to a revised four-pillar strategy that prioritized (1) combating transnational criminal organizations through intelligence sharing and law enforcement operations; (2) institutionalizing the rule of law while protecting human rights through justice sector reform and forensic assistance; (3) creating a "21 st century border" while improving immigration enforcement in Mexico; and (4) building strong and resilient communities with pilot programs to address the root causes of violence and reduce drug demand. The Mérida Initiative has continued to evolve along with U.S. and Mexican security concerns. Recent programs have focused on combating opioid production and distribution, improving border controls and interdiction, training forensic experts, and combating money laundering. Nevertheless, organized crime-related homicides in Mexico and opioid-related deaths in the United States have surged, leading some critics to question the efficacy of bilateral efforts. The future of the Mérida Initiative is unclear. Some observers predict López Obrador may seek to emphasize anticorruption initiatives, social investments in at-risk youth, human rights, and drug policy reform as he did during his presidential campaign. Others maintain that López Obrador has thus far accommodated the Trump Administration's emphasis on combating Central American migration and may back other U.S. priorities, such as combating the fentanyl trade. Other common interests may include countering human rights violations, combating weapons trafficking, and accelerating efforts against money laundering and corruption. There has been bipartisan support in Congress for the Mérida Initiative, which has accounted for the majority of U.S. foreign assistance to Mexico provided over the past decade (see Table 1 ). The FY2019 Consolidated Appropriations Act ( P.L. 116-6 ) provided some $145 million for accounts that fund the initiative ($68 million above the budget request). The increased resources are primarily for addressing the flow of U.S.-bound opioids. The joint explanatory statement accompanying the act ( H.Rept. 116-9 ) requires a State Department strategy on international efforts to combat opioids (including efforts in Mexico) and a report on how the Mérida Initiative is combating cocaine and methamphetamine flows. The Administration's FY2020 budget request asks Congress to provide $76.3 million for the Mérida Initiative. Department of Defense Assistance In contrast to Plan Colombia, the Department of Defense (DOD) did not play a primary role in designing the Mérida Initiative and is not providing assistance through Mérida accounts. However, DOD oversaw the procurement and delivery of equipment provided through the FMF account. Despite DOD's limited role in the Mérida Initiative, bilateral military cooperation has been increasing. DOD assistance aims to support Mexico's efforts to improve security in high-crime areas, track and capture suspects, strengthen border security, and disrupt illicit flows. A variety of funding streams support DOD training and equipment programs. Some DOD equipment programs are funded by annual State Department appropriations for FMF, which totaled $5.0 million in FY2018. International Military Education and Training (IMET) funds, which totaled $1.5 million in FY2018, support training programs for the Mexican military, including courses in the United States. Apart from State Department funding, DOD provides additional training, equipping, and other support to Mexico that complements the Mérida Initiative through its own accounts. Individuals and units receiving DOD support are vetted for potential human rights issues in compliance with the Leahy Law. DOD programs in Mexico are overseen by U.S. Northern Command, which is located at Peterson Air Force Base in Colorado. DOD counternarcotics support to Mexico totaled approximately $63.3 million in FY2018. Policymakers may want to receive periodic briefings on DOD efforts to guarantee that DOD programs are being adequately coordinated with Mérida Initiative efforts, complying with U.S. vetting requirements, and not reinforcing the militarization of public security in Mexico. Extraditions During the Calderón government, extraditions were another indicator that the State Department used as an example of the Mérida Initiative's success. During the final years of the Calderón government, Mexico extradited an average of 98 people per year to the United States, an increase over the prior administration. When President Peña Nieto took office, extraditions fell to 54 in 2013 but rose to a high of 76 in 2016 (see Figure 6 ). Human Rights99 The U.S. Congress has expressed ongoing concerns about human rights conditions in Mexico. Congress has continued to monitor adherence to the Leahy vetting requirements that must be met under the Foreign Assistance Act (FAA) of 1961, as amended (22 U.S.C. 2378d), which pertains to State Department aid, and 10 U.S.C. 2249e, which guides DOD funding. DOD reportedly suspended assistance to a brigade based in Tlatlaya, Mexico, due to concerns about the brigade's potential involvement in the extrajudicial killings previously described. From FY2008 to FY2015, Congress made conditional 15% of U.S. assistance to the Mexican military and police until the State Department sent a report to appropriators verifying that Mexico was taking steps to comply with certain human rights standards. In FY2014, Mexico lost $5.5 million in funding due to human rights concerns. For FY2016-FY2019, human rights reporting requirements applied to FMF rather than to Mérida Initiative accounts. U.S. assistance to Mexico has supported the Mexican government's efforts to reform its judicial system and to improve human rights conditions in the country. Congress has provided funding to support Mexico's transition from an inquisitorial justice system to an oral, adversarial, and accusatory system that aims to strengthen human rights protections for victims and the accused. The State Department has established a high-level human rights dialogue with Mexico. The U.S. Agency for International Development (USAID) supported Mexico's 2014-2018 human rights plan, including the development of legislation in compliance with international standards, prevention efforts, improved state responses to abuses, and expanded assistance to victims. One recent project addressed the way the Mexican government addresses cases of torture and enforced disappearances, another sought to help the government protect journalists and resolve crimes committed against them. In many of these areas, U.S. technical assistance to the government is complemented by support to think tanks and civil society organizations, including in the area of providing forensic assistance to help search for missing people. Congress may choose to augment Mérida Initiative funding for human rights programs, such as ongoing training programs for military and police, or to fund new efforts to support human rights organizations. Human rights conditions in Mexico, as well as compliance with conditions included in the FY2019 Consolidated Appropriations Act ( P.L. 116-6 ) are likely to be closely monitored. Some Members of Congress have written letters to U.S. and Mexican officials regarding human rights concerns, including allegations of extrajudicial killings by security forces, abuses of Central American migrants, and the use of spyware against human rights activists. U.S. policymakers may question how the López Obrador administration moves to punish past human rights abusers, how it intends to prevent new abuses from occurring, and how the police and judicial reforms being implemented are bolstering human rights protections. Economic and Trade Relations108 The United States and Mexico have a strong economic and trade relationship that has been bolstered through NAFTA. Since 1994, NAFTA has removed virtually all tariff and nontariff trade and investment barriers among partner countries and provided a rules-based mechanism to govern North American trade. Most economic studies show that the net economic effect of NAFTA on the United States and Mexico has been relatively small but positive, though there have been adjustment costs to some sectors in both countries. Further complicating assessments of NAFTA, not all trade-related job gains and losses since NAFTA entered into force can be entirely attributed to the agreement. Numerous other factors have affected trade trends, such as Mexico's trade-liberalization efforts, economic conditions, and currency fluctuations. Mexico is the United States' third-largest trading partner. Mexico ranks third as a source of U.S. merchandise imports and second as an export market for U.S. goods. The United States is Mexico's most important export market for goods, with 80% of Mexican exports destined for the United States. Merchandise trade between the two countries in 2018 was six times higher (in nominal terms) than in 1993, the year NAFTA entered into force. The merchandise trade balance went from a U.S. surplus of $1.7 billion in 1993 (the year before NAFTA entered into force) to a widening deficit that reached $81.5 billion in 2018. In services, the United States had a trade surplus with Mexico of $7.4 billion in 2017 (latest available data); it largely consists of travel, transportation, business, and financial services. Total trade (exports plus imports) amounted to $561.3 billion in 2018. Much of that bilateral trade occurs in the context of supply chains, as manufacturers in each country work together to create goods. The expansion of trade has resulted in the creation of vertical supply relationships, especially along the U.S.-Mexican border. The flow of intermediate inputs produced in the United States and exported to Mexico and the return flow of finished products increased the importance of the U.S.-Mexican border region as a production site. Foreign direct investment (FDI) is also an integral part of the bilateral economic relationship. The stock of U.S. FDI in Mexico increased from $15.2 billion in 1993 to $109.7 billion in 2017. Although the stock of Mexican FDI in the United States is much lower, it has also increased significantly since NAFTA, from $1.2 billion in 1993 to $18.0 billion in 2017. The Obama Administration worked with Mexico to balance border security with facilitating legitimate trade and travel, promote economic competitiveness, and pursue energy integration. The U.S.-Mexican High-Level Economic Dialogue, launched in 2013, was a bilateral initiative to advance economic and commercial priorities through annual Cabinet meetings. The High-Level Regulatory Cooperation Council launched in 2012 helped align regulatory principles. Trilateral (with Canada) cooperation occurred under the aegis of the North American Leadership Summits. While those mechanisms have not continued under the Trump Administration, the bilateral Executive Steering Committee (ESC), which guides broad efforts along the border, and the Bridges and Border Crossings group on infrastructure have continued to meet. The U.S.-Mexico CEO Dialogue has also continued to convene biannual meetings to produce joint recommendations for the two governments. Mexican business leaders reportedly worked with U.S. executives, legislators, and governors to encourage the Trump Administration to back the proposed USMCA rather than just abandoning NAFTA. Trade Disputes Despite positive advances on many aspects of bilateral and trilateral economic relations, trade disputes continue. The United States and Mexico have had a number of trade disputes over the years, many of which have been resolved. Some of them have involved: country-of-origin labeling, dolphin-safe tuna labeling, and NAFTA trucking provisions. In 2017, Mexico and the United States concluded a suspension agreement on a U.S. antidumping and countervailing duty investigation on Mexican sugar exports to the United States in which Mexico agreed to certain limitations on its access to the U.S. sugar market. In recent years, new trade disputes have emerged. In January 2018, President Trump announced new tariffs on imported solar panels and washing machines under the Trade Act of 1974 that included products coming from Mexico. In February 2019, U.S. Commerce Secretary Wilbur Ross announced that the United States intends to withdraw from a 2013 suspension agreement on fresh tomato exports from Mexico. The agreement effectively suspends an investigation by the U.S. International Trade Commission (USITC) into whether Mexican producers are dumping fresh tomatoes into the U.S. market. Mexico's ambassador to the United States has stated she is "cautiously optimistic" the United States and Mexico will agree to a new arrangement before a U.S. withdrawal. The United States and Mexico are in another trade dispute over U.S. actions to impose tariffs on imports of steel and aluminum under Section 232 of the Trade Expansion Act of 1962, which authorizes the President to impose restrictions on certain imports based on national security threats. Using these authorities, on May 31, 2018, the United States imposed a 25% duty on steel imports and a 10% duty on aluminum imports from Mexico and Canada. In response, Mexico applied retaliatory tariffs of 5% to 25% on U.S. exports valued at approximately $3.6 billion on pork, apples, potatoes, and cheese, among other items. On May 23, 2018, the Trump Administration initiated a Section 232 investigation into the imports of motor vehicles and automotive parts (83 FR 24735) to determine if those imports threaten to impair U.S. national security. The Proposed USMCA119 On November 30, 2018, the United States, Canada, and Mexico signed the proposed USMCA, which, if approved by Congress and ratified by Mexico and Canada, would replace NAFTA. The proposed USMCA would retain many of NAFTA's chapters, while making notable changes to others, including market access provisions for autos and agriculture products, and new rules on investment, government procurement, and intellectual property rights (IPR). It would add new chapters on digital trade, state-owned enterprises, and currency misalignment. The USMCA would tighten rule of origin requirements for duty-free treatment of U.S. motor vehicle imports from Mexico. Under NAFTA, motor vehicles must contain 62.5% North American content, while all other vehicles and motor parts must contain 60% North American content to qualify for duty-free treatment. The new rules would require that 75% of a motor vehicle and 70% of its steel and aluminum originate in North America and that 40%-45% of auto content be made by workers earning at least $16 per hour. Side letters would exempt up to 2.6 million vehicles from Canada and Mexico annually from potential Section 232 auto tariffs. USMCA would maintain the NAFTA state-to-state mechanism for resolving most disputes, as well as NAFTA's binational mechanism for reviewing and settling trade remedy disputes. However, it would maintain an investor-state dispute settlement (ISDS) process only between the United States and Mexico, without Canada, but limit its scope to government contracts in oil, natural gas, power generation, infrastructure, and telecommunications sectors. It would also maintain U.S.-Mexico ISDS in other sectors provided the claimant exhausts national remedies first, among other changes and new limitations. Policymakers may consider numerous issues related to U.S.-Mexico trade as they debate the proposed USMCA. Some issues could include the timetable for congressional consideration under Trade Promotion Authority (TPA), whether the proposed USMCA meets TPA's negotiating objectives and other requirements, and the impact of the agreement on U.S.-Mexico trade relations. In April 2019, the USITC completed a required study on the possible economic impact of a USMCA on the United States. The report estimates that the agreement would have a very small but positive impact on the U.S. economy, potentially raising U.S. real GDP by "0.35% and U.S. employment by 176,000 jobs (0.12 %)." Other policymakers contend that the United States lift steel and aluminum tariffs on imports from Canada and Mexico before the agreement is considered by Congress and state that the tariffs act as a barrier hindering Mexican and Canadian ratification of the proposed USMCA. Congressional objectives and concerns are likely to shape timing of congressional consideration of the proposed USMCA. Some policymakers view the agreement as vital for U.S. firms, workers, and farmers, and believe that the updated agreement would benefit U.S. economic interests. Other issues of concern include a lack of worker rights protection in Mexico and the enforceability of labor provisions, the scaling back of ISDS provisions, which could affect U.S. investors, and possible adverse effects of auto rules of origin on U.S. automakers. Although USMCA would revise NAFTA labor provisions and provide the same dispute mechanism as other parts of the agreement, some critics contend that USMCA has the same limitations as NAFTA; they allege that the proposed USMCA enforcement tools do not go far enough to ensure the protection of worker rights to organize and bargain collectively. It is unclear whether labor reforms that have passed the Mexican Congress will be enough to assuage those concerns. Migration and Border Issues Mexican-U.S. Immigration Issues Immigration policy has been a subject of congressional concern over many decades, with much of the debate focused on how to prevent unauthorized migration and address the large population of unauthorized migrants living in the United States. Mexico's status as both the largest source of migrants in the United States and a continental neighbor means that U.S. migration policies—including stepped-up border and interior enforcement—have primarily affected Mexicans. Beginning in FY2012, foreign nationals from countries other than Mexico began to comprise a growing percentage of total apprehensions. Due to a number of factors, more Mexicans have been leaving the United States than arriving. Nevertheless, protecting the rights of Mexicans living in the United States, including those who are unauthorized, remains a top Mexican government priority. Since the mid-2000s, successive Mexican governments have supported efforts to enact immigration reform in the United States, while being careful not to appear to be infringing upon U.S. authority to make and enforce immigration laws. Mexico has made efforts to combat transmigration by unauthorized migrants and worked with U.S. law enforcement to combat alien smuggling and human trafficking. In FY2018, the Trump Administration removed (deported) some 141,045 Mexicans, as compared to 128,765 removals in FY2017. During the Obama Administration, some of Mexico's past concerns about U.S. removal policies, including nighttime deportations and issues concerning the use of force by some U.S. Border Patrol officials, were addressed through bilateral migration talks and letters of agreement. President Trump's shifts in U.S. immigration policies have tested U.S.-Mexican relations. His repeated assertions that Mexico will pay for a border wall resulted in President Peña Nieto canceling a White House meeting in January 2017 and continued to strain relations throughout his term. The Mexican government expressed regret after the Administration's decision to rescind the Deferred Action for Childhood Arrivals (DACA) initiative, which has provided work authorization and relief from removal for migrants brought to the United States as children, but pledged to assist DACA beneficiaries who return to Mexico. In June 2018, Mexico criticized U.S. "zero tolerance" immigration policies. Despite these developments, Mexico has continued to work with the United States on migration management and border issues. In E.O. 13678, the Trump Administration broadened the categories of authorized immigrants prioritized for removal. As a result, the profile of Mexican deportees now include more individuals who have spent many decades in the United States than in recent years (when the Obama Administration had focused on recent border crossers and those with criminal records). The potential for large-scale removal of Mexican nationals present in the United States without legal status is an ongoing concern of the Mexican government that reportedly has been expressed to Trump Administration officials. Mexico's consular network in the United States has bolstered the services offered to Mexicans in the United States, including access to identity documents and legal counsel. It has launched a 24-hour hotline and mobile consultants to provide support, both practical and psychological, to those who may have experienced abuse or are facing removal. The Mexican government has expressed hope that the U.S. Congress will develop a solution to resolve the phased ending of the DACA initiative. As of July 2018, some 561,400 Mexicans brought to the United States as children had received work authorizations and relief from removal through DACA. Many DACA recipients born in Mexico have never visited the country, and some do not speak Spanish. Dealing with Unauthorized Migration, Including from Central America137 Since 2014, Mexico has helped the United States manage a surge in unauthorized migration from the "Northern Triangle" (El Salvador, Guatemala, and Honduras). Collectively, those countries have overtaken Mexico as the primary source for migrants apprehended at the U.S.-Mexico border. From 2015 to November 2018, Mexico reported apprehending almost 524,000 migrants and asylum seekers from the Northern Triangle. As U.S. asylum policies have tightened, Mexico also has absorbed more Central Americans in need of humanitarian protection (see Figure 7 ). Mexico has received U.S. assistance for its immigration control efforts through the Mérida Initiative. Mexico has received support for its humanitarian protection efforts through global U.S. Migration and Refugee Assistance (MRA) implemented by the U.N. High Commissioner for Refugees (UNHCR) and others. Some U.S. policymakers have praised Mexico's management of these migration flows, whereas others have questioned Mexico's ability to protect migrants from abuse and to provide asylum to those in need of protection. The López Obrador administration has a broad vision of addressing immigration by protecting human rights, decriminalizing migration, and cooperating with Central America. Implementing this vision has thus far proved difficult in an environment of increased flows from the Northern Triangle and pressure from the United States to limit them. The Mexican government has long maintained that the best way to stop illegal immigration from Central America is to address the insecurity and lack of opportunity there, but fiscal limitations limit its ability to support Central American efforts to address those challenges. As previously mentioned, the U.S. and Mexican governments issued a joint statement in December 2018 pledging to boost public and private investment in Central America. On March 29, 2019, the Trump Administration announced that it intends to end foreign assistance programs for the Northern Triangle countries for failing to combat unauthorized migration, appearing to reverse its prior pledge. The State Department has indicated that the decision will affect approximately $450 million in FY2018 funding. The López Obrador administration has provided humanitarian relief to Central American migrants in Mexico, but not increased funding for the migration agency or asylum system. Under pressure from the United States and with its migration stations overcapacity, the Mexican government has recently limited protections and increased deportations, particularly for those traveling in large groups or caravans, to discourage future flows. From April 1-22, 2019, Mexico removed nearly 11,800 people, up from 9,650 removed in the month of April 2018. Mexico's asylum system is underfunded and overwhelmed; it received 29,000 applications in 2018 even as 80% of applications from 2017 still awaited resolution. President López Obrador's desire to maintain positive relations with the U.S. government has prompted domestic criticism and may cause strain in its relations with some Central American governments. His government's decision to allow Central American asylum seekers to be returned to Mexico under the U.S. Migrant Protection Protocols (MPP) to obtain humanitarian visas—rather than challenging the MPP—has put pressure on local governments and aid organizations to assist the migrants. Many state it may also be putting migrants' lives at risk; many Mexican border cities are among the countries most dangerous. Modernizing the U.S.-Mexican Border Since the terrorist attacks of September 11, 2001, there have been significant delays and unpredictable wait times at the U.S.-Mexican border. The majority of U.S.-Mexican trade passes through a port of entry along the southwestern border, often more than once, due to the increasing integration of manufacturing processes in the United States and Mexico. Past bilateral efforts discussed below have contributed to reductions in wait times at some points of entry, but infrastructure and staffing issues remain on both the U.S. and Mexican sides of the border. One effort that has continued is the use of public-private partnerships to address those issues. On May 19, 2010, the United States and Mexico declared their intent to collaborate on enhancing the U.S.-Mexican border as part of pillar three of the Mérida Initiative. A Twenty-First Century Border Bilateral Executive Steering Committee (ESC) has met since then, most recently in November 2017, to develop binational action plans and oversee implementation of those plans. The plans set goals within broad objectives: coordinating infrastructure development, expanding trusted traveler and shipment programs, establishing pilot projects for cargo preclearance, improving cross-border commerce and ties, and bolstering information sharing among law enforcement agencies. In 2015, the two governments opened the first railway bridge in 100 years at Brownsville-Matamoros and launched three cargo pre-inspection test locations where U.S. and Mexican customs officials are working together. A Mexican law allowing U.S. customs personnel to carry arms in Mexico hastened these bilateral efforts. In recent months, wait times have lengthened as a result of U.S. efforts to deal with an influx of Central American asylum seekers and to hasten construction of additional border barriers. Businesses have been concerned that unless López Obrador speaks out, President Trump may adopt policies that could exacerbate the delays at the border resulting from his decision to transfer customs personnel from ports of entry to perform migration management duties. As an example, President Trump has recently threatened to close the U.S.-Mexico border or to impose 25% tariffs on Mexican motor vehicle exports to the United States if the Mexican government does not increase its efforts to stop U.S.-bound migrants over the coming year. Mexico has recently urged the U.S. government to reconsider policies resulting in extended border delays. As Congress carries out its oversight function on U.S.-Mexican migration and border issues, questions that may arise include the following: How well is Mexico fulfilling its pledges to increase security along its northern and southern borders and to enforce its immigration laws? What is Mexico doing to address Central American migration through its territory? What is the current level of bilateral cooperation on border security and immigration and border matters, and how might that cooperation be improved? How well are the U.S. and Mexican governments balancing security and trade concerns along the U.S.-Mexican border? To what extent would the construction of a new border wall affect trade and migration flows in the region? Energy153 The future of energy production in Mexico is important for Mexico's economic growth and for the U.S. energy sector. Mexico has considerable oil and gas resources, but its state oil company (Pemex), has struggled to counter declining production and postponed needed investments due to fiscal challenges. Mexico's 2013 constitutional reforms on energy opened up oil, electricity, gas, transmission, production, and sales to private and foreign investment while keeping ownership of Mexico's hydrocarbons under state control, as established in its 1917 constitution. The 2013 reforms created opportunities for U.S. businesses in exploration, pipeline construction and ownership, natural gas production, and commercial gasoline sales. Although the reforms did not privatize Pemex, they did expose the company to competition and hastened its entrance into joint ventures. Because of the reforms, Mexico has received more than $160 billion in promised investment. However, the reforms ended subsidies that kept gasoline prices low for Mexican consumers and failed to reverse production declines and ongoing problems within Pemex. Pemex's debt increased by more than 60% from 2013 to 2017. While analysts still predict that the reforms will bring long-term benefits to the country, the Peña Nieto administration oversold their short-term impacts, which has emboldened those within the López Obrador government who have opposed private involvement in the sector. The United States sought to help lock in Mexico's energy reforms through the NAFTA renegotiations. NAFTA includes some reservations for investment in Mexico's energy sector. The proposed USMCA would reinforce Mexico's 2013 constitutional reforms and the current legal framework for private energy projects in Mexico. It also would apply similar investor-state dispute settlement mechanisms that currently exist in NAFTA to the oil and gas, infrastructure, and other energy sectors. In addition, the free trade agreement would allow for expedited exports of U.S. natural gas to Mexico, which have increased about 130% since the 2013 reforms. Private sector trade, innovation, and investment have created a North American energy market that is interdependent and multidirectional, with cross-border gas pipelines and liquefied natural gas (LNG) shipments from the United States to Mexico surging. In 2018, the value of U.S. petroleum products exports to Mexico totaled $30.6 billion, nearly double the value of U.S. energy imports from Mexico ($15.8 billion). Some experts estimate that the United States, Mexico, and Canada represent 20% of global oil and gas supply, as well as 20%-25% of the expected additions to international supply over the next 25 years. They believe that deepened energy cooperation with Mexico will give North America an industrial advantage. López Obrador's plans for Mexico's energy sector are still developing. He opposed the 2013 reforms, but he and his top officials have said that his government will honor existing contracts that do not involve any corruption. Despite that commitment, the new government has halted future rounds of auctions and plans to upgrade existing refineries and construct a new refinery in Tabasco rather than importing U.S. natural gas. López Obrador's energy plans also focus on revitalizing Pemex, although the company's financial problems have already become a financial burden for the government and its credit rating has been downgraded. The government's decision to halt new auctions in wind and solar energy, which had also attracted significant investment as a result of the reforms, has led some environmentalists to challenge López Obrador's commitment to a clean energy future for Mexico. Opportunities exist for continued U.S.-Mexican energy cooperation in the hydrocarbons sector, but the future of those efforts may depend on the policies of the López Obrador government. Leases have been awarded in the Gulf of Mexico under the U.S.-Mexico Transboundary Agreement, which was approved by Congress in December 2013 ( P.L. 113-67 ). Bilateral efforts to ensure that hydrocarbon resources are developed without unduly damaging the environment could continue, possibly through collaboration between Mexican and U.S. regulatory entities. Educational exchanges and training opportunities for Mexicans working in the petroleum sector could expand. The United States and Mexico could build upon efforts to provide natural gas resources to help reduce energy costs in Central America and connect Mexico to the Central American electricity grid, as discussed during conferences on Central America cohosted by both governments in 2017 and in 2018. Analysts also have urged the United States to provide more technical assistance to Mexico—particularly in deepwater and shale exploration. In addition to monitoring energy-related issues as they pertain to NAFTA, oversight questions may focus on how the Transboundary Hydrocarbons Agreement is implemented, the extent to which Mexico is developing capable energy-sector regulators, and the effects of transnational crime groups and violence on Mexico's energy industry and the safety of foreign workers employed in the energy sector. An emerging issue for congressional oversight may involve the fairness of policies adopted by the incoming Mexican government toward foreign investors. Water and Floodplain Issues162 The United States and Mexico share the waters of the Colorado River and the Rio Grande. These shared rivers have long presented complex issues leading to cooperation and conflict in the U.S.-Mexican border region and between the United States and Mexico. A bilateral water treaty from 1944 (the 1944 Water Treaty) and other binational agreements guide how the two governments share the flows of these rivers. The binational International Boundary and Water Commission (IBWC) administers these agreements and includes a U.S. Section that operates under foreign policy guidance from the U.S. Department of State. Since 1944, the IBWC has been the principal venue for addressing river-related disputes between the United States and Mexico. The 1944 Water Treaty authorizes the IBWC to develop rules and to issue proposed decisions, called minutes , regarding matters related to the treaty's execution and interpretation. Under the 1944 Water Treaty, the United States is required to provide Mexico annually with 1.5 million acre-feet (AF) of Colorado River water. U.S. deliveries to Mexico in the Rio Grande basin near El Paso/Ciudad Juárez occur annually under a 1906 binational convention, whereas Mexico's deliveries downstream of Fort Quitman, TX, are established in the 1944 Water Treaty. Mexico is to deliver to the United States a minimum amount during a five-year cycle. IBWC also administers other binational boundary and water-related agreements and projects for flood control and sanitation (principally wastewater treatment facilities) and binational reservoirs. Recent Developments in the Colorado River Basin . The United States continues to meet its Colorado River annual delivery requirements to Mexico pursuant to the 1944 Water Treaty. Recent IBWC actions on the Colorado River have focused on how to manage the Colorado River's water and infrastructure to improve water availability during drought and to restore and protect riverine ecosystems. The most recent minute governing basin operations, Minute 323 (signed in September 2017) is a set of binational measures that provides for binational cooperative basin water management, including environmental flows to restore riverine habitat. Minute 323 also provides for Mexico to share in cutbacks during shortage conditions in the U.S. portion of the basin, including delivery reductions under Drought Contingency Plans that were authorized by Congress in April 2019. In addition, Minute 323 designates a "Mexican Water Reserve" through which Mexico can delay its water deliveries from the United States and store its delayed deliveries upstream at Lake Mead, thereby increasing the lake's elevation. For the Colorado River basin, issues before Congress may be largely related to oversight of Minute 323 implementation and water management associated with potential shortage conditions. Recent Development in the Rio Grande Basin . On multiple occasions since 1994, Mexico has not met its Rio Grande delivery obligations within the five-year cycle established by the 1944 Water Treaty, most recently during the five-year cycle from 2010 to 2015. Mexico made up for those shortfalls in subsequent five-year cycles, as authorized under the 1944 Treaty. The October 2015 to October 2020 cycle is under way. Mexico offset its below-target deliveries for the first year of this cycle with additional deliveries in the second year. IBWC indicates that Mexico delivered less than its 350,000 AF in the third year of the cycle; however, higher deliveries in the second year resulted in Mexico's deliveries being almost at 98% of the three-year cumulative delivery target. In recent years, IBWC reportedly has been working toward a binational model for water management in the Rio Grande and obtaining input from binational working groups with the objective of improved predictability and reliability in water deliveries and treaty compliance. To date, Congress has been primarily involved in conducting oversight through reporting requirements for the U.S. Department of State. The FY2019 Consolidated Appropriations Act ( P.L. 116-6 ) includes a reporting requirement from the Senate Appropriations Subcommittee on State, Foreign Operations, and Related Programs ( S.Rept. 115-282 ): Not later than 45 days after enactment of the act, the Secretary of State, in consultation with the IBWC Commissioner, shall submit to the Committee an update to the report required in section division J of Public Law 113–325 detailing efforts to establish mechanisms to improve transparency of data on, and predictability of, water deliveries from Mexico to the United States to meet annual water apportionments to the Rio Grande, in accordance with the 1944 Treaty between the United States and Mexico Respecting Utilization of Waters of the Colorado and Tijuana Rivers and of the Rio Grande, and actions taken to minimize or eliminate future water deficits to the United States. Pursuant to the various reporting requirements, various reports have been delivered to various committees of Congress, including in the spring of 2019. Recent Development in Wastewater and River Pollution . On border wastewater issues, congressional appropriators have shown interest in increasing oversight through statements and reporting requirements related to the pollution in the Tijuana River. Authorizing committees have engaged on issues related to wastewater management near Nogales, AZ. The FY2019 Consolidated Appropriations Act ( P.L. 116-6 ) includes a reporting requirement stating that Not later than 180 days after enactment of the act, the IBWC shall submit a report to the Committee quantifying the total annual volume and composition of transboundary flows that enter the United States from Mexico in the Tijuana watershed, as well as the amount of time between each discharge from Mexico and the notification of the U.S. Government and local communities, as recorded…by the IBWC. The report shall also include a description of steps taken by the IBWC and other relevant Federal agencies to implement additional mitigation measures to address increased flows in 2017 and 2018. Border Floodplain Encroachment . Discussion of increased U.S. security measures along the border, particularly the border between Texas and Mexico, may revive concerns regarding compliance with treaty provisions related to the construction of structures in the binational floodplain that increase flood risk. Environment and Renewable Energy Policy In addition to the water management and conservation issues addressed by the IBWC, the U.S. and Mexican governments have worked together on broader environmental issues in the border region since signing the La Paz Agreement in 1983. Led by the U.S. Environmental Protection Agency (EPA) and the Mexican secretary of environmental resources, the agreement committed the two governments to regularly consult and review environmental concerns. Federal funding and interest in border environmental issues peaked in the 1990s during the negotiations for and implementation of the environmental side agreement to NAFTA that created the North American Development Bank (NADB) and the Border Environment Cooperation Commission (BECC). Even after federal funding for border environmental projects decreased post-2000, the governments have continued to design and implement binational environmental programs. The current 10-year border program, Border 2020, is focused on cooperation in five areas: (1) reducing air pollution; (2) improving access to clean water; (3) promoting materials and waste management; (4) enhancing joint preparedness for environmental response; and (5) enhancing environmental stewardship. The Trump Administration's FY2020 budget request would zero out funding and staff for the U.S.-Mexican border programs run by the EPA. In FY2018 and FY2019, the Administration did not requested any funding for the programs, but Congress provided $3.0 million in EPA funding each year. In 2009, President Obama and then-President Calderón announced the Bilateral Framework on Clean Energy and Climate Change to jointly develop clean energy sources and encourage investment in climate-friendly technologies. Among others, its goals included enhancing renewable energy, combating climate change, and strengthening the reliability of cross-border electricity grids. USAID and Mexico also expanded cooperation through the Mexico Global Climate Change (GCC) Program, which began in 2010 and provided $50 million in funding through FY2016, although bilateral efforts on climate change began around 1990. By 2016, environmental protection and clean energy became a priority for North American cooperation. Mexico, Canada, and the United States all became parties to the Paris Agreement, which entered into force on November 4, 2016, under the U.N. Framework Convention on Climate Change. The Mexican Congress and the Canadian parliament ratified the Paris Agreement. In contrast, U.S. executive branch officials stated that the Paris Agreement is an executive agreement not requiring Senate advice and consent to ratification. President Obama signed an instrument of acceptance on behalf of the United States on August 29, 2016, without submitting it to Congress. On June 1, 2017, President Trump announced his intention to withdraw from the Paris Agreement. The Administration's FY2018 budget request, released on May 23, 2017, proposed to "eliminate U.S. funding for the Green Climate Fund (GCF) in FY2018, in alignment with the President's promise to cease payments to the United Nations' climate change programs." The FY2018 budget request also eliminates funding for Global Climate Change programs run by USAID, the Department of State, and the Department of the Treasury. Congress did not provide funding for those programs in FY2018. President López Obrador's 2018-2014 plan for the environment includes pledges to adjust government policies to comply with the Paris Accord and meet Mexico's Nationally Determine Contribution (NDC). It is unlikely that those pledges will be met, however, as López Obrador has also pledged to bolster hydrocarbons production rather than renewable energy sources. Environmental groups are concerned about López Obrador's plans to build a coal-fired refinery, which would reverse prior pledges to reduce the country's coal-based electricity generation beginning in 2017. According to data from Mexico's National Institute of Ecology and Climate Change, Mexico would need to invest $8 billion per year from 2014 to 2030 to meet its NDC. In 2017, the country reportedly invested $2.4 billion. Educational Exchanges and Research Educational and research exchanges between the United States and Mexico have been occurring for decades, but they rose higher in the bilateral agenda during the Obama Administration as part of the High-Level Economic Dialogue. In 2011, President Obama established a program called "100,000 Strong in the Americas" to boost the number of U.S. students studying in Latin America (including Mexico) to 100,000 (and vice versa) by 2020. Similarly, President Peña Nieto implemented Proyecta 100,000, which aimed to have 100,000 Mexican students and researchers studying in the United States by 2018. Together, the U.S. and Mexican governments launched a Bilateral Forum on Higher Education, Innovation, and Research (FOBESII) in May 2013, which led to more than 80 partnerships between U.S. and Mexican universities. Both programs are still being implemented, albeit mostly with private funding. Country and bilateral efforts face continued challenges. In 2016-2017 (the latest year available), the number of U.S. students studying in Mexico increased by 10.8% compared to 2015-2016. In contrast, the number of Mexicans studying in the United States decreased by 8.9% in 2017-2018 as compared to the previous year. Mexico ranks ninth on the Institute of International Education's list of countries with students studying in the United States. China is number one and India is number two. A lack of scholarship funding and a lack of English language skills have been barriers for many Mexican students. Appendix. Structural Reforms Structural Reforms: Enacted but Implemented Unevenly Many analysts praised President Peña Nieto and his advisers for shepherding structural reforms through the Mexican Congress but predicted that the reforms' impact would depend on their implementation. Mexico's ranking in the World Economic Forum's Global Competiveness Index for 2017 improved, in part due to some of the reforms. Nevertheless, critics have alleged that votes in favor of the reforms "were duly purchased" by the PRI." Some of Mexico's reforms have faced problems due to issues in implementation; others have faced opposition from entrenched interest groups. Still others have faced unfavorable global conditions. Fiscal reforms faced challenges in tax collection, and a 2017 Supreme Court ruling reportedly watered down the telecommunications reform. Teachers unions, particularly in southern Mexico, vehemently opposed education reforms requiring teacher evaluations and accountability measures. In June 2016, 8 people died and more than 100 were injured after unions and police clashed in Oaxaca. Although Mexico's energy sector has attracted significant international investment, low global oil prices thus far have rendered shale resources and other unconventional fields unfeasible to develop.

Congress has maintained significant interest in Mexico, an ally and top trade partner. In recent decades, U.S.-Mexican relations have grown closer through cooperative management of the 2,000-mile border, the North American Free Trade Agreement (NAFTA), and security and rule of law cooperation under the Mérida Initiative. Relations have been tested, however, by President Donald J. Trump's shifts in U.S. immigration and trade policies. On December 1, 2018, Andrés Manuel López Obrador, the leftist populist leader of the National Regeneration Movement (MORENA) party, which he created in 2014, took office for a six-year term after winning 53% of votes in the July 1, 2018, presidential election. Elected on an anticorruption platform, López Obrador is the first Mexican president in over two decades to enjoy majorities in both chambers of Congress. López Obrador succeeded Enrique Peña Nieto of the Institutional Revolutionary Party (PRI). From 2013-2014, Peña Nieto shepherded reforms through the Mexican Congress, including one that opened Mexico's energy sector to foreign investment. He struggled, however, to address human rights abuses, insecurity, and corruption. President López Obrador has pledged to make Mexico a more just and peaceful society, but also to govern with austerity. Given fiscal constraints and rising insecurity, observers question whether his goals are attainable. López Obrador aims to build infrastructure in southern Mexico, revive the state oil company, promote social programs, and maintain a noninterventionist position in foreign affairs, including the crisis in Venezuela. His power is constrained, however, by MORENA's lack of a two-thirds majority in Congress, which he would need to enact constitutional reforms or to roll back reforms. Non-MORENA governors have also opposed some of his policies. Still, as of April 2019, López Obrador had an approval rating of78%. U.S. Policy Despite predictions to the contrary, U.S.-Mexico relations under the López Obrador government have thus far remained friendly. Nevertheless, tensions have emerged over several key issues, including trade disputes and tariffs, immigration and border security issues, and Mexico's decision to remain neutral in the crisis in Venezuela. The new government has accommodated U.S. migration and border security policies, despite the domestic criticism it has received for agreeing to allow Central American asylum seekers to await U.S. immigration proceedings in Mexico and for rapidly increasing deportations. The Trump Administration requested $76.3 million for the Mérida Initiative for FY2020 (a 35% decline from the FY2018-enacted level). In November 2018, Mexico, the United States, and Canada signed a proposed U.S.-Mexico-Canada (USMCA) free trade agreement that, if approved by Congress and ratified by Mexico and Canada, would replace NAFTA. Mexico has applied retaliatory tariffs in response to U.S. tariffs on steel and aluminum imports imposed in 2018. Legislative Action The 116th Congress may consider approval of the USMCA. Congressional concerns regarding the USMCA include possible effect on the U.S. economy, working conditions in Mexico and the protection of worker rights, enforceability of USMCA labor provisions, U.S.-Mexican economic relations, and other issues. It is not known whether or when Congress will consider implementing legislation for USMCA. In January 2019, Congress provided $145 million for the Mérida Initiative ($68 million above the budget request) in the FY2019 Consolidated Appropriations Act (P.L. 116-6) and asked for reports on how bilateral efforts are combating flows of opioids, methamphetamine, and cocaine. The House also passed H.R. 133 (Cuellar), a bill that would promote economic partnership between the United States and Mexico, as well as educational and professional exchanges. A related bill, S. 587 (Cornyn), has been introduced in the Senate. Further Reading CRS In Focus IF10578, Mexico: Evolution of the Mérida Initiative, 2007-2019. CRS In Focus IF10400, Transnational Crime Issues: Heroin Production, Fentanyl Trafficking, and U.S.-Mexico Security Cooperation. CRS In Focus IF10215, Mexico's Immigration Control Efforts. CRS Report R45489, Recent Migration to the United States from Central America: Frequently Asked Questions. CRS Report RL32934, U.S.-Mexico Economic Relations: Trends, Issues, and Implications. CRS Report R44981, NAFTA Renegotiation and the Proposed United States-Mexico-Canada Agreement (USMCA) CRS Report R45430, Sharing the Colorado River and the Rio Grande: Cooperation and Conflict with Mexico

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Introduction The federal government, through the Department of Energy, operates four regional power marketing administrations (PMAs), created by statute: the Bonneville Power Administration (BPA), the Southeastern Power Administration (SEPA), the Southwestern Power Administration (SWPA), and the Western Area Power Administration (WAPA). Each PMA operates in a distinct geographic area of the coterminous United States (see Figure 1 ). Congressional interest in the PMAs has included diverse issues such as rate setting, cost and compliance associated with the Endangered Species Act (ESA; P.L. 93-205 ; 16 U.S.C. §§1531 et seq.), and questions of privatization of these federal agencies. In general, the PMAs came into being because of the government's need to dispose of electric power produced by federal dams constructed largely for irrigation, flood control, or other purposes, and to achieve small community and farm electrification—that is, providing service to customers whom it would not have been profitable for a private utility to serve. With minor exceptions, these agencies market the electric power produced by federal dams constructed, owned, and operated by the Corps of Engineers (Corps) and the U.S. Bureau of Reclamation (BOR). PMAs must give preference to public utility districts and cooperatives (e.g., "preference customers"), selling their power at cost-based rates set at the lowest possible rate consistent with sound business principles. The Federal Energy Regulatory Commission (FERC) regulates PMA rates to ensure that they are set high enough to repay the U.S. Treasury on schedule for the portion of federal facility costs that have been allocated to hydropower beneficiaries. Since FY2011, power revenues associated with the PMAs have been classified as discretionary offsetting receipts (i.e., receipts that are available for spending by the PMAs), thus the agencies are sometimes noted as having a "net-zero" spending authority. Only the capital expenses of WAPA and SWPA require appropriations from Congress. Each PMA also has unique elements and regional issues that affect its business. They are discussed in alphabetical order. Bonneville Power Administration Created by the Bonneville Project Act of 1937 (16 U.S.C. §832) just before the completion of two large dams in the Pacific Northwest—Bonneville Dam in 1938 and Grand Coulee Dam in 1941—BPA was the first PMA. Though it serves a smaller geographical area, BPA is on par with WAPA (which serves the largest area) in the size of its transmission system. The agency operates and maintains about 75% of the high voltage transmission lines in its service territory, which includes Idaho, Oregon, Washington, western Montana and small parts of eastern Montana, California, Nevada, Utah, and Wyoming. BPA also markets wholesale electricity from 31 federally owned hydropower facilities in the Northwest. These generation facilities are owned both by the Corps and BOR. BPA differs from the other three PMAs in that it is self-financed: it receives no federal appropriations. Since passage of the Federal Columbia River Transmission System Act of 1974 (16 U.S.C. §838), BPA has covered its operating costs through power rates set to ensure repayment to the Treasury of capital and interest on funds used to construct the Columbia River power system. BPA also has permanent Treasury borrowing authority, which it may use for capital on large projects. This money is repaid with interest, through power sales. As of 2018, BPA had $5.53 billion of bonds outstanding to the U.S. Treasury, with BPA's current borrowing authority capped by Congress at $7.70 billion. BPA has also looked at other financing options as it approaches its debt limit, looking at nonfederal debt refinancing, lease-purchases, and other asset management strategies. Current Issues BPA has initiated strategies and a financial plan to address a changing power generation and demand market, as it endeavors to meet its mandate for cost-based electric power rates. These plans are outlined in its Strategic Plan for 2018 to 2023, and address goals from financial health to infrastructure modernization. Cost Competitiveness Wholesale power prices in the United States are generally trending downward, while BPA's firm power rates have trended upward. BPA repays its funding from the U.S. Treasury largely through electricity sales to customers. While BPA generates its electricity from hydropower (which is traditionally one of the lower-cost means of power generation), increasing amounts of renewable electricity from growing wind and solar capacity installations in the Pacific Northwest are challenging BPA's price competitiveness, and perhaps its ability to repay its debts in a timely manner. Regional Cooperation Debt In 2014, BPA entered into the Regional Cooperation Agreement (RCA) with the State of Washington to address the debt of Energy Northwest, a "joint action agency formed by the Washington state legislature in 1957" to manage public power utility costs. Energy Northwest owns and operates four electric power generation facilities: White Bluffs Solar Station, Packwood Lake Hydroelectric Project, Nine Canyon Wind Project, and the Columbia Generating Station. The Regional Cooperation debt is "the issuance of new bonds by Energy Northwest to refund outstanding bonds shortly before their maturities when substantial principal repayments were and are due." According to BPA, this allows for "integrated debt management" for the combined total debt portfolios of BPA and Energy Northwest, with a net effect reducing the "weighted average interest rate and the maturity of BPA's overall debt portfolio" over the life of the program. This refinancing, according to BPA, has enabled BPA to prepay higher-interest-rate federal obligations, and has "preserved or restored U.S. Treasury borrowing authority." However, the debt service of the RCA is "borne by BPA ratepayers through BPA rates." BPA estimates that the "aggregate potential principal amount" of RCA refunding through bonds issued in fiscal years 2019 through 2030 could exceed $4.0 billion. Grid Balancing Role and Infrastructure Modernization BPA is responsible for maintaining and modernizing the generation and transmission infrastructure of its systems, and preserving and enhancing its physical and cybersecurity. With energy and capacity markets changing in the western United States (especially with the growing need to integrate increasing amounts of variable renewable sources), and the development of the Energy Imbalance Market (EIM) in the West, BPA is considering whether to join the EIM, and how this might affect its operations and customers. Dams and Fish Endangerment Environmental, fishing, and tribal advocates have sued the federal government over concerns that operating rules for hydropower dams on the Columbia and Snake Rivers (i.e., operations consistent with the National Marine Fisheries Service Biological Opinion) are inadequate to ensure survival of species threatened or endangered under the Endangered Species Act. In addition, several environmental groups filed a lawsuit blaming the dams for warm river waters in summer 2015 that resulted in the deaths of about 250,000 adult sockeye salmon migrating up the Columbia and Snake Rivers. Some of these parties have sought to remove the four lower dams on the Snake River to ensure survival of some salmon and steelhead species. In 2016, a federal judge overturned a previous management plan for the dams, finding that it would not be sufficient to protect salmon runs, and ordered a new management plan that could include removing the dams. However, in 2018, President Trump issued a Presidential Memorandum accelerating the process for a new management plan, requiring the biological opinion to be ready by 2020. The memorandum ordered the Secretary of the Interior and the Secretary of Commerce "to appropriately suspend, revise, or rescind any regulations or procedures that unduly burden" water infrastructure projects so they "are better able to meet the demands of their authorized purposes." How this will affect the fish endangerment finding is unclear at this time. Southeastern Power Administration The Southeastern Power Administration was created in 1950 by the Secretary of the Interior to carry out the functions assigned to the Secretary by the Flood Control Act of 1944 (P.L. 78-534) in 11 states (Alabama, Florida, Georgia, Illinois, Kentucky, Mississippi, North Carolina, South Carolina, Tennessee, Virginia, and West Virginia). SEPA is unique among the four PMAs in two ways. It is the smallest PMA, with just over 40 employees, and, unlike the other three agencies, SEPA does not operate or maintain any transmission facilities, and thus contracts with other utilities for transmitting the federal power it markets to more than 12 million consumers. Current Issues Southeastern markets approximately 3,400 MW of power produced at 22 multipurpose water projects, operated and maintained by the Corps. SEPA's facilities are aging; for instance, in 2018 it reported that its Cumberland System customers have agreed to fund $1.2 billion of planned rehabilitations of the nine hydroelectric facilities in the Corps' Nashville District. According to SEPA, it has an overcapacity issue. Projections for electricity load growth (in consultation with its preference customers) made before the 2008 economic downturn reportedly led to SEPA acquiring additional capacity it currently does not use. As a result, municipalities and electric cooperatives in SEPA's service area will have to make economic decisions regarding how to handle this excess capacity. As of 2018, at least one preference customer has terminated its contract with SEPA due to this issue. Southwestern Power Administration Section 5 of the Flood Control Act of 1944 (P.L. 78-534) established the Southwestern Power Administration. SWPA markets hydroelectric power in Arkansas, Kansas, Louisiana, Missouri, Oklahoma, and Texas from 24 multipurpose Corps dams with a combined capacity of 2,194 MW. SWPA serves more than 100 preference customer utilities with more than 8 million end-use customers. The agency manages nearly 1,400 miles of high-voltage transmission lines. SWPA is the only U.S. electrical balancing area supported solely by hydroelectric generation, and its use of the reservoirs and river systems within the SWPA marketing area must be balanced with flood control and other required uses so that the power needs of its customers can be met. SWPA states that it uses alternative financing and offsetting collection authorities to fund expenses and purchase power to help SWPA meet its obligations while minimizing congressional appropriations. Current Issues Periodically, SWPA has been challenged by low water conditions. It has a rain-based water supply—rather than one that is snow-based, like the mountain snowpack water supply of WAPA and BPA—and sells power from a comparatively small reservoir system which stores that water. Extended dry periods sometimes mean that SWPA must purchase replacement power and energy to meet its contractual obligations. This means that SWPA requires congressional authority to use its revenues from power sales over the long term—across high and low water years. Prior year balances have been available to Southwestern so that we are financially prepared and able to achieve rate stability for our customers. This authority is critical to operating our program according to sound business principles. Southwestern's program is funded by authority to use receipts, alternative financing, and other authorities approved by Congress, including appropriations, which represent only 6.5% of Southwestern's total program. Western Area Power Administration Created by the Department of Energy Organization Act of 1977 ( P.L. 95-91 ), WAPA is the newest and largest of the PMAs in terms of service area. WAPA's service area covers 1.3 million square miles, and its power—transmitted by a high voltage grid over 17,000 miles long—serves customers in 15 western states. WAPA markets and transmits hydropower from 56 federal dams operated by BOR, and the Corps. It also sells hydropower power produced by facilities administered by the International Boundary and Water Commission, and markets the United States' 24.3% share (547 megawatts) of the coal-fired Navajo Generating Station in Arizona. In addition to the types of public bodies traditionally served as preference customers by the other PMAs, WAPA has developed a policy to give preference to Native American tribes regardless of their utility status. Current Issues WAPA has been working with other regional entities to address the changing electric power needs of its customers. In 2014, WAPA published its Strategic Roadmap 2024, titled "Powering the Energy Frontier." The document is intended to serve as WAPA's strategic plan to guide the agency's actions for the next 10 years. However, according to some, the developing Energy Imbalance Market in the West may provide additional options for WAPA to address transmission development needs to balance regional generation and demand. Transmission Congestion An issue of continuing importance to WAPA is its role in relieving transmission congestion within its marketing area. There are a number of constrained transmission paths in the West whose limited capacity to transfer power may reduce the ability of utilities to serve electric loads on a seasonal or ongoing basis. Building Transmission to Access Renewable Energy In 2009, Section 402 of the American Recovery and Reinvestment Act ( P.L. 111-5 ) amended the Hoover Power Plant Act of 1984 to give WAPA authority to borrow up to $3.25 billion from the U.S. Treasury to pursue transmission projects that integrate renewable generation sources into the electric transmission grid. The law provides authority to construct and upgrade transmission lines to help deliver renewable resources to market. Western created the Transmission Infrastructure Program, also known as TIP, to implement this new initiative. Several transmission projects have been initiated under the program. Previous budget proposals and legislation have proposed repealing WAPA's loan authority, but to date, none of these proposals have been enacted. WAPA Region Joins the Southwest Power Pool In 2015, WAPA's Upper Great Plains (UGP) region joined the Southwest Power Pool (SPP), a Regional Transmission Organization (RTO). Under the operating agreement with SPP, WAPA was required to transfer functional control of UGP's eligible transmission facilities to SPP. WAPA is the first PMA to formally join an RTO, and states that benefits to date from joining SPP have significantly exceeded the original estimate of $11.5 million per year. WAPA reports that two of its other regions are considering joining SPP. Hydrology and Water Power For Water Year 2017, WAPA reported that it delivered 26,148 gigawatt-hours of hydroelectric power to its customers, which is 101% of average annual power sales. The West has been experiencing periodic droughts for a number of years, resulting in lower snowmelts and less water in storage and available for power generation. To help smooth the resulting annual differences, a "drought-adder" reduction program has been implemented in recent years. A drought-adder charge was levied to help repay deferred drought costs accrued during the 2000s in the Rocky Mountain and Upper Great Plains regions. The balance was paid a year ahead of schedule and, as of this year, has resulted in $40 million annual savings for more than 50 percent of WAPA's customers in Colorado, Wyoming, Montana, Kansas, Nebraska, the Dakotas and the western sections of Minnesota and Iowa. This is the second year that 417 of WAPA's customers, out of 700, have had a rate reduction. The drought-adder component of the rate remains available to WAPA to adjust to the variable hydropower resource—a lasting risk if drought conditions persist in WAPA's territory. Moderate to extreme drought conditions have been reported in parts of the western United States. Proposed Power Marketing Administration Reforms In addition to issues specific to individual PMAs, some recent proposals have applied to multiple PMAs. In 2018, the Trump Administration proposed to sell the transmission assets owned and operated by the federal Power Marketing Administrations. The proposal suggested that "eliminating or reducing" the federal government's role in owning and operating transmission assets and increasing the private sector role would "encourage a more efficient allocation of economic resources and mitigate unnecessary risk to taxpayers." The proposal calls for federal transmission infrastructure assets (lines, towers, substations, and/or rights of way) to be sold, with the private sector and/or state and local entities potentially taking over the transmission functions now provided by the PMAs. The Federal entities that would result after such sales could contract with other utilities to provide transmission service for the delivery of Federal power just as the Southeastern Power Administration, which does not own transmission lines, already does. The proposal reports that according to the Administration's FY2019 budget justification, the sale of federal transmission assets would result in a net budgetary savings of $9.5 billion, in total, over a 10-year window. Reportedly, the Administration dropped the plan due to stakeholder opposition, with the Department of Energy stating that such a sale of PMA transmission assets would not proceed unless directed by Congress. Proposals to sell all or part of the PMAs are not new, and have been made in some form by almost every President since Reagan. However, Congress has sought to prevent executive branch alterations of PMA structures and authority. Under Section 208 of the Urgent Supplemental Appropriations Act, 1986 ( P.L. 99-349 ), the executive branch is prohibited from spending funds to study or draft proposals to transfer from federal control any portion of the assets of the PMAs unless specifically authorized by Congress. The Trump Administration divestment proposal could have had an indirect impact on the original congressional intent for the PMAs to provide electricity at the lowest possible cost. This in turn could require changes to the following provisions: Flood Control Act of 1944, as amended (FCA; 16 U.S.C. §825s et seq. ); The 1937 Bonneville Project Act (BPA; 16 U.S.C. §832c ); and The Reclamation Project Act of 1939 (RPA; 43 U.S.C. §485h(c)) . These laws also stipulate a preference of public bodies for the sale of federal power. Selling federally owned transmission assets could potentially affect the "lowest possible" rates of sale, and the statutory preference for publicly or cooperatively owned utilities to be the vehicle for sale of electric power produced by federal facilities.

The federal government, through the Department of Energy, operates four regional power marketing administrations (PMAs), created by statute: the Bonneville Power Administration (BPA), the Southeastern Power Administration (SEPA), the Southwestern Power Administration (SWPA), and the Western Area Power Administration (WAPA). Each PMA operates in a distinct geographic area. Congressional interest in the PMAs has included diverse issues such as rate setting, cost and compliance associated with the Endangered Species Act (ESA; P.L. 93-205; 16 U.S.C. §§1531 et seq.), and questions of privatization of these federal agencies. In general, the PMAs came into being because of the government's need to dispose of electric power produced by dams constructed largely for irrigation, flood control, or other purposes, and to achieve small community and farm electrification—that is, providing service to customers whom it would not have been profitable for a private utility to serve. With minor exceptions, these agencies market the electric power produced by federal dams constructed, owned, and operated by the U.S. Army Corps of Engineers (Corps) and the Bureau of Reclamation (BOR). By statute, PMAs must give preference to public utility districts and cooperatives (e.g., "preference customers"), and sell their power at cost-based rates set at the lowest possible rate consistent with sound business principles. The Federal Energy Regulatory Commission regulates PMA rates to ensure that they are set high enough to repay the U.S. Treasury for the portion of federal facility costs allocated to hydropower beneficiaries. With energy and capacity markets changing in the western United States (especially with the growing need to integrate increasing amounts of variable renewable sources), and the development of the Energy Imbalance Market in the West, BPA and WAPA may have to adapt their plans with regard to generation needs and how transmission systems are developed. In 2018, the Trump Administration proposed to sell the transmission assets (lines, towers, substations, and/or rights of way) owned and operated by the federal Power Marketing Administrations. The proposal suggested that "eliminating or reducing" the federal government's role in owning and operating transmission assets, and increasing the private sector's role, would "encourage a more efficient allocation of economic resources and mitigate unnecessary risk to taxpayers." The resulting PMA entities would then contract with other utilities to provide transmission services for the delivery of federal power, similar to what SEPA does currently. Reportedly, the proposed sale of PMA assets was dropped after opposition to the plan emerged from stakeholders. Under Section 208 of the Urgent Supplemental Appropriations Act, 1986 (P.L. 99-349), the executive branch is prohibited from spending funds to study or draft proposals to transfer from federal control any portion of the assets of the PMAs unless specifically authorized by Congress. Environmental, fishing, and tribal advocates have sued the federal government over concerns that operating rules for hydropower dams on the Columbia and Snake Rivers (i.e., the National Marine Fisheries Service Biological Opinion) are inadequate to ensure survival of species threatened or endangered under the ESA. In 2016, a federal judge overturned a previous management plan for the dams, finding that it would not be sufficient to protect salmon runs, and ordered a new management plan that could include removing the dams. However, in 2018, President Trump issued a Presidential Memorandum accelerating the process for a new management plan, requiring the biological opinion to be ready by 2020. Since FY2011, power revenues associated with the PMAs have been classified as discretionary offsetting receipts (i.e., receipts that are available for spending by the PMAs), thus the agencies are sometimes noted as having a "net-zero" spending authority. Only the capital expenses of WAPA and SWPA require appropriations from Congress.

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Introduction The federal government has played a role in subsidizing housing construction and providing homeownership and rental assistance for lower-income households since the 1930s. Today, Congress funds a number of programs to help meet the housing needs of poor and vulnerable populations. The programs are primarily administered by the Department of Housing and Urban Development (HUD), with some assistance provided to rural communities through the Department of Agriculture and some tax benefits administered through the Department of the Treasury. The modern housing assistance programs include both relatively flexible grants to state and local governments to serve homeless people, build affordable housing, provide assistance to first-time homebuyers, and promote community development; and more structured, direct assistance programs that provide low-cost apartments and rental vouchers to poor families, administered through local public, quasi-public, and private intermediaries. The federal government also makes tax credits available to states to distribute to developers of low-cost housing and provides mortgage insurance to lenders that make certain types of mortgages to eligible homebuyers or developers of multifamily housing. One of the federal government's largest housing benefits, arguably, is the mortgage interest deduction, which is not targeted to lower-income households and is available to homeowners who pay mortgage interest and itemize their deductions. This report begins with an overview of the history and evolution of federal housing assistance policy. It then provides descriptions of today's major federal housing assistance programs. The report concludes with a discussion of issues and trends in federal housing assistance policy. This report is primarily focused on the federal government's programs and policies that provide housing-related assistance to households and communities to assist lower-income families. This is a narrower focus than the federal government's role in all aspects of housing and housing finance. For example, this report does not explore the federal government's regulation of lead-based paint hazards in residential structures, assistance to communities in responding to mass displacement immediately following natural disasters, or financial industry regulations as they affect both residential and commercial lending. It also does not provide an in-depth discussion of the federal government's role in facilitating a secondary market for mortgages through the government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac or the government agency Ginnie Mae. History and Evolution of Federal Housing Assistance Policy The Beginning of Federal Housing Assistance: FHA and Public Housing The federal government's first major housing policy was formulated in response to trouble in the mortgage market resulting from the Great Depression. Until the early 1930s, most mortgages were written for terms of three to five years and required borrowers to make payments only on an annual basis. At the end of the three- or five-year terms, the remaining loan balance had to be repaid or the mortgage had to be renegotiated. Another feature of the mortgage market at that time was that lenders would only lend 40% to 50% of the value of the property, so borrowers had to have the cash to complete the transaction or find someone willing to finance the balance (or part of the balance) in a second mortgage. During the Great Depression, however, lenders were unable or unwilling to refinance many of the loans that became due. When borrowers could not pay the loan balances, lenders foreclosed on the loans and took possession of the properties. It was against this backdrop that the Housing Act of 1934 (P.L. 73-479) was enacted. The broad objectives of the act were to (1) encourage lenders to invest in housing construction, and (2) stimulate employment in the building industry. The act created the Federal Housing Administration (FHA). FHA insured lenders against losses on home modernization and home improvement loans, created the Mutual Mortgage Insurance Fund to fund the operation of the newly created mortgage insurance programs, and established national mortgage associations to buy and sell mortgages. The creation of FHA also institutionalized a new idea: 20-year mortgages on which a loan would be completely repaid at the end of its term. If borrowers defaulted, FHA insured the lender for full repayment. Eventually, lenders began to make long-term mortgages without FHA insurance as long as borrowers made significant down payments. Over time, 15- and 30-year mortgages have become the standard mortgage products. As in the case of the mortgage finance market, the federal government initially became involved in providing rental housing assistance in response to the Great Depression. In the early 1930s, a housing division was added to President Franklin D. Roosevelt's Works Progress Administration (WPA) as a part of the effort to create jobs and spur economic growth. The Housing Division acquired land and built multifamily housing projects for occupancy by lower-income families across the country. However, the Housing Division's activities proved controversial with local government officials who thought that they were not consulted in the process. This provided the background for the enactment of the U.S. Housing Act of 1937 (P.L. 75-412). It replaced the WPA's Housing Division and its projects by establishing a new, federal United States Housing Agency (a precursor agency to today's Department of Housing and Urban Development) and a new Low-Rent Public Housing program. The new program required partnerships between the federal government, states, and localities. States that wished to receive assistance in building low-rent public housing were required to pass enabling legislation creating new, quasi-governmental, local public housing authorities (PHAs). These PHAs could then apply to the federal government for funding to aid in the construction and maintenance of low-rent housing developments targeted to low-income families. The act declared that it was the policy of the United States to promote the general welfare of the nation by employing its funds and credit, as provided in this Act, to assist the several states and their political subdivisions to alleviate present and recurring unemployment and to remedy the unsafe and unsanitary housing conditions and the acute shortage of decent, safe, and sanitary dwellings for families of low-income, in rural or urban communities, that are injurious to the health, safety, and morals of the citizens of the nation. Housing was a major issue in the presidential and congressional races of 1948. President Harry S. Truman's pledge to address the postwar housing shortage and the problem of urban slums played a key role in his large margin of victory. In his State of the Union Address in 1949, which unveiled the "Fair Deal," President Truman observed that "Five million families are still living in slums and firetraps. Three million families share their homes with others." He further stated The housing shortage continues to be acute. As an immediate step, the Congress should enact the provisions for low-rent public housing, slum clearance, farm housing, and housing research which I have repeatedly recommended. The number of low-rent public housing units provided for in the legislation should be increased to 1 million units in the next 7 years. Even this number of units will not begin to meet our need for new housing. The Housing Act of 1949 (P.L. 81-171) declared the goal of "a decent home and a suitable living environment for every American family." The act (1) established a federal urban redevelopment and slum clearance program, authorizing federal loans of $1 billion over a five-year period to help local redevelopment agencies acquire slum properties and assemble sites for redevelopment; (2) reactivated the public housing program for low-income families (which had been on hold during World War II), authorizing subsidies to local housing authorities sufficient to build 810,000 units over six years; (3) expanded the FHA's mortgage insurance program to promote home building and homeownership; (4) created within the U.S. Department of Agriculture a program of financial assistance and subsidies to improve housing conditions on farms and in rural areas; and (5) authorized federal grants for research, primarily to improve the productivity of the housing industry. Government Subsidization of Private Rental Development Through the 1950s, the federal government's role in housing assistance focused largely on public housing, which served a mostly poor population. Congress recognized that there was a gap in the market—few options existed for moderate-income families whose incomes were too high to qualify for public housing but too low to afford adequate market rate housing. Proposals had been made in Congress to address the shortage of housing for moderate-income households during the 1950s; however, no legislation had been enacted, in part due to the cost to the government of creating and funding a new program. To find a way to serve this segment of the population without creating another large housing program with high expenditures, Congress approved legislation at the end of the 1950s and throughout the 1960s that engaged the private sector in the development of affordable rental housing. The Housing Act of 1959 (P.L. 86-372) was the first significant instance where government incentives were used to persuade private developers to build housing that would be affordable to low- and moderate-income households. As part of P.L. 86-372, Congress created the Section 202 Housing for the Elderly program. Through the Section 202 program, the federal government extended low-interest loans to private nonprofit organizations for the development of affordable housing for moderate-income residents age 62 and older. The low interest rates were meant to ensure that units would be affordable, with nonprofit developers being able to charge lower rents and still have adequate revenue to pay back the government loans. The Housing Act of 1961 (P.L. 87-70) further expanded the role of the private sector in providing housing to low- and moderate-income households. The act created the Section 221(d)(3) Below Market Interest Rate (BMIR) housing program, which both insured mortgages to private developers of multifamily housing and provided loans to developers at low interest rates. The BMIR program expanded the pool of eligible borrowers to private for-profit developers and government entities, as well as nonprofit developers. Eligible developers included cooperatives, limited-dividend corporations, and state or local government agencies. Like the Section 202 program, the low interest rates in the BMIR program were meant to ensure that building owners could offer affordable rents to tenants. The Housing and Urban Development Act of 1965 (P.L. 89-117) added rental assistance to the list of incentives for private multifamily housing developers that participated in the Section 221(d)(3) BMIR program. The Rent Supplement Program, enacted as part of P.L. 89-117, capped the rents charged to participating tenants at 20% of their incomes and paid building owners the difference between 20% of a tenant's income and fair market rent. P.L. 89-117 also created the Section 23 leased housing program, which was the first program to provide rent subsidies for use with existing private rental market units. The Housing and Urban Development Act of 1968 (P.L. 90-448) created the Section 236 and Section 235 programs. In the Section 236 program, the government subsidized private developers' mortgage interest payments so that they would not pay more than 1% toward interest. Some Section 236 units also received rent subsidies (referred to as Rental Assistance Payments [RAP]) to make them affordable to the lowest-income tenants. The Section 235 program instituted mortgage interest reduction payments similar to the Section 236 program, but for individual homeowners rather than multifamily housing developers. Through it, eligible borrowers could obtain FHA-insured mortgages with subsidized interest rates. As the program was originally enacted, HUD was to make subsidy payments to the lender in order to reduce the interest rate on the mortgage to as low as 1%. By the end of the 1960s, subsidies to private developers had resulted in the creation of hundreds of thousands of rental housing units. Approximately 700,000 units of housing had been built through the Section 236 and Section 221(d)(3) programs alone. The Section 202 program had created more than 45,000 units for elderly households. The Section 235 program and Section 23 leased-housing program provided ownership and rental subsidies for thousands more. Through 1972, the Section 235 program subsidized nearly 400,000 homeowners, while the Section 23 leased-housing program provided rent subsidies for more than 38,000 private market rental units. Despite the growth in the role of private developers, public housing was still the largest housing subsidy program, with roughly 1 million units built and subsidized by the early 1970s. Another development during the 1960s was an income-based rent structure. Under the public housing program, tenants generally paid rent in an amount equal to the costs of operating the assisted housing in which they lived. Over time, as operating costs rose, there was a concern that the below-market rents being charged were too high to be affordable to the poorest families. The Brooke Amendment, which was included as part of the Housing and Urban Development Act of 1969 (P.L. 91-152), limited tenant contributions toward rent in all rent assisted units (including public housing and all project-based rental assistance units) to an amount equal to 25% of tenant income (this was later raised to 30%). The Brooke Amendment is considered to be responsible for codifying an income-based rent structure in federal housing programs. Housing Discrimination, the Fair Housing Act, and the Community Reinvestment Act In 1968, Congress enacted the Fair Housing Act as Title VIII of the Civil Rights Act (P.L. 90-284). The law prohibits discrimination in the sale, rental, or financing of housing based on race, color, religion, national origin, sex, familial status, and handicap. In addition to prohibiting discrimination, the Fair Housing Act also requires HUD and other federal agencies to administer their housing and urban development programs in ways that affirmatively further fair housing. In other words, as determined by courts, HUD is to prevent segregation and ensure that housing is open to everyone. Leading up to the passage of the Fair Housing Act, there had been years of governmental and private discrimination in the provision of housing. For example, the Federal Housing Administration's policies and underwriting requirements often discouraged or prohibited FHA insurance for mortgages in certain areas, including non-white or racially mixed areas, and encouraged occupancy restrictions based on race for the mortgages it insured. Such policies limited minority households' opportunities to achieve homeownership and contributed to patterns of racial segregation. Systematic racial discrimination was not limited to private market housing transactions, but was also prevalent in public housing. Together, a presidential order, Supreme Court cases, and civil rights legislation, including the Fair Housing Act, worked to make it illegal to deny public housing assistance to families based on their race and to segregate public housing residents systematically by race, both of which had been common practice since the inception of the program. In 1977, Congress enacted the Community Reinvestment Act (CRA) as part of the Housing and Community Development Act of 1974 ( P.L. 95-128 ). The CRA affirms that federally insured depository institutions have an obligation to meet the credit needs of the communities in which they are chartered and accept deposits, consistent with financial safety and soundness considerations, and requires federal banking regulators to assess the extent to which banks are meeting those needs. The enactment of the CRA grew out of concern that banking deposits were funding lending activities across the country at the expense of providing credit in certain areas where deposits were collected, thereby contributing to neighborhood disinvestment. Rethinking the Strategy: The Shift from Construction Subsidies to Rent Subsidies By the early 1970s, concern was growing about the cost, efficacy, and equity of the construction-based housing subsidy programs, such as the Section 236 and public housing programs. Multiple series of pilot programs were launched to test the cost-effectiveness of supply-side (construction) subsidies versus demand-side (rental assistance) subsides. President Richard M. Nixon criticized the existing programs as not equitably serving families in the same circumstances, providing poor quality housing, being too costly, and placing some families in homes they could not afford. Based on these concerns, President Nixon declared a moratorium on all new activity under the major housing subsidy programs—except for the Section 23 leased-housing program—that began in January 1973. Assisted housing activity slowly restarted in response to lawsuits and new legislation. The Housing Act of 1974 ( P.L. 93-383 ) was the first omnibus housing legislation since 1968 and the first such legislation following the Nixon moratorium. The act created a new low-income rental assistance program, referred to as Section 8. Although the 1960s had seen rental assistance programs like Rent Supplement and Section 23, the scale of the Section 8 program made it the first comprehensive rental assistance program. The Section 8 program combined features of the Section 236 program, which was popular with advocates of construction-based subsidies, and the Section 23 leased-housing program, which used the existing housing stock and was popular with the Nixon Administration. Through Section 8, the federal government provided private property owners monthly assistance payments for new or substantially rehabilitated rental units. In exchange for monthly rental payments, property owners agreed to rent to eligible low-income families (defined as families with incomes at or below 80% of local area median income), who would pay an income-based rent. It also provided PHAs with the authority to enter into rental assistance contracts for existing, private market units that met certain quality standards. Over time, the use of Section 8 in new construction and substantial rehabilitation projects was found to be more expensive than its use in existing housing. The Housing and Urban-Rural Recovery Act of 1983 ( P.L. 98-181 ) repealed HUD's authority to enter into new Section 8 contracts tied to new construction and substantial rehabilitation, but retained HUD's authority to issue new contracts for existing properties. The act also created a new demonstration program to test a modified use of Section 8, referred to as vouchers. Vouchers were similar to the use of Section 8 rent subsidies in existing housing, but they provided more flexibility to PHAs, particularly by permitting families to pay more than 30% of their incomes in rent. The demonstration was made permanent in 1985. The Increasing Role of State and Local Governments By the mid-1980s, federal housing programs had gone through a number of iterations. Some programs had been scrapped as inefficient, subject to fraud and abuse, or too expensive. Shifting federal priorities—toward reducing taxes and increasing military spending in response to the Cold War—reduced funding available for social programs, including housing assistance. Creation of assisted housing with federal funds was on the decline, with production slowing significantly between 1982 and 1988. In addition, existing affordable rental units were being lost as use restrictions between private owners and HUD expired or as owners chose to prepay their low-interest mortgages and begin charging market-rate rent. As a result of reduced federal support for housing, state and local governments and private for-profit or nonprofit organizations began to take the initiative in developing innovative ways of providing housing in their communities. Policymakers acknowledged that, in some cases, local communities had better knowledge about how to provide housing than the federal government, and might be able to provide housing more efficiently than HUD. From the late 1980s through the 1990s, Congress acknowledged the value of local control and gave more decisionmaking authority over housing policy to state and local governments through the creation of block grants and tax credits. In 1986, the Low Income Housing Tax Credit (LIHTC) program was created as part of the Tax Reform Act of 1986 ( P.L. 99-514 ). The LIHTC was not initially part of the bill that became the Tax Reform Act ( H.R. 3838 ). However, because portions of H.R. 3838 eliminated the favorable treatment of real estate investment income, Members added the LIHTC program to the bill to ensure that developers would have an incentive to continue to construct low- and moderate-income housing. The LIHTC, intentionally or not, was one of the first major programs to give a good deal of control over federal funding for housing to states. Tax credits are allocated to states based on population, and states have discretion in setting priorities as to how the credits will be used. While states must prioritize projects that serve the lowest-income tenants for the longest period of time, they may choose to allocate credits based on criteria such as the tenant populations served (e.g., those with special needs, families with children, or those on public housing waiting lists). Just one year after enactment of the LIHTC, Congress passed the Stewart B. McKinney Homeless Assistance Act ( P.L. 100-77 ), which included funding for several grants that states and localities could use to assist people experiencing homelessness. Grants were available for permanent and transitional housing, as well as supportive services, with the idea that localities are in a better position to know how to serve the people living in their communities. In 1990, Congress created another large, flexible block grant to states and localities. The National Affordable Housing Act of 1990 (NAHA, P.L. 101-625 ) authorized the HOME Investment Partnerships program. HOME was modeled after an earlier block grant, the Community Development Block Grant (CDBG), which was created as part of the Housing Act of 1974 to consolidate several special purpose grants funding many activities other than housing, such as neighborhood revitalization, open space, and water and sewer grants. NAHA directed that HOME funds be allocated to states and localities based on a formula and that funds be targeted to assist families with incomes at or below 80% of area median income (or lower in some cases). Recipient jurisdictions were permitted to use funds to assist homebuyers and homeowners, construct rental housing, and provide rental assistance, and they were required to establish plans for spending their funds, meet matching requirements, and partner with local nonprofits. The Native American Housing Assistance and Self-Determination Act of 1996 (NAHASDA, P.L. 104-330 ) reorganized the system of federal housing assistance to Native Americans by eliminating several separate programs of assistance and replacing them with a single block grant program. In addition to simplifying the process of providing housing assistance, a purpose of NAHASDA was to provide federal assistance for Indian tribes in a manner that recognizes the right of Indian self-determination and tribal self-governance. Reforming Rental Assistance Throughout the 1990s, concern about the state of public housing grew. The public perceived public housing to be mismanaged, of poor quality, and dangerous. At the same time, interest was growing in reforming social programs by devolving control to the states and increasing the programs' focus on promoting work and self-sufficiency. Concern over the condition of public housing—and the influence of the 1996 welfare reform debate and legislation—led to proposals for major public and assisted housing reforms. Several years of debate in Congress culminated with the enactment of the Quality Housing and Work Responsibility Act of 1998 (QHWRA; P.L. 105-276 ). The purposes of QHWRA, as defined in the act, were to deregulate PHAs, provide PHAs with more flexibility in their use of federal assistance, facilitate mixed income communities, decrease concentrations of poverty in public housing, increase accountability and reward effective management of PHAs, create incentives and economic opportunities for residents assisted by PHAs to work and become self-sufficient, consolidate the Section 8 voucher and certificate programs into a single market-driven program, remedy the problems of troubled PHAs, and replace or revitalize severely distressed public housing projects. Specific reforms in QHWRA included increased income targeting in the voucher program, removal of federal preference categories for housing assistance, enactment of a limited community service requirement in public housing, creation of the Section 8 Housing Choice Voucher program (a hybrid of the Section 8 voucher and certificate programs), authorization of the HOPE VI program, consolidation and reform of funding for public housing, and modifications to the assessment systems for PHAs. QHWRA also featured the so-called "Faircloth Amendment," which prohibited the use of public housing funding for the development of any net new units of public housing. The Decline of Public Housing and Aftermath of the Financial Crisis In the 10 years following passage of QHWRA, the number of public housing units declined by more than 10%. This is attributable to a number of policy changes, many of which were contained in QHWRA, including the Faircloth Amendment limiting development of new public housing, the growth of HOPE VI paired with the removal of a requirement for one-for-one replacement of demolished units, and an increased focus on mixed finance redevelopment of public housing. The pace of decline in the overall number of public housing units increased again with the introduction of the Rental Assistance Demonstration in 2012 ( P.L. 112-55 ). RAD allows PHAs to remove their properties from the public housing program and instead receive a form of Section 8 rental assistance. As the program is currently authorized, HUD is authorized to approve the conversion of nearly half of the remaining public housing stock to Section 8 rent assistance. Another important development in housing policy in more recent years was the 2007 financial crisis and its aftermath. The financial crisis itself was precipitated in large part by mortgage lending practices and its aftermath was felt heavily in housing markets as home prices fell, foreclosures rose, and the homeownership rate dropped significantly. This led to a variety of policy responses addressing both the perceived causes and the effects of the housing and financial market turmoil. For example, major reforms enacted in 2008 resulted in federal conservatorship for two housing government-sponsored enterprises (Fannie Mae and Freddie Mac) that continues today. Congress and both the George W. Bush and Obama Administrations created several temporary programs to address rising foreclosure rates. The recession that accompanied the financial market turmoil prompted Congress and President Obama to enact an economic stimulus package in 2009 that included a significant one-time increase in resources for, among other things, several federal housing programs (including public housing, CDBG, and grants for LIHTC projects). In 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act ( P.L. 111-203 ) instituted new rules related to mortgages intended to protect consumers and the financial system from some of the lending practices that preceded the financial crisis, among other reforms. In the ensuing years, there has been ongoing debate about the effects of some of these policy responses as well as the appropriate role of the government in providing support for homeownership and the housing finance system more generally. Today's Housing Assistance Programs Today's system for providing housing assistance to low-income families is made up of programs that fall into three main categories: rental housing assistance, federal assistance to state and local governments, and housing finance and homeownership assistance. These categories are not necessarily mutually exclusive. For example, some assistance provided to states and local governments can in turn be used to provide various types of housing finance or homeownership assistance. Rental assistance is provided primarily through rent vouchers that families can use in the private market; below-market rental units owned by PHAs or private landlords under contract with the federal government; and, to a limited extent, construction of new below-market rental units. Assistance to state and local governments comes in several forms, including broad, flexible block grants that can be used for rental, homeownership, or community development purposes; special purpose block grants; and programs based in the tax system. Housing finance and homeownership assistance can include direct assistance to defray home buying costs, tax incentives, and mortgage insurance programs to help provide incentives for the private market to meet the needs of underserved segments of the population. Such assistance may help finance single-family housing, which can assist eligible homebuyers in obtaining mortgages to purchase homes, or multifamily housing, which can assist housing developers in obtaining financing to develop affordable rental housing. This section provides a description of the major housing assistance programs that fall into the three aforementioned categories. Rental Housing Assistance Section 8 Housing Choice Vouchers Section 8 Housing Choice Vouchers (vouchers) are a form of tenant-based rental assistance funded by the federal government, administered locally by quasi-governmental PHAs, and provided to private landlords on behalf of low-income families. (The program is codified at 42 U.S.C. §1437f(o)). Generally, an eligible family with a voucher lives in the housing of its choice in the private market (assuming the unit meets program standards and the landlord is willing to participate in the program) and the voucher pays the difference between the family's contribution toward rent and the actual rent for the unit. Specifically, a family pays 30% of its adjusted income toward rent (although it can choose to pay more) and the PHA, which receives funding from HUD, makes payments to the landlord based on a maximum subsidy set by the PHA (based on the local fair market rent established by HUD), less the tenant's contribution. Families are eligible to receive vouchers if they are very low-income (earning 50% or less of the local area median income) or low-income (earning 80% or less of the local area median income) and meet other special criteria (for example, are elderly or have disabilities). However, PHAs must provide 75% of all vouchers available in a year to extremely low-income families (earning 30% or less of the greater of area median income or the poverty guidelines). Vouchers are nationally portable; once a family receives a voucher, it can take that voucher and move to any part of the country where a voucher program is being administered. There are several special forms of Section 8 vouchers. Tenant protection vouchers are provided to families who are being displaced from other HUD programs. Some tenant protection vouchers, called enhanced vouchers, can have higher values than regular vouchers. PHAs also have the discretion to "project-base" some of their vouchers. Project-based vouchers are attached to specific housing units rather than given to families to use in homes of their choosing. Another special form is the homeownership voucher; PHAs have the discretion to allow eligible first-time homebuyers to use their vouchers to make monthly mortgage payments. (For more information, see CRS Report RL32284, An Overview of the Section 8 Housing Programs: Housing Choice Vouchers and Project-Based Rental Assistance , by Maggie McCarty.) The voucher program is not an entitlement program. Families that wish to receive vouchers must generally apply to their local PHA and are placed on a waiting list, the length of which varies by community and can range from several months to many years. Congress has authorized and funded roughly 2 million vouchers. The funding for them is provided annually by Congress in the appropriations for HUD. The Section 8 voucher program is the largest of HUD's rental assistance programs, serving the largest number of households and accounting, in recent years, for more than one-third of the department's budget. Congress has generally renewed all existing vouchers each year; in some years, Congress also creates new vouchers to serve additional families, referred to as incremental vouchers. The current distribution of vouchers across PHAs results from a variety of allocation methods used in the past: formula-based, competitive, and other methods. While the distribution of funding to PHAs is generally based on the number of vouchers that they have and the cost of those vouchers, the exact distribution formula has often been modified by Congress in the appropriations process. Project-Based Section 8 Rental Assistance Under the project-based Section 8 rental assistance program, HUD entered into contracts with private property owners under which owners agreed to rent their housing units to eligible low-income tenants for an income-based rent, and HUD agreed to pay the difference between tenants' contributions and a rent set by HUD. Families are eligible to live in project-based Section 8 units if they are low-income (having income at or below 80% of the area median income), but 40% of units made available each year must be reserved for extremely low-income families (those with income at or below 30% of the area median income). No new project-based Section 8 contracts with private landlords have been awarded since the mid-1980s, although existing contracts can be renewed upon their expiration. Roughly 1 million project-based units are still under contract and receive assistance. The original contracts were for 10- to 40-year periods and were provided with multiyear funding from Congress for the length of the contracts. Therefore, each year Congress only has to provide new funding for those contracts that have expired and require annual renewal (although, eventually, all of those long-term contracts will expire so all contracts will require annual funding). (See Table 1 for appropriations information.) Not all contracts are renewed, so there has been a loss of project-based Section 8 units over time. When owners do not renew, tenants are provided with Section 8 tenant protection vouchers. For more information, see CRS Report RL32284, An Overview of the Section 8 Housing Programs: Housing Choice Vouchers and Project-Based Rental Assistance , by Maggie McCarty. Public Housing Low-rent public housing developments are owned and operated by local public housing authorities (PHAs) and subsidized and regulated by the federal government. (The program is codified at 42 U.S.C. §1437.) Generally, families are eligible to live in public housing if they are low-income (earning at or below 80% of area median income), but 40% of public housing units that become available in a year must be given to families that are extremely low-income (earning at or below the greater of 30% of area median income or the federal poverty guidelines). As in the two Section 8 programs, families living in public housing pay 30% of their adjusted income toward rent. PHAs receive several streams of funding from HUD to help make up the difference between what tenants pay in rent and what it costs to maintain public housing. PHAs receive operating funds and capital funds through a formula allocation process; operating funds are used for management, administration, and the day-to-day costs of running a housing development, and capital funds are used for modernization needs (such as replacing a roof or heating and cooling system, or reconfiguring units). PHAs can also apply for competitive Choice Neighborhoods revitalization grants (which replaced the HOPE VI program), which are used to demolish and rebuild, or substantially rehabilitate, severely distressed public housing, replacing it with mixed-income housing. There are roughly 1 million public housing units under contract with the federal government, making public housing the second-largest direct housing assistance program. The 1998 Public Housing Reform Act ( P.L. 105-276 ) prohibited PHAs from increasing the total number of public housing units in their inventories; however, the number of public housing units had begun to decline steadily before then for a number of reasons. PHAs are authorized to demolish or sell their public housing developments with HUD's permission, and since the mid-1990s they have not been required to replace those units with new units (although they must provide displaced families with Section 8 vouchers). The 1998 act also provided authority to allow, and in some cases require, PHAs to convert their public housing units to the voucher program. Also, the HOPE VI program has contributed to the demolition of more units than it has replaced. Most recently, the Rental Assistance Demonstration (RAD) authorizes up to nearly half of the current public housing stock to leave the program via conversion to Section 8. (For more information about public housing, see CRS Report R41654, Introduction to Public Housing , by Maggie McCarty.) Section 202 Supportive Housing for the Elderly Program and the Section 811 Supportive Housing for Persons with Disabilities Program Through the Section 202 Supportive Housing for the Elderly program, HUD provides funds to nonprofit organizations that in turn build rental properties for low-income elderly households (those where one or more persons are age 62 or older). It was created as part of the Housing Act of 1959 (P.L. 86-372). (The program is codified at 12 U.S.C. §1701q.) Section 202 is the only federal housing program that funds housing exclusively for elderly persons, although from approximately 1964 to 1990 non-elderly persons with disabilities were eligible for residency in Section 202 properties. Although the Section 202 program initially provided low-interest loans to nonprofit developers, since the early 1990s the program has provided nonprofit developers with capital grants, together with project rental assistance contracts (rental assistance that is similar to project-based Section 8). The current version of the Section 202 program serves very low-income elderly households (those with incomes at or below 50% of area median income). (For more information about the Section 202 program, see CRS Report RL33508, Section 202 and Other HUD Rental Housing Programs for Low-Income Elderly Residents , by Libby Perl.) The Section 811 Supportive Housing for Persons with Disabilities Program was created in 1990 as part of the Cranston-Gonzalez National Affordable Housing Act ( P.L. 101-625 ). (The program is codified at 42 U.S.C. §8013.) Until the enactment of Section 811, the Section 202 program provided housing for persons with disabilities. Through Section 811, HUD provides capital grants to nonprofit organizations to create rental housing that is affordable to very low-income households (income at or below 50% of AMI) with an adult who has a disability. The program also funds project rental assistance contracts to subsidize the rent paid by tenants. Housing built with capital grants may include group homes, independent living facilities, multifamily rental units, condominium units, and cooperative housing. Section 811 developers must provide supportive services to those residing in the units. In addition, through FY2010 the Section 811 program created tenant-based rental assistance, sometimes called "mainstream vouchers," that tenants could use to find housing in the private market, much like Section 8 vouchers. However, since FY2011 (based on a law enacted in 2010 [ P.L. 111-374 ]), Section 811 tenant-based assistance has been funded via the Section 8 account. Also as part of P.L. 111-374 , Section 811 rental assistance funds were made available to be used in conjunction with capital funding from other sources (such as LIHTC and HOME funds). (For more information about the Section 811 program, see CRS Report RL34728, Section 811 and Other HUD Housing Programs for Persons with Disabilities , by Libby Perl.) Other Rent-Restricted Units The Section 236 program was an initiative to encourage private developers to create housing affordable to low- and moderate-income households. It was created as part of the Housing and Urban Development Act of 1968 (P.L. 90-448), and was active in promoting new development from approximately 1969 to 1973. (The program is codified at 12 U.S.C. §1715z-1.) The Section 236 program provided mortgage insurance to housing developers for the construction and rehabilitation of rental housing, and it continues to provide mortgage subsidies to building owners through a mechanism called Interest Reduction Payments (IRPs). IRPs are subsidies to owners that ensure they will only pay 1% interest on their mortgages. Given the reduced financing costs, owners can charge below-market rents for Section 236 units. Many units also receive rental assistance payments through the project-based Section 8 rental assistance program, Rent Supplement program, or Rental Assistance Payments (RAP) program, making the units affordable to very low-income and extremely low-income families. The Section 221(d)(3) Below Market Interest Rate (BMIR) program was another HUD program that encouraged private developers to create affordable housing by offering FHA-insured loans with interest rates of 3%. It was enacted as part of the Housing Act of 1961 (P.L. 87-70) and actively insured new loans until 1968, when the Section 236 program replaced it as a vehicle for affordable housing development. (The Section 221(d)(3) program is codified at 12 U.S.C. §1715 l .) Like Section 236, units created under this program are offered for below-market rents and may also receive rental assistance. Department of Agriculture Rural Rental Housing Programs Title V of the Housing Act of 1949 authorized the U.S. Department of Agriculture (USDA) to make loans to farmers to enable them to construct, improve, repair, or replace dwellings and other farm buildings to provide decent, safe, and sanitary living conditions for themselves and their tenants, lessees, sharecroppers, and laborers. USDA was authorized to make grants, or combinations of loans and grants, to those farmers who could not qualify to repay the full amount of a loan but needed the funds to make their dwellings sanitary or to remove health hazards to the occupants or the community. Although the act was initially targeted to farmers, over time it has been amended to enable USDA to make housing loans and grants to rural residents in general. The USDA housing programs are generally referred to by the section number under which they are authorized in the Housing Act of 1949, as amended. Under the Section 515 program, the Rural Housing Service of the USDA is authorized to make direct loans for the construction of rural rental and cooperative housing. (The program is codified at 42 U.S.C. §1485.) The loans are made at a 1% interest rate and are repayable in 50 years. Except for public agencies, all borrowers must demonstrate that financial assistance from other sources is not enough to enable the borrower to provide the housing at terms that are affordable to the target population. Under the Section 538 program, USDA guarantees loans made by private lenders to developers of affordable rural rental housing for low- and moderate-income households. (The program is codified at 42 U.S.C. §1490p-2.) Under the Section 521 program, rental assistance payments, which are made directly to owners of rental properties, make up the difference between the tenants' rent payments (30% of tenant income) and the USDA-approved rent for the Section 515 units. (The Section 521 program is codified at 42 U.S.C. §1490a.) Owners must agree to operate the property on a limited profit or nonprofit basis. (For more information about rural housing assistance programs, see CRS Report RL31837, An Overview of USDA Rural Development Programs , by Tadlock Cowan.) Funding for States and Localities Low Income Housing Tax Credit The LIHTC was enacted as part of the Tax Reform Act of 1986 ( P.L. 99-514 ) and provides incentives for the development of affordable rental housing through federal tax credits administered through the Internal Revenue Service. (The program is codified at 26 U.S.C. §42.) The tax credits are disbursed to state housing finance agencies (HFAs) based on population. HFAs, in turn, award the credits to housing developers that agree to build or rehabilitate housing in which a certain percentage of units will be affordable to low-income households. Housing developers then sell the credits to investors and use the proceeds to help finance the housing developments. The benefit of the tax credits to the purchasing investors is that they reduce the investor's federal income tax liability annually over a 10-year period. Because tax credits reduce the amount of private financing required to build or rehabilitate housing, the owners of developments financed through tax credits are able to charge lower rents. To qualify for the tax credits, one of three criteria must be met: at least 20% of units in a development must be occupied by households with incomes at or below 50% of area median income; at least 40% of units must be occupied by households with incomes at or below 60% of area median income; or, more recently, properties have been allowed to adopt an "income-averaging" approach that enables them to serve a mix of higher-income families if they also serve lower-income families, as long as it results in an average of 40% of units being occupied by households with incomes that average 60% or below of area median income. Rent charged for the rent-restricted units in a development may not exceed 30% of an imputed income limitation—calculated based on area median incomes. Units financed with tax credits must remain affordable for at least 15 years, although states may choose to adopt longer use restrictions. As of 2018, more than 2.3 million units had been placed in service using LIHTCs. In FY2018, the Joint Committee on Taxation estimated that the LIHTC would result in a $9 billion tax expenditure. (For more information about the LIHTC, see CRS Report RS22389, An Introduction to the Low-Income Housing Tax Credit , by Mark P. Keightley.) Mortgage Revenue Bonds The federal government authorizes state and local governments to issue private activity bonds, up to a certain limit, which are exempt from federal taxes. One form of a private activity bond is a mortgage revenue bond (MRB). (MRBs are codified at 26 U.S.C. §143.) State or local governments—or their authorized agencies, such as housing finance agencies—sell MRBs to investors. Because the interest earned by bondholders is exempt from federal (and sometimes state) taxation, the bonds can be marketed at lower interest rates than would be required for similar taxable instruments. The proceeds of the bond sales, less issuance costs and reserves, are used to finance home mortgages to eligible (generally first-time) homebuyers. In effect, the tax exemption on the bonds provides an interest rate subsidy to homebuyers. To qualify for the benefit, a borrower must not have been a homeowner in the past three years, the mortgage must be for the principal residence of the borrower, the purchase price may not exceed 90% (110% in targeted areas) of the average purchase price in the area, and the income of the borrower may not exceed 110% (140% in targeted areas) of the median income for the area. In FY2018, the Joint Committee on Taxation estimated that MRBs would result in a $1.3 billion tax expenditure. Community Development Block Grants The Community Development Block Grant (CDBG) program was enacted as part of the Housing and Community Development Act of 1974 ( P.L. 93-383 ), and is administered by HUD. (The program is codified at 42 U.S.C. §§5301-5321.) Its purpose is to develop viable urban communities by providing decent housing, a suitable living environment, and expanding economic opportunities primarily for low- and moderate-income persons. The CDBG program distributes 70% of total funds through formula grants to entitlement communities—central cities of metropolitan areas, cities with populations of 50,000 or more, and urban counties—and the remaining 30% goes to states for use in small, non-entitlement communities. Recipient communities may use CDBG funds for a variety of activities, although at least 70% of funds must be used to benefit low- and moderate-income persons. Eligible activities include the acquisition and rehabilitation of property for purposes such as public works, urban beautification, and historic preservation; the demolition of blighted properties; services such as crime prevention, child care, drug abuse counseling, education, or recreation; neighborhood economic development projects; the rehabilitation or development of housing; and housing counseling services. Beyond CDBG's annual appropriations, Congress has used the program's framework to provide additional, supplemental, and special appropriations to assist states and communities in responding to various economic crises and manmade and natural disasters. (For more information about CDBG, see CRS Report R43394, Community Development Block Grants: Recent Funding History , by Eugene Boyd.) HOME Block Grants The HOME Investment Partnerships Program is a housing block grant program administered by HUD and designed to expand the supply of decent, safe, sanitary, and affordable housing. (The program is codified at 42 U.S.C. §§12741 et seq.) HOME funding is allocated via formula: 60% of funds are awarded to "participating jurisdictions" (localities that have populations above a certain threshold and qualify for a certain amount of funding under the formula), and 40% are awarded to states. HOME grantees must match 25% of their HOME grants (with some exceptions) and submit a plan to HUD detailing their community housing needs and priorities. HOME funds can be used for four main purposes: rehabilitation of owner-occupied housing, homebuyer assistance, rental housing construction and rehabilitation, and the provision of tenant-based rental assistance. All HOME funds must be used to benefit low-income families (those with incomes at or below 80% of area median income), and at least 90% of funds used for rental housing activities or tenant-based rental assistance must be used to benefit families with incomes at or below 60% of area median income. (For more information about HOME, see CRS Report R40118, An Overview of the HOME Investment Partnerships Program , by Katie Jones.) Housing Trust Fund The Housing Trust Fund (HTF) was created in the Housing and Economic Recovery Act of 2008 (HERA, P.L. 110-289 ). It is a block grant administered by HUD that is targeted primarily toward the development of rental housing for the lowest-income households. (The program is codified at 12 U.S.C. §4568.) HTF funds are allocated to states via formula. HTF funds are to be used primarily for rental housing; however, by statute up to 10% of funds can be used for certain homeownership activities for eligible first-time homebuyers. Furthermore, all HTF funds must benefit households that are at least very low-income, and at least 75% of the funds used for rental housing must benefit extremely low-income households (or households with incomes at or below the poverty line). While the HTF is similar to the HOME program in some ways, it is more explicitly focused on rental housing and has deeper income targeting requirements than HOME. The HTF is funded through contributions from the government-sponsored enterprises Fannie Mae and Freddie Mac rather than through appropriations. Although the HTF was created in 2008, due to concerns about Fannie Mae's and Freddie Mac's financial situations, the first contributions were not provided to the HTF until 2016. (For more information about the Housing Trust Fund, see CRS Report R40781, The Housing Trust Fund: Background and Issues , by Katie Jones.) Homeless Assistance Grants The Homeless Assistance Grants were established in 1987 as part of the Stewart B. McKinney Homeless Assistance Act ( P.L. 100-77 ). They are administered by HUD and fund housing and services for homeless persons. The grants have gone through several permutations since their enactment, with the most recent change taking place when they were reauthorized in the 111 th Congress by the Homeless Emergency Assistance and Rapid Transition to Housing (HEARTH) Act, enacted as part of the Helping Families Save Their Homes Act ( P.L. 111-22 ). (The Homeless Assistance Grants are codified at 42 U.S.C. §11360, et seq.) The Homeless Assistance Grants consist of the Emergency Solutions Grants (ESG) program, Continuum of Care (CoC) program, and Rural Housing Stability (RHS) program. ESG funds are distributed to local communities and states by formula and may be used by grantees in two categories: (1) emergency shelter and related services and (2) homelessness prevention and rapid rehousing. The statute limits use of funds in the first category to the greater of 60% of a state or local government's ESG allocation or the amount the recipient spent for these purposes in the year prior to the effective date of the HEARTH Act. CoC program funds, distributed to nonprofit organizations, public housing agencies, and state and local governments via a competition, may be used for transitional housing, permanent supportive housing, rapid rehousing, supportive services, and Homeless Management Information Systems. The RHS program has not been implemented, but would allow rural grantees to assist people who are experiencing homelessness in the same ways as the CoC program. The statute would also allow RHS funds to be used for homelessness prevention activities, relocation assistance, short-term emergency housing, and home repairs that are necessary to make housing habitable. (For more information about the Homeless Assistance Grants, see CRS Report RL33764, The HUD Homeless Assistance Grants: Programs Authorized by the HEARTH Act , by Libby Perl.) Housing Opportunities for Persons with AIDS The Housing Opportunities for Persons with AIDS (HOPWA) program is the only federal program that provides funding specifically for housing for persons with acquired immunodeficiency syndrome (AIDS) and related illnesses. Congress established the program as part of the Cranston-Gonzalez National Affordable Housing Act ( P.L. 101-625 ) in 1990. (The program is codified at 42 U.S.C. §§12901-12912.) HOPWA program funding is distributed both by formula allocations and competitive grants. HUD awards 90% of appropriated funds by formula to states and eligible metropolitan statistical areas (MSAs) that meet thresholds regarding population, AIDS cases, and AIDS incidence. Recipient states and MSAs may allocate grants to nonprofit organizations or administer the funds through government agencies. HOPWA grantees may use funds for a wide range of housing, social services, program planning, and development costs. (For more information about HOPWA, see CRS Report RL34318, Housing for Persons Living with HIV/AIDS , by Libby Perl.) NAHASDA The Native American Housing Assistance and Self-Determination Act of 1996 (NAHASDA, P.L. 104-330 ), reorganized the system of federal housing assistance to Native Americans by separating Native American programs from the public housing program, and by eliminating several separate programs of assistance and replacing them with a single block grant program. In addition to simplifying the process of providing housing assistance, a purpose of NAHASDA was to provide federal assistance for Indian tribes in a manner that recognizes the right of Indian self-determination and tribal self-governance. The act provides block grants to Indian tribes or their tribally designated housing entities (TDHEs) to use for a wide range of affordable housing activities through the Native American Housing Block Grant (NAHBG) program. The tribe must submit an Indian housing plan (IHP), which is reviewed by HUD for compliance with statutory and regulatory requirements. Funding is provided under a need-based formula, which was developed pursuant to negotiated rulemaking between tribal representatives and HUD. Tribes and TDHEs can leverage funds, within certain limits, by using future grants as collateral to obtain private loans for affordable housing activities under the Title VI Loan Guarantee Program. (For more information about NAHASDA, see CRS Report R43307, The Native American Housing Assistance and Self-Determination Act of 1996 (NAHASDA): Background and Funding , by Katie Jones.) Housing Finance and Homeownership Assistance Federal Housing Administration The Federal Housing Administration (FHA) was established by the National Housing Act of 1934 (P.L. 73-479). Today, it is an agency within HUD that insures private lenders against losses on certain home mortgages. Because lenders are insured against loss if borrowers default, they are more willing to make loans to borrowers who might not otherwise be served by the private market, particularly those with low down payments or little credit history. FHA-insured borrowers pay insurance premiums to FHA and mortgages are subject to certain requirements, such as limits on the size of the loan. FHA administers a variety of both single-family and multifamily mortgage insurance products. Single-family products include insurance for home purchase, refinance, and home improvement loans, as well as reverse mortgages to allow the elderly to access equity in their homes. Multifamily products include insurance for loans for the purchase, repair, or construction of apartments, hospitals, and nursing homes. These products are administered through two primary program accounts—the Mutual Mortgage Insurance Fund account (MMI Fund) and the General Insurance/Special Risk Insurance Fund account (GI/SRI Fund). The MMI Fund provides financial backing for insurance on single-family mortgages. The GI/SRI Fund backs insurance for mortgages on multifamily buildings, hospitals and nursing homes, and for an assortment of special purpose loans such as manufactured housing loans and home improvement loans. While FHA insures a variety of different types of mortgages, its single-family home mortgage program is by far its largest. FHA insures mortgages for both home purchases and refinances, but it tends to make up a larger share of the home purchase market than the refinance market (FHA's market share fluctuates depending on economic conditions and other factors). FHA's share of the home purchase market averaged about 14% from the mid-1990s until the early 2000s, but fell to 5% by 2005 as other types of mortgage credit (including subprime mortgages) became more easily available. It then increased dramatically after 2007, reaching a high of 33% in 2009, as the housing market experienced turmoil, mortgage credit standards tightened, and FHA insured a larger number of mortgages in what had become a smaller mortgage market overall. FHA's share has decreased since its peak, but at 20% in 2017 it remains higher than it was in the years preceding the housing market turmoil. (For more information on FHA, see CRS Report RS20530, FHA-Insured Home Loans: An Overview , by Katie Jones.) Department of Veterans Affairs Loan Guarantees The Servicemen's Readjustment Act of 1944 (P.L. 78-346) established the home loan guaranty program, which is administered by the Department of Veterans Affairs (VA). (The program is codified at 38 U.S.C. §3710 et seq.) The VA loan guaranty came about as a less expensive alternative to a cash bonus for veterans returning from World War II that would still provide benefits to veterans. The loan guaranty program assists veterans by insuring mortgages made by private lenders, and it is available for the purchase or construction of homes and for refinancing existing loans. The loan guaranty has expanded over the years so that it is available to (1) all veterans who fulfill specific duration of service requirements or who were released from active duty due to service-connected disabilities, (2) members of the reserves who completed at least six years of service, and (3) spouses of veterans who died in action, died of service-connected disabilities, or died while receiving (or while being entitled to receive) benefits for certain service-connected disabilities. Under the loan guaranty, the VA agrees to reimburse lenders for a portion of losses if borrowers default. Unlike the FHA insurance program, the VA does not insure 100% of the loan; instead, the percentage of the loan that is guaranteed is based on the loan amount, and is typically about 25% of the loan. As shown in Table 11 , the total number of VA-insured purchase loans originated per year as a share of all home purchase mortgages has increased from 2% in FY2005 through FY2007 to 9% in FY2017. (For more information on VA home loans, see CRS Report R42504, VA Housing: Guaranteed Loans, Direct Loans, and Specially Adapted Housing Grants , by Libby Perl.) Department of Agriculture Rural Homeownership Programs USDA's Rural Housing Service administers a number of loan programs to assist with the financing of both owner-occupied housing and rental housing in rural areas. It also administers some grant programs for purposes such as home repairs. Through the Section 502 Rural Housing Loan program, USDA is authorized both to make direct loans and to guarantee private loans to very low- to moderate-income rural residents for the purchase or repair of new or existing single-family homes. (The program is codified at 42 U.S.C. §1472.) The direct loans have a 33-year term and interest rates may be as low as 1%. Borrowers in rural areas with incomes at or below 80% of area median income qualify for the direct loans. The guaranteed loans have 30-year terms, and borrowers in rural areas with incomes at or below 115% of the area median qualify. Priority for both direct and guaranteed loans is given to first-time homebuyers, and USDA may require that borrowers complete a homeownership counseling program. Through the Section 504 program, USDA makes loans and grants to very low-income homeowners (those with incomes at or below 50% of area median income) for home repairs or improvements, or to remove health and safety hazards. (The program is codified at 42 U.S.C. §1474.) The Section 504 grants may be available to homeowners who are age 62 or older. Depending on the cost of the repairs and the income of the elderly homeowner, the owner may be eligible either for a grant that would cover the full cost, or for some combination of a loan and grant. To qualify for a grant, the elderly homeowner must be unable to repay the full cost of the repairs. In FY2017, USDA provided about 3,400 Section 504 loans for a total of about $20 million and about 4,800 grants for a total of about $29 million. (For more information about rural housing programs, see CRS Report RL31837, An Overview of USDA Rural Development Programs , by Tadlock Cowan.) Federal Home Loan Banks' Affordable Housing and Community Investment Programs The Federal Home Loan Banks (FHLB; the Banks) were created in 1932 by the Federal Home Loan Bank Act (P.L. 72-304) to serve as lenders to savings and loan associations, which at the time made the majority of home mortgage loans. The Banks were established to ensure the liquidity of these associations, and today lend money to commercial banks, credit unions, and insurance companies in addition to savings and loan associations. The FHLB System includes eleven regional wholesale Banks and an Office of Finance. Each Bank is a separate legal entity, cooperatively owned by its member financial institutions, and has its own management, employees, and board of directors. Each Bank is assigned a distinct geographic area. The FHLB System is a government-sponsored enterprise (GSE). As a GSE, a Bank receives certain privileges, such as an exemption from particular taxes, to assist it in carrying out its mission, and it is also required to engage in required activities to support affordable housing. Each of the Banks is required annually to contribute 10% of its net income toward an Affordable Housing Program (AHP). (The program is codified at 12 U.S.C. §1430. Regulations are at 12 C.F.R. Part 1291.) Through the AHP, the Banks provide grants and subsidized loans for rental and owner-occupied housing for very low- and low-income households. Each Bank may set aside up to the greater of 35% of its AHP funds or $4.5 million per year to help low- and moderate-income households purchase homes by providing grants for down payment or closing cost assistance or other costs related to buying or rehabilitating a home. At least one-third of the amount set aside for homeownership assistance must be used for first-time homebuyers or rehabilitation of owner-occupied housing, with a maximum per-household grant amount that may be adjusted annually to account for changes in home prices. Each of the Banks also operates a Community Investment Program (CIP). (The program is codified at 12 U.S.C. §1430. Regulations are at 12 C.F.R. Part 952.) Through the CIP, the Banks offer advances to member financial institutions at discounted interest rates to fund rental and owner-occupied housing for households at or below 115% of area median income, as well as other community development activities. Capital Magnet Fund The Capital Magnet Fund (CMF) was created in the Housing and Economic Recovery Act of 2008 (HERA, P.L. 110-289 ) and is administered by the Department of the Treasury's Community Development Financial Institutions (CDFI) Fund. (The program is codified at 12 U.S.C. §4569.) The CMF provides competitive grant funds to CDFIs or eligible nonprofit organizations to use to finance affordable housing and certain related community development activities. CMF funds can be used for either rental housing or homeownership, but they must primarily benefit low-income households. The CMF is meant to leverage other sources of funding, and eligible activities are supposed to leverage at least 10 times the CMF award amount from other sources. Eligible forms of assistance that grantees can provide with CMF funds include capitalizing loan loss reserves or revolving loan funds and providing risk-sharing loans or loan guarantees, among other things. Like the Housing Trust Fund, described earlier in this report, the CMF is funded through contributions from the government-sponsored enterprises Fannie Mae and Freddie Mac rather than through appropriations. Although the CMF was created in 2008, the first contributions were not transferred to it until 2016 due to concerns about Fannie Mae's and Freddie Mac's financial situations. (For more information on the CMF and CDFIs in general, see CRS Report R42770, Community Development Financial Institutions (CDFI) Fund: Programs and Policy Issues , by Sean Lowry.) Mortgage Interest Deduction Homeownership promotion has generally taken two forms: government assistance in the financing of home purchases, and tax preferences favoring homeowners. One of the largest tax benefits for homeowners is the mortgage interest deduction. It allows homeowners to deduct the interest paid on their mortgage (subject to caps) from their taxable income, thus reducing their tax liability. The deduction benefits those households that own homes, have a mortgage on which they pay interest, have federal income tax liability, and for whom itemized deductions exceed the standard deduction (note that the vast majority of tax filers take the standard deduction). It is not targeted to lower-income households. In FY2018, the Joint Committee on Taxation estimated that the mortgage interest deduction would result in a $33.7 billion tax expenditure. (For more information about the mortgage interest deduction, see CRS Report R41596, The Mortgage Interest and Property Tax Deductions: Analysis and Options , by Mark P. Keightley.) Issues and Trends in Housing Assistance Programs Incidence of Housing Problems When the federal housing assistance programs began in the 1930s, the nation was considered to be ill-housed. The Housing Act of 1937 identified an "acute shortage of decent, safe, and sanitary dwellings." Thanks in part to stricter building codes and standards, most housing in the United States today is decent, safe, and sanitary. Although some units are still considered substandard, the greatest housing problem today is perceived to be affordability. Housing is considered "affordable" if it costs no more than 30% of a household's income. Households that pay half or more of their income toward their housing costs are considered severely cost burdened; households that pay between 30% and 50% are considered moderately cost burdened. According to data from the Census Bureau's American Community Survey, 18.5 million households were severely cost burdened and 19.6 million households were moderately cost burdened in 2016. Public policy is generally most concerned with the housing affordability problems of the lowest-income families, because high housing costs may prevent these families from meeting their other basic needs. The American Community Survey data show that in 2016, 70% of households with annual income below $15,000 were severely cost burdened (compared to 64% in 2001), and 33% of households with annual income between $15,000 and $29,999 were severely cost burdened (compared to 25% in 2001). HUD must report to Congress periodically on the incidence of "worst case" housing needs, which are defined as occurring when unassisted renters with very low incomes (at or below 50% of area median income) pay more than half of their income for housing costs or live in severely substandard housing. In a 2017 report, HUD found that roughly 8.3 million renter households (7% of all households) had worst case housing needs in 2015. This represented an increase compared to 2013, when 7.7 million renter households (6.7% of all households) had worst case housing needs; a decrease from 2011, when 8.5 million renter households had worst case needs; and a nearly 41% increase since 2007, when 5.9 million renter households had worst case needs. Prior to 2005, the percentage of households with worst case housing needs had remained relatively steady—roughly 5% of all households—since HUD began reporting on worst case needs in 1991. The vast majority of households with worst case housing needs are severely cost burdened but live in standard housing. For example, in 2015 about 95.6% of households with worst case housing needs experienced cost burdens only. About 1.8% of households had worst case housing needs solely because they lived in substandard housing, while another 2.6% experienced both conditions. Characteristics of Families Receiving Assistance Public housing, Section 8 vouchers, and the project-based Section 8 rental assistance programs combined serve roughly 4 million households and can be considered the primary housing assistance programs for low-income families. These three forms of assistance are similar in many ways. They all target assistance to extremely low-income families, require families to pay 30% of their incomes toward rent, and generally have long waiting lists for assistance. However, they vary in terms of their evolution, the structure of their benefit (a portable voucher versus a housing unit), and their administration (PHA versus private owner). The similarities and differences in the programs themselves result in similarities and differences in the characteristics of the households they serve. Table 14 provides household characteristics data for participants in the tenant-based Section 8 voucher program, the public housing program, and the project-based Section 8 rental assistance program. The tenant-based Section 8 voucher program serves more single, female-headed households with children than do the public housing program or project-based programs, although they are not a majority of those served by the program. Based on 2017 HUD data, 40% of voucher households were households with children headed by females, compared to 34% of public housing households and 25% of project-based households. The project-based Section 8 program primarily serves families headed by persons who are elderly or disabled, which account for over three-fourths (81%) of all households served in the program. This is not surprising given that owners of project-based housing may designate entire properties for elderly or disabled households. In addition, units of Section 202 housing for the elderly that were developed during the 1970s and 1980s were subsidized with project-based Section 8 rental assistance. Public housing and the Section 8 voucher program each also have a large majority of households (71% and 61%, respectively) where the head or spouse is elderly or disabled. HUD reports the race and ethnicity of the head of household as non-Hispanic white, non-Hispanic black, Hispanic, non-Hispanic Asian or Pacific Islander, and non-Hispanic Native American. In the Section 8 voucher program and public housing, households headed by non-Hispanic blacks make up the largest share (48% and 43%, respectively). In the project-based Section 8 program, households headed by non-Hispanic whites are the largest share (42%), with households headed by non-Hispanic blacks making up 34% of the total. Between 15% and 21% of households served across the three programs have heads of household who identify their ethnicity as Hispanic, with public housing having the largest share. The rules governing the three main housing assistance programs require that they serve households that are low-income (income at or below 80% of area median income). However, with the targeting required in these programs, many households that are served have very low or extremely low incomes (at or below 50% or 30% of area median income, respectively). As an example, in 2018 the national median income was $71,900, meaning that low income would be considered to be at or below $57,500; very low income, $35,950; and extremely low income, $21,550. The majority of households served in each of the three programs have incomes at or below $14,999. The percentage of households with incomes at or below this level is 63% in the Section 8 voucher program, 65% in public housing, and 70% in project-based Section 8 rental assistance. The Federal Government's Role in Directly Subsidizing Affordable Rental Housing Beginning in the 1980s, the federal government decreased its role in the creation of assisted housing. This occurred in several ways. Congress ceased funding new construction under the project-based Section 8 program, which from its enactment in 1974 had subsidized hundreds of thousands of units of assisted housing. This left very few active programs in which HUD supported the development of physical housing units. Between 1976 and 1982, the federal housing programs produced more than 1 million units of subsidized housing. In the following years, however, annual production was around 25,000 new subsidized units. Around the time that federal housing production was declining, Congress created two programs—the Treasury Department's Low Income Housing Tax Credit (LIHTC) program and HUD's HOME Investment Partnerships program—that gave a good deal of control over decisions regarding housing policy and development to state and local governments. These programs, particularly the LIHTC, have been used by states and localities to create hundreds of thousands of units of affordable housing. The federal government's decision to take a lesser role in the development of housing has had several consequences. First, state and local governments have taken on an increased role in providing affordable housing and establishing priorities in their communities. Second, due to a reduction in the number of new affordable housing units that are created each year, the need to preserve existing affordable housing units has taken on a new importance. A third consequence is the need for multiple streams of funding other than federal grants in order both to support the creation of new affordable housing units and to preserve existing units. These three consequences are discussed more fully below. First, with the advent of both the LIHTC program and the HOME program, states and localities were able to prioritize and develop housing using a larger and more flexible pool of federal funds. Until that point, states helped finance mortgage loans and affordable rental housing through their Housing Finance Agencies, but the states' roles were limited by the amount of funds available. In the LIHTC program, states develop plans in which they may set aside a certain percentage of tax credits for populations such as homeless individuals or persons with disabilities. They may also decide to use tax credits to preserve existing housing and/or build new housing. Funds that states receive from the HOME program may be used for the construction of new rental housing and rental assistance for low-income households. A potential drawback of these programs is their inability, on their own, broadly to reach the neediest households. For example, in an LIHTC development, at least 20% of units must be affordable to households at or below 50% of area median income, or 40% of units must be affordable to households at or below 60% of area median income. More recently, properties have been allowed to adopt an "income-averaging" approach that allows them to serve a mix of higher-income families if they also serve lower-income families, as long as it results in an average of 40% of units being occupied by households with incomes that average 60% or below of area median income. Many of the older HUD programs constructed housing that was affordable to households at or below 30% of area median income—those considered extremely low-income. Often these households cannot afford units in LIHTC properties without rental subsidies, such as Section 8 vouchers. Another way some states and local governments support affordable housing is through establishment of their own housing trust funds. These trust funds use dedicated funding sources such as document recording fees or real estate transfer taxes to create a pool of funds for affordable housing. By using a dedicated source of financing, trust funds may not be as subject to the vicissitudes of state budgets as are other means of funding housing development. States and local communities also support affordable housing through inclusionary zoning. Through this method, housing developers are expected to dedicate a percentage of units they build as affordable housing. In exchange, states or local communities give developers incentives that allow them to expand or speed up the pace of development. Some of the incentives include density bonuses or zoning variances that allow developers to build larger facilities than they would be able to under existing zoning regulations, as well as expedited approval of building permits. A second consequence of the decreased role of the federal government in the production of affordable housing units is the increased pressure to maintain the affordability of existing units. Many HUD subsidized units that were developed in the 1960s and 1970s through programs such as Section 236 and Section 221(d)(3), as well as those units that received project-based Section 8 rental assistance, are no longer available to low-income households. At the time the properties were developed, building owners entered into contracts with HUD in which they agreed to maintain affordability for a certain number of years. The duration of these contracts varied; depending on the federal program, these contracts, or "use restrictions," may last between 15 years (the LIHTC program, although states may adopt longer use restrictions) and 50 years (early Section 202 developments). Over time, these contracts have begun to expire, property owners have chosen to pay off their mortgages early and end the use restrictions, or mortgages have matured and their accompanying use restrictions have ended. When any of these events occur, owners may have the option to charge market-rate rents for the units, potentially making them unaffordable for current tenants. The term used to refer to efforts to maintain the affordability of these housing units is "affordable housing preservation." Congress has attempted to enact laws that would preserve affordable housing units; however, due to the temporary nature of some of the measures, preservation remains a concern. Congress first enacted legislation to help preserve affordable rental housing in 1987. The Emergency Low-Income Housing Preservation Act (ELIHPA), enacted as part of the Housing and Community Development Act of 1987 ( P.L. 100-242 ), was a temporary measure that prevented owners of Section 236 and Section 221(d)(3) properties from prepaying their mortgages unless certain conditions were met, including permission from HUD. In 1990, the Low-Income Housing Preservation and Resident Homeownership Act (LIHPRHA), enacted as part of the Cranston-Gonzalez National Affordable Housing Act ( P.L. 101-625 ), continued the ELIHPA conditions required for prepayment, and also offered incentives to owners to maintain affordability. However, six years after LIHPRHA was enacted, Congress reinstated the right of owners to prepay their mortgages without prior HUD permission (see P.L. 104-134 ). Two years later, in FY1998, Congress stopped providing funding to HUD for preservation incentives to owners under LIHPRHA, effectively ending the LIHPRHA program (see H.Rept. 105-175 ). Another effort to preserve affordable housing was enacted as part of the Multifamily Assisted Housing Reform and Accountability Act (MAHRA, P.L. 105-65 ). Through this effort, HUD restructures the debt of building owners while at the same time renegotiating their rental assistance contracts. Unlike ELIHPA and LIHPRHA, MAHRA is still in effect. A third consequence of the decreased federal role in the production of affordable housing is the need for low-income housing developers to bring together multiple funding streams in order to build a development. When the federal government first began to subsidize the production of affordable housing, in many cases the funds appropriated for housing programs were sufficient to construct or rehabilitate the affordable units without the need for funds from the private financial markets. Over the years, however, federal programs that provide grants for the construction of multifamily housing for low-income households have become a smaller portion of the government's housing portfolio. At the same time, the grants themselves have become a smaller portion of the total amount needed to support the development of affordable housing. As a result, it has become necessary for developers to turn to multiple sources of financing, including LIHTCs, tax exempt bonds, and state or local housing trust funds. In addition, it is often necessary for building owners to seek rent subsidies through programs like Section 8 and HOME to make renting to very low- or extremely low-income households feasible. The interactions among these various financing streams can be complex, and putting together a development plan may require the expertise of housing finance professionals. The Shift to Tenant-Based Assistance Over time, the number of Section 8 vouchers provided and funded by the federal government has grown, while the number housing units it directly subsidizes—through project-based Section 8 rental assistance and public housing—has declined. This change from project-based assistance to tenant-based assistance is due, in part, to Congress's decision to expand the voucher program by creating new vouchers after new construction in the project-based Section 8 program and public housing program had been halted. Some of these were general purpose vouchers, available to any eligible family, and some were special purpose vouchers, targeted to special populations such as families transitioning from welfare to work and homeless veterans. This shift is also due, in part, to declines in the number of project-based assistance and public housing units. As previously noted in this report, the project-based rental assistance contracts between private landlords and HUD began expiring in the 1980s. When these contracts expire, private property owners can either renew their contracts with HUD (typically on an annual or five-year basis) or leave the program. When property owners leave the program, their tenants typically receive Section 8 vouchers—referred to as tenant protection vouchers. Since the mid-1990s, when public housing units are demolished or sold, PHAs are not required to replace each lost unit with a new public housing unit. Instead, displaced families who are not relocated to other public housing units are provided with tenant-protection vouchers. Also contributing to the decline in public housing units is the Rental Assistance Demonstration (RAD) program, enacted as part of the FY2012 Consolidated Appropriations Act ( P.L. 112-55 ). Through RAD, PHAs may, with HUD's approval, remove their public housing properties from the public housing program and convert the funds they receive through the public housing operating and capital funds to either project-based Section 8 rental assistance or project-based vouchers. As noted earlier, HUD is currently authorized to transition up to nearly half of the current stock of public housing to a form of Section 8 via RAD. The shift from project-based assistance to tenant-based assistance has several implications for families. Vouchers offer portability, which, for some residents of public or other assisted housing, may mean the ability to move out of a troubled community to a community with new opportunities. However, there is debate over whether voucher portability leads to economic or social mobility. Early research on mobility showed promise that families—particularly, low-income black families—that moved from heavily poverty- and minority-concentrated public housing neighborhoods to more economically and racially integrated neighborhoods using vouchers could see improved employment and child outcomes. Subsequent mobility research showed mixed results, although the most recent research has further supported the idea that neighborhood effects can be powerful for young children. There is also some evidence that, for families accustomed to living in public housing, the transition to the private rental market with a voucher can be difficult without counseling and other supports, which may not be provided consistently. Finally, there is evidence that the portability option offered by vouchers is not utilized fully by families to access areas of opportunity. This may be due in part to families' preferences, but it also may be due to structural barriers in the program and/or in local rental markets, such as the maximum value of the voucher relative to rents in opportunity areas and landlord willingness to participate in the program. Supporting Homeownership Since the 1930s, the federal government has engaged in various activities that provide support for homeownership. The specific types of support provided, and the policy rationales for that support, have evolved over the decades. Currently, the federal government provides support for homeownership through a variety of programs and activities, many of which are described in this report. Some of these programs and activities benefit a broad range of homebuyers (e.g., the favorable tax treatment of homeownership, secondary market institutions that support the mortgage market) while others focus specifically on homebuyers who face certain barriers to homeownership (e.g., federal mortgage insurance and guaranty programs, grant programs that can be used for down payment or closing cost assistance). While not all of these existing programs and initiatives were established specifically with the intention of promoting homeownership, many policymakers have come to view the programs and activities as important for helping households access affordable financing to purchase a home. In recent decades, federal efforts related to homeownership have also included a focus on reducing disparities in homeownership rates. Homeownership rates vary based on a number of demographic and geographic factors, but large and long-standing gaps in homeownership rates by race and ethnicity have been a particular area of concern, in part out of recognition of federal policies that explicitly contributed to these disparities. Many Presidents in recent decades have expressed support for the concept of specifically increasing homeownership rates, particularly among minority groups who have traditionally been less likely to be homeowners. Generally, these proposals involved little new federal funding, but sought to rally the private sector to use existing programs to reach some specified target. The severe downturn in U.S. housing and mortgage markets that began around 2007 resulted in increased mortgage foreclosure rates and steep declines in home equity in many parts of the country. It also led to a pronounced drop in the overall homeownership rate and further widened the gap in homeownership rates between white and black householders, in particular. As of 2017, the Census Bureau reported a homeownership rate of 63.9%, down from a peak of 69% in 2004. The homeownership rate for non-Hispanic white householders (72.3%) is 30 percentage points higher than it is for black householders (42.3%). (In comparison, in 2001 the homeownership rate for non-Hispanic white householders was about 27 percentage points higher than it was for black householders: 74.3% compared to 47.7%.) Hispanics, who can be of any race, had a homeownership rate of 46.2% in 2017, about 26 percentage points lower than the rate for non-Hispanic white households. The housing market turmoil and its aftermath have raised a variety of questions about the appropriate role of the federal government in supporting homeownership going forward, including how best to balance the perceived benefits of homeownership with its possible risks. Many policymakers believe that federal policy should continue to support activities that help provide access to homeownership, especially for creditworthy households who may otherwise have difficulty becoming homeowners. However, recent experience has reduced the focus on specifically attempting to increase homeownership rates to a particular target and underscored the importance of ensuring that homeownership is not just attainable, but also sustainable over the long term. Data The following tables present data on federal spending (outlays) on selected housing assistance programs as well as data on the number of rent-assisted units, since 1980. Spending Table 15 presents spending, or outlays, for selected housing assistance programs, in both real and nominal dollars. This table does not include any spending information related to loan commitments or obligations, nor does it include tax expenditures or expenditures from non-appropriated sources (such as the National Housing Trust Fund). As can be seen in Table 15 , outlays for the selected programs have increased, in both real and nominal dollars (a 449% increase in nominal dollars, a 108% increase in real dollars), over the more than three decades presented. Rental Assistance Units Table 16 and Figure 1 present the total number of units eligible for payment /households served under selected rental assistance programs from FY1980 to FY2016. The rental assistance programs reflected in these data are a subset of a group of housing assistance programs for which spending data are presented in Table 15 . As shown, units/households in the rental assistance programs has grown by 66% over the more than three decades presented. Most of that growth happened in the 1980s and early 1990s. Since the early 1990s, the number of units eligible for payment has gone up and down from year to year, with an overall decline in units from FY2001 to FY2009. HUD stopped publishing "units eligible for payment" data after FY2009. Beginning with FY2010, the data shown reflect HUD's report of the number of households served by various HUD programs, taken from their annual performance reports. Between FY2010 and FY2016, there was some modest and uneven growth in the number of assisted households, with increases in vouchers offsetting decreases in other forms of assistance. Table 16 also helps to illustrate the trend away from public housing and other housing assistance toward rental assistance (e.g., Section 8 vouchers) discussed earlier in this report. The number of units assisted under the other housing assistance programs has been on the decline since the Nixon moratorium in the 1970s. For many of those units, once the family leaves the program, it receives a voucher. In the case of public housing, the number of units continued to increase until the mid-1990s, as contracted units became available. Since the mid-1990s, through the HOPE VI program and other authority, PHAs have been demolishing and disposing of many of their public housing developments. Some replacement public housing units have been built in their place, but many of the units were replaced with Section 8 vouchers.

The federal government has been involved in providing housing assistance to lower-income households since the 1930s. In the beginning, the federal government played a role in supporting the mortgage market (through establishment of the Federal Housing Administration [FHA] and the government-sponsored enterprises) and in promoting construction of low-rent public housing for lower-income families through local public housing authorities (PHAs). Over time, the federal government has shifted away from providing construction-based subsidies toward providing rental subsidies, and private developers and property owners have been playing a larger role. Today's federal housing assistance programs fall into three main categories: rental housing assistance, assistance to state and local governments, and assistance for homeowners. Most of these programs are administered by the Department of Housing and Urban Development (HUD). Current housing assistance programs include Section 8 vouchers and project-based rental assistance, public housing, housing for the elderly (Section 202), housing for persons with disabilities (Section 811), rural rental assistance (the United States Department of Agriculture's Section 521 program), Community Development Block Grants (CDBG), HOME Investment Partnerships Block Grants, Low-Income Housing Tax Credits (LIHTC), homeless assistance programs, Federal Housing Authority (FHA) and Department of Veterans Affairs mortgage insurance, and the mortgage interest deduction in the tax code. Most federal housing assistance programs are aimed at making housing affordable for low-income families. Affordability—defined as housing that costs no more than 30% of a family's income—is considered to be the largest housing problem today. Rental assistance programs, which are the largest source of direct housing assistance for low-income families, all allow families to pay affordable, income-based rents; however, different forms of assistance target different types of households, including the elderly, persons with disabilities, and families with children. Several trends in federal housing policy have emerged in recent decades. As the focus of federal housing assistance has shifted away from construction-based subsidies to rental assistance, block grants, and LIHTC, state and local governments have had greater access to federal resources to fund local housing and community development priorities. This shift in federal funding has also led affordable housing developers to pursue mixed financing: the use of multiple streams of federal, state, and local funding, or private financing. In the past, lagging homeownership rates among low-income and minority households have prompted several Presidents to promote homeownership-based housing policies. However, given the severe downturn in U.S. housing markets that began in 2007 and the resulting high foreclosure rate, it is unclear to what degree federal policy will continue to focus on increasing access to homeownership.

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Introduction The Longshore and Harbor Workers' Compensation Act (LHWCA) requires that private-sector firms provide workers' compensation coverage for their employees engaged in longshore, harbor, or other maritime occupations on or adjacent to the navigable waters of the United States. Although the LHWCA program is administered by the Department of Labor (DOL), most benefits are paid either through private insurers or self-insured firms. The LHWCA is a workers' compensation system and not a federal benefits program. Like other workers' compensation systems in the United States, the LHWCA ensures that all covered workers are provided medical and disability benefits in the event they are injured or become ill in the course of their employment, and it provides benefits to the survivors of covered workers who die on the job. In 2016, the LHWCA paid approximately $1.41 billion in cash and medical benefits to injured workers and the families of deceased workers. Workers' Compensation in the United States Nearly all private- and public-sector workers in the United States are covered by some form of workers' compensation. The federal government has a limited role in workers' compensation and administers workers' compensation programs only for federal employees and several classes of private-sector workers, including longshore and harbor workers. For most occupations, workers' compensation is mandated by state laws and administered by state agencies. There is no federal mandate that states provide workers' compensation. However, every state and the District of Columbia has a workers' compensation system. There are no federal standards for state workers' compensation systems. However, all U.S. workers' compensation systems provide for limited wage replacement and full medical benefits for workers who are injured or become ill as a result of their work and survivors benefits to the families of workers who die on the job. Workers' compensation in the United States is a no-fault system that pays workers for employment-related injuries or illnesses without considering the culpability of any one party. In exchange for this no-fault protection and the guarantee of benefits in the event of an employment-related injury, illness, or death, workers give up their rights to bring actions against employers in the civil court system and give up their rights to seek damages for injuries and illnesses, including pain and suffering, outside of those provided by the workers' compensation laws. Workers' compensation is mandatory in all states and the District of Columbia, with the exception of Texas. In Texas, employers may, under certain conditions, opt out of the workers' compensation system, but in doing so subject themselves to civil actions brought by injured employees. History of the LHWCA Prior to the enactment of the LHWCA in 1927, longshore and harbor workers were not covered by any workers' compensation system. Although persons who worked entirely on land were covered by workers' compensation laws in those states that enacted such laws, pursuant to the Supreme Court's 1917 decision in Southern Pacific Co. v. Jensen , state workers' compensation systems did not have jurisdiction over persons working on the "navigable waters" of the United States because the Constitution granted the authority over "matters of admiralty and maritime jurisdiction" to the federal government. The LHWCA created a federal workers' compensation program to cover these workers. In 1972, the LHWCA zone of coverage was extended to include areas adjacent to navigable waters that are used for loading, unloading, repairing, or building vessels. Firms and Workers Covered by the LHWCA Covered Firms The LHWCA provisions apply to any private firm with any covered employees who work, full- or part-time, on the navigable waters of the United States, including in any of the following adjoining areas: piers; wharves; dry docks; terminals; building ways; marine railways; or other areas customarily used in the loading, unloading, repairing, or building of vessels. Covered Workers With the exception of workers excluded by statute (listed below), the LHWCA covers any maritime employee of a covered firm, including longshore workers (those who load and unload ships) and harbor workers (i.e., ship repairmen, ship builders, and ship breakers). Workers Excluded by Statute Sections 2(3) and 3(b) of the LHWCA exclude the following workers from coverage: Workers covered by a state workers' compensation law, including employees exclusively engaged in clerical, secretarial, security, or data processing work; persons employed by a club, camp, recreational operation, museum, or retail outlet; marina employees not engaged in the construction, replacement, or expansion of the marina; suppliers, transporters, and vendors doing business temporarily at the site of a covered employer; aquaculture workers; and employees who build any recreational vessel under 65 feet in length, or repair any recreational vessel, or dismantle any part of a recreational vessel in connection with the repair of the vessel. Workers, whether covered or not covered by a state workers' compensation law, including masters and crew members of vessels; persons engaged by the master of a vessel to unload any vessel under 18 tons net; and employees of the federal government, or any state, local, or foreign government or any subdivision of such a government. 2009 Amendment to the LHWCA Section 803 of the American Recovery and Reinvestment Act of 2009 (ARRA) modified one of the excluded classes of workers under the LHWCA by adding additional exclusions for persons who work on recreational vessels over 65 feet in length. Prior to the amendment, Section 2(3)(F) of the LHWCA read as follows: (3) The term "employee" means…but such term does not include… (F) individuals employed to build, repair, or dismantle any recreational vessel under sixty-five feet in length. This section, as amended, reads as follows (with additions in italics): (3) The term "employee" means…but such term does not include… (F) individuals employed to build any recreational vessel under sixty-five feet in length, or individuals employed to repair any recreational vessel, or to dismantle any part of a recreational vessel in connection with the repair of such vessel. By granting an exemption from the LHWCA to persons engaged in the repair of any recreation vessel, regardless of its size, this amendment limits the scope of the LHWCA and increases the types of workers excluded from coverage. 2011 DOL Regulations Defining Recreational Vessel In 2011, the DOL promulgated implementing regulations for the new recreational vessel provision provided by Section 803 of ARRA. These regulations provided definitions of recreational vessel for the purposes of the determination of LHWCA coverage. These definitions are based on the classification of vessels used by the U.S. Coast Guard (USCG) and provided in statute and regulation. General Definition Specifically, under these current DOL regulations, a vessel is considered a recreational vessel if the vessel is being manufactured or operated mainly for pleasure or leased, rented, or chartered to another person for his or her pleasure. Definition for Vessel Being Built or Repaired Under Warranty In addition, for a vessel being built or repaired under warranty by its manufacturer or builder, the vessel is considered a recreational vessel if it appears based on its design and construction to be intended for recreational uses. The manufacturer or builder bears the burden under this regulation to establish that the vessel is a recreational vessel. Definition for Vessel Being Repaired or Dismantled For a vessel being repaired, dismantled for repair, or dismantled at the end of its life (ship breaking), the vessel is not considered a recreational vessel if it was operating, more than infrequently, in one of the following categories provided in the U.S. Code : "passenger vessel" (46 U.S.C. §2101(22)); "small passenger vessel" (46 U.S.C. §2101(35)); "uninspected passenger vessel" (46 U.S.C. §2101(42)); vessel routinely engaged in "commercial service" (46 U.S.C. §2101(5)); or vessel that routinely carries "passengers for hire" (46 U.S.C. §2101(21a)). A vessel being repaired, dismantled for repair, or dismantled at the end of its life is considered a recreational vessel if the vessel is a public vessel owned, or bareboat chartered, by the federal government or a state or local government and shares elements of design and construction with traditional recreational vessels and is not used for military or commercial purposes. Legislation to Change the DOL's Definition of Recreational Vessel Since the promulgation of the DOL's 2011 rules providing regulatory definitions of recreational vessels for the purposes of the LHWCA, numerous bills have been introduced that would, if enacted, remove the existing regulatory definitions for a vessel being repaired, dismantled for repair, or dismantled at the end of its life so that the USCG categories of vessels provided in Section 2101 of Title 46 of the United States Code would no longer be used in the classification of such a vessel under the LHWCA. This legislation would expand the types of recreational vessels. Because persons who work on recreational vessels are not covered by the LHWCA, the legislation would allow employers to purchase workers' compensation for these workers under state laws rather than the LHWCA, which, due to the more generous benefits frequently offered by the LHWCA and the limited number of providers, may be more expensive. In the 115 th Congress, Section 3509 of H.R. 2810 , the National Defense Authorization Act for 2018 (NDAA), as initially passed by the House of Representatives on July 14, 2017, contained this legislative provision. This provision was not included in the Senate version of the bill nor in the final NDAA enacted into law. Extensions of Coverage Under the LHWCA The LHWCA has been amended four times to extend coverage to occupations outside the original scope of the law. In 1928, coverage was extended to employees of the District of Columbia . The provision was repealed, effective for all injuries occurring on or after July 26, 1982, with the enactment by the District of Columbia government of the District of Columbia Workers' Compensation Act of 1982. Benefits for injuries that occurred prior to July 26, 1982, continue to be paid under the LHWCA. Coverage was extended to overse a s military and public works contractors in 1941 with the enactment of the Defense Base Act. In 1952, coverage was extended to civilian employees of nonappropriated fund instrumentalities of the armed forces , such as service clubs and post exchanges. Coverage was extended in 1953 to employees working on the Outer Continental Shelf in the exploration and the development of natural resources , such as workers on offshore oil platforms. Insurance and Financing Employers required by the LHWCA to provide workers' compensation coverage to their employees may either purchase private insurance or self-insure. The DOL is responsible for authorizing insurance carriers to provide coverage under the LHWCA program and for authorizing companies to self-insure. However, the DOL does not set or regulate insurance premiums. These insurance arrangements are the primary means of providing LHWCA benefits to injured, sick, and deceased workers and their families. General revenue is not used to pay any LHWCA benefits. Special Fund The DOL operates the Special Fund to provide LHWCA benefits in cases in which the responsible employer or insurance carrier cannot pay or in which benefits must be paid for a second injury under Section 8(f) of the LHWCA. The Special Fund is financed through an annual assessment charged to employers and insurance carriers based on the previous year's claims, payments required when an employee dies without any survivors, disability payments due to an employee without survivors after his or her death, and penalties and fines assessed for noncompliance with LHWCA program rules. Administrative Costs The administrative costs associated with the LHWCA are largely provided by general revenue. General revenue is used to pay for most oversight functions associated with the LHWCA and the processing of LHWCA claims. General revenue is also used to pay legal and investigative costs associated with the DOL Office of the Solicitor and Office of the Inspector General. Revenue from the Special Fund is used to finance oversight activities related to the Special Fund and the program's vocational rehabilitation activities. In 2016, total administrative costs associated with the LHWCA were approximately $15.8 million, of which $13.6 million, or 86%, was paid by general revenue and $2.2 million, or 14%, was paid by the Special Fund. LHWCA Benefits The LHWCA provides medical benefits for covered injuries and illnesses and disability benefits to partially cover wages lost due to covered injuries or illnesses, and it provides survivors benefits to the families of workers who die on the job. Medical Benefits The LHWCA provides medical benefits to fully cover the cost of any medical treatment associated with a covered injury or illness. These medical benefits are provided without any deductibles, copayments, or costs paid by the injured worker. Prescription drugs and medical procedures are fully covered, as are costs associated with travelling to and from medical appointments. A covered worker may select his or her own treating physician, provided the physician has not been debarred from the LHWCA program for violating program rules. Vocational Rehabilitation Covered workers are entitled to vocational rehabilitation services provided under the LHWCA. Vocational rehabilitation services are designed to assist the covered worker in returning to employment. There is no cost to the covered worker for vocational rehabilitation and workers actively participating in a rehabilitation program are entitled to an additional benefit of $25 per week. All costs associated with vocational rehabilitation under the LHWCA are paid out of the Special Fund. Vocational rehabilitation services may be provided by public or private rehabilitation agencies. Disability Benefits The LHWCA provides disability benefits to covered workers to partially cover wages lost due to the inability to work because of a covered injury or illness. The amount of disability benefits is based on the worker's pre-disability wage, subject to maximum and minimum benefits based on the National Average Weekly Wage (NAWW) as determined by the DOL. The NAWW is updated October 1 of each year and is based on average wages across the United States for the three calendar quarters ending on June 30 of that year. The minimum weekly benefit that can be paid to a covered employee is equal to 50% of the NAWW and the maximum weekly benefit that can be paid is equal to 200% of the NAWW. Disability benefits under the LHWCA, like all workers' compensation benefits, are not subject to federal income taxes. Unlike most state workers' compensation benefits, however, LHWCA benefits are adjusted based on wage inflation rather than price inflation. Benefits are adjusted annually each October 1 to reflect the change in the NAWW from the previous year, up to a maximum increase of 5%. Total Disability Benefits The LHWCA provides benefits in cases of total disability. Under the LHWCA, a worker is considered totally disabled if he or she is unable to earn his or her pre-injury wage because of a covered injury or illness. In addition, a worker is also considered totally disabled if he or she loses both hands, arms, feet, legs, or eyes, or any two of these body systems, such as the loss of one arm and one leg. Total disability benefits under the LHWCA are equal to two-thirds of the covered worker's wage at the time of the injury or illness. Total disability benefits continue until the worker is no longer totally disabled or dies. Partial Disability Benefits If a covered worker is able to partially return to work or return to work at a wage level less than his or her wage at the time of injury, then he or she is considered partially disabled. In cases of temporary partial disability, the LHWCA benefit is equal to two-thirds of the difference between the workers' pre-injury wage and his or her current earning capacity or actual earnings. Permanent Partial Disability Benefits Section 8(c) of the LHWCA provides a schedule of benefits to be paid in cases of permanent partial disability (PPD), such as the loss of a limb. The benefit schedule provides the number of weeks of compensation, at two-thirds of the pre-injury wage, for each type of PPD. For example, the LHWCA schedule provides that a worker who loses an arm is entitled to 312 weeks of compensation. Benefits in cases not listed on the schedule are paid at two-thirds of the difference between the pre-injury wage and current earning capacity for the duration of the disability. Schedule benefits for PPD are paid regardless of the current work status or earnings capacity of the employee. Thus, an employee with a PPD can fully return to work and earn his or her wage in addition to the PPD compensation. A copy of the LHWCA PPD schedule can be found in the Appendix to this report. Disability After Retirement If a worker has an illness that was caused by his or her covered employment but did not manifest itself until after his or her retirement, then he or she is entitled to disability benefits equal to two-thirds of the NAWW multiplied by the percentage of his or her impairment. The percentage of impairment is determined using the current edition of the American Medical Association's Guides to the Evaluation of Permanent Impairment (AMA Guides ), or another professionally recognized source if the condition is not listed in the AMA Guides. Survivors Benefits The LHWCA provides cash benefits to the surviving spouses and minor children of workers killed on the job. Benefits for a surviving spouse end when the spouse remarries or dies and benefits for surviving children continue until the children reach the age of 18, age 23 if a full-time student, or for the life a child with a disability. A surviving spouse with no eligible children is entitled to one-half of the deceased worker's wage at the time of death under the LHWCA. A surviving spouse with one or more eligible children is entitled to two-thirds of the deceased worker's wage at the time of death. Once all children become ineligible for benefits because of their ages, the surviving spouse's benefit is reduced to the level of a spouse without any eligible children. If an eligible spouse becomes ineligible for benefits because of death or remarriage, or if there is no surviving spouse, benefits are still paid to any surviving children. Under the LHWCA, a single surviving eligible child is entitled to one-half of the deceased worker's wage at the time of death, and two or more surviving children are eligible for a combined two-thirds of the wage at the time of death. The survivors of a covered worker killed on the job are entitled under the LHWCA to a cash payment to provide for the burial and funeral of the deceased. The burial and funeral allowance is capped by Section 9(a) of the LHWCA at $3,000, and this cap not adjusted to reflect changes in prices or wages. If a covered worker who is receiving scheduled PPD benefits dies of a cause unrelated to his or her illness or injury, then the balance of any remaining PPD benefits is paid to his or her survivors. If a covered worker who dies on the job leaves no survivors, his or her employer or the employer's insurance carrier is required to pay $5,000 into the Special Fund. LHWCA Claims Process Although the responsibility for the payment of benefits under the LHWCA rests with the employer or the employer's insurance company, decisions on benefit eligibility and the amount of benefits are made by the DOL. Upon the report of an injury, illness, or death, the LHWCA claims process begins. If the employer or insurance carrier does not controvert the claim, then arrangements are made by the DOL for the claim to be paid. If, however, the employer controverts any part of the claim, then the DOL sets up an informal conference, either in person or by phone, between the employer or insurance carrier and worker with the goal of resolving any disputes over the claim. If this informal conference fails to resolve all outstanding disputes, then a formal hearing before a DOL administrative law judge (ALJ) is scheduled. If the employer or insurance carrier or the worker is dissatisfied with the decision of the ALJ, then this decision may be appealed to the Benefits Review Board (BRB). The BRB is made up of five members appointed by the Secretary of Labor. Either party dissatisfied with the decision of the BRB may file a petition with the U.S. Court of Appeals for the circuit in which the injury occurred praying that the BRB's decision be set aside or modified. If an employer or insurance carrier fails to pay compensation in accordance with a final decision on a claim, the covered worker or the DOL may request that the U.S. District Court order that payment be made. Appendix. Benefits Schedule for LHWCA PPD

The Longshore and Harbor Workers' Compensation Act (LHWCA) is a federal workers' compensation program that covers certain private-sector maritime workers. Firms that employ these workers are required to purchase workers' compensation or self-insure and are responsible for providing medical and disability benefits to covered workers who are injured or become ill on the job and survivors benefits to the families of covered workers who die on the job. The LHWCA is administered by the Department of Labor (DOL), and all benefit costs are paid by employers and their insurance carriers. In 2016, more than $1.4 billion in LHWCA benefits were paid to beneficiaries. Congress has extended the LHWCA provisions to cover workers outside of the maritime industry, such as overseas government contractors and civilian employees of military post exchanges. As part of the American Recovery and Reinvestment Act of 2009 (ARRA), persons who repair recreational vessels of any size were added to the LHWCA exemption list. In 2011, the DOL implemented this provision; since then, those regulations have proven controversial and numerous bills have been introduced to modify the regulatory definition to increase the number of workers exempted from the LHWCA. The LHWCA pays for all medical care associated with a covered injury or illness. Disability benefits are based on a worker's pre-injury wage, and, unlike comparable state workers' compensation benefits, are adjusted annually to reflect national wage growth.

crs_R45625

crs_R45625_0

Introduction The U.S. Fourth National Climate Assessment, released in 2018, concluded that "the impacts of global climate change are already being felt in the United States and are projected to intensify in the future—but the severity of future impacts will depend largely on actions taken to reduce greenhouse g as [GHG] emissions and to adapt to the changes that will occur." Although a variety of efforts seeking to reduce GHG emissions are currently underway on the international and sub-national level, federal policymakers and stakeholders have different viewpoints over what to do, if anything, about future climate change and related impacts. Their views regarding climate change cover a wide range of perspectives. For example, some contend that climate change poses a "direct, existential threat" to human society and that nations must start making significant reductions in GHG emissions in order to avoid "dire effects." To support this argument, proponents of climate change mitigation highlight the evidence and conclusions from recent reports that are generally considered authoritative, including: 1. The Intergovernmental Panel on Climate Change, Global W arming of 1.5°C , 2018; and 2. The U.S. Global Change Research Program, Fourth National Climate Assessment , Volume II: Impacts, Risks, and Adaptation in the United States , 2018. On the other hand, some question whether there are sufficient risks of climate change to merit a federal program requiring GHG emission reductions. In addition, others argue that a unilateral approach to climate change by the United States could disproportionately impact domestic industries while achieving minimal results in global climate change mitigation. If Congress were to consider establishing a program to reduce GHG emissions, one option would be to apply a tax or fee on GHG emissions or the inputs that produce them. This type of approach is commonly called a carbon tax or a GHG emissions fee (see "Terminology Issues: A Carbon Tax or an Emissions Fee?"). This report does not compare and analyze the multiple policy tools available to Congress that could address climate change (see text box "Other Policy Options for Addressing GHG Emissions"). This report focuses on the policy considerations and potential impacts of using a carbon tax or GHG emissions fee to control GHG emissions. The key human-related GHG is CO 2 , which is generated primarily through the combustion of fossil fuels: coal, oil, and natural gas. In 2016, fossil fuel combustion accounted for 94% of U.S. CO 2 emissions and 76% of U.S. GHG emissions. A carbon tax could apply either directly to GHG emissions or to the materials—based on their carbon contents—that ultimately generate the emissions (i.e., "emissions inputs"). A carbon price on emissions or their emissions inputs—mainly fossil fuels—would increase the relative price of the more carbon-intensive energy sources, particularly coal. This result could spur innovation in less carbon-intensive technologies (e.g., renewable energy, nuclear power, carbon capture and sequestration [CCS]) and stimulate other behavior that may decrease emissions, such as efficiency improvements. The energy price increases could also have both economy-wide impacts and negative effects on specific industries and particular demographic groups. A carbon tax approach has received some attention and debate in recent years. In the 115 th Congress, Members introduced nine carbon tax or fee proposals. Outside of Congress, the Climate Leadership Council—a bipartisan group of former policymakers and industry leaders—published a conceptual carbon tax approach in 2017 that generated some interest. Some of the industry leaders on the council represent major energy companies, including Shell, BP, and ExxonMobil. On the other hand, many Members have expressed their opposition to a carbon tax. Starting in the 112 th Congress and going through the 115 th Congress, Members have introduced resolutions in both the House and Senate expressing the view that a carbon tax is not in the economic interests of the United States. In 2018, the House passed a resolution "expressing the sense of Congress that a carbon tax would be detrimental to the United States economy" ( H.Con.Res. 119 ). An analogous resolution was not introduced in the Senate in the 115 th Congress. The first section of this report examines carbon tax design issues, including the point of taxation, the rate of taxation, and potential border carbon adjustments. The second section discusses issues related to the distribution of carbon tax revenues. The third section discusses additional considerations associated with a carbon tax program, including estimates of GHG emissions, federal revenue, and fossil fuel prices and changes in energy use. The fourth section provides concluding observations. Carbon Tax Design Considerations If policymakers decide to establish a carbon tax system, Congress would face several key design decisions, including the point of taxation—where to impose the tax and what to tax—the rate of taxation, and whether and/or how to address imported carbon-intensive materials. Alternatively, Congress could direct one or more federal agencies to determine these design features through a rulemaking procedure. Although a few of the GHG emission reduction proposals in prior Congresses delegated such authority to an agency, such as the U.S. Environmental Protection Agency (EPA), all of the proposals since the 111 th Congress have included some degree of design details in the statutory language. (A later section discusses carbon tax revenue application considerations.) Point of Taxation The point of taxation would determine which entities would be required to (1) make tax payments based on emissions or emission inputs, such as fossil fuels, (2) monitor emissions or emission inputs, and (3) maintain records of relevant activities and transactions. This section provides some considerations for policymakers deciding which GHG emissions and/or emission sources to cover in a carbon tax system. Throughout the U.S. economy, millions of discrete sources generate GHG emissions: power plants, industrial facilities, motor vehicles, households, commercial buildings, livestock, etc. Administrative costs and challenges would likely increase with a broader scope of an emissions tax. A carbon tax may apply to CO 2 emissions alone, which account for most U.S. GHG emissions, or to multiple GHGs. Carbon tax proposals that apply only to CO 2 generally attach a price to a metric ton of CO 2 emissions (mtCO 2 ). Some sources emit non-CO 2 GHGs, such as methane, nitrous oxides, and sulfur hexafluoride. GHG emissions from these sources could be addressed by attaching a price to a metric ton of CO 2 emissions-equivalent (mtCO 2 e). This term of measure is used because GHGs vary by global warming potential (GWP). At these sources, the determined GWP values would be an important issue. Policymakers may consider limiting the tax to sectors or sources that emit above a certain percentage of total U.S. GHG emissions, many of which currently report their emissions to the government. For more than 20 years, monitoring devices or systems have been installed in smokestacks of most large facilities, such as power plants, which are required to periodically report emissions data to EPA. In addition, since 2010, EPA has collected annual emissions data from approximately 8,000 facilities that directly release above certain amounts of GHG emissions. Using these established monitoring frameworks, policymakers could employ a "downstream" approach, applying a carbon tax at the point where the GHGs from these facilities are released to the atmosphere. Alternatively, the tax could be applied to reliable proxies for emissions, such as emission inputs. For example, the carbon content of fossil fuels—coal, natural gas, petroleum—can serve as a proxy for the emissions released when the fuels are combusted. Applying a tax on emission inputs allows for the consideration of various points of taxation. For instance, emission inputs could be taxed at "upstream" (e.g., wells) or "midstream" stages in that process (e.g., refineries), the latter allowing for potential tax administration advantages that may be provided by specific infrastructure chokepoints in the fossil fuel market. For example, with respect to petroleum, the number of upstream sources—wells that produce crude oil—is over 445,000, but the number of midstream sources—facilities that refine crude oil—is only 137. Table A-1 (in Appendix A) lists the top GHG emission sources in the United States. These sources combined to account for approximately 95% of U.S. GHG emissions in 2016. Table A-1 identifies the number of entities for each source category (e.g., number of coal mines, number of steel production facilities) and the percentage of total U.S. GHG emissions the category contributes. In the case of fossil fuel combustion—which accounted for 76% of total U.S. GHG emissions—the table provides several options for segmenting the universe of sources if policymakers choose to implement a carbon tax. It identifies the number of entities that might be subject to the carbon tax under a particular option (pending any exclusions). For example, policymakers could address fossil fuel combustion emissions by applying a carbon tax to fossil fuels (based on their carbon content) at the following entities, which include both upstream and midstream infrastructure chokepoints: 137 petroleum refineries (based on 2017 data) and 166 petroleum importers (based on 2018 data); 671 coal mines and eight companies supplying imported coal (based on 2017 data); and 1,679 entities that report natural gas deliveries to the Energy Information Administration (EIA) on Form EIA-176 and 123 natural gas fractionators (based on 2016 data). Some of the above points of taxation might take advantage of the administrative frameworks for existing federal excise taxes. For example, a per-barrel federal excise tax on crude oil at the refinery supports the Oil Spill Liability Trust Fund. An excise tax on the sale or use of coal supports the Black Lung Disability Trust Fund. Rate of Carbon Tax A central policy choice when establishing a price on GHG emissions is the rate of the carbon tax. Several approaches, which are discussed below, could inform the decision. GHG Emissions Target Approach One approach would set the carbon tax rate at a level or pathway—based on modeling estimates—that would achieve a specific GHG emissions target. For example, a 2018 study estimated the carbon tax rate needed to meet the U.S. GHG emission reduction targets established under the 2015 Paris Agreement: 26%-28% below 2005 net GHG emission levels by 2025. The study found that a constant tax rate of $43/ton starting in 2019 would meet the 2025 reduction target. Emissions reduction estimates from carbon tax programs are based on multiple assumptions. Accordingly, such estimates provide different tax rates needed to meet a particular emissions target depending on these assumptions. See " Impacts on GHG Emission Levels " for selected analyses of emission reductions for a given carbon price and rate of price increase. Marginal Benefits or "Social Cost of Carbon" Approach Under another approach, policymakers could base the carbon tax rate on the estimated marginal net benefits associated with reduced CO 2 emissions. The net benefits would be the avoided net damages (i.e., costs) of climate change. The estimates of net benefits of avoided emissions often rely on analyses of the social cost of carbon (SC-CO 2 ) or the social cost of greenhouse gases (SC-GHG ). Therefore, policymakers could use SC-CO 2 measurements—as the basis for an estimate of the net benefits of a marginal change in emissions—to set the rate of a carbon tax or emissions fee. One potential challenge of relying on SC-CO 2 estimates to set a carbon fee are methodological concerns. For example, the existing estimates in peer-reviewed research cover a wide range. In addition, some argue that the underlying simulation models for estimating the SC-CO 2 values are insufficient. For any level of emissions, the projected increase in global average temperature may cover multiple degrees Fahrenheit, and other measures of climate change, such as precipitation patterns, may encompass directional uncertainties. No estimates of impacts are comprehensive at this time, and many of the risks are difficult to estimate and value. When valuing the SC-CO 2 , analysts encounter a range of views on methods and assumptions, and establishing study parameters may be challenging. For example, estimates of the monetary values of climate change impacts may be difficult or controversial to estimate, such as the monetary values associated with human deaths or sickness. A related framework question is whether to include global climate impacts or just domestic impacts. In addition, the element of time in climate change impacts particularly complicates the valuation. The fact that many impacts of climate change will occur in the distant future requires consideration of society's willingness to pay in the near term to reduce emissions that would cause future damages, mostly to future generations. To take time into account, economists discount future values to a calculated "present value." Economists do not agree on the appropriate discount rate(s) to use for a multi-generational, largely nonmarket issue such as human-induced climate change. The choice of discount rate can significantly increase or decrease values of the SC-CO 2 . A low discount rate would give greater value today to future impacts than would a higher discount rate. High discount rates can reduce the value today of future climate change impacts to a small fraction of their undiscounted values. A high discount rate would recommend applying fewer of today's resources to addressing climate change impacts in the future. Since 2008, federal agencies have used SC-CO 2 estimates in dozens of final rulemakings as a method to estimate the net benefits of abating CO 2 emissions. An Interagency Working Group prepared SC-CO 2 estimates, which were updated over time and subjected to expert and public comment. On March 28, 2017, President Trump issued Executive Order 13783, "Promoting Energy Independence and Economic Growth," which effectively withdrew the federal SC-CO 2 estimates. Nonetheless, federal agencies have used new, interim values generated by EPA in 2017, modified from the withdrawn technical support documents, in regulatory and other decisions. Legislation could set a carbon price citing any of these SC-CO 2 values or others available from nonfederal researchers or prescribe methods for estimating new ones. Using SC-CO 2 estimates to set the tax rate would involve a cost-benefit framework. Although many posit that a cost-benefit framework remains the best option, some economists argue that a cost-benefit framework may be inappropriate for climate change policy for these reasons Many experts expect climate change—and policies to address it—to cause nonmarginal changes to economies and ecosystems. The changes are expected to increase disproportionately with incremental climate change with a potential for crossing critical "tipping points" after which systems change dramatically and rapidly. Climate change impacts are multi-generational, and uncertainty and disagreement exists about whether and how to assign a present value to social costs and benefits over generations. Some impacts from climate change may be irreversible on the timescale of human civilizations, such as melting of major ice sheets in Antarctica or Greenland. Other Considerations Policymakers might consider a carbon tax as a fiscal tool to help reduce the federal deficit, reduce other taxes, or pay for specific programs that may or may not be related to climate change policy. In addition, some have proposed a phased-in approach, setting a rate that is initially lower but increases at an announced or adjustable rate either for a fixed period or indefinitely. Advantages of this approach include providing an opportunity for consumers and investors to adjust their behavior before the higher tax rates go into effect, such as purchasing more energy efficient appliances or investing in low-emissions technologies. Phasing in a carbon tax, however, could delay climate-related benefits. If Congress finds agreement in principle on carbon pricing, the rate(s) could emerge from the process of reaching political agreement. Elements that might be considered include the options described above or consideration of the magnitude of overall economic impact; impacts on certain economic sectors, regions, or population groups; timing to motivate and allow an orderly transition to a lower-GHG economy; or other factors. Border Carbon Adjustments Many stakeholders have voiced concerns over how a U.S. carbon price system would interact with policies in other nations, particularly if the United States were to enact a carbon tax system that covers more sources or is more stringent than enacted elsewhere. A central concern is that a U.S. carbon tax could raise U.S. prices more than the prices of goods manufactured abroad, potentially creating a competitive disadvantage for some domestic businesses. Certain businesses may become less profitable, lose market share, and reduce jobs. The industries generally expected to experience disproportionate impacts under a U.S. carbon tax are often described as "emission-intensive, trade-exposed" industries. An industry's CO 2 emission intensity is a function of both direct CO 2 emissions from its manufacturing process (e.g., CO 2 from cement or steel production) and indirect CO 2 emissions from the inputs to the manufacturing process (e.g., electricity, natural gas). Such industries are likely to experience greater cost increases than less carbon intensive industries, all else being equal. In general, trade-exposed industries are those that face greater international competition compared to other domestic industries. A carbon tax could present a particular challenge for these industries, because they might be less able to pass along the tax in the form of higher prices, because they may lose global market share—and jobs—to competitors in countries lacking comparable carbon policies. Policymakers might consider approaches to mitigate these potential economic impacts in several ways. One approach that has received interest in recent years is a border adjustment mechanism, which is often described as a border carbon adjustment (BCA) in the carbon tax context. A BCA would apply a tariff to emission-intensive, imported goods such as steel, aluminum, cement, and certain chemicals. Each of the carbon price proposals in the 115 th Congress would have established a BCA to address emission-intensive imports. Another rationale for adding a BCA to a carbon tax system is the possibility that it would encourage other nations to adopt comparable carbon price policies. Many of the recently proposed BCA mechanisms allow for exemptions for nations with comparable programs. To date, no nations have implemented a BCA as part of their climate change policies. Establishing an economically efficient BCA would likely present substantial challenges. For example, policymakers must decide which goods and/or industries would be covered by a BCA and how the adjustment program would assess the comparability of varied climate-related policies in other nations. In addition, accurately determining and verifying the volume of GHG emissions embodied in a particular imported product would be data intensive and challenging. To alleviate some of the measurement complexity, policymakers could limit the program to selected industries and apply default values and assumptions to particular manufacturing processes. However, this simplified approach could result in less accurate import price adjustments, which could potentially affect the accuracy of GHG emission reductions achieved by the carbon tax program. Another option would be to allow companies to provide measured, independently verified emissions data as an alternative to default values. In addition, the border adjustment approach would likely raise concerns of violating international trade rules. Further, some researchers have highlighted the potential for unintended consequences from a BCA. For example, some studies have found that a border adjustment may lead to lower net exports than the carbon price alone, due to the adjustment's terms-of-trade effect on U.S. currency. These issues are beyond the scope of this report, but some of the concerns may be lessened to some degree if a larger number of nations establish comparable emission reduction policies, as many have agreed to do under the Paris Agreement. Another possible rationale for a BCA is to address the concern of "emissions leakage" (or "carbon leakage"). Emissions leakage "occurs when economic activity is shifted as a result of the emission control regulation [e.g., a carbon tax program] and, as a result, emission abatement achieved in one location that is subject to emission control regulation is [diminished] by increased emissions in unregulated locations." The concern of emissions leakage has been central in the debate over whether the United States (or any nation) should unilaterally address GHG emissions. A BCA may diminish the potential for emissions leakage by reducing the incentive to shift economic activity to a nation without a comparable carbon tax. However, some recent studies raise questions regarding the degree to which emissions leakage would be a concern under a unilateral U.S. carbon tax. Applications for Carbon Tax Revenue Although a tax may be levied on fossil fuels or GHG emission sources at various points in the economy, the carbon tax impacts may be experienced elsewhere. Policymakers have multiple options to address these expected impacts. Policymakers would face challenging decisions regarding the distribution of the new carbon tax revenues. As discussed below, some economic analyses indicate that certain distributions of tax revenue—depending on the level of the tax—would have a greater economic impact than the direct effects from the tax or fee on GHG emissions. Carbon tax revenues could be treated as general fund revenue without a dedication to a specific purpose in the enacting legislation (i.e., subject to the annual appropriations process), or policymakers could state that the new revenues would support deficit (or debt) reduction. Alternatively, the enacting legislation could return the tax revenue to the economy in some manner, sometimes called "revenue recycling." All of the carbon tax legislative proposals in recent Congresses have proposed some manner of revenue recycling, specifically directing the carbon tax revenue to support specific policy objectives. Carbon tax revenues may be used to support a variety of policy goals. When deciding how to allocate the new revenue stream, policymakers would likely encounter trade-offs among objectives, including: reducing the economy-wide costs resulting from a carbon tax program; alleviating the costs borne by subgroups in the U.S. population, particularly low-income households and/or communities most dependent on carbon-intensive economic activity; and supporting specific policy objectives, such as domestic employment, climate change adaptation, energy efficiency, technological advance, energy diversity, or federal deficit reduction, among others. In general, economic carbon tax studies have found that the relative ranking of revenue recycling options to mitigate the economy-wide impacts is generally the opposite of the relative ranking for alleviating distributional impacts. The contrasting relative rankings highlight a central tradeoff policymakers would face when deciding how to allocate carbon tax revenues. The following sections discuss these trade-offs and some of the revenue application options that have received attention in recent years. A large body of economic literature has examined the economic impacts of hypothetical carbon tax programs, particularly the impacts of using the carbon tax revenues for different purposes. Many of the economic studies cited below were prepared prior to the enactment of the Tax Cuts and Jobs Act (TCJA, P.L. 115-97 ). Signed by President Trump in December 2017, the act changed various elements of the U.S. federal tax system. In particular, the act lowered the corporate income tax rate from 35% to 21%. As discussed below, adjusting the corporate income tax rate is one of the central policy options generally considered in carbon tax economic literature both before and after enactment of P.L. 115-97 . Based on a selected review of the economic literature that includes the tax code changes in P.L. 115-97 , the central conclusions from carbon tax literature regarding revenue recycling appear to be largely unchanged. Economy-Wide Impacts A primary concern with a carbon tax is the potential economy-wide costs that may result. Generally, a tax or fee on GHG emissions or the fuels that generate them would increase certain energy prices, namely fossil fuels, in the near- to medium-term as well as the prices of goods and services produced using these materials, like electricity. This outcome is inherent to the carbon tax, as its purpose is to increase the relative price of the more carbon-intensive energy sources compared to less carbon-intensive alternatives, encourage innovation in less carbon-intensive technologies, and promote other activity (e.g., energy efficiency) that may decrease emissions. These expected outcomes will have some economy-wide impacts. Ultimately, the economy-wide effects would depend on a number of factors, including, but not limited to, the magnitude and scope of the carbon tax and, most importantly, use of the ensuing revenues. Economy-wide costs (referred to as macroeconomic costs) are often measured in terms of changes in projected gross domestic product (GDP) or another societal-scale metric, such as economic welfare. The magnitude of macroeconomic impacts from a carbon tax has been a subject of debate among policymakers and stakeholders. In addition, results of economy-wide impacts will not include comparisons of impacts to different subpopulations or geographic regions, which may be of interest to policymakers. Multiple economic studies and models have examined and compared various options for addressing the economy-wide impacts that may result from a carbon tax. One option for reducing the economic cost of a carbon tax is using the revenue to reduce existing taxes, such as those on labor, income, and investment. Economists generally describe such taxes as distortionary, because the taxes discourage economically beneficial activity, such as employment and investment. Another option for policymakers is to use the tax revenues to address the national debt. Fewer studies have examined deficit reduction scenarios, because "modeling the effects of budget deficits is much more difficult than modeling the effects of tax cuts." Some studies have concluded that using tax revenues for this purpose would help alleviate economy-wide costs from a carbon tax because of the reduced need to impose distortionary taxes in the future. These studies indicate that the economy-wide benefit would be delayed and its realization assumes policymakers would, sometime in the future, address the deficit by raising taxes. Many recent legislative proposals would distribute the carbon tax revenue back to households in lump-sum payments. Policymakers have generally included this carbon tax revenue application to address distribution impacts (discussed below). These payments could take multiple forms. Economic analyses typically assume an equal payment to individuals or households regardless of their income or location or the effects of the carbon price on them individually. Alternatively, payments could be targeted or scaled to different segments of the population. Among the options mentioned above, economic studies indicate that using carbon tax revenues to offset reductions in existing, distortionary taxes would be the most economically efficient use of the revenues and yield the greatest benefit to the economy overall. This concept is sometimes referred to as a "tax swap." Using carbon tax or fee revenues to offset other distortionary taxes (e.g., labor or capital) may yield a "double-dividend," which includes: reduced GHG emissions; and reduced market distortions by reducing other distortionary taxes, such as investment or income. The economic models that examine the economic impacts of a carbon tax differ in their frameworks and underlying assumptions and often include multiple scenarios involving different uses of carbon tax revenue. In general, the economic models find that certain revenue recycling options may reduce the economy-wide carbon tax impacts but may not eliminate them entirely. Some studies cite particular economic modeling scenarios in which a carbon tax with certain revenue recycling applications would produce a net increase in GDP or economic welfare compared to a baseline scenario. These results indicate that, in certain modeling conditions, the economic improvements gained by reducing existing distortionary taxes would be greater than the costs imposed by the new carbon tax (without including the intended climate benefits of the policy). For example, results from a 2018 study demonstrated a net increase in GDP, compared to baseline conditions, when carbon tax revenues were used to finance proportionate reductions in labor tax rates (payroll tax). In general, the economic carbon tax studies usually agree on the relative ranking of revenue recycling options in terms of their ability to mitigate the economy-wide impacts of a carbon tax program. The studies indicate that the approaches that use carbon tax revenue to proportionately lower existing tax rates are able to mitigate more of the carbon tax economy-wide costs than using the revenue to provide a lump-sum distribution to individuals or households. Researchers prepared multiple carbon tax analyses prior to the enactment of the TCJA in 2017 that estimated the magnitude GDP impacts. As with other estimates relating to carbon tax impacts, the results depend on the scope of the carbon tax, underlying assumptions in the analytical model, and the terms of measurement: Some estimates measure GDP growth rates; others measure actual GDP. Figure 1 illustrates the modeled GDP results from a 2018 carbon tax analysis that includes the changes made by the TCJA. This study assessed the GDP impacts under a $50/mtCO 2 e carbon tax (starting in 2020 and increasing by 2% annually) that would apply to CO 2 emissions from fossil fuel combustion and methane emissions from fossil fuel production activities. The figure compares projected GDP impacts under a baseline scenario (i.e., no carbon tax) with three carbon tax revenue applications: a payroll tax rate reduction tax swap, a lump-sum distribution to households, and a scenario that would use tax revenue to reduce the national debt for 10 years and then use revenues for a lump-sum distribution to households. The figure projects GDP impacts in 2020, 2024, 2029, and 2039. As the figure indicates, the payroll tax rate scenario would result in a 0.1% loss of GDP in the first year (2020), but would yield GDP gains in subsequent years compared to baseline. The lump-sum distribution approach would yield GDP losses each year, ranging from 0.3% to 0.4% below the projected baseline. The deficit reduction approach would yield a range of GDP losses in the first 10 years—ranging from 0.4% to 0.04%—but would yield a GDP gain in 2039 (if not before), compared to baseline. Opponents of a carbon tax approach often highlight the GDP losses that would result from a carbon tax. Policymakers and stakeholders may have different perspectives regarding whether the magnitude of the GDP impacts are significant. In addition, GDP impact estimates may be presented in several ways. For example, one could compare the differences in GDP value for a particular year between carbon tax scenarios and a baseline scenario. This approach is employed in the above figure. Alternatively, one could present the GDP losses with a cumulative measure. For instance, if one were to add up the annual GDP losses (for example, over a 10-year period) from the lump-sum scenario compared to the baseline scenario, the resulting sum would be much larger. These types of calculations would require assumptions about annual GDP growth rates. Some may point out that the GDP impact estimates do not account for the environmental and public health benefits for reducing GHG emissions and that the GDP projections should be compared with the climate benefits achieved from the program as well as the estimated costs of taking no action. As discussed above, estimates of climate-related benefits and costs often contain considerable uncertainty and have generated debate in recent years. Household Impacts Many economic analyses have found that a carbon tax (before revenue recycling) would produce a regressive outcome among households, with lower-income households facing a larger impact from the tax than higher-income households. However, "the degree to which a carbon tax is found to disproportionately burden low-income households varies across studies, based on the metrics against which analysts measure costs." Entities that pay the carbon tax may pass its costs back to fuel producers or forward to fuel consumers. If entities pass the costs forward, consumers would face higher prices for fuels and electricity and carbon-intensive products. When the carbon tax is passed forward to consumers, lower-income households in particular would likely face a disproportionate impact (i.e., regressive outcome), because a larger percentage of their income is used to pay for energy needs, such as electricity, gasoline, or home heating oil. Many economic analyses of carbon price scenarios assume that the vast majority (if not all) of the carbon tax impact is passed forward to consumers, leading to a regressive outcome. On the other hand, if entities pass the costs backward to producers, the tax impacts would fall on labor through reduced wages or owners of capital through reduced returns on investment. Economic models that assume this outcome produce more progressive results (absent revenue recycling), with lower-income households experiencing smaller impacts than higher-income households. The economic analyses appear to agree that the distributional effects among households (i.e., regressive vs. progressive) of a carbon tax program would be largely dependent on how the carbon tax revenues were used. A number of economic studies have used models to estimate the impacts of a carbon tax across households under several revenue distribution scenarios. The results vary because the studies use different modeling frameworks, carbon tax rates and scopes, underlying assumptions, and ways to measure impacts. For example, a 2018 study assessed the impacts to household income for different household quintiles under a carbon tax of $50/mtCO 2 e, starting in 2020. This study examined four revenue distribution scenarios: 1. reduce federal deficit, 2. reduce corporate income tax rate, 3. reduce payroll tax rate, and 4. provide a per-capita rebate to households. This report highlights this study, because it includes carbon tax revenue applications that have generated interest in recent years. In addition, this analysis was prepared after the 2017 tax rate changes in P.L. 115-97 . Figure 2 illustrates the modeled results, which the study measured as percentage reductions to household income. Thus, negative percentages illustrated in the figure are gains to household income. The per-capita rebate approach provides the most progressive result, yielding a net benefit for the bottom three household quintiles but a net loss for the top quintile. The fourth quintile impact is zero. By comparison, the other approaches produce varying degrees of regressive outcomes while providing a net gain for wealthier groups in two particular instances. Of the four options, the payroll tax rate reduction approach estimates the smallest variance between the income quintiles, ranging from a 0.5% loss for the lowest quintile to a 0.2% gain for the fourth quintile. The fifth quintile impact is zero. The relative ranking among options for progressivity is generally the opposite of the relative ranking for mitigating economy-wide impacts. Other economic analyses have found similar relative rankings of revenue recycling options. The contrasting rankings highlight a central tradeoff policymakers would face when deciding how to allocate carbon tax revenues. Policymakers could allot some portion of the revenues to partially support both objectives. In a 2018 carbon tax study, economic modelers assessed a scenario in which a portion of the revenue was used to offset the welfare impacts for the lowest-income household quintile and the remaining revenue supported reductions in capital tax rates. The study's models estimated that a carbon tax's impacts on the lowest-income household quintile could be counteracted with approximately 10% of the revenue. This would allow for 90% of the revenue to be used to reduce capital tax rates and thus address the economy-wide impacts from the carbon tax. Industry Impacts and Transition Assistance As discussed above, a carbon tax is projected to disproportionately impact certain industries, particularly those that are described as "emission-intensive, trade-exposed industries." To address these concerns, many of the recent carbon tax legislative proposals have included design mechanisms that would attach a carbon price to certain imported materials and products (see " Border Carbon Adjustments "). Another approach to addressing the competitiveness concerns of domestic industries would involve distributing a portion of the carbon tax revenues to emission-intensive, trade-exposed industries as rebates based on their output. Output rebate proposals generally determine rebate amounts by measuring emissions intensity at the relevant sector level or by a benchmark that would encourage facilities to reduce their emissions intensity. These rebates could be phased out over time or continue until other nations adopt comparable carbon price policies. Under a carbon tax system in Canada, which is scheduled to take effect in 2019, industries will be subject to an "output-based pricing system." Some contend that the data and administrative resources necessary to implement such a program would be substantial. A carbon tax system is also expected to disproportionately impact fossil fuel industries and the communities that rely on their employment. In particular, coal-mining communities are expected to experience substantial impacts based on the coal production declines predicted in carbon tax analyses. For example, one model estimates that under a $50/mtCO 2 e carbon tax, annual U.S. coal production would decline by almost 80% in 2030 compared to a reference case. Policymakers may consider supporting worker transition or community transition assistance to help mitigate the economic impacts. Several of the recent carbon tax proposals would have devoted carbon tax revenues for this objective. Other Policy Objectives Policymakers may also consider using the carbon tax revenues to provide funding to support a range of objectives, which may include policy goals that are not directly related to climate change. Some options are identified below, and many have been included in recent legislative proposals or in state GHG mitigation programs that raise revenues: Technology development and deployment: Efforts to reduce the costs of emission mitigation technologies—particularly carbon capture, utilization, and sequestration—are often considered in carbon tax programs, and Congress has funded such programs in other legislation. Energy efficiency programs: Although a carbon tax would likely stimulate energy efficiency to some degree, Congress may consider using the revenues to provide additional incentives and/or technical assistance, particularly to encourage households and small businesses to increase efficiency, which would also reduce the effects of the tax on their energy bills. States in the Regional Greenhouse Gas Initiative (RGGI) have used revenues from the program to support efficiency improvements, among other objectives. Biological sequestration: Trees, plants, and soils sequester carbon, removing it from the earth's atmosphere. Revenues could be used to promote carbon sequestration efforts, particularly forestry or agricultural activities, which would supplement the GHG reductions of the carbon tax. Adaptation to climate change: Regardless of emission reduction efforts taken today, climatic changes are expected due to the ongoing accumulation of GHGs in the atmosphere. Therefore, some advocate using revenues to reduce potential damage—domestically and internationally—of a changing climate. Deficit reduction: The possible contribution of a carbon tax to deficit reduction would depend on the magnitude and scope of the carbon tax, various market factors, and assumptions about the size of the deficit. Some carbon tax proposals in recent congressional sessions would have allotted a portion of revenues for deficit reduction. Infrastructure funding: Some recent proposals have provided funding for infrastructure projects. This objective could be combined with funding for adaptation activities. Additional Considerations Impacts on GHG Emission Levels Multiple economic studies have estimated the emission reductions that particular carbon tax designs could achieve. Economic models provide estimates based on the best information available at the time. Comparing results from different studies is problematic, because the studies' scenarios differ in multiple ways, including the tax rate, start date, scope of the program, assumptions about economic growth and technological advances, and assumptions about other federal and state policies and their effects. A 2018 study avoided some of these comparison difficulties by inviting modeling teams to analyze a coordinated set of scenarios. The 2018 Stanford Energy Modeling Forum study ("EMF 32") assembled 11 modeling teams to analyze the economic impacts of four carbon tax scenarios starting in 2020: a $25/metric ton and $50/metric ton carbon tax, increasing annually by 1% and 5%. Within each of these carbon price frameworks, the models ran separate revenue distribution scenarios: a reduction in labor tax rates, a reduction in capital tax rates, and household rebates. Figure 3 illustrates the study's estimates of CO 2 emissions from fossil fuel combustion. The red lines in the figure display the average values for the 11 models. The shaded areas illustrate the range of results, highlighting the uncertainties in emission reduction estimates. Based on these results, the study authors concluded that each of the tax rate scenarios would likely achieve the U.S. CO 2 emission reduction targets under the Paris Agreement. As Figure 3 indicates, a carbon tax or emissions fee could be set with the expectation that it would achieve an emissions reduction target, but the resulting level of emissions would be uncertain. The uncertainty of resulting emissions may lead some stakeholders to disfavor a carbon tax or fee option to control GHG emissions. Although uncertain emissions are inherent with a carbon tax approach, Congress could employ certain design elements to enhance the emission control certainty. For example, the existing GHG emission reporting data could be used to track the impact and performance of a carbon price. If policymakers determine that emission reduction is not occurring at a desired pace, the price could be amended. Legislation could establish the conditions and process by which price changes could occur. Some may argue that adjusting the carbon price to reflect actual emissions performance would undermine the benefits of price certainty. Others may point out that unplanned adjustments to the carbon price could be politically unpalatable. For example, it may be difficult for policymakers to increase the tax rate, especially during periods of high energy prices. Some have suggested that Congress authorize an independent board or agency with the mandate to modify the tax rate administratively in order to meet pre-determined emission reduction objectives. Although this approach would likely improve emission certainty, long-term price certainty may be sacrificed to some degree, depending on the authority of the delegated entity to adjust the tax rate. Some would argue that potential year-to-year emission variations under a carbon tax would not undermine efforts to control climate change so long as long-term emission goals are achieved. Indeed, they would assert that annual emission fluctuations are preferable to price volatility that could result from an emissions cap program. They support their preference for price control by suggesting that CO 2 generates damages through its overall accumulation as concentrations in the atmosphere, not its annual flow. A potential concern of a carbon tax is whether it would be effective in reducing GHG emissions in all of its covered sectors, particularly emissions in the transportation sector. As of 2016, the transportation sector contributes the largest percentage (36%) of CO 2 emissions from fossil fuel combustion, with electric power second at 35%. Carbon tax analyses generally agree that the majority of the emission reductions resulting from a carbon tax program would occur in the electricity sector. By comparison, economic models generally conclude that a carbon tax would have much less of an impact on emissions in the transportation sector. Several factors explain this projected outcome. The transportation sector offers fewer opportunities to switch to less carbon-intensive fuels in the short term than does the electric power sector, which can displace coal with natural gas relatively quickly. In addition, short-term emission changes in the transportation sector are largely influenced by changes in driving demand, which has historically been relatively insensitive to gasoline price increases. Based on these projected outcomes, some may contend that to achieve deeper, long-term reductions in total GHG emissions, policymakers would need to complement a carbon tax with other programs, such as vehicle technology standards (e.g., Corporate Average Fuel Economy, CAFE) or fuel performance standards, among other options. Potential to Generate Revenues The quantity of revenues generated under a carbon tax system depend on the program's design features, namely the tax base and rate, as well as such independent factors as prices in global energy markets. They would also depend on how covered emission sources respond to the carbon price, for example by adopting alternative technologies or changing behavior. Several carbon tax studies have prepared revenue estimates, which are presented in Table 1 . From a public finance perspective, a carbon tax may not be a reliable source of long-term funding, because a primary goal of the carbon tax is to reduce its tax base—GHG emissions. The estimates in Table 1 project carbon tax revenue values in 2020. Multiple studies have projected carbon tax revenue trajectories beyond 2020. In the 2018 EMF 32 study, all but one of eight models projected carbon tax revenue increases from 2020 through 2040. The carbon tax scenarios with larger annual rate increases resulted in steeper trajectories of increasing revenues through 2040. The models' estimates of annual carbon tax revenue in 2040 ranged from approximately $250 billion to $475 billion (under the tax rate scenario of $50/metric ton, increasing 5% annually). Effects on Energy Prices and Energy Use Fossil fuels have a wide range of CO 2 emission intensity (i.e., emissions per unit of energy). As illustrated in Figure 4 , the CO 2 emission intensity of coal is approximately 30% more than oil and approximately 80% more than natural gas. These emissions intensity differences would lead to different tax rates per unit of energy across different fuels in a carbon tax regime. Carbon taxes could affect fuel prices in complex ways. The change in consumer fuel prices would likely not be the same as the price paid by the party directly subject to the tax. Actual price impacts for consumers would depend on multiple factors, including whether: a carbon tax is applied at the beginning of the production process ("upstream") to fossil fuels; and the price impacts are passed through to end users and not absorbed by upstream energy producers or midstream entities, such as retailers. In addition, market participants such as electric power plant operators can avoid paying the increased costs by substituting fuels or technologies. Energy consumers may modify their behavior in the marketplace—energy conservation, consuming less or different products and services—to mitigate impacts from the increased prices. Table 2 includes estimates of price increases on coal, crude oil, natural gas, home heating oil, and motor gasoline based on a carbon tax rate of $25/mtCO 2 that applies CO 2 emissions from fossil fuel combustion. As indicated in the table, a carbon tax would have the greatest impact on the price of coal due to coal's relatively high CO 2 emissions intensity. By comparison, a carbon tax is expected to have less of an impact on the price of gasoline, increasing its price by 8%. Economic models have projected how carbon prices would impact energy use, particularly the consumption of different fossil fuels and less carbon-intensive alternatives, such as renewables or nuclear power. For example, the 2018 EMF 32 study, which included results from 11 modeling groups, assessed how several carbon tax scenarios would impact energy consumption. Highlights of these models' results (compared to reference case scenarios) include the following: Coal consumption could decline by 40% to nearly 100% by 2030 under a $50/mtCO 2 carbon tax, though one model projected an increase in coal due to the model incorporating CCS technology. Natural gas consumption estimates vary across the models, with some showing minimal change in 2030 and others showing declines ranging between 40% and 60%. Oil consumption estimates indicate that the largest decline (approximately 4% by 2030) would occur under the $50/mtCO 2 carbon tax scenario. Wind energy consumption could increase by 48% to 300% by 2030 under a $50/mtCO 2 carbon tax scenario. Concluding Observations A carbon tax is one policy option to address U.S. GHG emission levels, which contribute to climate change and related impacts. Economic modeling indicates that a carbon tax would achieve emission reductions, the level of which would depend on which GHG emissions and sources are covered and the rate of the carbon tax. A carbon tax would generate a new revenue stream. The magnitude of the revenues would depend on the scope and rate of the tax and multiple market factors, which introduce uncertainty in the revenue projections. A 2018 CBO study estimated that a $25/metric ton tax on CO 2 emissions from energy-related activities and other selected GHG emission sources would yield approximately $100 billion in the first year of the program. To put this estimate in context, the CBO projected that total federal revenue would be $3.5 trillion in FY2019. Policymakers would face challenging decisions regarding the distribution of the new carbon tax revenues. Depending on the level of the tax, some economic analyses indicate that the distribution of tax revenue could yield greater economic impacts than the direct impacts of the tax. Some models indicate that the economic impacts are greatest in the early years of the carbon tax. Policymakers could apply the tax revenues to support a range of policy objectives. When deciding how to allocate the revenues, policymakers would encounter trade-offs among objectives. The central trade-offs involve minimizing economy-wide costs, lessening the costs borne by specific groups—particularly low-income households—and supporting a range of specific policy objectives. A primary concern with a carbon tax is the potential economy-wide costs that may result. The potential costs would depend on a number of factors, including the magnitude, design, and use of revenues of the carbon tax. In general, economic literature finds that some of the modeled revenue applications would reduce the economy-wide costs imposed by a carbon tax but may not eliminate them entirely. Policymakers and stakeholders may have different perspectives regarding whether these estimated economy-wide costs (typically measured in terms of GDP loss) represent a significant concern. Some argue that the estimated economy-wide costs should be compared with the policy option of not establishing a carbon tax. This comparison is uncertain as carbon tax analyses do not generally consider the benefits that would be gained by reducing GHG emissions and avoiding climate change and its adverse impacts. Some studies cite particular economic modeling scenarios in which a carbon tax and revenue recycling could produce a net increase in GDP or economic welfare, compared to a baseline scenario. These scenarios involve using carbon tax revenues to offset reductions in existing, distortionary taxes, such as corporate income or payroll taxes. Although the models indicate that these revenue applications would yield the greatest benefit to the economy overall, the models also find that lower-income households would likely face a disproportionate impact under such revenue applications. As lower-income households spend a greater proportion of their income on energy needs, these households are expected to experience disproportionate impacts from a carbon tax if revenues were not recycled back to them in some fashion, such as a lump-sum distribution. Carbon tax revenues that are used to offset the burden imposed on various sectors or specific population groups would not be available to support other objectives. An additional concern with a carbon tax involves potential disproportionate impacts to "emission-intensive, trade-exposed industries." Policymakers could select among several options to address these concerns, either by establishing a border carbon adjustment program or allocating some of the carbon tax revenues to selected industry sectors based on an output-based metric. If other nations were to adopt comparable carbon price policies, this concern may be alleviated to some degree. Relatedly, a carbon tax is projected to disproportionately impact fossil fuel industries, particularly coal, and the communities that rely on their employment. To alleviate these impacts, policymakers could allocate some of the carbon tax revenue to provide transition assistance to employees or affected communities. Appendix. Potential Applications of a Carbon Tax Table A-1 identifies sources of GHG emissions that account for 0.5% or more of total U.S. GHG emissions. The sources are listed in descending order by their percentage contribution. CO 2 emissions from fossil fuel combustion, which accounts for almost 76% of total U.S. GHG emissions, are broken down by fossil fuel type: petroleum, coal, and natural gas. The table identifies potential points in the economy at which a carbon tax could be applied. The table lists the approximate number of entities that would be involved with different tax applications. The number of entities listed is current as of the most recent data available and varies accordingly by category. See table notes for details. The right-hand column of the table provides additional comments for some of the emission sources. In some cases the comments discuss potential opportunities for additional GHG emissions coverage at a particular source. In other cases, the comments address potential limitations of covering all of the emissions from a particular source.

The U.S. Fourth National Climate Assessment, released in 2018, concluded that "the impacts of global climate change are already being felt in the United States and are projected to intensify in the future—but the severity of future impacts will depend largely on actions taken to reduce greenhouse gas [GHG] emissions and to adapt to the changes that will occur." Members of Congress and stakeholders articulate a wide range of perspectives over what to do, if anything, about GHG emissions, future climate change, and related impacts. If Congress were to consider establishing a program to reduce GHG emissions, one option would be to attach a price to GHG emissions with a carbon tax or GHG emissions fee. In the 115th Congress, Members introduced nine bills to establish a carbon tax or emissions fee program. However, many Members have expressed their opposition to such an approach. In particular, in the 115th Congress, the House passed a resolution "expressing the sense of Congress that a carbon tax would be detrimental to the United States economy." Multiple economic studies have estimated the emission reductions that particular carbon tax would achieve. For example, a 2018 study analyzed various impacts of four carbon tax rate scenarios: a $25/metric ton of CO2 and $50/metric ton of CO2 carbon tax, increasing annually by 1% and 5%. The study concluded that each of the scenarios would likely achieve the U.S. GHG emission reduction target pledged under the international Paris Agreement (at least in terms of CO2 emissions). A carbon tax system would generate a new revenue stream, the magnitude of which would depend on the scope and rate of the tax, among other factors. In 2018, the Congressional Budget Office (CBO) estimated that a $25/metric ton carbon tax would yield approximately $100 billion in its first year. CBO projected that federal revenue would total $3.5 trillion in FY2019. Policymakers would face challenging decisions regarding the distribution of the new carbon tax revenues. Congress could apply revenues to support a range of policy objectives but would encounter trade-offs among the objectives. The central trade-offs involve minimizing economy-wide costs, lessening the costs borne by specific groups—particularly low-income households and displaced workers in certain industries (e.g., coal mining)—and supporting other policy objectives. A primary argument against a carbon tax regards it potential economy-wide impacts, often measured as impacts to the U.S. gross domestic product (GDP). Some may argue that projected impacts should be compared with the climate benefits achieved from the program as well as the estimated costs of taking no action. The potential impacts would depend on a number of factors, including the program's magnitude and design and, most importantly, the use of carbon tax revenues. In general, economic literature finds that some of the revenue applications would reduce the economy-wide costs from a carbon tax but may not eliminate them entirely. In addition, some studies cite particular economic modeling scenarios in which certain carbon tax revenue applications produce a net increase in GDP compared to a baseline scenario. These scenarios involve using carbon tax revenues to offset reductions in other tax rates (e.g., corporate income or payroll taxes). Although economic models generally indicate that these particular revenue applications would yield the greatest benefit to the economy overall, the models also find that lower-income households would likely face a disproportionate impact under such an approach. As lower-income households spend a greater proportion of their income on energy needs (electricity, gasoline), these households are expected to experience disproportionate impacts from a carbon tax if revenues were not recycled back to them in some fashion (e.g., lump-sum distribution). A price on GHG emissions could create a competitive disadvantage for some industries, particularly "emission-intensive, trade-exposed industries." Policymakers have several options to address this concern, including establishing a "border carbon adjustment" program, which would levy a fee on imports from countries without comparable GHG reduction programs. Alternatively, policymakers could allocate (indefinitely or for a period of time) some of the carbon tax revenues to selected industry sectors or businesses. Relatedly, a carbon tax system is projected to disproportionately impact fossil fuel industries, particularly coal, and the communities that rely on their employment. To alleviate these impacts, policymakers may consider using some of the revenue to provide transition assistance to employees or affected communities.

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Introduction The U.S. energy pipeline network is integral to the nation's energy supply and provides vital links to other critical infrastructure, such as power plants, airports, and military bases. These pipelines are geographically widespread, running alternately through remote and densely populated regions—from Arctic Alaska to the Gulf of Mexico and nearly everywhere in between. Because these pipelines carry volatile, flammable, or toxic materials, they have the potential to injure the public, destroy pr operty, and damage the environment. Although they are generally an efficient and comparatively safe means of transport, pipeline systems are nonetheless vulnerable to accidents, operational failure, and malicious attacks. A series of accidents in California, Pennsylvania, and Massachusetts, among other places, have demonstrated this vulnerability and have heightened congressional concern about U.S. pipeline safety. The Department of Energy's first Quadrennial Energy Review (QER), released in 2015, also highlighted pipeline safety as a growing concern for the nation's energy infrastructure. The federal pipeline safety program resides primarily within the Department of Transportation's (DOT's) Pipeline and Hazardous Materials Safety Administration (PHMSA), although its inspection and enforcement activities rely heavily upon partnerships with the states. Together, the federal and state pipeline safety agencies administer a comprehensive set of regulatory authorities which has changed significantly over the last decade and continues to do so. The federal pipeline safety program is authorized through the fiscal year ending September 30, 2019, under the Protecting Our Infrastructure of Pipelines and Enhancing Safety Act of 2016 (PIPES Act; P.L. 114-183 ) signed by President Obama on June 22, 2016. This report reviews the history of federal programs for pipeline safety, discusses significant safety concerns, and summarizes recent developments focusing on key policy issues. It discusses the roles of other federal agencies involved in pipeline safety and security, including their relationship with PHMSA. Although pipeline security is not mainly under PHMSA's jurisdiction, the report examines the agency's past role in pipeline security and its recent activities working on security-related issues with other agencies. The U.S. Pipeline Network The U.S. energy pipeline network is composed of approximately 3 million miles of pipeline transporting natural gas, oil, and hazardous liquids ( Table 1 ). Of the nation's approximately half million miles of long-distance transmission pipeline, roughly 215,000 miles carry hazardous liquids—over two thirds of the nation's crude oil and refined petroleum products, along with other products. The U.S. natural gas pipeline network consists of around 300,000 miles of inter state and intra state transmission. It also contains some 240,000 miles of field and gathering pipeline, which connect gas extraction wells to processing facilities. However, with 7% of gathering lines currently under federal regulation (discussed later in this report), the total mileage of U.S. gathering lines is not known more precisely. Few state agencies collect this information. The natural gas transmission pipelines feed around 2.2 million miles of regional pipelines in some 1,500 local distribution networks serving over 69 million customers. Natural gas pipelines also connect to 152 active liquefied natural gas (LNG) storage sites, as well as underground storage facilities, both of which can augment pipeline gas supplies during peak demand periods. Safety in the Pipeline Industry Uncontrolled pipeline releases can result from a variety of causes, including third-party excavation, corrosion, mechanical failure, control system failure, operator error, and malicious acts. Natural forces, such as floods and earthquakes, can also damage pipelines. Taken as a whole, releases from pipelines cause few annual injuries or fatalities compared to other product transportation modes. According to PHMSA statistics, there were, on average, 12 deaths and 66 injuries annually caused by 32 pipeline incidents in all U.S. pipeline systems from 2009 through 2018. After steady decline between 2009 and 2013, the average incident count increased and recently shows no clear trend ( Figure 1 ). A total of 40 serious pipeline incidents was reported for 2018. Apart from injury to people, some accidents may cause environmental damage or other physical impacts, which may be significant, particularly in the case of oil spills or fires. PHMSA requires the reporting of such incidents involving $50,000 or more in total costs, measured in 1984 dollars, highly volatile liquid releases of 5 barrels or more or other liquid releases of 50 barrels or more, or liquid releases resulting in an unintentional fire or explosion. On average there were 260 such "significant" incidents (not involving injury or fatality) per year from 2009 through 2018. As with serious incidents, there is no clear trend for pipeline incidents affecting only the environment or property over the last five years ( Figure 2 ). It should be noted that federally regulated pipeline mileage overall rose approximately 7% over this period; neither the annual statistics for injury nor environmental incidents are adjusted on a per-mile basis. Although pipeline releases have caused relatively few fatalities in absolute numbers, a single pipeline accident can be catastrophic in terms of public safety and environmental damage. Notable pipeline and pipeline-related incidents over the last decade include the following: 2010 ―A pipeline spill in Marshall, MI, released 19,500 barrels of crude oil into a tributary of the Kalamazoo River. 2010 —An explosion caused by a natural gas pipeline in San Bruno, CA, killed 8 people, injured 60 others, and destroyed 37 homes. 2011― An explosion caused by a natural gas pipeline in Allentown, PA, killed 5 people, damaged 50 buildings, and caused 500 people to be evacuated. 2011 ―A pipeline spill near Laurel, MT, released an estimated 1,000 barrels of crude oil into the Yellowstone River. 2012 —An explosion caused by a natural gas pipeline in Springfield, MA, injured 21 people and damaged over a dozen buildings. 2013 —An oil pipeline spill in Mayflower, AK, spilled 5,000 barrels of crude oil in a residential community causing 22 homes to be evacuated. 2014 —An explosion caused by a natural gas distribution pipeline in New York City killed 8 people, injured 50 others, and destroyed two 5-story buildings. 2015 —A pipeline in Santa Barbara County, CA, spilled 3,400 barrels of crude oil, including 500 barrels reaching Refugio State Beach on the Pacific Ocean. 2015 — The Aliso Canyon underground natural gas storage facility in Los Angeles County, CA, released 5.4 billion cubic feet of gas, causing the temporary relocation of over 2,000 households and two schools in Porter Ranch. 2016 —An explosion caused by a natural gas distribution pipeline in Canton, OH, killed one person, injured 11 others, and damaged over 50 buildings. 201 8 —Explosions and fires caused by natural gas distribution pipelines in the Merrimack Valley, MA, killed one person, injured 21 others, damaged 131 structures, and required 30,000 residents to evacuate. Such incidents have generated persistent scrutiny of pipeline regulation and have increased state and community activity related to pipeline safety. Federal Agencies in Pipeline Safety Three federal agencies play the most significant roles in the formulation, administration, and oversight of pipeline safety regulations in the United States. As stated above, PHMSA has the primary responsibility for the promulgation and enforcement of federal pipeline safety standards. The Federal Energy Regulatory Commission (FERC) is not operationally involved in pipeline safety but examines safety issues under its siting authority for interstate natural gas pipelines. The National Transportation Safety Board (NTSB) investigates transportation accidents—including pipeline accidents—and issues associated safety recommendations. These agency roles are discussed in the following sections. Pipeline and Hazardous Materials Safety Administration The Natural Gas Pipeline Safety Act of 1968 (P.L. 90-481) and the Hazardous Liquid Pipeline Act of 1979 ( P.L. 96-129 ) are two of the principal early acts establishing the federal role in pipeline safety. Under both statutes, the Transportation Secretary is given primary authority to regulate key aspects of interstate pipeline safety: design, construction, operation and maintenance, and spill response planning. Pipeline safety regulations are covered in Title 49 of the Code of Federal Regulations . PHMSA Organization and Funding As of March 8, 2019, PHMSA employed 290 full-time equivalent (FTE) staff in its Office of Pipeline Safety (OPS)—including 145 regional inspectors—and in DOT offices outside of OPS that also support pipeline safety functions. Those staff include attorneys, data analysts, information technology specialists, and regulatory specialists required for certain enforcement actions, promulgating regulations, issuing pipeline safety grants, and issuing agreements for pipeline safety research and development. In addition to federal staff, PHMSA's enabling legislation allows the agency to delegate authority to intra state pipeline safety offices, and allows state offices to act as "agents" administering inter state pipeline safety programs (excluding enforcement) for those sections of inter state pipelines within their boundaries. According to the DOT, "PHMSA leans heavily on state inspectors for the vast network of intrastate lines." A few states serve as agents for inspection of interstate pipelines as well. There were approximately 380 state pipeline safety inspectors in 2018. PHMSA's pipeline safety program is funded primarily by user fees assessed on a per-mile basis on each regulated pipeline operator. The agency's total annual budget authority has grown fairly steadily since 2001, with the largest increase in FY2015 ( Figure 3 ). For FY2019, PHMSA's estimated budget authority is approximately $164 million—more than double the agency's budget authority in FY2008 (not adjusted for inflation). The Trump Administration's requested budget authority for PHMSA is approximately $151 million for FY2020, roughly 8% less than the FY2019 budget authority, with proposed reductions primarily in contract programs, research and development, and grants to states. PHMSA's Regulatory Activities PHMSA uses a variety of strategies to promote compliance with its safety standards. The agency conducts programmatic inspections of management systems, procedures, and processes; conducts physical inspections of facilities and construction projects; investigates safety incidents; and maintains a dialogue with pipeline operators. The agency clarifies its regulatory expectations through published protocols and regulatory orders, guidance manuals, and public meetings. PHMSA relies upon a range of enforcement actions, including administrative actions such as corrective action orders (CAOs) and civil penalties, to ensure that operators correct safety violations and take measures to preclude future safety problems. From 2014 through 2018, PHMSA initiated 943 enforcement actions against pipeline operators. Of these cases, 348 resulted in safety orders to operators. Civil penalties proposed by PHMSA for safety violations during this period totaled approximately $24.2 million. PHMSA also conducts accident investigations and system-wide reviews focusing on high-risk operational or procedural problems and areas of the pipeline near sensitive environmental areas, high-density populations, or navigable waters. Since 1997, PHMSA has increasingly required industry's implementation of "integrity management" programs on pipeline segments near "high consequence areas." Integrity management provides for continual evaluation of pipeline condition; assessment of risks to the pipeline; inspection or testing; data analysis; and follow-up repair; as well as preventive or mitigative actions. High consequence areas (HCAs) include population centers, commercially navigable waters, and environmentally sensitive areas, such as drinking water supplies or ecological reserves. The integrity management approach prioritizes resources to locations of highest consequence rather than applying uniform treatment to the entire pipeline network. PHMSA made integrity management programs mandatory for most oil pipeline operators with 500 or more miles of regulated pipeline as of March 31, 2001 (49 C.F.R. §195). Congress subsequently mandated the expansion of integrity management to natural gas pipelines, along with other significant changes to federal pipeline safety requirements, through a series of agency budget reauthorizations as discussed below. PHMSA Reauthorization and Pipeline Safety Statutes The PIPES Act of 2016 was preceded by a series of periodic pipeline safety statutes, each of which reauthorized funding for PHMSA's pipeline safety program and included other provisions related to PHMSA's authorities, administration, or regulatory activities. Pipeline Safety Improvement Act of 2002 On December 12, 2002, President George W. Bush signed into law the Pipeline Safety Improvement Act of 2002 ( P.L. 107-355 ). The act strengthened federal pipeline safety programs, state oversight of pipeline operators, and public education regarding pipeline safety. Among other provisions, P.L. 107-355 required operators of regulated natural gas pipelines in high-consequence areas to conduct risk analysis and implement integrity management programs similar to those required for oil pipelines. The act authorized DOT to order safety actions for pipelines with potential safety problems and increased violation penalties. The act streamlined the permitting process for emergency pipeline restoration by establishing an interagency committee, including the DOT, the Environmental Protection Agency, the Bureau of Land Management, the Federal Energy Regulatory Commission, and other agencies, to ensure coordinated review and permitting of pipeline repairs. The act required DOT to study ways to limit pipeline safety risks from population encroachment and ways to preserve environmental resources in pipeline rights-of-way. P.L. 107-355 also included provisions for public education, grants for community pipeline safety studies, "whistle blower" and other employee protection, employee qualification programs, and mapping data submission. Pipeline Inspection, Protection, Enforcement, and Safety Act of 2006 On December 29, 2006, President Bush signed into law the Pipeline Inspection, Protection, Enforcement and Safety Act of 2006 ( P.L. 109-468 ). The main provisions of the act address pipeline damage prevention, integrity management, corrosion control, and enforcement transparency. The act created a national focus on pipeline damage prevention through grants to states for improving damage prevention programs, establishing 811 as the national "call before you dig" one-call telephone number, and giving PHMSA limited "backstop" authority to conduct civil enforcement against one-call violators in states that have failed to conduct such enforcement. The act mandated the promulgation by PHMSA of minimum standards for integrity management programs for natural gas distribution pipelines. It also mandated a review of the adequacy of federal pipeline safety regulations related to internal corrosion control, and required PHMSA to increase the transparency of enforcement actions by issuing monthly summaries, including violation and penalty information, and a mechanism for pipeline operators to make response information available to the public. Pipeline Safety, Regulatory Certainty, and Job Creation Act of 2011 On January 3, 2012, President Obama signed the Pipeline Safety, Regulatory Certainty, and Job Creation Act of 2011 (Pipeline Safety Act, P.L. 112-90 ). The act contains a broad range of provisions addressing pipeline safety. Among the most significant are provisions to increase the number of federal pipeline safety inspectors, require automatic shutoff valves for transmission pipelines, mandate verification of maximum allowable operating pressure for gas transmission pipelines, increase civil penalties for pipeline safety violations, and mandate reviews of diluted bitumen pipeline regulation. Altogether, the act imposed 42 mandates on PHMSA regarding studies, rules, maps, and other elements of the federal pipeline safety program. P.L. 112-90 authorized the federal pipeline safety program through the fiscal year ending September 30, 2015. Protecting Our Infrastructure of Pipelines and Enhancing Safety Act of 2016 On June 22, 2016, President Obama signed the Protecting Our Infrastructure of Pipelines and Enhancing Safety Act of 2016 (PIPES Act, P.L. 114-183 ). As noted earlier, the act authorizes the federal pipeline safety program through FY2019. Among its other provisions, the act requires PHMSA to promulgate federal safety standards for underground natural gas storage facilities and grants PHMSA emergency order authority to address urgent "industry-wide safety conditions" without prior notice. The act also requires PHMSA to report regularly on the progress of outstanding statutory mandates, which are discussed later in this report. Federal Energy Regulatory Commission One area related to pipeline safety not under PHMSA's primary jurisdiction is the siting approval of interstate natural gas pipelines, which is the responsibility of the Federal Energy Regulatory Commission (FERC). Companies building interstate natural gas pipelines must first obtain from FERC certificates of public convenience and necessity. (FERC does not oversee oil pipeline construction.) FERC must also approve the abandonment of gas facility use and services. These approvals may include safety provisions with respect to pipeline routing, safety standards, and other factors. In particular, pipeline and aboveground facilities associated with a proposed pipeline project must be designed in accordance with PHMSA's safety standards regarding material selection and qualification, design requirements, and protection from corrosion. FERC and PHMSA cooperate on pipeline safety-related matters according to a Memorandum of Understanding (MOU) signed in 1993. According to the MOU, PHMSA agrees to promptly alert FERC when safety activities may impact commission responsibilities, notify FERC of major accidents or significant enforcement actions involving pipelines under FERC's jurisdiction, refer to FERC complaints and inquiries by state and local governments and the public about environmental or certificate matters related to FERC-jurisdictional pipelines, and when requested by FERC, review draft mitigation conditions considered by the commission for potential conflicts with PHMSA's regulations. Under the MOU, FERC agrees to promptly alert PHMSA when the commission learns of an existing or potential safety problem involving natural gas transmission facilities, notify PHMSA of future pipeline construction, periodically provide PHMSA with updates to the environmental compliance inspection schedule, and coordinate site inspections, upon request, with PHMSA officials, notify PHMSA when significant safety issues have been raised during the preparation of environmental assessments or environmental impact statements for pipeline projects, and refer to PHMSA complaints and inquiries made by state and local governments and the public involving safety matters related to FERC-jurisdictional pipelines. FERC may also serve as a member of PHMSA's Technical Pipeline Safety Standards Committee which determines whether proposed safety regulations are technically feasible, reasonable, cost-effective, and practicable. In April 2015, FERC issued a policy statement to provide "greater certainty regarding the ability of interstate natural gas pipelines to recover the costs of modernizing their facilities and infrastructure to enhance the efficient and safe operation of their systems." FERC's policy statement was motivated by the commission's expectation that governmental safety and environmental initiatives could soon cause greater safety and reliability costs for interstate gas pipeline systems. National Transportation Safety Board The National Transportation Safety Board (NTSB) is an independent federal agency charged with determining the probable cause of transportation incidents—including pipeline releases—and promoting transportation safety. The board's experts investigate significant incidents, develop factual records, and issue safety recommendations to prevent similar events from reoccurring. The NTSB has no statutory authority to regulate transportation, however, and it does not perform cost-benefit analyses of regulatory changes; its safety recommendations to industry or government agencies are not mandatory. Nonetheless, because of the board's strong reputation for thoroughness and objectivity, over 82% of the NTSB's safety recommendations have been implemented across all transportation modes. In the pipeline sector, specifically, the NTSB's safety recommendations have led to changes in pipeline safety regulation regarding one-call systems before excavation ("Call Before You Dig"), use of pipeline internal inspection devices, facility response plan effectiveness, hydrostatic pressure testing of older pipelines, and other pipeline safety improvements. San Bruno Pipeline Incident Investigation In August 2011, the NTSB issued preliminary findings and recommendations from its investigation of the San Bruno Pipeline incident. The investigation included testimony from pipeline company officials, government agency officials (PHMSA, state, and local), as well as testimony from other pipeline experts and stakeholders. The investigation determined that the pipeline ruptured due to a faulty weld in a pipeline section constructed in 1956. In addition to specifics about the San Bruno incident, the hearing addressed more general pipeline issues, including public awareness initiatives, pipeline technology, and oversight of pipeline safety by federal and state regulators. The NTSB's findings were highly critical of the pipeline operator (Pacific Gas and Electric, PG&E) as well as both the state and federal pipeline safety regulators. The board concluded that "the multiple and recurring deficiencies in PG&E operational practices indicate a systemic problem" with respect to its pipeline safety program. The board further concluded that the pipeline safety regulator within the state of California, failed to detect the inadequacies in PG&E's integrity management program and that the Pipeline and Hazardous Materials Safety Administration integrity management inspection protocols need improvement. Because the Pipeline and Hazardous Materials Safety Administration has not incorporated the use of effective and meaningful metrics as part of its guidance for performance-based management pipeline safety programs, its oversight of state public utility commissions regulating gas transmission and hazardous liquid pipelines could be improved. In an opening statement about the San Bruno incident report, the NTSB chairman summarized the board's findings as "troubling revelations … about a company that exploited weaknesses in a lax system of oversight and government agencies that placed a blind trust in operators to the detriment of public safety." The NTSB's final incident report concluded "that PHMSA's enforcement program and its monitoring of state oversight programs have been weak and have resulted in the lack of effective Federal oversight and state oversight." The NTSB issued 39 recommendations stemming from its San Bruno incident investigation, including 20 recommendations to the Secretary of Transportation and PHMSA. These recommendations included the following: conducting audits to assess the effectiveness of PHMSA's oversight of performance-based pipeline safety programs and state pipeline safety program certification, requiring pipeline operators to provide system-specific information to the emergency response agencies of the communities in which pipelines are located, requiring that automatic shutoff valves or remote control valves be installed in high consequence areas and in class 3 and 4 locations, requiring that all natural gas transmission pipelines constructed before 1970 be subjected to a hydrostatic pressure test that incorporates a pressure spike test, requiring that all natural gas transmission pipelines be configured so as to accommodate internal inspection tools, with priority given to older pipelines, and revising PHMSA's integrity management protocol to incorporate meaningful metrics, set performance goals for pipeline operators, and require operators to regularly assess the effectiveness of their programs using meaningful metrics. Marshall, MI, Pipeline Incident Investigation In July 2012, the NTSB issued the final report of its investigation of the Marshall, MI, oil pipeline spill. In addition to finding management and operation failures by the pipeline operator, the report was critical of PHMSA for inadequate regulatory requirements and oversight of crack defects in pipelines, inadequate regulatory requirements for emergency response plans, generally, and inadequate review and approval of the response plan for this particular pipeline. The NTSB issued eight recommendations to the Secretary of Transportation and PHMSA, including auditing the business practices of PHMSA's onshore pipeline facility response plan programs, including reviews of response plans and drill programs, to correct deficiencies, allocating sufficient resources to ensure that PHMSA's facility response plan program meets all of the requirements of the Oil Pollution Act of 1990, clarifying and strengthening federal regulation related to the identification and repair of pipeline crack defects, issuing advisory bulletins to all hazardous liquid and natural gas pipeline operators describing the circumstances of the accident in Marshall, asking them to take appropriate action to eliminate similar deficiencies, to identify deficiencies in facility response plans, and to update these plans as necessary, developing requirements for team training of control center staff involved in pipeline operations similar to those used in other transportation modes, strengthening operator qualification requirements, and harmonizing onshore oil pipeline response planning requirements with those of the U.S. Coast Guard and the U.S. Environmental Protection Agency for oil and petroleum products facilities to ensure that operators have adequate resources for worst-case discharges. Merrimack Valley Pipeline Incident Investigation In October 2018, the NTSB issued a preliminary report of its investigation into the Merrimack Valley natural gas fires and explosions, which affected the communities of Lawrence, Andover, and North Andover, MA. The report concluded, based on an initial investigation, that the natural gas releases were caused by excessive pressure in a local distribution main during a cast iron pipeline replacement project. Due to an erroneous work order, pipeline workers improperly bypassed critical pipeline pressure-sensing lines. Without an accurate sensor signal from the bypassed pipeline segment, the pipeline pressure regulators allowed high-pressure gas into the distribution lines supplying homes and businesses—many of which failed and released natural gas as a result. The NTSB's formal incident investigation continues, so the agency has not yet released a final accident report. However, in response to its initial findings, the NTSB made a preliminary recommendation to the Commonwealth of Massachusetts to eliminate its professional engineer license exemption for public utility work and to require a professional engineer's seal on public utility engineering drawings. The NTSB also made recommendations to the natural gas distribution utility regarding its design and operating practices. It made no recommendations to PHMSA. Other Investigations The NTSB has made recommendations to PHMSA as a result of other pipeline incident investigations. Detailed discussion of NTSB findings and recommendations, including those described above, are publicly available in the NTSB's docket management system. In addition, in January 2015, the NTSB released a safety study examining integrity management of natural gas transmission pipelines in high consequence areas. The study identified several areas of potential safety improvement among such facilities expanding and improving PHMSA guidance to both operators and inspectors for the development, implementation, and inspection of operators' integrity management programs, expanding the use of in-line inspection, especially for intrastate pipelines, eliminating the use of direct assessment as the sole integrity assessment method, evaluating the effectiveness of the approved risk assessment approaches, strengthening aspects of inspector training, developing minimum professional qualification criteria for all personnel involved in integrity management programs, and improving data collection and reporting, including geospatial data. PHMSA maintains a list of NTSB's pipeline safety recommendations directed at the agency which are currently open. As of September 11, 2018, there were 25 open recommendations dating back to 2011. In many cases, NTSB has classified these recommendations as "Open—Acceptable Response" because they are being incorporated satisfactorily in ongoing PHMSA rulemakings, further discussed below. However, a few recommendations are classified as "Open—Unacceptable response," because NTSB is not satisfied with PHMSA's actions to implement them. PHMSA's Role in Pipeline Security Pipeline safety and security are distinct issues involving different threats, statutory authorities, and regulatory frameworks. Nonetheless, pipeline safety and security are intertwined in some respects—and PHMSA is involved in both. The Department of Transportation played the leading role in pipeline security through the late 1990s. Presidential Decision Directive 63 (PDD-63), issued during the Clinton Administration, assigned lead responsibility for pipeline security to DOT. These responsibilities fell to the Office of Pipeline Safety, at that time a part of DOT's Research and Special Programs Administration, because the agency was already addressing some elements of pipeline security in its role as safety regulator. The DOT's pipeline (and LNG) safety regulations already included provisions related to physical security, such as requirements to protect surface facilities (e.g., pumping stations) from vandalism and unauthorized entry. Other regulations required continuing surveillance, patrolling pipeline rights-of-way, damage prevention, and emergency procedures. In the early 2000s, OPS conducted a vulnerability assessment to identify critical pipeline facilities and worked with industry groups and state pipeline safety organizations "to assess the industry's readiness to prepare for, withstand and respond to a terrorist attack.... " Together with DOE and state pipeline agencies, OPS promoted the development of consensus standards for security measures tiered to correspond with the five levels of threat warnings issued by the Office of Homeland Security. OPS also developed protocols for inspections of critical facilities to ensure that operators implemented appropriate security practices. To convey emergency information and warnings, OPS established a variety of communication links to key staff at the most critical pipeline facilities throughout the country. OPS also began identifying near-term technology to enhance deterrence, detection, response, and recovery, and began seeking to advance public and private sector planning for response and recovery. On September 5, 2002, OPS circulated formal guidance developed in cooperation with the pipeline industry associations defining the agency's security program recommendations and implementation expectations. This guidance recommended that operators identify critical facilities, develop security plans consistent with prior trade association security guidance, implement these plans, and review them annually. While the guidance was voluntary, OPS expected compliance and informed operators of its intent to begin reviewing security programs and to test their effectiveness. PHMSA Cooperation with TSA In November 2001, President Bush signed the Aviation and Transportation Security Act ( P.L. 107-71 ) establishing the Transportation Security Administration (TSA) within DOT. According to TSA, the act placed DOT's pipeline security authority (under PDD-63) within TSA. The act specified for TSA a range of duties and powers related to general transportation security, such as intelligence management, threat assessment, mitigation, security measure oversight, and enforcement. On November 25, 2002, President Bush signed the Homeland Security Act of 2002 ( P.L. 107-296 ) creating the Department of Homeland Security (DHS). Among other provisions, the act transferred the Transportation Security Administration from DOT to DHS (§403). On December 17, 2003, President Bush issued Homeland Security Presidential Directive 7 (HSPD-7), clarifying executive agency responsibilities for identifying, prioritizing, and protecting critical infrastructure. HSPD-7 maintained DHS as the lead agency for pipeline security (paragraph 15), and instructed DOT to "collaborate in regulating the transportation of hazardous materials by all modes (including pipelines)" (paragraph 22h). In 2004, the DOT and DHS entered into a memorandum of understanding concerning their respective security roles in all modes of transportation. The MOU notes that DHS has the primary responsibility for transportation security with support from the DOT, and establishes a general framework for cooperation and coordination. The MOU states that "specific tasks and areas of responsibility that are appropriate for cooperation will be documented in annexes ... individually approved and signed by appropriate representatives of DHS and DOT." On August 9, 2006, the departments signed an annex "to delineate clear lines of authority and responsibility and promote communications, efficiency, and nonduplication of effort through cooperation and collaboration between the parties in the area of transportation security." In January 2007, the PHMSA Administrator testified before Congress that the agency had established a joint working group with TSA "to improve interagency coordination on transportation security and safety matters, and to develop and advance plans for improving transportation security," presumably including pipeline security. According to TSA, the working group developed a multiyear action plan specifically delineating roles, responsibilities, resources and actions to execute 11 program elements: identification of critical infrastructure/key resources, and risk assessments; strategic planning; developing regulations and guidelines; conducting inspections and enforcement; providing technical support; sharing information during emergencies; communications; stakeholder relations; research and development; legislative matters; and budgeting. P.L. 109-468 required the DOT Inspector General (IG) to assess the pipeline security actions taken by the DOT in implementing its 2004 MOU with the DHS (§23). The Inspector General published this assessment in May 2008. The IG report stated, PHMSA and TSA have taken initial steps toward formulating an action plan to implement the provisions of the pipeline security annex.... However, further actions need to be taken with a sense of urgency because the current situation is far from an "end state" for enhancing the security of the Nation's pipelines. The report recommended that PHMSA and TSA finalize and execute their security annex action plan, clarify their respective roles, and jointly develop a pipeline security strategy that maximizes the effectiveness of their respective capabilities and efforts. According to TSA, working with PHMSA "improved drastically" after the release of the IG report; the two agencies began to maintain daily contact, share information in a timely manner, and collaborate on security guidelines and incident response planning. Consistent with this assertion, in March 2010, TSA published a Pipeline Security and Incident Recovery Protocol Plan which lays out in detail the separate and cooperative responsibilities of the two agencies with respect to a pipeline security incident. Among other notes, the plan states, DOT has statutory tools that may be useful during a security incident, such as special permits, safety orders, and corrective action orders. DOT/PHMSA also has access to the Regional Emergency Transportation Coordinator (RETCO) Program…. Each RETCO manages regional DOT emergency preparedness and response activities in the assigned region on behalf of the Secretary of Transportation. The plan also refers to the establishment of an Interagency Threat Coordination Committee established by TSA and PHMSA to organize and communicate developing threat information among federal agencies that may have responsibility for pipeline incident response. DOT has continued to cooperate with TSA on pipeline security in recent years. For example, TSA coordinated with DOT and other agencies to address ongoing vandalism and sabotage against critical pipelines by environmental activists in 2016. In April 2016, the Director of TSA's Surface Division testified about her agency's relationship with DOT: TSA and DOT co-chair the Pipeline Government Coordinating Council to facilitate information sharing and coordinate on activities including security assessments, training, and exercises. TSA and DOT's Pipeline and Hazardous Materials Safety Administration (PHMSA) work together to integrate pipeline safety and security priorities, as measures installed by pipeline owners and operators often benefit both safety and security. In December 2016, PHMSA issued an Advisory Bulletin "in coordination with" TSA regarding cybersecurity threats to pipeline Supervisory Control and Data Acquisition (SCADA) systems. In July 2017, the two agencies collaborated on a web-based portal to facilitate sharing sensitive but unclassified incident information among federal agencies with pipeline responsibilities. In February 2018, the Director of TSA's Surface Division again testified about cooperation with PHMSA, stating "TSA works closely with [PHMSA] for incident response and monitoring of pipeline systems," although she did not provide specific examples. Key Policy Issues The 116 th Congress may focus on several key issues in its continuing oversight of federal pipeline safety and as it considers PHMSA's reauthorization, including incomplete statutory mandates, adequacy of PHMSA staffing, state program oversight, aging pipeline infrastructure, and PHMSA's role in pipeline security. These issues are discussed in the following sections. Overdue PHMSA Statutory Mandates Congress has used reauthorizations to impose on PHMSA various mandates regarding standards, studies, and other elements of pipeline safety regulation—usually in response to major pipeline accidents. The Pipeline Safety, Regulatory Certainty, and Job Creation Act of 2011 ( P.L. 112-90 ) and the PIPES Act of 2016 ( P.L. 114-183 ) together included 61 such mandates. As of March 5, 2019, according to PHMSA, the agency had completed 34 of 42 mandates under P.L. 112-90 and 16 of 19 mandates under P.L. 114-183 . Some Members of Congress are concerned that major mandates remain unfulfilled years beyond the deadlines specified in statute. They have expressed frustration with PHMSA's failure to fulfill its statutory obligations, arguing that it delays important new regulations, undermines public confidence in pipeline safety, and does not allow Congress to evaluate the effectiveness of prior mandates as it considers PHMSA's next reauthorization. Among the overdue mandates, Congress has focused on several key regulations (rules) with potentially significant impacts on pipeline operations nationwide. Safety of Gas Transmission Pipelines Rule This rulemaking would require operators to (1) reconfirm pipeline maximum allowable operating pressure and (2) test the material strength of previously untested gas transmission pipelines in high-consequence areas ( P.L. 112-90 §23(c-d)). The statutory deadline for PHMSA to finalize these two rules was July 3, 2013. The rulemaking also would address the expansion of "integrity management" programs for gas transmission pipelines beyond high-consequence areas ( P.L. 112-90 §5(f)). Integrity management provides for continual evaluation of pipeline condition; assessment of risks; inspection or testing; data analysis; and follow-up repair; as well as preventive or mitigative actions. The deadline for PHMSA to finalize the integrity management provisions was January 3, 2015. The rulemaking also would address the application of existing regulations to currently unregulated gathering lines ( P.L. 112-90 §21(c)). PHMSA issued a Notice of Proposed R ule making incorporating the above provisions, and other requirements, on June 7, 2016. However, PHMSA subsequently decided to split its efforts into three separate rulemakings to facilitate completion. PHMSA anticipates publication of a final rule for the maximum allowable operating pressure and material testing provisions in July 2019. PHMSA anticipates publication of separate final rules for the integrity management provisions and for the gathering line provisions in December 2019. Safety of Hazardous Liquids Pipelines Rule Among other requirements, this rulemaking would require leak detection systems, where practicable, for hazardous liquids (i.e., oil and refined fuel) pipelines and would set standards for leak detection capability ( P.L. 112-90 §8(b)). It also would address the expansion of integrity management for liquids pipelines beyond high-consequence areas ( P.L. 112-90 §5(f)). The deadlines for PHMSA to finalize these rules were, respectively, January 3, 2014, and January 3, 2015. The rulemaking also would require additional integrity assessment measures for certain underwater onshore liquids pipelines ( P.L. 114-183 §25). PHMSA issued a prepublication final rule on January 13, 2017, but withdrew it on January 24, 2017, for further review in compliance with the "Memorandum for the Heads of Executive Departments and Agencies" issued by the White House. PHMSA anticipates publication of a final rule in May 2019 . Amendments to Parts 192 and 195 This rulemaking, which refers to Title 49 of the Code of Federal Regulations, involves requirements for pipeline valve installation and minimum rupture detection standards. These measures are intended to enhance the ability of pipeline operators to quickly stop the flow of a commodity (e.g., oil) in case of an unintended release by installing automatic or remote-controlled valves ( P.L. 112-90 §4). The rulemaking also would outline performance standards for pipeline rupture detection ( P.L. 112-90 §8(b)). The deadline for PHMSA to finalize these rules was January 3, 2014. PHMSA anticipates issuing a proposed rule in August 2019. Underground Natural Gas Storage Facilities This rulemaking would set minimum federal safety standards for underground natural gas storage facilities ( P.L. 114-183 §12). The deadline for PHMSA to finalize this rule was June 22, 2018. PHMSA issued an interim final rule on December 19, 2016. However, the agency temporarily suspended certain enforcement actions on June 20, 2017, and re opened the rule to public comment until November 20, 2017. DOT anticipates publishing the final rule in August 2019 . Emergency Order Authority This rulemaking would implement PHMSA's new authority to issue emergency orders, which would apply to all operators and/or pipeline systems to abate an imminent hazard ( P.L. 114-183 §16). The deadline for PHMSA to finalize this rule was March 22, 2017. The agency issued an interim final rule on October 14, 2016. PHMSA anticipates publication of a final rule in March 2019. PHMSA Rulemaking Oversight and Agency Response In response to questions during a 2015 hearing about overdue statutory mandates, a PHMSA official testified that rulemaking delays at that time did not reflect a lack of commitment but rather their complexity, the agency's rulemaking process, and limited staff resources. A 2016 audit report by the DOT Inspector General concluded that PHMSA lacked "sufficient processes, guidance, and oversight for implementing mandates" in a timely manner. On June 21, 2018, the current PHMSA administrator testified that the agency had adequate staffing and funding for its rulemaking activities and was working to streamline the agency's rulemaking process to accelerate finalization of the overdue rules. He stated that PHMSA would prioritize rulemaking in three areas: the safety of hazardous liquid pipelines, the safety of gas transmission and gathering pipelines, and pipeline rupture detection and automatic shutoff valves. Staffing Resources for Pipeline Safety The U.S. pipeline safety program employs a combination of federal and state staff to implement and enforce federal pipeline safety regulations. To date, PHMSA has relied heavily on state agencies for pipeline inspections, with over 70% of inspectors being state employees. As the PHMSA administrator remarked in 2018, PHMSA faces a manpower issue. It is obvious that an agency that employs about 536 people cannot oversee 2.7 million miles of pipeline all by itself. In fact, PHMSA makes no attempt to do so. Most actual safety inspections are performed by our state partners. Nonetheless, some in Congress have criticized inspector staffing at PHMSA for being insufficient to cover pipelines under the agency's jurisdiction. In considering PHMSA staff levels, issues of interest have been the number of federal inspectors and the agency's historical use of staff funding. PHMSA Inspection and Enforcement Staff In FY2019, PHMSA is funded for 308 full-time equivalent (FTE) employees in pipeline safety. As noted earlier, PHMSA employed 290 full-time equivalent staff in pipeline safety, including 145 inspectors, as of March 8, 2019. According to PHMSA officials, the agency continues hiring and anticipates employing additional staff in the second half of the fiscal year. While t he President's request ed budget authority for PHMSA's pipeline safety program in FY2020 is less than the FY2019 budget authority , it projects only a small reduction in funded staff . The budget includes an estimate of 306 FTEs for FY2020 , two fewer FTEs than the prior year . According to PHMSA, these two positions , which support pipeline safety data anal ysis and information technology, are to be transferred to DOT's Office of the Chief Information Officer as part of a centralization of all systems and technology within that office. If PHMSA's pipeline safety staffing were to be funded at the level of the President's FY2020 budget request, it would maintain the significant increase in PHMSA staff funding (mostly for inspectors) appropriated since FY2014 ( Figure 4 ). However, to the extent it reduces funding for grants available to the states, it potentially could reduce the number of staff in state pipeline safety agencies. It would also be a step back, in terms of funding, from the long-term expansion of PHMSA's pipeline safety program begun over 20 years ago in response to a series of pipeline accidents, the terrorist attacks of 9/11, implementation of PHMSA's integrity management regulations, and the boom in U.S. shale gas and oil production. PHMSA officials have offered a number of reasons for the persistent shortfall in inspector staffing. These reasons include a scarcity of qualified inspector job applicants, delays in the federal hiring process during which applicants accept other job offers, and PHMSA inspector turnover—especially to pipeline companies, which often hire away PHMSA inspectors for their corporate safety programs. Because PHMSA pipeline inspectors are extensively trained by the agency (typically for two years before being allowed to operate independently), they are highly valued by pipeline operators seeking to comply with federal safety regulations. The agency has stated that it is challenged by industry recruitment of the same candidates it is recruiting, especially with the rapid development of unconventional oil and gas shales, for which the skill sets PHMSA seeks (primarily engineers) have been in high demand. A 2017 DOT Inspector General (IG) report supported PHMSA's assertions about industry-specific hiring challenges and confirmed "a significant gap between private industry and Federal salaries for the types of engineers PHMSA hires." To overcome its pipeline inspector hiring challenges, PHMSA has implemented a "robust recruitment and outreach strategy" that includes certain noncompetitive hiring authorities (e.g., Veterans Employment Opportunities Act) and a fellows program. The agency also has offered recruitment, relocation and retention incentives, and a student loan repayment program. In addition to posting vacancy announcements on USAJOBS, PHMSA has posted job announcements using social media (Twitter and LinkedIn), has conducted outreach to professional organizations and veterans groups, and has attended career fairs and on-campus hiring events. PHMSA states that it has been "working hard to hire and retain inspector staff" but continues to experience staff losses due to an aging workforce and continued difficulty hiring and retaining engineers and technical staff because of competition from the oil and natural gas industry. Although PHMSA has taken concrete actions in recent years to shore up its workforce, there may still be room for improvement. Notably, the IG report concluded in 2017 that PHMSA did "not have a current workforce management plan or fully use retention tools," although the agency had improved how it integrates new employees in the agency. According to the IG, PHMSA concurred with the report's workforce management recommendations and proposed appropriate action plans. On a related issue, a 2018 study by the Government Accountability Office (GAO) reports that "PHMSA has not planned for future workforce needs for interstate pipeline inspections," and, in particular, has not assessed the resources and benefits available from its state partners. The GAO concluded that without this type of forward-looking analysis, "PHMSA cannot proactively plan for future inspection needs to ensure that federal and state resources are in place to provide effective oversight of interstate pipelines." According to GAO, PHMSA has concurred with its recommendation to develop a workforce plan for interstate pipeline inspections. What impact PHMSA's subsequent actions may have on its staff recruitment, retention, and deployment is an open question. Direct-Hire Authority One specific remedy PHMSA has pursued in its efforts to recruit pipeline inspectors is to seek direct-hire authority (DHA) from the Office of Personnel Management (OPM). This authority can expedite hiring, for example, by eliminating competitive rating and ranking, or not requiring veterans' preference. OPM can grant DHA to federal agencies in cases of critical hiring need or a severe shortage of candidates. In its 2013 appropriations report, the House Appropriations Committee stated The Committee is aware of several challenges PHMSA faces in hiring pipeline safety inspectors. One such challenge is the delay caused by the federal hiring process, which is compounded by other market dynamics. The Committee encourages the Office of Personnel Management to give strong consideration to PHMSA's request for direct-hire authority for its pipeline safety inspection and enforcement personnel. Such authority may enable PHMSA to increase its personnel to authorized levels and thereby demonstrate the need for additional resources. The same language appears in the committee's 2014 appropriations report. Consistent with the committee's recommendations, PHMSA applied to the OPM for direct-hire authority in April 2015 but was denied. According to PHMSA, the OPM informed agency officials of the denial verbally, but did not provide a formal, written explanation for the denial at the time. In 2016, the PHMSA administrator reiterated the agency's desire for DHA, stating that it "would complement our recruitment efforts by reducing the agency's time to hire from more than 100 days to less than 30 days." P.L. 114-183 did not grant PHMSA direct-hire authority, but did allow the agency to apply to the OPM for it upon identification of a period of macroeconomic and pipeline industry conditions creating difficulty in filling pipeline safety job vacancies (§9b). However, the aforementioned IG report concluded that direct hire authority might not provide PHMSA with the needed tools to recruit staff more effectively. According to the IG, while this authority might speed hiring of new employees, "it is not clear how it alone would resolve long-standing staffing challenges such as competing with a well-paying industry over a limited talent pool." State Pipeline Safety Program Oversight In the wake of several major safety incidents involving facilities under the jurisdiction of state pipeline safety regulators, some state programs have come under scrutiny regarding their overall effectiveness. After the San Bruno pipeline incident, the California state pipeline safety program—which had regulatory responsibility for the pipeline that ruptured—was criticized by the NTSB for its failure to detect the pipeline's problems. The NTSB was also critical of PHMSA's oversight of the state because the agency had not "incorporated the use of effective and meaningful metrics as part of its guidance for performance-based management" of state pipeline safety programs. A 2014 investigation by the DOT Office of Inspector General assessed the effectiveness of PHMSA's state program oversight as recommended by the NTSB. The IG report stated PHMSA's oversight of State pipeline safety programs is not sufficient to ensure States comply with program evaluation requirements and properly use suspension grant funds. Lapses in oversight have resulted in undisclosed safety weaknesses in State programs. The IG report recommended that PHMSA "take actions to further refine its policies and procedures for managing the program, including its guidelines to the States and improve its oversight to ensure States fulfill their role in pipeline safety." The report made seven specific programmatic recommendations to achieve these goals. In its response to a draft version of the IG report, PHMSA officials concurred or partially concurred with all of the IG reports' recommendations, describing actions it had taken to address the IG's concerns. The IG report therefore considered all but two of its recommendations resolved, but urged PHMSA to reconsider and clarify its response to the remaining two recommendations. These recommendations pertained to PHMSA's staffing formula and its annual evaluations of inspection procedures among the states. The Aliso Canyon and Merrimack Valley incidents again focused attention on the oversight and effectiveness of state pipeline safety programs. For example, during the Aliso Canyon incident, PHMSA expressed concern to state regulators about aspects of the state's safety oversight, including its review of historical well records showing facility anomalies and requirements for safety contingency plans to protect workers, the public, and property. A subsequent federal interagency task force concluded that "the practices for monitoring and assessing leaks and leak potential at the Aliso Canyon facility were inadequate to maintain safe operations." In the Merrimack Valley case, state legislators reportedly criticized Massachusetts' pipeline safety regulators for insufficient staffing and inadequate oversight of pipeline facilities. However, PHMSA's annual evaluation of the state's pipeline safety program—conducted the month before the natural gas releases—gave the state program a rating of 97.4 out of 100 maximum points. PHMSA's evaluation did note a shortfall in inspector staffing, which could impact the agency's inspection schedule, and that the state agency was working to hire additional inspectors. In light of these incidents, and the IG's prior recommendations, Congress may reexamine the adequacy of PHMSA's oversight of its state pipeline safety partners. Aging Pipeline Infrastructure The NTSB listed the safe shipment of hazardous materials by pipeline among its 2019-2020 Most Wanted List of Transportation Safety Improvements , stating "as infrastructure ages, the risk to the public from pipeline ruptures also grows." Likewise, Congress has ongoing concern about the safety of older transmission pipelines—a key factor in San Bruno—and in the replacement of leaky and deteriorating cast iron pipe in natural gas distribution systems—a key factor in Merrimack Valley. The construction work in Merrimack Valley, which led to the natural gas release, was part of a cast iron pipe replacement project. (Age was also a factor in the failure of the well casing which led to the uncontrolled natural gas release at the Aliso Canyon facility.) According to the American Gas Association and other stakeholders, antiquated cast iron pipes in natural gas distribution systems, many over 50 years old, "have long been recognized as warranting attention in terms of management, replacement and/or reconditioning." Old distribution pipes have also been identified as a significant source of methane leakage, which poses safety risks and contributes to U.S. greenhouse gas emissions. In April 2015, then-Secretary of Energy Ernest Moniz reportedly stated that safety and environmental risks from old, leaky distribution lines were "a big issue." Natural gas distribution system operators all have ongoing programs for the replacement of antiquated pipes in their systems, although some are constrained by state regulators who face challenges considering significant rate increases to pay for these upgrades. According to the Department of Energy, the total cost of replacing cast iron and bare steel distribution pipes is approximately $270 billion. Practical barriers, such as urban excavation and disruption of gas supplies, also limit annual replacement. Although the federal role in natural gas distribution systems is limited, because they are under state jurisdiction, there have been prior proposals in Congress and in the QER to provide federal support for the management and replacement of old cast iron pipe. The Pipeline Safety Act mandated a survey (with follow-up every two years thereafter) of pipeline operator progress in adopting and implementing plans for the management and replacement of cast iron pipes (§7(a)). The Merrimack Valley incident may refocus attention on PHMSA's regulation of pipe replacement (currently voluntary), pipeline modernization projects and work packages, older pipeline records, safety management systems, and other issues related to aging pipelines. Congress also may examine the industry's overall progress in addressing the safety of antiquated distribution lines and opportunities for federal support of those efforts. PHMSA and Pipeline Security Ongoing physical and cyber threats against the nation's pipelines since passage of the PIPES Act have heightened concerns about the security risks to these pipelines. In a December 2018 study , GAO stated that since the terrorist attacks of September 11, 2001, "new threats to the nation's pipeline systems have evolved to include sabotage by environmental activists and cyber attack or intrusion by nations." Recent oversight of federal pipeline security activities has included discussion of PHMSA's role in pipeline security. While PHMSA reports cooperation with TSA in pipeline security under the terms of the pipeline security annex and subsequent collaboration, questions remain regarding exactly what this cooperation entails and the ongoing roles of the two agencies. Congress has considered in the past whether the TSA-PHMSA pipeline security annex optimally aligns staff resources and capabilities across both agencies to fulfill the nation's overall pipeline safety and security missions. More recently, some in the pipeline industry have questioned PHMSA's focus on, and ongoing commitment to, pipeline security issues, especially in cybersecurity. In the 116 th Congress, the Pipeline and LNG Facility Cybersecurity Preparedness Act ( H.R. 370 , S. 300 ) would require the Secretary of Energy to enhance coordination among "appropriate Federal agencies," state government agencies, and the energy sector in pipeline security; coordinate incident response and recovery; support the development of pipeline cybersecurity applications, technologies, demonstration projects, and training curricula; and provide technical tools for pipeline security. What role PHMSA might play in any future pipeline security initiatives, and what resources it might require to perform that role, may be a consideration for Congress. Conclusion Both government and industry have taken numerous steps to improve pipeline safety over the last 10 years. In 2016, the Association of Oil Pipe Lines stated that "the oil and natural gas industry is committed to achieving zero incidents throughout our operations." Likewise, the American Gas Association, which represents investor-owned natural gas distribution companies, recently stated that "safety is the core value for America's natural gas utilities." Nonetheless, major oil and natural gas pipeline accidents continue to occur. Both Congress and the NTSB have called for additional regulatory measures to reduce the likelihood of future pipeline accidents. Past PHMSA reauthorizations included expansive pipeline safety mandates, such as requirements for the agency to impose integrity management programs, significantly increase inspector staffing, or regulate underground natural storage. In light of the most recent pipeline accidents or security incidents, Congress may consider new regulatory mandates on PHMSA or may impose new requirements directly on the pipeline industry. However, a number of broad pipeline safety rulemakings and many NTSB recommendations remain outstanding, and others have not been in place for long, so their effectiveness in improving pipeline safety have yet to be determined. As Congress continues its oversight of the federal pipeline safety program, an important focus may be the practical effects of the many changes being made to particular aspects of PHMSA's pipeline safety regulations. In addition to the specific issues highlighted in this report, Congress may assess how the various elements of U.S. pipeline safety activity fit together in the nation's overall strategy to protect the public and the environment. Pipeline safety necessarily involves various groups: federal and state agencies, pipeline associations, large and small pipeline operators, and local communities. Reviewing how these groups work together to achieve common goals could be an overarching concern for Congress.

The U.S. energy pipeline network is composed of approximately 3 million miles of pipeline transporting natural gas, oil, and other hazardous liquids. Recent incidents in California, Pennsylvania, Massachusetts, and other states have drawn criticism from stakeholders and have raised concerns in Congress about pipeline safety. The Department of Energy's (DOE's) 2015 Quadrennial Energy Review also highlighted pipeline safety as an issue for the nation's energy infrastructure. Recent incident statistics suggest there is opportunity for safety improvement. The federal pipeline safety program is administered by the Department of Transportation's Pipeline and Hazardous Materials Safety Administration (PHMSA), which relies heavily on state partnerships for inspection and enforcement of its regulations. PHMSA's pipeline safety program is authorized through FY2019. For FY2019, PHMSA's estimated budget authority is approximately $164 million—more than double the agency's budget authority in FY2008 (not adjusted for inflation). Much of PHMSA's funding is for inspectors. However, due to private sector competition, the agency faces persistent challenges recruiting and retaining the staff for which it is funded. The Trump Administration's requested budget authority for PHMSA is approximately $151 million for FY2020, roughly 8% less than the FY2019 amount. The request would only slightly reduce PHMSA staffing but proposes cuts in state grants that could impact staffing at state pipeline safety agencies. In the wake of major incidents involving facilities under state jurisdiction, some state programs have come under scrutiny regarding their effectiveness and oversight by PHMSA. Congress has used past reauthorizations to impose various mandates on PHMSA regarding standards, studies, and other elements of pipeline safety regulation. The Pipeline Safety, Regulatory Certainty, and Job Creation Act of 2011 (P.L. 112-90) and the PIPES Act of 2016 (P.L. 114-183) together included 61 such mandates. As of March 5, 2019, according to PHMSA, the agency had completed 34 of 42 mandates under P.L. 112-90 and 16 of 19 mandates under P.L. 114-183. PHMSA also has not satisfied a number of safety recommendations from the National Transportation Safety Board (NTSB). Some in Congress are concerned that major mandates and NTSB recommendations remain unfulfilled. The NTSB highlighted aging pipelines as a particular concern in its 2019-2020 Most Wanted List of Transportation Safety Improvements. Likewise, Congress has ongoing interest in the safety of older transmission pipelines and in the replacement of leaky and deteriorating cast iron pipe in natural gas distribution systems. Recent accidents involving older pipelines and related infrastructure may refocus attention on PHMSA's regulation of pipe replacement (currently voluntary), pipeline modernization projects and work packages, older pipeline records, safety management systems, and other issues related to aging pipelines. Ongoing physical and cyber threats against the nation's pipelines since passage of the PIPES Act have heightened concerns about pipeline security risks. Although the Transportation Security Administration (TSA) has the primary statutory authority over pipeline security, pipeline safety and security are intertwined—and PHMSA is involved in both. Under the terms of a 2006 agreement, PHMSA and TSA are directed to work together "to delineate clear lines of authority … in the area of transportation security." While PHMSA reports ongoing cooperation with TSA, questions remain about what this cooperation entails and the ongoing roles of the two agencies. In addition to these specific issues, Congress may assess how the various elements of U.S. pipeline safety and security fit together in the nation's overall approach to protect the public and the environment. This approach involves federal and state agencies, pipeline associations, large and small pipeline operators, and local communities. Reviewing how these various groups work together to achieve common goals could be an overarching consideration for Congress.

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Introduction The Violence Against Women Act (VAWA) was originally enacted in 1994 ( P.L. 103-322 ). It addressed congressional concerns about violent crime, and violence against women in particular, in several ways. Among other things, it allowed for enhanced sentencing of repeat federal sex offenders; mandated restitution to victims of specified federal sex offenses; and authorized grants to state, local, and tribal law enforcement entities to investigate and prosecute violent crimes against women. This report provides a brief history of VAWA and an overview of the crimes addressed through the act. It includes brief descriptions of earlier VAWA reauthorizations and a more-detailed description of the most recent reauthorization in 2013. It also briefly addresses reauthorization activity in the 116 th Congress. The report concludes with a discussion of VAWA programs and a five-year history of funding from FY2015 through FY2019. Origins of VAWA The enactment of VAWA was ultimately spurred by decades of growing unease over a rising violent crime rate and a focus on women as crime victims. In the 1960s, the violent crime rate rose fairly steadily—it more than doubled from 1960 (160.9 per 100,000) to 1969 (328.7 per 100,000) —igniting concern from both the public and the federal government. Adding to this was the concern about violent crimes committed against women. In the 1970s, grassroots organizations began to stress the need for attitudinal change among both the public and the law enforcement community regarding violence against women. In the 1970s and 1980s, researchers increased their attention on the issue of violence against women as well. In one study, researchers collected data on family violence and attributed declines in spousal assault to heightened awareness of the issue in men as well as the criminal justice system. The public and the criminal justice system were beginning to view family violence as a crime rather than a private family matter. In 1984, Congress and President Reagan enacted the Family Violence Prevention and Services Act (FVPSA, P.L. 98-457 ) to assist states in preventing incidents of family violence and to provide shelter and related assistance to victims and their dependents. While FVPSA authorized programs similar to those discussed in this report and FVPSA reauthorizations subsequently reauthorized programs that were originally created by VAWA, such as the National Domestic Violence Hotline, it is a separate piece of legislation and beyond the scope of this report. In 1994, Congress passed and President Clinton signed into law, the Violent Crime Control and Law Enforcement Act of 1994 ( P.L. 103-322 ), which included VAWA as Title IV. The act created an unprecedented number of programs geared toward helping local law enforcement fight violent crime and providing services to victims of violent crime, among other things. In their opening remarks on VAWA in 1994, Senators Barbara Boxer and Joseph Biden highlighted the insufficient response to violence against women by police and prosecutors. The shortfalls of legal responses and the need for a change in attitudes toward violence against women were primary reasons cited for the passage of VAWA. VAWA has been reauthorized three times since its original enactment. Most recently, Congress passed and President Obama signed the Violence Against Women Reauthorization Act of 2013 ( P.L. 113-4 ), which reauthorized most of the programs under VAWA, among other things. In addition, this VAWA reauthorization amended and authorized appropriations for the Trafficking Victims Protection Act of 2000, enhanced measures to combat trafficking in persons, and amended VAWA grant purpose areas to include sex trafficking. Moreover, P.L. 113-4 gave American Indian tribes authority to enforce tribal laws pertaining to domestic violence and related crimes against non-tribal members, and established a nondiscrimination provision for VAWA grant programs. The reauthorization also included new provisions to address states' rape kit backlogs. Violence Against Women Act of 1994 The Violence Against Women Act of 1994, among other things, (1) enhanced investigations and prosecutions of sex offenses; (2) provided for a number of grant programs to address the issue of violence against women from a variety of angles, including law enforcement, public and private entities and service providers, and victims of crime; and (3) established immigration provisions for abused aliens. The sections below highlight examples of these VAWA provisions. Investigations and Prosecutions As originally enacted, VAWA impacted federal investigations and prosecutions of cases involving violence against women in a number of ways. For instance, it established new offenses and penalties for the violation of a protection order or stalking in which an abuser crossed a state line to injure or harass another, or forced a victim to cross a state line under duress and then physically harmed the victim in the course of a violent crime. It added new provisions to require states, tribes, and territories to enforce protection orders issued by other states, tribes, and territories. VAWA allowed for enhanced sentencing of repeat federal sex offenders, and it also authorized funding for the Attorney General to develop training programs to assist probation and parole officers in working with released sex offenders. In addition, VAWA established a new requirement for pretrial detention of defendants in federal sex offense or child pornography felony cases. It also modified the Federal Rules of Evidence to include new procedures specifying that, with few exceptions, a victim's past sexual behavior was not admissible in federal criminal and civil cases of sexual misconduct. Moreover, VAWA directed the Attorney General to study states' actions to ensure confidentiality between sexual assault or domestic violence victims and their counselors. VAWA mandated restitution to victims of specified federal sex offenses, particularly sexual abuse, sexual exploitation, and other abuse of children. It also established new provisions such as a civil remedy that allows victims of sexual assault to seek civil penalties from their alleged assailants, and a provision that allows rape victims to demand that their alleged assailants be tested for HIV. Grant Programs The original VAWA created a number of grant programs for a range of activities, including programs aimed at (1) preventing domestic violence and sexual assault; (2) encouraging collaboration among law enforcement, judicial personnel, and public/private sector providers with respect to services for victims of domestic violence and related crimes; (3) investigating and prosecuting domestic violence and related crimes; (4) encouraging states, tribes, and local governments to treat domestic violence as a serious crime and implement arrest policies; (5) bolstering investigations and prosecutions of domestic violence and child abuse in rural states; and (6) preventing crime in public transportation as well as public and national parks. VAWA created new and reauthorized grants under FVPSA. These included grants for youth education on domestic violence and intimate partner violence as well as grants for community intervention and prevention programs. It authorized the grant for the National Domestic Violence Hotline and authorized funding for its operation. VAWA also reauthorized funding for battered women's shelters. VAWA authorized research and education grants for judges and court personnel in federal court circuits to gain a better understanding of the nature and the extent of gender bias in the federal courts. It additionally authorized grants for developing model programs for training of state and tribal judges and personnel on laws on rape, sexual assault, domestic violence, and other crimes of violence motivated by the victim's gender. It also authorized a new grant to be used for assisting state and local governments with entering data on stalking and domestic violence into local, state, and national databases—such as the National Crime Information Center (NCIC) database. VAWA authorized the expansion of grants under the Public Health Service Act to include rape prevention education. Additionally, it expanded the purposes of the Runaway and Homeless Youth Act to allow for grant funding to assist youth at risk of or who have been subjected to sexual abuse. VAWA reauthorized the Court-Appointed Special Advocate Program and the Child Abuse Training Programs for Judicial Personnel and Practitioners. It also authorized funding for Grants for Televised Testimony by Victims of Child Abuse. Immigration Provisions17 VAWA of 1994 addressed immigration-related problems faced by battered aliens. It included three provisions related to abused aliens: self-petitioning by abused foreign national spouses and their children, required evidence for demonstrating abuse, and suspension of deportation and cancellation of removal. These petitions allowed battered foreign national spouses and their children to essentially substitute a self-petition for lawful status in place of a petition for lawful status that was based on sponsorship by the abusive spouse, clarified the evidence required for joint petition waivers, and established requirements for battered foreign national spouses and children to stay deportation. Other VAWA Requirements Beyond the criminal justice improvements, grant programs, and immigration provisions, VAWA included provisions for several other activities, including requiring that the U.S. Postal Service take measures to ensure confidentiality of domestic violence shelters' and abused persons' addresses; mandating federal research by the Attorney General, National Academy of Sciences, and Secretary of Health and Human Services to increase the government's understanding of violence against women; and requesting special studies on campus sexual assault and battered women's syndrome. Office on Violence Against Women In 1995, the Office on Violence Against Women (OVW) was administratively created within the Department of Justice (DOJ) to administer grants authorized under VAWA. In 2002, OVW was codified through Title IV of the 21 st Century Department of Justice Appropriations Authorization Act ( P.L. 107-273 ). Since its creation through FY2018, OVW has awarded more than $8 billion in grants and cooperative agreements to state, tribal, and local governments, nonprofit organizations, and universities. While OVW administers the majority of VAWA-authorized grants, other federal agencies, including the Centers for Disease Control and Prevention (CDC) and the Office of Justice Programs (OJP), also manage VAWA programs. Categories of Crime Addressed through VAWA VAWA programs generally address domestic violence, sexual assault, dating violence, and stalking, although some VAWA programs address additional crimes. VAWA grant programs largely address the criminal justice system and community response to these crimes, but certain programs address prevention as well. These crimes involve a wide range of victim demographics, but the risk of victimization is highest for women. Public concern over violence against women prompted the original passage and enactment of VAWA. As such, VAWA legislation and programs have historically emphasized women victims. More recently, however, there has been a focus on ensuring that the needs of all victims are met through provisions of VAWA programs. Of note, while the title of the act and some headings and general purpose areas refer to women only, most VAWA grant purpose areas are not specific to women. National victimization data on domestic violence, sexual assault, dating violence, and stalking are available from two surveys, the National Crime Victimization Survey (NCVS) and the Youth Risk Behavior Surveillance System. Offense data are available from the Federal Bureau of Investigation's (FBI's) Uniform Crime Reporting (UCR) Program. UCR data differ from victimization data because the UCR data describe crimes that were reported to law enforcement, while victimization data include crimes that might not have been reported to law enforcement. Due to differences in what they are trying to measure, victimization data are not directly comparable to UCR data. Domestic Violence Domestic violence can take many forms, but is often labeled as family violence or intimate partner violence. Under VAWA, domestic violence is generally interpreted as intimate partner violence; it includes felony or misdemeanor crimes committed by spouses or ex-spouses, boyfriends or girlfriends, and ex-boyfriends or ex-girlfriends. Crimes may include sexual assault, simple or aggravated assault, and homicide. As defined in statute for the purposes of VAWA grant programs, domestic violence includes felony or misdemeanor crimes of violence committed by a current or former spouse or intimate partner of the victim, by a person with whom the victim shares a child in common, by a person who is cohabitating with or has cohabitated with the victim as a spouse or intimate partner, by a person similarly situated to a spouse of the victim under the domestic or family violence laws of the jurisdiction receiving grant monies, or by any other person against an adult or youth victim who is protected from that person's acts under the domestic or family violence laws of the jurisdiction. From 1993 to 2017, the rate of serious intimate partner violence victimization declined by 70% for females, from 5.7 victimizations per 1,000 females aged 12 and older in 1993 to 1.7 per 1,000 in 2017; and 87% for males, from 1.5 victimizations per 1,000 males aged 12 and older in 1993 to 0.2 per 1,000 in 2017. In 2015, a survey conducted by the CDC included questions about lifetime victimization. The CDC estimates that 21.4% of women and 14.9% of men have experienced severe physical violence by an intimate partner in their lifetime. Intimate Partner Homicide Since peaking in the early 1990s, the violent crime rate (including homicide and intimate partner homicide) has declined. Although it has fluctuated over the last several years, the violent crime rate remains far lower now than it was in the 1990s. In examining the initial decline in the 1990s and early 2000s, researchers studied a range of social factors that may influence homicide rates and suggested possible reasons for the decline in the intimate partner homicide rate. For instance, most intimate partner homicides involve married couples; as such, some researchers suggested the decline in marriage rates among young adults is a contributing factor in the decline in intimate partner homicide rates. Additionally, divorce and separation rates increased. Fewer marriages may result in less exposure to abusive partners, and may suggest that those who do marry are more selective in choosing a partner. Overall, homicide is committed largely by males, mostly victimizing other males. In 2017, males made up 84% of all offenders and 78% of all homicide victims; however, 78% of all intimate partner homicide victims were female. From 2003-2014, the CDC found that approximately 55% of female homicides for which circumstances were known were related to intimate partner violence. Sexual Assault Sexual assault may include the crimes of forcible rape, attempted forcible rape, assault with intent to rape, statutory rape, and other sexual offenses. For VAWA programs, sexual assault is defined as "any nonconsensual sexual act proscribed by Federal, tribal, or State law, including when the victim lacks capacity to consent." Sexual assault is termed as "sexual abuse" and "aggravated sexual abuse" under federal criminal law. Of note, intimate partner violence can, and often does, include sexual assault. Until 2012, and for the purposes of its UCR program, the FBI defined forcible rape as "the carnal knowledge of a female forcibly and against her will." In January 2012, the FBI revised its definition of rape , and 2013-2017 rape data rely on the following definition: "penetration, no matter how slight, of the vagina or anus with any body part or object, or oral penetration by a sex organ of another person, without the consent of the victim." The new, more inclusive definition includes either male or female victims or offenders, includes instances in which the victim is incapable of giving consent because of temporary or permanent mental or physical incapacity, and reflects the various forms of sexual penetration understood to be rape. Both the legacy definition and the current definition exclude statutory rape—nonforcible sexual intercourse with or between individuals, at least one of whom is younger than the age of consent. According to UCR data, and applying the revised definition of rape, 135,755 forcible rapes were reported to law enforcement in 2017—a rate of 41.7 per 100,000 people. From 2013-2017, the number of rapes (revised definition) increased by 19.4%, and the rate increased each year, from 35.9 per 100,000 in 2013 to 41.7 per 100,000 in 2017. Using the legacy definition, 99,856 forcible rapes were reported to law enforcement in 2017. Since 1990, when 102,555 forcible rapes (previous definition) were reported, the number has fluctuated but has generally declined, though it also has increased each year since 2013 (see Figure 1 ). According to statistics from the National Crime Victimization Survey (NCVS), it is estimated that there were 393,980 sexual assaults (1.4 per 1,000 aged 12 and older) in 2017—which is nearly triple the number of forcible rapes reported in the 2017 UCR. As noted, NCVS estimates are not directly comparable to UCR program data because victimizations are self-reported during interviews and may not have been reported to law enforcement. The UCR and NCVS also measure rape and sexual assault differently—among other variations, the NCVS combines rape and sexual assault into one category. As shown in Figure 2 , and similar to UCR data, NCVS data reflect a decline in sexual assaults since 1993; however, the victimization survey went through a redesign in 2006 and 2016, so data over time should be interpreted with caution. Figure 2 demonstrates that a fairly low percentage of rape/sexual assaults are reported to police each year. In 2017, it is estimated that 40% of rape or sexual assault incidents were reported to the police—nearly double the percentage that were reported in 2016. Dating Violence Under VAWA, dating violence refers to "violence committed by a person who is or has been in a social relationship of a romantic or intimate nature with the victim." The relationship between the offender and victim is determined based on the following factors: (1) the length of the relationship, (2) the type of relationship, and (3) the frequency of interaction between the persons involved in the relationship. While teenagers are not the only demographic subject to dating violence, data reports on dating violence usually refer to teenagers as the relevant age demographic. According to the CDC's 2017 Youth Risk Behavior Survey , approximately 8.0% of high school students who dated or went out with someone during the 12 months before the survey reported being "hit, slammed into something, or injured with an object or weapon on purpose by someone they were dating or going out with" one or more times in the past year. The prevalence of physical dating violence victimization was higher among female students (9.1%) than male students (6.5%). The overall percentage of high school students experiencing physical dating violence has declined since the CDC first included the question in its 2013 survey. In 2013, approximately 10.3% of high school students reported being a victim of physical dating violence; in 2015, it was 9.6%; and in 2017, it was 8.0%. Stalking All 50 states, the District of Columbia, and U.S. territories have stalking laws, though they vary in definition. Federal law makes it unlawful to travel across state lines or use the mail or computer and electronic communication services with the intent to kill, injure, harass, or intimidate another person, and as a result, place that person in reasonable fear of death or serious bodily injury or cause substantial emotional distress to that person, a spouse or intimate partner of that person, or a member of that person's family. The NCVS Supplemental Victimization Survey (SVS) defines stalking as "a course of conduct directed at a specific person that would cause a reasonable person to feel fear." The SVS measures these unwanted stalking behaviors: making unwanted phone calls; sending unsolicited or unwanted letters or emails; following or spying on; showing up at places without a legitimate reason; waiting at places for the victim; leaving unwanted items, presents, or flowers; or posting information or spreading rumors about the victim on the internet, in a public place, or by word of mouth. According to the NCVS SVS, an estimated 3.3 million individuals aged 18 and older were victims of stalking in 2006. More females than males were stalked. Also, the percentage of individuals targeted decreased with age; those aged 18-24 experienced the highest incidence of stalking. The CDC measures stalking differently than the NCVS. For the purposes of CDC reports, a person is considered a stalking victim "if they experienced multiple stalking tactics or a single stalking tactic multiple times by the same perpetrator and felt very fearful, or believed that they or someone close to them would be harmed or killed as a result of the perpetrator's behavior." The CDC measured the following stalking tactics: unwanted phone calls, voice or text messages, hang-ups; unwanted emails, instant messages, messages through social media; unwanted cards, letters, flowers, or presents; watching or following from a distance, spying with a listening device, camera, or global positioning system (GPS); approaching or showing up in places, such as the victim's home, workplace, or school, when it was unwanted; leaving strange or potentially threatening items for the victim to find; sneaking into victim's home or car and doing things to scare the victim or let the victim know the perpetrator had been there. The CDC asked about two additional tactics after respondents were identified as possible stalking victims: damaged personal property or belongings, such as in their home or car; and made threats of physical harm. According to 2015 data from the CDC, 16.0% of women (19.1 million) and 5.8% of men (6.4 million) have been stalked by an intimate partner in their lifetimes. In the 12 months preceding the survey, approximately 4.5 million women and 2.1 million men were victims of stalking. See Figure 3 . Federal Programs Authorized by VAWA The fundamental goals of VAWA are to prevent violent crime; respond to the needs of crime victims; learn more about crime; and change public attitudes through a collaborative effort by the criminal justice system, social service agencies, research organizations, schools, public health organizations, and private organizations. The federal government tries to achieve these goals primarily through federal grant programs that provide funding to state, tribal, territorial, and local governments; nonprofit organizations; and universities. As previously mentioned, OVW administers the majority of VAWA-authorized programs, while other federal agencies, including OJP and the CDC, also manage VAWA programs. Since its creation in 1995 through FY2018, OVW has awarded more than $8 billion in grants and cooperative agreements to state, tribal, and local governments; nonprofit organizations; and universities. FY2018–FY2019 Appropriations In FY2018 and FY2019, $553 million and $559 million, respectively, were appropriated for VAWA programs administered by OVW, OJP, and the CDC, as shown in Table 1 . For program descriptions, authorization levels, and a five-year history of appropriations, see the Appendix . FY2020 Appropriations While authorizations of appropriations for VAWA programs have expired, the Administration has requested FY2020 funding for VAWA-authorized programs. The Administration's budget request proposes to fund OVW at $492.5 million for FY2020 (a 1% decrease from FY2019), all of which would be derived from a transfer from the Crime Victims Fund. The Administration requests $9.0 million for OJP (a 25% decrease from FY2019) for the Court Appointed Special Advocates (CASA). Also for FY2020, the Administration requests level funding ($49.4 million) for the Rape Prevention and Education Program at the CDC. Past Reauthorizations and Changes to VAWA Since it was enacted in 1994, VAWA has been reauthorized three times. Of note, the reauthorizations in 2000 and 2005 had broad bipartisan support, while the most recent reauthorization in 2013 had bipartisan support but faced greater opposition. This section will provide comparatively more detail for the 2013 reauthorization because it was the most recent and some issues may remain relevant to current reauthorization discussions. 2000 Reauthorization In 2000, Congress reauthorized VAWA through the Victims of Trafficking and Violence Protection Act ( P.L. 106-386 ; VAWA 2000). Modifications included additional protections for battered nonimmigrants, a new program for victims of domestic violence, dating violence, sexual assault, and stalking in need of transitional housing, a requirement for grant recipients to submit reports on the effectiveness of programs, new programs designed to protect elderly and disabled women, mandatory funds to be used exclusively for rape prevention and education programs, and inclusion of victims of dating violence. VAWA 2000 amended interstate stalking and domestic violence law to include (1) a person who travels in interstate or foreign commerce with the intent to kill, injure, harass, or intimidate a spouse or intimate partner, and who in the course of such travel commits or attempts to commit a crime of violence against the spouse or intimate partner; (2) a person who causes a spouse or intimate partner to travel in interstate or foreign commerce by force or coercion and in the course of such travel commits or attempts to commit a crime of violence against the spouse or intimate partner; (3) a person who travels in interstate or foreign commerce with the intent of violating a protection order or causes a person to travel in interstate or foreign commerce by force or coercion and violates a protection order; and (4) a person who uses the mail or any facility of interstate or foreign commerce to engage in a course of conduct that would place a person in reasonable fear of harm to themselves or their immediate family or intimate partner. 2005 Reauthorization In 2005, Congress reauthorized VAWA through the Violence Against Women and Department of Justice Reauthorization Act ( P.L. 109-162 ; VAWA 2005). VAWA 2005 added protections for battered and/or trafficked nonimmigrants, programs for American Indian victims, and programs designed to improve the public health response to domestic violence. The act emphasized collaboration among law enforcement; health and housing professionals; and women, men, and youth alliances, and it encourages community initiatives to address these issues. This reauthorization enhanced penalties for repeat stalking offenders and expanded the federal criminal definition of stalking to include cyberstalking. It also amended the federal criminal code to revise the definition of the crime of interstate stalking to (1) include placing someone under surveillance with the intent to kill, injure, harass, or intimidate that person; and (2) require consideration of substantial emotional harm to the stalking victim. 2013 Reauthorization Authorization for appropriations for the programs under VAWA expired in 2011; however, programs continued to receive appropriations in FY2012 and FY2013. In 2013, the 113 th Congress reauthorized VAWA through the Violence Against Women Reauthorization Act of 2013 ( P.L. 113-4 ; VAWA 2013). Most VAWA grants were reauthorized from FY2014 through FY2018. This section briefly describes provisions of VAWA 2013. Consolidation of Grant Programs VAWA 2013 reauthorized most VAWA grant programs and authorized appropriations at a lower level, in general. It consolidated several VAWA grant programs, and in doing so authorized new grant programs. These actions are summarized below. The Grants to Support Families in the Justice System program was created by consolidating two previously authorized programs: (1) the Safe Havens for Children program (also referred to as Supervised Visitation), and (2) the Court Training and Improvements program. The purpose of this program is to improve the civil and criminal justice systems' responses to families with a history of domestic violence, dating violence, sexual assault, or stalking, or in cases involving allegations of child sexual abuse. The Creating Hope Through Outreach, Options, Services, and Education for Children and Youth (CHOOSE Children & Youth) was created by consolidating two previously authorized programs: (1) Services to Advocate for and Respond to Youth (also referred to as Youth Services) and (2) Grants to Combat Domestic Violence, Dating Violence, Sexual Assault, and Stalking in Middle and High Schools (also referred to as Supporting Teens through Education and Protection, or STEP). The purpose of this program is to enhance the safety of youth and children who are victims of or exposed to domestic violence, dating violence, sexual assault, stalking, or sex trafficking. The program also aims to prevent future violence. The Saving Money and Reducing Tragedies Through Prevention (SMART Prevention) was created by consolidating two previously authorized programs: (1) Engaging Men and Youth in Prevention and Grants to Assist Children and (2) Youth Exposed to Violence. The SMART Prevention program aims to prevent domestic violence, sexual assault, dating violence, and stalking through awareness and education programs, and also through assisting children who have been exposed to violence and abuse. In addition, this program aims to prevent violence by engaging men as leaders and role models. The Grants to Strengthen the Healthcare System's Response to Domestic Violence, Dating Violence, Sexual Assault, and Stalking was created using the purpose areas of three previously unfunded programs—(1) Interdisciplinary Training and Education on Domestic Violence and Other Types of Violence and Abuse, (2) Research on Effective Interventions in the Health Care Setting, and (3) Grants to Foster Public Health Responses to Domestic Violence, Dating Violence, Sexual Assault, and Stalking—these programs were eliminated. The purpose of this program is to improve training and education for health professionals in preventing and responding to domestic violence, dating violence, sexual assault, and stalking. VAWA Grant Provisions VAWA 2013 established new provisions for all VAWA grant programs. It established a nondiscrimination provision to ensure that victims are not denied services and are not subjected to discrimination based on actual or perceived race, color, religion, national origin, sex, gender identity, sexual orientation, or disability. It also enhanced protection of personally identifiable information of victims and specified the type of information that may be shared by grantees and subgrantees. It also required that any grantee or subgrantee that provides legal assistance must comply with certifications required under the Legal Assistance for Victims Grant Program. The 2013 reauthorization also added, modified, or expanded several definitions of terms in VAWA. Examples include the following: The definition of domestic violence was revised to specifically include "intimate partners" in addition to "current and former spouses." The term linguistically was removed from the Culturally Specific Services Grant and the definition of "culturally specific services" was amended to address the needs of culturally specific communities. With respect to providing VAWA-related services, the act added the terms population specific services and population specific organizations , which focus on "members of a specific underserved population." Underserved populations was redefined to include those who may be discriminated against based on religion , sexual orientation, or gender identity. The definition of cyberstalking was expanded to include use of any "electronic communication device or electronic communication service or electronic communication system of interstate commerce." A definition of rape crisis center was added, meaning "a nonprofit, nongovernmental, or tribal organization, or governmental entity in a State other than a Territory that provides intervention and related assistance ... to victims of sexual assault without regard to their age. In the case of a governmental entity, the entity may not be part of the criminal justice system ... and must be able to offer a comparable level of confidentiality as a nonprofit entity that provides similar victim services." Individual in later life was defined as a person who is 50 years of age or older. Youth was defined as a person who is 11 to 24 years of age. The definition of rural state was revised to include states with more densely populated rural areas than under the prior definition. Accountability of Grantees VAWA 2013 imposed new accountability provisions, including an audit requirement and mandatory exclusion from eligibility if a grantee is found to have an unresolved audit finding. Additionally, it required OVW to establish a biennial conferral process with state and tribal coalitions and technical assistance providers that receive OVW funding. It prohibited conferences funded through cooperative agreements from using more than $20,000 in funding without prior written approval by DOJ officials. Sexual Assault and Rape Kit Backlog VAWA 2013 amended the DNA Analysis Backlog Elimination Act of 2000 ( P.L. 106-546 ) to strengthen audit requirements for sexual assault evidence backlogs. It also required that for each fiscal year through FY2018, not less than 75% of the total Debbie Smith grant amounts be awarded to carry out DNA analyses of samples from crime scenes for inclusion in the Combined DNA Index System (CODIS) and to increase the capacity of state or local government laboratories to carry out DNA analyses. Additionally, VAWA 2013 expanded the purpose areas of several VAWA grants to respond to the needs of sexual assault survivors by addressing rape kit backlogs. It also established a new requirement that at least 20% of funds within the STOP (Services, Training, Officers, Prosecutors) program and 25% of funds within the Grants to Encourage Arrest Policies and Enforce Protection Orders program be directed to programs that meaningfully address sexual assault. Trafficking in Persons VAWA 2013 amended and authorized appropriations for the Trafficking Victims Protection Act of 2000 (Division A of P.L. 106-386 ). It enhanced measures to combat trafficking in persons, and amended the purpose areas for several grants to address sex trafficking. VAWA 2013 also clarified that victim services and legal assistance include services and assistance to victims of domestic violence, dating violence, sexual assault, or stalking who are also victims of severe forms of trafficking in persons. American Indian Tribes VAWA 2013 included new provisions for American Indian tribes. It granted authority to tribes to exercise special domestic violence criminal jurisdiction and civil jurisdiction to issue and enforce protection orders over any person. It also created a voluntary two-year pilot program for tribes that make a request to the Attorney General to be designated as a participating tribe to have special criminal jurisdiction over domestic violence cases. (Note: The Attorney General may grant a request after concluding that the tribe's criminal justice system has adequate safeguards in place to protect defendants' rights.) In addition, it created a new grant program to assist tribes in exercising special criminal jurisdiction in cases involving domestic violence. VAWA 2013 also expanded the purpose areas of grants for tribal governments and coalitions to include sex trafficking; develop and promote legislation and policies that enhance best practices for responding to violent crimes against Indian women; and raise awareness of and response to domestic violence, including identifying and providing technical assistance to enhance access to services for Indian women victims of domestic and sexual violence, including sex trafficking. Battered Nonimmigrants VAWA 2013 extended VAWA coverage to derivative children whose self-petitioning parent died during the petition process, a benefit currently afforded to foreign nationals under the family-based provisions of the Immigration and Naturalization Act (INA). It also exempted VAWA self-petitioners, U visa petitioners, and battered foreign nationals from being classified as inadmissible for legal permanent resident status if their financial circumstances raised concerns about them becoming potential public charges. Additionally, it amended the INA to expand the definition of the nonimmigrant U visa to include victims of stalking. VAWA 2013 added several new purpose areas to the Grants to Encourage Arrest Policies and Enforcement of Protection Orders program (Arrest Program), one of which was to improve the criminal justice system response to immigrant victims of domestic violence, sexual assault, dating violence, and stalking. Underserved Populations In addition to expanding the definition of underserved populations , VAWA 2013 established several new grant provisions to address the needs of underserved populations. It required STOP implementation plans to include demographic data on the distribution of underserved populations within states and how states will meet their needs. It expanded the purpose areas of the Grants to Combat Violent Crimes on Campuses program to address the needs of underserved populations on college campuses. It also dedicated 2% of annual appropriated funding for the Arrest and STOP programs to Grants for Outreach to Underserved Populations, a previously unfunded VAWA program. Housing VAWA 2013 added housing rights for victims of domestic violence, dating violence, sexual assault, and stalking, including a provision stating that applicants may not be denied public housing assistance based on their status as victims of domestic violence, dating violence, sexual assault, or stalking. It also required each executive department carrying out a covered housing program to adopt a plan whereby tenants who are victims of domestic violence, dating violence, sexual assault, or stalking can be transferred to another available and safe unit of assisted housing. Additionally, it required the Secretary of Housing and Urban Development to establish policies and procedures under which a victim requesting such a transfer may receive Section 8 assistance under the U.S. Housing Act of 1937. Under the VAWA-authorized Transitional Housing Assistance Grant program, the act ensured that victims receiving transitional housing assistance are not subject to prohibited activities, including background checks or clinical evaluations, to determine eligibility for services. It removed the requirement that victims must be "fleeing" from a violent situation in order to receive transitional housing assistance. It also specified that transitional housing services may include employment assistance. Institutions of Higher Education (IHEs) VAWA 2013 made several changes to higher education policy. It amended the Clery Act and incorporated provisions from the Campus Sexual Violence Elimination Act. These provisions required, among other things, IHEs to report data on domestic violence, dating violence, and stalking in annual security reports (ASRs). Newly reportable crime categories included domestic violence, dating violence, and stalking. VAWA 2013 also added two new categories of bias applicable to hate crime reporting (i.e., national origin and gender identity). VAWA 2013 required ASRs to include a statement of the IHE's policy on programs to prevent sexual assaults, domestic violence, dating violence, and stalking; policies to address these incidents if they occur, including a statement on the standard of evidence that will be used during an institutional conduct proceeding regarding these crimes; and primary prevention programs to promote awareness of these crimes for incoming students and new employees, as well as providing ongoing awareness and prevention training for students and faculty. It also required that crime statistics on victims who were "intentionally selected" because of their national origin or gender identity are recorded and reported according to category of prejudice. In addition, VAWA 2013 required that students and employees receive written notification of available victim services including counseling, advocacy, and legal assistance, as well as options for modifying a victim's academic, living, transportation, or work arrangements. Victims were to be notified of their rights, including their right to notify or not notify law enforcement and campus authorities of a crime of sexual violence. The law also required that officials who investigate a complaint or conduct an administrative proceeding regarding sexual assault, domestic violence, dating violence, or stalking receive annual training on how to conduct investigations or proceedings that protect the safety of victims and promote accountability. Other Changes VAWA 2013 amended rules for sexual acts in federal custodial facilities by adding "the commission of a sexual act" as grounds for civil action by a federal prisoner and mandating that detention facilities operated by the Department of Homeland Security and custodial facilities operated by the Department of Health and Human Services adopt national standards established pursuant to the requirements in the Prison Rape Elimination Act of 2003 ( P.L. 108-79 ). VAWA 2013 also enhanced criminal penalties for assaulting a spouse, intimate partner, or dating partner. Rape Survivor Child Custody Act In May 2015, as part of the Justice for Victims of Trafficking Act (Title IV, P.L. 114-22 ), the Rape Survivor Child Custody Act was enacted into law. It requires the Attorney General (through OVW) to increase grant funding under the STOP and SASP formula grant programs to states that have a law allowing the mother of a child conceived through rape to seek court-ordered termination of the parental rights of her rapist. The increase in formula grants is allowed to be provided for a total of four two-year periods (eight years), and is equal to not more than 10% of the total amount of funding provided to the state averaged over the previous three years. Of the increased funding, 25% is for STOP grants and 75% for the SASP grants. The Rape Survivor Child Custody Act authorized $5 million a year for FY2015 through FY2019 for the grant increases. Current Efforts to Reauthorize VAWA There are several issues that Congress may consider in current reauthorization efforts. These include, but are not limited to, improvements to data collection, assessing tribal jurisdiction over non-tribal members who commit VAWA-related crimes on tribal lands, new approaches for law enforcement in assisting victims, and enforcement of the federal prohibition on firearms for those convicted of a misdemeanor crime of domestic violence and those who are subject to a domestic violence protective order. Congress may also consider further changes to VAWA programs. The Violence Against Women Reauthorization Act of 2019 ( H.R. 1585 ), as passed by the House, would address some of these issues. Among other things, it would reauthorize funding for VAWA programs and authorize new programs; amend and add definitions used for VAWA programs; amend federal criminal law relating to firearms, custodial rape, and stalking; and expand tribal jurisdiction over certain crimes committed on tribal lands. Improvements to Data Collection Congress may address issues concerning limited law enforcement data at the national level on the crimes of domestic violence and stalking. The data are limited because the UCR does not currently collect information on these offenses from state and local agencies like it does for its traditional violent and property crime offense categories. In 2019, the UCR program plans to begin collecting domestic violence offense data through the National Incident-Based Reporting System (NIBRS). NIBRS also includes stalking as part of an intimidation offense category. Even though the NIBRS data are not yet nationally representative, the FBI states that it is transitioning its UCR program to a "NIBRS only data collection" by 2021. Congress may consider options to expand the NIBRS program sooner than 2021 or to adjust the UCR program in other ways, such as by requiring the FBI to collect data on stalking as its own offense under NIBRS rather than incorporating it into the intimidation offense category. Congress may also address the availability of data on the sexual assault kit (SAK, or rape kit) backlog. According to the National Institute of Justice (NIJ), "it is unknown how many unanalyzed [SAKs] there are nationwide." NIJ notes that while there are many reasons why there are no data on the number of untested SAKs in law enforcement's possession, one contributing factor is that there is no national system for collecting these data. Also, tracking and counting SAKs is an antiquated process in many jurisdictions (often done in nonelectronic formats), and the availability of computerized evidence-tracking systems has been an issue for many jurisdictions for years. The Joyful Heart Foundation, a grassroots organization, addressed the SAK data void by attempting to count the backlog (through public records requests) and track data in cities and states across the country. While the organization's data are incomplete, it has estimates of rape kit backlogs for various cities and states. Thus far, it has identified approximately 41 municipal and county jurisdictions with known rape kit backlogs ranging from several hundred to thousands—its current total is 40,000 untested SAKs. Congress may assess the SAK backlog and debate if the federal response should be changed as the issue evolves and agencies, including NIJ, capture the full breadth of the problem. H.R. 1585 , as passed by the House, would authorize several new activities related to increasing or improving data collection. These include, but are not limited to, the following: requiring the Attorney General to establish an interagency working group to study federal efforts to collect data on sexual violence and to make recommendations on the harmonization of such efforts, authorizing funding for tribal governments to improve data collection and to enter information into and obtain information from national crime information databases, and requiring NIJ to prepare a report on the status of women in federal incarceration—this requirement allows for inmate and personnel data to be collected from the Bureau of Prisons. Tribal Jurisdiction As discussed previously, VAWA 2013 granted authority to American Indian tribes to exercise special domestic violence criminal jurisdiction and civil jurisdiction to issue and enforce protection orders over any person, including non-tribal members. As of March 2018, 18 tribes were exercising this authority. These tribes have reported 143 arrests of 128 non-tribal individuals, which led to 74 convictions and five acquittals with 24 cases pending as of March 2018. According to the National Congress of American Indians (NCAI), tribes are exercising jurisdiction "with careful attention to the requirements of federal law and in a manner that upholds the rights of defendants." While NCAI issued its assessment report in 2018, Congress also may elect to assess implementation in the five years since this authority was granted. If it so chooses, Congress may require the Government Accountability Office (GAO) to evaluate tribal jurisdiction. Congress may elect to grant special jurisdiction over non-tribal members for additional VAWA crimes such as sexual assault and stalking, as well as non-VAWA crimes. NCAI stated in its assessment report that many implementing tribes were unable to prosecute non-tribal members for many crimes that co-occur with domestic violence such as drug and alcohol offenses. H.R. 1585 , as passed by the House, would amend tribal criminal jurisdiction authorized under Section 204 of the Indian Civil Rights Act. Among other changes, tribal jurisdiction over criminal behavior on tribal lands would consist of domestic violence ( H.R. 1585 would also expand the definition of domestic violence used for tribal jurisdiction), as well as obstruction of justice, assaulting a law enforcement officer, sex trafficking, sexual violence, and stalking. New Approaches for Law Enforcement As there are further developments in the fields of criminal justice and public health, researchers and practitioners report new and developing approaches and methods for law enforcement and other criminal justice personnel in working with victims of domestic violence, sexual assault, dating violence, and stalking. Congress may consider these new approaches when debating additions to grant purpose areas or encouraging states to adopt certain practices. For example, over the last decade there has been a push for criminal justice professionals to incorporate trauma-informed policing and response policies. Congress may consider requiring law enforcement grantees to incorporate trauma-informed training and policies into their required training or standard operating procedures or creating new funding opportunities to develop these trainings and policies. Of note, OVW has supported several initiatives related to trauma-informed approaches. Other new and developing approaches include, but are not limited to, new protocols for police officers about when they would activate their body-worn cameras as they interact with victims of domestic violence, sexual assault, dating violence, or stalking and so-called "red flag" laws that allow law enforcement or family members to petition a court to have firearms removed from those who are a danger to themselves or others. H.R. 1585 , as passed by the House, would authorize a new demonstration program under OVW to promote trauma-informed training for law enforcement. Through this program, OVW would make grants on a competitive basis to eligible entities to implement evidence-based or promising policies and practices to incorporate trauma-informed techniques designed to prevent re-traumatization of crime victims and improve communication between victims and law enforcement officers, among other purpose areas, in an effort to increase the likelihood of successful investigations and prosecutions of reported crime in a manner that protects the victim to the greatest extent possible. Domestic Violence and Federal Prohibition of Possession of Firearms The Gun Control Act (GCA) prohibits certain individuals from possessing firearms, including individuals who have been convicted of a misdemeanor crime of domestic violence and those who are subject to a protective order involving an intimate partner or child of an intimate partner. Congress may consider any number of issues surrounding prohibitions on firearms possession and matters of domestic violence, but the issue of enforcement of domestic violence and protection order prohibitions has been subject to some debate. While there is a federal process for preventing those convicted of a misdemeanor crime of domestic violence or those subject to a protective order from purchasing a firearm, there is not a federal process for these individuals to surrender their firearms. The process is left up to states and local jurisdictions, which vary in their approaches to enforcing these prohibitions. In some jurisdictions, the process for informing defendants/respondents they must surrender their firearms can vary by judge. Of note, VAWA 2005 established a provision that required states or units of local government to certify that its judicial policies and practices included notification to domestic violence offenders of the firearms prohibitions in Section 922(g)(8) and (g)(9) of Title 18 in order to be eligible to receive STOP funding. Congress may choose to take further steps to ensure the enforcement of these prohibitions, such as adding to the certification requirement, or it might leave the decisions to the states, some of which have enacted laws requiring the removal of firearms from those subject to the prohibitions. H.R. 1585 , as passed by the House, includes several provisions that seek to reduce firearms-related intimate partner violence. It would amend federal law to prohibit persons convicted of misdemeanor stalking crimes from receiving or possessing a firearm or ammunition, and revise related provisions governing domestic violence protection orders and the definition of "intimate partner" under current law. H.R. 1585 also includes other provisions related to improving enforcement of federal firearm possession prohibitions under 18 U.S.C. §922, subsections (g)(8), (g)(9), and (g)(10). Other Changes to VAWA Programs In the next effort to reauthorize VAWA, Congress may debate additional changes to VAWA programs such as adding new grant purpose areas or additional crimes, creating new programs, or consolidating existing programs. Examples of potential changes Congress may consider should it choose to reauthorize VAWA appropriations include the following: Female genital mutilation or female genital cutting (FGM/C) may be added to grant programs in a variety of ways. For example, it can be added as a crime for services eligibility, or Congress may try to encourage or require states (in order to receive grant funding) to make FGM/C a crime. Many VAWA grant programs fund the same services and the same organizations. For example, nine separate VAWA programs may be used to fund emergency shelter or transitional housing. Congress may consider streamlining funding into fewer, larger grant programs. Currently, OVW administers 4 formula grant programs and 15 discretionary grant programs. Congress may opt to support domestic violence courts. While some grantees already use funds for this purpose and OVW has provided technical assistance to fund model domestic violence courts, Congress may elect to create a program to support these specialized courts. While there is a large amount of grantee data available on the VAWA programs administered by OVW, grantee data from the Rape Prevention and Education (RPE) formula grant program administered by the CDC are limited. Congress may choose to require the CDC to submit reports on the activities supported with RPE funds. H.R. 1585 , as passed by the House, would define FGM/C for VAWA grant purposes, and amend the purpose areas of three VAWA grant programs (STOP, Outreach and Services to Underserved Populations, and CHOOSE Children and Youth) to include providing culturally specific victim services regarding responses to, and prevention of, FGM/C. The bill would also require the Director of the FBI to classify FGM/C, or female circumcision, as a part II crime in the UCR (see " Categories of Crime Addressed through VAWA " for discussion of UCR crime data). H.R. 1585 would also amend the Rape Prevention and Education Grant Program to require the CDC Director to submit to Congress a report on the activities funded by grants and best practices relating to rape prevention and education. H.R. 1585 , if enacted, would make many other changes that are not discussed in detail in this report. These include changes to definitions used for VAWA grant purposes, new housing protections for victims, and the creation of new grant programs that address issues such as lethality assessment in domestic violence cases and economic security for victims. Of note, H.R. 1585 would reauthorize funding for most VAWA programs for FY2020-FY2024. Appendix. Additional Data for VAWA Programs The Violence Against Women Reauthorization Act of 2013 ( P.L. 113-4 ) authorized appropriations for most VAWA programs for FY2014 through FY2018. Table A-1 provides descriptions of currently funded VAWA programs, Table A-2 provides a list of unfunded VAWA-authorized programs, and Table A-3 provides a five-year funding history of VAWA programs by total funding amounts for each administrative office. For more-detailed program funding, see Table 1 .

The Violence Against Women Act (VAWA; Title IV of P.L. 103-322) was originally enacted in 1994. It addressed congressional concerns about violent crime, and violence against women in particular, in several ways. It allowed for enhanced sentencing of repeat federal sex offenders; mandated restitution to victims of specified federal sex offenses; and authorized grants to state, local, and tribal law enforcement entities to investigate and prosecute violent crimes against women, among other things. VAWA has been reauthorized three times since its original enactment. Most recently, Congress passed and President Obama signed the Violence Against Women Reauthorization Act of 2013 (P.L. 113-4), which reauthorized most VAWA programs through FY2018, among other things. The fundamental goals of VAWA are to prevent violent crime; respond to the needs of crime victims; learn more about crime; and change public attitudes through a collaborative effort by the criminal justice system, social service agencies, research organizations, schools, public health organizations, and private organizations. The federal government tries to achieve these goals primarily through federal grant programs that provide funding to state, tribal, territorial, and local governments; nonprofit organizations; and universities. VAWA programs generally address domestic violence, sexual assault, dating violence, and stalking—crimes for which the risk of victimization is highest for women—although some VAWA programs address additional crimes. VAWA grant programs largely address the criminal justice system and community response to these crimes, but certain programs address prevention as well. The Office on Violence Against Women (OVW) administers the majority of VAWA-authorized programs, while other federal agencies, including the Centers for Disease Control and Prevention (CDC) and the Office of Justice Programs (OJP), also manage VAWA programs. Since its creation in 1995 through FY2018, OVW has awarded more than $8 billion in grants and cooperative agreements to state, tribal, and local governments, nonprofit organizations, and universities. In FY2019, approximately $559 million was appropriated for VAWA-authorized programs administered by OVW, OJP, and CDC. While several extensions of authorization for VAWA were provided through FY2019 continuing appropriations, authorizations for appropriations for all VAWA programs have since expired. However, all VAWA programs funded in FY2018 have been funded in FY2019 (select programs at slightly higher levels), and thus far it appears that the expiration of authorizations has not impacted the continuing operation of VAWA programs. The Administration has requested FY2020 funding for all VAWA-authorized programs funded in FY2019. There are several issues that Congress may consider in efforts to reauthorize VAWA. These include, but are not limited to, improvements to data collection on domestic violence and stalking or the rape kit backlog; assessing the implementation and future direction of tribal jurisdiction over non-tribal members, including potentially adding new crimes under VAWA; new approaches for law enforcement in assisting victims; and enforcement of the federal prohibition on firearms for those convicted of a misdemeanor crime of domestic violence and those who are subject to a domestic violence protective order. Congress may also consider further changes to VAWA programs. In the 116th Congress, the House passed the Violence Against Women Reauthorization Act of 2019 (H.R. 1585). Among other things, it would reauthorize funding for VAWA programs and authorize new programs; amend and add definitions used for VAWA programs; amend federal criminal law relating to firearms, custodial rape, and stalking; and expand tribal jurisdiction over certain crimes committed on tribal lands.

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Frequently Asked Questions This report addresses frequently asked questions related to the overtime provisions in the Fair Labor Standards Act (FLSA) for executive, administrative, and professional employees (the "EAP" or "white collar" exemptions). For a history of DOL regulations on the EAP exemptions, see CRS Report R45007, Overtime Exemptions in the Fair Labor Standards Act for Executive, Administrative, and Professional Employees , by David H. Bradley. For a broader overview of the FLSA, see CRS Report R42713, The Fair Labor Standards Act (FLSA): An Overview . This report proceeds in three sections. First, there is an overview of the main federal statute on overtime pay—the FLSA—and of defining and delimiting the EAP exemptions. Second, there is a discussion of the applicability of the EAP exemptions. Finally, there is information on the EAP exemptions in the 2019 proposed rule and the 2016 final rule (which was finalized but invalidated before it took effect). Defining and Delimiting the EAP Exemptions What are the "EAP" or "White Collar" exemptions in the FLSA? The FLSA, enacted in 1938, is the main federal law that establishes minimum wage and overtime pay requirements for most, but not all, private and public sector employees. Section 7(a) of the FLSA specifies that unless an employee is specifically exempted in the FLSA, he or she is considered to be a covered "nonexempt" employee and must receive pay at the rate of one-and-a-half times ("time and a half") the employee's regular rate for any hours worked in excess of 40 hours in a workweek. When the FLSA was enacted, Section 13(a)(1) provided an exemption, from both the minimum wage (Section 6) and overtime (Section 7) provisions of the act, for "any employee employed in a bona fide executive, administrative, and professional capacity." Rather than define the terms executive, administrative, or professional employee, the FLSA authorizes the Secretary of Labor to define and delimit these terms "from time to time" by regulations . The general rationale for including the EAP exemption in the FLSA at the time of enactment was twofold. One, the nature of the work performed by EAP employees seemed to make standardization difficult and thus output of EAP employees was not as clearly associated with hours of work per day as it was for typical nonexempt workers. Two, bona fide EAP employees were considered to have other forms of compensation (e.g., above-average benefits, greater opportunities for advancement) not available to nonexempt workers. How are the EAP exemptions determined? As mentioned, the Secretary of Labor is authorized to define and delimit the EAP exemptions. Including the first rulemaking on EAP exemptions in 1938, DOL has finalized nine rules. Although the determinations have changed over time, to qualify for an exemption currently under Section 13(a)(1) of the FLSA (i.e., not to be entitled to overtime pay), an employee generally has to meet three criteria: 1. The "salary basis" test: the employee must be paid a predetermined and fixed salary. 2. The "duties" test: the employee must perform executive, administrative, or professional duties. 3. The "salary level" test: the employee must be paid above the threshold established in the rulemaking process, typically expressed as a per week rate. What is the "salary basis" test? To qualify for the EAP exemption, an employee must be paid on a "salary basis," rather than on a per hour basis. That is, an EAP employee must receive a predetermined and fixed payment that is not subject to reduction due to variations in the quantity or quality of work. The salary must be paid on a weekly or less-frequent basis. What is the "duties" test? Job titles alone do not determine exemption status for an employee. Rather, the Secretary of Labor, through issuance of regulations, specifies the duties that EAP employees must perform to be exempt from the overtime pay requirements of the FLSA. To qualify for the exemption for executive employees , all of the following job duties tests must be met: the employee's primary duty "is management of the enterprise in which the employee is employed or of a customarily recognized department or subdivision thereof"; the employee "customarily and regularly directs the work of two or more other employees"; and the employee "has the authority to hire or fire other employees or whose suggestions and recommendations as to the hiring, firing, advancement, promotion or any other change of status of other employees are given particular weight." To qualify for the exemption for administrative employees , both of the following job duties tests must be met: the employee's primary duty "is the performance of office or non-manual work directly related to the management or general business operations of the employer or the employer's customers"; and the employee's primary duty "includes the exercise of discretion and independent judgment with respect to matters of significance." To qualify for the exemption for professional employees , the following job duties test must be met: The employee's primary duty is the performance of work requiring "knowledge of an advanced type in a field of science or learning customarily acquired by a prolonged course of specialized intellectual instruction"; or work "requiring invention, imagination, originality or talent in a recognized field of artistic or creative endeavor." What is the "salary level" test? In addition to the duties test, an employee must earn above a certain salary in order to qualify for the EAP exemption. Since the FLSA was enacted and the first salary thresholds were established in 1938, the standard salary level thresholds have been raised nine times. Prior to 2004, the salary level for exemption varied by the type of employee and the type of duty test. In addition to the standard salary level, in 2004 DOL created a "highly compensated employee" (HCE) exemption in which employees earning an amount above the standard EAP salary threshold annually are exempt from overtime requirements if they perform at least one (among many) of the duties of an EAP employee. Applicability of the EAP Exemptions Do the EAP exemptions affect independent contractors? Because the FLSA applies to "employees," individuals who are classified as independent contractors are not covered by the FLSA provisions. Do the EAP exemptions apply to nonprofits? Yes. There is no general exemption for nonprofits in the FLSA or the EAP overtime regulations. Coverage for workers in nonprofits, like other entities, is determined by the enterprise and individual coverage tests. It is important to note, however, that charitable activities often associated with nonprofits do not count as ordinary commercial activities and thus do not count toward the $500,000 threshold for enterprise coverage under the FLSA. Only the commercial activities of nonprofits (e.g., gift shops, fee for service activities) count toward that threshold. On the other hand, even if a nonprofit does not meet the enterprise test for coverage, individual employees in an otherwise exempt nonprofit may be covered by the FLSA and the overtime rules if they engage in interstate commerce (e.g., regularly making out of state phone calls, processing credit card transactions). Do the EAP exemptions apply to institutions of higher education? Yes. Both the FLSA and the EAP overtime regulations apply to institutions of higher education (IHEs). Due to other provisions of the FLSA, however, many personnel at IHEs are not eligible for overtime on the basis of the duties test alone and thus are unaffected by changes in the EAP standard salary level for exemption. For example, in general, bona fide teachers are exempt regardless of salary level and thus are not eligible for overtime. Similarly, academic administrative personnel are exempt from overtime pay if they are paid at least the EAP salary level threshold or are paid at least equal to the entrance salary for teachers at the same institution. On the other hand, some IHE workers would be affected by changes in the EAP salary level for exemption, including postdoctoral researchers who are employees, nonacademic administrative employees, and other salaried workers who are not covered by another exemption. Finally, like some public sector employers, but unlike private sectors employers, public IHEs may have the option of using compensatory time (i.e., a rate of 1.5 hours for each hour of overtime), rather than cash payment, to meet the obligation of providing overtime compensation. Do the EAP exemptions apply to state and local governments? Yes. There is no blanket exemption from FLSA and overtime rule coverage for state and local governments. In general, employees of state and local governments are covered by the overtime provisions of the FLSA and thus are affected by EAP rulemaking updating the salary level threshold for the EAP exemptions. That said, other FLSA provisions apply to state and local governments that affect the applicability of overtime rules to these public sector employees. One way in which FLSA overtime rules apply differently in the public sector relates to the mode of compensation. State and local governments may have the option of using compensatory time, at a rate of 1.5 hours for each hour of overtime, rather than cash payment to meet the obligation of providing overtime compensation—an alternative not available to private sector employers. Additionally, some public sector employees are not covered by the FLSA. For instance, certain state and local employees—elected officials, their appointees and staff who are not subject to civil service laws, and legislative branch employees not subject to civil service laws—are not covered and will not be affected by changes to the EAP exemptions. The FLSA provides partial exemptions from the overtime requirements for fire protection and law enforcement employees. Specifically, fire protection and law enforcement employees are exempt from overtime pay requirements if they are employed by an agency with fewer than five fire protection or law enforcement employees. In addition, the FLSA allows overtime for all fire protection and law enforcement employees (not just those in small agencies) to be calculated on a "work period" (i.e., 7 to 28 consecutive days) rather than the standard "workweek" period (i.e., 7 consecutive 24-hour periods). Do the EAP exemptions apply to U.S. territories? Yes. The FLSA overtime provisions apply to employees in the U.S. territories—American Samoa, the Commonwealth of the Northern Mariana Islands, Guam, Puerto Rico, and the U.S. Virgin Islands. While the exemption for American Samoa has traditionally been set at 84% of the standard salary level, the other territories have been subject to the standard level. Are congressional employees covered by the FLSA overtime provisions? The application of the provisions of the FLSA is determined by the Congressional Accountability Act (CAA, P.L. 104-1 ), which was enacted in 1995 and extends some FLSA provisions, including overtime provisions, and other labor and workplace laws to congressional employees. In addition, the CAA created the Office of Compliance (now the Office of Congressional Workplace Rights), headed by a five-member Board of Directors (Board), to enforce the CAA. Rulemaking on the EAP exemptions would apply to congressional staff if the Board adopts them and Congress approves the Board's regulations, pursuant to the process established in the CAA. In other words, regulations adopted by the Board do not have legal effect until they are approved by Congress. When the Secretary of Labor issued new regulations to update the EAP exemptions in 2004, the Board adopted them; but thus far, Congress has apparently not approved the 2004 overtime regulations. Thus, overtime regulations that were adopted by the Board and approved by Congress in 1996, based on DOL regulations originally promulgated in 1975, currently apply to congressional staff. In the absence of action by the Board and by Congress, the provisions in any future final rules would not change the status quo. What are the options for congressional action on EAP exemptions? Congress can pass legislation to repeal rules or compel new rules. For example, prior to the publication of the 2016 final rule, legislation was introduced that would have prohibited the Secretary of Labor from enforcing the final rule and would have required additional analysis from the Secretary before the issuance of any substantially similar rule in the future. How might employers comply with changes in the EAP salary levels? Given that rulemaking on the EAP exemptions typically includes increases in the salary level threshold for the EAP exemption, a greater number of employees become eligible for overtime pay with each upward adjustment of the salary level. To comply with the proposed regulations, employers would have several options, including the following: pay overtime to newly covered EAP employees if they work more than 40 hours in a workweek; increase the weekly pay for workers near the salary threshold to a level above it so that the EAP employees would become exempt and thus not be eligible for overtime pay; reduce work hours of nonexempt (covered) employees to 40 or fewer so that overtime pay would not be triggered; hire additional workers to offset the reduction in hours from nonexempt employees; or reduce base pay of nonexempt workers and maintain overtime hours so that base pay plus overtime pay would not exceed, or would remain close to, previous employer costs of base pay plus overtime. The 2019 Proposed Rule This section provides an overview of the main provisions of the 2019 proposed rule on EAP exemptions. For context, some provisions of the 2016 final rule are discussed. What is the status of the 2016 final rule? A final rule updating the EAP exemptions was published in the Federal Register on May 23, 2016, with an effective date of December 1, 2016. However, on November 22, 2016, the U.S. District Court for the Eastern District of Texas issued a preliminary injunction blocking the implementation of the rule. On August 31, 2017, the U.S. District Court for the Eastern District of Texas ruled that DOL exceeded its authority by setting the threshold at the salary level in the 2016 final rule ($913 per week) and thus invalidated it. Subsequently, DOJ appealed that decision to the U.S. Court of Appeals for the Fifth Circuit, which granted DOJ's motion to hold the appeal in abeyance until DOL issued new rulemaking on the EAP salary level. Thus, DOL is currently enforcing the EAP regulations in effect on November 30, 2016, which include a standard salary level of $455 per week. What is the status of the 2019 proposed rule? DOL issued a request for information (RFI) related to the EAP exemptions on July 26, 2017, seeking information from the public to assist in formulating a proposal to revise the exemptions. On March 22, 2019, a Notice of Proposed Rulemaking (NPRM) was published in the Federal Register to define and delimit EAP exemptions. The proposed rule would not only revise the regulations on the EAP exemptions but would also formally rescind the 2016 final rule. Such a rescission would provide that if any or all of the substantive provisions of the 2019 rule were invalidated or not put into effect, the EAP regulations would revert to those promulgated in the 2004 final rule. Due to the invalidation of the 2016 final rule (discussed above), DOL currently enforces the provisions of the 2004 final rule. What are the main changes to the EAP exemptions in the 2019 proposed rule? The main changes to the EAP exemptions in the 2019 proposed rule, as summarized in Table 1 , include the following: an increase in the salary level test from the current $455 per week ($23,660 annually) to $679 per week ($35,308 annually); an increase in the annual salary threshold for the HCE exemption from $100,000 to $147,414; an allowance that up to 10% of the standard salary level may be comprised of nondiscretionary bonuses, incentive payments, and commissions; a salary level of $455 per week for the Commonwealth of the Northern Mariana Islands, Guam, Puerto Rico, and the U.S. Virgin Islands, and of $380 in American Samoa; and an increase in the "base rate" weekly salary level for employees in the motion picture industry from $695 per week to $1,036 per week. How are the salary levels determined in the proposed 2019 rule? Since the FLSA was enacted in 1938, the salary level threshold has been increased eight times, including the proposed 2019 increase. Each of the previous increases have occurred through intermittent rulemaking by the Secretary of Labor, with periods between adjustments ranging from 2 years (1938–1940) to 29 years (1975–2004). Since 1938, measures of the salary level have fluctuated according to DOL's identification of data sources most suitable for studying wage distributions and the department's determinations of the proportion and types of workers who should be below salary thresholds, as well as its determinations of whether regional, industry, or cost-of-living considerations should be factored into salary tests. Starting with the 2004 final rule, DOL has used survey data from the Current Population Survey (CPS) in determining the salary level for the EAP exemptions, albeit with different methodological choices. Standard Salary Level Effective January 2020 (approximately), the standard salary level threshold would equal the 20 th percentile of weekly earnings of full-time non-hourly workers in the lowest-wage Census region, which in 2019 is the South, and/or in the retail sector nationwide. In 2020, about 20% of full-time salaried workers in the South region and/or the retail sector nationwide are estimated to earn at or below $679 per week ($35,308 annually). Highly Compensated Employee Effective January 2020 (approximately), the HCE salary level for the EAP exemptions would equal the annual earnings equivalent of the 90 th percentile of the weekly earnings of full-time non-hourly workers nationally. In 2020, 90% of full-time non-hourly workers are estimated to earn at or below $147,414 per year. Territories Effective January 2020 (approximately), the salary level for the Commonwealth of the Northern Mariana Islands, Guam, Puerto Rico, and the U.S. Virgin Islands would be $455 per week, and in American Samoa it would be $380 per week. Except for American Samoa, this would depart from past regulations by establishing a salary threshold for the territories below the standard level. Motion Picture Industry Effective January 2020 (approximately), the motion picture industry employee salary level for the EAP exemption would be $1,036 per week. This level was derived by increasing the previous threshold ($695 per week) proportionally to the increase in the standard salary level. This would continue a special salary test created in 1953 for the motion picture industry that provides an exception to the "salary basis" test. Specifically, employees in the motion picture industry may be classified as exempt if they meet the duties tests for EAP exemption and are paid a "base rate" (rather than on a "salary basis") equal to the salary level for this exemption. What are the provisions for future adjustments to the salary level in the 2019 proposed rule? The 2019 proposed rule would implement a commitment by DOL to update the EAP salary level thresholds every four years by submitting an NPRM for comment. If the 2019 proposed rule is finalized, DOL would publish its first proposed update on January 1, 2023, and subsequent updates every four years thereafter. The future salary level updates would be based on the same data source (CPS) and methodology of the salary levels established in the 2019 proposed rule: the standard salary level would be adjusted to the 20 th percentile of weekly earnings of full-time salaried workers in the lowest-wage Census region and/or in the retail sector, the HCE salary level threshold would be adjusted to the 90 th percentile of annual earnings of full-time non-hourly workers nationally, and the quadrennial NPRM would seek comment on whether to update the salary level for the territories established in the 2019 proposed rule. Who would be covered by the changes to the EAP exemptions in the 2019 proposed rule? The 2019 proposed rule would expand overtime coverage to EAP employees through a higher salary level threshold rather than through additional classes of employees. As such, EAP employees making between $455 per week (the current effective level) and the new rate of $679 per week in 2019 would likely become nonexempt (i.e., covered) by the overtime provisions and entitled to overtime pay for hours worked in excess of 40 per workweek. How many employees would be affected by the changes to the EAP exemptions in the 2019 proposed rule? It is difficult to project the number of employees currently exempt under the EAP exemptions who would no longer be exempt under the 2019 proposed rule. This is due in part to uncertainty about potential employer responses, such as increasing salaries above the new threshold to maintain exemption for EAP employees. DOL estimates, with caveats, that approximately 4.9 million workers would be affected by the proposed rule. DOL identifies two groups in particular that would be affected—newly covered workers and workers with strengthened protections. Specifically, DOL estimates the following: In the first year under the provisions of the 2019 proposed rule, about 1.3 million EAP employees would become newly entitled to overtime pay due to the increase in the salary threshold: about 1.1 million employees in this group meet the duties test for the EAP exemption but earn between the current standard salary threshold ($455 per week) and the proposed threshold ($679 per week); and an additional 201,000 employees in this group meet the HCE duties test for exemption, but not the standard test, and earn at least the current HCE salary threshold ($100,000 per year) but less than the proposed threshold ($147,414 per year). An additional 3.6 million workers would receive "strengthened" overtime protections, including the following: An additional 2.0 million white collar workers who are paid on a salary basis and earn between the current salary threshold of $455 per week and the proposed threshold of $679 per week but do not meet the EAP duties test (i.e., they perform nonexempt work but might be misclassified) would gain overtime protections because their exemption status would not depend on the duties test. In other words, this group of workers would gain overtime coverage because the higher salary threshold would create a clearer line exemption test and reduce misclassification for exemption purposes. About 1.6 million salaried workers in blue collar occupations whose overtime coverage would have been clearer with the higher salary threshold. As DOL notes, this group of workers should currently be covered by overtime provisions but may not be due to worker classification. By comparison, DOL estimated that in the first year under the provisions of the 2016 final rule, approximately 13.1 million workers would have been affected. This total would have included about 4.2 million EAP employees who would have become newly entitled to overtime pay due to the increase in the salary threshold and an additional 8.9 million workers who would have received "strengthened" overtime protections. The data in Table 2 provide a summary of the estimated numbers of affected workers under the 2019 proposed rule and the 2016 final rule.

The Fair Labor Standards Act (FLSA), enacted in 1938, is the main federal law that establishes general wage and hour standards for most, but not all, private and public sector employees. Among other protections, the FLSA establishes that covered nonexempt employees must be compensated at one-and-a-half times their regular rate of pay for each hour worked over 40 hours in a workweek. The FLSA also establishes certain exemptions from its general labor market standards. One of the major exemptions to the overtime provisions in the FLSA is for bona fide "executive, administrative, and professional" employees (the "EAP" or "white collar" exemptions). The FLSA grants authority to the Secretary of Labor to define and delimit the EAP exemption "from time to time." To qualify for this exemption from the FLSA's overtime pay requirement, an employee must be salaried (the "salary basis" test); perform specified executive, administrative, or professional duties (the "duties" test); and earn above an established salary level threshold (the "salary level" test). In March 2019, the Secretary of Labor published a Notice of Proposed Rulemaking (NPRM) to make changes to the EAP exemptions. The 2019 proposed rule would become effective around January 2020. The major changes in the 2019 proposed rule include increasing the standard salary level threshold from the previous level of $455 per week to $679 per week and committing the Department of Labor (DOL) to updating the EAP exemptions every four years through the rulemaking process. The 2019 proposed rule does not change the duties and responsibilities that employees must perform to be exempt. Thus, the 2019 proposed rule would affect EAP employees at salary levels between $455 and $679 per week in 2020. DOL estimates that about 4.9 million workers would be affected in the first year, including about 1.3 million EAP employees who would become newly entitled to overtime pay and an additional 3.6 million workers who would have overtime protection clarified and thereby strengthened. This report answers frequently asked questions about the overtime provisions of the FLSA, the EAP exemptions, and the 2019 proposed rule that would define and delimit the EAP exemptions.

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Governance, Human Rights, and Reform The United Arab Emirates (UAE) is a federation of seven emirates (principalities): Abu Dhabi, the oil-rich federation capital; Dubai, a large commercial hub; and the five smaller and less wealthy emirates of Sharjah, Ajman, Fujayrah, Umm al-Qaywayn, and Ras al-Khaymah. Sharjah and Ras al-Khaymah have a common ruling family—leaders of the Al Qawasim tribe. After Britain announced in 1968 that it would no longer ensure security in the Gulf, six "Trucial States" formed the UAE federation in December 1971; Ras al-Khaymah joined in 1972. The federation's last major leadership transition occurred in November 2004, upon the death of the first UAE president and ruler of Abu Dhabi, Shaykh Zayid bin Sultan Al Nuhayyan. Shaykh Zayid's eldest son, Shaykh Khalifa bin Zayid al-Nuhayyan, born in 1948, was elevated from Crown Prince to ruler of Abu Dhabi upon Zayid's death. In keeping with a long-standing agreement among the seven emirates, Khalifa was subsequently selected as UAE president by the leaders of all the emirates, who collectively comprise the "Federal Supreme Council." The ruler of Dubai traditionally serves concurrently as Vice President and Prime Minister of the UAE; that position has been held by Shaykh Mohammad bin Rashid Al Maktum, architect of Dubai's modernization drive, since the death of his elder brother Shaykh Maktum bin Rashid Al Maktum in January 2006. The Federal Supreme Council meets four times per year to establish general policy guidelines, although the leaders of the emirates consult frequently with each other. UAE leadership posts almost always change only in the event of death of an incumbent. The leadership of the UAE was put into doubt by Shaykh Khalifa's stroke on January 24, 2014. He has not appeared publicly since and reportedly is incapacitated, but, in order not to cause turmoil within ruling circles, there is unlikely to be a formal succession as long as he remains alive. His younger brother and the third son of Shaykh Zayid, Crown Prince Shaykh Mohammad bin Zayid al-Nuhayyan (born in 1961), is almost certain to succeed him in all posts. Shaykh Mohammad had been assuming day-to-day governing responsibilities prior to Khalifa's stroke and has been de facto leader since. He and Shaykh Mohammad bin Rashid of Dubai have long been considered the key strategists of UAE foreign and defense policy. Several senior UAE officials are also brothers of Shaykh Mohammad bin Zayid, including Foreign Minister Abdullah bin Zayid, deputy Prime Minister Mansur bin Zayid, deputy Prime Minister and Minister of Interior Sayf bin Zayid, and National Security Advisor Shaykh Tahnoun bin Zayid. In 2017, Shaykh Mohammad appointed his son, Khalid bin Mohammad, as deputy National Security Adviser. As shown in the table above, each emirate has its own leader. The five smaller emirates, often called the "northern emirates," tend to be more politically and religiously conservative and homogenous than are Abu Dhabi and Dubai, which are urban amalgams populated by many Arab, South Asian, and European expatriates. Governance Issues UAE leaders argue that the country's social tolerance and distribution of national wealth have rendered the bulk of the population satisfied with the political system, and that Emiratis are able to express their concerns directly to the country's leaders through traditional consultative mechanisms. Most prominent among these channels are the open majlis (councils) held by many UAE leaders. UAE officials maintain that Western-style political parties and elections for a legislature or other representative body would aggravate schisms among tribes and clans, cause Islamist factions to become radical, and open UAE politics to regional influence. UAE officials have stated that the UAE's end goal is not to form a multiparty system, arguing that this model does not correspond with UAE cultural or historical development. Such assertions appear, at least in part, to signal that the country will work to prohibit the development of factions linked to regional Islamist movements or to regimes in the region. UAE law prohibits political parties. Federal National Council (FNC) and FNC Elections The UAE has provided for some formal popular representation through a 40-seat Federal National Council (FNC)—a body that can review and recommend, but not enact or veto, legislation. The FNC can question, but not remove, ministers and it conducts such questionings regularly. Its sessions are open to the public. The seat distribution of the FNC is weighted in favor of Abu Dhabi and Dubai, which each hold eight seats. Sharjah and Ras al-Khaymah have six each, and the others each have four. The government has not implemented calls, such as were expressed in a March 2011 petition signed by 160 UAE intellectuals, to transform the FNC into an all-elected body with full legislative powers. Each emirate also has its own appointed consultative council. First FNC Vote s . In 2006, the UAE leadership apparently assessed that it had fallen too far behind its Gulf neighbors on political reform and relented to the suggestion to make at least part of the FNC seats elective. In December 2006, the government instituted a limited election process for half of the FNC seats, with the other 20 FNC seats remaining appointed. The Election Commission approved a small "electorate" of about 6,600 persons, of which about 20% were women. Out of the 452 candidates for the 20 elected seats, there were 65 female candidates. Only one woman was elected (from Abu Dhabi), but another seven were given appointed seats. The September 24, 2011, FNC election was held in the context of the "Arab spring" uprisings, with an expanded electorate (129,000), nearly half of which were female. There were 468 candidates for the 20 seats, including 85 women. However, there was little campaigning, and turnout was about 25%, which UAE officials called disappointing. Of the 20 winners, only one was female. Other winners were elected largely along tribal lines. Of the 20 appointed seats, 6 were women. The government selected a woman, Amal al-Qubaisi, to be deputy speaker—the first woman to hold as high a position in a GCC representative body. The 2015 elections were again for half the FNC, but the electorate was expanded to 225,000 voters, about double that in 2011. The 2015 process included "early voting" and out of country voting, culminating on "election day" of October 3, 2015. There were 330 candidates (somewhat lower than in 2011), including 74 women (almost as many as in 2011). Turnout was 35%, which government officials stated was a more satisfactory turnout than in 2011. One woman was elected, as happened in 2011. Of the 20 appointed seats, eight were women. Of those, Abu Dhabi representative Ms. Amal al-Qubaisi, was promoted to speaker. The next FNC elections are to be held in the fall of 2019. UAE officials assert that there are plans to eventually make all 40 seats elected, but likely not in the 2019 vote. In December 2018, the UAE leadership decreed that, as of the 2019 election, half of the FNC members will be women – a quota presumably be achieved by appointing enough women to constitute half of the body, after accounting for those elected. A National Election Committee has been meeting to review procedures, particularly the use of technology for voter screening, for the upcoming election. Muslim Brotherhood and other Opposition There has been little evident clamor for major political reform, but some UAE intellectuals, businessmen, students, and others have agitated for greater political space. During the 2011 "Arab Spring" uprisings, some UAE youth tried unsuccessfully to use social media to organize a public protest in March 2011. Five high-profile activists—the so-called "UAE-5"—were put on trial in November 2011. They were convicted and their sentences were commuted. The government has particularly targeted for arrest Islamists linked to the Muslim Brotherhood organization, which UAE leaders named in 2014 as one of 85 "terrorist organizations"(a list that included Al Qaeda and the Islamic State). The UAE affiliate of the Brotherhood is the Islah (Reform) organization, which emerged in 1974 as an offshoot of the Muslim Brotherhood and attracts followers mostly from the less wealthy and more religiously conservative northern emirates. UAE officials accuse Islah of being funded by the main Brotherhood chapter in Egypt. The government stepped up its crackdown on Islah in 2012, the year that Muslim Brotherhood figure Mohammad Morsi was elected president of Egypt. UAE authorities arrested and revoked the citizenship of several senior Islah members, including a member of the Ras al-Khaymah ruling family. In July 2013, the UAE State Security Court convicted and sentenced 69 out of 94 UAE nationals ("UAE-94")—Islamists arrested during 2011-2013—for trying to overthrow the UAE government. In June 2014, 30 persons, of which 20 are Egyptian nationals, were convicted for connections to the Muslim Brotherhood organization in Egypt. A Saudi-UAE list of "persons to be isolated," released in connection with the June 2017 intra-GCC dispute, included Muslim Brotherhood-linked Egyptian cleric Yusuf Qaradawi, who resides in Qatar. The disagreements between Qatar and the UAE and other GCC states over the Muslim Brotherhood and other political Islamist movements are discussed further in the section on foreign policy. Other Government Responses The government has also addressed domestic opposition with reforms and economic incentives. In 2011, the government invested $1.5 billion in utilities infrastructure of the poorer, northern emirates; raised military pensions; and began subsidizing some foods. In 2013, a "new look" cabinet included several young figures. Cabinet reshuffles in February 2016 and October 2017 added more young ministers, many of them female, and established minister of state positions for "tolerance," "happiness," artificial intelligence, and food security. Other reforms included formation of an Emirates Foundation for Schools, run by an independent board of directors; limiting the mandate of the Ministry of Health to a focus on disease prevention; and creating a science council with a mandate to promote a new generation of Emirati scientists. U.S. Democracy Promotion Efforts and UAE Restrictions Human rights observers assert that U.S. officials downplay criticism of the UAE's human rights record because of the U.S.-UAE strategic alliance. U.S. officials assert that they continue to promote democracy, rule of law, independent media, and civil society in the UAE through State Department programs that are tolerated by the UAE government. Such programs have included the broader Middle East Partnership Initiative (MEPI), which has its headquarters for the Gulf region located at the U.S. Embassy in Abu Dhabi. On the other hand, the UAE government has expelled some U.S. and European-sponsored democracy promotion efforts that the government asserted were too intrusive into UAE politics. In 2012, the government ordered closed the offices in the UAE of the National Democratic Institute (NDI) and the Germany-based Konrad Adenauer Foundation. No U.S. funding for democracy promotion in UAE has been provided in recent years. Other Human Rights-Related Issues7 Recent State Department human rights reports and reports by independent groups such as Human Rights Watch assert that there are a variety of human rights problems in the UAE including: unverified reports of torture, government restrictions of freedoms of speech and assembly, and lack of judicial independence. UAE organizations that monitor the government's human rights performance include the Jurists' Association's Human Rights Committee, the Emirates Human Rights Association (EHRA), and the Emirates Center for Human Rights (ECHR), but their degree of independence is uncertain. In a January 2018 U.N. Human Rights Council Universal Periodic Review, UAE officials highlighted that they had formed a new human rights commission under international standards known as the "Paris Principles"—a response to reports that British police were investigating UAE officials suspected of torturing Qatari nationals. According to the State Department, there are an estimated 20,000 to 100,000 stateless persons in the UAE ("Bidoon"). Most Bidoon lacked citizenship because they did not have the preferred tribal affiliation when the country was founded. They lack accepted forms of identification and their movements within the UAE or internationally are restricted. Media and Research Institute Freedoms The UAE government has increased restrictions on media usage, particularly social media, since the 2011 Arab uprisings, tempering its former commitment to free and open media. A 2012 "cybercrimes decree" (Federal Legal Decree No. 5/2012) established a legal basis to prosecute and jail people who use information technology to promote dissent. It provides for imprisonment for using information technology to "incite actions that endanger state security or infringe on the public order," and for life imprisonment for anyone using such technology to advocate the overthrow of the government. In May 2015, the government enacted an Anti-Discrimination Law, which criminalizes the publication of "provocative" political or religious material. Several activists have been jailed for violating the decree, including Ahmed Mansoor, who was arrested in 2018 for "defaming" the country on social media. On December 31, 2018, a UAE court upheld his 10-year prison sentence and fine of $272,000. A "National Media Council" (NMC) directly oversees all media content, and provisions governing media licensing do not clearly articulate government standards in evaluating license applications. Restrictions do not apply to the "Free Zones" in UAE in which foreign media operate. However, some media organizations report that the government has banned some journalists from entering the country, and prohibited distribution of books and articles that highlight human rights abuses. The country has also become less welcoming of research institutes, several of which had opened in UAE in the 1990s. The government applied increasingly strict criteria to renewing the licenses of some research institutes and some left the UAE as a result. In November 2012, the UAE ordered out the Rand Corporation, and UAE officials have denied entry to some academics and human rights organizations representatives who have been critical of the UAE's human rights record. On the other hand, some new UAE-run think tanks have opened or become increasingly active in recent years, including the Emirates Policy Center and the TRENDS Institute. Justice/Rule of Law The UAE constitution provides for an independent judiciary, but court decisions are subject to review and overrule by political leaders. UAE judicial institutions include Sharia (Islamic law) courts that adjudicate criminal and family law matters, and civil courts that adjudicate civil matters. The civil court system, based on French and Egyptian legal systems, was established in 1973 when a Federal Supreme Court was inaugurated. This court, which consists of a president and a five judges appointed by the UAE leadership, adjudicates disputes between emirates or between an emirate and the UAE federal government; the constitutionality of federal and other laws; conflicts of jurisdiction between the federal and local judicial authorities; and crimes affecting the UAE federation. It also interprets the provisions of the constitution and questions ministers and senior federal officials for official misconduct. A 2012 amendment to the UAE constitution set up a "Federal Judicial Council" chaired by the UAE president, which human rights groups asserted reflected increased political influence over the judiciary. Foreign nationals hold positions in the judiciary, making them subject to being threatened with deportation for judgments against Emiratis. In 2010, a UAE court acquitted the UAE president's brother of torturing an Afghan merchant, ruling that he was not liable because he was affected by prescription drugs. The UAE justice system has often come under criticism in cases involving expatriates. Western expatriates have sometimes been arrested for sexual activity on beaches. In 2007, human rights groups criticized the conservative-dominated justice system for threatening to prosecute a 15-year-old French expatriate for homosexuality, a crime in UAE, when he was raped by two UAE men; the UAE men were later sentenced for sexual assault and kidnapping. In August 2012, a 78-year-old pediatrician from South Africa was imprisoned for two months for alleged issues of malpractice related to his six-week service as a doctor in Abu Dhabi in 2002 and he was prevented from leaving the UAE until June 2013. In May 2018, UAE authorities detained a British academic, Matthew Hedges, on charges of "spying for a foreign state." He was sentenced to life imprisonment in November but shortly thereafter, following expressions of outrage from British and other world leaders, was pardoned by the leadership. Women's Rights Women's political rights have expanded steadily. As of December 2011, UAE women are allowed to pass on their citizenship to their children—the first GCC state to allow this. However, UAE women are still at a legal disadvantage relative to men, for example in divorce cases and other family law issues. The penal code allows men to use physical means, including violence, against female family members. Many domestic service jobs are performed by migrant women, and they are denied basic legal protections such as limits to work hours. Recent cabinet reshuffles have greatly increased the number of female ministers. Seven women are in the FNC, one is now its speaker, and, as noted, the FNC will have women as half its members after the 2019 vote. About 10% of the UAE diplomatic corps is female, whereas there were no female diplomats prior to 2001. The UAE Air Force has several female fighter pilots. Religious Freedom11 The UAE constitution provides for freedom of religion but also declares Islam as the official religion. The death penalty for conversion from Islam remains in law, but is not known to be enforced. In practice, non-Muslims in UAE are free to practice their religion. UAE officials boast of the country's religious tolerance by citing the 40 churches in the UAE, of a variety of denominations. In 2016 the government donated additional lands for the building of more churches, as well as some new Hindu and Sikh temples. In January 2017, the Ministry hosted an event for 30 Christian leaders from nine denominations located throughout the Gulf; the event took place at the site of an early Christian monastery on Sir Bani Yas Island in Abu Dhabi. In November 2017, the Abu Dhabi Department of Justice signed an agreement with Christian leadership to allow churches to handle non-Islamic marriages and divorces. In September 2016, Shaykh Mohammad bin Zayid met with Pope Francis in the Vatican and invited him to visit. The visit took place during February 3-5, 2019, and enabled the UAE—at a time of widespread criticism of its intervention in Yemen—to showcase its commitment to religious tolerance, and the Pope to advocate for the creation of more churches in the UAE to better accommodate the approximately 1 million Christians in the country, almost all of whom are expatriates. The papal visit was the first such trip to the Gulf region. There are no Jewish synagogues or Buddhist temples. The Shia Muslim minority, which is about 15% of the citizen population and is concentrated largely in Dubai emirate, is free to worship and maintain its own mosques. However, Shia mosques receive no government funds and there are no Shias in top federal posts. At times, the government has acted against non-UAE Shia Muslims because of their perceived support for Iran and Iran's regional allies. The government has at times closed Shia schools and prohibited the holding of conferences for international Shias. The government has deported some foreign Shias in recent years. Labor Rights and Trafficking in Persons UAE law prohibits all forms of compulsory labor, but enforcement is inconsistent. On several occasions, foreign laborers working on large construction projects have conducted strikes to protest poor working conditions and nonpayment of wages. There have been numerous and persistent allegations that foreign workers are housed in cramped "labor camp" conditions, have their passports held, are denied wages or paid late, are forced to work long hours, are deported for lodging complaints, and are subjected to many other abuses. In May 2014, the government arrested foreign laborers striking to protest many of the conditions discussed above in the course of building a facility for New York University's (NYU's) branch in Abu Dhabi. NYU apologized to the workers for being excluded from a labor "code of conduct" that covers migrant workers in the UAE and compensated several hundred of them. The government has put in place a "Wages Protection System," an electronic salary payments system that requires companies with more than 100 workers to pay workers via approved banks and other financial institutions, thereby facilitating timely payment of agreed wages. The Ministry of Human Resources and Emiratization (MOHRE, formerly the Labor Ministry) has addressed problems such as those above by penalizing employers and requiring that workers' salaries be deposited directly in banks. In 2011 the UAE reformed its "kafala" system to allow migrant workers to more easily switch employers, producing higher earnings by immigrant laborers in the country. Trafficking in Persons14 The UAE is considered a "destination country" for women trafficked from Asia and the former Soviet Union. The Trafficking in Persons report for 2018, for the eighth year in a row, rated the UAE as "Tier 2." The rating is based on the assessment that the UAE does not meet the minimum standards for eliminating human trafficking, but is taking significant efforts to do so. The 2018 State Department report credits the UAE with implementing reforms that reduce forced labor among foreign workers in the private sector, instituting direct governmental oversight of domestic laborers, increasing the number of labor trafficking prosecutions, and funding and implementing a national action plan to combat trafficking in persons. UAE authorities continue to prosecute and punish sex trafficking offenders. In March 2015, the government put into effect amendments to victim protection clauses of Federal Law 51 of 2006 on Combating Human Trafficking Crimes. Since 2013, the UAE government, through its "National Committee to Combat Human Trafficking," has assisted human trafficking victims, including through shelters in several UAE emirates. The government opened its first shelter for male sexual trafficking victims in 2013. The government assists victims of human trafficking through a human rights office at Dubai International Airport. An issue in previous years was trafficking of young boys as camel jockeys, a concern alleviated with repatriation of many of those trafficked and the use of robot jockeys. Foreign Policy and Defense Issues Despite its small population and territorial size, the UAE is increasingly attempting to influence regional outcomes. Its assertiveness has been enhanced by the training, arms, and advice the country has received from its close security partnership with the United States, forged during the 1980-1988 Iran-Iraq war and strengthened after the 1990 Iraqi invasion of Kuwait. The UAE and the five other members of the Gulf Cooperation Council (GCC: Saudi Arabia, Kuwait, Qatar, Bahrain, and Oman) also have close defense ties to the United States. The alliance was formed in late 1981 in response to the Iran-Iraq war, during which the GCC states gave extensive financial and political backing to Iraq. The UAE and Saudi Arabia are closely aligned, particularly in their assertion that Islamist movements including the Muslim Brotherhood pose a significant threat. UAE leaders have publicly defended Saudi Crown Prince Mohammad bin Salman Al Saud against criticism caused by the Saudi killing of U.S.-based Saudi journalist Jamal Kashoggi at the Saudi consulate in Istanbul on October 2, 2018. The Saudi-UAE alliance has contributed to a fracturing of the GCC since the June 5, 2017, move by the two, joined by Bahrain, Egypt, and a few other Muslim states, to isolate Qatar by denying it land, sea, and air access to their territories. The UAE and Saudi Arabia asserted that Qatar supports Iran and Muslim Brotherhood-related movements, although many experts assert that Saudi Arabia and the UAE sought primarily to limit Qatar's foreign policy independence. The rift has, to date, defied mediation efforts by U.S. officials and caused repeated postponements of a U.S.-GCC summit—first planned for May 2018—that is to formally unveil a U.S.-led "Middle East Strategic Alliance" (MESA) to counter Iran. Some press accounts refer to the MESA as an "Arab NATO," which was to consist of the GCC states, Jordan, and Egypt. However, the plan suffered a setback in April 2019 when Egypt said it would not join a MESA, possibly as a protest of the Administration's strong support for Israeli Prime Minister Benjamin Netanyahu. Among other consequences of the intra-GCC rift, in December 2017, Saudi Arabia and the UAE announced the formation of a "joint cooperation committee" as a subgroup of the GCC. The rift has scuttled long-standing GCC plans to establish a joint military command and joint naval force to be based in Bahrain, supported by an Abu Dhabi-based "Gulf Academy for Strategic and Security Studies." Saudi Arabia, possibly as an overture, formally invited the Amir of Qatar to the GCC summit of December 7-9, 2018, but the Amir did not attend. Yet, the UAE and Saudi Arabia have allowed Qatari commanders to participate in joint GCC security meetings, suggesting that the UAE and Saudi Arabia do not want the Trump Administration to assess them as harming U.S. security interests in the Gulf. The broader issues dividing Qatar and some of its neighbors had caused rifts in the past, although not as extended as the current crisis. In March 2014, the UAE, Saudi Arabia, and Bahrain recalled their ambassadors from Qatar, but that dispute was resolved in November 2014 following an agreement that the GCC countries will not undermine each other's interests. Despite its strategic alliance with Saudi Arabia, the UAE has had border disputes and other disagreements with the Kingdom. A 1974 "Treaty of Jeddah" with Saudi Arabia formalized Saudi access to the Persian Gulf via a corridor running through UAE, in return for UAE gaining formal control of villages in the Buraymi oasis area. In March 2011, the UAE contributed 500 police officers to a Saudi-led GCC military intervention in Bahrain to support the Al Khalifa regime against a Shia-led uprising. At least some of the UAE force remained after that time, and one UAE police officer was killed in a bombing in Manama in March 2014. Iran UAE leaders assert that Iran is a threat to the UAE and the region and must be countered assertively. UAE leaders publicly backed the July 2015 Iran nuclear agreement (Joint Comprehensive Plan of Action, JCPOA), while simultaneously expressing reservations that the pact would reduce the U.S. interest in countering Iran's regional activities. UAE leaders strongly support the Trump Administration's characterization of Iran as a major U.S. adversary, its May 2018 withdrawal from the JCPOA, and its reimposition of all U.S. sanctions on Iran. UAE officials have committed, along with Saudi leaders and others, to ensure that the global oil market remains well supplied to support the April 2019 U.S. decision to sanction countries that continue to import Iranian oil. UAE leaders have explained the UAE intervention in Yemen, discussed further below, primarily as an effort to counter Iran's regional ambitions. In January 2016, the UAE withdrew its ambassador from Iran in solidarity with Saudi Arabia's breaking relations with Iran over issues related to the Saudi execution of a dissident Shia cleric. Because of Hezbollah's affiliation with Iran, in February 2016, the UAE barred its nationals from travelling to Lebanon, downgraded its diplomatic relations with Lebanon, and joined the other GCC states in a declaration that Hezbollah is a terrorist organization. UAE policy in east Africa, Yemen, Syria, and elsewhere is driven largely by the UAE objective of weakening Iran. Some UAE officials assert that the large Iranian-origin community in Dubai emirate (estimated at 400,000 persons) could pose a "fifth column" threat to UAE stability. Dubai leaders express less concern about Iranian-origin residents, asserting that this population is a product of long-standing UAE-Iran commercial ties. The extensive Iranian commercial presence in the UAE also gives the United States ample opportunity to enlist the UAE in sanctioning Iran. In 2010, when international sanctions on Iran tightened dramatically, the UAE government directed its banks to limit transactions with Iran, even though a decline in UAE-Iran trade harmed the powerful UAE trading community. Gulf Islands Dispute An additional complication in UAE-Iran relations is a dispute over several Persian Gulf islands. In 1971, Iran, then ruled by the U.S.-backed Shah, seized the Greater and Lesser Tunb islands from the emirate of Ras al-Khaymah, and intimidated the emirate of Sharjah to reach an agreement for shared control of another island, Abu Musa. In April 1992, Iran asserted complete control of Abu Musa. The UAE has called for peaceful resolution of the issue through direct negotiations, referral to the International Court of Justice, or through another agreed forum. The United States takes no position on the sovereignty of the islands, and supports the UAE's call to negotiate the dispute. In October 2008—after the UAE protested Iran's opening in August 2008 of administrative and maritime security offices on Abu Musa—the UAE and Iran established a joint commission to resolve the dispute. The dispute flared again in 2012, when then-President Ahmadinejad visited Abu Musa and spoke to the inhabitants there, an action that UAE officials said undermined diplomacy on the issue, including the appointment of negotiators. Iran incurred further UAE criticism with a May 2012 visit to Abu Musa by then-Islamic Revolutionary Guard Corps (IRGC) Commander-in-Chief Mohammad Ali Jafari. In 2014, the two countries discussed a possible solution under which Iran might cede control of the disputed islands in exchange for rights to the seabed around them. Iran reduced its presence on Abu Musa as a confidence-building measure. No discussions have been reported in recent years. Policy Toward and Intervention in Regional Conflicts Since the 2011 Arab uprisings, the UAE has become more active in the region, including through the use of its own military forces and its development of regional military facilities from which to project power. The UAE's capabilities have been enhanced by the many years of defense cooperation with the United States. The UAE's opposition to the Muslim Brotherhood generally drives its policies toward countries where Brotherhood-linked groups are prominent. Egypt In line with opposition to the Muslim Brotherhood, the UAE supported the Egyptian military's 2013 toppling of Muslim Brotherhood figure Mohammad Morsi, who was elected president in 2012. The UAE has given Egypt over $20 billion in assistance (including loans, grants, and investments) since the ouster of Morsi. UAE officials denied that they had blocked a potential competitor to President Sisi in March 2018 elections from leaving UAE to return to Egypt. Libya Intra-GCC differences—as well as differences between the UAE and U.S. policy—have manifested in post-Qadhafi Libya. In 2011, several GCC states, including the UAE, conducted air strikes and armed some Libyan rebels to help overthrow then-Libyan leader Muammar Qadhafi. In post-Qadhafi Libya, the UAE and Qatar support rival groups in the highly fractured country. The UAE, possibly in violation of U.N. Security Council resolutions on Libya, reportedly provides arms in support of Field Marshal Khalifa Hafter and his Libyan National Army (LNA) movement and reportedly continues to support operations at an airbase in eastern Libya from which pro-LNA forces fly air strikes. Hafter, a former commander in the Libyan armed forces, has refused to recognize the authority of the U.N.-backed Government of National Accord (GNA) and leads a coalition of military personnel and militias that has fought Islamist groups and some GNA-aligned forces. In July 2018, press reports claimed that UAE-based entities had signed agreements with Hafter-aligned oil authorities in eastern Libya to export Libyan oil in violation of U.N. Security Council resolutions. Other outside actors, including Russia, have given Hafter some backing as well. These actors have backed Hafter's April 2019 advance on Tripoli as an attempt to unify Libya and counter Islamist militia groups that back the GNA. In August 2014, the UAE and Egypt carried out an air strike in Libya against a Muslim Brotherhood-linked Islamist militia that reportedly enjoyed support from Qatar. The United States criticized the strike as detracting from Libyan stability. Islamic State/Syria Conflict26 The UAE is a member of the U.S.-led coalition against the Islamic State organization. During 2014-2015, it conducted more strikes in Syria against Islamic State positions than any country except the United States, and was the only Arab state that the United States permitted to command strikes there. The UAE also hosted other forces participating in the anti-Islamic State effort, including French jets stationed at Al Dhafra Air Base and 600 forces from Australia. The GCC states, including the UAE, at first sought to help oust Assad in part to strategically weaken Assad's ally, Iran. The UAE contributed to a multilateral pool of funds to buy arms for approved rebel groups in Syria. After Russia's intervention in Syria in 2015, the UAE accepted Assad's eventual victory. In recognition of Russia's predominant position in Syria, and its growing involvement in the region more generally, de facto UAE leader Mohammad bin Zayid has engaged Russian leaders with increasing frequency. On December 27, 2018, and in the wake of President Trump's announcement that a substantial portion of the 2,000 U.S. troops in Syria would be withdrawn, the UAE reopened its embassy in Damascus. UAE officials explained the move as an effort to reassert Arab influence in counter to Iran's presence in Syria. It is unclear whether the UAE will invest in any reconstruction in Syria. The UAE has also sought to alleviate suffering from the Syria crisis through donations to Syrian refugees and grants to Jordan to help it cope with the Syrian refugees that have fled there. In 2018, the UAE, Saudi Arabia, and Kuwait provided $2.5 billion to help stabilize Jordan's finances. The UAE portion was about $833 million. UAE forces also have participated in annual military exercises in Jordan intended to help protect Jordan from Syria conflict spillover. Iraq The GCC states all supported Iraq against Iran in the 1980-1988 Iran-Iraq war, and all broke relations with Iraq after it invaded Kuwait in 1990s. No Arab state, including the UAE, participated in the U.S.-led invasion that overthrew Saddam Hussein in 2003. In 2008, the UAE posted an ambassador to Iraq, wrote off $7 billion in Iraqi debt, and Shaykh Mohammad bin Zayid visited the country. It opened a consulate in the Kurdish region of Iraq in 2012. However, the relationship deteriorated as the Shia-dominated government of former Prime Minister Nuri al-Maliki (2006-2014) marginalized Sunnis. UAE officials welcomed the change of leadership in Iraq to Prime Minster Haydar Al Abadi in August 2014 and hosted him in December 2014. Still, the UAE and other GCC states did not conduct anti-Islamic State air operations in Iraq, possibly because of the Iraqi government's close relations with Tehran. Since mid-2017, Saudi Arabia and the UAE have improved ties to Iraq's Shia leaders to dilute Iranian influence there. The UAE and Germany jointly run a fund to pay for coalition efforts to reconstruct and stabilize areas of Iraq liberated from the Islamic State. The UAE donated $50 million to the fund in late 2016, and UAE companies have separately invested in housing and other projects in Iraq. The UAE-Germany cooperation reprises their joint cooperation in Iraq during 2003-2011, in which the UAE provided facilities for Germany to train Iraqi police and the UAE provided over $200 million for Iraq reconstruction, including for hospitals and medical treatment in the UAE for Iraqi children. Yemen34 In Yemen, another state roiled by the 2011 Arab uprisings, the UAE has intervened militarily since early 2015 with military personnel, armor, and airstrikes, in close partnership with Saudi Arabia, against the Zaydi Shia "Houthi" faction. The Saudi-led coalition asserts that the intervention was required to roll back the regional influence of Iran, which has supplied the Houthis with arms, including short-range ballistic and cruise missiles the Houthis have fired on the UAE and Saudi Arabia and their ships in the vital Bab el Mandeb Strait. In October 2016, the Houthis used anti-ship cruise missiles to damage a UAE Navy logistics ship in the Bab el Mandeb Strait. Since the UAE intervened, nearly 150 UAE soldiers have died. The Saudi and UAE-led intervention in Yemen has precipitated widespread international criticism of the two countries over the humanitarian effects of the war and other alleged abuses. In June 2017, UAE officials denied allegations by human rights organizations that UAE forces were maintaining a secret network of prisons in Yemen in which detainees were being severely abused. In early 2019, press investigations indicated that the UAE was arming some anti-Houthi militia commanders that were, and may still be, linked to Al Qaeda and/or the Islamic State. Some of these reports also indicate that some U.S. armor supplied to the UAE might have fallen into the hands of the Houthis. In an attempt to address critics, the UAE has highlighted the country's humanitarian aid to the people of Yemen in the context of the conflict. The UAE has provided $4 billion to Yemen, of which about $1.25 billion was provided in 2018, according to official UAE media. However, some of the total aid figure represents infrastructure investments, not grant aid. Criticism of the Arab coalition war effort has produced increasing congressional opposition to the U.S. logistical support provided to the effort, which included intelligence and aerial refueling under a cross-servicing agreement, as well as related arms sales and some direct U.S. military action to prevent Iranian weapons flows to the Houthis. In November 2018, the United States ended the refueling for coalition aircraft. But, fallout from the Kashoggi killing propelled additional congressional efforts to cease U.S. support for the coalition Yemen effort. For information on Congressional initiatives on the Yemen issues, see: CRS Report R45046, Congress and the War in Yemen: Oversight and Legislation 2015-2019 , by Jeremy M. Sharp and Christopher M. Blanchard. Separately, the UAE works closely with U.S. forces and with local Yemeni communities to counter the local faction of Al Qaeda—Al Qaeda in the Arabian Peninsula (AQAP). U.S. Special Operations Forces in Yemen reportedly worked with the UAE to defeat AQAP fighters at the port of Mukalla in April 2016, in the process killing the leader of the Yemeni branch of the Muslim Brotherhood. In January 2017, the Trump Administration authorized a raid in concert with some UAE special forces on allies of AQAP, an operation in which one U.S. soldier was killed. In August 2017, UAE and U.S. forces reportedly advised about 2,000 Yemen government forces conducting an operation against AQAP sanctuaries in Shabwa Province. Some experts assert that the UAE is promoting separatism in south Yemen and exercises significant control over governance in areas where UAE forces operate. In early March 2019, a UAE led operation, assisted by the United States, rescued an American hostage in Yemen, Danny Lavone Burch, who had been held by a gang with some ties to Al Qaeda. Congressional criticism of UAE operations in Yemen has not extended to the anti-AQAP mission. Related UAE Power Projection Capabilities/East Africa The UAE has been using its financial and military assets to be able to project power into Yemen as well as to counter Iranian influence more broadly. Another pillar of the UAE's effort to counter Iran has been to establish military bases and support friendly leaders and factions in several East African countries. During 2015, UAE forces deployed to Djibouti to support the intervention in Yemen, but in mid-2015 a UAE-Djibouti dispute over funding arrangements caused UAE (and Saudi) forces to begin using facilities in Eritrea to stage and to train pro-government Yemeni forces—a relationship that might violate a U.N. embargo on Eritrea. Perhaps to solidify its relations with Eritrea, the UAE helped broker a rapprochement between Eritrea and Ethiopia, which culminated in a trilateral (Ethiopia-Eritrea-UAE) summit in Abu Dhabi on July 24, 2018. The summit came one month after the UAE pledged to give Ethiopia $3 billion in investments. Yet, during a visit to the United States in late July 2018, the Prime Minister of Ethiopia, Abiy Ahmed, said he had rejected a UAE offer to build an Islamic center in Ethiopia and downplayed the UAE role in brokering the rapprochement. The UAE reportedly will be investing in energy infrastructure linking the two countries. Also in 2015, the UAE expanded its partnership with the fragile government in Somalia to open a new center at which a few hundred UAE special forces trained Somali commandos to counter terrorist groups, particularly Al Shabab. The UAE also established a base at the port of Berbera, in the breakaway region of Somaliland, triggering a legal complaint from the government of Somalia in February 2017. The 30-year basing agreement reportedly includes UAE training for Somaliland military and police forces. However, the rift with the government in Mogadishu led to a termination of the UAE training mission in Somalia in early 2018. In early July 2018, the European Union accused the UAE of "destabilizing" Somalia, referring to UAE pressure on Somalia to join the boycott of Qatar. The UAE has cooperated with the Saudi-led effort to persuade Sudan's leaders to realign with the GCC countries and forgo its erstwhile alliance with Iran. Sudanese troops have joined the Arab coalition effort in Yemen and Sudan's then-leader, Omar Hassan al-Bashir, visited the UAE in February 2017. In April 2019, Bashir was ousted by military colleagues in response to a popular uprising. In late April 2019, the UAE and Saudi Arabia pledged $3 billion in aid to Sudan, although the two were criticized for supplying funds to Sudan even though the military has said it will not transfer authority to civilian rule for two years. Afghanistan The UAE has assisted the U.S.-led mission to stabilize Afghanistan by allowing the use of its military facilities for U.S. operations there and by deploying a 250-person contingent of Presidential Guard forces, since 2003, in the restive south. During 2012-2014, the UAE deployed six F-16s for close air support missions there. The UAE also has donated several hundred million dollars of humanitarian and development aid to Afghanistan since the fall of the Taliban regime. The risks of the involvement were evident in January 2017 when five UAE diplomats were killed by a bomb during their visit to the governor's compound in Qandahar. The UAE Ambassador survived. In mid-December 2018, the UAE hosted meetings between Taliban representatives, U.S. officials, and officials from several regional stakeholder countries to discuss a possible political settlement in Afghanistan. Before the September 11, 2001, attacks on the United States, the UAE apparently did not perceive the Taliban movement as a major threat. The UAE was one of only three countries (Pakistan and Saudi Arabia were the others) that recognized the Taliban during 1996-2001 as the government of Afghanistan, even though the Taliban regime was harboring Al Qaeda leaders. Israeli-Palestinian Dispute The UAE has no formal diplomatic relations with Israel, but UAE troops did not participate militarily in any major Arab-Israeli war (two of which - 1948 and 1967 - occurred before the UAE was formed). Unlike Qatar and Oman, the UAE did not host multilateral Arab-Israeli working groups on regional issues during 1994-1998. In 2007, the UAE joined Saudi Arabia, Egypt, and Jordan in a "quartet" of Arab states to assist U.S. diplomacy on Israeli-Palestinian issues, and it attended the Annapolis summit on the issue that year. In recent years, Israel and the UAE have informally aligned against Iran and there are consistent reports of quiet diplomatic cooperation and security cooperation, including reported 2018 visits to Tel Aviv by UAE security officials. Israeli diplomats have attended multilateral meetings in the UAE, such as the January 2014 conference of the 144-country International Renewable Energy Agency (IRENA), attended by Israel's Minister of National Infrastructure, Energy, and Water. In November 2015, the UAE gave Israel permission to establish a diplomatic office in Abu Dhabi to facilitate Israel's participation in IRENA. The interactions indicate that the UAE has set aside its recriminations over an Israeli assassination of Hamas figure Mahmoud al-Mabhouh at a hotel in Dubai in 2010. There apparently are unspecified levels of Israel-UAE bilateral trade, even though the UAE formally claims it is enforcing the Arab League primary boycott of Israel. In 1994, the UAE joined with the other Gulf monarchies in ending enforcement of the Arab League's secondary and tertiary boycotts (boycotts of companies doing business with Israel and on companies that deal with companies that do business with Israel). In August 2018, the head of state-owned Dubai Ports World, which has ties with Israeli shipping company Zim Integrated Shipping Services Ltd. and other Israeli firms, visited Israel. The UAE has deferred to Saudi Arabia in formulating Arab or GCC proposals to resolve the Israeli-Palestinian dispute. And the UAE position on that issue aligns with other Arab states, for example in support of the Palestinian Authority (PA) bid for statehood recognition and opposition to the Trump Administration's 2018 recognition that Israel's capital is in Jerusalem and 2019 recognition of Israeli sovereignty on the Golan Heights. Yet, the government reportedly is poised to support a Trump Administration Israel-Palestinian peace plan that purportedly is far less favorable toward the Palestinians than were previous peace proposals. In line with UAE animosity toward Muslim Brotherhood-related movements, the UAE does not support Hamas but rather its rival, the Fatah faction of the Palestine Liberation Organization, which runs the West Palestinian Authority (PA) based on the West Bank. In June 2015, the UAE donated $12 million to help the Gaza victims of war with Israel, channeling the funds through Fatah, not Hamas. The UAE also hosts and financially backs senior PLO official Mohammad Dahlan, hoping to propel him to succeed PA President Mahmoud Abbas. According to the UAE government, the UAE has provided over $500 million to humanitarian projects for Palestinian refugees in the Palestinian territories and in Syria, sending the funds through the U.N. Relief and Works Agency (UNRWA). In April 2018, the UAE contributed $50 million to UNRWA to help it compensate for a shortfall in its operating funds caused by the Trump Administration cessation of funding to the agency. The UAE in the past funded a housing project in Rafah, in the Gaza Strip, called "Shaykh Khalifa City." UAE Foreign Aid54 The UAE asserts that it has provided billions of dollars in international aid through its government and through funds controlled by royal family members and other elites. Among initiatives outside the Near East and South Asia region are the following: The Abu Dhabi Fund for Development (ADFD), established in 1971, has distributed over $4 billion for more than 200 projects spanning 53 countries. The UAE provided $100 million for victims of the December 2004 tsunami in the Indian Ocean. During 2011-2012, UAE foundations responded to U.N. appeals for aid to the victims of a drought in East Africa and provided about $2 million for victims of conflict in Somalia. In October 2013, the UAE reopened a UAE embassy in Mogadishu, in part to facilitate the delivery of relief to Somalis. The UAE has donated for disaster relief and for health care facilities in the United States, including: $100 million to assist New Orleans after Hurricane Katrina; $150 million to Children's National Medical Center in Washington, DC; $5 million to the reconstruction of the new pediatric health care wing at St. John's Mercy Hospital in Joplin, MO, in the wake of the May 2011 tornado there; and $10 million to assist with the reconstruction and recovery efforts of communities affected by Hurricane Sandy in 2013. In 2012, Johns Hopkins officials unveiled the Sheikh Zayid Cardiovascular and Critical Care Tower, funded by a UAE donation. In December 2018, the UAE announced it would increase its contribution to the U.N. Central Emergency Relief Fund to $5 million in 2019, from $1.75 million provided in 2018. Defense Cooperation with the United States The UAE's ability to project power in the region is a product of many years of U.S.-UAE defense cooperation that includes U.S. arms sales and training, strategic planning, and joint exercises and operations. The UAE's armed forces are small—approximately 50,000 personnel—but they have participated in several U.S.-led military operations, including Somalia (1992), the Balkans (late 1990s), Afghanistan (since 2003), Libya (2011), and Syria (2014-2015). Some experts say the UAE has joined U.S.-led operations to further invest the United States in UAE security and increase UAE influence over U.S. policy. The UAE reportedly has also augmented its manpower by recruiting foreign nationals and hiring U.S. and other security experts to build militias and mercenary forces that supplement UAE national forces. Defense Cooperation Agreement (DCA) and U.S. Forces in UAE The United States and UAE have established a "Defense Cooperation Framework" to develop joint strategic approaches to regional disputes and conflicts and to better integrate U.S. capabilities with those of the UAE. The Framework includes UAE development of a defense plan that will facilitate joint U.S.-UAE planning in case of attack on the UAE. In accordance with the Framework, the two countries have established a "Joint Military Dialogue" (JMD) to identify shared security objectives and consult on a wide range of strategic issues. The fourth U.S.-UAE JMD was help on April 11, 2019. The Framework builds on the July 25, 1994, bilateral Defense Cooperation Agreement (DCA), the text of which is classified. The DCA was accompanied by a separate "Status of Forces Agreement" (SOFA) giving U.S. military personnel in UAE certain legal immunities, but several incidents reportedly caused the UAE to void the SOFA and to agree with the United States to handle legal incidents on a "case-by-case basis." On May 15, 2017, Secretary of Defense James Mattis and Shaykh Mohammad bin Zayid confirmed that the United States and the UAE had concluded a new DCA with a 15-year duration. In accordance with the DCA The United States stations about 5,000 U.S. military personnel at several UAE facilities including Jebel Ali port (between Dubai and Abu Dhabi), Al Dhafra Air Base (near Abu Dhabi), and naval facilities at Fujairah. Jebel Ali, capable of handling aircraft carriers, is the U.S. Navy's busiest port of call. The U.S. forces in UAE support U.S. operations in Afghanistan, combat the Islamic State, deter Iran, try to intercept terrorists, and combat smuggling and illicit shipments of weaponry or proliferation-related equipment. The number of U.S. forces currently in UAE is much higher than the 800 U.S. personnel there prior to the 2003 U.S. intervention in Iraq. The United States stations combat and other aircraft. About 3,500 of the U.S. contingent are Air Force personnel deployed at Al Dhafra air base. The facility at first only hosted U.S. surveillance aircraft such as the U-2 and the KC-10 refueling aircraft, but the UAE later permitted the stationing of F-15s; the "Stealth" F-22 Raptor; and the Global Hawk and the AWACS (Airborne Warning and Control System). Dhafra is the only overseas base for F-22s. In April 2019, the United States deployed the F-35 combat aircraft to Al Dhafra – the first such U.S. deployment of that aircraft in the Middle East region. The United States trains UAE forces. About 600-800 UAE military personnel study and train in the United States each year, mostly through the Foreign Military Sales program, through which the UAE buys most of its U.S.-made arms. The quality of the UAE force has, by all accounts, benefitted substantially from the U.S. training. U.S. military officers say that UAE fighter pilots, operators of HAWK surface-to-air missile batteries, and special operations forces are highly proficient and have demonstrated their effectiveness in recent combat missions, particularly against AQAP in Yemen. Since 2000, the UAE has hosted a "Joint Air Warfare Center" (AWC) where UAE and U.S. forces conduct joint exercises on early warning, air and missile defense, and logistics. Since 2009, UAE Air Force personnel have participated in yearly Desert Falcon exercises at Nellis Air Force Base in Nevada. Within a broader GCC context, joint statements issued after a 2015 and a 2016 U.S.-GCC summit at Camp David announced a new U.S.-GCC strategic partnership in which the United States pledged to (1) facilitate U.S. arms transfers to the GCC states; (2) increase U.S.-GCC cooperation on maritime security, cybersecurity, and counterterrorism; (3) organize additional large-scale joint military exercises and U.S. training; (4) help realize a long-discussed concept of a Gulf-wide ballistic missile defense capability; and (5) U.S.-GCC military exercises and U.S. training for GCC special forces. U.S. and Other Arms Sales U.S. officials assert that arms sales to the UAE enhance U.S. security by building up indigenous GCC capabilities and promoting interoperability. UAE representatives assert that the country would like to work out a mechanism with the United States under which requests for munitions and arms purchases could receive expedited U.S. consideration. Some options might include designating the UAE as a "Major Non-NATO Ally" (MNNA), or a mechanism UAE officials say they prefer: legislation that would declare the UAE a key U.S. defense partner. Two Gulf states—Kuwait and Bahrain—are designated as MNNAs. Yet, the United States' preference to work with the GCC as a bloc rather than country-by-country was enshrined in a December 16, 2013, Presidential Determination to allow defense sales to the GCC as a bloc. Some defense sales to the UAE might be contingent on the UAE's joining the Missile Technology Control Regime (MTCR), which UAE officials say they are considering trying to do. The UAE does not receive U.S. aid to purchase U.S. weaponry. On the other hand, congressional opposition to further U.S. support for UAE operations in Yemen could mean that U.S. arms sales to the UAE will halt or slow. Among major FMS programs with or potential sales to the UAE F-16 Program . In 2000, the UAE purchased 80 U.S. F-16 aircraft, equipped with the Advanced Medium Range Air to Air Missile (AMRAAM) and the High Speed Anti-Radiation Missile (HARM), at a value of about $8 billion. Congress did not block the sale, although some Members questioned the AMRAAM as an introduction of the weapon into the Gulf. In April 2013, the United States sold the UAE an additional 30 F-16s and associated "standoff" air-to-ground munitions, in conjunction with similar weapons sales to Israel and Saudi Arabia, which U.S. officials indicated were intended to signal resolve to Iran. The UAE also has about 60 French-made Mirage 2000 warplanes, and is reportedly considering buying French-made Rafales and the Boeing F/A-18. F-35 . UAE officials and industry sources say the country wants to buy two dozen of the advanced F-35 "Joint Strike Fighter," asserting that possessing the most sophisticated U.S. aircraft enhances interoperability with U.S. air operations. Even though Israel and the UAE are aligned on many regional policies, U.S. officials have said that the United States would not sell the aircraft to the UAE before Israel receives the weapon; delivery to Israel is expected to begin in late 2016. That apparently is an effort to enforce U.S. law that requires maintaining Israel's "Qualitative Military Edge" (QME) in the region. However, it was reported in November 2017 that the Trump Administration agreed to preliminary talks on future UAE procurement of the F-35. JDAMs and other Precision-Guided Munitions . The United States has sold the UAE precision-guided missiles for the F-16s, including 20 of the advanced ATM-84 SLAM-ER Telemetry missile and 5,000 GBU-39/B "bunker buster" bombs. (The sale of the SLAM-ER to UAE was the first sale of that weapon to a Gulf state.) In 2008, the United States sold the UAE an unspecified number of Join Direct Attack Munitions (JDAM) kits (which convert gravity bombs to precision-guided bombs) worth about $326 million. In 2011, the United States sold the UAE an additional 4,900 JDAM kits at an estimated value of $304 million. On several occasions in 2015, the United States sold the UAE precision-guided munitions (Guided Bomb Units—GBU-31s and GBU-12s) and resupplied it with JDAMs for use against the Islamic State and the Houthi rebellion in Yemen. However, some recent sales of such munitions have been held up by Congress in 2018 and 2019 over concerns about the humanitarian effects of the Yemen war. Apache Helicopters . On November 4, 2010, the Defense Security Cooperation Agency (DSCA) notified Congress of two potential sales, including a $5 billion sale of AH-64 Apache helicopters (30 helicopters, remanufactured to Block III configuration). Missiles. The UAE reportedly possesses a small number (six) of Scud -B ballistic missiles obtained from a non-U.S. suppliers . The United States does not supply or assist the UAE with ballistic missile technology, in part because the country is not an adherent of the Missile Technology Control Regime (MTCR). UAE officials say the country is considering trying to join that convention. Drone s. At a UAE defense show in 2013, the UAE agreed to a commercial sale, worth about $200 million, for Predator X-P unmanned aerial vehicles (UAVs), although they are unarmed and for surveillance only. The system arrived in 2017. Were the UAE to join the MTCR, it might be eligible to buy a U.S.-made armed drone, such as the "Guardian," the sale of which to non-MTCR countries is precluded because it is an MTCR "Category One" system. The UAE also reportedly has some Chinese-made UAVs. High Mobility Artillery Rocket System (HIMARS) . In September 2006, the United States sold UAE High Mobility Artillery Rocket Systems (HIMARS) and Army Tactical Missile Systems (ATACMs), valued at about $750 million. Tanks . UAE forces still use primarily 380 French-made Leclerc tanks. Missile and Rocket Defenses A long-standing U.S. objective—and a driving force behind the formation of the "U.S.-GCC Strategic Cooperation Forum" formed in March 2012—has been to organize a coordinated Gulf-wide ballistic missile defense (BMD) network. This objective has taken on greater urgency in the United States and in the Gulf as Iran's missile capability has advanced and Iran has supplied short-range missiles to the Houthis and other allies. The UAE hosts an Integrated Air and Missile Defense (IAMD) Center—a training facility to enhance intra-GCC and U.S.-GCC missile defense cooperation. A U.S. sale to the UAE of the Patriot Advanced Capability 3 (PAC-3) missile defense system, with an estimated value of $9 billion value, was announced in December 2007. In 2008, the United States sold the UAE vehicle-mounted "Stinger" antiaircraft systems with an estimated value of $737 million. In 2016, the Administration notified Congress of a potential sale of "Large Aircraft Infrared Countermeasures" to protect UAE head of state aircraft against missile threats. On May 11, 2017, the Administration notified a potential sale to the UAE of 60 PAC-3 and 100 Patriot Guidance Enhanced Missile-Tactical (GEM-T) missiles, with a total estimated value of about $2 billion. Because these are defensive systems, the sale was not affected by the June 26, 2017, commitment (rescinded in early 2018) by then-Senate Foreign Relations Committee Chairman Senator Bob Corker to withhold informal clearances on sales of "lethal military equipment" to the GCC states until there is a path to the resolution of the intra-GCC dispute. THAAD. The UAE was the first GCC state to order the Terminal High Altitude Air Defense System (THAAD), the first sale ever of that sophisticated missile defense system, with an estimated value of about $7 billion. The delivery and training process for the UAE's THAAD system took place in late 2015. UAE Defense Cooperation with Other Powers Despite expressing no concerns about any interruption or diminution of its defense ties to the United States, the UAE has sought to diversify its defense partnerships. In 2004, the UAE joined NATO's "Istanbul Cooperation Initiative," later gaining "observer" status in NATO. In 2011, the UAE sent an Ambassador to NATO under that organization's revised alliance policy. In 2017, NATO established a liaison office in Abu Dhabi under the auspices of the embassy of Denmark. Since well before the formation of the anti-Islamic State coalition, the UAE has been hosting other countries' forces. In January 2008 the UAE and France signed an agreement to allow a French military presence in UAE. The facilities used—collectively termed Camp De La Paix ("Peace Camp")—were inaugurated during a French presidential visit in May 2009. It includes a 900-foot section of the Zayid Port for use by the French navy; an installation at Dhafra Air Base used by France's air force; and a barracks at an Abu Dhabi military camp that houses about 400 French military personnel. India's Prime Minister, Narendra Modi, visited the UAE in August 2015, the first such visit by an Indian leader since 1981. The visit included a strategic component in light of India's naval exercises with GCC countries in recent years. Crown Prince Mohammad bin Zayid made a reciprocal visit to India in January 2017, during which the two countries signed a "Comprehensive Strategic Partnership Agreement." The UAE relationship with Russia has attracted significant attention. In February 2017, press reports indicated that the UAE and Russia might jointly develop a combat aircraft based on the Soviet-era MiG-29. The collaboration—with a partner that is acting against the UAE's interests in Syria and other parts of the region—appeared as an acknowledgment by the UAE of Russia's growing role in the region. The UAE might also be attempting to engage Russia in defense cooperation in order to perhaps try to steer Russian policy in Syria or enlist Russian cooperation in settling regional conflicts. Significant differences between the UAE and United States emerged in 2015 over apparent purchases of weapons by the UAE's Al Mutlaq Technology Company of weapons from North Korea. The North Korean supplier is said to be Korea Mining Development Trading Corporation (Komid), which has been sanctioned by the United States for its involvement in North Korean strategic programs. Cooperation against Terrorism and Proliferation The UAE cooperates with U.S. counterterrorism and counterproliferation policies in the region, not only through operations against terrorist groups but also in seeking to preventing the movement of terrorists, pirates, human traffickers, and proliferation-related technology through UAE borders and waters. U.S. programs, which have sometimes included providing small amounts of counterterrorism assistance, have helped build the UAE's capacity to enforce its borders and financial controls. In FY2015, about $400,000 in DOD funds were provided to the UAE to assist its counternarcotics capability, and about $300,000 in similar funding was provided in FY2016. In FY2015, about $260,000 in State Department funds were provided to the UAE to build its capacity to counter terrorism financing (see below). About $310,000 in such funding was provided in FY2016. International Terrorism Issues78 During the mid-1990s, some Al Qaeda activists reportedly were able to move through the UAE, and two of the September 11, 2001, hijackers were UAE nationals who reportedly used UAE-based financial networks. Since then, State Department reports on terrorism have credited the UAE with making significant efforts against terrorism and terrorism financing, and with continuing to foil potential terrorist attacks within the UAE. UAE authorities have arrested and prosecuted Al Qaeda and Islamic State operatives; denounced terror attacks; improved border security; instituted programs to counter violent extremism; instituted laws to block suspect financial transactions; criminalized use of the internet by terrorist groups; and strengthened its bureaucracy and legal framework to combat terrorism. Human rights groups allege that UAE counterterrorism law is often used against domestic political dissidents. In 2014, the government, with FNC concurrence, enacted a revised counterterrorism law that makes it easier to prosecute, and increases penalties for, planning acts of terrorism, and authorizes the UAE cabinet to set up lists of designated terrorist organizations and persons. The UAE cochairs the anti-Islamic State-related "Coalition Communications Working Group" along with the United States and Britain. At the December 2014 GCC summit, the leaders announced the creation of a regional police force to be headquartered in Abu Dhabi. The UAE has also joined the Saudi-initiated GCC "Security Pact" that requires increased information-sharing and cooperation among the GCC states on internal security threats. Among notable UAE counterterrorism actions, in October 2010, UAE authorities assisted in foiling an Al Qaeda in the Arabian Peninsula plot to send bombs to the United States. In December 2012, the UAE, working with Saudi Arabia, arrested members of an alleged terrorist cell plotting attacks in the United States. In April 2013, UAE authorities arrested seven non-UAE Arab nationals allegedly affiliated with Al Qaeda. In 2014, the UAE tried nine people on charges of supporting the Al Nusrah Front (renamed Front for the Conquest of Syria), an Al Qaeda-linked faction of Syrian rebels that is named by the United States as a Foreign Terrorist Organization (FTO). UAE authorities failed to prevent a December 1, 2014, killing of an American teacher by a 38-year-old Emirati woman who allegedly had visited extremist websites, although they defused a bomb she planted outside the home of an American doctor. In 2015, the UAE arrested and prosecuted, or deported, numerous individuals who allegedly planned to join the Islamic State or commit terrorism in the UAE. In March 2016, UAE courts convicted 30 out of 41 individuals (38 of whom were UAE citizens) belonging to a group called Shabab al Manara of plotting terrorist attacks in the UAE. Facilities and assets of the group were closed or seized. Yet, the United States and the UAE sometimes differ on whether some groups are terrorist organizations. For example, the 85 groups that the UAE government designates as terrorist organizations include some U.S.- and Europe-based groups that represent Muslims in those societies and which neither the United States nor any European government accuses of terrorism. These groups include the U.S.-based Muslim American Society and Council on American-Islamic Relations (CAIR); the Muslim Association of Sweden; the Federation of Islamic Organizations in Europe; and the U.K.-based Islamic Relief. The United States Embassy in Abu Dhabi questioned the UAE government about why it designated these groups. The UAE also identifies as terrorist groups several organizations that the United States has not designated as terrorist groups, including the Houthis in Yemen and the Afghan Taliban. The UAE, as noted above, also considers the Muslim Brotherhood as a terrorist group; the Trump Administration reportedly considered designating it as a foreign terrorist organization (FTO). Antit errorism Financing and Money Laundering (A ML/CFT ) . The UAE Central Bank's Financial Intelligence Unit is credited in State Department terrorism reports with providing training programs to UAE financial institutions on money laundering and terrorism financing, and making mandatory the registration of informal financial transmittal networks ( hawala s ). In September 2012, the FBI Legal Attache established a suboffice at the U.S. consulate in Dubai to assist with joint efforts against terrorism and terrorism financing. In June 2014 the UAE set up a financial task force to better prevent use of UAE financial institutions by terrorist organizations. In October 2014, the country adopted a law (Federal Law No. 9) to strengthen a 2002 anti-money-laundering law. On October 29, 2018, the government announced it replaced a 2002 anti-money-laundering law with a new law that raises the country's anti-money-laundering and counter-terrorism financing rules to international standards. The country is a member of the Middle East and North Africa Financial Actions Task Force (MENAFATF), a FATF-style regional body, and it chairs the MENAFATF's Training and Typologies Working Group. The UAE is a participant in the Counter-Islamic State Finance Group chaired by Italy, Saudi Arabia, and the United States. In May 2017, the UAE joined the U.S.-GCC Terrorist Financing Targeting Center based in Riyadh. In October 2017, the members of the center designated as terrorists several AQAP and Islamic State-Yemen individuals and entities. Countering Violent Extremism . In 2011, the UAE founded the Global Counterterrorism Forum (GCTF) along with the United States and Turkey. In December 2012, during a meeting of the GCTF, the UAE-based "International Center of Excellence for Countering Violent Extremism," known as Hedayah ("guidance"), was inaugurated. The government partners with the U.S. government to run the Sawab Center, an online counter-Islamic State messaging hub. The center, which has an annual budget of about $6 million and a staff of 14, is an institution for training, dialogue, collaboration, and research to counter violent extremism. Its priority is to work to prevent educational institutions from becoming breeding grounds for violent extremism. It also promotes information sharing so that police organizations around the world can receive information from family members who report on relatives who have become radicalized. Several UAE-based think tanks, including the Emirates Center for Strategic Studies and Research (ECSSR), the Emirates Policy Center, the TRENDS Institute, the Tabah Foundation, and the Future Institute for Advanced Research and Statuies, also conducted seminars on confronting terrorism and violent extremism. Transfers from Guantanamo . The UAE has cooperated with U.S. efforts to reduce the detainee population at the U.S. prison facility in Guantanamo Bay, Cuba. In November 2015, the Department of Defense transferred five Yemeni detainees from the facility to the UAE. In August 2016, another 15 Guantanamo detainees (12 Yemenis and 3 Afghans) were transferred to the UAE, the biggest single Guantanamo transfer to date. The day before it left office in January 2017, the Obama Administration transferred another three to the UAE. Port and Border Controls The UAE has signed on to several U.S. efforts to prevent proliferation and terrorism. These include the Container Security Initiative, aimed at screening U.S.-bound containerized cargo transiting Dubai ports, and the UAE has cooperated with all U.S. measures designed to protect aircraft bound for the United States. Several U.S. Customs and Border Protection officers, colocated with the Dubai Customs Intelligence Unit at Port Rashid in Dubai, inspect U.S.-bound containers, many of them apparently originating in Iran. The UAE is also a party to the Proliferation Security Initiative, the Megaports Initiative designed to prevent terrorists from using major ports to ship illicit material, and the Customs-Trade Partnership against Terrorism. In 2013, a "preclearance facility" was established at the Abu Dhabi International Airport for travelers boarding direct flights to the United States. The UAE government supports the Department of Homeland Security's programs to secure any UAE-to-U.S. flights, including collecting passenger information and employing retina-screening systems. Export Controls The UAE effort to prevent the reexport of advanced technology, particularly to Iran, has improved considerably since 2010. As a GCC member, the UAE participates in the U.S.-GCC Counter-proliferation Workshop. Taking advantage of geographic proximity and the presence of many Iranian firms in Dubai emirate, numerous Iranian entities involved in Iran's weapons and technology programs maintained offices in Dubai. In connection with revelations of illicit sales of nuclear technology to Iran, Libya, and North Korea by Pakistan's nuclear scientist A.Q. Khan, Dubai was named as a key transfer point for Khan's shipments of nuclear components. Two Dubai-based companies, SMB Computers and Gulf Technical Industries, were apparently involved in transshipping components. In 2004, the United States sanctioned a UAE firm, Elmstone Service and Trading FZE, for selling weapons-related technology to Iran, under the Iran-Syria Non-Proliferation Act ( P.L. 106-178 ). In 2006, the Commerce Department's Bureau of Industry and Security (BIS) imposed a licensing requirement on U.S. exports to Mayrow General Trading Company and related UAE-based companies after Mayrow allegedly transshipped devices used to make improvised explosive devices (IED) in Iraq and Afghanistan. In February 2007 the Bush Administration threatened to characterize the UAE as a "Destination of Diversion Control" and to restrict the export of certain technologies to it. A June 2010 Iran sanctions law, the Comprehensive Iran Sanctions, Accountability, and Divestment Act (CISADA, P.L. 111-195 ), formally authorizes countries to be designated as Destinations of Diversion Control and subject to U.S. sanctions. The UAE avoided any such designation by strengthening its export control regime, including a September 2007 law, enacted with FNC concurrence, that tightened export controls. UAE authorities used that law to shut down 40 foreign and UAE firms allegedly involved in dual use exports to Iran and other countries. In September 2012 the UAE (and Bahrain) impounded shipments to Iran of items that Iran could use for its nuclear program. The issue of leakage of technology has sometimes caused U.S. criticism or questioning of UAE investment deals. In December 2008, some Members of Congress called for a review by the interagency Committee on Foreign Investment in the United States (CFIUS) of a proposed joint venture between Advanced Micro Devices and Advanced Technology Investment Co. of Abu Dhabi for the potential for technology transfers. In February 2006, CFIUS approved the takeover by the Dubai-owned Dubai Ports World company of a British firm that manages six U.S. port facilities. Congress, concerned that the takeover might weaken U.S. port security, opposed it in P.L. 109-234 , causing the company to divest assets involved in U.S. port operations. Nuclear Agreement and Other Technology Issues88 The UAE announced in 2008 that it would acquire its first nuclear power reactors to satisfy projected increases in domestic electricity demand. As a condition of receiving U.S. nuclear technology, the United States and the UAE reached an agreement that commits the UAE officials to strict standards that ensure that its nuclear program can only be used for peaceful purposes. Among those commitments is to refrain from domestic uranium enrichment or reprocessing spent nuclear reactor fuel—both processes could produce fissile material for nuclear weapons. The Obama Administration signed an agreement for the United States to assist the program, subject to conditions specified in Section 123 of the Atomic Energy Act of 1954 [42 U.S.C. 2153(b)], on May 21, 2009 (and submitted to Congress that day). Some in Congress expressed concerns about the potential for leakage of technology to Iran as well as the potential for regional proliferation of nuclear technology, but several congressional resolutions approving the agreement ( S.J.Res. 18 and H.J.Res. 60 ) were introduced, as was one disapproving ( H.J.Res. 55 ). No measure blocking the agreement was enacted within 90 days of the submission of the agreement to Congress, and the "1-2-3 Agreement" entered into force on December 17, 2009. The International Atomic Energy Agency announced in December 2011 that a group of experts that reviewed the UAE's regulatory framework for the program found "noted good practices" and provided suggestions to the Federal Authority for Nuclear Regulation, the UAE's nuclear regulatory authority. Still, reflecting the fact that a Saudi nuclear program might not be bound by the same restrictions that the UAE committed to, UAE officials reportedly told U.S. officials in October 2015 that they no longer consider themselves bound by the pledge that the country would not enrich uranium. A number of U.S. and European firms have secured administrative and financial advisory contracts with the program. In January 2010, the Emirates Nuclear Energy Corporation (ENEC), the institution that is administering the program, announced that it had chosen the Korea Electric Power Corporation (KEPCO of South Korea) to construct the first of four APR1400 nuclear reactors that would sell electricity to the Abu Dhabi Water and Electricity Authority. The first plant is undergoing preoperational testing. The other three are to be operational by 2020. The United States gives the UAE small amounts of assistance to help safeguard its nuclear program and prevent illicit exports of technology from it. For FY2015, the Department of Energy provided the country with about $370,000 for such purposes, and for FY2016, about $220,000 was provided for those programs. On other technology issues, in July 2014 the UAE announced it will form a "UAE Space Agency" that, by 2021, is to launch an unmanned spaceship that will probe Mars. The government plans to send its first astronaut to the International Space Station in April 2019. Economic Issues The UAE, a member of the World Trade Organization (WTO), has developed a free market economy, but its financial institutions are weakly regulated. As have the other GCC states that have long depended on exports of hydrocarbons, the UAE has announced plans and policies ("Vision 2021") to try to further diversify its economy to a "post-oil" era. Dubai emirate, in particular, has long pursued an economic strategy based on attracting investors to construct luxurious and sometimes futuristic projects that provide jobs and attract tourism and publicity. The country is also accepting investment by China under that country's "Belt and Road Initiative" (BRI) intended to better connect China economically to other parts of Asia, Central Asia, the Middle East, and Africa.in April 2019, the UAE and China signed deals worth $3.4 billion, most of which will be invested to store and ship Chinese products from the UAE port of Jebel Ali. To help it weather the effect of the sharp drop in oil prices since mid-2014, the government cut some subsidies and raised capital on international markets, including an April 2016 bond offering of $5 billion and an October 2017 bond offering of about $10 billion. The government budget was only slightly in deficit 2017 and 2018, and, coupled with the bond offerings, the UAE has been able to avoid drawing down its $600 billion in various sovereign wealth funds overseen by the Emirates Investment Authority (EIA). Oil and Gas Sector and "Clean Energy" Initiatives The key factor in the UAE's wealth is that it exports large amounts of crude oil while having a small population that receives benefits and services. The UAE exports nearly as much oil as Iraq, while its citizen population is a small fraction of that of Iraq. Abu Dhabi has 80% of the federation's proven oil reserves of about 100 billion barrels, enough for over 100 years of exports at the current production rate of about 2.9 million barrels per day (mbd). Of that, over 2.2 mbd are exported, and the UAE has as much as 500,000 bpd of spare capacity. UAE representatives indicated in late October 2018 that they might increase production to over 3 mbd, but the subsequent sharp drop in world oil prices and OPEC agreement in November 2018 to cut production has likely forestalled any UAE production increase. The United States imports negligible amounts of UAE crude oil; the largest share of UAE oil goes to Japan and China. The UAE has vast quantities of natural gas but consumes more than it produces. It has entered into an arrangement (Dolphin Energy) with neighboring countries under which a pipeline carries natural gas from the large gas exporter, Qatar, to the UAE and on to Oman. However, the political differences with Qatar have contributed to UAE evaluation of renewable and other alternatives to relying on Qatar-supplied natural gas. The UAE is trying to secure its oil export routes against any threat by Iran to close the strategic Strait of Hormuz, through which the UAE and other major oil exporters transport their oil exports. In July 2012, the UAE loaded its first tanker of oil following completion of the Abu Dhabi Crude Oil Pipeline (ADCOP) which terminates in the emirate of Fujairah, on the Gulf of Oman. The line, which cost $3 billion, can transport 1.5 million barrels per day of crude oil—about half of UAE production. The UAE is planning a large refinery near that terminal, and possibly a second oil pipeline, to secure its oil exports and value-added petroleum products. The UAE government is also attempting to plan for a time when the developed world is no longer reliant on oil imports. The government has set a target of using 21% renewable energy sources by 2021. It has funded "Masdar City"—a planned city, the first phase of which was completed in 2015, that relies only on renewable energy sources and features driverless taxis. U.S.-UAE Trade and Trade Promotion Discussions U.S. trade with the UAE is a significant issue because the UAE is the largest market for U.S. exports to the Middle East. Over 1,000 U.S. companies have offices there and there are over 60,000 Americans working in UAE. U.S. exports to the UAE in 2017 totaled about $20 billion, about 10% less than in 2016. U.S. imports from UAE for 2017 totaled about $4.3 billion, about 20% higher than in 2016. U.S. exports to the UAE were roughly the same as for 2017 (about $20 billion), but imports were somewhat higher ($5 billion, as compared to $4.2 billion in 2017). Goods sold to UAE are mostly commercial aircraft, industrial machinery and materials, and other high-value items. On November 15, 2004, the Bush Administration notified Congress it had begun negotiating a free trade agreement (FTA) with the UAE. Several rounds of talks were held prior to the June 2007 expiration of Administration "trade promotion authority." The FTA talks were later replaced by a U.S.-UAE "Economic Policy Dialogue," between major U.S. and UAE economic agencies. The dialogue, consisting of two meetings per year, began in late 2011 and also included discussion of reform of UAE export controls. In addition, as part of the GCC, the UAE negotiated with the United States a September 2012 "GCC-U.S. Framework Agreement on Trade, Economic, Investment, and Technical Cooperation"—a GCC-wide trade and investment framework agreement (TIFA). The agreement was negotiated by the U.S. Trade Representative (USTR). U.S. Assistance to the UAE As noted, because of the UAE's relative wealth, it receives only very small amounts of U.S. foreign assistance. Amounts provided for counternarcotics, counterterrorism financing, and nuclear security are broken down in the sections above. For FY2016, total U.S. aid to the UAE was about $1.15 million. For FY2015, U.S. assistance to the UAE totaled about $840,000. "Open Skies" Issue In 2015, several U.S. airlines asserted that two UAE airlines, Emirates Air (Dubai-based) and Etihad Air (Abu Dhabi-based), as well as Qatar Airways, had an unfair competitive advantage because of alleged receipt of subsidies from their respective governments. The U.S. airlines asserted that the "Open Skies Agreement" that the UAE and Qatar have with the United States should be renegotiated so as to limit the access of the three Gulf-based airlines to U.S. routes. The airlines assert they are not subsidized and instead create substantial numbers of jobs for American workers building and serving their aircraft and operations in the United States. UAE officials assert that the country will not agree to renegotiate the Open Skies Agreement. The Obama Administration declined to renegotiate the agreement and President Trump, following a February 2017 meeting with U.S. airline executives, did not indicate any change to that stance.

The United Arab Emirates (UAE) is a significant U.S. partner in Gulf security, helping to address multiple regional threats by hosting about 5,000 U.S. military personnel at UAE military facilities under a bilateral defense cooperation agreement (DCA). The UAE is a significant buyer of U.S. military equipment, including sophisticated missile defenses, and it reportedly wants to buy the F-35 combat aircraft. The alliance is expected to continue after UAE President Shaykh Khalifa bin Zayid Al Nuhayyan, who suffered an incapacitating stroke in January 2014, is succeeded by his younger brother and de-facto UAE leader Shaykh Muhammad bin Zayid Al Nuhayyan. Advised and armed by the United States, the UAE military has become sufficiently capable that the country is able to, and is, asserting itself in the region, including militarily. The UAE is part of a Saudi-led military effort to pressure the Iran-backed Zaidi Shia Houthi rebels in Yemen, an effort to which the United States provides logistical support but which has produced criticism over the effects of the war on Yemen's civilians. UAE forces, alongside U.S. special operations forces, also are combatting Al Qaeda's affiliate in that country. UAE forces have built up several bases in East African countries to train allied forces and facilitate UAE operations in Yemen. The UAE is supporting an anti-Islamist commander based in eastern Libya, Khalifa Hafter, who in April 2019 launched an assault to capture Tripoli from a U.N.-backed government based there. The UAE has sought to counteract criticism by expanding its long-standing donations of assistance to regional and international organizations and economically strapped countries. The UAE's opposition to Muslim Brotherhood-linked regional organizations as regional and domestic threats has driven UAE policy toward Egypt, Syria, the Palestinian territories, and other countries. The UAE's stance has contributed to a major rift with Qatar, another member of the Gulf Cooperation Council alliance (GCC: Saudi Arabia, Kuwait, UAE, Bahrain, Qatar, and Oman), but which supports Brotherhood-related groups as Islamists willing to work within established political processes. In June 2017, the UAE joined Saudi Arabia in isolating Qatar until it adopts policies closer to those of the three GCC states on the Brotherhood and other issues, including on Iran, where the UAE and the Trump Administration share a policy of strongly pressuring Iran economically and politically. U.S. mediation efforts have failed to resolve the intra-GCC rift, to date. The October 2018 killing by Saudi agents of a U.S.-based Saudi journalist at the Saudi consulate in Istanbul has added to criticism of UAE leaders for their close strategic alliance with Saudi Arabia's Crown Prince Mohammad bin Salman Al Saud. The UAE's relatively open borders and economy have won praise from advocates of expanded freedoms in the Middle East. The UAE is considered among the wealthiest countries in the world, in part because of the small population that requires services, and the wealth has helped the government maintain popular support. In 2006, the government established a limited voting process for half of the 40 seats in its quasi-legislative body, the Federal National Council (FNC). The most recent such vote was held in October 2015, and resulted in the selection of a woman as speaker of the FNC. However, the country remains under the control of a small circle of leaders. And, since the Arab Spring uprisings, the government has become more wary of the potential for regional conflicts to affect domestic stability and has suppressed domestic opponents. The country sought to showcase its continued commitment to pluralism by hosting a visit by Pope Francis in February 2019. In part to cope with the effects of reduced prices for crude oil during 2014-2018, the government has created new ministries tasked with formulating economic and social strategies that, among other objectives, can attract the support of the country's youth. Any U.S. assistance to the UAE has been very small in dollar amounts and intended mainly to qualify the UAE for inclusion in training and other programs that benefit UAE security.

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Background The United States Fire Administration (USFA) is currently an entity within the Federal Emergency Management Agency (FEMA) of the Department of Homeland Security (DHS). Its mission is to provide leadership, coordination, and support for the nation's fire prevention and control, fire training and education, and emergency medical services activities, and to prepare first responders and health care leaders to react to hazard and terrorism emergencies of all kinds. One of USFA's key objectives is to significantly reduce the nation's loss of life from fire, while also achieving a reduction in property loss and nonfatal injury due to fire. Although fire loss has improved significantly over the past 25 years, the fire problem in the United States remains serious. The United States still has one of the highest fire death rates in the industrialized world. According to the National Fire Protection Association (NFPA), in 2015 there were 1,345,500 total fires reported, 3,280 civilian fire deaths, 15,700 civilian fire injuries, and an estimated $14.3 billion in direct property loss. There were 69 on-duty firefighter deaths in 2016. The genesis of USFA and FEMA's fire prevention and control activities can be found in the landmark 1973 report of the National Commission on Fire Prevention and Control, entitled America Burning . The commission recommended the creation of a federal fire agency which would provide support to state and local governments and private fire organizations in their efforts to reduce fire deaths, injuries, and property loss. The commission recommended that this new agency be placed within the Department of Housing and Urban Development. Congress instead opted to place the agency in the Department of Commerce, and with the passage of the Federal Fire Prevention and Control Act of 1974 ( P.L. 93-498 ), the National Fire Prevention and Control Administration (NFPCA) was established. In 1978, Congress changed the name of NFPCA to USFA ( P.L. 95-422 ), and in 1979, President Carter's Reorganization Plan No. 3 placed the USFA within the newly created FEMA. Also in 1979, the National Fire Academy (NFA) in Emmitsburg, MD, was opened, offering courses and training to fire service personnel and other persons engaged in fire prevention and control. During the early 1980s, the Reagan Administration proposed the elimination of the USFA (while preserving the Fire Academy). Although Congress did not allow the termination of the USFA, the agency suffered severe staff reductions and the Fire Academy was separated from the USFA and housed organizationally with other FEMA emergency training programs. In 1991, the NFA was subsequently reorganized back into the USFA, where it remains today. Currently, the USFA is located on the grounds of the National Emergency Training Center in Emmitsburg, MD. USFA programs include the following: Data Collection —USFA's National Fire Data Center (NFDC) administers a national system (the National Fire Incident Reporting System or NFIRS) used for collecting, analyzing, and disseminating data and information on fire and other emergency incidents to state and local governments and the fire community. The NFDC provides a national analysis of the fire problem, identifying problem areas for which prevention and mitigation strategies are needed. Public Education and Awareness —Through partnerships and special initiatives, USFA involves the fire service, the media, other federal agencies, and safety interest groups in the development and delivery of fire safety awareness and education programs. These programs are targeted at those groups most vulnerable to the hazards of fire, including the young, elderly, and disabled. Training —USFA's National Fire Academy (NFA) offers educational opportunities for the advanced professional development of the mid-level and senior fire/EMS officers and allied professionals involved in fire prevention and life safety activities. The academy develops and delivers educational and training programs with a national focus that supplement and support state and local fire service training. The NFA also offers training to support the National Incident Management System Integration Center (NIC) and nationwide implementation of the National Incident Management System (NIMS). Research and Technology —Through research, testing, and evaluation, USFA works with public and private entities to promote and improve fire and life safety. Research and special studies are conducted on fire detection, suppression, and notification systems, as well as issues related to firefighter and emergency responder health and safety. Research results are published and made available to the public free of charge through the USFA Publications Center. In fulfilling its mission, the USFA uses the assets of the National Fire Academy, the National Emergency Training Center (NETC) Facilities and Support Services, and the National Fire Programs Division. On May 18, 2017, President Trump announced his intention to appoint Chief G. Keith Bryant as the USFA Administrator. G. Keith Bryant was sworn in as the U.S. Fire Administrator on August 4, 2017. Budget The USFA receives its annual appropriation through the House and Senate Appropriations Subcommittees on Homeland Security. Table 1 shows recent and proposed appropriated funding for USFA. Appropriations Beginning in FY2004, the USFA was funded through the Preparedness, Mitigation, Response, and Recovery (PMRR) account within the Emergency Preparedness and Response Directorate of the Department of Homeland Security. On July 13, 2005, then-DHS Secretary Michael Chertoff announced a restructuring of DHS, effective October 1, 2005. USFA was removed from the PMRR account and received a separate appropriation (its own line item) under the new DHS Directorate for Preparedness. The FY2007 Department of Homeland Security appropriations bill ( P.L. 109-295 ) transferred the USFA back to the Federal Emergency Management Agency within DHS. FY2017 The Administration's FY2017 budget proposed $42.3 million for USFA, a 3.8% decrease from the FY2016 level. The request included $1.5 million for facilities improvement under the Procurement, Construction, and Improvements account. The budget proposal included $500,000 for distance learning capability and reductions of $1 million each for NFIRS and state fire training grants. The budget request would also transfer the stand-alone USFA budget account into the Preparedness and Protection activity under FEMA's broader Federal Assistance account. On May 26, 2016, the Senate Appropriations Committee approved S. 3001 , the Department of Homeland Security Act, 2017. The Senate bill would provide $44 million for USFA, which matches the FY2016 level and is $1.688 million above the request. In the accompanying report ( S.Rept. 114-68 ), the committee stated that the increase over the Administration request should allow for the continued development of NFIRS and support for the National Fallen Firefighters Memorial. The committee maintained a separate budget account for USFA and did not transfer the USFA budget account to the Federal Assistance account as proposed in the Administration budget request. On June 22, 2016, the House Appropriations Committee approved its version of the Department of Homeland Security Appropriations Act, 2017. Unlike the Senate, the House committee transferred the USFA budget account into a broader "Federal Assistance" account in FEMA. The bill provided $42.5 million for USFA under the Federal Assistance account and $1.5 million under Procurement, Construction, and Improvements for National Fire Academy facility costs. The Consolidated Appropriations Act, 2017 ( P.L. 115-31 ) funded USFA at a total level of $44 million in FY2017. This consisted of $42.5 million under Education, Training, and Exercises in the Federal Assistance account, and $1.5 million under the Procurement, Construction, and Improvements account. FY2018 For FY2018, the Administration requested $43.41 million for USFA, slightly below the FY2017 level of $44 million. The FY2018 level consists of $41.913 million under Education, Training, and Exercises in the Federal Assistance account, and $1.497 million under the Procurement, Construction, and Improvements account. According to the FY2018 budget proposal, the request reflects a $1 million reduction to the State Fire Training Assistance grants. On July 18, 2017, the House Appropriations Committee approved the Department of Homeland Security Appropriations Act, 2018 ( H.R. 3355 ; H.Rept. 115-239 ). The bill provided the same level as the Administration request: $41.913 million under Education, Training, and Exercises in the Federal Assistance account, and $1.497 million under the Procurement, Construction, and Improvements account. On September 14, 2017, the House passed H.R. 3354 , a FY2018 omnibus appropriations bill that includes funding for USFA. During floor consideration, the House adopted an amendment offered by Representative Pascrell that added $1 million for USFA's State Fire Training Assistance grants, thereby restoring the Administration's proposed reduction. H.R. 3354 would provide a total of $44.41 million for USFA. The Consolidated Appropriations Act, 2018 ( P.L. 115-141 ) provided $44.397 million for USFA. This total included $1.497 million in the FEMA Procurement, Construction, and Improvements account for the National Emergency Training Center. State Fire Training Assistance grants continued to be funded by USFA. FY2019 For FY2019, the Administration requested $44.993 million for USFA. The FY2019 level consisted of $43.493 million under Education, Training, and Exercises in the Federal Assistance account, and $1.5 million for annual capital improvement of the National Emergency Training Center under the Procurement, Construction, and Improvements account. On June 21, 2018, the Senate Appropriations Committee approved S. 3109 , the Department of Homeland Security Act, 2019 ( S.Rept. 115-283 ). The Senate bill would provide $44 million to USFA in the Federal Assistance account, $507,000 above the budget request, to ensure the National Fire Academy can fulfill its mission of providing training and professional development without reducing its ability to carry out other important responsibilities. The bill report directed FEMA to continue its traditional funding for the congressionally mandated National Fallen Firefighters Memorial. S. 3109 would also provide $1.5 million for annual capital improvement of the National Emergency Training Center under the Procurement, Construction, and Improvements account. On July 25, 2018, the House Appropriations Committee approved its version of the FY2019 Homeland Security bill. Identical to the Administration's budget request, the House bill would provide $43.493 million under Education, Training, and Exercises in the Federal Assistance account, and $1.5 million under the Procurement, Construction, and Improvements account. The Consolidated Appropriations Act, 2019 ( P.L. 116-6 ) provided $45.679 million for USFA, including $1.5 million in the FEMA Procurement, Construction, and Improvements account for the National Emergency Training Center. FY2020 For FY2020, the Administration requested $46.605 million for USFA, which includes $1.5 million transferred from the Procurement, Construction, and Improvements account for NETC campus renovations. The budget proposal would be a $1 million increase over the FY2019 level; the increase would fund further improvements to NETC facilities. The budget proposal does not include funding for State Fire Training Assistance. Authorizations The U.S. Fire Administration Reauthorization Act of 2003 ( P.L. 108-169 ) was signed into law on December 6, 2003. The act reauthorized the USFA through FY2008 at the following levels: $63 million for FY2005, $64.85 million for FY2006, $66.796 million for FY2007, and $68.8 million for FY2008. P.L. 108-169 also reestablished the presidentially appointed position of the U.S. Fire Administrator, which had been statutorily abolished by the Homeland Security Act of 2002. Additionally, the legislation directed the USFA to develop new firefighting technologies and standards in coordination with private sector standards groups and federal, state, and local agencies. P.L. 108-169 required that equipment purchased with fire grant money meet or exceed voluntary consensus standards when feasible. The U.S. Fire Administration Reauthorization Act of 2008 was signed into law on October 8, 2008 ( P.L. 110-376 ). P.L. 110-376 authorized the USFA at $70 million for FY2009, $72.1 million for FY2010, $74.263 million for FY2011, and $76.491 million for FY2012. Provisions included authorizing National Fire Academy training program modifications and reports; directing the National Fire Academy to provide training on incidents occurring in the wildfire-urban interface, multijurisdictional fires, hazardous materials incidents, and advanced emergency medical services; authorizing USFA to enter into contracts with one or more nationally recognized third-party organizations to deliver training; a report on the feasibility of providing incident command training for fires at ports and in marine environments; national fire incident reporting system upgrades; sponsoring and disseminating research on fire prevention and control at the wildland-urban interface; encouraging adoption of national voluntary consensus standards for firefighter health and safety; establishing a state and local fire service position at the National Operations Center within DHS; providing coordination regarding fire prevention and control and emergency medical services; and expressing congressional support for USFA recommendations for adoption and education regarding sprinklers in commercial and residential buildings. On January 2, 2013, the President signed P.L. 112-239 , the FY2013 National Defense Authorization Act. Title XVIII, Subtitle B was the U.S. Fire Administration Reauthorization Act of 2012, which authorized USFA through FY2017. P.L. 112-239 included the following provisions: reauthorized USFA at an annual level of $76,490,890 for FY2013 through FY2017, and for each fiscal year sets aside $2,753,672 to be used to carry out Section 8(f) of the Fire Prevention and Control Act (15 U.S.C. 2207) related to evaluation of technology and development of standards; authorized the USFA Administrator to appoint a Deputy Administrator; authorized the Administrator to take such steps as the Administrator considers appropriate to educate the public and overcome public indifference as to fire, fire prevention, and individual preparedness; and removed the limitation on funding levels for updating the National Fire Incident Reporting System. In the 115 th Congress, on July 12, 2017, the House Subcommittee on Research and Technology, Committee on Science, Space and Technology, held a hearing entitled U.S. Fire Administration and Fire Grant Programs Reauthorization: Examining Effectiveness and Priorities . Testimony was heard from the USFA acting administrator and from fire service organizations. On December 15, 2017, H.R. 4661 , the United States Fire Administration, AFG, and SAFER Program Reauthorization Act of 2017, was introduced by Representative Comstock, which sought to reauthorize the USFA through FY2023. On December 18, 2017, the House passed H.R. 4661 by voice vote under suspension of the rules. On December 21, 2017, the Senate passed H.R. 4661 without amendment by unanimous consent. On January 3, 2018, the President signed the United States Fire Administration, AFG, and SAFER Program Reauthorization Act of 2017 ( P.L. 115-98 ). P.L. 115-98 extends the USFA authorization through FY2023. The authorization levels are the same as in the previous authorization: $76,490,890 each year for FY2017 through FY2023, of which $2,753,672 each fiscal year is to be used to carry out Section 8(f) of the Fire Prevention and Control Act (15 U.S.C. 2207) related to evaluation of technology and development of standards. Assistance to Firefighters Program (FIRE Act Grants) The Assistance to Firefighters Grant (AFG) Program, also known as the FIRE Act grant program, was established by Title XVII of the FY2001 Floyd D. Spence National Defense Authorization Act ( P.L. 106-398 ). The program provides federal grants directly to local fire departments and unaffiliated Emergency Medical Services (EMS) organizations to help address a variety of equipment, training, and other firefighter-related and EMS needs. A related program is the Staffing for Adequate Fire and Emergency Response Firefighters (SAFER) program, which provides grants for hiring, recruiting, and retaining firefighters. Since its inception, the fire grant program has been administered by FEMA/USFA (FY2001-FY2003), the Office for Domestic Preparedness (FY2004), the Office of State and Local Government Coordination Preparedness (FY2005), and the Office of Grants and Training in the DHS Directorate for Preparedness (FY2006). The FY2007 DHS Appropriations Act ( P.L. 109-295 ) transferred USFA to FEMA and the fire and SAFER grants to the Grants Programs Directorate in FEMA. Congressional appropriations reports have consistently instructed DHS to maintain USFA involvement in the grant administration process for AFG and SAFER grants. In September 2016, the Government Accountability Office (GAO) released a report entitled Fire Grants: FEMA Could Enhance Program Administration and Performance Assessment. Among its findings, GAO concluded that FEMA has not defined and documented USFA's specific role or responsibilities with the fire grants program, and that there is no formalized relationship or policy regarding how the two organizations' programs could work together. According to GAO Although a level of informal coordination exists between GPD [Grant Programs Directorate] and USFA, enhancing these efforts by using collaborative mechanisms that our work across the federal government has identified as key features and issues to consider during implementation—such as clearly defining and agreeing upon USFA's role and responsibilities and documenting agreement regarding how they will be collaborating—could help GPD further leverage USFA expertise and resources in support of the fire grants programs, which could also help GPD manage the integration of fire grants into broader national preparedness efforts. In December 2016, the USFA signed an agreement with FEMA's Grant Programs Directorate to provide a framework for each entity's roles and responsibilities for improving the management of the fire grants. Issues in the 116th Congress Concerns over the federal budget deficit could impact future funding levels for the USFA. Debate over the USFA budget has focused on whether the USFA is receiving an appropriate level of funding to accomplish its mission, given that appropriations for USFA have consistently been well below the agency's authorized level, and given that USFA's budget has remained flat over recent years. The 116 th Congress may also consider whether the role of USFA might be expanded. For example, H.R. 1646 , the Helping Emergency Responders Overcome Act of 2019 (the HERO Act), introduced by Representative Bera on March 8, 2019, would direct USFA, in coordination with the Secretary of Health and Human Services, to develop and make publicly available resources that may be used by the federal government and other entities to educate mental health professionals about the mental health issues and challenges faced by firefighters and emergency medical services personnel. Finally, an ongoing issue is the viability and status of the USFA and National Fire Academy within the Department of Homeland Security. While supportive of the reorganization of FEMA into DHS, many in the fire service community have cautioned that USFA and NFA programs—which address the day-to-day challenges faced by fire departments—should not be overshadowed in an organization which focuses on homeland security and counterterrorism. Since the establishment of DHS in March 2003, fire service groups have opposed a number of actions DHS has taken with respect to the USFA and NFA. These included the abolishment of the presidentially appointed position of U.S. Fire Administrator (subsequently reestablished by enactment of the USFA Reauthorization Act of 2003); proposed cancellations of some NFA courses in 2003 due to an across-the-board FEMA budget cut (those NFA courses were subsequently restored after fire service protests); and the transfer of the fire grant program from the USFA to the DHS Office for Domestic Preparedness.

The United States Fire Administration (USFA)—which includes the National Fire Academy (NFA)—is currently housed within the Federal Emergency Management Agency (FEMA) of the Department of Homeland Security (DHS). The objective of the USFA is to significantly reduce the nation's loss of life from fire, while also achieving a reduction in property loss and nonfatal injury due to fire. The Consolidated Appropriations Act, 2019 (P.L. 116-6) provided $45.679 million for USFA, including $1.5 million in the FEMA Procurement, Construction, and Improvements account for the National Emergency Training Center. For FY2020, the Administration requested $46.605 million, which includes $1.5 million transferred from the Procurement, Construction, and Improvements account for NETC campus renovations. The budget proposal would be a $1 million increase over the FY2019 level; the increase would fund further improvements to NETC facilities. The budget proposal does not include funding for State Fire Training Assistance. On January 3, 2018, the President signed the United States Fire Administration, AFG, and SAFER Program Reauthorization Act of 2017 (P.L. 115-98). P.L. 115-98 extends the USFA authorization through FY2023. The authorization levels are the same as in the previous authorization: $76,490,890 each year for FY2017 through FY2023. Meanwhile, concerns over the federal budget deficit could impact future funding levels for the USFA. Debate over the USFA budget has focused on whether the USFA is receiving an appropriate level of funding to accomplish its mission, given that appropriations for USFA have consistently been well below the agency's authorized level. Additionally, an ongoing issue is the viability and status of the USFA and the National Fire Academy within the Department of Homeland Security.

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Introduction The 116 th Congress, in both its legislative and oversight capacities, faces numerous trade policy issues related to the North American Free Trade Agreement (NAFTA) renegotiations and the proposed United States-Mexico-Canada Agreement (USMCA). On May 18, 2017, the Trump Administration sent a 90-day notification to Congress of its intent to begin talks with Canada and Mexico to renegotiate and modernize NAFTA, as required by the 2015 Trade Promotion Authority (TPA). Talks officially began on August 16, 2017. On September 30, 2018, leaders from the United States, Canada, and Mexico announced the conclusion of the negotiations for a modernized NAFTA, which would now be called the USMCA. On November 30, 2018, the proposed USMCA was signed by President Donald J. Trump, then President Enrique Peña Nieto of Mexico, and Canadian Prime Minister Justin Trudeau. President Trump stated his intention to withdraw from or renegotiate NAFTA during his election campaign and has hinted at the possibility of NAFTA withdrawal since he entered into office. Key issues for Congress in regard to the consideration of the proposed USMCA include the constitutional authority of Congress over international trade, its role in revising, approving, or withdrawing from the agreement, U.S. negotiating objectives and the extent to which the proposed agreement makes progress in meeting them as required under TPA. Congress may also consider the agreement's impact on U.S. industries, the U.S. economy, and broader U.S. trade relations with Canada and Mexico, two of the United States' largest trading partners. The proposed USMCA, if approved by Congress, would revise some key provisions such as auto rules of origin, which, some argue roll back longstanding U.S. FTA provisions. On the other hand, it establish new updated provisions in areas such as digital trade and intellectual property rights. A key question for Congress may be whether the agreement strikes the right balance overall. After numerous rounds of negotiations, on August 31, 2018, after the United States and Mexico announced a preliminary U.S.-Mexico agreement, President Trump notified Congress of his intention to "enter into a trade agreement with Mexico – and with Canada if it is willing." On September 30, 2018, U.S. Trade Representative (USTR) Robert Lighthizer announced that the three countries had reached an agreement on a USMCA trade deal that would revise, modernize, and replace NAFTA upon ratification. Canada, in its negotiating objectives, pledged to make NAFTA more "progressive" by strengthening labor and environmental provisions, adding a new chapter on indigenous rights, reforming the investor-state dispute settlement process, and protecting Canada's supply-management system for dairy and poultry, among other objectives. Mexico's set of negotiating objectives prioritized free trade of goods and services, and included provisions to update NAFTA, such as working toward "inclusive and responsible" trade by incorporating cooperation mechanisms in areas related to labor standards, anticorruption, and the environment, as well as strengthening energy security by enhancing NAFTA's chapter on energy. While the USTR's NAFTA negotiating objectives included many goals consistent with TPA, USTR also sought, for the first time in U.S. trade negotiations, to reduce the U.S. trade deficit with NAFTA countries, among other specific objectives. U.S. objectives appeared to seek to "rebalance the benefits" of the agreement, echoing President Trump's statements that NAFTA has been a "disaster" and the "worst agreement ever negotiated." Some U.S. negotiating positions could be seen to have the explicit or implicit goal of promoting U.S. economic sovereignty and/or rolling back previous liberalization commitments in specific areas, such as reviewing and potentially sunsetting the agreement every five years, questioning the validity of binational dispute settlement, enhancing government procurement restrictions, and increasing U.S. and North American content in the auto rules of origin. Trump Administration officials also spoke of unraveling the North American and global supply chains as a way of attempting to divert trade and investment from Canada and Mexico to the United States. Mexican and Canadian negotiators viewed such proposals as counterproductive to the spirit and mutual economic benefits of NAFTA and repeated their positions to modernize NAFTA with provisions such as those in the proposed Trans-Pacific Partnership (TPP). The differences between views on modernizing the agreement and U.S. proposals led to perceived tensions in the negotiations. The proposed USMCA presents an opportunity to incorporate elements of more recent FTAs that have entered into force or were negotiated, such as the U.S.-Korea FTA (KORUS) and the proposed TPP. The U.S. and global economies have changed significantly since NAFTA entered into force 25 years ago, especially due to technology advances. The widespread use of the commercial internet, for example, has dramatically affected consumer habits, commercial activities such as e-commerce and supply chain management. Negotiators also sought updated provisions in other areas such as intellectual property rights (IPR), labor, and the environment. The increased role of state-led or supported firms in trade competition with private sector firms is also a new issue of debate and focus of new rules-setting. Many economists and business representatives generally look to maintain and strengthen the trade and investment relationship with Canada and Mexico under NAFTA or the proposed USMCA, and to further improve overall relations and economic integration within the region. However, labor groups and some consumer-advocacy groups argue that NAFTA resulted in outsourcing and lower wages that have had a negative effect on the U.S. economy. Some proponents and critics of NAFTA agree that NAFTA should be modernized, but have contrasting views on how to revise the agreement. This report provides a brief overview of NAFTA and the role of Congress in the renegotiation process, and discusses key provisions in the proposed USMCA, as well as issues related to the negotiations. It also provides a discussion of policy implications for Congress going forward. It will not examine existing NAFTA provisions and economic relations in depth. For more information on these issues, please see CRS Report R42965, The North American Free Trade Agreement (NAFTA) , by M. Angeles Villarreal and Ian F. Fergusson. NAFTA Overview NAFTA negotiations were first launched under President George H. W. Bush. President William J. Clinton signed into law the NAFTA Implementation Act on December 8, 1993 ( P.L. 103-182 ). NAFTA entered into force on January 1, 1994. It is significant because it was the first FTA among two wealthy countries and a lower-income country and because it established trade liberalization commitments that led the way in setting new rules for future trade agreements on issues important to the United States. These include provisions on intellectual property rights (IPR) protection, services trade, agriculture, dispute settlement procedures, investment, labor, and the environment. NAFTA addressed policy issues that were new to FTAs and was influential in concluding major multilateral trade negotiations under the General Agreement on Tariffs and Trade (GATT) and its successor, the World Trade Organization (WTO). The United States now has 14 FTAs with 20 countries. NAFTA's market-opening provisions gradually eliminated nearly all tariff and most nontariff barriers on goods and services produced and traded within North America. At the start of NAFTA, average applied U.S. duties on imports from Mexico were 2.07% and over 50% of U.S. imports from Mexico entered duty free. In contrast, the United States faced higher tariff, nontariff, and investment barriers in Mexico. Trade among NAFTA partners has more than tripled since the agreement entered into force, forming integrated production chains among all three countries. Many trade policy experts and economists give credit to NAFTA for expanding trade and economic linkages among the parties, creating more efficient production processes, increasing the availability of lower-priced and greater choice of consumer goods, and improving living standards and working conditions. Others blame NAFTA and subsequent U.S. FTAs for disappointing employment trends, a decline in average U.S. wages, and for not having done enough to improve labor standards and environmental conditions abroad. Another important element of NAFTA is that it helped "lock in" trade and investment liberalization efforts taking place at the time, especially in Mexico. NAFTA was instrumental in developing closer U.S. relations with both Mexico and Canada and it may have accelerated ongoing trade and investment trends. At the time that NAFTA was implemented, the U.S.-Canada Free Trade Agreement (CUSFTA) was already in effect and U.S. tariffs on most Mexican goods were low, while Mexico had the highest level of trade barriers among the three countries. From the 1930s through part of the 1980s, Mexico maintained a strong protectionist trade policy in an effort to be independent of any foreign power and as a means to promote domestic-led industrialization. In 1991, for example, U.S. businesses were very restricted in investing in Mexico. Under Mexico's restrictive Law to Promote Mexican Investment and Regulate Foreign Investment , about a third of Mexican economic activity was not open to majority foreign ownership. Mexico's failed protectionist policies did not result in increased income levels or economic growth, and the income disparity with the United States remains large, even after NAFTA . NAFTA coincided with Mexico's unilateral trade liberalization efforts. After NAFTA, the United States and Canada gained greater access to the Mexican market, which was the fastest-growing major export market for U.S. goods and services at the time. NAFTA also opened up the U.S. market to increased imports from Mexico and Canada, creating one of the largest free trade areas in the world. Since NAFTA, the three countries have made efforts to cooperate on issues of mutual interest, including trade and investment, and also in other, broader aspects of the relationship, such as regulatory cooperation, industrial competitiveness, trade facilitation, border environmental cooperation, and security. Key NAFTA Provisions Some key NAFTA provisions include tariff and nontariff trade liberalization, rules of origin, commitments on services trade and foreign investment, IPR protection, government procurement rules, and dispute resolution. Labor and environmental provisions are included in separate NAFTA side agreements. NAFTA provisions and rules governing trade were groundbreaking in a number of areas, particularly in regard to enforceable rules and disciplines that were included in a trade agreement for the first time. There were almost no FTAs in place worldwide at the time, and NAFTA influenced subsequent agreements negotiated by the United States and other countries, especially at the multilateral level in light of the then-pending Uruguay Round of major multilateral trade liberalization negotiations. The market-opening provisions of the agreement gradually eliminated nearly all tariffs and most nontariff barriers on goods produced and traded within North America, mostly over a period of 10 years after it entered into force. Some tariffs were eliminated immediately, while others were phased out in various schedules of 5 to 15 years. Most of the market-opening measures from NAFTA resulted in the removal of tariffs and quotas applied by Mexico on imports from the United States and Canada. The average applied U.S. duty for all imports from Mexico was 2.07% in 1993. Moreover, many Mexican products entered the United States duty-free under the U.S. Generalized System of Preferences (GSP). In 1993, over 50% of U.S. imports from Mexico entered the United States duty-free. In contrast, the United States faced considerably higher tariffs and substantial nontariff barriers on exports to Mexico. In 1993, Mexico's average applied tariff on all imports from the United States was 10% (Canada's average tariff on U.S. goods was 0.37%). Non-tariff barriers also affected U.S.-Mexico trade, such as sanitary and phytosanitary (SPS) rules, Mexican import licensing requirements, and U.S. marketing orders. The market opening that occurred after NAFTA is likely a factor in the significance of trade for Mexico's economy. In 1994, Mexico's exports and imports equaled 14% and 18%, respectively, of GDP, while in 2017, these percentages increased to 37% and 39%. For the United States, trade is less significant for the economy, with the value of imports and exports equaling 15% and 12%, respectively, of GDP in 2017 (see Table 1 ). NAFTA rules, disciplines and nontariff provisions include the following: Agri c ulture. NAFTA eliminated tariffs and tariff-rate quotas (TRQs) on most agricultural products. It maintains TRQs with high over-quota tariffs for U.S. exports of dairy, poultry, and egg products to Canada. NAFTA addressed sanitary and phytosanitary (SPS) measures and other types of agricultural non-tariff barriers. SPS regulations are often regarded by agricultural exporters as one of the greatest challenges in trade, often resulting in increased costs and product loss and disrupting integrated supply chains. Investment . NAFTA removed significant investment barriers in Mexico, ensured basic protections for NAFTA investors, and provided a mechanism for the settlement of disputes between investors and a NAFTA country. NAFTA provided for national and "nondiscriminatory treatment" for foreign investment by NAFTA parties in certain sectors of other NAFTA countries. The agreement included country-specific liberalization commitments and exceptions to national treatment. Exemptions from NAFTA included the energy sector in Mexico, in which the Mexican government reserved the right to prohibit private investment or foreign participation. Services Trade . NAFTA services provisions established a set of basic rules and obligations in services trade among partner countries. The agreement granted services providers certain rights concerning nondiscriminatory treatment, cross-border sales and entry, investment, and access to information. However, there were certain exclusions and reservations by each country. These included maritime shipping (United States), film and publishing (Canada), and oil and gas drilling (Mexico). NAFTA liberalized certain service sectors in Mexico, particularly financial services, which significantly opened its banking sector. Financial and Telecommunications S ervices . Under NAFTA, Canada extended an exemption granted to the United States, under the CUSFTA, to Mexico in which Mexican banks would not be subject to Canadian investment restrictions. In turn, Mexico agreed to permit financial firms from another NAFTA country to establish financial institutions in Mexico, subject to certain market-share limits applied during a transition period ending by the year 2000. In telecommunications, NAFTA partners agreed to exclude provision of, but not the use of, basic telecommunications services. NAFTA granted a "bill of rights" for the providers and users of telecommunications services, including access to public telecommunications services; connection to private lines that reflect economic costs and available on a flat-rate pricing basis; and the right to choose, purchase, or lease terminal equipment best suited to their needs. NAFTA did not require parties to authorize a person of another NAFTA country to provide or operate telecommunications transport networks or services. Nor did it bar a party from maintaining a monopoly provider of public networks or services, such as Telmex, Mexico's dominant telecommunications company. Intellectual Property Rights (IPR) Protection . NAFTA was the first U.S. FTA to include IPR protection provisions. It built upon the then-ongoing Uruguay Round negotiations that would create the Trade Related Aspects of Intellectual Property Rights (TRIPS) agreement in the WTO and on various existing international intellectual property treaties. The agreement set specific enforceable commitments by NAFTA parties regarding the protection of copyrights, patents, trademarks, and trade secrets, among other provisions. Dispute Resolution . NAFTA's provisions for preventing and settling disputes regarding enforcement of commitments under the agreement were built upon provisions in the CUSFTA. NAFTA created a system of arbitration for resolving disputes that included initial consultations, taking the issue to the NAFTA Trade Commission, or going through arbitral panel proceedings. NAFTA included separate dispute settlement provisions for addressing disputes related to investment and over antidumping and countervailing duty determinations. Government Procurement . NAFTA opened up a significant portion of federal government procurement in each country on a nondiscriminatory basis to suppliers from other NAFTA countries for goods and services. It contains some limitations for procurement by state-owned enterprises. Labor and Environment . NAFTA marked the first time that labor and environmental provisions were associated with an FTA. For many, it represented an opportunity for establishing a new type of relationship among NAFTA partners. Labor and environmental provisions were included in separate side agreements. They included language to promote cooperation on labor and environmental matters as well as provisions to address a party's failure to enforce its own labor and environmental laws. Perhaps most notable were the side agreements' dispute settlement processes that, as a last resort, may impose monetary assessments and sanctions to address a party's failure to enforce its laws. Trade Trends U.S. trade with NAFTA partners increased rapidly once the agreement took effect, increasing more rapidly than trade with most other countries. U.S. total merchandise imports from NAFTA partners increased from $151 billion in 1993 to $614 billion in 2017 (307%), while merchandise exports increased from $142 billion to $525 billion (270%) (see Figure 1 ). The United States had a trade deficit with Canada and Mexico of $89.6 billion in 2017, compared to a deficit of $9.1 billion in 1993. Services trade with NAFTA partners has also increased. The United States had a services trade surplus with Canada and Mexico of $31.4 billion in 2016 (see Figure 2 ). Trade in Oil and Gas Trade in oil and gas is a significant component of trilateral trade, accounting for 7.2% of total U.S. merchandise trade with Canada and Mexico in 2017. As shown in Figure 3 , U.S. oil and gas exports to Canada and Mexico increased from $0.9 billion in 1997 to $13.4 billion in 2017, while imports increased from $22.3 billion to $69.0 billion. If oil and gas products are excluded from the trade balance, the deficit with NAFTA partners is lower than the overall trade deficit. In 2017, the total U.S. merchandise trade deficit with Canada and Mexico was $88.6 billion, while the merchandise deficit without oil and gas products was a significantly lower $33.0 billion. Trade in Value Added Conventional measures of international trade do not always reflect the flows of goods and services within global production chains. For example, some auto trade experts claim that auto parts and components may cross the borders of NAFTA countries as many as eight times before being installed in a final assembly plant in a NAFTA country. Traditional trade statistics include the value of the parts every time they cross the border and count the value multiple times. The Organization for Economic Co-operation and Development (OECD) and the World Trade Organization (WTO) developed a Trade in Value Added (TiVA) database, which presents indicators that provide insight into domestic and foreign value added content of gross exports by an exporting industry. These statistics provide a more detailed picture of the location where value is added during the various stages of production. U.S. trade with Canada and Mexico is diverse and complex since a final good sold in the market could have a combination of value added from all three countries, or from other trading partners. The most recent TiVA data available (2011) for trade in goods and services indicate that the conventional measurement puts the total U.S. trade deficit (including goods and services) with NAFTA countries at $135 billion, while the TiVA methodology puts the deficit at $79.8 billion (see Figure 4 ). Merchandise Trade in Selected Industries NAFTA removed Mexico's protectionist policies in the auto sector and was instrumental in the integration of the motor vehicle industry in all three countries. The sector experienced some of the most significant changes in trade following the agreement. Motor vehicles and motor vehicle parts rank first among leading exports to and imports from NAFTA countries as shown in Figure 5 . Agriculture trade also expanded after NAFTA, but to a lesser degree than the motor vehicle industry. The trade balance in agriculture also has a far lower trade deficit. Trade trends by sector indicate that NAFTA achieved many of the trade and economic benefits that proponents claimed it would bring, although there have been adjustment costs. It is difficult to isolate the effects of NAFTA to quantify the effects on trade in specific industries because other factors, such as economic growth and currency fluctuations, also affect trade. U.S. Investment with Canada and Mexico Foreign direct investment (FDI) has been an integral part of the economic relationship between the United States and NAFTA partners for many years. Two-way investment between Canada and the United States has increased markedly since NAFTA, both in terms of the stock and flow of investment. The United States is the largest single investor in Canada with a stock of FDI into Canada reaching $391.2 billion in 2017, up from a stock of $69.9 billion in 1993 (see Figure 6 ). U.S. investment represents about half of the total stock of FDI in Canada from global investors. The United States was the largest destination for Canadian FDI in 2017 with a stock of $453.1 billion, a significant increase from $40.4 billion in 1993. These trends highlight the changing view of FDI among Canadians, from one that could be considered fearful or hostile to FDI as vehicles of foreign control over the Canadian economy, to one that is more welcoming of new jobs and technologies that result from FDI. In Mexico, the United States is the largest source of FDI. The stock of U.S. FDI in Mexico increased from $15.2 billion in 1993 to $109.7 billion in 2017 (see Figure 6 ). Total FDI in Mexico dropped 19% in 2015, mainly due to a decline in investment in the services sector and automotive industry. Other countries in Latin America also experienced similar declines in FDI in 2015. Some economists contend that Mexico's recent economic reforms have added resilience to the Mexican economy and that greater economic growth and investment in Mexico would occur over time as a result. Mexican FDI in the United States, while substantially lower than U.S. investment in Mexico, has also increased rapidly, from $1.2 billion in 1993 to $18.0 billion in 2017. NAFTA Renegotiation Process and TPA Under Article II of the Constitution, the President has the authority, with the advice and consent of the Senate, to make treaties. Under Article I, Section 8, Congress has the authority to lay and collect duties, and to regulate foreign commerce. The President may seek expedited treatment of the implementing legislation of a renegotiated NAFTA under the Bipartisan Comprehensive Trade Promotion and Accountability Act of 2015 (TPA). NAFTA provides, "The Parties may agree on any modification of or addition to this Agreement. When so agreed, and approved in accordance with the applicable legal procedures of each party, a modification or addition shall constitute an integral part of the agreement." Under TPA, the President must consult with Congress before giving the required 90-day notice of his intention to start negotiations. The Trump Administration's consultations included meetings between U.S. Trade Representative Robert Lighthizer and members of the House Ways and Means Committee and Senate Finance Committee and with members of the House and Senate Advisory Groups on Negotiations. The Office of the United States Trade Representative (USTR) held public hearings and has received more than 12,000 public comments on NAFTA renegotiation. In order to use the expedited procedures of TPA, the President must notify and consult with Congress before initiating and during negotiations, and adhere to several reporting requirements following the conclusion of any negotiations resulting in an agreement. The President must conduct the negotiations based on the negotiating objectives set forth by Congress in the 2015 TPA authority. See box below for the dates on which these requirements were or are expected to be met. Trade Deficit Reduction The Trump Administration, for the first time in the negotiating objectives of an FTA, indicated its aim to improve the U.S. trade balance and reduce the trade deficit with NAFTA countries in the renegotiation of NAFTA. The trade balance with NAFTA partners has fluctuated since the agreement entered into force, increasing from $9.1 billion in 1993 to $89.6 billion in 2017. President Trump and some officials within his Administration believe that trade deficits are detrimental to the U.S. economy. USTR Robert Lighthizer stated after the second round of negotiations that while he wanted to negotiate an agreement that is approved by Congress, he also wanted to bring down the trade deficit, as part of his mission, in order to help American workers and farmers. Other critics of NAFTA also argue that U.S. free trade agreements (FTAs) have contributed to rising trade deficits with some trade partners. Economists generally argue that it is not feasible to use trade agreement provisions as a tool to decrease the deficit because trade imbalances are determined by underlying macroeconomic fundamentals, such as a savings-investment imbalance in which the demand for capital in the U.S. economy outstrips the amount of gross savings supplied by households, firms, and the government sector. According to some economists, a more constructive alternative would be to help strengthen Mexico's economy and boost Mexico's imports from the United States. Others contend that FTAs are likely to affect the composition of trade among trade partners, but have little impact on the overall size of the trade deficit. They argue that trade balances are incomplete measures of the comprehensive nature of economic relations between the United States and its trading partners, and maintain that trade imbalances are determined by macroeconomic fundamentals and not by trade policy. From this perspective, it is not clear how the Administration would expect to reduce the trade deficit through the proposed USMCA. Proposed USMCA The proposed USMCA, comprising 34 chapters and 12 side letters, retains most of NAFTA's chapters, making notable changes to market access provisions for autos and agriculture products, and to rules and disciplines, such as on investment, government procurement, and IPR. New issues, such as digital trade, state-owned enterprises, anticorruption, and currency misalignment, are also addressed. Because NAFTA is 25 years old, the proposed USMCA could be viewed as an opportunity to include obligations not currently covered in the original text, such as digital trade or more enforceable labor and environmental provisions. The following selective topics provide an overview of proposed USMCA provisions and a comparison to existing NAFTA provisions. Rules of Origin Rules of origin in NAFTA and other FTAs help ensure that the benefits of the FTA are granted only to goods produced by the parties that are signatories to the FTAs rather than to goods made wholly or in large part in other countries. If a U.S. import does not meet NAFTA rules-of-origin requirements, it will enter the United States under another import program or at U.S. MFN tariff rates. In 2017, 53% of U.S. imports from Canada and Mexico entered duty-free under NAFTA, while 47% entered under normal trade relations. In the case of NAFTA, most goods that contain materials from non-NAFTA countries may also be considered as North American if the materials are sufficiently transformed in the NAFTA region to go through a Harmonized Tariff Schedule (HTS) change in tariff classification (called a "tariff shift"). In many cases, goods must have a minimum level of North American content in addition to undergoing a tariff shift. Regional value content may be calculated using either the "transaction-value" or the "net-cost" method. The transaction-value method, which is simpler, is based on the price of the good, while the net-cost method is based on the total cost of the good less the costs of royalties, sales promotion, and packing and shipping. Producers generally have the option to choose which method they use, with some exceptions, such as the motor vehicle industry, which must use the net-cost method. The U.S. proposal on tightening rules of origin in the motor vehicle industry was viewed as one of the more contentious issues in the negotiations. Please see section below on the " Motor Vehicle Industry " for a discussion of the auto rules of origin. NAFTA's rules of origin requirements state that if the transaction value method is used, not less than 60 per cent if the good must be of North American content for a good to receive NAFTA benefits. If the net cost method is used, not less than 50 percent if the value of the good must be of North American content. The proposed USMCA maintains these percentages for general imports. As noted below, certain industries such as the motor vehicle industry have specific rules of origin requirements. Motor Vehicle Industry NAFTA phased out U.S. tariffs on motor vehicle imports from Mexico and Mexican tariffs on U.S. and Canadian products as long as they met the rules of origin requirements of 62.5% North American content for autos, light trucks, engines and transmissions; and 60% for automotive parts. Some tariffs were eliminated immediately, while others were phased out in periods over 5 to 10 years. The agreement phased out Mexico's restrictive auto decrees, which for many years imposed high import tariffs and investment restrictions in Mexico's auto sector, and opened the Mexican motor vehicle sector to trade with and investment from the United States. NAFTA and the elimination of Mexican trade barriers liberalized North American motor vehicle trade and was instrumental in the integration of the North American motor vehicle industry. North American motor vehicle manufacturing is now highly integrated, with major Asia- and Europe-based automakers constructing their own supply chains within the region. The major recent growth in the North American market occurred largely in Mexico, which now accounts for about 20% of total continental vehicle production. In general, recent investments in U.S. and Canadian assembly plants have involved modernization or expansion of existing facilities, while Mexico has seen new assembly plants. The proposed USMCA would tighten auto rules of origin by including new motor vehicle rules of origin and procedures, including product-specific rules, and requiring 75% North American content; for the first time in a trade agreement, wage requirements stipulating 40%-45% of North American auto content be made by workers earning at least $16 per hour; a requirement that 70% of a vehicle's steel and aluminum must originate in North America; and a provision aiming to streamline the enforcement of manufacturers' rules of origin certification requirements. In addition, side letters would exempt from potential Section 232 tariffs, which are being investigated by the Department of Commerce , the following items from Canada and Mexico: 2.6 million passenger vehicles each from Canada and Mexico on an annual basis; light trucks imported from Canada or Mexico; and auto part imports amounting to U.S. $32.4 billion from Canada and U.S. $108 billion from Mexico in declared customs value in any calendar year. During the negotiations, vehicle and parts manufacturers generally supported retaining the current rules of origin under NAFTA, whereas labor groups sought to require a higher percentage of regional content, which they believe would reduce the share of parts produced in non-NAFTA countries. Some observers state that "it is unclear" whether the auto rules of origin in the proposed USMCA meet the requirements under the World Trade Organization's Article XXIV of the General Agreement on Tariffs and Trade. Article XXIV states that duties and other commerce regulations between parties of a customs union "should not on the whole be higher or more restrictive" than the rate of the duties and regulations "applicable in the constituent territories prior to the formation of such union." Some economists and other experts believe that the higher North American content requirement in the proposed USMCA could have unintended consequences. They contend that trade in motor vehicles within North America may not be able to meet the new requirements and would be ineligible for USMCA benefits. Such experts say that it would be more cost efficient for manufacturers of motor vehicles and motor vehicle parts to pay the MFN tariff of about 2.5%, rather than meet the cumbersome rules-of-origin requirements. They argue that a change in rules poses a significant risk to North American auto production, because it is likely that manufacturers would not have the supply to meet the new rules and would not be able to remain competitive in the market. Auto manufacturers in Mexico are concerned that they may lose market share to Asian manufacturers. For example, because the rules of origin in the U.S.-South Korea FTA are much lower than those in the USMCA, it is possible that motor vehicle producers would shift production to South Korea, especially in light trucks. Even with these concerns, motor vehicle producers, in general, support the conclusion of the negotiations for the proposed USMCA and its ratification. Some automakers say that complying with the new rules of origin may be cumbersome, but probably manageable. Some also contend that production in the United States has the potential to increase under the agreement, although it is not clear whether this would translate into more U.S. jobs. Auto industry representatives reacted favorably to the conclusion of the negotiations and generally agree with changes modernizing the agreement, such as updating border customs procedures (i.e., trade facilitation measures), digital trade provisions, and IPR protection. The United Auto Workers union (UAW) called for the renegotiation of NAFTA to provide more benefits to workers in all three signatory countries. The UAW supports a strengthening of labor and environmental provisions, ensuring "fair" trade among all NAFTA parties through more enforceable provisions, and enhancing provisions on worker rights protection. After the announcement of the proposed USMCA, the UAW issued a statement that it would need time to evaluate the details of the agreement before determining whether the "agreement will protect our UAW jobs and the living standards of all Americans." Agriculture65 NAFTA's agriculture provisions include tariff and quota elimination, sanitary and phytosanitary (SPS) measures, rules of origin, and grade and quality standards. NAFTA set separate bilateral undertakings on cross-border trade in agriculture, one between Canada and Mexico, and the other between Mexico and the United States. As a general matter, CUSFTA provisions continued to apply on trade with Canada. Under CUSFTA, Canada excluded dairy, poultry, and eggs for tariff elimination. In return, the United States excluded dairy, sugar, cotton, tobacco, peanuts, and peanut butter. Although NAFTA resulted in tariff elimination for most agricultural products and redefined import quotas for some commodities as tariff-rate quotas (TRQs), some products are still subject to high above-quota tariffs, such as U.S. dairy and poultry exports to Canada. Canada maintains a supply-management system for these sectors that effectively limits U.S. market access. These products were also exempt from Canada-Mexico trade liberalization. NAFTA also addressed SPS measures and other types of nontariff barriers that may limit agricultural trade. SPS regulations continue to be regarded by agricultural exporters as challenging to trade and disruptive to integrated supply chains. In conjunction with agricultural reforms underway in Mexico at the time, NAFTA eliminated most nontariff barriers in agricultural trade with Mexico, including import licensing requirements, through their conversion either to TRQs or to ordinary tariffs. Tariffs were phased out over 15 years with sensitive products such as sugar and corn receiving the longest phase-out periods. Approximately one-half of U.S.-Mexico agricultural trade became duty-free when the agreement went into effect. Prior to NAFTA, most tariffs in agricultural trade between the United States and Mexico, on average, were fairly low, though some U.S. exports to Mexico faced tariffs as high as 12%. However, approximately one-fourth of U.S. agricultural exports to Mexico (by value) were subjected to restrictive import licensing requirements. In the USMCA negotiations on agriculture, a principal U.S. demand was for additional market access to Canada's supply-management-restricted dairy, poultry, and egg markets. This system places a tariff-rate quota on imports of those products into Canada. While most of the in-quota tariff levied is 0%, out of quota tariffs (TRQ) can reach 313.5% for dairy products. Canada was not willing to abolish supply management, but did allow a yearly expansion of the TRQ for dairy products; an expansion of duty-free quota for poultry from 47,000 tons to 57,000 tons in year six, and a subsequent 1% annual increase for 10 years. The TRQ for eggs would increase to 10 million dozen annually. In return, the United States is providing more access to Canadian dairy, sugar, peanuts and cotton. U.S. tariffs for peanuts and cotton are to be phased-out over five years, and TRQs for dairy and sugar products are to be increased. The United States also negotiated changes to Canadian wheat grading system and providing national treatment for beer, wine, and spirits labeling and sales. A U.S. proposal to allow trade remedies to be used for seasonal produce was not adopted. USMCA partners agreed to several other non-market access provision in the agriculture and sanitary and phytosanitary standards chapter. These include regulatory alignment among the parties; protection for proprietary formulas for pre-packaged foods and food additives (limited to furthering "legitimate objective[s]," which is not defined); and SPS rules based on "relevant scientific principles;" greater transparency in SPS rules. Biotechnology provisions affecting agriculture include transparent and timely application and approval process for crops using biotechnology; procedures for import shipments containing a low-level presence of an unapproved crop produced with biotechnology; and establishment of a working group on agricultural biotechnology. Customs and Trade Facilitation Customs and trade facilitation relates to the efficient flow of legally traded goods in and out of the United States. Enforcement of U.S. trade laws and import security are other important components of customs operations at the border. NAFTA's chapter on customs procedures includes provisions on certificates of origin, administration and enforcement, and customs regulation and cooperation. More recent agreements have modernized provisions in regard to customs procedures and trade facilitation. The World Trade Organization (WTO) Trade Facilitation Agreement (TFA), the newest international trade agreement in the WTO, entered into force on February 22, 2017. Two-thirds of WTO members, including the United States, Canada, and Mexico, ratified the multilateral agreement. Trade facilitation measures aim to simplify and streamline customs procedures to allow the easier flow of trade across borders and thereby reduce the costs of trade. There is no precise definition of trade facilitation, even in the WTO agreements. Trade facilitation can be defined narrowly as improving administrative procedures at the border or more broadly to also encompass behind-the-border measures and regulations. The TFA aims to address trade barriers, such as lack of customs procedural transparency and overly burdensome documentation requirements. In the proposed USMCA, parties affirmed their rights and obligations under the TFA of the WTO. USMCA provisions also include commitments to administer customs procedures in such ways as to facilitate trade or the transit of a good while supporting compliance with domestic laws and regulations. Parties commit to create a Trade Facilitation Committee to cooperate on trade facilitation and adopt additional measures if necessary. Other provisions include measures for online publication of information and resources related to trade facilitation, communications mechanisms, establishment of enquiry points to respond to enquiries by interested persons, rules for issuing written advance customs rulings, procedures for efficient release of goods in order to facilitate trade between the parties, expedited customs procedures for express shipments, automated risk analysis and management procedures, creation of a single-access window system to enable electronic submission through a single entry point for importation into the territory of another party, and transparency procedures. Given the magnitude and frequency of U.S. trade with NAFTA partners, more updated customs provisions in NAFTA could have a significant impact on companies engaged in trilateral trade. The USMCA would set d e m inimis customs threshold for duty free treatment at US$800 for the United States, C$150 (about US$117) for Canada, and US$117 for Mexico. Tax-free threshold would be set at C$40 (about US$31) for Canada and US$50 for Mexico. Proponents of the higher de minimis thresholds contend that these changes will facilitate North American trade by allowing low-value parcels to be shipped across international borders tax and tariff free and with simple customs forms. Some Members and other stakeholders have raised concerns about a footnote that would allow the United States to decrease its threshold to a reciprocal de minimis amount in an amount no greater than the Canadian or Mexican threshold. They contend that lowering the current U.S. threshold could come at a cost to U.S. consumers and express carriers. Energy NAFTA includes explicit country-specific exceptions and reservations, including the energy sector in Mexico. In NAFTA's energy chapter, the three parties confirmed respect for their constitutions. This was of particular importance for Mexico and its 1917 Constitution, which established Mexican national ownership of all hydrocarbons resources. Under NAFTA, the Mexican government reserved to itself strategic activities, including investment and provisions in such activities, related to the exploration and exploitation of crude oil, natural gas, and basic petrochemicals. Mexico also reserved the right to provide electricity as a public service within the country. Despite these exclusions from NAFTA, energy remains a central component of U.S.-Mexico trade. The proposed USMCA does not have an energy chapter and moves some of NAFTA's energy provisions to other parts of the agreement. The USMCA adds a new chapter specifically recognizing Mexico's constitutional prohibitions on foreign investment or ownership of Mexico's energy sector. Other provisions in the USMCA, such as the investor-state dispute settlement (ISDS) provisions in regard to Mexico's energy sector, would help protect private U.S. energy projects in Mexico. In 2013, the Mexican Congress approved the Peña Nieto Administration's constitutional reform proposals for the energy sector. The reforms restructured Mexico's state-owned oil company, PEMEX, as a "state productive company," which means that despite being owned by the state, it competes in the market like any private company. It has operational autonomy, in addition to its own assets. These reforms opened Mexico's energy sector to production-sharing contracts with private and foreign investors while keeping the ownership of Mexico's hydrocarbons under state control. Following the reforms, Mexico adopted new procurement rules to increase efficiency and effectiveness in the procurement process. In the NAFTA renegotiations, U.S. industry groups called for the United States to use NAFTA's so-called ratchet mechanism in regard to Mexico's energy reforms, which would prevent the reforms from being reversed and grant protection to U.S. investors. In regard to Canada, negotiators addressed a so-called "proportionality" provision contained in the energy chapters of both CUSFTA and NAFTA, which would be dropped under the proposed USMCA. This provision provides that Canadian restrictions on energy exports cannot reduce the proportion of exports delivered to the United States. The chapter also prohibits pricing discrimination between domestic consumption and exports to the United States. Some Canadians maintain that this provision restricts the ability of Canada to make energy policy decisions and may seek to change this provision. Government Procurement The NAFTA government procurement chapter sets standards and parameters for government purchases of goods and services. Government procurement chapters typically extend national and nondiscriminatory treatment among parties and promote transparency in the tendering process. The schedule of commitments, set out in an annex to the chapter, provides opportunities for firms of each nation to bid on certain contracts for specified government agencies over a set monetary threshold on a reciprocal basis. The United States and Canada also have made certain government procurement opportunities available through similar obligations in the plurilateral WTO Government Procurement Agreement (GPA). Mexico is currently not a member of the GPA. Supporters of expanded procurement opportunities in FTAs argue that the reciprocal nature of the government procurement provisions in FTAs allows U.S. firms access to major government procurement market opportunities overseas. In addition, supporters claim open government procurement markets at home allow government entities to accept bids from partner country suppliers, potentially making more efficient use of public funds. Other stakeholders contend that public procurement should primarily benefit domestic industries. The Buy American Act of 1933, as amended, limits the ability of foreign companies to bid on government procurements of manufactured and construction products. Buy American provisions periodically are proposed for legislation such as infrastructure projects requiring government purchases of iron, steel, and manufactured products. Such restrictions are waived for products from countries with which the United States has FTAs or to countries belonging to the GPA. The Trump Administration has made it a priority to support strong Buy American and Hire American policies in government procurement and has sought to minimize government procurement commitments with other parties. The proposed USMCA government procurement chapter only applies to procurement between Mexico and the United States. It is the first U.S. FTA not to include procurement commitments for all parties. Procurement opportunities between the United States and Canada continue to be covered by the plurilateral WTO GPA. The proposed USMCA carries over much of the NAFTA government procurement chapter's coverage for U.S.-Mexico procurement. It covers largely the same entities and maintains the same thresholds as NAFTA, as adjusted annually for inflation. Core provisions promote transparency in the tendering process through online tender information and descriptions; provide online application and documentation processes without cost to the applicant; provide for publication of post-award explanations of procurement decisions; exclude government procurement from the financial services chapter; exclude textile and apparel procured by the Transportation Security Administration (TSA) under the "Kissell Amendment;" allow Mexico to set aside annual procurement contracts of $2.328 billion, annually adjusted for inflation, to Mexican suppliers; allow for coverage of build-operate-transfer (BOT) contracts (As Mexico has taken an exception to this provision, the United States will extend this coverage to Mexico when Mexico reciprocates.) The exclusion of Canada is a break from previous government procurement chapters in U.S. FTAs. As noted above, procurement opportunities in each country for U.S. and Canadian firms will continue to be covered by the GPA, which was revised and updated in 2014. The national treatment and transparency provisions are common to both the GPA and the proposed USMCA, as are the provisions modernizing the agreement to provide for online tendering. The differences primarily are with the schedules and the thresholds. In some areas, the GPA provides a more open procurement market. For example, the GPA covers 75 U.S. government entities, including 35 U.S. states, whereas NAFTA covers 56 federal entities and does not cover state procurement. The GPA has a higher monetary threshold than NAFTA for procurement of goods and services ($180,000 v. $80,317), but a lower construction procurement threshold ($6.9 million v. $10.4 million). In addition, while the proposed USMCA uses a negative list approach for services (all services included unless specifically excluded), Canada—though not the United States—maintains a positive list (only services specifically enumerated are covered) for services in the GPA. Government procurement between Canada and Mexico will continue to be covered by the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP or TPP-11). Some industry groups have criticized the exclusion of Canada and financial services from the agreement. The Automotive and Capital Goods Advisory Committee (ITAC-2) maintained that excluding countries sets a bad precedent for future FTAs, that there was a "not inconceivable" chance that the United States could withdraw from the GPA, leaving no reciprocal access to the Canadian procurement market, and that other countries with FTAs with Canada, such as the EU and the TPP-11, would have greater access to the Canadian procurement market than that provided by the GPA. The Services ITAC (ITAC-10) expressed concern that continued access to government procurement for financial services under USMCA has been called into doubt by the exclusion of that sector from the agreement. ITAC-10 noted that, under NAFTA coverage, U.S. insurance providers cover two-thirds of Mexican government employees. Investment NAFTA removed significant investment barriers, ensured basic protections for NAFTA investors, and provided a mechanism for the settlement of disputes between investors and a NAFTA country. U.S. FTAs, including NAFTA and bilateral investment treaties (BITs) maintain core investor protections reflecting U.S. law, such as obligations for governments to provide investors with nondiscriminatory treatment, a minimum standard of treatment, and protections against uncompensated expropriation, among other provisions. Since NAFTA, investment chapters in FTAs and the U.S. model BIT clarified certain provisions, including commitments to affirm more clearly a government's right to regulate for environmental, health, and other public policy objectives. The proposed USMCA provisions, in general, largely track those of NAFTA, with the exception of the elimination of some investor-state dispute settlement (ISDS) provisions in NAFTA's investment chapter (See " Investor-State Dispute Settlement (ISDS) "). During the negotiations of the proposed USMCA, the U.S. business community strongly opposed reported U.S. proposals to scale back or eliminate NAFTA ISDS provisions. The American Petroleum Institute (API), for example, stated that strong ISDS provisions protect U.S. business interests and that weakening or eliminating NAFTA's ISDS would "undermine U.S. energy security, investment protections and our global energy leadership." On the other hand, U.S. labor and civil society groups welcomed the Administration's more skeptical approach to ISDS. The 2015 TPA called for "providing meaningful procedures for resolving investment disputes," which may affect congressional consideration of an agreement. The proposed USMCA clarifies language related to national treatment and most-favored-nation treatment. In determining whether an investment is afforded national treatment in the context of expropriation, a "like circumstances" analysis can be used. Under the article, "like circumstances" depends on the totality of the circumstances including whether the relevant treatment distinguishes between investors or investments on the basis of legitimate public welfare objectives." Minimum Standard of Treatment (MST) The proposed USMCA, like NAFTA, requires parties to provide MST to investments in accordance with applicable customary international law, including fair and equitable treatment and full protection and security. It defines the applicable standard of treatment for a covered investment as the customary international law MST of aliens, and that "fair and equitable treatment" and "full protection and security" do not create additional substantive rights. However, the proposed USMCA clarifies that a party's action (or inaction) that may be inconsistent with investor expectations is not, on its own, a breach of MST, even if loss or damage to the investment follows. Performance Requirements The proposed USMCA would prohibit parties from imposing specific "performance requirements" in connection with an investment or related to the receipt of an advantage in connection with it. These include prohibitions on performance requirements such as to export a given level or percentage of goods, achieve a given level or percentage of domestic content, or transfer a particular technology. A new feature not in NAFTA includes prohibitions on performance requirements related to the purchase, use, or according of a preference to a technology of the party (or of a person of the party), and related to certain royalties and license contracts. Denial of Benefits The proposed USMCA's denial of benefits article, among other things, permits a party to deny the investment chapter's benefits to an investor that is an enterprise of another party (and to the investments of that investor) if that enterprise is owned or controlled by a person of a non-party or of the denying party or does not have "substantial business activities" in the territory of any party other than the party denying benefits. This article presumably is intended to address some stakeholder concerns that the chapter could be used to afford shell companies access to its protections. Government Right to Regulate Unlike NAFTA, the proposed USMCA contains a provision stating that, except in rare circumstances, nondiscriminatory regulatory action by a party to protect legitimate public welfare objectives (e.g., in public health, safety, and the environment) do not constitute indirect expropriation. Debate exists about what exactly are "rare circumstances." The proposed USMCA includes a statement that nothing in the Investment Chapter shall be construed to prevent a government from regulating in a manner sensitive to "health, environmental, and other regulatory objectives," as long as the action taken is otherwise consistent with the chapter. Previous U.S. FTAs, including NAFTA, limited the affirmation of a government's right to regulate to "environmental concerns." Investor-State Dispute Settlement (ISDS) ISDS has been a controversial aspect of the NAFTA investment chapter. It is a form of binding arbitration that allows private investors to pursue claims against sovereign nations for alleged violations of the investment provisions in trade agreements. It is included in NAFTA and nearly all other U.S. trade agreements that have been enacted since then, and is also a core provision in U.S. bilateral investment treaties (BITs). Generally, ISDS tribunals are composed of three lawyer-arbitrators: one chosen by the claimant investor, one by the respondent country, and one by mutual decision between the two parties. Most cases follow the rules of the World Bank's Centre for Settlement for Investor Dispute or the United Nations Commission on International Trade Law. Fifty-nine ISDS actions have been adjudicated under NAFTA, with the majority coming after 2004. Supporters argue that ISDS is important for protecting investors from discriminatory treatment and are modeled after U.S. law. They also argue that trade agreements do not prevent governments from regulating in the public interest, with clear exceptions for these actions, as well as for national security and for prudential reasons; ISDS remedies are limited to monetary penalties; and ISDS cannot force governments to change their laws or regulations. Critics counter that companies use ISDS to restrict governments' ability to regulate in the public interest (such as for environmental or health reasons), leading to "regulatory chilling" even if an ISDS outcome is not in a company's favor. The United States, to date, has never lost a claim brought against it under ISDS in a U.S. investment agreement. ISDS provisions in the proposed USMCA would substantially revise longstanding provisions in NAFTA, other U.S. FTAs, and current BITs that were actively sought by past Administrations. Significantly, ISDS between Canada and the United States is ended under the new agreement. U.S. and Mexican investors would not be able to bring arbitration claims under USMCA against Canada, nor would Canadian investors bring such claims against the United States or Mexico. With respect to Mexico and the United States, the proposed USMCA would limit ISDS to claimants regarding government contracts in natural gas, power generation, infrastructure, transportation, and telecommunications sectors; or in other sectors provided the claimant exhausts national remedies first. Canada and Mexico are maintaining ISDS among themselves through CPTPP. Under the proposed USMCA, ISDS is continued in three circumstances: Legacy claims from existing investments are eligible for arbitration under NAFTA ISDS provisions for three years from the date of NAFTA termination; Direct expropriation claims, including claims of violation of national treatment, would continue to be eligible for arbitration for United States and Mexican investors, provided that they exhaust domestic remedies first. Indirect expropriation, in which an action or series of actions by a Party has an effect equivalent to direct expropriation without formal transfer of title or outright seizure, is no longer covered; and Government contracts in certain covered sectors (oil and gas, power generation, telecommunications, transportation, and infrastructure) would be eligible for arbitration under USMCA ISDS. This use of ISDS is designed to protect investors in heavily regulated industries whose investments may be affected by the presence of state-owned enterprises in the sector. Services The United States has a highly competitive services sector and has made services trade liberalization a priority in its negotiations of FTAs, including NAFTA and the proposed USMCA. NAFTA covers core obligations in services trade in its own chapter, but because of the complexity of the issues, it also covers services trade in other related chapters, including financial services and telecommunications. NAFTA contained the first "negative list" services chapter in a U.S. trade agreement, and it is maintained in the proposed USMCA. With a negative list, all services are covered under the agreement unless specifically excluded from it, or unless NAFTA parties reserved a service to domestic providers at the time of the agreement. This approach generally is considered to be more comprehensive than the "positive list approach" used in the WTO General Agreement on Trade in Services (GATS), which requires each covered service to be identified. The negative list approach also implies that any new type of service that is developed after the agreement enters into force is automatically covered unless it is specifically excluded. Key provisions of the services chapter in NAFTA and the proposed USMCA include the following: nondiscriminatory treatment of services from partner-country providers in like circumstances, including national treatment and MFN treatment; no limitations on the number of service suppliers, the total value or volume of services provided, the number of persons employed, or the types of legal entities or joint ventures that a foreign service supplier may employ; prohibition on locality requirements that a service provider maintain a commercial presence in the country of the buyer; support of mutual recognition of professional qualifications for certification of service providers; transparency in the development and application of government regulations; and allowance for payments and transfers of capital flows "freely and without delay" that relate to the provision of services, with permissible restrictions in some cases for bankruptcy and criminal offences. Express Delivery NAFTA did not contain commitments on express delivery; however, the United States made market access of express delivery services a priority in its more recent FTA negotiations. The proposed USMCA addresses express delivery in a chapter annex. The commitments on express delivery focus, in particular, on cases where a government-owned and operated postal system provides express delivery services competing with private sector providers. The proposed USMCA stipulates that the postal system cannot use revenue generated from its monopoly power in providing postal services to cross-subsidize an express delivery service. The proposed USMCA would also require independence between express delivery regulators and providers, prohibit the requirement of providing universal postal service as a prerequisite for express delivery, and prohibit fees on express delivery providers for the purpose of funding other such providers. In addition, the proposed USMCA specified a threshold level for the customs de minimi s , a critical commitment for express delivery providers and small businesses as shipments valued below the de minimis receive expedited customs treatment and pay no duties or taxes. Temporary Entry for Business Purposes In addition to cross-border trade in services, a person supplying the service may travel to and provide certain services in the location where the service is performed. NAFTA includes commitments on temporary entry for service professionals, such as accountants, architects, legal, and medical providers, and other business personnel, in order to facilitate such trade. As temporary entry has been a controversial issue in the context of previous trade agreements, the proposed USMCA chapter on temporary entry largely replicates NAFTA's provisions. The proposed USMCA does not place new restrictions on the number of entrants or expand the list of eligible professionals, as many businesses and other service providers had hoped. Financial Services Financial services, including insurance and insurance-related services, banking and related services, as well as auxiliary services of a financial nature, are addressed in a separate USMCA chapter as in previous U.S. FTAs. The financial services chapter adapts relevant provisions from the foreign investment chapter and the cross-border trade in services chapter. The prudential exception in NAFTA and the proposed USMCA provides that nothing in the FTA would prevent a party to the agreement from imposing measures to ensure the integrity and stability of the financial system. As with NAFTA and other FTAs, the proposed USMCA distinguishes between financial services traded across borders and those sold by a provider with a commercial presence in the home country of the buyer. In the case of providers with a foreign commercial presence, the USMCA applies the negative list approach with commitments applying generally except where noted; in the case of cross-border trade, the proposed language limits coverage to a positive list of specific banking and insurance services as defined by each country. Perhaps the provision in the proposed USMCA that has drawn the most attention is the prohibition on data localization requirements. Financial services firms rely on cross-border data flows to ensure data security, create efficiencies and cost savings through economies of scale, and utilize internet cloud services that are often provided by U.S. technology firms. Localization requirements imposed by countries could require companies to have in-country servers and data centers to store data. These types of regulations can create additional costs and may serve as a deterrent for firms seeking to enter new markets or a disguised barrier to trade. Localization supporters, though, claim they increase local control, privacy protection, and data security. While NAFTA allowed the transfer of data in and out of a party in the ordinary course of business, TPP was the first proposed U.S. FTA to prohibit data localization for e-commerce applications. However, it specifically carved out financial services, based on the apprehension of regulatory authorities that such data may not be available during time of crisis. The proposed USMCA strengthened the language to protect the free flow of data and removes the carve-out provided that a Party's financial regulatory authorities have "for regulatory and supervisory purposes, immediate, direct, complete, and ongoing access" to data located in another party's territory. Canada has a one-year transition period to implement the data localization prohibition. The proposed USMCA also includes commitments on electronic payment card services. It requires that each country in the agreement allow for the supply, by persons of other parties, of electronic payment services for payment card transactions, defined by each country, generally including credit and debit cards. The provisions on card services would, however, allow for certain preconditions of access, including requiring a representative or office within country. Other new USMCA financial services provisions would exclude government procurement from financial services disciplines; modify investor-state dispute settlement (ISDS) through a bilateral annex on Mexico-United States Investment Disputes in Financial Services; allow a financial institution from one party with a presence in a second party to have access to the latter's payment and clearance system; and protect source code and algorithms and a prohibition on forced technology transfer in the digital trade section. Telecommunications The telecommunication chapter in NAFTA requires regulatory transparency; interconnection among providers; reasonable and nondiscriminatory access to network infrastructure and government-controlled resources like spectrum bandwidth for reasonable rates; and protection of the supplier's options for employing technology. The proposed USMCA telecommunications chapter adopts these provisions and would be the first U.S. FTA to cover mobile service providers. The chapter would promote cooperation on charges for international roaming services and allow regulation for mobile roaming service rates. Other provisions aim to ensure that suppliers can resell and unbundle services, and that suppliers can furnish value-added services. The telecommunications chapter does not cover television or radio broadcast or cable suppliers. It also promotes the independence of regulators. It does not contain the provision in NAFTA recognizing the importance of international standards for global compatibility and interoperability. The chapter has the effect of binding Mexico to its 2013 Constitutional reforms in telecommunications, by guaranteeing the independence of the regulatory commission, nondiscriminatory repurchase rates, and interconnection obligations. The proposed USMCA chapter does not affect Canadian restrictions on foreign ownership of telecommunications common carriers. Digital Trade NAFTA was negotiated and came into effect at the dawn of the consumer Internet age, and it did not contain provisions to address barriers and rules and disciplines on digital trade. Congress established principal negotiating objectives in TPA-2015 on digital trade in goods and services, as well as on cross-border data flows. The objectives include equal treatment of electronically delivered goods and services, as compared to physical products, protection of cross-border data flows, and prevention of data localization regulations, as well as prohibitions on duties on electronic transmissions. The proposed USMCA digital trade chapter broadly covers all industries, but explicitly excludes government procurement or provisions on data held or processed by governments of the parties. It also does not include financial services, which has separate obligations in the financial services chapter. Overall, the chapter aims to promote digital trade and the free flow of information, and to ensure an open Internet. While the majority of the obligations related to digital trade are found in the digital trade chapter, there are relevant provisions in other chapters, including financial services, IPR, and telecommunications. Key provisions of the proposed USMCA digital trade chapter ensure nondiscriminatory treatment of digital products; prohibit cross-border data flows restrictions and data localization requirements; prohibit requirements for source code or algorithm disclosure or transfer as a condition for market access, with exceptions; prohibit customs duties or other charges for electronically transmitted products; require parties to have online consumer protection and anti-spam laws, and a legal framework on privacy; promote cooperation on cybersecurity, and risk-based strategies and consensus-based standards over prescriptive regulation in combating cybersecurity risks and events; prohibit imposition of liability for harms against Internet services providers or users related to information stored, processed, transmitted, distributed, or made available by the service, with the exclusion of ISP liability for intellectual property rights (IPR) infringement; and promote publication of open government data in machine readable format for public usage. Intellectual Property Rights (IPR) NAFTA was the first FTA to contain an IPR chapter, which in turn was the model for the WTO Trade-Related Aspects of Intellectual Property Rights (TRIPs) Agreement that came into effect a year later in 1995. IPR chapters in trade agreements include provisions on patents, copyrights, trademarks, trade secrets, geographical indications (GIs), and enforcement. NAFTA predated the widespread use of the commercial Internet, and subsequent IPR chapters in U.S. FTAs contain obligations more extensive than those found in TRIPS and NAFTA. In general, they have followed the TPA negotiating objective that agreements should "reflect a standard of protection similar to that found in U.S. law." The President's NAFTA renegotiation objectives reflect TPA-2015 and the aims of U.S. negotiators in the TPP (although in some instances the negotiated TPP outcomes were less extensive). The United States achieved most of what it sought in the proposed USMCA and some results that went beyond TPP: Patents Patents protect new innovations, such as pharmaceutical products, chemical processes, business technologies, and computer software. These provisions largely track provisions in more recent U.S. FTAs, including TPP: Copyrights Copyrights provide creators of artistic and literary works with the exclusive right to authorize or prohibit others from reproducing, communicating, or distributing their works. Debate exists over balancing copyright protections while protecting the free flow of information, with digital trade raising new issues: Extension of copyright terms. Extends copyright terms from 50 years after death of the author, or 50 years from the publication (the WTO standard) to a 70-year period. Among the USMCA parties, only Canada maintains the 50-year term. Technological Protection Measures. Prohibits circumventing technological protection measures (TPMs), such as encryption, or altering or disabling rights management information (RMI). Limitation and Exceptions. Confines "limitations and exceptions to "certain special cases that do not conflict with the normal exploitation of the work….and do not unreasonably prejudice the legitimate interests of the rights holder." The proposed USMCA does not contain additional language that was in the TPP to "endeavor to achieve an appropriate balance" between users and rights holders in their copyright systems, including digitally, through exceptions for legitimate purposes (e.g., criticism, comment, news reporting, teaching, research). The "appropriate balance" language speaks to "fair use," exceptions in copyright law for media, research, and teaching. Rights-holder groups have criticized such provisions in the FTA context, while open Internet groups have sought to have the fair-use provision inserted into the proposed USMCA. " Safe harbor . " Protects internet service providers (ISPs) against liability for digital copyright infringement, provided ISPs address intermediary copyright liability through "notice and takedown" or alternative systems (e.g., "notice and notice" in Canada). Rights-holder groups sought to limit what they considered "overly broad safe harbor provisions," while technology and business groups favored retention. Trademarks Trademarks protect distinctive commercial names, marks, and symbols. The proposed USMCA includes provisions on trademark protection and enforcement and provides for the following: Sound and Scent Marks. Extends trademark protection to sounds and requires "best efforts" to register scents. (Under NAFTA, a party could require that marks be "visually perceptible" in order to be registered.) Certification and Collective M arks. Provides trademark protections to "certification marks" (e.g., such as the Underwriters' Laboratory or Good Housekeeping Seal) and adds protection for "collective marks." Certification marks are usually given for "compliance with defined standards," while collective marks are usually defined as "signs which distinguish the geographical origin, material, mode of manufacture or other common characteristics of goods or services of different enterprises using the collective mark."   Well-known Trademarks. Extends specific protections for "well-known marks" to dissimilar goods and services, whether or not registered, so long as the use of the mark would indicate a connection between the goods or services and the owner of the well-known mark and the trademark owner's interests are likely to be damaged by the use. Domain Names. Requires each party to have a system for managing its country-code top level domains (ccTLDs) and to make available online public access to a database of contact information for domain-name registrants. The proposed USMCA requires parties to make available appropriate remedies when a person registers or holds, with "bad faith intent to profit," a domain name that is identical or confusingly similar to a trademark. This provision is intended to protect against what is often referred to as "cybersquatting." Trade Secrets Trade secrets are confidential business information (e.g., formula, customer list) that are commercially valuable. The proposed USMCA parties agreed to require criminal and civil procedures and penalties for trade secret theft, prohibition on impeding licensing of trade secrets, protections for trade secrets during the litigation process, and penalties for government officials who wrongfully disclose trade secrets, including through cyber theft and by state-owned enterprises (SOEs). Geographical Indications (GIs) GIs are geographical names that protect the quality and reputation of a distinctive product from a region (e.g., Ontario ice wine, Florida oranges). In FTA negotiations, the United States has sought to limit GI protections that can improperly constrain U.S. agricultural market access in other countries by protecting terms viewed as "common." This goal may be complicated by the recent Comprehensive Economic and Trade Agreement (CETA) between Canada and the European Union, which provides additional protections for GIs in Canada. The proposed USMCA protects GIs for food products that Canada and Mexico have already accepted as a consequence of trade agreements with the European Union; provides transparency and notification requirements, and objection procedures, for new GIs; and sets forth guidelines to determine whether a term is customary in the common language. IPR Enforcement Like previous U.S. FTAs, the proposed USMCA commits parties to provide civil, criminal, and other national enforcement for IPR violations, such as copyright enforcement in the digital environment, criminal penalties for trade secret theft and camcording, and ex-officio authority to seize counterfeit trademark and pirated copyright goods at the border. The provisions of the chapter, in turn, are enforceable through the state-to-state dispute settlement chapter. Cultural Exemption Since the U.S.-Canada FTA, Canada has taken an exclusion on cultural industries from national treatment and MFN treatment. This exclusion reflects the Canadian government's attempts to promote a distinctly Canadian culture and the fear that, without its support, American culture would come to dominate Canada. Thus, the government imposes Canadian content ("Cancon") requirements on radio and television broadcasts, cable and satellite diffusion, the production of audio-visual material, film or video recording, and on various print media. The U.S. entertainment industry, in particular, has long sought to have this provision eliminated. In the end, Canada prevailed and the exclusion remains, although a provision was inserted allowing the United States and Mexico to take reciprocal action. State-Owned Enterprises (SOEs) NAFTA includes provisions on SOEs, but they are limited in scope. They allow parties to maintain or establish SOEs, while requiring that any enterprise owned or controlled by a federal, provincial, or state government must act in a manner consistent with that country's NAFTA obligations when exercising regulatory, administrative, or other government authority, such as the granting of licenses. NAFTA committed parties to ensure that any SOEs accord nondiscriminatory treatment in the sale of goods or services to another party's investment in that territory. The proposed USMCA includes a new chapter on SOEs, requiring SOEs to act in accordance with commercial considerations and to provide nondiscriminatory treatment to other USCMA country firms. The provisions update NAFTA by ensuring that SOEs compete on a commercial basis, and that the advantages SOEs receive from their governments, such as subsidies, do not have an adverse impact on U.S. workers and businesses. The renegotiations addressed potential commercial disadvantages to private sector firms from state-supported competitors receiving preferential treatment. U.S. government and business stakeholders raised concerns in the TPP negotiations over competition with companies linked to the state through ownership or influence. As a result, they supported new specific FTA disciplines, such as those in the proposed USMCA, to address such competition. Some legal analysts contend that the proposed USMCA limits the definition of expropriation so as to protect against "direct" expropriation only, and that it does not protect interests against indirect expropriation. Indirect expropriation occurs when a state's regulatory actions could take effective control of—or interfere with—an investment. Labor NAFTA marked the first time that worker rights provisions were associated with an FTA by including labor provisions in a side agreement, the North American Agreement on Labor Cooperation (NAALC), which required all parties to enforce their own labor laws, as well as provisions to encourage greater cooperation. The side agreement includes a consultation mechanism for addressing labor disputes and a special labor dispute settlement procedure. The enforcement mechanism applies mainly to a party's failure to enforce its own labor laws. Under provisions of the 2002 TPA, seven subsequent FTAs included a similar provision within the main text of the agreement. The rationale for including labor provisions in U.S. FTAs is to help ensure that countries not derogate from labor laws to attract trade and investment and that liberalized trade does not give a competitive advantage to developing countries due to a lack of adequate standards. Worker rights provisions in U.S. trade agreements have evolved significantly since NAFTA. More recent agreements, including FTAs with Colombia, Panama, Peru, and South Korea, incorporated internationally recognized labor principles requiring parties to adopt and maintain in their statutes and regulations core labor principles of the International Labor Organization (ILO) (ILO Declaration). They also required countries to enforce their labor laws and not to waive or derogate from those laws to attract trade and investment. These provisions are enforceable under the same dispute settlement procedures that apply to other provisions of the FTA, and violations are subject to the same potential trade sanctions. In the NAFTA renegotiations, the United States sought to strengthen NAFTA provisions related to the protection of worker rights. The proposed USMCA revises these provisions and provides the same dispute mechanism as other parts of the agreement. USMCA's provisions on labor would require parties to not only enforce their own laws, but also to adopt and maintain specific laws related to the ILO Declaration. It would require parties to adopt and maintain in statutes and regulation, and practices, worker rights as stated in the ILO Declaration of Rights at Work, in addition to acceptable conditions of work with respect to minimum wages, hours of work, and occupational safety and health; not waive or otherwise derogate from its statues or regulations; not fail to effectively enforce labor laws through a sustained or recurring course of action or inaction in a manner affecting trade or investment between parties; promote compliance with labor laws through appropriate government action such as appointing and training inspectors or monitoring compliance and investigating suspected violations. The provisions include language stating that each party retains the right to exercise reasonable enforcement discretion and to make bona fide decisions with regard to the allocation of enforcement resources provided that the exercise of that discretion is not inconsistent with the labor obligations. The agreement also states that nothing in the labor chapter shall be construed to empower a party's authorities to undertake labor law enforcement activities in the territory of another party. Additionally, the USMCA would commit Mexico to enact specific legislative action to establish effective recognition of the right to collective bargaining; establish and maintain independent and impartial bodies to register union activities and collective bargaining agreements; establish independent Labor Courts for the adjudication of labor disputes; and enact other legislation to protect worker rights. Concerns over NAFTA labor provisions are often discussed in the context of Mexico's record on worker rights. While Mexico has enacted labor laws and undertaken constitutional reforms, the challenge has been to enforce those laws. Mexican labor reform is a priority for Mexico's new President Andrés Manuel López Obrador. In the proposed TPP, the United States signed separate labor consistency plans with Vietnam, Malaysia, and Brunei, which included commitments for specific legal reforms and other measures. Some stakeholders advocated for a similar plan for Mexico in conjunction with a revised NAFTA, although the United States was unable to negotiate one with Mexico in TPP. However, in the USMCA, Mexico agreed to develop and implement reforms to strengthen its labor laws to protect collective bargaining and to reform its system for administering labor justice. Labor reform measures to increase protection of worker rights have been introduced in the Mexican Senate. Mexican Trade Undersecretary Maria Luz de la Mora stated that legislation enacting Mexican labor reforms is expected to be passed by the Mexican Senate before the end of the legislative session, in April 2019. Environment NAFTA was the first U.S. FTA to include a side agreement related to the environment. As with the chapter on worker rights, environment provisions in U.S. FTAs have evolved significantly over time. The NAFTA side agreement—the North American Agreement on Environmental Cooperation (NAAEC)—requires all parties to enforce their own environmental laws, and contains an enforcement mechanism applicable to a party's failure to enforce these laws. NAAEC includes a consultation mechanism for addressing disputes with a special dispute settlement procedure. Seven subsequent FTAs, negotiated under the 2002 TPA, included a similar environmental chapter within the main text of the agreement, including a country's obligations to enforce their own laws. More recent U.S. FTAs added an affirmative obligation for FTA partner countries to adhere to multilateral environmental agreements (MEAs) and allowed for environmental disputes under the FTAs to access the main dispute settlement provisions of the agreement. These obligations generally were reflected in the TPA-2015 negotiating objectives. The proposed USMCA environment chapter obligates each party to not to fail to effectively enforce its environmental laws through a sustained or recurring course of action or inaction to attract trade and investment; not to waive or derogate from such laws in a manner that weakens or reduces the protections afforded in those law to encourage trade or investment; and ensure that its environmental laws and policies provide for and encourage high levels of protection; and strive to improve its levels of environmental protection. The agreement also would require parties to adopt and maintain statutes and regulations consistent with multilateral environmental agreements to which each is a party; recognize the sovereign right of each party to establish its own levels of domestic environmental protection, its own regulatory priorities, and to adopt or modify its priorities accordingly; acknowledge a party's right to exercise discretion with regard to enforcement resources; provide for the resolution of disputes; and provide for a mechanism on implementation of the agreement. The proposed USMCA directly or implicitly addresses obligations under major Multilateral Environmental Agreements (MEAs). It also includes obligations and encouragements to protect the ozone layer, protect the marine environment from ship pollution, encourage conservation and sustainable use of biodiversity, and encourage sustainable fisheries management. Dispute Settlement NAFTA and other U.S. FTAs, as well as the WTO, provide for the resolution of disputes arising under the agreement. These provisions are in addition to procedures with regard to investor-state dispute resolution (see " Investor-State Dispute Settlement "). The proposed USMCA dispute settlement provisions are designed to resolve disputes in a cooperative manner. A party first seeks redress of a grievance through a request for consultation with the other party. These steps include initial consultations between the parties; good offices, conciliation, or mediation; and (if no resolution); establishment of a dispute settlement panel. Panels are composed of five members, of whom each side appoints two. A chair is appointed by mutual consent of the parties. Failing that, the disputing party selected by lot makes the decision. After the panel renders its decision, the unsuccessful party is expected to remedy the measure or practice under dispute. If it does not, the aggrieved party may seek compensation, suspension of benefits, or fines. In cases in which a dispute is common to both WTO and FTA rules, a party can choose the forum in which to bring the dispute (i.e., at the WTO or before a NAFTA panel), but cannot bring the dispute to multiple fora. Three state-to-state dispute resolution panels under NAFTA were completed between 1994 and 2001 A fourth case (Restrictions on Sugar from Mexico) was never considered because the United States was able to block a panel chair—and, consequently, a panel—from forming. This action exposed an issue in the panel selection process, which has not been used since. Under the panel selection process, the parties shall select and maintain a roster of 30 panelists, chosen by consensus for a three-year term with the possibility of reappointment. The issue arises when the roster is not constituted or maintained. If a roster has lapsed, as may have been the case in the sugar dispute, a party can challenge any proposed panelist and potentially block any panel from being established. As noted above, a party seeking redress of an issue common to the USMCA and WTO can use either venue. However, the proposed USMCA contains several provisions that are not in the WTO agreements at all, or are treated less extensively. In this case, a functioning USMCA dispute settlement system could be the only arbiter of such disputes. This issue was not resolved in the USMCA. In addition, some chapters or sections are not subject to dispute settlement including The Good Regulatory Practices chapter; The Competition Policy chapter; The Competitiveness chapter; The Small and Medium-Sized Enterprise chapter; The Transparency and Procedural Fairness for Pharmaceutical Products and Medical Devices section of the Publications and Administration chapters; The Macroeconomic Policies and Exchange Rate Matters Chapter other than transparency and reporting obligations that have not been resolved through consultations. Binational Review Panels for Trade Remedies Unlike other U.S. FTAs, NAFTA (and the proposed USMCA) contains a binational dispute settlement mechanism (NAFTA Chapter 19, USMCA Chapter 10). It provides disciplines for settling disputes arising from a NAFTA party's statutory amendment of its antidumping (AD) or countervailing duty (CVD) laws, or from a NAFTA party's AD or CVD final determination on the goods of an exporting NAFTA party. The dispute settlement system in NAFTA Chapter 19 originated during the Canada-United States Free Trade Agreement (CUSFTA) negotiations that culminated in 1988, and it was retained under NAFTA. It was a priority negotiating issue for the Canadian government. The binational panel mechanism provides for a review of NAFTA parties' final administrative determinations in AD/CVD investigations in lieu of judicial review in domestic courts. In cases in which an aggrieved NAFTA country maintains that a NAFTA partner did not preserve "fair and predictable disciplines on unfair trade practices," or asserts that a NAFTA partner's amendment to its AD or CVD law is inconsistent with the WTO Antidumping or Subsidies Agreements, the aggrieved NAFTA partner may request a judgment from a binational panel rather than through the legal system of the defending party. The Trump Administration sought to eliminate the Chapter 19 dispute settlement mechanism during the USMCA negotiations. By contrast, Canada and Mexico expressed support for retaining the mechanism, with Canada drawing a "red line" firmly opposing its elimination. At the end of the negotiations, the three countries decided to retain the system. NAFTA Chapter 19 is effectively replicated in the Trade Remedies Chapter of the USMCA. Currency Manipulation NAFTA does not have provisions related to currency manipulation. For the first time in a U.S. trade agreement, the proposed USMCA includes obligations to guard against currency manipulation. The parties agreed to "achieve and maintain a market-determined exchange rate regime," and to "refrain from competitive devaluation, including through intervention in the foreign exchange market." However, only transparency and reporting requirements are subject to dispute settlement procedures. The June 2015 TPA included, for the first time, a principal trade negotiating objective addressing currency manipulation. While neither Canada nor Mexico have been accused of currency manipulation in the past, the inclusion of a currency manipulation chapter could serve as a precedent for including such provisions in future FTAs. Over the past decade, some Members of Congress and policy experts have been concerned that foreign countries may use exchange rate policies to gain an unfair trade advantage against the United States, or are "manipulating" their currencies. Specifically, the concern is that other countries may purposefully undervalue their currencies to boost exports, making it harder for other countries to compete in global markets. They argue that U.S. companies and jobs have been adversely affected by the exchange rate policies adopted by China, Japan, and other countries "manipulating" their currencies. Some economists are skeptical about currency manipulation and whether it is a significant problem. They raise questions about whether government policies have long-term effects on exchange rates, whether it is possible to differentiate between "manipulation" and legitimate central bank activities, and the net effect of alleged currency manipulation on the U.S. economy. Regulatory Practices Nontariff barriers, including discriminatory and unpredictable regulatory processes, can be an impediment to market access for U.S. goods and services exports. NAFTA includes broad provisions on regulatory practices in several chapters, including the Customs Procedures, Financial Services, and Energy chapters, but does not have a specific chapter on regulatory practices. NAFTA may have influenced the United States, Canada, and Mexico to increase cooperation on economic and security issues through various endeavors such as the North American Leaders' Summits, the North American Trusted Traveler Program, the U.S.-Canada Beyond the Border Action Plan, and the U.S.-Mexico High Level Regulatory Cooperation Council. The proposed USMCA has a new, separate chapter on regulatory practices in which the parties agreed upon commitments to promote regulatory quality through greater transparency, objective analysis, accountability, and predictability to facilitate international trade, investment, and economic growth. The chapter states that the application of good regulatory practices can support the development of compatible regulatory approaches among the parties, and reduce or eliminate unnecessarily burdensome, duplicative, or divergent regulatory requirements. Such commitments could complement ongoing efforts and include increased transparency in the development and implementation of proposed regulations, opportunities for public comment in the development of regulations, and/or the use of impact assessments and other methods to ensure regulations are evidence-based and current. Trucking The implementation of NAFTA trucking provisions was a major trade issue between the United States and Mexico for many years because the United States delayed its trucking commitments under NAFTA. NAFTA provided Mexican commercial trucks full access to four U.S.-border states by 1995 and full access throughout the United States by 2000. The two countries cooperated to resolve the issue over time and engaged in numerous talks regarding safety and operational issues. By 2015, the trucking issue had been resolved. Under NAFTA, Mexican commercial trucks have authority under the agreement to operate in the United States, but they cannot operate between two points within the country. This means that they can haul cross-border loads but cannot haul loads that originate and end in the United States. The proposed USMCA would cap the number of Mexican-domiciled carriers that can receive U.S. operating authority and would continue the prohibition on Mexican-based carriers hauling freight between two points within the United States. Mexican carriers that already have authority under NAFTA to operate in the United States would continue to be allowed to operate in the United States. Anticorruption The United States has been influential in including commitments to combat corruption in international trade into its FTAs by incorporating chapters on transparency and anticorruption into the agreements. Although it has been part of U.S. policy for many years, the use of these types of provisions has evolved over time with anticorruption commitments becoming progressively stronger. NAFTA does not include a separate chapter related to transparency or anticorruption, but it does include several provisions that were considered groundbreaking at the time, including binding rules and disciplines on and removal of barriers to foreign investment. It was not until the proposed TPP that anticorruption provisions were specifically included as a U.S. FTA chapter. Earlier agreements such as the U.S.-Chile FTA included anticorruption provisions related to government procurement, but none in the transparency chapter. The Dominican Republic-Central America FTA (CAFTA-DR) was negotiated several years later and contains anticorruption provisions in the transparency chapters that apply to the whole agreement. In the NAFTA renegotiations, both the United States and Mexico included anticorruption provisions in their negotiating objectives. The proposed USMCA has a new chapter on anti-corruption, similar to that of the proposed TPP, in which the parties affirm their resolve to prevent and combat bribery and corruption in international trade and investment. The scope of the chapter is limited to measures to prevent and combat bribery and corruption in regard to any matter covered by the agreement. "Sunset" Provision in Review and Term Extension In the Final Provisions chapter of the proposed USMCA, parties commit to a review of the agreement on the sixth anniversary of the agreement's entry into force. If all parties agree to continue the agreement after six years, it shall remain in force for another 16 years. If a party does not confirm its wish to extend the term of the agreement for another 16-year period, parties shall conduct a joint review of the agreement every year. The agreement only specifies that a "party" would review the agreement; it does not state whether it would be the President or Congress that reviews the agreement. This may be of interest to Congress as it considers the USMCA implementing legislation and what its role would be in reviewing the USMCA. Some industry observers contend that the sunset provision may have a detrimental effect on investor confidence and affect long-term investments. Others believe that the provision will not have an effect as parties can choose to review an agreement at any time. Issues for Congress There are a number of significant issues for Congress in the consideration of the proposed USMCA. Key issues Congress may examine include modernized provisions of the agreement, the role of the Congress and the President in the NAFTA renegotiation and approval process, whether the agreement meets TPA objectives, the possible economic impact, especially in the auto industry, and how the agreement may impact U.S. relations with Canada and Mexico, two of the United States' largest trading partners. Some lawmakers believe that the renegotiations resulted in a positive outcome that would enhance relations with NAFTA partners through a modernized agreement. Other lawmakers have expressed concerns about specific aspects of the agreement, including labor, with a goal of revision. What follows are a few selected areas of potential congressional interest. Roles of Congress and the President in NAFTA Renegotiations A possible issue for Congress relates to the roles of Congress and the President in the modernization of the agreement or possible withdrawal. Implementing legislation for the USMCA agreement may be considered under Trade Promotion Authority (TPA). Under TPA, if the President "makes progress in meeting" TPA's principal trade negotiating objectives and meets various consultative, notifications, and reporting requirements before, during, and after the conclusion of negotiations, Congress shall provide expedited procedures for automatic introduction of the implementing bill submitted by the President, a timetable for guaranteed committee consideration and discharge, floor consideration, prohibition of amendments, and limitation on debate. The process from introduction must be completed within 90 days, but it has often been completed much more quickly. As TPA was in effect when the USMCA was signed on November 30, 2018, it is eligible for TPA consideration. There is no deadline for presidential submission or congressional consideration of implementing legislation. TPA's requirement that the President fulfill consultation, notification and reporting obligations helps preserve the congressional role in trade agreements by giving Congress the opportunity to influence the agreement before it is finalized. Congress may be interested in the extent to which the President advances U.S. negotiating objectives in TPA as approved by Congress in 2015, given several notable breaks in USMCA with the contents of previous U.S. FTAs. Should Congress determine that the President has failed to meet these and other requirements, it may decide that the implementing bill is not eligible for consideration under TPA rules. It would implement this decision by adopting a joint "procedural disapproval" resolution in both houses of Congress or a Consultation and Compliance Resolution in either house. In addition, expedited procedures under TPA are considered rules of Congress and can be changed at any time. Given that, either House can deny expedited treatment to implementing legislation. In the House, the Speaker may direct the Rules Committee to enact a rule stripping expedited treatment from the implementing legislation. In the Senate, changing a rule would require unanimous consent, or a supermajority to waive it. President Trump has indicated that he would consider withdrawing from NAFTA as a means of pressuring Congress to support timely action on implementing legislation. It is not clear, though, whether the President has the legal authority for withdrawing from an agreement without the consent of Congress. If President Trump attempts to withdraw from the agreement, it is possible that Congress would attempt to challenge or delay the effort. The question of who has the authority to terminate NAFTA, a congressional-executive agreement, has been debated by lawmakers, legal experts, and others. Economic and Other Considerations Congress may examine the economic effects of a USMCA and the broader strategic implications of possible withdrawal from NAFTA absent action on legislation to implement the USCMA. President Trump has repeatedly threatened to withdraw from NAFTA. Some analysts maintain that these statements are not to be taken lightly because the potential cost of such actions could be very significant for the U.S. economy. The United States shares strong economic ties with Mexico and Canada. Any disruption to the economic relationship could have adverse effects on investment, employment, productivity, and North American competitiveness. In addition, Mexico and Canada could consider imposing retaliatory tariffs on U.S. exports if the United States were to withdraw, while at the same time maintaining existing and pursuing new FTAs without the United States. The full effects of the proposed USMCA on North American trade relations are not be expected to be significant because nearly all U.S. trade with Canada and Mexico that meets rules of origin requirements is now conducted duty and barrier free under NAFTA. The proposed USMCA would maintain NAFTA's tariff and non-tariff barrier eliminations. If the USMCA is approved by Congress and it enters into force, many economists and other observers believe that it is not expected to have a measurable effect on U.S. trade and investment with other NAFTA parties, jobs, wages, or overall economic growth, and that it would probably not have a measurable effect on the U.S. trade deficit. The U.S. International Trade Commission (ITC) is conducting an investigation into the likely economic impacts of the proposed USMCA, a required element of the Trade Promotion Authority (TPA) process. TPA 2015 states that the ITC must issue its report within 105 days of the President's signing of a trade deal. The ITC report, due by March 15, 2019, has been delayed because of the partial government shutdown, which lasted 35 days. It is now expected to be released by April 20, 2019. One exception to this overall economic evaluation may be the motor vehicle industry, which may experience more significant effects than other industries because of the changes in rules of origin in the USMCA and because of the high percentage of motor vehicle goods that enter duty-free under NAFTA. The highest share of U.S. trade with Mexico is in the motor vehicle industry and it is also the industry with the highest percentage of duty-free treatment under NAFTA because of high North American content. In 2017, leading U.S. merchandise imports from NAFTA partners were motor vehicles ($102.1 billion or 17% of total imports from Canada and Mexico), oil and gas ($68.8 billion or 11% of imports), and motor vehicle parts ($58.7 billion or 10% of imports). About 98.6% of U.S. motor vehicle imports and about 77.5% of motor vehicle parts imports from Canada and Mexico entered the United States duty-free under NAFTA. In comparison, only 12.6% of oil and gas imports and 49.3% of total U.S. imports from Canada and Mexico in 2017 received duty-free benefits under NAFTA as shown in Figure 7 . Some analysts believe that the updated auto rules of origin requirements contained in the USMCA could raise compliance and production costs and could lead to higher prices, which could possibly negatively affect U.S. vehicle sales. The net impact, however, may be more limited depending on the capacity of U.S. automakers and parts manufacturers to shift suppliers and production locations and the ability to absorb higher costs, according to some observers. Some observers contend that manufacturers with a stronger presence in Mexico, such as General Motors and Fiat Chrysler Automobiles, may be more impacted. Other observers and stakeholders are continuing to review the provisions in the new agreement and what effect, if any, these changes would have on U.S. economic relations with Canada and Mexico. To some analysts, provisions in areas such as customs regulation, digital trade, sanitary and phytosanitary measures, and enforcement on labor and the environment are considered an improvement over similar provisions in NAFTA. Other proposed changes in the agreement, such as largely heightened IPR protections and generally less extensive investment provisions, have both supporters and detractors. For example, there is some concern that the ISDS provisions in the USMCA effectively may only apply to certain U.S. contracts in Mexico's energy sector and possibly leave out other sectors such as services. Under USMCA, investors in many sectors would be limited to filing ISDS claims for breaches of national treatment, most-favored nation treatment, or expropriation, but not indirect expropriation. Mexico's New President On July 1, 2018, Mexico held presidential and legislative elections in which Andrés Manuel López Obrador and his leftist MORENA party won by wide margins. President López Obrador entered into office on December 1, 2018. He won the presidency with 53.2% of the vote, more than 30 percentage points ahead of his nearest rival. MORENA's coalition also won majorities in both chambers of Mexico's Congress. Although President López Obrador voiced skepticism about NAFTA in the past, he has stated on several occasions that he supports the agreement, arguing that it should be improved to benefit Mexico rather than being terminated. Mexico's chief NAFTA negotiator under López Obrador's Administration, Jesús Seade, stated that the proposed USMCA is a "satisfactory result" for Mexico and that it will create an incentive for increased investment linkages and deeper economic integration. Canada and Mexico's Participation in the CPTPP and other FTAs An issue for congressional consideration is Mexico and Canada's ongoing trade initiatives and how they may affect the United States. In addition to numerous FTAs with other countries, Canada and Mexico are signatories to the TPP, now known as CPTPP or TPP-11. Following the withdrawal of the Trump Administration from the then-proposed TPP in January 2017, the 11 parties agreed on a final deal for the CPTPP on January 23, 2018; it was signed on March 8, 2018. Canada and Mexico have ratified the agreement. With six of the 11 countries having ratified it, the CPTPP came into effect on December 30, 2018. It provides Canada and Mexico preferential market access in numerous industries to several lucrative Asian markets, especially Japan, and may affect current trade and investment trends with the United States. According to a June 2017 study, Canada and Mexico could have potential gains from CPTPP, mainly because they would have increased access to other markets, especially Japan, without having to compete with U.S. exports. The study projects that Canada's exports to CPTPP countries, without the United States, would increase by 4.7% by 2035 and that Mexico's would increase by 3.1%. The study states that Canada's agricultural exports, particularly beef, would benefit from access to the Japanese market. Canada's FTAs In addition to NAFTA, and the CPTPP, Canada has also negotiated other FTAs. Canada's Comprehensive Economic and Trade Agreement (CETA) with the European Union provisionally came into force on September 21, 2017. This agreement provides preferential market access for goods and certain services (including agriculture) among other provisions such as those on geographical indications (GIs)—geographical names that protect the quality and reputation of a distinctive product originating in a certain region. For instance, Canada agreed to recognize GIs on certain cheeses generally viewed as common food names in the United States, some of which survived as recognized GIs under the USMCA. Canada likely will begin talks with the United Kingdom for an FTA, if the terms of Brexit allow it to negotiate FTAs with other countries. Canada also has a free trade agreement in force with South Korea and has conducted exploratory discussions on launching FTA negotiations with China. In addition, Canada has FTAs with several countries in Central and South America, and is an observer to the Pacific Alliance. Mexico's FTAs Some observers contend that Mexico's trade policy is the most open in the world. It has a total of 11 free trade agreements involving 46 countries, including it the 11-member CPTPP. These also include agreements with most countries in the Western Hemisphere, as well as agreements with Israel, Japan, and the EU. Mexico and the EU renegotiated a new FTA that is expected to open up the Mexican market to more EU exporters and investors. The two parties announced an agreement in principle on April 21, 2018. The new agreement, which must be ratified by both parties before entering into force, includes commitments to cooperate on issues such as climate change, human rights, combating poverty, or researching new medicines. Mexico is also a party to the Pacific Alliance, a regional trade integration initiative formed by Chile, Colombia, Mexico, and Peru. The trade bloc's main purpose is for members to forge stronger economic ties and integration with the Asia-Pacific region. In addition to reducing trade barriers, the Alliance has sought to integrate in areas including financial markets and the free movement of people. In 2018, the Pacific Alliance admitted Singapore, Australia, New Zealand, and Canada as associate members as a first step to deepening the relationship. Potential Impact of U.S. Withdrawal from NAFTA President Trump stated to reporters on December 1, 2018, that he intended to notify Canada and Mexico of his intention to withdraw from NAFTA in six months. Article 2205 of NAFTA states that a party may withdraw from the agreement six months after it provides written notice of withdrawal to the other parties. If a party withdraws, the agreement shall remain in force for the remaining parties. Private sector groups are urging the President to remain within NAFTA until the proposed USMCA enters into force. They claim that withdrawing from NAFTA would have "devastating" negative consequences. Congress may consider the ramifications of withdrawing from NAFTA and how it may affect the U.S. economy and foreign relations with Mexico. It may monitor and consider the congressional role in a possible withdrawal. Numerous think tanks and economists have written about the possible economic consequences of U.S. withdrawal from NAFTA. For example An analysis by the Peterson Institute for International Economics (PIIE) finds that a withdrawal from NAFTA would cost the United States 187,000 jobs that rely on exports to Mexico and Canada. These job losses would occur over a period of one to three years. By comparison, according to the study, between 2013 and 2015, 7.4 million U.S. workers were displaced or lost their jobs involuntarily due to companies shutting down or moving elsewhere globally. The study notes that the most affected states would be Arkansas, Kentucky, Mississippi, and Indiana. The most affected sectors would be autos, agriculture, and non-auto manufacturing. A 2017 study by ImpactEcon, an economic analysis consulting company, estimates that if NAFTA were to terminate, real GDP, trade, investment, and employment in all three NAFTA countries would decline. The study estimates U.S. job losses of between 256,000 and 1.2 million in three to five years, with about 95,000 forced to relocate to other sectors. Canadian and Mexican employment of low skilled workers would decline by 125,000 and 951,000, respectively. The authors of the study estimate a decline in U.S. GDP of 0.64% (over $100 billion). The Coalition of Services Industries (CSI) argues that NAFTA continues to be a remarkable success for U.S. services providers, creating a vast market for U.S. services providers, such as telecommunications and financial services. CSI estimates that if NAFTA is terminated, the United States risks losing $88 billion in annual U.S. services exports to Canada and Mexico, which support 587,000 high-paying U.S. jobs. Some trade policy experts contend that NAFTA has been a bad deal for U.S. workers and cost the United States nearly 700,000 jobs as of 2010. They contend that renegotiating NAFTA offers new opportunities to update the agreement with a new labor template and updated provisions to raise labor standards and help protect U.S. workers. The Economic Policy Institute (EPI) recommends that the United States seek stronger labor standards and enforcement in the NAFTA renegotiations. USMCA's modernized labor provisions may reflect some of the EPI recommended changes of including ILO conventions concerning the freedom of association, collective bargaining, discrimination, forced labor, child labor, and workplace safety and health. Canada and Mexico likely would maintain NAFTA between themselves if the United States were to withdraw. U.S.-Canada trade could be governed either by CUSFTA, which entered into force in 1989 (suspended since the advent of NAFTA), or by the baseline commitments common to both countries as members of the World Trade Organization. If CUSFTA remains in effect, the United States and Canada would continue to exchange goods duty free and would continue to adhere to many provisions of the agreement common to both CUSFTA and NAFTA. Some commitments not included in the CUSFTA, such as intellectual property rights, would continue as baseline obligations in the WTO. However, it is unclear whether CUSFTA would remain in effect, as its continuance would require the assent of both parties. Tariffs In the unlikely event of a U.S. withdrawal from NAFTA, the United States would presumably would return WTO most-favored-nation tariffs, the rate it applies to all countries with which the United State does not have an FTA. The United States and Canada maintain relatively low simple average MFN rates, at 3.5% and 4.1%, respectively. Mexico has a higher 7.0% simple average rate. However, all countries have higher "peak" tariffs on labor intensive goods, such as apparel and footwear, and some agriculture products. Of the three NAFTA parties, the United States has the lowest MFN tariffs in most categories. Applied tariffs are higher in Mexico than the United States or Canada, although Canada has double-digit applied agricultural tariffs. The United States and Canada have relatively similar bound and applied tariffs at the WTO. Mexico's bound tariff rates are very high and far exceed U.S. bound rates. Without NAFTA, there is a risk that tariffs on U.S. exports to Mexico could reach up to 36.2% (see Table 2 ). In agriculture, U.S. farmers would face double-digit applied and trade-weighted rates in both Mexico and Canada. Mexico and Canada likely would maintain duty-free treatment between themselves through maintenance of a bilateral NAFTA, or through commitments made in conjunction with the CPTPP (TPP-11) If the United States withdrew from NAFTA, certain commitments would be affected, such as the following: Services Access . The three NAFTA countries committed themselves to allowing market access and nondiscriminatory treatment in certain service sectors. If the United States withdrew from NAFTA, it would still be obligated to adhere to the commitments it made for the WTO's General Agreement on Trade in Services. While these commitments were made contemporaneously with NAFTA, given that the NAFTA schedule operated under a negative list basis—all sectors included unless specifically excluded—and GATS on a positive list—specific sectors are listed for inclusion—NAFTA is likely more extensive. Government Procurement . As noted previously in this report, the NAFTA government procurement chapter sets standards and parameters for government purchases of goods and services. The schedule annexes set forth opportunities for firms of each party to bid on certain contracts for specified government agencies. The WTO Government Procurement Agreement (GPA) also imposes disciplines and obligations on government procurement. Unlike most other WTO agreements, membership in the GPA is optional. Canada and the United States would still have reciprocal obligations as members of the GPA. In fact, since the GPA was renegotiated in 2014, commitments between the two are greater than under NAFTA. However, Mexico is not a member of the GPA, and U.S. withdrawal from NAFTA would allow Mexico to adopt any domestic content or buy local provisions. (Since U.S. firms are more competitive in obtaining Mexican contracts than Mexican firms in the United States, this may adversely affect some U.S. domestic firms.) Investment . Unlike many chapters in NAFTA which have analogous counterparts in the WTO Agreements, the investment chapter in the WTO does not provide the level of protection for investors as does NAFTA, subsequent U.S. trade agreements, or bilateral investment treaties. If the United States withdrew from NAFTA, U.S. investors would lose protections in Canada and Mexico. Countries would have more leeway to block individual investments. U.S. investors would not have recourse to the investor-state dispute settlement (ISDS) mechanism, but would need to deal with claims of expropriation through domestic courts, or recourse to government-to-government consultation. Canada and Mexico likely would maintain investor protection between them through the prospective CPTPP or through maintenance of NAFTA provisions. Outlook The timeline for congressional consideration of the proposed USMCA remains unclear in part because of the TPA timeline and also because of issues voiced by Congress related to various provisions of the agreement and other ongoing trade issues with Canada and Mexico. The agreement would have to be approved by Congress and ratified by Mexico and Canada before entering into force. On August 31, 2018, pursuant to TPA, President Trump provided Congress a 90-day notification of his intent to sign an FTA with Canada and Mexico. On January 29, 2019, as required by TPA 60 days after an agreement is signed, U.S. Trade Representative Robert Lighthizer submitted to Congress changes to existing U.S. laws that will be needed to bring the United States into compliance with the proposed USMCA. A report by the ITC on the possible economic impact of TPA is not expected to be completed until April 20, 2019 due to the 35-day government shut down. The report has been cited by some Members of Congress as key to their decisions on whether to support the agreement. Some policymakers have stated that the path forward to passage of the USMCA by Congress is uncertain partially because the three countries have yet to resolve disputes over U.S. steel and aluminum tariffs. The United States, Canada, and Mexico are currently in a trade dispute over U.S. actions to impose tariffs on such imports due to national security concerns as discussed earlier in the report, The conclusion of the proposed USMCA did not resolve the Section 232 tariff dispute. The U.S. business community, industry groups, some congressional leaders, and Mexican government officials have publicly stated that the tariff issues must be resolved before the USMCA could enter into force. Questions surrounding passage of Mexico's proposed labor reforms could be a key issue for Congress as lawmakers consider the proposed USMCA. Under Annex 23-A of USMCA's labor chapter, Mexico has commitments to adopt and maintain measures necessary for the effective recognition of the right to bargain collectively, including the establishment of an independent Labor Court for the adjudication of labor disputes. The reforms were expected to be passed into law before January 1, 2019 in order to avoid a delay of the USMCA's entry into force. Mexico has not yet passed the reforms. Mexican officials have stated that passing labor reforms are a priority for President López Obrador and the Mexican Congress and that the legislation could be passed as early as February 2019. Other issues are also surfacing as major areas of debate among Members and between the Executive Branch and Congress, as discussed above.

The 116th Congress faces policy issues related to the Trump Administration's renegotiation of the North American Free Trade Agreement (NAFTA) and the proposed United States-Mexico-Canada Agreement (USMCA). On May 18, 2017, the Trump Administration sent a 90-day notification to Congress of its intent to begin talks with Canada and Mexico to renegotiate and modernize NAFTA, as required by the 2015 Trade Promotion Authority (TPA). Talks officially began on August 16, 2017. Negotiations were concluded on September 30, 2018. The proposed USMCA was signed on November 30, 2018. The agreement must be approved by Congress and ratified by the governments of Mexico and Canada before it can enter into force. The first NAFTA negotiations were launched in 1992 under President George H.W. Bush and continued under President William J. Clinton, who signed the implementing legislation on December 8, 1991 (P.L. 103-182). NAFTA entered into force on January 1, 1994. It is particularly significant because it was the most comprehensive free trade agreement (FTA) negotiated at the time, contained several groundbreaking provisions, and was the first of a new generation of U.S. FTAs later negotiated. Congress played a major role during its consideration and, after contentious and comprehensive debate, ultimately approved legislation to implement the agreement. NAFTA established trade liberalization commitments and set new rules and disciplines for future FTAs on issues important to the United States, including intellectual property rights protection, services trade, dispute settlement procedures, investment, labor, and environment. NAFTA's market-opening provisions gradually eliminated nearly all tariff and most nontariff barriers on merchandise trade. At the time of NAFTA negotiations, average applied U.S. duties on imports from Mexico were 2.07%, while U.S. businesses faced average tariffs of 10%, in addition to nontariff and investment barriers, in Mexico. The U.S.-Canada FTA had been in effect since 1989. The proposed USMCA, comprising 34 chapters and 12 side letters, retains most of NAFTA's market opening measures and most of its chapters, while making notable changes to auto rules of origin, dispute settlement provisions, government procurement, investment, and intellectual property rights (IPR) protection. It also modernizes provisions in services, labor, and the environment. New trade issues, such as digital trade, state-owned enterprises, anticorruption, and currency misalignment, are also addressed. Key issues for Congress in regard to the proposed USMCA include the constitutional authority of Congress over international trade, its role in revising, approving, or withdrawing from the agreement, U.S. negotiating objectives and the extent to which the proposed agreement makes progress in meeting them as required under TPA. Congress may also consider the agreement's impact on U.S. industries, the U.S. economy, and broader U.S. trade relations with Canada and Mexico. The timing for congressional consideration of the proposed USMCA is unclear in part because of the TPA timeline and also because of issues of interest and concern voiced by Congress, including the level of enforceable labor provisions, auto rules of origin, and investor-state dispute settlement. Some policymakers have stated that the path forward to passage of the USMCA by Congress is uncertain partially because the three countries have yet to resolve disputes over U.S. steel and aluminum tariffs imposed by the Trump Administration. The United States, Canada, and Mexico are currently in a trade dispute over U.S. actions under Section 232 of the Trade Act of 1962 to impose tariffs on such imports due to national security concerns. In response to the U.S. action, Mexico and Canada initiated World Trade Organization dispute settlement proceedings and retaliated against certain U.S. exports. The conclusion of the proposed USMCA did not resolve the Section 232 tariff dispute. The U.S. business community, industry groups, and some congressional leaders have publicly stated that the tariff issue must be resolved before the USMCA could enter into force.

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Introduction To ensure that Members of Congress uphold high standards, the U.S. Constitution provides sole authority to establish rules and punish and expel Members to the House of Representatives and the Senate, respectively. Article I, Section 5, clause 2 provides that "Each House may determine the Rules of its Proceedings, punish its Members for disorderly Behaviour, and, with the Concurrence of two thirds, expel a Member. " In the 18 th and 19 th centuries, the Senate used its authority to establish ethics rules and to punish individual Members sparingly. Former Senate historian Richard Baker observed that "[f]or nearly two centuries, a simple and informal code of behavior existed. Prevailing norms of general decency served as the chief determinants of proper legislative conduct. " During that time, Congress often dealt with ethics issues "on a case-by-case basis, [and then] only with the most obvious acts of wrongdoing, those clearly 'inconsistent with the trust and duty of a member. '" Events in the early 1960s, including charges of corruption and influence peddling against Secretary to the Majority Robert G. "Bobby" Baker, prompted the Senate Committee on Rules and Administration, which had jurisdiction over "[m]atters relating to the payment of money out of the contingent fund of the Senate or creating a charge upon the same," to hold hearings on financial and business activities of current and former Members, officers, and employees of the Senate. This report examines the history and evolution of the Senate Select Committee on Ethics, including the committee's jurisdiction and investigative procedure. It does not deal with changes to criminal law (as defined in Title 18, U .S. Code ), with criminal prosecutions of Members of Congress, or with the specifics of disciplinary cases in the Senate. Creating a Permanent Ethics Committee Prior to the 88 th Congress (1963-1964), no standard mechanism existed for discipline of Senators. During the 88 th Congress, the Senate created the first ethics committee, the Select Committee on Standards and Conduct. In the 95 th Congress (1977-1978), the Senate changed the committee's name to the Committee on Ethics. Select Committee on Standards and Conduct Ethics reform became more salient in the Senate after Secretary to the Majority Robert G. "Bobby" Baker resigned on October 8, 1963, following allegations that he had misused his official position for personal financial gain. Following Mr. Baker's resignation, the Senate agreed to a resolution (S.Res. 212) to "inquire into the financial and business interests of any officer, employee, or former employee of the Senate." The resolution directed the Committee on Rules and Administration to conduct an investigation into current and former officers' and employees' financial and business interests. The resolution stated, Resolved , That the Committee on Rules and Administration or any duly authorized subcommittee thereof is authorized and directed to make a study and investigation with respect to any financial or business interests or activities of any officer or employee or former officer or employee of the Senate, for the purpose of ascertaining (1) whether any such interests or activities have involved conflicts of interest or other impropriety, and (2) whether additional laws, rules, or regulations are necessary or desirable for the purpose of prohibiting or restricting any such interests or activities. The Committee shall report to the Senate at the earliest practicable date the results of its study and investigation, together with such recommendation as it may deem desirable. Pursuant to the S.Res. 212, the Committee on Rules and Administration held a series of hearings to investigate the general business interests and activities of Senate officials and employees. In the report issued following the hearings, the committee recognized that serious allegations had been made against a former employee, and that no specific rules or regulations governed the duties and activities of Members, officers, or employees of the Senate. The committee also concluded that many of Baker's outside activities were in conflict with his official duties and made several recommendations, including adoption of public financial disclosure rules and other guidelines for Senate employees. Following the investigation into Mr. Baker, additions to the Senate rules—calling for public financial disclosure reports and more controls on staff involvement with Senate campaign funds—were introduced to implement the committee's recommendations. Additionally, the Committee on Rules and Administration considered the creation of a separate ethics committee. In a committee report on proposed amendments to Senate rules, Senator John Sherman Cooper discussed an amendment he proposed, but which did not pass the committee, to create a select committee on standards and conduct. I regret that a resolution which I offered was rejected by the majority party representation on the committee. The resolution which I offered would have established a select committee on standards and conduct, composed of six members, three from each of the parties, to be appointed by the President of the Senate. This committee would be authorized to receive complaints of unethical, improper, illegal conduct of members, officers, or employees of the Senate, to make investigation of allegations of such conduct, to propose rules and regulations, to give advisory opinions, and to make recommendations to the Senate regarding disciplinary action if required. I believe the establishment of such a committee made up of distinguished Members of the Senate would act as a deterrent upon possible violations, and in the exercise of jurisdiction, would have the confidence of the Senate and the public. I do not consider that such a special select committee should be considered as a policing committee, but one which, as I have said, would deter possible violations and deal with them with utmost dispatch and fairness. On July 1, 1964, Senator B. Everett Jordan filed a resolution (S.Res. 338) to amend the jurisdiction of the Committee on Rules and Administration and allow the committee to investigate every alleged violation of the rules of the Senate, and to make appropriate findings of fact and conclusions with respect thereto after according to any individual concerned due notice and opportunity for hearing. In any case in which the committee determines that any such violation has occurred, it shall be the duty of the committee to recommend to the Senate appropriate disciplinary action, including reprimand, censure, suspension from office or employment, or expulsion from office or employment. Consideration of S.Res. 338 began on July 24, 1964. During debate, Senator Cooper proposed an amendment similar to his proposed amendment in the Committee on Rules and Administration. The amendment proposed to remove jurisdiction over ethical issues from the Committee on Rules and Administration and create a permanent, bipartisan Select Committee on Standards and Conduct. In proposing his amendment, Senator Cooper summarized why he thought the Senate should create a select committee instead of granting disciplinary authority to the Committee on Rules and Administration. First, in the event that an investigation into the affairs of a Member of the Senate or an employee becomes necessary, it is to give assurance that the investigation would be complete and, so far as possible, would be accepted by the Senate and by the public as being complete. Second—and this is important to all Members and to all employees of the Senate—it is to provide that an investigation, which could touch their rights and their offices as well as their honor, would be conducted by a select committee which by reason of its experience and its judgment, would give assurance that their right and honor would be justly considered. Senator Cooper's amendment was adopted by a vote of 50 to 33. Subsequently, the Senate agreed to S.Res. 338, as amended, to create a Select Committee on Standards and Conduct and for the first time created a continuing internal disciplinary body. Members of the Select Committee on Standards and Conduct were first appointed in July 1965, allowing the Committee on Rules and Administration to complete the Baker investigation. In October 1965, the committee elected a chair and vice chair, appointed its first staff, and began developing standards of conduct for the Senate. Select Committee on Ethics On March 11, 1975, Senator Adlai Stevenson introduced S.Res. 109 to "establish a temporary select committee to study the Senate committee system." Agreed to in March 1976, the temporary select committee held hearings in July and September. Among items considered was the combination of the Select Committee on Standards and Conduct and the Committee on Rules and Administration. In a letter from Senator Howard Cannon, chair of the Select Committee on Standards, the ethics committee expressed opposition to this idea. In part, the letter read, The Select Committee on Standards and Conduct took note of the tentative decision of your Committee to recommend the consolidation of this Committee with the Committee on Rules and Administration. While we are mindful of the promised benefit of reducing the number of Committees which Senators must attend, we strongly believe that your decision would fatally damage any usefulness our Committee might have as well as to impugn any system of ethics in the Senate. By its very nature it is indispensable to an ethics committee of the Congress to be bipartisan in membership, to conduct any worthy investigation without control of its budget by any other committee, to be served by a nonpartisan staff, to advice and counsel with Senators, and to exercise prudent judgment in the conduct of its business. Consolidation of any ethics committee with a more-normal type of committee is likely to destroy all of these characteristics and to overwhelm any ethics identity. Unlike other committees, moreover, the Senate Committee on Standards and Conduct is mandated to directly assist the Senate in the discharge of a Constitutional responsibility. Subsequently, the temporary select committee recommended that the functions of the Select Committee on Standards and Conduct should be combined with the Committee on Rules and Administration. While no further action was taken by the 94 th Congress (1975-1976), the issue was readdressed during the 95 th Congress (1977-1978). In a report on S.Res. 4 , a resolution to amend the Senate committee system, the Committee on Rules and Administration rejected the idea of combining the Committee on Standards with the Committee on Rules and Administration and instead recommended establishment of a newly constituted bipartisan ethics committee to demonstrate to the public the "seriousness with which the Senate views congressional conduct." In February 1977, the Senate agreed to S.Res. 4 and created the permanent Select Committee on Ethics to replace the Select Committee on Standards and Conduct. Initially, membership on the new select committee was limited to six years. In the 96 th Congress (1979-1980), the Senate adopted S.Res. 271 , and removed the six-year service limitation. Senate Code of Conduct In the 1940s, public criticism regarding potential conflicts of interest by Members of Congress supplementing their income from speeches and outside activities led to concern over the lack of disclosure of Members' finances. In 1946, Senator Wayne Morse introduced the first public financial disclosure legislation to require annual, public financial disclosure reports by Senators (S.Res. 306). In remarks on the introduction of the resolution, Senator Morse defended Members' right to earn outside income, but believed that the American people were entitled to know about alternate income sources. Commenting on the resolution's purpose, Senator Morse stated, I may say that my resolution is bottomed upon the very sound philosophical principle enunciated by Plutarch that Caesar's wife must be above suspicion. Likewise, I feel that, so far as the public's evaluation of Members of the Senate is concerned, they must be above suspicion. Hence, I think my resolution which calls for the filing with the Secretary of the Senate of all sources and amounts of senatorial income is in keeping with the public's right to know what influences may possibly be brought to bear upon Members of the Senate in the performance of their legislative duties. No action was taken on Senator Morse's proposal. In 1958, Congress established the first Code of Ethics for Government Service (Code of Ethics). Initially proposed in 1951 by Representative Charles Bennett, the Code of Ethics was adopted following a House investigation of presidential chief of staff Sherman Adams, who was alleged to have received gifts from an industrialist being investigated by the Federal Trade Commission. The Code of Ethics for Government Service standards continue to be recognized as ethical guidance in the House and Senate. The Code of Ethics is not legally binding, however, because it was adopted by congressional resolution, not by law. In October 1965, as one of its first actions, the Select Committee on Standards and Conduct recommended rules of conduct for Members, officers, and employees of the Senate. In March 1968, the Select Committee on Standards and Conduct reported a resolution (S.Res. 266) making four additions to the Standing Rules of the Senate. After several days of debate, the Senate adopted a new code of conduct. The four areas covered by the new code of conduct were (1) outside employment of officers and employees, (2) raising and permissible uses of campaign funds, (3) political fund-raising activities of Senate staff, and (4) annual financial disclosures by senatorial candidates as well as Members, officers, and designated employees of the Senate. Formal Code of Conduct Following the Watergate scandal in the Nixon Administration, reforms "such as electoral changes, designed to prevent the recurrence of the Watergate type of offense" were initiated in the executive branch. Subsequently, the Senate began to examine their own activities and behavior. On January 18, 1977, Senate Majority Leader Robert Byrd and Minority Leader Howard Baker jointly introduced S.Res. 36 , to establish a temporary Select Committee on Official Conduct. As part of a larger discussion on raising salaries for all federal employees, Senator Baker expressed his belief that establishing a formal code of conduct was an essential piece of raising government salaries. The increase in compensation for Members of Congress will, no doubt, be considered and voted upon in the very near future. It is imperative, therefore, that prompt attention be given to questions relating to ethical conduct and financial disclosure. For this reason, the distinguished majority leader and I have agreed to propose the establishment of an ad hoc committee to study all questions relating to a Senate code of conduct. The committee will have 15 members, including a chairman and vice chairman, of which eight will be of the majority party and seven of the minority party. It will be instructed to study all matters relating to the standards and conduct of Members of the Senate and to make its report and recommendations no later than March 1. In this manner, Mr. President, I believe that the Senate can proceed to adoption of an equitable code of conduct as quickly as possible and with the benefit of the ad hoc committee's report. S.Res. 36 was adopted by unanimous consent. The Select Committee on Official Conduct held hearings in February 1977 and issued a final report on March 10. The Select Committee reported a resolution ( S.Res. 110 ) to amend the Code of Conduct and propose additions to the Standing Rules of the Senate (then numbered XLII to L), which would become the Code of Official Conduct. The proposed rules changes included the first public financial disclosure requirements for Senators and officers and employees of the Senate; limits on gifts, outside earnings, and the use of the frank; and prohibited unofficial office accounts and lame-duck foreign travel. There was also a provision prohibiting discrimination in staff employment. On April 1, 1977, S.Res. 110 was agreed to and the Select Committee recommendations were adopted. In 2007, pursuant to the Honest Leadership and Open Government Act, several sections of the Senate Code of Official Conduct were amended. These included placing restrictions on former Senators and senior staff who become federally registered lobbyists; requiring disclosure by Senators and staff of post-employment job negotiations; implementing protections against Senators from influencing hiring decisions based on political affiliation; and amending the Senate gift rules. Current Code of Official Conduct The current Senate Code of Official Conduct can be found in Rules 34 through 43 of the Standing Rules of the Senate. Additionally, federal statutes contain numerous provisions which prohibit or restrict certain activities by Members and employees. Discussion of the prohibitions and restrictions pursuant to federal law are included in the Senate Ethics Manual . Table 1 provides a list of Standing Rules of the Senate that are included in the Code of Official Conduct. Jurisdiction Pursuant to S.Res. 338 (88 th Congress), the Select Committee on Standards and Conduct was given the authority to (1) investigate allegations of improper conduct which may reflect upon the Senate; (2) investigate violations of laws, rules, and regulations of the Senate relating to the conduct of Members, officers, and employees in their official duties; (3) recommend disciplinary action, when appropriate; and (4) recommend additional Senate rules to insure proper conduct. Following the creation of the Select Committee on Ethics, the Senate adopted S.Res. 110 (95 th Congress) and transferred the jurisdiction of the former Select Committee on Standards and Conduct and made the new committee responsible for enforcing and interpreting the Senate Code of Official Conduct. Additions to Jurisdiction Since 1973, several additions have been made to the Select Committee on Ethics' jurisdiction. The additions have included use of the frank, disclosure of intelligence material, acceptance of foreign gifts, administration of public financial disclosure forms, and enforcement of fair employment practices. Franking Privilege In 1973, Congress passed legislation ( P.L. 93-191 ) clarifying the proper use of the franking privilege by Members of Congress and authorizing the Select Committee on Standards and Conduct to provide assistance and counsel to Senators and staff on the use of the frank. Intelligence Information Disclosure When the Senate Select Committee on Intelligence was created in 1976, the Ethics Committee was given specific jurisdiction to investigate any unauthorized disclosure of intelligence information by a Senator, officer, or employee of the Senate and to report to the Senate on any substantiated allegation. Acceptance of Foreign Gifts In August 1977, following the enactment of P.L. 95-105 (FY1978 Foreign Relations Authorization Act), which amended the Foreign Gifts and Decorations Act of 1966, the Select Committee on Ethics was designated the "employing agency" for the Senate and was authorized to issue regulations governing the acceptance by Senators and staff of gifts, trips, and decorations from foreign governments. Public Financial Disclosure Forms In August 1979, the Select Committee on Ethics was given responsibility for administering the Senate public financial disclosure requirements contained in the Ethics in Government Act of 1978. Pursuant to amendments in the Ethics Reform Act of 1989, the Ethics Committee was named as the "supervising ethics office" for laws governing gifts to federal employees and gifts by employees to their supervisors. Fair Employment Practices In 1991, Title III (Government Employee Rights Act of 1991) of the Civil Rights Act of 1991 established the Senate Office of Fair Employment Practices. The Office of Fair Employment Practices was designed to adjudicate discrimination complaints and gave the Select Committee on Ethics jurisdiction to review, upon request, decisions of the office. In 1995, authority to review discrimination cases was transferred to the Office of Compliance with the passage of the Congressional Accountability Act (CAA). The Ethics Committee continues to have jurisdiction over disciplinary cases that could result from an Office of Compliance investigation under Senate Rule 42. Insider Trading and Financial Disclosure On April 4, 2012, the STOCK Act (Stop Trading on Congressional Knowledge Act) was passed to affirm that no exemption exists from "insider trading" laws and regulations for Members of Congress and congressional employees. Pursuant to the act, the Senate Select Committee on Ethics is required to issue interpretive guidance of the relevant rules of each chamber, including rules on conflicts of interest and gifts, clarifying that a Member of Congress and an employee of Congress may not use nonpublic information derived from such person's position as a Member of Congress or employee of Congress or gained from the performance of such person's official responsibilities as a means for making a private profit. Pursuant to the STOCK Act, the Select Committee on Ethics has issued two sets of guidance on the implementation of the law. The first, issued on June 15, 2012, provided a summary of STOCK Act requirements for Senate Staff, reminders of periodic transaction and financial disclosure requirements, and disclosure forms. The second, issued on December 4, 2012, provided specific guidance on insider trading restrictions under securities laws and Senate ethics rules. Current Jurisdiction Pursuant to changes made since 1977, the Select Committee on Ethics currently has jurisdiction over the following areas: 1. receive complaints and investigate allegations of improper conduct which may reflect upon the Senate, violations of law, violations of the Senate Code of Official Conduct, and violations of rules and regulations of the Senate, relating to the conduct of individuals in the performance of their duties as Members of the Senate, or as officers or employees of the Senate, and to make appropriate findings of fact and conclusions with respect thereto; 2. recommend, when appropriate, disciplinary action against Members and staff; 3. recommend rules or regulations necessary to insure appropriate Senate standards of conduct; 4. report violations of any law to the proper Federal and State authorities; 5. regulate the use of the franking privilege in the Senate; 6. investigate unauthorized disclosures of intelligence information; 7. implement the Senate public financial disclosure requirements of the Ethics in Government Act; 8. regulate the receipt and disposition of gifts from foreign governments received by Members, officers, and employees of the Senate; 9. render advisory opinions on the application of Senate rules and laws to Members, officers, and employees; 10. for complaints filed under the Government Employee Rights Act of 1991 respecting conduct occurring prior to January 23, 1996, review, upon request, any decision of the Senate Office of Fair Employment Practices; 11. develop and implement programs for Members, officers, and employees to educate them about standards of conduct applicable in the performance of their official duties; 12. "conduct ongoing ethics training and awareness programs for Members of the Senate and Senate staff"; and 13. issue an annual report on the number of alleged violations of Senate rules received from any source, including the number raised by a Senator or staff of the committee, and including the number of allegations dismissed or on which the committee took the specific actions. Procedure Procedures for the Select Committee on Ethics are established pursuant to S.Res. 338 (88 th Congress), as amended; P.L. 93-191 ; S.Res. 400 (94 th Congress); and 5 U.S.C. Section 7342. The Ethics Committee may initiate an inquiry or investigate allegations brought by Senators, Senate officers, Senate staff, or outside individuals and groups. While the committee does not have formal procedural requirements for filing a complaint, the committee can issue public statements regarding a specific inquiry. If the committee chooses not to issue a public statement, all allegations are treated confidentially and the committee has a practice of neither confirming nor denying that a matter is before the committee. "Upon completion of its investigative process, the Committee may recommend to the Senate or party conference an appropriate sanction for a violation or improper conduct, including, for Senators, censure, expulsion, or party discipline and, for staff members, termination of employment." In 1977, the Senate agreed to S.Res. 110 , which created the Code of Official Conduct. Title II of S.Res. 110 amended S.Res. 338, the 1964 resolution that created the procedures of the Select Committee on Standards and Conduct, which became the Select Committee on Ethics. The amendments required the Select Committee to receive complaints and investigate alleged violations of the Senate Code of Official Conduct and to publish necessary regulations to implement the code. Title II also required the publishing of advisory opinions in the Congressional Record, if requested by specified individuals. Appendix A. Membership on the Senate Select Committee on Standards and Conduct, 1965-1976 Created in the 89 th Congress (1965-1966), a total of 14 Senators served on the Senate Select Committee on Standards and Conduct prior to its being disbanded with the creation of the Senate Select Committee on Ethics in the 95 th Congress (1977-1978). Table A-1 provides a list of all Members who served on the Senate Select Committee on Standards and Conduct, their party affiliation, and their state. Majority party Members are listed first. Appendix B. Membership on the Senate Select Committee on Ethics, 1977-2019 Created in the 95 th Congress (1977-1978), the Senate Select Committee on Ethics has had a total of 57 different members. Table B-1 provides a list of all Members who have served on the Senate Select Committee on Ethics, their party affiliation, and their state. Majority party Members are listed first.

The U.S. Constitution provides each House of Congress with the sole authority to establish rules and punish and expel Members. From 1789 to 1964, the Senate dealt individually with cases of disciplinary action against Members, often forming ad hoc committees to investigate and make recommendations when acts of wrongdoing were brought to the chamber's attention. Events of the 1960s, including the investigation of Secretary to the Majority Robert G. "Bobby" Baker, for alleged corruption and influence peddling, prompted the creation of a permanent ethics committee and the writing of a Code of Conduct for Members, officers, and staff of the Senate. The Senate Select Committee on Ethics was first established in 1964. This bipartisan, six-member committee investigates alleged violations of the rules of the Senate and recommends disciplinary actions. In the 95th Congress (1977-1978), the Senate expanded the committee's jurisdiction and altered its procedures to implement revisions to the Senate Code of Official Conduct. Also, to reflect these changes the committee was renamed the Select Committee on Ethics. This report briefly outlines the background of ethics enforcement in the Senate, including the creation of the Select Committee on Standards and Conduct and the subsequent renaming of the committee as the Select Committee on Ethics. The report also provides a brief overview of the Senate Code of Conduct and on the Select Committee's current jurisdiction and procedures. For additional information on ethics in the Senate, please see CRS Report RL30764, Enforcement of Congressional Rules of Conduct: A Historical Overview, by Jacob R. Straus.

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Introduction Congress has long deliberated on drinking water quality and infrastructure, which have been brought to the forefront of national attention by several events. Such events include the detection of elevated lead levels in tap water in Flint, MI, and other cities; hurricanes and other natural disasters that damaged or destroyed community drinking water infrastructure; and local source water contamination events (e.g., chemical spills and algal blooms). Representatives of state drinking water agencies, private sector engineers, and others report that much of the nation's drinking water infrastructure is deteriorating, threatening public health, and increasing operations and maintenance costs. In 2012, the American Water Works Association (AWWA) reported that much of the drinking water infrastructure (more than 1 million miles of buried pipe) was constructed in the 19 th and 20 th centuries and is nearing the end of its useful life. While disagreement exists over the scope and costs of improvement and replacements, estimates of the funding needs are substantial. In March 2018, the U.S. Environmental Protection Agency (EPA) issued its sixth Drinking Water Infrastructure Needs Survey and Assessment. In this survey, EPA estimated that public water systems would need to invest $472.60 billion for drinking water capital improvements over the next 20 years to achieve compliance and ensure the provision of safe drinking water. Although all projects identified in the needs survey would promote health objectives, EPA reported that 12% of the 20-year estimated need was directly attributed to statutory compliance. The majority (88%) of needs are for ongoing investments, such as repair of aging drinking water infrastructure. In 2012, AWWA conducted a broader drinking water infrastructure survey that reported that the costs to replace aging drinking water infrastructure and expand water service to growing populations will increase to more than $1 trillion over the next 25 years. Communities nationwide may face financial challenges as they manage the need to repair or replace aging drinking water infrastructure. As of early 2019, EPA's database indicated that some 50,000 public water systems in the United States regularly serve 25 or more of the same individuals. About 80% of these community water systems are relatively small, serving 3,300 or fewer people. These small systems have a narrow rate base from which to finance drinking water infrastructure improvements. In addition, older cities may face declining populations and declining utility revenues from which utilities can finance drinking water infrastructure repairs. In 2012, AWWA estimated that the costs to address aging drinking water infrastructure may as much as triple household water bills. Due to these financing concerns, communities may be challenged to protect water supplies, respond to contamination incidents, and afford projects to repair or replace aging drinking water infrastructure. Congress deliberated on several of these drinking water infrastructure issues while developing America's Water Infrastructure Act of 2018 (AWIA; P.L. 115-270 ), enacted on October 23, 2018. Title I of the act, "The Water Resource Development Act of 2018," authorizes a wide variety of water resource and infrastructure policies, programs, and projects for the U.S. Army Corps of Engineers (USACE). Water Resource Development Act bills are often considered on a biennial schedule and have primarily addressed USACE projects. Title III of AWIA primarily addresses hydropower activities of the Federal Energy Regulatory Commission. Title II and IV of the act include provisions that address EPA water infrastructure programs and other authorities. This report analyzes the drinking water provisions of Title II and IV rather than providing a comprehensive summary of AWIA. Title II constitutes the most comprehensive reauthorization of the Safe Drinking Water Act (SDWA) since 1996. It amends SDWA to promote compliance with SDWA requirements, reauthorize appropriations for the Drinking Water State Revolving Fund (DWSRF) program, expand program eligibilities, increase emphasis on assisting disadvantaged communities, make SDWA compliance more affordable, and improve consumer confidence in public water supplies. Title II also authorizes new grant programs to reduce lead contamination in school drinking water, assist small and disadvantaged communities, and develop public water system resilience, among other purposes. Title IV addresses several other water quality and infrastructure issues by authorizing and revising activities and programs for EPA, the Bureau of Reclamation within the Department of the Interior, and other federal agencies. Title IV of AWIA extends, authorizes, and amends drinking-water-related activities and provisions administered by EPA. Specifically, these provisions authorize a water efficiency program and activities and revise the Water Infrastructure Finance Innovation Act (WIFIA) program, which provides credit assistance for water infrastructure projects. Title IV of AWIA also includes several amendments to the Clean Water Act to address stormwater by expanding a municipal sewer overflow grant programs to include stormwater management projects, reauthorizing appropriations for said municipal sewer overflow grant program, and directing EPA to establish a task force for stormwater management. The first section of this report provides select legislative background on AWIA. The second section describes the reauthorizations, revisions, and additions to SDWA. The third section discusses a provision in AWIA that addresses requirements that apply to federal financial assistance for drinking water improvements. The fourth section describes a provision in AWIA that addresses assistance for drinking water repairs in disaster areas. The fifth section includes the revisions in AWIA to federal water infrastructure financial assistance programs. The final section provides a discussion of the provisions of AWIA that address water efficiency. In addition, the appendices contain tables of plans, reports, and regulations required by AWIA; cross-references of the AWIA provisions, provisions in SDWA, and the U.S. Code citations; and summaries of the other EPA-related provisions of AWIA that are not discussed in this report, such as the stormwater provisions in Title IV. AWIA: Legislative Development and Background Drinking water infrastructure and related topics received congressional attention during the 115 th Congress. AWIA combines provisions from several bills that the 115 th Congress considered. Numerous bills were introduced to amend SDWA to address drinking water regulation and infrastructures issues, with particular focus on the technical, managerial, and financial challenges facing small and disadvantaged communities. AWIA Title II, entitled Drinking Water System Improvement, broadly parallels the Drinking Water System Improvement Act of 2017 ( H.R. 3387 ; H.Rept. 115-380 ). This SDWA reauthorization bill would have authorized activities and revised existing law to improve water systems' technical, managerial, financial capacity, and consumer confidence and facilitate communities' access to financial assistance for drinking water infrastructure improvements. In addition, this bill would have reauthorized appropriations for a key drinking water infrastructure financial assistance program and revised that program to help communities access assistance. Congress also considered the USACE-focused Water Resources Development Act of 2018 ( H.R. 8 ) in the House and, in the Senate, America's Water Infrastructure Act ( S. 2800 ), a broader water resources infrastructure bill that included revisions to water infrastructure programs administered by EPA. Both bills contained provisions that would have authorized USACE projects and studies for water resource development, including flood control, navigation improvements, and aquatic ecosystem restoration activities. The House incorporated selected provisions of H.R. 3387 , H.R. 8 , and S. 2800 into S. 3021 . S. 3021 , as amended and renamed, passed the House on September 13, 2018. The Senate agreed to the House amendments to S. 3021 and passed the bill on October 10, 2018. The President signed the bill on October 23, 2018, and it became P.L. 115-270 . Table 1 identifies the amounts authorized to be appropriated in the drinking-water-related provisions of AWIA. For a summary of deadlines for reports, regulations, and other activities related to drinking water as provided for in AWIA, see Appendix A . AWIA Amendments to the Safe Drinking Water Act Several provisions of AWIA Title II, "Drinking Water System Improvement," amend SDWA to revise existing drinking water programs, reauthorize appropriations, and establish new drinking water infrastructure grant programs. SDWA authorizes the regulation of contaminants in public water systems. Enacted in 1974, the act was last broadly amended in 1996. The act is implemented through programs that (1) establish national primary drinking water regulations and monitoring and reporting requirements for contaminants present in water delivered by public water systems, (2) promote water system compliance through technical and financial assistance and capacity development programs, and (3) address public water systems' preparedness for emergencies. The act established a federal-state partnership in which states, tribes, and territories may be delegated primary implementation and enforcement authority (i.e., primacy) for the drinking water program. One key component of SDWA is the requirement that EPA establish national primary drinking water regulations for contaminants that may adversely affect human health and are likely to be present in public water supplies. EPA has issued regulations for more than 90 contaminants. These include numerical standards or treatment techniques for drinking water disinfectants and their byproducts, microorganisms, radionuclides, organic chemicals, and inorganic chemicals. The SDWA Amendments of 1996 ( P.L. 104-182 ) reauthorized appropriations for most SDWA programs through FY2003. Although the authority has expired for most appropriations, Congress has continued to appropriate funds for the ongoing SDWA programs. Even though the authorization of appropriations may expire, program authority (i.e., an agency's "enabling" authority) does not expire unless there is a "sunset" date for that authority or if Congress repeals it through subsequent laws. Drinking Water State Revolving Fund Program Authorized in 1996, the DWSRF program provides federal financial assistance to communities to finance drinking water infrastructure improvements. SDWA Section 1452 authorizes EPA to make annual grants to states to capitalize their state revolving loan fund. The statute requires states to provide a 20% match. States may use DWSRF financing for public water system projects needed to comply with federal drinking water standards and address risks to human health. The primary type of DWSRF financial assistance are low interest rate loans. SDWA Section 1452 authorizes states to provide additional subsidization (including forgiveness of principal) to disadvantaged communities. The federal capitalization grants together with state funds (e.g., state match, loan repayments, leveraged bonds, and other state sources) are intended to build a sustainable source of drinking water infrastructure funding for the state. The authorization of appropriation for DWSRF expired in FY2003. Congress has continued to provide funds for the DWSRF program through annual appropriations. From FY1997 through FY2018, Congress appropriated over $23.33 billion for the DWSRF program. The appropriation for DWSRF program generally ranged between $820.0 million in FY2000 and $1.39 billion in FY2010. Table 2 includes historical appropriations for the DWSRF program. DWSRF Program Revisions (AWIA Sections 2002, 2015, and 2022) AWIA makes the most substantial revisions to the DWSRF provisions of SDWA since the program was authorized in 1996. These revisions expand the eligible uses of DWSRF financial assistance, provide states with additional flexibility to administer the DWSRF program, and include provisions intended to make DWSRF assistance more accessible to public water systems. AWIA Section 2015(a) amends SDWA to expressly state that DWSRF funds can be used for projects to replace or rehabilitate aging treatment, storage, or distribution systems. Under EPA guidance, these replacement and rehabilitation projects have been eligible for financial assistance from the DWSRF if needed to protect public health. According to EPA's needs survey, this category of projects accounts for 66.1% of the estimated drinking water infrastructure need. Prior to AWIA, these activities were not previously explicitly identified in statute. Section 2015 also revises existing DWSRF provisions that address financial assistance for disadvantaged communities. These amendments increase the portion of a state's capitalization grant that states may dedicate to additional subsidization and extend the amortization period for loans made to disadvantaged communities. Before AWIA, states could use 30% of their annual capitalization grants to subsidize loans for disadvantaged communities. Section 2015(c) of AWIA increases that proportion to 35% while conditionally requiring states to use at least 6% of their capitalization grant for these subsidies. The section also amends the SDWA DWSRF provisions to extend the amortization period for loans made to disadvantaged communities from 30 to 40 years. Section 2015(d) of AWIA also extends the repayment and amortization period for all projects financed by the DWSRF. Previously, SDWA required DWSRF financing recipients to pay the initial principal and interest payments within one year of project completion. This amendment extends the date of that initial payment to 18 months after project completion. This section also authorizes the extension of the amortization period for projects that receive DWSRF assistance from 20 to 30 years. Section 2015(e) requires EPA to evaluate and include the cost to replace lead service lines in the drinking water infrastructure needs survey, which EPA completes every four years. EPA uses the needs survey to allot the DWSRF appropriation among the states. In conducting the needs survey, EPA has not previously requested that public water systems report the cost to replace these lines. AWIA specifies that the cost to replace lead lines must be included in the needs survey (to the extent practicable), which may potentially affect some states' allotments of DWSRF capitalization grants. Section 2015(g) of AWIA requires EPA to gather specified information on DWSRF administration from state drinking water administrators and report to Congress on best practices for implementing the DWSRF to facilitate the application process and to improve DWSRF financial management and sustainability. Source Water Assessment and Protection In 1996, Congress added source water assessment provisions to SDWA to encourage protection of drinking water sources. Section 1453 required states to develop source water assessment programs that delineate areas from which public water systems receive water and identify the origins of regulated contaminants to determine threats to water systems. States were authorized to fund these activities from 10% of their DWSRF capitalization grant for FY1996 and FY1997. Section 2015(f) of AWIA removes this fiscal year limitation and accordingly authorizes states to use a portion of their capitalization grant to fund these source water assessments or update an existing source water assessment. The 1996 SDWA amendments required states to conduct source water assessments as a condition of adopting modified monitoring requirements. However, the 1996 amendments did not authorize states to fund implementation of source water protection plans from their DWSRF capitalization grants. AWIA Section 2002 authorizes states to fund implementation of surface drinking water sources protection efforts and activities from the 10% set-aside of a state's annual DWSRF capitalization grant. Source water protection is also addressed in the " Protecting Source Water " section of this report. Federal Cross-Cutting Requirements for DWSRF-financed Projects Recipients of DWSRF financial assistance must comply with cross-cutting requirements, which are other federal laws or executive orders that apply to certain federal financial assistance programs. Examples of federal cross-cutting requirements include environmental laws such as the National Environmental Policy Act and Endangered Species Act, executive orders on equal employment opportunities, and the National Historic Preservation Act. AWIA specifies two such requirements for DWSRF-financed projects: the use of American iron and steel and compliance with Davis-Bacon prevailing wage law. Section 2022 of AWIA renews the requirement to use American iron and steel products in DWSRF-financed projects for FY2019-FY2023. Previously, Congress has required American iron and steel for DWSRF-financed projects for specified fiscal years. The Water Infrastructure Innovation for the Nation (WIIN) Act ( P.L. 114-322 ) amended SDWA to require the use of American iron and steel for FY2017. In the American Recovery and Reinvestment Act of 2009 ( P.L. 111-5 ), Congress provided supplemental appropriations for the DWSRF and first required the use of "Buy American" iron and steel in projects financed from that supplemental appropriation. Since FY2014, Congress has regularly required the use of American iron and steel for DWSRF-financed projects through appropriations acts. AWIA Section 2015(b) amends SDWA to add Davis-Bacon prevailing wage requirements for projects that receive DWSRF assistance. Since 2009, Congress has often applied Davis-Bacon prevailing wage requirements to funds for DWSRF-financed projects through annual appropriations acts. Reauthorization of Drinking Water State Revolving Fund Capitalization Grants (AWIA Section 2023) AWIA Section 2023 amends SDWA to reauthorize DWSRF capitalization grants for FY2019-FY2021. The authorization of appropriations for the DWSRF are approximately $1.17 billion in FY2019, $1.30 billion in FY2020, and $1.95 billion in FY2021. Appropriations for the DWSRF capitalization grants were $863.2 million for each of FY2016 and FY2017 and $1.16 billion for FY2018. The Consolidated Appropriations Act, 2019 ( P.L. 116-6 ), included $1.16 billion for DWSRF capitalization grants in FY2019. For a summary of historical DWSRF appropriation levels, see Table 2 . Drinking Water Grant Programs AWIA addresses several drinking water infrastructure issues by revising an existing grant program and authorizing additional grant programs. These grant programs are intended to (1) reduce lead in school drinking water, (2) support state responses to contamination or threats of contamination of drinking water supplies that may pose substantial endangerment to underserved communities, (3) assist disadvantaged communities in improving drinking water infrastructure resilience to natural hazards, and (4) improve drinking water systems serving Indian tribes in specified areas. Voluntary School and Child Care Program Lead Testing Grant Program (AWIA Section 2006(a)) Section 2006 of AWIA revises an existing grant program to address the sources of lead contamination in drinking water at schools. The 2016 WIIN Act repealed and replaced SDWA Section 1464(d) to direct EPA to establish the Voluntary School and Child Care Program Lead Testing Grant Program. This grant program provides funds to test for lead in drinking water at schools and child care programs through local education agencies (LEAs). The WIIN act authorized annual appropriations of $20.0 million for FY2017 through FY2021 for this grant program. The 115 th Congress appropriated $20.0 million for this grant program for FY2018 in the Consolidated Appropriations Act, 2018 (Section 430 of Title IV of P.L. 115-141 ). Section 2006(a) of AWIA authorizes a $5.0 million increase (from $20.0 million to $25.0 million) in the amount authorized to be appropriated for the existing Voluntary School and Child Care Program Lead Testing Grant Program in FY2020 and FY2021. The Consolidated Appropriations Act, 2019, included a FY2019 appropriation of $25 million to support this grant program. Section 2006 also amends SDWA Section 1464(d) and directs EPA to give grant priority to LEAs in low-income areas. This provision requires EPA to provide technical assistance to lead testing grant recipients. The technical assistance may help identify opportunities to remediate lead contamination if found during the lead testing. Specifically, Section 2006(a) states that the technical assistance may include identification of (1) the source of lead contamination at the school or child care program, (2) state and federal grant programs to eliminate the source of lead contamination, (3) financing options for eliminating the source of lead contamination, and (4) nonprofit and other organizations to help the grantee eliminate the source of lead contamination. Drinking Water Fountain Replacement for Schools (AWIA Section 2006(b)) Section 2006(b) of AWIA establishes the Drinking Water Fountain Replacement for Schools program. This section requires EPA to implement a drinking water fountain replacement grant program for water fountains manufactured prior to 1988. EPA must prioritize grants based on LEAs' economic needs. This section authorizes the annual appropriation of $5.0 million for this grant program for FY2019-FY2021. Drinking Water System Infrastructure Resilience and Sustainability Program (AWIA Section 2005(4)) AWIA Section 2005 amends SDWA Section 1459A to authorize EPA to establish the Drinking Water System Infrastructure Resilience and Sustainability Program, which is a new grant program for small and disadvantaged public water systems. This section authorizes EPA to award grant funds to eligible public water systems for projects that increase resilience to natural hazards, including hydrologic changes. Eligible projects include those that increase water use efficiency, enhance water supply through watershed management or desalination, and increase energy efficiency in the conveyance or treatment of drinking water. This section authorizes appropriations of $4.0 million for each of FY2019 and FY2020 for this program. Grants to Respond to Imminent and Substantial Endangerment (AWIA Section 2005) Section 2005 also revises SDWA Section 1459A to add an EPA-administered grant program to help states assist underserved communities to respond to imminent and substantial contamination. This section authorizes EPA to make grants to requesting states to assist communities when contaminants are present in and pose an imminent and substantial threat to their public water system or underground drinking water sources and when EPA or a court of competent jurisdiction determines that the appropriate authorities have not responded in a sufficient manner. This section also authorizes EPA to recover funds from grant recipients who are found to have caused or contributed to the contamination addressed by the grant program. SDWA Section 1459A authorizes appropriations of $60.0 million to support this and other grant programs for small and disadvantaged communities authorized therein. Drinking Water Infrastructure for Indians Tribes (AWIA Section 2001) Section 2001 of AWIA authorizes a new grant program at EPA for public water systems that serve federally recognized Indian tribes. Section 2001 directs EPA—subject to appropriations—to establish a drinking water infrastructure grant program for 20 eligible projects (10 projects in the Upper Missouri River Basin and 10 projects in the Upper Rio Grande River Basin) to improve water quality, water pressure, or water services. One of the 10 projects in the Upper Missouri River Basin must serve two or more tribes. To be eligible, the public water system must either be on a reservation or serve a federally recognized Indian tribe. Section 2001 authorizes an appropriation $20.0 million annually from FY2019 to FY2022 to support this program. State Program Administration Grants (AWIA Section 2014) SDWA authorizes EPA to make grants to primacy states and territories to implement the public water system supervision program (PWSS). Although the authorization of appropriation for PWSS grants expired in FY2003, Congress has continued to appropriate funds for this program. While the appropriation amount has changed over time, since FY2014, Congress appropriated about $101 million annually for grants to states to support the PWSS program. States also use set-asides from the DWSRF capitalization grants and other state resources (e.g., state general funds and/or state-established fee programs) to support the PWSS program. In 2013, state drinking water administrators estimated that the states would require an additional $308.0 million per year to support the PWSS program. They attribute this funding gap to increased workload for water system supervision for an increased number of regulated contaminants. Section 2014 of AWIA reauthorizes appropriations for the PWSS program for FY2020 and FY2021, increasing the authorized appropriation from $100.0 million to $125.0 million for these two fiscal years. Information to Consumers Several provisions of AWIA amend SDWA to address consumer access to compliance data and the transparency of drinking water quality information. These provisions seek to increase the understandability of drinking water quality information provided to consumers, notify consumers more frequently about their drinking water quality, and expand existing monitoring requirements to gather additional data on occurrence of unregulated contaminants. Improved Consumer Confidence Reports (AWIA Section 2008) Prior to AWIA, SDWA required public water systems to provide their customers with an annual consumer confidence report on their drinking water quality and SDWA compliance. Section 1414(c) of SDWA required public water system operators in the consumer confidence reports to include the level of regulated contaminants and their associated maximum contaminant level or action level. Section 2008 of AWIA revises the requirements for data included in the consumer confidence report. AWIA directs public water system operators to also report exceedances resulting in a treatment technique, other occurrences that required corrective action, corrosion control efforts, and any violations of SDWA that occurred during the monitoring period. The collection of this additional information expands the information captured in the consumer confidence report to include lead exceedances and associated lead treatment techniques. AWIA Section 2008 also increases the frequency that operators of large public water systems (serving more than 10,000 consumers) produce and distribute consumer confidence reports from annually to biannually. This section also expressly authorizes public water system operators to transmit the consumer confidence report electronically. Strategic Plan to Address Compliance Monitoring Data (AWIA Section 2011) Section 2011 of AWIA requires EPA to develop a strategic plan to improve the accuracy and availability of monitoring data shared between public water systems, the primacy states, and EPA. The strategic plan must identify barriers to (1) ensuring the accuracy of reported data, (2) submitting data electronically, and (3) retrieving reported data. The plan must also recommend economically feasible and practical ways to transmit monitoring data. Monitoring for Unregulated Contaminants (AWIA Section 2021) The 1996 amendments authorized a monitoring program for unregulated contaminants in public water supplies. The act requires EPA, every five years, to promulgate a rule requiring certain public water systems to monitor for up to 30 unregulated contaminants. Unregulated Contaminant Monitoring Rules (UCMRs) are used to gather national occurrence data to inform EPA's review of contaminants that may warrant regulation. For example, a 2012 UCMR (UCMR 3) required systems to test their water for the presence of six poly- and perfluoroalkyl substances, including perfluorooctanoic acid and perfluorooctanesulfonic acid. Prior to enactment of AWIA, SDWA required monitoring by all large public water systems (serving more than 10,000 consumers) and a representative sample of small public water systems (serving 10,000 consumers or fewer). For the 800 small public water systems sampled in UCMR 3, EPA funded the monitoring costs. AWIA Section 2021(b) reauthorized $10.0 million to be appropriated for each year for FY2019-FY2021 for this program. The authority to appropriate funds for the unregulated contaminant monitoring program expired in FY2003, although Congress has continued to appropriate funds for the program. Section 2021(a) of AWIA expands unregulated contaminant monitoring requirements to include public water systems serving 3,300-10,000 individuals—subject to the availability of appropriations for this purpose and lab capacity. This requirement enters into effect three years after the enactment date of AWIA (i.e., October 23, 2021). This section authorizes $15.0 million to be appropriated for each year from FY2019 through FY2021 to support the expanded monitoring. Requiring monitoring by a larger number of public water systems for unregulated contaminants is intended to provide a more comprehensive assessment of the occurrence of unregulated contaminants in public water supplies. As of December 2018, EPA's database indicated that more than 5,000 public water systems serve from 3,301 to 10,000 individuals. This subset of systems serves more than 30 million individuals in total. The monitoring by these additional systems would provide more occurrence data to inform EPA's determination of whether a particular contaminant warrants a nationwide regulation. Compliance Capacity Development The 1996 SDWA amendments authorized programs to assist public water systems with SDWA compliance. Technical assistance, operator certification, and other programs seek to improve the technical, managerial, and financial capacity of public water systems to achieve and maintain compliance with drinking water regulations. Other provisions authorize incentives for SDWA compliance by encouraging consolidation of public water systems. AWIA authorizes new programs and revises authorities to further support and enhance public water system capacity to comply with SDWA. Asset Management (AWIA Section 2012) AWIA Section 2012 amends SDWA capacity development provisions (SDWA §1420). This provision directs states to revise their capacity development strategies to include a description of how they will encourage public water systems to develop asset management plans. Asset management is a budgetary and planning process that public water systems may undertake to evaluate their capital assets and plan the maintenance of their infrastructure (e.g., pumps, motors, and piping) to ensure that the water system can fund the costs. Some urban water utilities and other stakeholders argue that asset management can help lower the overall operation and maintenance costs, as it may lead to fewer infrastructure failure incidents (e.g., pipe ruptures). Asset management is not statutorily required. EPA has issued educational materials and provided training for water systems that choose to develop an asset management plan. EPA and the U.S. Department of Agriculture (USDA) have also provided support to assist small water utilities with asset management. This section further amends SDWA Section 1420 to require states to demonstrate their progress in encouraging public water systems to develop asset management plans. Every five years, EPA must review and update (if necessary) the asset management materials that EPA makes available. According to the House Energy and Commerce Committee Report ( H.Rept. 115-380 ), such asset management technical assistance will improve the economic sustainability of public water systems. Consolidation by Management Contract (AWIA Section 2009) Some public water systems may lack the technical, managerial, and financial capacity to meet regulatory standards, fund drinking water repairs or upgrades, identify or access source water, and manage budgetary constraints. Among other strategies, such systems may address these challenges by consolidating with or transferring ownership to another water system where feasible. EPA states that this type of restructuring can be effective in returning noncompliant public water systems to SDWA compliance or building technical, managerial, and financial capacity. The SDWA amendments of 1996 amended SDWA enforcement provisions to authorize limited enforcement relief as an incentive for noncompliant public water systems to consolidate with other systems. If a system faces a particular compliance violation, SDWA Section 1414(h) authorizes public water systems to submit a plan to primacy states or EPA for the physical consolidation or the consolidation of management and administrative functions with another public water system or the transfer of ownership of a public water system. If the plan to consolidate or transfer ownership is approved by a primacy state or EPA, enforcement action against that public water system for the specified violation would not be taken for two years. Section 2009 of AWIA provides that, in addition to the physical or management consolidation or transfer of ownership, a public water system may also submit a plan to execute a contractual agreement with another public water system to manage the noncompliant public water system. Consolidation Assessments (AWIA Section 2010) Section 2010 of AWIA authorizes primacy states or EPA to require, under certain circumstances, public water systems to assess options for consolidation or transfer of ownership. This section specifies that the required assessments be proportionate to the size of public water system. Therefore, a small public water system would complete an assessment that is less complex than a larger system. Any public water systems that consolidate, as a result of an assessment, are eligible for financial assistance from the DWSRF. This section also provides limited liability protection for the owner or operator who has a state-approved consolidation plan. In the consolidation plan, the owner or operator of public water system must identify any potential or existing liabilities from specific violations and their available assets. This section limits the liability of a consolidating system to the amount of its assets and to the liabilities identified in the plan. This section also requires EPA to promulgate regulations to implement these provisions. Intractable Water Systems (AWIA Section 2003) Section 2003 of AWIA defines intractable water system as a public water system serving fewer than 1,000 individuals that the owner or operator effectively abandoned for a range of reasons, including financial default, significant noncompliance with SDWA, or failure to maintain facilities. Section 2003 directs EPA, in collaboration with the USDA and the U.S. Department of Health and Human Services, to conduct a study on these systems to gather more information about intractable water systems and barriers to deliver potable water. Water Infrastructure Workforce Development (AWIA Section 4304) Section 4304 of AWIA seeks to address concerns about the rate for replacing workers by establishing a water-specific workforce development competitive grant program. While estimates vary, the increasing rate of retirement among water sector employees has generated interest in water sector workforce development. A 2010 report from AWWA and the Water Research Foundation estimated that 30%-50% of water sector employees will retire over the following 10 years. Similarly, the Department of Labor's Bureau of Labor Statistics projected that annually 8.2% of water operators will need to be replaced between 2016 and 2026. In 2018, the U.S. Government Accountability Office (GAO) also concluded that EPA could take additional steps to address water sector workforce development and succession planning. Section 4304 directs EPA, in consultation with USDA, to establish the Innovative Water Infrastructure Workforce Development program. It authorizes EPA to award grants to institutions of higher education, nonprofit organizations, or labor organizations for a wide range of activities including bridge programs for water utilities, educational programs to increase public awareness of career opportunities in the water sector, and leadership development. This section authorizes appropriations of $1.0 million annually for FY2019 and FY2020 to support this grant program. Protecting Source Water As noted in the " Source Water Assessment and Protection " section of this report, AWIA makes other amendments to the DWSRF provisions related to source water. It authorizes the use of DWSRF set-asides for source water assessment and protection activities. In addition, AWIA reauthorizes appropriations to a source water program and revises certain notification requirements to better enable public water systems to know of and respond to contamination. Source Water Petition Programs (AWIA Section 2016) Section 2016 of AWIA reauthorizes $5.0 million in annual appropriations for FY2020 and FY2021 to support the source water protection partnership petition program (SDWA §1454). SDWA Section 1454 authorized states to establish this program, in which public water system operators and the community members request state assistance to form a voluntary partnership to prevent source water degradation. The authorization of appropriation for this program had expired in FY2003. Planning for and Responding to Chemical Releases (AWIA Section 2018) AWIA Section 2018 amends the Emergency Planning and Community Right-to-Know Act of 1986 (EPCRA; P.L. 99-499 ) to enhance awareness among community water system operators of a hazardous substance or an extremely hazardous substance released into the drinking water source of the water system and a broader group of hazardous chemicals stored at facilities located near their water system to help facilitate emergency preparedness in the event of a release. EPCRA Section 312 is intended to enhance emergency preparedness in an event of a chemical release. This provision requires a facility operator or owner to report hazardous chemicals present at their site in excess of certain thresholds to the State Emergency Response Commission (SERC), relevant Local Emergency Planning Committee (LEPC), and the local fire department with jurisdiction over the facility. Section 312(e) authorizes any person to request specified information about chemicals stored at a specified facility from that SERC or LEPC. Section 304 of EPCRA addresses notification when a release occurs. This provision requires a facility operator or owner to notify the SERC and the relevant LEPC of releases of a smaller subset of hazardous chemicals, specifically hazardous substances and other extremely hazardous substances. EPCRA Section 325 authorizes EPA to fine facility owners or operators if they do not comply with these emergency planning and release notification requirements, in addition to other requirements in EPCRA. Section 2018 of AWIA amends EPCRA Section 304 to require the SERC to notify the state drinking water agency of releases of hazardous substances and other extremely hazardous substances. This provision requires the state drinking water agency in turn to forward the notice to community water systems with source waters that are affected by the release. In states where EPA retains SDWA primacy, AWIA Section 2018 requires the SERC to provide notice to community water systems with source waters affected by the release of hazardous substances and extremely hazardous substances as defined by EPCRA. The EPCRA provisions added by AWIA would not change a facility owner or operator's reporting requirements, and EPCRA enforcement provisions apply only to facility owners or operators. In addition, Section 2018 amends EPCRA Section 312 to expressly authorize community water systems operators to request information on hazardous chemicals at facilities from SERC or LEPC. Access to this information existed in EPCRA prior to this amendment, but AWIA Section 2018 amends EPCRA to expressly include community water systems. Public Water System Resilience and Sustainability (AWIA Section 2013) AWIA Section 2013 amends SDWA to address the resilience and sustainability of water systems to both natural and intentional threats. This provision replaces SDWA Section 1433, which was added by the Public Health Security and Bioterrorism Preparedness and Response Act of 2002 ( P.L. 107-188 ; Title IV). Prior to AWIA, SDWA Section 1433 required water systems to assess their vulnerabilities to terrorist or other intentional acts and, based on the assessment, prepare emergency response plans. The statute required public water system operators to certify their assessments by a specified deadline but did not require public water systems to update their risk assessments or emergency response plans. Extreme weather events, such as hurricanes and wildfires, may require an emergency response to repair drinking water quality and supply. Accordingly, some stakeholders have testified that drinking water systems should address the risks of weather events and other natural hazards in their assessment and planning deliberations. EPA, with water partners, has developed tools and provided training and technical assistance to water utilities to increase their resilience to extreme weather events. AWIA Section 2013 expands the risk types addressed in a public water system's assessment to include risks of natural hazards and malevolent acts. In addition, community water systems are required to evaluate the resilience of their current physical infrastructure and their management practices, including financial capacity to respond to these risks. Based on the assessment, public water systems must also develop emergency response plans that address the risks and resilience issues that systems may face. Public water systems serving 3,300 or more persons must review their assessments every five years and update them if needed. This provision requires public water systems to coordinate with the relevant LEPC when preparing or revising a risk assessment or emergency response plan. The assessments and response plans are voluntary for public water systems serving fewer than 3,300 people. These public water systems must certify their assessments and submit the certifications to EPA by deadlines specific to the communities' size. To facilitate compliance with this section, Section 2013 authorized public water systems to use technical standards developed by third-party organizations to structure the assessment and plans. Federal agencies were first authorized to use technical standards developed by third-party organizations, when appropriate, in 1995. Some argue that this alternative route to compliance may help minimize federal administrative burdens while recognizing the efforts of third-party organizations in developing assessment and planning standards. Section 2013 authorized $25.0 million to be appropriated each year for FY2020 and FY2021 for EPA to make grants to public water systems to plan or implement projects to address their system's resiliency. AWIA Section 2013 requires EPA to issue guidance and provide technical assistance on conducting assessments and preparing emergency response plans for public water systems serving fewer than 3,300 individuals. Section 2013 authorizes appropriations of $10.0 million for grants to public water systems serving fewer than 3,300 people and grants to nonprofit organizations to support these activities. Review of Technologies (AWIA Section 2017) Section 2017 of AWIA adds SDWA Section 1459D to require EPA to review approaches or technologies that help ensure physical integrity of drinking water systems, address contamination, develop alternative water sources, and facilitate source water protection. In conducting this review, EPA is required to evaluate equipment and technologies for their cost, efficacy, and availability. The review of technologies explicitly includes approaches related to distribution systems (e.g., leak prevention, corrosion control, metering), intelligent systems that address the distribution systems, point-of-entry or point-of-use devices, real-time contaminant monitoring, and non-traditional sources of water. This section authorizes appropriation of $10.0 million in FY2019 for this purpose. Report on Federal Cross-Cutting Requirements (AWIA Section 2019) AWIA Section 2019 requires GAO to report to Congress on any duplicative or substantially similar requirements of state and local environmental law to federal cross-cutting requirements. In 2015, GAO concluded that the existing federal financing mechanisms to rehabilitate or replace aging water infrastructure are complex and that small water systems lack the technical expertise to apply for federal financial assistance. Regarding federal cross-cutting requirements, GAO reported that water systems often face duplicative state requirements when applying for financial assistance for drinking water infrastructure. Representatives of public water systems have testified that compliance with federal cross-cutting requirements is burdensome, as DWSRF projects must often comply with similar state and local requirements. Disaster Assistance (AWIA Section 2020) Section 2020 of AWIA authorizes the appropriation of $100.0 million, available for 24 months, for grants to certain public water systems in specified disaster areas. Section 2020 of AWIA allows additional subsidization (e.g., grants, forgiveness of loan principal, negative interest rate loans, or zero-interest rate loans) for eligible public water systems regardless of whether they meet the statutory designation of disadvantaged. Section 2020(a)(3) defines eligible public water system as a water system that (1) serves an area for which the President declared a major disaster (after January 1, 2017) and provided disaster assistance or (2) is capable of extending drinking water services to underserved areas. Projects eligible for these subsidies are those that restore or increase compliance with national drinking water standards, including expanding drinking water service to underserved areas. To access this subsidization, this section requires states to submit a supplemental intended use plan with relevant information on the public water system project, the intended use of the funds, estimated cost, and projected start date. This section also exempts Puerto Rico from the 20% state-match for any funds received under this section, which is generally required by SDWA Section 1452(e). Water Infrastructure Finance and Innovation Act (WIFIA) Program The Water Resources Reform and Development Act of 2014 ( P.L. 113-121 ) included WIFIA, which authorized both EPA and USACE to administer a five-year pilot program to help finance a broad range of water infrastructure projects. The EPA-administered WIFIA program provides credit assistance (e.g., direct loans) to eligible entities for different types of drinking water and wastewater infrastructure projects (e.g., desalination or water recharge). Eligible projects for EPA-administered assistance from WIFIA include projects that are eligible for the Clean Water State Revolving Fund (CWSRF) and the DWSRF. However unlike the DWSRF, WIFIA-financed projects generally need not be associated with SDWA compliance or public health goals. Qualifying projects for WIFIA assistance must generally cost $20.0 million or more. In an effort to encourage nonfederal and private sector financing, WIFIA assistance generally cannot exceed 49% of project costs. In FY2017, Congress appropriated $25.0 million to cover EPA's subsidy costs of WIFIA loans and $5.0 million for administrative purposes. For FY2018, Congress provided $63.0 million for the EPA-administered WIFIA program in the Consolidated Appropriations Act, 2018 ( P.L. 115-141 ). Of this amount, Congress directed $55.0 million for WIFIA projects, which EPA estimated would be leveraged into $5.50 billion of credit assistance. EPA began issuing loans in 2018. The Consolidated Appropriations Act, 2019, included $60.0 million to cover EPA's subsidy costs of WIFIA loans and $8.0 million to support program administration. These appropriations are available until expended. WIFIA Program Revisions (AWIA Section 4201) Section 4201 of AWIA amends WIFIA provisions to remove the pilot designation from the program, reauthorizes appropriations, and revises provisions related to program administration. Section 4201 authorizes appropriations of $50.0 million each year for FY2020 and FY2021 for EPA. This section increases the amount of appropriations that EPA can use for administrative purposes, including technical assistance for projects, from $2.2 million to $5 million. AWIA prohibits repayment of WIFIA assistance from the federal grants that fund the CWSRF and the DWSRF. Several revisions to the WIFIA program address state finance authorities' use of WIFIA financial assistance. AWIA authorizes an additional $5 million to be appropriated (under certain conditions, discussed below) for WIFIA to provide credit assistance to state finance authorities to support combined projects eligible for assistance from the CWSRF and DWSRF. When this additional appropriation is made, Section 4201(b) of AWIA authorizes state financing authorities to use WIFIA financial assistance to cover 100% of project costs. As discussed earlier, WIFIA financing generally supports up to 49% of project costs. The additional $5.0 million appropriation is available only to the extent that both the CWSRF and the DWSRF are funded at FY2018 levels or 105% or more of the previous year's funding, whichever is greater, and when EPA receives at least $50.0 million in WIFIA appropriations. Section 4201(b)(2) of AWIA clarifies that state finance authorities cannot pass WIFIA application fees on to parties that utilize the credit assistance. Prior to AWIA, WIFIA projects required two letters of credit from rating agencies. Section 4201(a)(2) of AWIA authorizes projects from state finance authorities to supply one letter of credit. In addition, AWIA requires EPA to review and approve or provide guidance on WIFIA projects submitted by state finance authorities within 180 days of submittal. AWIA Section 4201authorizes EPA to enter into agreements with other relevant agencies authorized to provide WIFIA assistance to allow EPA to administer the WIFIA program for another authorized agency. Relatedly, Section 4301 of AWIA specifically directs EPA and the commissioner of the Bureau of Reclamation to enter into such an agreement. Such agreements may help prevent the duplication of WIFIA-related administrative functions across federal agencies. AWIA also requires GAO to report to Congress within three years of enactment on all projects that receive WIFIA assistance. WaterSense (AWIA Section 4306) Initiated by EPA in 2006, WaterSense is a voluntary labeling program that identifies and promotes water-efficient products, buildings, and services. Prior to the enactment of AWIA, WaterSense was not explicitly authorized in law. It is similar to the Department of Energy's (DOE) EnergyStar voluntary labeling program to promote energy efficiency. Section 4306 of AWIA amends the Energy Policy Act of 2005 ( P.L. 109-58 ) to establish the WaterSense program at EPA. Section 4306 authorizes EPA to establish specifications that products and services must meet to earn a WaterSense label, some of which differ from the original program. AWIA stipulates that products and services earning the WaterSense label must reduce water use, decrease strain on water systems, conserve energy, and preserve water resources. Section 4306 requires EPA to set detailed performance criteria for water efficiency. Every six years, EPA must review the water efficiency criteria and update them as necessary. AWIA authorizes EPA to establish the WaterSense performance criteria based on technical specifications and testing protocols of relevant voluntary consensus standards organizations. It also requires EPA to consider reviewing and revising WaterSense performance criteria established prior to January 1, 2012, by December 31, 2019. Section 4306 establishes EPA's oversight responsibilities for the WaterSense program. These responsibilities include auditing the use of the WaterSense label, testing protocols, and managing the accreditation process for WaterSense certification bodies. This section directs EPA and DOE to coordinate to prevent duplicative or conflicting requirements in the WaterSense and EnergyStar programs. AWIA explicitly requires the inclusion of certain products and services in the WaterSense program. These include irrigation technologies and services, point-of-use water treatment devices, plumbing products, water reuse and recycling technologies, various landscaping and gardening products and services, whole house humidifiers, and water-efficient buildings. Innovative Water Technology Grant Program (AWIA Section 2007) Section 2007 of AWIA directs EPA to administer a competitive grant program to accelerate the development of innovative water technology that addresses drinking water supply, quality, treatment or security. Among the selection criteria for grants, EPA must prioritize projects that provide additional drinking water supplies with minimal environmental impact. Eligible grant recipients include research institutions, regional water organizations, nonprofit organizations, and institutions of higher education, which can partner with private entities. The maximum single grant award for any one recipient is $5.0 million. Grant recipients may use these grants for developing, testing, or deploying water technologies or providing technical assistance to deploy existing innovative water technologies. EPA must submit a report to Congress that details advancements in water technology associated with this grant program. This section authorizes $10.0 million to be appropriated each year for FY2019 and FY2020 to support this grant program. Conclusion With AWIA, the 115 th Congress passed an omnibus water infrastructure and project authorization bill that affects several federal agencies. The act includes the most comprehensive amendments to the Safe Drinking Water Act since 1996, with overarching themes involving drinking water infrastructure affordability and water system compliance capacity and sustainability. The amendments authorize new competitive grant programs and activities that are broadly intended to help communities afford drinking water infrastructure improvements needed to achieve compliance with federal drinking water standards and protect public health. Other new SDWA programs authorize grants for projects and activities that (1) improve drinking water system sustainability and resiliency, (2) develop water system capacity to respond to contamination or other events, and (3) address lead in school drinking water. AWIA's DWSRF provisions constitute the first major revision of the program since its establishment in 1996. As with the competitive grant programs, these revisions are intended to facilitate communities' access to DWSRF financial assistance. Among other purposes, AWIA's DWSRF revisions authorize the use of DWSRF funds for (1) source water protection activities, (2) providing additional financing flexibility for public water systems, (3) replacing and repairing aging infrastructure, and (4) increasing subsidies for disadvantaged communities. AWIA authorizes additional water infrastructure assistance with revisions to the WIFIA program. In addition to making the program permanent, AWIA authorizes an additional appropriation for WIFIA assistance under certain conditions. These revisions further authorize EPA to partner with Bureau of Reclamation and other relevant agencies to allow for implementation of WIFIA credit assistance for a broader range of eligible water infrastructure projects. Appendix A. Reports, Plans, and Regulations in AWIA ( P.L. 115-270 ) Appendix B. Cross Reference: AWIA, SDWA, and U.S. Code Sections Appendix C. Other EPA-Related Provisions of AWIA

Congress has long deliberated on the condition of drinking water infrastructure and drinking water quality as well as the financial and technical challenges some public water systems face in ensuring the delivery of safe and adequate water supplies. Several events and circumstances—including source water contamination incidents; water infrastructure damage from natural disasters, such as hurricanes; detection of elevated lead levels in tap water in various cities and schools; and the nationwide need to repair or replace aging drinking water infrastructure—have increased national attention to these issues. America's Water Infrastructure Act of 2018 (AWIA; P.L. 115-270), enacted on October 23, 2018, contains provisions that seek to address these and other water infrastructure concerns. Overall, AWIA authorizes various water infrastructure projects and activities for several federal agencies. Title I of AWIA, "Water Resources Development Act of 2018," authorizes water resource development activities for the U.S. Army Corps of Engineers (USACE). Title II of AWIA constitutes the most comprehensive amendments to the Safe Drinking Water Act (SDWA) since 1996. Title III primarily includes provisions that address hydropower-related activities of the Federal Energy Regulatory Commission. Among its provisions, Title IV amends U.S. Environmental Protection Agency (EPA)-administered water infrastructure programs and several Clean Water Act authorities. This report focuses on the drinking water provisions of Title II and Title IV of AWIA, which authorize appropriations for several drinking water and wastewater infrastructure programs for projects that promote compliance, address aging drinking water infrastructure and lead in school drinking water, and increase drinking water infrastructure resilience to natural hazards. Title II amends SDWA to help communities achieve SDWA compliance, revise the Drinking Water State Revolving Fund (DWSRF) program, reauthorize appropriations for the DWSRF program, and increase emphasis on assisting disadvantaged communities. Provisions in Title II also revise emergency notification and planning requirements; authorize the use of DWSRF funds for the assessment and protection of drinking water sources; identify options intended to develop public water systems' technical, managerial, and financial capacity; and improve consumer confidence in public drinking water supplies. Title II authorizes a supplemental DWSRF appropriation for disaster assistance for public water systems in certain areas under certain conditions. Other provisions authorize new grant programs to reduce lead contamination in school drinking water, improve drinking water infrastructure for specified Indian tribes, respond to contamination of small and disadvantaged communities' drinking water sources, and improve the sustainability and resilience of small and disadvantaged communities' drinking water systems. Title IV addresses several other water quality and infrastructure issues by authorizing and revising activities and programs for the EPA and other federal agencies. Title IV extends, authorizes, and amends drinking-water-related activities and programs administered by EPA. Specifically, these provisions authorize WaterSense, an EPA-initiated voluntary water efficiency labeling program, and revise the Water Instructure Finance and Innovation Act (WIFIA) financial assistance program. The WIFIA program provides credit assistance for water infrastructure projects. Other provisions authorize grant programs for innovative water technology and for water sector workforce development. Title IV also amends the Clean Water Act to expand a municipal sewer overflow grant program to include stormwater management projects, reauthorize appropriations for that program, and direct EPA to establish a task force for stormwater management. With AWIA, the 115th Congress passed an omnibus water infrastructure and project authorization bill that affects several federal agencies. The act includes several provisions related to drinking water, with overarching themes involving drinking water infrastructure affordability and water system compliance capacity and sustainability.

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Introduction Iran ratified the nuclear Nonproliferation Treaty (NPT) in 1970. Article III of the treaty requires non-nuclear-weapon states-parties to accept comprehensive International Atomic Energy Agency (IAEA) safeguards; Tehran concluded a comprehensive safeguards agreement with the IAEA in 1974. In 2002, the agency began investigating allegations that Iran had conducted clandestine nuclear activities; the IAEA ultimately reported that some of these activities had violated Tehran's safeguards agreement. Following more than three years of investigation, the IAEA Board of Governors referred the matter to the U.N. Security Council in February 2006. Since then, the council adopted six resolutions requiring Iran to take steps to alleviate international concerns about its nuclear program. This report provides a brief overview of Iran's nuclear program and describes the legal basis for the actions taken by the IAEA board and the Security Council. For more detailed information about Iran's nuclear program, see CRS Report RL34544, Iran's Nuclear Program: Status , by Paul K. Kerr. For more information about the July 2015 Joint Comprehensive Plan of Action (JCPOA) concerning Iran's nuclear program, see CRS Report R43333, Iran Nuclear Agreement , by Kenneth Katzman and Paul K. Kerr. Background Iran's nuclear program has generated widespread concern that Tehran is pursuing nuclear weapons. Tehran's construction of gas centrifuge uranium enrichment facilities has been the main source of proliferation concern. Gas centrifuges enrich uranium by spinning uranium hexafluoride gas at high speeds to increase the concentration of the uranium-235 isotope. Such centrifuges can produce both low-enriched uranium (LEU), which can be used in nuclear power reactors, and highly enriched uranium (HEU), which is one of the two types of fissile material used in nuclear weapons. HEU can also be used as fuel in certain types of nuclear reactors. Iran also has a uranium conversion facility, which converts uranium oxide into several compounds, including uranium hexafluoride. Tehran claims that it wants to produce LEU for its current and future power reactors. Iran's construction of a reactor moderated by heavy water has also been a source of concern. Although Tehran says that the reactor, which Iran is building at Arak, is intended for the production of medical isotopes, it was a proliferation concern because the reactor's spent fuel would have contained plutonium well-suited for use in nuclear weapons. In order to be used in nuclear weapons, however, plutonium must be separated from the spent fuel—a procedure called "reprocessing." Iran has said that it will not engage in reprocessing. Pursuant to the Joint Comprehensive Plan of Action (JCPOA), which Iran concluded in July 2015 with China, France, Germany, Russia, the United Kingdom, and the United States (collectively known as the "P5+1"), Tehran has rendered the Arak reactor's original core inoperable. Iran has also begun to fulfill a JCPOA requirement to redesign and rebuild the Arak reactor based on a design agreed to by the P5+1 so that it will not produce weapons-grade plutonium. The agreement also requires Iran to export the spent fuel from this reactor and all other nuclear reactors. Iran and the IAEA agreed in August 2007 on a work plan to clarify the outstanding questions regarding Tehran's nuclear program. Most of these questions, which had contributed to suspicions that Iran had been pursuing a nuclear weapons program, were subsequently resolved. Then-IAEA Director General Mohamed ElBaradei, however, told the IAEA board June 2, 2008, that there was "one remaining major [unresolved] issue," which concerns questions regarding "possible military dimensions to Iran's nuclear programme." The IAEA agency did not make any substantive progress on these matters for some time. Tehran has questioned the authenticity of some of the evidence underlying the agency's concerns and maintains that it has not done any work on nuclear weapons. Iran also expressed concern to the IAEA that resolving some of these issues would require agency inspectors to have "access to sensitive information related to its conventional military and missile related activities." The IAEA, according to a September 2008 report from ElBaradei, stated its willingness to discuss with Iran modalities that could enable Iran to demonstrate credibly that the activities referred to in the documentation are not nuclear related, as Iran asserts, while protecting sensitive information related to its conventional military activities. Indeed, the agency made several specific proposals, but Tehran did not provide the requested information. The IAEA Board of Governors adopted a resolution on November 18, 2011, stating that "it is essential" for Iran and the IAEA "to intensify their dialogue aiming at the urgent resolution of all outstanding substantive issues." IAEA and Iranian officials met 10 times between January 2012 and May 2013 to discuss what the agency termed a "structured approach to the clarification of all outstanding issues related to Iran's nuclear programme." However, during an October 2013 meeting, IAEA officials and their Iranian counterparts decided to adopt a "new approach" to resolving these issues. Iran signed a joint statement with the IAEA on November 11, 2013, describing a "Framework for Cooperation." According to the statement, Iran and the IAEA agreed to "strengthen their cooperation and dialogue aimed at ensuring the exclusively peaceful nature of Iran's nuclear programme through the resolution of all outstanding issues that have not already been resolved by the IAEA." Iran subsequently provided the agency with information about several of the outstanding issues. Iran later agreed in May 2014 to provide information to the IAEA by August 25, 2014, about five additional issues, including alleged Iranian research on high explosives and "studies made and/or papers published in Iran in relation to neutron transport and associated modelling and calculations and their alleged application to compressed materials." Iran subsequently provided information about four of these issues. According to the JCPOA, Iran was to "complete" a series of steps set out in an Iran-IAEA "Roadmap for Clarification of Past and Present Outstanding Issues." According to IAEA Director General Yukiya Amano, this road map set out "a process" under a November 24, 2013, Joint Plan of Action between Iran and the P5+1, "to enable the Agency, with the cooperation of Iran, to make an assessment of issues relating to possible military dimensions to Iran's nuclear programme." According to a December 2, 2015, report from Amano to the IAEA Board of Governors, "[a]ll the activities contained in the road-map were implemented in accordance with the agreed schedule." The road map required Amano to present this report, which contains the agency's "final assessment on the resolution" of the aforementioned outstanding issues. In response, the board adopted a resolution on December 15, 2015, that notes Iran's cooperation with the road map and "further notes that this closes the Board's consideration" of the "outstanding issues regarding Iran's nuclear programme." Since the IAEA has verified that Iran has taken the steps required for Implementation Day to take effect, the board is no longer focused on Iran's compliance with past Security Council resolutions and past issues concerning Iran's safeguards agreement. Instead, the board is focused on monitoring and verifying Iran's JCPOA implementation "in light of" United Nations Security Council Resolution 2231, which the Council adopted on July 20, 2015. This latter resolution requests the IAEA Director General "to undertake the necessary verification and monitoring of Iran's nuclear-related commitments for the full duration of those commitments under the JCPOA." The December 2015 IAEA resolution requests the Director General to issue quarterly reports to the board regarding Iran's "implementation of its relevant commitments under the JCPOA for the full duration of those commitments." The Director General is also to report to the Board of Governors and the Security Council "at any time if the Director General has reasonable grounds to believe there is an issue of concern" regarding Tehran's compliance with its JCPOA or safeguards obligations. The JCPOA and Resolution 2231 also contain a variety of reporting provisions for the IAEA. For example, the resolution requests the agency's Director General to provide regular updates to the IAEA Board of Governors and, as appropriate, in parallel to the Security Council on Iran's implementation of its commitments under the JCPOA and also to report to the IAEA Board of Governors and in parallel to the Security Council at any time if the Director General has reasonable grounds to believe there is an issue of concern directly affecting fulfilment of JCPOA commitments. Several U.N. Security Council Resolutions required Iran to cooperate fully with the IAEA's investigation of its nuclear activities, suspend its uranium enrichment program, suspend its construction of a heavy-water reactor and related projects, and ratify the Additional Protocol to its IAEA safeguards agreement. Tehran has signed, but not ratified, its Additional Protocol. Resolution 1929, which the council adopted in June 2010, contains these requirements and also required Tehran to refrain from "any activity related to ballistic missiles capable of delivering nuclear weapons." Iran has also continued its extensive ballistic missile program. Resolution 1929 also required Iran to comply with the modified Code 3.1 of its subsidiary arrangements. (See " Potential Noncompliance Since September 2005 .") Iran did not take any of these steps prior to concluding the JCPOA, but did limit and reverse some aspects of its nuclear program since the government began implementing the November 2013 Joint Plan of Action. Moreover, pursuant to the Joint Plan of Action and its November 2013 agreement with the IAEA, Iran provided some information to the agency required by the modified Code 3.1. Pursuant to the JCPOA, Tehran has since implemented additional restrictions on its uranium enrichment program and heavy-water reactor program, as well as begun implementing its additional protocol and the modified Code 3.1. On the JCPOA's Implementation Day, which took place on January 16, 2016, all of the previous Security Council resolutions' requirements were terminated pursuant to U.N. Security Council Resolution 2231, which along with the NPT, composes the current legal framework governing Iran's nuclear program. Although the IAEA reports findings of its inspection and monitoring activities and the JCPOA-established Joint Commission monitors the parties' implementation of the agreement, compliance determinations are national decisions. "Iran continued to adhere" to its JCPOA commitments during 2017, according to an April 2018 State Department report covering that period. All official reports and statements from the United Nations, European Union, the IAEA, and the non-U.S. participating governments also indicate that Iran has complied with the JCPOA and related Resolution 2231 requirements. The most recent report from IAEA Director General Amano states that the IAEA has continued verification and monitoring of the restrictions described in Section T of the JCPOA, which prohibits a number of nuclear weapons-related activities. The agreement, as noted, describes arrangements for agency inspectors to gain access to Iranian sites, including military sites, other than those that Tehran has declared to the agency, "if the IAEA has concerns regarding undeclared nuclear materials or activities, or activities inconsistent with" the JCPOA. The agreement also provides for alternative means to clarify the matter. The IAEA has not reported whether it has requested access to any Iranian military facilities, but the agency has a number of methods other than inspections, such as analyzing open-source information and receiving intelligence briefings from governments, to monitor Iranian compliance with these and other JCPOA commitments. According to the April 2018 State Department report [t]he IAEA continues to exercise its full authorities in pursuing any new safeguards-relevant or JCPOA-related information in Iran, including any new concerns regarding weaponization should they arise, through implementation of Iran's Safeguards Agreement, Additional Protocol, and the enhanced transparency and verification measures contained in the JCPOA. There are no apparent disputes between Iran and the IAEA with respect to Iranian cooperation with the agency. Amano noted in an October 2, 2018, statement that the IAEA has been able to access "all the sites and locations in Iran which" agency inspectors "needed to visit." Similarly, a February 2019 report from Amano states that the IAEA "has conducted complementary accesses under the Additional Protocol to all the sites and locations in Iran which it needed to visit." Iran and the IAEA As noted, Iran is a party to the NPT and has concluded a comprehensive safeguards agreement with the agency. Such agreements are designed to enable the IAEA to detect the diversion of nuclear material from peaceful purposes to nuclear weapons uses, as well as to detect undeclared nuclear activities and material. Safeguards include agency inspections and monitoring of declared nuclear facilities. Although comprehensive safeguards agreements give the IAEA the authority "to verify the absence of undeclared nuclear material and activities, the tools available to it to do so, under such agreements, are limited," according to the agency. As a practical matter, the IAEA's ability to inspect and monitor nuclear facilities, as well as obtain information, in a particular country pursuant to that government's comprehensive safeguards agreement is limited to facilities and activities that have been declared by the government. Additional Protocols to IAEA comprehensive safeguards agreements increase the agency's ability to investigate undeclared nuclear facilities and activities by increasing the IAEA's authority to inspect certain nuclear-related facilities and demand information from member states. Iran signed such a protocol in December 2003 and agreed to implement the agreement pending ratification. Tehran stopped adhering to its Additional Protocol in 2006. The IAEA's authority to investigate nuclear-weapons-related activity is limited. Then Director General ElBaradei explained in a 2005 interview that the IAEA does not have "an all-encompassing mandate to look for every computer study on weaponization. Our mandate is to make sure that all nuclear materials in a country are declared to us." Similarly, a February 2006 report from ElBaradei to the IAEA board stated that "absent some nexus to nuclear material the agency's legal authority to pursue the verification of possible nuclear weapons related activity is limited." There is no requirement that there be any nexus to nuclear material in order for the IAEA to request access to a facility, but there are disagreements among IAEA member states regarding the extent of the agency's rights to access locations where there is no reason to suspect the presence of nuclear material. Such disagreements could play a role if the IAEA Board is required to consider a request for special inspections in Iran or another country (see Appendix B ). Therefore, the closer the connection between nuclear material and the location in question, the more likely the Board would be to approve such an inspection. The current public controversy over Iran's nuclear program began in August 2002, when the National Council of Resistance on Iran (NCRI), an Iranian exile group, revealed information during a press conference (some of which later proved to be accurate) that Tehran had built nuclear-related facilities that it had not revealed to the IAEA. The United States had been aware of at least some of these activities, according to knowledgeable former officials. Prior to the NCRI's revelations, the IAEA had expressed concerns that Iran had not been providing the agency with all relevant information about its nuclear programs, but had never found Tehran in violation of its safeguards agreement. In fall 2002, the IAEA began to investigate Iran's nuclear activities at the sites named by the NCRI; inspectors visited the sites the following February. Adopting its first resolution on the matter in September 2003, the IAEA board called on Tehran to increase its cooperation with the agency's investigation, suspend its uranium enrichment activities, and "unconditionally sign, ratify and fully implement" an Additional Protocol. In October 2003, Iran concluded a voluntary agreement with France, Germany, and the United Kingdom, collectively known as the "E3," to suspend its enrichment activities, sign and implement an Additional Protocol to its IAEA safeguards agreement, and comply fully with the IAEA's investigation. As a result, the agency's board decided to refrain from referring the matter to the U.N. Security Council. As noted, Tehran signed this Additional Protocol in December 2003, but has never ratified it. Ultimately, the IAEA's investigation, as well as information Iran provided after the October 2003 agreement, revealed that Iran had engaged in a variety of clandestine nuclear-related activities, some of which violated the country's safeguards agreement (see Appendix A ). After October 2003, Iran continued some of its enrichment-related activities, but Tehran and the E3 agreed in November 2004 to a more detailed suspension agreement. However, Iran resumed uranium conversion in August 2005 under the leadership of then-President Mahmoud Ahmadinejad, who had been elected two months earlier. On September 24, 2005, the IAEA Board of Governors adopted a resolution (GOV/2005/77) that, for the first time, found Iran to be in noncompliance with its IAEA safeguards agreement. The board, however, did not refer Iran to the Security Council, choosing instead to give Tehran additional time to comply with the board's demands. The resolution urged Iran to implement transparency measures including access to individuals, documentation relating to procurement, dual use equipment, certain military owned workshops, and research and development locations; to reestablish full and sustained suspension of all enrichment-related activity; to reconsider the construction of the research reactor moderated by heavy water; to ratify promptly and implement in full the Additional Protocol; and to continue to act in accordance with the provisions of the Additional Protocol. No international legal obligations required Tehran to take these steps. But ElBaradei's September 2008 report asserted that, without Iranian implementation of such "transparency measures," the IAEA would "not be in a position to progress in its verification of the absence of undeclared nuclear material and activities in Iran." Iran announced in January 2006 that it would resume research and development on its centrifuges at Natanz. The next month, the IAEA Board of Governors referred Iran's case to the U.N. Security Council. Tehran announced shortly after that it would stop implementing its Additional Protocol. (For details, see " Iran and the U.N. Security Council " below.) Potential Noncompliance Since September 2005 Iran further scaled back its cooperation with the IAEA in March 2007, when the government told the agency that it would stop complying with a portion of the subsidiary arrangements for its IAEA safeguards agreement. That provision (called the modified code 3.1), to which Iran agreed in February 2003, requires Tehran to provide design information for new nuclear facilities "as soon as the decision to construct, or to authorize construction, of such a facility has been taken, whichever is earlier." Beginning in March 2007, Iran argued that it was only obligated to adhere to the previous notification provisions of its subsidiary arrangements, which required Tehran to provide design information for a new facility 180 days before introducing nuclear material into it. This decision constituted the basis for Iran's stated rationale for its subsequent refusal to provide the IAEA with some information concerning its nuclear program. For example, Tehran had refused to provide updated design information for the heavy-water reactor under construction at Arak. As part of the November 2013 Joint Plan of Action, Iran submitted this information to the IAEA on February 12, 2014. Similarly, Tehran had refused to provide the IAEA with design information for a reactor that Iran intends to construct at Darkhovin. Although Iran provided the agency with preliminary design information about the Darkhovin reactor in a September 22, 2009, letter, the IAEA requested Tehran to "provide additional clarifications" of the information, according to a November 2009 report. Amano reported in September 2010 that Iran had "provided only limited design information with respect to" the reactor. IAEA reports since 2012 do not appear to address this issue. Tehran also argued, based on its March 2007 decision, that its failure to notify the IAEA before September 2009 that it has been constructing a gas-centrifuge uranium enrichment facility, called the Fordow facility, near the city of Qom was consistent with the government's safeguards obligations. Exactly when Iran decided to construct the facility is unclear. Amano reported in May 2012 that the IAEA has requested information from Iran regarding the Fordow construction decision. But Tehran, according to Amano's November 2015 report, has not yet provided all of this information. Subsequent reports from Amano have not addressed the issue. Both the 2007 decision, which the IAEA asked Iran to "reconsider," and Tehran's refusal to provide the design information appear to be inconsistent with the government's safeguards obligations. Although Article 39 of Iran's safeguards agreement states that the subsidiary arrangements "may be extended or changed by agreement between" Iran and the IAEA, the agreement does not provide for a unilateral modification or suspension of any portion of those arrangements. Moreover, the IAEA legal adviser explained in a March 2009 statement that Tehran's failure to provide design information for the reactors is "inconsistent with" Iran's obligations under its subsidiary arrangements. The adviser, however, added that "it is difficult to conclude that" Tehran's refusal to provide the information "in itself constitutes noncompliance with, or a breach of" Iran's safeguards agreement. Nevertheless, a November 2009 report from ElBaradei described Tehran's failures both to notify the agency of the decision to begin constructing the Fordow facility, as well as to provide the relevant design information in a timely fashion, as "inconsistent with" Iran's safeguards obligations. The report similarly described Iran's delay in providing design information for the Darkhovin reactor. Iran may also have violated its safeguards agreement if it decided to construct other new nuclear facilities without informing the IAEA. The agency has investigated whether Iran has made such decisions. For example, the IAEA has asked the government for information about Iranian statements that the government is planning to construct new uranium enrichment facilities, is designing a nuclear reactor similar to a research reactor located in Tehran, is producing fuel for four new research reactors, and is planning to construct additional nuclear power reactors. Pursuant to its November 2013 agreement with the IAEA, Iran has provided at least some of this information to the agency. Iran's March 2007 decision regarding the provision of information to the IAEA also formed the basis for Tehran's refusal until August 2009 to allow agency inspectors to verify design information for the Arak reactor. This action also appeared to be inconsistent with Tehran's safeguards agreement. Article 48 of that agreement states that the IAEA "may send inspectors to facilities to verify the design information provided to the Agency"; in fact, the agency has a "continuing right" to do so, according to a November 2008 report from ElBaradei. Moreover, the legal adviser's statement characterized Iran's refusal to allow IAEA inspectors to verify the Arak reactor's design information as "inconsistent with" Tehran's obligations under its safeguards agreement. IAEA inspectors visited the reactor facility in August 2009 to verify design information, according to a report ElBaradei issued the same month. Inspectors have visited the facility several more times, according to reports from Amano. In addition to the lapses described above, Iran's failure to notify the IAEA of its decision to produce enriched uranium containing a maximum of 20% uranium-235 in time for agency inspectors to adjust their safeguards procedures may, according to a February 2010 report from Amano, have violated Iran's IAEA safeguards agreement. Article 45 of that agreement requires that Tehran notify the IAEA "with design information in respect of a modification relevant for safeguards purposes sufficiently in advance for the safeguards procedures to be adjusted when necessary," according to Amano's report, which describes Iran's enrichment decision as "clearly relevant for safeguards purposes." The IAEA board has neither formally found that any of the Iranian actions described above are in noncompliance with Tehran's safeguards agreement, nor referred these issues to the U.N. Security Council. The IAEA board adopted a resolution on November 27, 2009, that described Iran's failure to notify the agency of the Fordow facility as "inconsistent with" the subsidiary arrangements under Iran's safeguards agreement, but this statement did not constitute a formal finding of noncompliance. A September 13, 2012, IAEA board resolution expressed "serious concern" that Tehran has not complied with the obligations described in IAEA Board of Governors and U.N. Security Council resolutions, but the September resolution did not contain a formal finding of noncompliance. Iran and the U.N. Security Council As noted, Iran announced in January 2006 that it would resume research and development on its centrifuges at Natanz. In response, the IAEA board adopted a resolution (GOV/2006/14) on February 4, 2006, referring the matter to the Security Council and reiterating its call for Iran to take the measures specified in the September resolution. Two days later, Tehran announced that it would stop implementing its Additional Protocol. On March 29, 2006, the U.N. Security Council President issued a statement, which was not legally binding, that called on Iran to "take the steps required" by the February IAEA board resolution. The council subsequently adopted six resolutions concerning Iran's nuclear program: 1696 (July 2006), 1737 (December 2006), 1747 (March 2007), 1803 (March 2008), 1835 (September 2008), and 1929 (June 2010). The second, third, fourth, and sixth resolutions imposed a variety of restrictions on Iran. Resolution 1696 was the first to place legally binding Security Council requirements on Iran with respect to its nuclear program. That resolution made mandatory the IAEA-demanded suspension and called on Tehran to implement the transparency measures called for by the IAEA board's February 2006 resolution. Resolution 1737 reiterated these requirements but expanded the suspension's scope to include "work on all heavy water-related projects." It is worth noting that the Security Council has acknowledged (in Resolution 1803, for example) Iran's rights under Article IV of the NPT, which states that parties to the treaty have "the inalienable right ... to develop research, production and use of nuclear energy for peaceful Purposes." As noted, Resolution 1929 also required Tehran to refrain from "any activity related to ballistic missiles capable of delivering nuclear weapons" and to comply with the modified Code 3.1 of its subsidiary arrangement. Resolution 2231, which the U.N. Security Council adopted on July 20, 2015, states that all of the previous resolutions' requirements would be terminated when the council receives a report from the IAEA stating that Iran has implemented the nuclear-related measures by Implementation Day, as described by the July 2015 Joint Comprehensive Plan of Action. As noted, Implementation Day took place on January 16, 2016. Resolution 2231 also "reaffirms that Iran shall cooperate fully as the IAEA requests to be able to resolve all outstanding issues, as identified in IAEA reports." The IAEA Board of Governors' December 2015 resolution noted that the board had closed its consideration of the "outstanding issues regarding Iran's nuclear programme." The JCPOA spells out a process for Iran or the P5+1 to resolve disputes over alleged breaches of their JCPOA commitments pursuant to the agreement. Both the JCPOA and Resolution 2231 contain a "snap back" mechanism to reimpose sanctions should Iran fail to resolve satisfactorily a P5+1 claim regarding Iranian JCPOA noncompliance. This mechanism provides that any permanent UN Security Council member would be able to veto a Security Council resolution that would preserve U.N. sanctions relief in the event of Iranian noncompliance. The JCPOA specifies that, in such a case, "the provisions of the old U.N. Security Council resolutions would be re-imposed, unless the U.N. Security Council decides otherwise." The other P5+1 states are able to invoke this mechanism, but whether the United States may do so is unclear because Resolution 2231 provides that only a "JCPOA participant state" may bring a noncompliance finding to the Security Council; U.S. officials have stated that the United States is no longer participating in the agreement. Authority for IAEA and U.N. Security Council Actions The legal authority for the actions taken by the IAEA Board of Governors and the U.N. Security Council is found in both the IAEA Statute and the U.N. Charter. The following sections discuss the relevant portions of those documents. IAEA Statute48 Two sections of the IAEA Statute explain what the agency should do if an IAEA member state is found to be in noncompliance with its safeguards agreement. Article III B. 4. of the statute states that the IAEA is to submit annual reports to the U.N. General Assembly and, "when appropriate," to the U.N. Security Council. If "there should arise questions that are within the competence of the Security Council," the article adds, the IAEA "shall notify the Security Council, as the organ bearing the main responsibility for the maintenance of international peace and security." Additionally, Article XII C. states that IAEA inspectors are to report noncompliance issues to the agency's Director General, who is to report the matter to the IAEA Board of Governors. The board is then to "call upon the recipient State or States to remedy forthwith any non-compliance which it finds to have occurred," as well as "report the non-compliance to all members and to the Security Council and General Assembly of the United Nations." In the case of Iran, the September 24, 2005, IAEA board resolution (GOV/2005/77) stated that the board found that Iran's many failures and breaches of its obligations to comply with its NPT Safeguards Agreement, as detailed in GOV/2003/75 [a November 2003 report from then-Director General ElBaradei], constitute non compliance in the context of Article XII.C of the Agency's Statute; According to the resolution, the board also found that the history of concealment of Iran's nuclear activities referred to in the Director General's report [GOV/2003/75], the nature of these activities, issues brought to light in the course of the Agency's verification of declarations made by Iran since September 2002 and the resulting absence of confidence that Iran's nuclear programme is exclusively for peaceful purposes have given rise to questions that are within the competence of the Security Council, as the organ bearing the main responsibility for the maintenance of international peace and security. ElBaradei issued the report cited by the resolution, GOV/2003/75, in November 2003. It described a variety of Iranian nuclear activities, which are detailed in Appendix A , that violated Tehran's safeguards agreement. ElBaradei subsequently reported that Iran has taken corrective measures to address these safeguards breaches. As noted above, the 2005 resolution called on Iran to take a variety of actions that Tehran was not legally required to implement. U.N. Charter and the Security Council Several articles of the U.N. Charter, which is a treaty, describe the Security Council's authority to impose requirements and sanctions on Iran. Article 24 confers on the council "primary responsibility for the maintenance of international peace and security." The article also states that the "specific powers granted to the Security Council for the discharge of these duties are laid down" in several chapters of the charter, including Chapter VII, which describes the actions that the council may take in response to "threats to the peace, breaches of the peace, and acts of aggression." Chapter VII of the charter contains three articles relevant to the Iran case. Security Council resolutions that made mandatory the IAEA's demands concerning Iran's nuclear program invoked Chapter VII. Article 39 of that chapter states that the council shall determine the existence of any threat to the peace, breach of the peace, or act of aggression and shall make recommendations, or decide what measures shall be taken in accordance with Articles 41 and 42, to maintain or restore international peace and security. Resolution 1696 invoked Article 40 of Chapter VII "in order to make mandatory the suspension required by the IAEA." As noted, that resolution did not impose any sanctions on Iran. Article 40 states that the Security Council may, before making the recommendations or deciding upon the measures provided for in Article 39 [of Chapter VII], call upon the parties concerned to comply with such provisional measures as it deems necessary or desirable. Resolutions 1737, 1747, 1803, and 1929, which did impose sanctions, invoked Article 41 of Chapter VII. According to Article 41, the Security Council may decide what measures not involving the use of armed force are to be employed to give effect to its decisions, and it may call upon the Members of the United Nations to apply such measures. These may include complete or partial interruption of economic relations and of rail, sea, air, postal, telegraphic, radio, and other means of communication, and the severance of diplomatic relations. As noted, Security Council resolution 1835 did not impose new sanctions, but reaffirmed the previous resolutions and called on Iran to comply with them. It is worth noting that Article 25 of the U.N. Charter obligates U.N. members "to accept and carry out the decisions of the Security Council." Moreover, Article 103 of the Charter states that [i]n the event of a conflict between the obligations of the Members of the United Nations under the present Charter and their obligations under any other international agreement, their obligations under the present Charter shall prevail. The IAEA also has an obligation to cooperate with the Security Council, "[b]y virtue of its Relationship Agreement with the United Nations." As noted, Security Council Resolution 2231 requests the IAEA Director General "to undertake the necessary verification and monitoring of Iran's nuclear-related commitments for the full duration of those commitments under the JCPOA." Has Iran Violated the NPT?53 Whether Iran has violated the NPT is unclear. The treaty does not contain a mechanism for determining that a state-party has violated its obligations. Moreover, there does not appear to be a formal procedure for determining such violations. An NPT Review Conference would, however, be one venue for NPT states-parties to make such a determination. The U.N. Security Council has never declared Iran to be in violation of the NPT; neither the council nor the U.N. General Assembly has a responsibility to adjudicate treaty violations. However, the lack of a ruling by the council on Iran's compliance with the NPT has apparently had little practical effect because, as noted, the council has taken action in response to the IAEA Board of Governors' determination that Iran has violated its safeguards agreement. Iran's violations of its safeguards agreement appear to constitute violations of Article III, which requires NPT non-nuclear-weapon states-parties to accept IAEA safeguards, in accordance with the agency's statue, "for the exclusive purpose of verification of the fulfillment of its obligations assumed under this Treaty with a view to preventing diversion of nuclear energy from peaceful uses to nuclear weapons or other nuclear explosive devices." Tehran may also have violated provisions of Article II which state that non-nuclear-weapon states-parties shall not "manufacture or otherwise acquire nuclear weapons or other nuclear explosive devices" or "seek or receive any assistance in the manufacture of nuclear weapons or other nuclear explosive devices." As noted, the IAEA investigated evidence of what then-IAEA Director General Mohamed ElBaradei described in June 2008 as "possible military dimensions to Iran's nuclear programme." Such activities may indicate that Tehran has violated both Article II provisions described above. Moreover, a November 2007 National Intelligence Estimate (NIE) stated that "until fall 2003, Iranian military entities were working under government direction to develop nuclear weapons." This past program could be a violation of Article II, although the estimate does not provide any detail about the program. Nevertheless, the IAEA has never reported that Iran has attempted to develop nuclear weapons. Despite the lack of such an IAEA conclusion, a 2005 State Department report regarding states' compliance with nonproliferation agreements argued that the country had violated Article II of the NPT: The breadth of Iran's nuclear development efforts, the secrecy and deceptions with which they have been conducted for nearly 20 years, its redundant and surreptitious procurement channels, Iran's persistent failure to comply with its obligations to report to the IAEA and to apply safeguards to such activities, and the lack of a reasonable economic justification for this program leads us to conclude that Iran is pursuing an effort to manufacture nuclear weapons, and has sought and received assistance in this effort in violation of Article II of the NPT. The report also stated that Iran's "weapons program combines elements" of Tehran's declared nuclear activities, as well as suspected "undeclared fuel cycle and other activities that may exist, including those that may be run solely by the military." The State Department's 2005 reasoning appears to be based on an interpretation of the NPT which holds that a wide scope of nuclear activities could constitute violations of Article II. The 2005 report states that assessments regarding Article II compliance "must look at the totality of the facts, including judgments as to" a state-party's "purpose in undertaking the nuclear activities in question." The report also includes a list of activities which could constitute such noncompliance. The 2005 State Department report cites testimony from then-Arms Control and Disarmament Agency Director William Foster during a 1968 Senate Foreign Relations Committee hearing. Foster stated that "facts indicating that the purpose of a particular activity was the acquisition of a nuclear explosive device would tend to show non-compliance" with Article II. He gave two examples: "the construction of an experimental or prototype nuclear explosive device" and "the production of components which could only have relevance" to such a device. However, Foster also noted that a variety of other activities could also violate Article II, adding that the United States believed it impossible "to formulate a comprehensive definition or interpretation." It is worth noting that the 2005 State Department report's arguments appear to rely heavily on the notion that a state's apparent intentions underlying certain nuclear-related activities can be used to determine violations of Article II. This interpretation is not shared by all experts. The 2005 report "primarily reflected activities from January 2002 through December 2003." Whether the State Department assesses that Iran has violated Article II since then is unclear. A version of the report released in 2010, which primarily reflected activities from January 1, 2004, through December 31, 2008, states that "the issues underlying" the 2005 report's conclusion regarding Iran's Article II compliance "remain unresolved." Subsequent versions of the report reiterated the 2010 report's assessment until 2016, when the State Department assessed that "previous issues leading to NPT noncompliance findings [regarding Iran] had been resolved." As noted, the 2007 NIE assessed that Iran halted its nuclear weapons program in 2003; subsequent U.S. official statements have consistently reiterated that Tehran has not yet decided to build nuclear weapons. The United Kingdom's then-Foreign Secretary William Hague would not say whether Iran had violated Article II when asked by a Member of Parliament in March 2012. Appendix A. Iranian Noncompliance with Its IAEA Safeguards Agreement The November 2003 report (GOV/2003/75) from IAEA Director General ElBaradei to the agency's Board of Governors details what the September 2005 board resolution described as "Iran's many failures and breaches of its obligations to comply with its safeguards agreement." The report stated that Iran has failed in a number of instances over an extended period of time to meet its obligations under its Safeguards Agreement with respect to the reporting of nuclear material and its processing and use, as well as the declaration of facilities where such material has been processed and stored. The report detailed some of these failures and referenced other failures described in two earlier reports (GOV/2003/40 and GOV/2003/63) from ElBaradei to the IAEA board. According to GOV/2003/40, Iran failed to declare the following activities to the agency: The importation of natural uranium, and its subsequent transfer for further processing. The processing and use of the imported natural uranium, including the production and loss of nuclear material, and the production and transfer of resulting waste. Additionally, Iran failed to declare the facilities where nuclear material (including the waste) was received, stored, and processed; provide in a timely manner updated design information for a research reactor located in Tehran; as well as provide in a timely manner information on two waste storage sites. GOV/2003/63 stated that Iran failed to report uranium conversion experiments to the IAEA. According to GOV/2003/75, Iran failed to report the following activities to the IAEA: The use of imported natural uranium hexafluoride for the testing of centrifuges, as well as the subsequent production of enriched and depleted uranium. The importation of natural uranium metal and its subsequent transfer for use in laser enrichment experiments, including the production of enriched uranium, the loss of nuclear material during these operations, and the production and transfer of resulting waste. The production of a variety of nuclear compounds from several different imported nuclear materials, and the production and transfer of resulting wastes. The production of uranium targets and their irradiation in the Tehran Research Reactor, the subsequent processing of those targets (including the separation of plutonium), the production and transfer of resulting waste, and the storage of unprocessed irradiated targets. Iran also failed to provide the agency with design information for a variety of nuclear-related facilities, according to the report. These included the following: A centrifuge testing facility. Two laser laboratories and locations where resulting wastes were processed. Facilities involved in the production of a variety of nuclear compounds. The Tehran Research Reactor (with respect to the irradiation of uranium targets), the hot cell facility where the plutonium separation took place, as well as the relevant waste handling facility. Additionally, the report cited Iran's "failure on many occasions to co-operate to facilitate the implementation of safeguards, through concealment" of its nuclear activities. Appendix B. IAEA Special Inspections As noted, Iran's obligations under its Additional Protocol to provide access to certain locations are unclear; Tehran may refuse to grant the IAEA access to certain facilities. In such a case, the IAEA Director General could call for a special inspection; the inspection could require approval from the IAEA Board of Governors. According to the IAEA, an inspection is deemed to be special when it is in addition to IAEA routine inspections or "involves access to information or locations" that have not been identified to the IAEA as part of the agency's implementation of safeguards in that country. Such inspections "are foreseen in all Agency safeguards agreements, principally as a means for the Agency to resolve unforeseen verification problems," according to a 1991 IAEA document. Paragraph 73 of the model safeguards agreement, INFCIRC 153, states that comprehensive safeguards agreements should provide for the IAEA's ability to "make special inspections," subject to certain procedures, if the agency considers that information made available by the State, including explanations from the State and information obtained from routine inspections, is not adequate for the Agency to fulfill its responsibilities under the Agreement. According to the 1991 document, a special inspection could be triggered by the IAEA's receipt of "plausible information, which is not adequately explained by the State or otherwise resolved" by other IAEA inspections that the country has "nuclear material in a nuclear activity" outside of IAEA safeguards, or that the state has an undeclared nuclear facility that it had been required to report to the agency. The IAEA Director General "has the authority ... to determine the need for, and to direct the carrying out of, special inspections," according to another 1991 IAEA paper. In the event that the IAEA argues for a special inspection in a country, the agency and the government "must hold immediate consultations," according to the 1991 paper. Any dispute regarding the inspection request must be resolved according to dispute settlement provisions described in INFCIRC 153. However, paragraph 18 of INFCIRC 153 states that if the Board, upon report of the Director General, decides that an action by the State is essential and urgent in order to ensure verification that nuclear material subject to safeguards under the Agreement is not diverted to nuclear weapons or other nuclear explosive devices the Board shall be able to call upon the State to take the required action without delay, irrespective of whether procedures for the settlement of a dispute have been invoked. If the state refuses the inspection, the IAEA Board of Governors can take action according to paragraph 19 of INFCIRC 153, including reporting the matter to the U.N. Security Council. Appendix C. Extended Remarks by William Foster Regarding Possible NPT Article II Violations On July 10, 1968, then-Arms Control and Disarmament Agency Director William Foster testified before the Senate Foreign Relations Committee about the NPT. In response to a question regarding the type of nuclear activities prohibited by Article II of the treaty, Foster supplied the following statement: Extension of Remarks by Mr. Foster in Response to Question Regarding Nuclear Explosive Devices The treaty articles in question are Article II, in which non-nuclear-weapon parties undertake "not to manufacture or otherwise acquire nuclear weapons or other nuclear explosive devices," and Article IV, which provides that nothing in the Treaty is to be interpreted as affecting the right of all Parties to the Treaty "to develop research, production and use of nuclear energy for peaceful purposes…in conformity with Articles I and II of this Treaty." In the course of the negotiation of the Treaty, United States representatives were asked their views on what would constitute the "manufacture" of a nuclear weapon or other nuclear explosive device under Article II of the draft treaty. Our reply was as follows: "While the general intent of this provision seems clear, and its application to cases such as those discussed below should present little difficulty, the United States believe [sic] it is not possible at this time to formulate a comprehensive definition or interpretation. There are many hypothetical situations which might be imagined and it is doubtful that any general definition or interpretation, unrelated to specific fact situations could satisfactorily deal with all such situations. "Some general observations can be made with respect to the question of whether or not a specific activity constitutes prohibited manufacture under the proposed treaty. For example, facts indicating that the purpose of a particular activity was the acquisition of a nuclear explosive device would tend to show non-compliance. (Thus, the construction of an experimental or prototype nuclear explosive device would be covered by the term 'manufacture' as would be the production of components which could only have relevance to a nuclear explosive device.) Again, while the placing of a particular activity under safeguards would not, in and of itself, settle the question of whether that activity was in compliance with the treaty, it would of course be helpful in allaying any suspicion of non-compliance. "It may be useful to point out, for illustrative purposes, several activities which the United States would not consider per se to be violations of the prohibitions in Article II. Neither uranium enrichment nor the stockpiling of fissionable material in connection with a peaceful program would violate Article II so long as these activities were safeguarded under Article III. Also clearly permitted would be the development, under safeguards, of plutonium fueled power reactors, including research on the properties of metallic plutonium, nor would Article II interfere with the development or use of fast breeder reactors under safeguards."

Several U.N. Security Council resolutions adopted between 2006 and 2010 required Iran to cooperate fully with the International Atomic Energy Agency's (IAEA's) investigation of its nuclear activities, suspend its uranium enrichment program, suspend its construction of a heavy-water reactor and related projects, and ratify the Additional Protocol to its IAEA safeguards agreement. However, Tehran has implemented various restrictions on, and provided the IAEA with additional information about, its nuclear program pursuant to the July 2015 Joint Comprehensive Plan of Action (JCPOA), which Tehran concluded with China, France, Germany, Russia, the United Kingdom, and the United States. On the JCPOA's Implementation Day, which took place on January 16, 2016, all of the previous resolutions' requirements were terminated. The nuclear Nonproliferation Treaty (NPT) and U.N. Security Council Resolution 2231, which the Council adopted on July 20, 2015, compose the current legal framework governing Iran's nuclear program. Iran has complied with the JCPOA and resolution. Iran and the IAEA agreed in August 2007 on a work plan to clarify outstanding questions regarding Tehran's nuclear program. The IAEA had essentially resolved most of these issues, but for several years the agency still had questions concerning "possible military dimensions to Iran's nuclear programme." A December 2, 2015, report to the IAEA Board of Governors from agency Director General Yukiya Amano contains the IAEA's "final assessment on the resolution" of the outstanding issues. This report provides a brief overview of Iran's nuclear program and describes the legal basis for the actions taken by the IAEA board and the Security Council. It will be updated as events warrant.

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Introduction The Merit Systems Protection Board (MSPB or Board) is a n independent , executive branch agency that works to protect current, former, and prospective federal employees against inappropriate employment-related actions, in accordance with " merit system principles ," statutorily defined standards governing the performance and management of the federal workforce. The MSPB also aims to promote an effective federal workforce free of prohibited personnel practices. The Board mainly carries out its mission through adjudication of federal employee appeals of adverse actions . When the Board determines that a federal employee has been subject to an improper adverse action, it may order relief, including reins tatement, backpay, and attorney' s fees. The Board may also order federal agencies to comply with Board orders, conduct special studies of the civil service and other executive branch merit systems, and review Office of Personnel Management (OPM) rules and regulations to determine, for example, whether a federal agency has invalidly implemented the OPM requirements. This report focuses on the Board's adjudicatory authority. Federal law specifies that the Board consists of three members appointed by the President with the advice and consent of the Senate. However, as of March 2019, the Board lacks any sitting members. Although other MSPB employees, including administrative judges who issue initial decisions in cases, will continue their work, some Members of Congress and others have raised concerns about the extent to which these vacancies limit the agency's ability to perform its other functions. This report discusses the establishment of the MSPB and its structure, as well as the role of the Office of Special Counsel, an independent, prosecutorial agency that operates concurrently with the Board. The report then addresses the Board's authority to adjudicate matters within its jurisdiction and the scope of this jurisdiction, as well as the availability of judicial review for the Board's decisions. Finally, the report examines the effect of the lack of a quorum of Board members. Creation of the MSPB The origins of the MSPB may be traced back more than a century, as part of efforts to curtail the practice of political patronage in the federal government. Under the "spoils system" that existed in the first century of the Republic, "federal employees came and went, depending upon party service and changing administrations, rather than meritorious performance." In response to the "strong discontent with the corruption and inefficiency of the patronage system of public employment," Congress passed the Civil Service Act of 1883, also known as the Pendleton Act, which generally created a merit-based system for hiring federal employees. More specifically, the Act established a Civil Service Commission (CSC) authorized to aid the President in preparing suitable civil service rules for open, competitive examinations of applicants for federal employment. Over the next few decades, Congress enacted additional measures addressing issues such as merit hiring, due process rights, and appeals of agency adverse personnel actions, and the CSC played an increasingly larger role in implementing these requirements. Even so, some Members of Congress and others expressed concerns with the regulatory structure of the civil service system. One central criticism of this structure involved the CSC and its simultaneous handling of managerial and adjudicatory matters. A 1978 Senate committee report described the issue: At the present time the Civil Service Commission has a variety of functions . . . The CSC must now simultaneously serve as a management agent for a President elected through a partisan political process as well as the protection of the merit system from partisan abuse. The Commission serves, too, as the provider of services to agency management in implementing personnel programs, while maintaining sufficient neutrality to adjudicate disputes between agency managers and their employees. As a result, the Commission's performance of its conflicting functions has suffered. Expected to be all things to all parties—Presidential counsellor, merit "watchdog," employee protector, and agency advisory—the Commission has become progressively less credible in all of its roles. In response to these and other issues, Congress passed the Civil Service Reform Act (CSRA), the most comprehensive reform of the civil service system since the Pendleton Act and the current legal framework governing the federal civilian workforce. As part of this reform, and in conjunction with an earlier reorganization plan developed by President Carter, the CSRA split the functions of the Commission between two separate new agencies, OPM and the MSPB. In general, the CSRA charged OPM with conducting personnel management functions formerly performed by the CSC, such as providing training and productivity programs, examining for civil service positions, classifying positions, and administering pay and benefits. The MSPB retained the CSC's hearing, adjudication, and appeals functions, as well as authority to enforce agency compliance with its decisions. The CSRA further authorized the MSPB to develop its adjudicatory processes and procedures, and gave the Board power to, among other functions, issue subpoenas, call witnesses to testify at hearings, and enforce compliance with its final decisions. Board Composition and Terms of Office As noted above, the Board consists of three members—a Chairman, a Vice Chairman, and a third member—all appointed by the President with the advice and consent of the Senate. Not more than two members may be adherents of the same political party. In order to serve on the Board, members must have demonstrated ability, background, training, or experience that makes them "especially qualified" to carry out the MSPB's functions. The term of office of each Board member is seven years, and terms are nonrenewable. While a sitting member may not be reappointed after a seven-year term, a member may continue to serve on the Board for up to one additional year if no successor has been appointed. Board members also have for-cause removal protection and may be removed by the President only "for inefficiency, neglect of duty, or malfeasance in office." While the three Board members make decisions in all cases by majority vote, the Chairman of the Board is the chief executive and administrative officer, responsible for handling issues related to the Board's organization and personnel policies. The Vice Chairman is tasked with performing the Chairman's functions during absence, disability, or vacancy. During the absence or disability of both the Chairman and Vice Chairman or vacancies in both offices, the remaining Board member performs the Chairman's functions. Neither the CSRA nor the Board's regulations expressly address a scenario in which the Board is entirely vacant. Office of Special Counsel The Office of Special Counsel (OSC) in an independent federal agency that protects employees, former employees, and applicants for employment from prohibited personnel practices by receiving and investigating complaints of those practices. The OSC is headed by the Special Counsel, who is appointed by the President, by and with the advice and consent of the Senate, for a term of five years. After receiving and investigating allegations of prohibited personal practices, the Special Counsel may petition the MSPB for corrective action if an agency does not correct the practice, and may seek disciplinary action against any employee who has committed such a practice. The Special Counsel may also petition the Board to order a stay of any personnel action that he believes was taken or is to be taken as a result of a prohibited personnel practice. The Special Counsel position originally resided in the MSPB. In 1989, Congress established the OSC as an independent agency to be headed by the Special Counsel. Board Adjudication The MSPB hears and adjudicates matters within its jurisdiction, as provided by the CSRA and by any other statute, rule, or regulation. The Board maintains both original and appellate jurisdiction over cases. The Board has original jurisdiction over actions brought by the Special Counsel for corrective and disciplinary action, specified removals of persons in the Senior Executive Service (SES), and certain adverse personnel actions taken against administrative law judges (ALJs). In cases involving its original jurisdiction, the Board adjudicates the case initially rather than reviews an agency decision. The MSPB has appellate jurisdiction to review any action that is appealable to the Board under any statute, rule, or regulation by an employee or applicant for employment. For example, an agency's decision to remove or suspend an employee for more than 14 days may be appealed to the Board. Cases may be heard by Board members directly, or referred to ALJs or Board employees called "administrative judges." ALJs typically adjudicate and issue initial decisions in cases involving corrective and disciplinary action. Administrative judges adjudicate cases and issue initial decisions under the Board's appellate jurisdiction. Once decided, an initial decision may be appealed to the full Board. While both ALJs and administrative judges are attorneys who are licensed to practice law, administrative judges do not enjoy the tenure and job protections of ALJs. An ALJ, for example, may only be removed for cause. Limits on Board Jurisdiction The MSPB's jurisdiction does not depend solely on the nature of the action taken, but also requires consideration of the party involved. For example, the Board's ability to hear and adjudicate appeals of agency-imposed adverse actions, such as removals, reductions in grade or pay, and suspensions for more than 14 days, has been limited by statute to actions involving only specified employees: individuals in the competitive service who are not serving a probationary or trial period or who have completed one year of current continuous service; preference eligibles in the excepted service who have completed one year of current continuous service in an executive agency, the Postal Service, or the Postal Rate Commission; and non-preference eligible individuals in the excepted service who are not serving a probationary or trial period or who have completed two years of current or continuous service in an executive agency. For other actions, however, the Board's ability to hear and adjudicate an appeal may be broader, involving individuals other than current employees. For example, the Board can review cases involving employees, former employees, and applicants for employment when a personnel action was allegedly taken as a reprisal for whistleblowing. An employee in a collective bargaining unit that is represented by a union can generally appeal an agency's major disciplinary action, such as a removal or a reduction in grade or pay, to the MSPB or pursuant to a collective bargaining agreement's negotiated grievance procedure, but not both. The U.S. Supreme Court has also determined that the Board's jurisdiction over certain subject matters is constrained. For example, in Department of the Navy v. Egan , the Court concluded that the Board does not have jurisdiction to review the substance of a security clearance determination. The Court maintained that the Board may evaluate only: (1) whether an agency determined that an employee's position required a clearance; (2) whether the clearance was denied or revoked; and (3) whether the employee was provided procedural protections including notice of charges, an opportunity to respond to them, and representation by an attorney or other representative. In Kaplan v. Conyers , the U.S. Court of Appeals for the Federal Circuit (Federal Circuit) interpreted the holding in Egan expansively. The court maintained that the MSPB not only lacks jurisdiction to review the substance of agency security clearance determinations, but also cannot review agency determinations regarding which employees are eligible to occupy sensitive positions. Original Jurisdiction Corrective Action Cases The MSPB has original jurisdiction over cases brought by the Special Counsel to correct personnel actions involving a prohibited personnel practice. An employee, former employee, or applicant for employment, who believes that a prohibited personal practice has occurred, exists, or is to be taken, may seek corrective action from the OSC. If the Special Counsel believes that there are reasonable grounds to believe that a personnel action was taken or is to be taken as a result of a prohibited personnel practice, he may request a stay of the action from any Board member. A stay will be ordered unless the member determines that it would not be appropriate. If, following an investigation of the complaint, the Special Counsel determines that a prohibited personal practice has occurred, exists, or is to be taken, and corrective action is required, he or she will report that determination and any findings or recommendations to the MSPB, the agency involved, and OPM. If the agency does not correct the prohibited personnel practice, the Special Counsel may petition the Board for an order requiring the agency to do so. In general, the Board will order corrective action it considers appropriate so long as the Special Counsel has demonstrated that the prohibited personnel practice has occurred, exists, or is to be taken. In cases involving a personnel action taken against an employee for making a whistleblower disclosure or exercising a right granted by statute, rule, or regulation, the Board will order corrective action if the Special Counsel has demonstrated that the disclosure or activity was a contributing factor in the personnel action. However, in cases involving a whistleblower disclosure, corrective action may not be ordered if an agency demonstrates by clear and convincing evidence that it would have taken the same personnel action in the absence of the disclosure. A Board order to correct a prohibited personnel practice may require the reinstatement of the individual in the position that he would have occupied if the practice had not occurred, reimbursement for attorney's fees, back pay and related benefits, medical costs, travel expenses, other reasonable and foreseeable consequential damages, and any other compensatory damages. An employee, former employee, or applicant for employment who is adversely affected by the Board's final order or decision regarding corrective action may obtain judicial review. Disciplinary Action Cases The MSPB also has original jurisdiction over actions brought by the Special Counsel to discipline an employee for committing a prohibited personnel practice, violating the provisions of any statute, rule, or regulation, engaging in misconduct within the Special Counsel's jurisdiction, or knowingly and willfully refusing or failing to comply with a Board order. If the Special Counsel determines that disciplinary action should be taken, he is to prepare a written complaint against the employee that includes his determination and a statement of supporting facts. The complaint and statement are then presented to the employee and the MSPB. Upon receipt of a complaint, the employee is given an opportunity to provide an answer and to furnish affidavits and other documentary evidence in support of that answer. The employee is also entitled to be represented by an attorney or other representative, to a hearing before the MSPB or an ALJ designated by the Board, and to a written decision that includes a copy of any final order imposing disciplinary action. A final Board order may provide for an employee's removal, reduction in grade, debarment from federal employment for up to five years, suspension, or reprimand. The Board may also order a civil penalty not to exceed $1,000, or any combination of the aforementioned disciplinary actions. In general, an employee who is subject to a final order imposing disciplinary action may obtain judicial review of the order in the Federal Circuit. Informal Hearings for Career Senior Executives Removed from SES A career appointee who is removed from the SES for less than fully successful performance as a manager is entitled to an informal hearing before an ALJ designated by the MSPB. The appointee may appear and present arguments at such a hearing, but his removal will not be delayed as a result of the hearing. But the right to an informal hearing does not provide an appointee with a right to appeal a removal from the SES to the Board. Actions Against Administrative Law Judges The MSPB also has original jurisdiction over certain adverse actions taken against an ALJ, such as removals and reductions in grade or pay. An ALJ who faces such action has various rights, including the right to answer the agency's complaint and the right to be represented in an MSPB hearing on the record before a Board-designated ALJ. The ALJ who hears the case is to issue an initial decision, which may be reviewed by the Board. The MSPB is to uphold an agency-proposed disciplinary action against an ALJ only if it determines that an agency has established good cause. Good cause has been held to differ from the standard that the Board must find to sustain an adverse disciplinary action for misconduct involving most other employees. For employees who are neither ALJs nor members of the SES, the applicable standard is cause "as will promote the efficiency of the service." An ALJ who is subject to a final Board decision authorizing a proposed agency action may obtain judicial review before the Federal Circuit. Appellate Jurisdiction A qualifying employee or applicant for employment may submit an appeal to the MSPB from any action that is appealable to the Board under any statute, rule, or regulation. For example, Section 7513(d) of title 5, U.S. Code, permits an employee who, because of misconduct, is subject to removal, suspension for more than 14 days, a reduction in grade or pay, or a furlough of 30 days or less to appeal his agency's action to the MSPB. This type of action is often referred to as a "chapter 75 action." Under Section 4303(e) of title 5, U.S. Code, an employee who is removed or reduced in grade because of unacceptable performance may also appeal his agency's action to the MSPB. This type of action is often described as a "chapter 43 action." An individual who appeals a personnel action to the Board is entitled to a hearing and legal or other representation. Once an appeal is filed, the case may be heard by the Board or it may be referred to an ALJ or administrative judge for hearing. An initial decision rendered by the Board, ALJ, or administrative judge generally becomes the Board's final decision, unless a party to the appeal or the Director of OPM files a petition for review within 30 days after receiving the decision, or the Board reopens and reconsiders the case on its own motion. One Board member may grant a petition for review or otherwise direct the full Board to review a decision unless an ALJ's decision is required to be acted upon by the Board. An agency's personnel action is to be sustained only if it is supported by substantial evidence in cases involving an employee's unacceptable performance, or by a preponderance of the evidence in all other cases, such as those involving misconduct. An agency's action may not be sustained if the appellant shows: (1) harmful error in the application of the agency's procedures in arriving at its decision; (2) that the decision was based on a prohibited personnel practice; or (3) that the decision was not in accordance with law. In general, an agency must establish three factors to withstand an individual's challenge of his adverse personnel action. First, the agency must prove, by a preponderance of the evidence, that the charged conduct occurred. Second, it must establish a nexus between that conduct and the efficiency of the civil service. Finally, the agency must demonstrate that the penalty imposed on the employee is reasonable. If a member of a collective bargaining unit exercises a right to appeal a personnel action under a negotiated grievance procedure rather than through the MSPB, an arbitrator must apply the same standards of proof—substantial evidence for unacceptable performance actions and preponderance of the evidence for other personnel actions—that the Board applies. Penalty Mitigation Authority Penalties imposed by an agency for actions involving misconduct may be mitigated by the MSPB. In Douglas v. Veterans Administration , the Board concluded that its statutory authority to take final action on matters within its jurisdiction includes the ability to modify or reduce a penalty imposed on an employee by his or her agency's adverse action. While the Board acknowledged that the management of the federal workforce and the maintenance of discipline among its members are not among its functions, it maintained that it did have the authority to mitigate a penalty when it determines that the penalty is clearly excessive, disproportionate to the sustained charges, or arbitrary, capricious, or unreasonable. Noting that this authority had previously been vested in the CSC and was not altered by the CSRA, the Board identified factors that are relevant for consideration when evaluating the appropriateness of a penalty. These factors include the nature and seriousness of the offense, and its relationship to the employee's duties, position, and responsibilities, and the employee's past disciplinary record. The Board indicated that an agency's selection of an appropriate penalty must involve a balancing of the relevant factors in an individual case. Penalties imposed by an agency for actions involving an employee's unacceptable performance under chapter 43 of title 5, U.S. Code, may not be mitigated by the MSPB. In Lisiecki v. MSPB , the Federal Circuit maintained that the CSRA's legislative history suggested that such actions should be distinguished from actions involving misconduct. The court explained that the legislative history "repeatedly cautions that the old standards of review are not applicable under chapter 43 and . . . that the MSPB and the courts should 'give deference to the judgment by each agency of the employee's performance in light of the agency's assessment of its own personnel needs and standards.'" The Federal Circuit noted that allowing the Board to mitigate penalties in chapter 43 actions would give the agency more authority than Congress intended. The court observed that chapter 43 prescribes certain standards that do not apply to actions involving misconduct, such as a lighter burden of proof to sustain agency action. If Congress intended "more intrusive review of agency action" by the Board, the court maintained, "Congress knew what to say if such was its desire." Discrimination Cases involving an adverse personnel action and allegations of discrimination may be subject to review by both the MSPB and the Equal Employment Opportunity Commission (EEOC). When an employee or applicant for employment has been (1) affected by an agency personnel action that may be appealed to the MSPB and (2) believes that the basis for the action was discrimination prohibited by certain federal antidiscrimination provisions, he may appeal such action to the Board, which will decide both the discrimination issue and the appealable action. The Board's decision in a so-called "mixed case" may be appealed to the EEOC. However, if the individual does not seek review by the EEOC or if the agency decides not to review the Board's decision, that decision becomes judicially reviewable. An employee in a collective bargaining unit who alleges that he was affected by a prohibited personnel practice involving discrimination may raise the matter under a statutory procedure or a negotiated grievance procedure, but not both. An employee who selects a negotiated grievance procedure may request that MSPB review an arbitrator's final decision. Judicial Review Under 5 U.S.C. § 7703, federal employees or applicants for employment who are adversely affected by a final order or decision of the MSPB may obtain judicial review. This section also specifies the judicial forum for these decisions. In general, a petition for judicial review may be filed in the Federal Circuit within 60 days after the date the petitioner received notice of a Board final decision. The Federal Circuit must examine these cases under a standard of review that is deferential to the MSPB's determination. More specifically, the Federal Circuit is required to review the record in these cases and hold unlawful and set aside only any agency action, findings, or conclusions found to be: (1) arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law; (2) obtained without procedures required by statute, rule, or regulation having been followed; or (3) unsupported by substantial evidence. Under this standard of review, the Supreme Court has recognized that the Federal Circuit's ability to review the merits of MSPB decisions is "extremely narrow." As the Court has further explained, in examining these MSPB decisions, "it is not for the Federal Circuit to substitute its own judgment for that of the Board." Accordingly, the Federal Circuit typically upholds Board decisions. According to a 2019 MSPB report, over the past few years, the Federal Circuit has affirmed Board decisions in 93 to 96 percent of the cases it reviewed. Courts have also acknowledged that the CSRA, as amended, provides the Federal Circuit with exclusive jurisdiction over appeals of MSPB final decisions. However, one central exception to this exclusivity, found under 5 U.S.C. § 7702, is for so-called "mixed cases" involving allegations of federal antidiscrimination laws in connection with an improper adverse personnel action. Following the MSPB's decision in a mixed case, affected employees may seek judicial review in federal district court, rather than the Federal Circuit. District court review may be preferable for the petitioning federal employee, as district courts generally review these discrimination-related claims under a de novo standard (i.e., affording no deference to the determination of the MSPB). While this special jurisdictional rule for mixed cases may appear straightforward, courts have grappled with its application in a variety of circumstances. Two recent Supreme Court decisions, Kloeckner v. Solis and Perry v. Merit Systems Protection Board , illustrate some of the issues that courts have confronted with respect to the judicial review of MSPB decisions involving mixed cases. The Court in Kloeckner considered the proper judicial forum when the Board dismisses a mixed case on procedural grounds. Although the Federal Circuit generally held that the appropriate forum for review was the district court if the MSPB dismissed a mixed case on the merits, other courts reached varying conclusions with respect to cases dismissed by the MSPB for procedural reasons. In Kloeckner , a former Labor Department employee filed a discrimination claim with the agency, and the employee was subsequently terminated from her position. The employee filed her case with the MSPB, but the Board dismissed her claim as untimely. In a unanimous opinion written by Justice Kagan, the Supreme Court examined the statutory language in 5 U.S.C. § 7702 and held that when the MSPB decides a mixed case, the proper forum for review is the district court, irrespective of whether the MSPB dismissed the case on the merits or procedural grounds. The Court in Perry also explored the judicial review of mixed case appeals, particularly in situations where the MSPB dismissed a case for lack of Board jurisdiction. Traditionally, lower courts had commonly held that the Federal Circuit, and not a district court, was the appropriate court to hear these types of cases. In Perry , a U.S. Census Bureau employee received notice that he would be removed from his position for poor attendance. After the employee and the agency reached a settlement involving suspension from service and early retirement, the employee appealed to the MSPB. The MSPB found that the employee's separation from service was voluntary, and, therefore, not an issue that the Board had jurisdiction to examine. The employee appealed the case to the U.S. Court of Appeals for the District of Columbia Circuit (D.C. Circuit), but the court transferred the case to the Federal Circuit. In a 6-2 decision penned by Justice Ginsburg, the Supreme Court reversed the judgment of the D.C. Circuit. Similar to Kloeckner , the Court's opinion hinged on its interpretation of the statutory language in 5 U.S.C. § 7702, under which district court review of a mixed case applies only when an employee "(A) has been affected by an action which the employee . . . may appeal to the [MSPB] and "(B) alleges . . . discrimination." While the federal government had argued for purposes of this section that a case constitutes a mixed case only if the employee "may appeal to the Board," the Court rejected this argument. Instead, the Court declared that under this language, what matters is not what the MSPB determined about its ability to hear an appeal, but rather "the nature of an employee's claim that he had been "'affected by an action [appealable] to the [MSPB]'" (in this case, suspension and removal). The Court also relied on its decision in Kloe c kner and found that when it comes to mixed cases, there was nothing in the statutory language that demonstrated Congress's intent to treat jurisdictional dismissals differently from other types of MSPB dismissals. Accordingly, the Kloe c kner and Perry decisions both arguably demonstrate that despite MSPB's grounds for dismissing a mixed case, if an employee (or a former employee) "complains of serious adverse action prompted . . . by the employing agency's violation of federal antidiscrimination laws," the appropriate forum for judicial review is the district court. In recent years, Congress has passed legislation that, for some types of cases, expressly extends judicial review of MSPB decisions beyond the Federal Circuit. The Department of Veterans Affairs Accountability and Whistleblower Protection Act of 2017 addressed MSPB appeal rights for Veterans Affairs Department employees who have been suspended, demoted, or removed from federal service for performance or misconduct. Among other things, the act specifies that employees may appeal a decision of the MSPB to the Federal Circuit or any court of appeals of competent jurisdiction. Additionally, in 2018, Congress passed the All Circuit Review Act, which extends judicial review of MSPB decisions in certain whistleblower and other retaliation cases not only to the Federal Circuit, but also to federal circuit court of appeals. This act is a permanent extension of the Whistleblower Protection Enhancement Act, as amended, which provided for this expanded jurisdiction for a period that terminated on November 26, 2017. According to the Office of Special Counsel, the new Act will, among other things, promote more "robust implementation of whistleblower protection laws." The Special Counsel further maintained that given the number of district and appellate courts that will now be hearing these cases, "[d]iffering interpretations may result in 'circuit splits,' which make it more likely that the U.S. Supreme Court will take up questions that arise regarding how these important laws are applied. This expanded judicial accountability is precisely the outcome Congress intended and will strengthen whistleblower protections." Effect of Absence of Quorum The MSPB currently has no sitting members. Board member Mark A. Robbins, who served most recently as the MSPB's Acting Chairman, ended his term on February 28, 2019. The Board has lacked a quorum since January 8, 2017, when former Board Chairman Susan Tsui Grundmann resigned. Prior to that time, there were only two members on the Board. MSPB regulations provide generally that its members will make decisions in all cases by majority vote. These regulations do allow for some decision making when a majority vote is not possible because of a vacancy or recusal, but such decisionmaking is available only when there are at least two members in office. Without a quorum, the Board is unable to issue final decisions in cases where an initial decision has been appealed. As of December 31, 2018, there were approximately 1,800 cases pending before the Board. The absence of a quorum also restricts the Board's ability to publish reports on merit system studies or promulgate new regulations in response to any legislative changes involving the MSPB. In 2018, President Trump nominated three individuals to serve as Chairman, Vice Chairman, and Board member. A confirmation hearing for these nominees was subsequently held, but the nominees were not confirmed by the Senate before the adjournment of the 115th Congress. On January 16, 2019, the President resubmitted the nominations for consideration by the 116th Congress. On February, 13 , 2019, the Senate Committee on Homeland Security and Governmental Affairs approved two of the nominees, but the President's nominee for Vice Chairman withdrew from consideration prior to the committee's vote. The committee's chairman has indicated that he will not advance the two nominees to the full Senate until the President nominates, and the committee supports, a third member.

The Merit Systems Protection Board (MSPB or Board) is a quasi-judicial independent agency in the executive branch charged with protecting federal employees against improper employment-related actions. The Board works to ensure, for example, that federal agencies avoid taking arbitrary action against employees, exhibiting favoritism, or engaging in reprisals against whistleblowers. The MSPB also aims to promote an effective federal workforce free of certain types of discrimination and other prohibited personnel practices. While the Board mainly carries out its mission through adjudication of federal employment-related disputes, it also performs specified oversight functions related to federal employment, including conducting special studies of the civil service and other executive branch merit systems. Established by the Civil Service Reform Act of 1978, the MSPB consists of three Board members, appointed by the President with the advice and consent of the Senate. Not more than two Board members may be adherents of the same political party. The term of office of each Board member is seven years, and terms are nonrenewable. Board members may be removed by the President only for inefficiency, neglect of duty, or malfeasance in office. The Board operates concurrently with the Office of Special Counsel, an independent, prosecutorial federal agency. The Special Counsel receives and investigates complaints related to certain kinds of federal agency misconduct and may petition the Board for corrective action. The MSPB operates like a tribunal and maintains procedures for conducting hearings, examining evidence, and rendering decisions. Most cases the Board reviews are federal employee appeals of adverse actions, including those related to removal or suspension of employment. When the MSPB determines that a federal employee has been subject to an improper adverse action, the Board can issue orders that compel agencies to reverse these actions and, depending upon the particular agency action in question, may order relief, including reinstatement, backpay, and attorney's fees. The Board also maintains original jurisdiction over certain types of cases in which it hears and decides the case initially rather than reviews an agency decision. For example, the MSPB may adjudicate cases brought by the Office of Special Counsel related to a prohibited personnel practice. The Special Counsel may, among other things, petition the Board for a stay of an adverse employment action in relation to this practice. Some of the Board's adjudicatory functions, including appeals of adverse action decisions, typically are carried out by "administrative judges" employed by the Board, while administrative law judges (ALJs) may examine matters coming under the Board's original jurisdiction. Federal employees or applicants for employment who are adversely affected by a final order or decision of the MSPB may obtain judicial review. The U.S. Court of Appeals for the Federal Circuit (Federal Circuit) is generally the proper judicial forum for these cases. Federal law compels the Federal Circuit to examine these cases under a standard of review that is deferential to the MSPB's determination. Consequently, the Federal Circuit typically upholds Board decisions. But a special jurisdictional rule exists for so-called "mixed cases" involving an alleged violation of federal antidiscrimination laws in connection with an improper adverse personnel action. Following the MSPB's decision in a mixed case, affected employees may seek judicial review in federal district court rather than the Federal Circuit. District court review is generally preferable for the petitioning federal employee, as district courts typically review these discrimination-related claims under a de novo standard (i.e., affording no deference to the determination of the MSPB). Since March 2019, the Board has lacked sitting members. Lack of a quorum prevents the Board from performing some of its review functions, including issuing final decisions in cases when an initial decision issued by an administrative judge has been appealed to the full Board. As a result, a significant case backlog has developed. President Trump has submitted nominees to the Senate to fill vacancies on the Board.

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Member Pay: Constitutional Background, Source of Appropriations, and Current Rates Article I, Section 6, of the U.S. Constitution, states that the compensation of Members of Congress shall be "ascertained by law, and paid out of the Treasury of the United States." Additionally, the Twenty-Seventh Amendment to the Constitution states, "No law, varying the compensation for the services of the Senators and Representatives, shall take effect, until an election of Representatives shall have intervened." This amendment was submitted to the states on September 25, 1789, along with 11 other proposed amendments, 10 of which were ratified and became the Bill of Rights. It was not ratified until May 7, 1992. Since FY1983, Member salaries have been funded in a permanent appropriations account. The most recent pay adjustment for Members of Congress was in January 2009. Since then, the compensation for most Senators, Representatives, Delegates, and the Resident Commissioner from Puerto Rico has been $174,000. The only exceptions include the Speaker of the House ($223,500) and the President pro tempore of the Senate and the majority and minority leaders in the House and Senate ($193,400). Selected CRS Products This report provides historical tables on the rate of pay for Members of Congress since 1789; details on enacted legislation with language prohibiting the automatic annual pay adjustment since the most recent adjustment; the adjustments projected by the Ethics Reform Act as compared with actual adjustments in Member pay; and Member pay in constant and current dollars since 1992. Additional CRS products also address pay and benefits for Members of Congress: For information on actions taken each year since the establishment of the Ethics Reform Act adjustment procedure, see CRS Report 97-615, Salaries of Members of Congress: Congressional Votes, 1990-2018 , by Ida A. Brudnick. Members of Congress only receive salaries during the terms for which they are elected. Following their service, former Members of Congress may be eligible for retirement benefits, which are discussed in CRS Report RL30631, Retirement Benefits for Members of Congress , by Katelin P. Isaacs. For information on health insurance options available to Members, see CRS Report R43194, Health Benefits for Members of Congress and Designated Congressional Staff: In Brief , by Ada S. Cornell. For an overview of compensation, benefits, allowances, and selected limitations, see CRS Report RL30064, Congressional Salaries and Allowances: In Brief , by Ida A. Brudnick. Methods for Member Pay Adjustment There are three basic ways to adjust Member pay. Specific legislation was enacted to adjust Member pay prior to 1968. It has been used periodically since, most recently affecting pay for 1991. The second method by which Member pay can be increased is pursuant to recommendations from the President, based on those made by a quadrennial salary commission. In 1967, Congress established the Commission on Executive, Legislative, and Judicial Salaries to recommend salary increases for top-level federal officials (P.L. 90-206). Three times (in 1969, 1977, and 1987) Congress received pay increases made under this procedure; on three occasions it did not. Effective with passage of the Ethics Reform Act of 1989 ( P.L. 101-194 ), the commission ceased to exist. Its authority was assumed by the Citizens' Commission on Public Service and Compensation. Although the first commission under the 1989 act was to have convened in 1993, it did not meet. The third method by which the salary of Members can be changed is by annual adjustments. Prior to 1990, the pay of Members, and other top-level federal officials, was tied to the annual comparability increases provided to General Schedule (GS) federal employees. This procedure was established in 1975 ( P.L. 94-82 ). Such increases were recommended by the President, subject to congressional acceptance, disapproval, or modification. Congress accepted 5 such increases for itself—in 1975, 1979 (partial), 1984, 1985, and 1987—and declined 10 (1976, 1977, 1978, 1980, 1981, 1982, 1983, 1986, 1988, and 1989). The Ethics Reform Act of 1989 changed the method by which the annual adjustment is determined for Members and other senior officials. This procedure employs a formula based on changes in private sector wages and salaries as measured by the Employment Cost Index (ECI). The annual adjustment automatically goes into effect unless 1. Congress statutorily prohibits the adjustment; 2. Congress statutorily revises the adjustment; or 3. The annual base pay adjustment of GS employees is established at a rate less than the scheduled adjustment for Members, in which case Members would be paid the lower rate. Under this revised method, annual adjustments were accepted 13 times (adjustments scheduled for January 1991, 1992, 1993, 1998, 2000, 2001, 2002, 2003, 2004, 2005, 2006, 2008, and 2009) and denied 16 times (adjustments scheduled for January 1994, 1995, 1996, 1997, 1999, 2007, 2010, 2011, 2012, 2013, 2014, 2015, 2016, 2017, 2018, and 2019). Although discussion of the Member pay adjustment sometimes occurs during consideration of annual appropriations bills, these bills do not contain funds for the annual salaries or pay adjustment for Members. Nor do they contain language authorizing an increase. The use of appropriations bills as vehicles for provisions prohibiting the automatic annual pay adjustments for Members developed by custom. A provision prohibiting an adjustment to Member pay could be offered to any bill, or be introduced as a separate bill. January 2020 Potential Pay Adjustment The maximum potential January 2020 Member pay adjustment of 2.6%, or $4,500, was known when the Bureau of Labor Statistics (BLS) released data for the change in the Employment Cost Index (ECI) during the 12-month period from December 2017 to December 2018 on January 31, 2019. Each year, the adjustment takes effect automatically unless it is either denied or modified statutorily by Congress, or limited by the General Schedule (GS) base pay adjustment, since the percentage increase in Member pay is limited by law to the GS base pay percentage increase. January 2019 Member Pay Adjustment Denied The maximum potential January 2019 Member pay adjustment of 2.3%, or $4,000, was known when the BLS released data for the change in the ECI during the 12-month period from December 2016 to December 2017 on January 31, 2018. Each year, the adjustment takes effect automatically unless it is either denied or modified statutorily by Congress, or limited by the GS base pay adjustment, since the percentage increase in Member pay is limited by law to the GS base pay percentage increase. The 2019 GS base pay adjustment was 1.4%, automatically limiting any Member pay adjustment to $2,400. The House-passed ( H.R. 5894 ) and Senate-reported versions ( S. 3071 ) of the FY2019 legislative branch appropriations bill both contained provisions to prevent this adjustment. The Member pay provision was included in the bills as introduced and no separate votes were held on this provision. Division B of P.L. 115-244 , enacted September 21, 2018, included the pay freeze provision. January 2018 Member Pay Adjustment Denied The maximum potential January 2018 member pay adjustment of 1.8%, or $3,100, was known when the BLS released data for the change in the ECI during the 12-month period from December 2015 to December 2016 on January 31, 2017. Each year, the adjustment takes effect automatically unless it is either denied or modified statutorily by Congress, or limited by the GS base pay adjustment, since the percentage increase in Member pay is limited by law to the GS base pay percentage increase. The 2018 GS base pay adjustment was 1.4%, automatically limiting any Member pay adjustment to $2,400. The House-passed ( H.R. 3162 ) and Senate-reported versions ( S. 1648 ) of the FY2018 legislative branch appropriations bill both contained provisions to prevent this adjustment. The Member pay provision was included in the bills as introduced and no separate votes were held on this provision. Neither bill was enacted prior to the start of FY2018, and legislative branch activities were initially funded through a series of continuing appropriations resolutions (CRs) ( P.L. 115-56 , through December 8, 2017; P.L. 115-90 , through December 22, 2017; P.L. 115-96 , through January 19, 2018; P.L. 115-120 , through February 8, 2018; P.L. 115-123 , through March 23, 2018). P.L. 115-56 contained a provision, extended in the subsequent CRs, continuing "section 175 of P.L. 114-223 , as amended by division A of P.L. 114-254 ." This provision prohibited a Member pay adjustment in FY2017. Section 7 of the FY2018 Consolidated Appropriations Act ( P.L. 115-141 ) prohibited the adjustment for the remainder of the year. January 2017 Member Pay Adjustment Denied The maximum potential January 2017 Member pay adjustment of 1.6%, or $2,800, was known when the BLS released data for the change in the ECI during the 12-month period from December 2014 to December 2015 on January 30, 2016. Both the House-passed ( H.R. 5325 ) and Senate-reported ( S. 2955 ) versions of the FY2017 legislative branch appropriations bill—which would provide approximately $4.4 billion in funding for the activities of the House of Representatives, Senate, and legislative branch support agencies —contained a provision that would prohibit this adjustment. The Member pay provision was included in the bills as introduced and no separate votes were held on this provision. No further action was taken on H.R. 5325 or S. 2955 , but the pay prohibition language was included in the Further Continuing and Security Assistance Appropriations Act, 2017 ( P.L. 114-254 ). Absent the statutory prohibition on a Member pay adjustment, Members of Congress would have automatically been limited to a 1.0% ($1,700) salary increase to match the increase in base salaries for GS employees. January 2016 Member Pay Adjustment Denied The maximum potential January 2016 Member pay adjustment of 1.7%, or $3,000, was known when the BLS released data for the change in the ECI during the 12-month period from December 2013 to December 2014 on January 30, 2015. The House-passed and Senate-reported versions of the FY2016 legislative branch appropriations bill ( H.R. 2250 ) both contained a provision prohibiting this adjustment. The pay adjustment prohibition was subsequently included in the Consolidated Appropriations Act, 2016 ( P.L. 114-113 ). Absent the statutory prohibition on a Member pay adjustment, Members of Congress would have automatically been limited to a 1.0% ($1,700) salary increase to match the increase in base salaries for GS employees. January 2015 Member Pay Adjustment Denied The maximum potential January 2015 pay adjustment of 1.6%, or $2,800, was known when the BLS released data for the change in the ECI during the 12-month period from December 2012 to December 2013 on January 31, 2014. Each year, the adjustment takes effect automatically unless it is either denied statutorily by Congress, or limited by the GS base pay adjustment, since the percentage increase in Member pay is limited by law to the GS base pay percentage increase. The FY2015 legislative branch appropriations bill ( H.R. 4487 ), as reported by the Committee on Appropriations and passed by the House on May 1, 2014, contained a provision prohibiting this adjustment. This provision was continued in the House-passed and Senate-reported versions of this bill, with no separate vote on the Member pay provision. No further action on this bill was taken, but the provision was subsequently included in Section 8 of Division Q of the FY2015 Consolidated and Further Continuing Appropriations Act, which was enacted on December 16, 2014. On August 29, 2014, President Obama issued an "alternative pay plan for federal civilian employees," which called for a 1.0% increase in base salaries for General Schedule employees. Absent the statutory prohibition on a Member pay adjustment, Members of Congress would have automatically been limited to a 1.0% ($1,700) salary increase. January 2014 Member Pay Adjustment Denied The maximum potential 2014 pay adjustment of 1.2%, or $2,100, was known when the BLS released data for the change in the ECI during the 12-month period from December 2011 to December 2012 on January 31, 2013. The Continuing Appropriations Act, 2014 ( P.L. 113-46 , enacted October 17, 2013), however, prohibited the scheduled 2014 pay adjustment for Members of Congress. Each year, the adjustment takes effect automatically unless it is either denied statutorily by Congress, or limited by the GS base pay adjustment, since the percentage increase in Member pay is limited by law to the GS base pay percentage increase. The scheduled January 2014 across-the-board increase in the base pay of GS employees under the annual adjustment formula was 1.3%. A scheduled GS annual pay increase may be altered only if the President issues an alternative plan or if a different increase, or freeze, is enacted. The President issued an alternate pay plan for civilian federal employees on August 30, 2013. This plan called for a January 2014 across-the-board pay increase of 1.0% for federal civilian employees, the same percentage as proposed in the President's FY2014 budget. Legislation was not enacted to prohibit or alter the GS adjustment, and Executive Order 13655, issued on December 23, 2013, implemented a 1.0% increase for GS employees. Had the Member pay adjustment not been prohibited by law, the GS base pay adjustment would have automatically limited a salary adjustment for Members of Congress to 1.0% ($1,700). January 2013 Member Pay Adjustment Delayed and Then Denied The maximum potential 2013 pay adjustment of 1.1%, or $1,900, was known when the BLS released data for the change in the ECI during the 12-month period from December 2010 to December 2011 on January 31, 2012. The adjustment takes effect automatically unless (1) denied statutorily by Congress or (2) limited by the GS base pay adjustment, since the percentage increase in Member pay is limited by law to the GS base pay percentage increase. The President's budget, submitted on February 13, 2012, proposed an average (i.e., base and locality) 0.5% adjustment for GS employees. Partial Year Pay Freeze Enacted President Obama later stated in a letter to congressional leadership on August 21, 2012, that the current federal pay freeze should extend until FY2013 budget negotiations are finalized. Section 114 of H.J.Res. 117 , the Continuing Appropriations Resolution, 2013, which was introduced on September 10, 2012, extended the freeze enacted by P.L. 111-322 through the duration of this continuing resolution. H.J.Res. 117 was passed by the House on September 13 and the Senate on September 22. It was signed by the President on September 28, 2012 ( P.L. 112-175 ). A delay in the implementation of pay adjustments for GS employees automatically delays any scheduled Member pay adjustment. Executive Order Issued and Subsequent Pay Freeze Enacted On December 27, 2012, President Obama issued Executive Order 13635, which listed the rates of pay for various categories of officers and employees that would be effective after the expiration of the freeze extended by P.L. 112-175 . The executive order included a 0.5% increase for GS base pay, which automatically lowered the maximum potential Member pay adjustment from 1.1% to 0.5%. As in prior years, schedule 6 of the 2012 executive order listed the pay rate for Members of Congress for the upcoming year. This executive order indicated that an annual adjustment would take effect after the expiration of the freeze included in P.L. 112-175 . As stated above, the annual adjustments take effect automatically if legislation is not enacted preventing them. The executive order, however, by establishing the GS pay adjustment at a lower rate than the scheduled Member pay adjustment, automatically lowered the Member pay adjustment rate since by law Member pay adjustments cannot be higher than GS pay adjustments. Subsequently, a provision in H.R. 8 , the American Taxpayer Relief Act of 2012, which was enacted on January 2, 2013 ( P.L. 112-240 ), froze Member pay at the 2009 level for 2013. The language was included in S.Amdt. 3448 , a substitute amendment agreed to by unanimous consent. The bill, as amended, passed the Senate (89-8, vote #251) and the House (257-167, roll call #659) on January 1, 2013. This freeze was subsequently reflected in Executive Order 13641, which was signed April 5, 2013. This represented the second time, the first being in 2006, that Member pay was statutorily frozen for only a portion of the following year at the time of the issuance of the executive order. In both instances, the executive order listed new pay rates and indicated an effective date following the expiration of the statutory freeze. Pay adjustments in both years were further frozen pursuant to subsequent laws. January 2011 and January 2012 Member Pay Adjustments Denied As stated above, projected Member pay adjustments are calculated based on changes in the ECI. The projected 2011 adjustment of 0.9% was known when the BLS released data for the ECI change during the 12-month period from December 2008 to December 2009 on January 29, 2010. This adjustment would have equaled a $1,600 increase, resulting in a salary of $175,600. The 2011 pay adjustment was prohibited by the enactment of H.R. 5146 ( P.L. 111-165 ) on May 14, 2010. H.R. 5146 was introduced in the House on April 27 and was agreed to the same day (Roll no. 226). It was agreed to in the Senate the following day by unanimous consent. Other legislation was also introduced to prevent the scheduled 2011 pay adjustment. Additionally, P.L. 111-322 , which was enacted on December 22, 2010, prevents any adjustment in GS base pay before December 31, 2012. Since the percentage adjustment in Member pay may not exceed the percentage adjustment in the base pay of GS employees, Member pay is also frozen during this period. If not limited by GS pay, Members could have received a salary adjustment of 1.3% in January 2012 under the ECI formula. Pay for Members of Congress remained $174,000. January 2010 Member Pay Adjustment Denied Under the formula established in the Ethics Reform Act, Members were originally scheduled to receive a pay adjustment in January 2010 of 2.1%. This adjustment was denied by Congress through a provision included in the FY2009 Omnibus Appropriations Act. Section 103 of Division J of the act states, "Notwithstanding any provision of section 601(a)(2) of the Legislative Reorganization Act of 1946 (2 U.S.C. 31(2)), the percentage adjustment scheduled to take effect under any such provision in calendar year 2010 shall not take effect." Had this provision not been enacted, the 2.1% projected adjustment would have been automatically reduced to 1.5% to match the 2010 GS base pay adjustment. Member Pay: Other Proposals and Actions by Congress 116th Congress As in previous Congresses, legislation was introduced in the 116 th Congress to repeal the automatic pay adjustment provision (for example, H.R. 751 and H.R. 1466 ); change the procedure by which pay for Members of Congress is adjusted or disbursed by linking it to congressional actions or economic indicators, including passage of a budget resolution, passage of appropriations, or reaching the debt limit (for example, S. 39 , S. 44 , S. 949 , H.R. 86 , H.R. 102 , H.R. 129 , H.R. 236 , H.R. 298 , H.R. 834 , H.R. 1172 , H.R. 1178 , H.R. 1466 , H.R. 1612 , H.J.Res. 10 , and H.J.Res. 51 ); and prohibit pay for Members of Congress during a lapse in appropriations resulting in a government shutdown (for example, S. 74 , S. 949 , H.R. 26 , H.R. 211 , H.R. 845 , and H.R. 1612 ). 115th Congress Legislation was introduced in the 115 th Congress to prohibit adjustments in pay (for example, H.R. 342 ); repeal the automatic pay adjustment provision (for example, H.R. 668 and H.R. 5946 ); change the procedure by which pay for Members of Congress is adjusted or disbursed by linking it to congressional actions or economic indicators, including passage of a budget resolution or reaching the debt limit (for example, H.R. 429 , H.R. 536 , H.R. 646 , H.R. 1779 , H.R. 1951 , H.R. 2153 , H.R. 2665 , H.R. 3675 , H.R. 4512 , and H.R. 5946 , and S. 14 ); reduce the pay of Members of Congress (for example, H.R. 1786 and H.R. 5539 ); and prohibit pay for Members of Congress during a lapse in appropriations resulting in a government shutdown (for example, H.R. 1789 , H.R. 1794 , H.R. 2214 , H.R. 4852 , H.R. 4870 , and S. 2327 ). 114th Congress Legislation was introduced in the 114 th Congress to prohibit adjustments in pay (for example, H.R. 109 and H.R. 302 ); repeal the automatic pay adjustment provision (for example, H.R. 179 , H.R. 513 , H.R. 688 , H.R. 1585 , and S. 17 ); change the procedure by which pay for Members of Congress is adjusted or disbursed by linking it to congressional actions or economic indicators, including the passage of a budget resolution or existence of a deficit (for example, H.Con.Res. 27 , S.Con.Res. 11 , H.R. 92 , H.R. 110 , H.R. 174 , H.R. 187 , H.R. 3757 , H.R. 4814 , H.R. 4476 , and S. 39 ); reduce the pay of Members of Congress (for example, H.R. 179 and H.R. 688 ); and prohibit or reduce pay for Members of Congress during a lapse in appropriations resulting in a government shutdown (for example, S. 2074 , H.R. 3562 , H.R. 2023 , and H.R. 1032 ). Linking Salaries to Passage of a Concurrent Resolution on the Budget The House budget resolution for FY2016, H.Con.Res. 27 , included a policy statement that Congress should agree to a concurrent budget resolution each year by April 15, and if not, congressional salaries should be held in escrow (Section 819). The statement proposed that salaries would be released from the escrow account either when a chamber agrees to a concurrent resolution on the budget or the last day of the Congress, whichever is earlier. The House agreed to this resolution on March 25, 2015, and no further action was taken. The Senate agreed to its resolution on the FY2016 budget, S.Con.Res. 11 , on March 27, 2015, without this language. The conference report for S.Con.Res. 11 —agreed to in the House on April 30 and in the Senate on May 5, 2015—contains a "Policy Statement on 'No Budget, No Pay'" (Section 6216), which refers to actions by the House. 113th Congress Legislation was introduced in the 113 th Congress to prohibit adjustments in pay (for example, H.R. 54 , H.R. 243 , H.R. 636 , S. 18 , S. 30 ); repeal the automatic pay adjustment provision (for example, H.R. 134 , H.R. 150 , H.R. 196 , S. 65 , and H.R. 398 ); change the procedure by which pay for Members of Congress is adjusted or disbursed by linking it to congressional actions or economic indicators, including passage of a budget resolution or reaching the debt limit (for example, H.R. 108 , H.R. 167 , H.R. 284 , H.R. 308 , H.R. 310 , H.R. 325 , H.R. 372 , H.R. 397 , H.R. 396 , H.R. 522 , H.R. 593 , H.R. 1884 , H.R. 2335 , H.R. 3234 , S. 18 , S. 30 , and S. 263 ); reduce the pay of Members of Congress (for example, H.R. 37 , H.R. 150 , H.R. 391 , H.R. 396 , H.R. 398 , and H.R. 1467 ); prohibit pay for Members of Congress during a lapse in appropriations resulting in a government shutdown (for example, H.R. 3160 , H.R. 3215 , H.R. 3224 , H.R. 3234 , and H.R. 3236 ); and apply any sequester to Member pay (for example, S. 436 , H.R. 1181 , H.R. 1478 , and H.R. 2677 ). Linking Salaries to Passage of a Concurrent Resolution on the Budget H.R. 325 , which (1) included language holding congressional salaries in escrow if a concurrent resolution on the budget was not agreed to by April 15, 2013, and (2) provided for a temporary extension of the debt ceiling through May 18, 2013, was introduced on January 21, 2013. Salaries would have been held in escrow for Members in a chamber if that chamber had not agreed to a concurrent resolution by that date. Salaries would have been released from the escrow account either when that chamber agreed to a concurrent resolution on the budget or the last day of the 113 th Congress, whichever was earlier. H.R. 325 was agreed to in the House on January 23, 2013, and the Senate on January 31, 2013. It was enacted on February 4, 2013 ( P.L. 113-3 ). Both the House and Senate agreed to a budget resolution prior to that date, however, and salaries were not held in escrow. Linking Salaries to the Debt Limit H.R. 807 , the Full Faith and Credit Act, was introduced in the House on February 25, 2013. The bill would have prioritized certain payments in the event the debt reaches the statutory limit. An amendment, H.Amdt. 61 , was offered on May 9, 2013, that would clarify that these obligations would not include compensation for Members of Congress. It was agreed to the same day. The bill passed the House on May 13, 2013. No further action was taken in the 113 th Congress. The House-passed version of H.J.Res. 59 , the Continuing Appropriations Resolution, 2014, also contained a provision addressing actions by the Secretary of the Treasury in the event that the debt limit is reached and not raised. The provision (Section 138) would, in part, prohibit borrowing to provide pay for Members of Congress in the event that the debt reaches the statutory limit prior to December 15, 2014. The bill passed the House on September 20, 2013. It was enacted on December 26, 2013, without this section. 112th Congress Legislation was introduced in the 112 th Congress to repeal the automatic pay adjustment provision (for example, S. 133 , S. 148 , H.R. 187 , H.R. 235 , H.R. 246 , H.R. 343 , H.R. 431 , H.R. 3673 ); change the procedure by which pay for Members of Congress is adjusted or disbursed by linking it to other action or economic indicators (for example, H.R. 124 , H.R. 172 , H.R. 236 , H.R. 994 , H.R. 1454 , H.R. 3136 , H.R. 3565 , H.R. 3774 , H.R. 3799 , H.R. 3883 , H.R. 4036 , H.R. 6438 , S. 1442 ); reduce the pay of Members of Congress (for example, H.R. 204 , H.R. 270 , H.R. 335 , H.R. 1012 , H.R. 4399 ); otherwise alter or restrict pay for Members under certain conditions (for example, H.R. 6108 ); and freeze Member pay (for example, S. 1931 , S. 1936 , S. 2065 , S. 2079 , S. 2210 , H.R. 3858 , H.R. 6474 , H.R. 6720 , H.R. 6721 , H.R. 6722 ). Actions Related to Member Pay During a Lapse in Appropriations Legislation was also introduced in the 112 th Congress that would have affected Member pay in the event of a lapse of appropriations resulting in a government shutdown. These included H.R. 819 , H.R. 1255 , H.R. 1305 , H.Con.Res. 56 , and S. 388 . The Senate passed S. 388 on March 1, 2011. The bill would have prohibited Members of the House and Senate from receiving pay, including retroactive pay, for each day that there is a lapse in appropriations or the federal government is unable to make payments or meet obligations because of the public debt limit. The House passed H.R. 1255 on April 1, 2011. The bill would have prohibited the disbursement of pay to Members of the House and Senate during either of these situations. No further action was taken on either bill. On April 8, 2011, the Speaker of the House issued a "Dear Colleague" letter indicating that in the event of a shutdown, Members of Congress would continue to be paid pursuant to the Twenty-Seventh Amendment to the Constitution, which as stated above, states: "No law, varying the compensation for the services of the Senators and Representatives, shall take effect, until an election of Representatives shall have intervened"—although Members could elect to return any compensation to the Treasury. Additional Legislation Receiving Floor Action but Not Enacted Additional legislation to prohibit any Member pay adjustment in 2013 was introduced but not enacted in the 112 th Congress, including the following: Section 5421(b)(1) of H.R. 3630 , as introduced in the House, would have prohibited any adjustment for Members of Congress prior to December 31, 2013. Section 706 of the motion to recommit also contained language freezing Member pay. On December 13, 2011, the motion to recommit failed (183-244, roll call #922), and the bill passed the House (234-193, roll call #923). The House-passed version of the bill was titled the "Middle Class Tax Relief and Job Creation Act of 2011." The Senate substitute amendment, which did not address pay adjustments, passed on December 17. It was titled the "Temporary Payroll Tax Cut Continuation Act of 2011." The bill was enacted on February 22, 2012 ( P.L. 112-96 ), without the pay freeze language. H.R. 3835 , introduced on January 27, 2012, also would have extended the pay freeze for federal employees, including Members of Congress, to December 31, 2013. This bill passed the House on February 1, 2012. H.R. 6726 , introduced on January 1, 2013, would have extended the pay freeze for federal employees, including Members of Congress, to December 31, 2013. This bill passed the House on January 2, 2013. Reference and Historical Information and Explanation of Tables Table 1 provides a history of the salaries of Members of Congress since 1789. For each salary rate, both the effective date and the statutory authority are provided. Table 2 provides information on pay adjustments for Members since 1992, which was the first full year after the Ethics Reform Act that Representatives and Senators received the same salary. The table provides the projected percentage changes under the formula based on the Employment Cost Index and the actual percentage adjustment. The differences between the projected and actual Member pay adjustments resulted from the enactment of legislation preventing the increase (adjustments for 1994, 1995, 1996, 1997, 1999, 2007, 2010, 2011, 2012, 2013, 2014, 2015, 2016, 2017, 2018, and 2019); limits on the percentage increase of Member pay because of the percentage increase in GS base pay (adjustments for 1994, 1995, 1996, 1998, 1999, 2001, 2003, 2007, 2008, 2010, 2011, 2012, 2013, 2014, 2015, 2016, 2017, 2018, and 2019); and a combination of the above. In some years, the percentage adjustment for Member pay would have been lowered to match the percentage adjustment in GS base pay if Congress had not passed legislation denying the adjustment (adjustments for 1994, 1995, 1996, 1999, 2007, 2010, 2011, 2013, 2014, 2015, 2016, 2017, 2018, and 2019). If Members of Congress had received every adjustment prescribed by the ECI formula since 1992, and the 2 U.S.C. §4501 limitation regarding the percentage base pay increase for GS employees remained unchanged, the 2019 salary would be $210,900. Table 3 lists the laws which have previously delayed or prohibited Member pay adjustments, the dates these laws were enacted, and the text of the provision. While many of the bills in this list are appropriations bills, a prohibition on Member pay adjustments could be included in any bill, or be introduced as a separate bill. Figure 1 , which follows, shows the salary of Members of Congress in current and constant (inflation adjusted) dollars since 1992. It shows that Member salaries, when adjusted for inflation, decreased 15% from 2009 until 2019.

Congress is required by Article I, Section 6, of the Constitution to determine its own pay. In the past, Congress periodically enacted specific legislation to alter its pay; the last time this occurred affected pay in 1991. More recently, pay has been determined pursuant to laws establishing formulas for automatic adjustments. The Ethics Reform Act of 1989 established the current automatic annual adjustment formula, which is based on changes in private sector wages as measured by the Employment Cost Index (ECI). The adjustment is automatic unless denied statutorily, although the percentage may not exceed the percentage base pay increase for General Schedule (GS) employees. Member pay has since been frozen in two ways: (1) directly, through legislation that freezes salaries for Members but not for other federal employees, and (2) indirectly, through broader pay freeze legislation that covers Members and other specified categories of federal employees. Members of Congress last received a pay adjustment in January 2009. At that time, their salary was increased 2.8%, to $174,000. A provision in P.L. 111-8 prohibited any pay adjustment for 2010. Under the pay adjustment formula, Members were originally scheduled to receive an adjustment in January 2010 of 2.1%, although this would have been revised downward automatically to 1.5% to match the GS base pay adjustment. Members next were scheduled to receive a 0.9% pay adjustment in 2011. The pay adjustment was prohibited by P.L. 111-165. Additionally, P.L. 111-322 prevented any adjustment in GS base pay before December 31, 2012. Since the percentage adjustment in Member pay may not exceed the percentage adjustment in the base pay of GS employees, Member pay was also frozen during this period. If not limited by GS pay, Member pay could have been adjusted by 1.3% in 2012. The ECI formula established a maximum potential pay adjustment in January 2013 of 1.1%. P.L. 112-175 extended the freeze on GS pay rates for the duration of this continuing resolution, which also extended the Member freeze since the percentage adjustment in Member pay may not exceed the percentage adjustment in GS base pay. Subsequently, Member pay for 2013 was further frozen in P.L. 112-240. The maximum potential 2014 pay adjustment of 1.2%, or $2,100, was denied by P.L. 113-46. The maximum potential January 2015 Member pay adjustment was 1.6%, or $2,800. President Obama proposed a 1.0% increase in the base pay of GS employees, which would automatically have limited any Member pay adjustment to 1.0%. P.L. 113-235 contained a provision prohibiting any Member pay adjustment. The maximum potential January 2016 pay adjustment of 1.7%, or $3,000, would have been limited to 1.0%, or $1,700, due to the GS base pay increase. Member pay for 2016 was frozen by P.L. 114-113. The maximum potential January 2017 pay adjustment of 1.6%, or $2,800, would have been limited to 1.0%, or $1,700, due to the GS base pay increase. Member pay for 2017 was frozen by P.L. 114-254. The maximum potential January 2018 pay adjustment of 1.8%, or $3,100, was automatically limited to 1.4%, or $2,400, before being frozen by P.L. 115-141. The maximum potential January 2019 pay adjustment of 2.3%, or $4,000, was automatically limited to 1.4%, or $2,400, before being frozen at the 2009 level by P.L. 115-244. The maximum potential January 2020 pay adjustment is 2.6%, or $4,500. If Members of Congress had received every adjustment prescribed by the ECI formula since 1992, and the 2 U.S.C. §4501 limitation regarding the percentage base pay increase for GS employees remained unchanged, the 2019 salary would be $210,900. When adjusted for inflation, Member salaries have decreased 15% since the last pay adjustment in 2009. Both the automatic annual adjustments and funding for Members' salaries are provided pursuant to other laws (2 U.S.C. §4501)—not the annual appropriations bills—and a provision prohibiting a scheduled adjustment could be included in any bill, or introduced as a separate bill.

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Introduction This report provides both an overview of the FY2019 defense appropriations act ( P.L. 115-245 ) and access to other CRS products providing additional detail and analysis on particular issues and programs dealt with by that law. The Overview section of the report immediately following this Introduction covers the legislative history of the bill and the strategic and budgetary context within which is was debated. Subsequent sections of the report detail the bill's treatment of specific issues including procurement of various types of weapons. Each section dealing with procurement of a certain type of weapon includes a table presenting basic budget information and links to any relevant CRS product. Overview For FY2019, the Trump Administration requested $668.4 billion to fund programs falling within the scope of the annual defense appropriations act. This included $67.9 billion to be designated by Congress and the President as funding for Overseas Contingency Operations (OCO) and $599.4 billion for DOD's base budget, comprising all operations not designated as OCO. OCO-designated funding is related to current operations in Afghanistan and Syria, but includes other activities that Congress and the President so-designate. As enacted, H.R. 6157 provides $667.3 billion, a net reduction of $1.09 billion amounting to less than two-tenths of 1% of the total (i.e., base budget plus OCO) request. Compared with the total amount provided by the FY2018 defense appropriations bill (P.L. 114-113), the FY2019 act provides an increase of 2.3%. (See Table 1 .) The House initially passed H.R. 6197 on June 28, 2018, by a vote of 359-49. On that same day, the Senate Appropriations Committee reported S. 3159 , its own version of the FY2019 Defense Appropriations bill. Subsequently, the Senate adopted several amendments to H.R. 6157 , including one that substituted the text of the Senate committee bill for the House-passed text. The Senate also adopted an amendment that added to the defense bill the text of S. 3158 , the FY2019 appropriations bill for the Departments of Labor, Health and Human Services, and Education, which the Senate Appropriations Committee had approved on August 20, 2018. The Senate then passed H.R. 6197 , as amended, on August 23, 2018, by a vote of 85-7. A House-Senate conference committee reported a version of the bill on September 13, 2018. The Senate approved the conference report on September 18 by a vote of 93-7 and the House did likewise on September 26 by a vote of 361-61. President Donald J. Trump signed the bill into law ( P.L. 115-245 ) on September 28, 2018. (See Table 2 .) The total amount requested for DOD that falls within the scope of the annual defense appropriations bill and amounts provided in P.L. 115-245 as enacted are relatively close. Within those gross totals, however, there are differences between the amounts requested and the amounts provided for hundreds of specific elements within the sprawling DOD budget. Many of these individual differences reflect congressional judgements about particular issues. However, there also are patterns of differences that reflect congressional views on broad policy or budgetary questions: Title I of the act, that funds Military Personnel accounts, provides $2.2 billion less than was requested for pay and benefits. House-Senate conferees said the reduction should have no adverse impact on the force. According to the conference report, revised estimates of the budgetary impact of recent changes in the military retirement system were the basis for a net reduction from the request of $1.54 billion. Other reductions totaling $430 million were justified by conferees on the basis of "historical unobligated balances," that is, an accumulation of funds in certain accounts that were appropriated in prior years but were not spent. Base budget funding provided by the Operation and Maintenance (O&M) title of the act (Title II) amounts to a net reduction of $5.2 billion from the request. In part, the apparent cut reflects a transfer of nearly $2.0 billion to Title IX of the act, which funds OCO. The conferees justified additional reductions totaling $1.34 billion on the basis of either large unobligated balances or "historical underexecution," (i.e., a pattern of repeatedly spending less on military personnel in a given fiscal year than had been appropriated). On the other hand, total procurement funding for the base budget (Title III) is $4.8 billion higher than the request. While the act makes hundreds of additions and cuts to the funding requested for particular items, three broad themes all push the act's procurement total upward: $2.48 billion is added to buy aircraft and other equipment for National Guard and reserve forces; $2.31 billion is added to fully fund or acquire major components for additional six ships (see Table 9 ); and $2.13 billion is added to the $8.49 billion requested for procurement of F-35 Joint Strike Fighters (see Table 10 ). Similarly, base budget funding in the act for research and development (Title IV) is $3.8 billion higher than the request, partly because the legislation would add $2.3 billion to the $13.7 billion requested for science and technology (S&T) programs – that is, the part of the R&D effort focused on developing new and potentially useful scientific and engineering knowledge rather than on designing specific pieces of equipment intended for production. Strategic Context The Trump Administration presented its FY2019 defense budget request – nearly 96% of which is funded by the annual defense appropriations bill – as responding to an international security environment that has become increasingly contentious in recent years. Many observers view events such as China's construction of military bases in the South China Sea since 2013 and Russia's seizure of Crimea in March 2014 as marking an end to the post-Cold War era that began in the late 1980s and 1990s with the decline and collapse of the Soviet Union. Many observers of contemporary international security trends contend that the United States and its allies are entering an era of increased strategic complexity. Very broadly speaking, during the Cold War and beyond, U.S. national security challenges were difficult, yet relatively straightforward to conceptualize, prioritize, and manage. U.S. national security and foreign policies during the Cold War were focused on its strategic competition with the Union of Soviet Socialist Republics and on containing the spread of communism globally. In the years following the end of the Cold War, U.S. national security policies and practices were largely designed to curtail genocide in the Balkans and Iraq, while simultaneously containing regional aggressors such as Iran and North Korea and recalibrating relations with China and Russia. The terrorist attacks on U.S. territory on September 11 th , 2001 ushered in an era of national security policy largely focused on countering terrorism and insurgencies in the Middle East while containing, if not reversing, North Korean and Iranian nuclear weapons programs. As a legacy of the Cold War's ending, U.S. and allied military forces had overwhelming military superiority over adversaries in the Middle East and the Balkans. Accordingly, operations were conducted in relatively permissive environments. The 2014 Russian invasion of the Crimean peninsula and subsequent proxy war in eastern Ukraine fostered concern in the United States and in Europe about an aggressive and revanchist Russia. 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 employ military force unilaterally to accomplish their objectives. At the same time, the security challenges that surfaced at the end of the Cold War – fragile states, genocide, terrorism, and nuclear proliferation, to name a few – have remained serious threats to U.S. interests. In this international context, conceptualizing, prioritizing, and managing these myriad problems, arguably, is more difficult than it was in eras past. The situation is summarized by the December 2017 U.S. National Security Strategy (NSS), which notes: The United States faces an extraordinarily dangerous world, filled with a wide range of threats that have intensified in recent years. Likewise, the January 2018 National Defense Strategy (NDS) argues: We are facing increased global disorder, characterized by decline in the long-standing rules-based international order—creating a security environment more complex and volatile than any we have experienced in recent memory. The Trump Administration's 2017 NSS and the 11-page unclassified summary of the NDS explicitly reorients U.S. national security strategy (including defense strategy) toward a primary focus on great power competition with China and Russia and on countering Chinese and Russian 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-à-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 new U.S. strategy orientation set forth in the 2017 NSS and 2018 NDS 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), although given the radically differing nature of these challenges, one might posit that such a heuristic oversimplifies the contours of the strategic environment. Budgetary Context Congressional action on all FY2019 appropriations bills was shaped by an effort to rein in federal spending, out of concern for the increasing indebtedness of the federal government. The fastest growing segment of federal spending in recent decades has been mandatory spending for entitlement programs such as Social Security, Medicare, and Medicaid. (See Figure 1 .) 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 non-defense 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 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 has raised the annual spending caps repeatedly, most recently with the Bipartisan Budget Act of 2018 (P.L. 115-123), which set the national defense funding cap for FY2019 at $647 billion. Because the cap applies to defense-related spending in other agencies as well as to DOD, and because the annual defense appropriations bill covers most but not all of DOD's discretionary budget, the portion of the cap applicable to FY2019 defense appropriations bill is approximately $600 billion. The Administration's request for the bill was consistent with that cap, as is the enacted bill. The total FY2019 DOD request – including both base budget and OCO funding – continued 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. (See Figure 2 .) Appropriations Overview Military Personnel The law funds the Administration's proposal to increase the size of the armed forces by 15,600 personnel in the active components – with nearly half of that increase destined for the Navy – and by a total of 800 members of the Air Force Reserve and Air National Guard. The Senate-passed version of the bill would have funded less than half the amount of the proposed increase in active-duty personnel and none of the amount of the proposed increase in the reserve component. (See Table 3 .) The Senate Appropriations Committee report on S. 3159 (which became the basis for the Senate-passed version of the appropriations bill) stated no reason for recommending less than half the amount of the Administration's proposed increase. However, on this point, the Senate version of the appropriations bill mirrored the Senate-passed version of the companion John S. McCain National Defense Authorization Act (NDAA) for Fiscal Year 2019 (H.R. 5515; P.L. 115-232), which also would have approved half the amount of the proposed increase in the active-duty components and none of the amount of the proposed reserve component increase. In the Senate Armed Services Committee report to accompany its version of the NDAA, the panel expressed concern that, because unemployment is at historically low levels, the services might have trouble recruiting enough additional personnel to fill a larger force while maintaining their current standards for enlistment. As with the FY2019 defense appropriations bill, the conference report on the FY2019 NDAA authorized the Administration's proposed increase in military end-strength. The enacted version of the appropriations bill funds the Administration's recommended 2.6 % increase in military basic pay effective January 1, 2019 (as both the House and Senate versions would have done). The Congressional Budget Office (CBO) estimates the cost of this raise to be $1.8 billion. Defense Health Program In terms of total funding, the act appropriates $34.0 billion for the Defense Health Program (DHP) in FY2019, which represents an increase of less than 1% over the Administration's $33.7 billion request. As usual, those similar totals mask a number of differences. Compared with the request, the enacted bill cuts: $213 million to force DOD to deal with what House and Senate conferees labelled "excess growth" in the cost of pharmaceuticals; $215 million in anticipation that the funds will not be needed because the program will continue to exhibit its pattern of historical underexecution; and $597 million to correct what the House Appropriations Committee said was erroneous accounting for congressional action on the FY2018 DHP budget. Among the amounts the enacted bill would add to the request are: $10 million for training therapeutic service dogs; and $2 million to coordinate the actions of DOD and the Department of Veterans Affairs to study the possible adverse health effects of the widespread use of open burning pits to dispose of trash at U.S. military sites in Iraq and Afghanistan. The Senate-passed version of the bill would have added to the request $750 million for maintenance and repair of DHP facilities, but this was not included in the final version of the bill. Congressionally-Directed Medical R&D Continuing a 28-year-long pattern, the act adds to the Administration's DHP budget request funds for medical research and development. Beginning with a $25 million earmark for breast cancer research in the FY1992 defense appropriations act ( P.L. 102-172 ), Congress has added a total of $13.2 billion to the DOD budget through FY2018 for research on a variety of medical conditions and treatments. The Administration's DHP budget request included $710.6 million for research and development. The House-passed version of H.R. 6157 would have added $775.6 million, most of which was allocated to one of 27 specific medical conditions or treatments. The Senate version would have added to the request $963.2 of which $431.5 million was allocated among 10 specific diseases or treatments. The enacted version of the bill appropriates a total of $2.18 billion for DHP-funded medical research, an increase of $1.47 billion over the request that covers each of the particular medical conditions and treatments that would have been funded by either chamber's bill. As has been typical for several years, the largest amounts for particular diseases in both the House and Senate versions of the FY2019 bill are aimed at breast cancer, prostate cancer, and traumatic brain injury (TBI). (See Table 4 .) Operation and Maintenance (O&M) Funds The act cuts $4.8 billion from the Administration's $199.5 billion request for base budget O&M funds, making the final appropriation $194.7 billion. However, more than one-third of the apparent reduction ($2.0 billion) is accounted for by funds that the bill appropriates as part of the budget for OCO, despite their having been requested in the base budget. For dozens of additional cuts from the base budget O&M request, House-Senate conferees cited rationales that imply that the reductions need not have an adverse impact on DOD activities: Cuts totaling $1.3 billion were justified by the assumption that particular programs would underspend their budget requests by that amount, often on the basis of what the conferees called a pattern of historic al underexecution of their annual appropriations; Cuts totaling $1.3 billion were justified on grounds that DOD had not justified its request for those funds; and Cuts totaling $343 million were justified on grounds that the requests amounted to unrealistically large increases over the prior year's appropriation. House-backed 'Readiness' Increases The House-passed version of the bill would have added a total of $1.0 billion spread across the active and reserve components of the armed forces to "restore readiness." According to the House committee report, the funds were intended to be spent on training, depot maintenance, and base operations according to a plan DOD was to submit to Congress 30 days in advance of expenditure. The funds were not included in the enacted version of the bill. Selected Acquisition Programs Strategic and Long-Range Strike Systems The Administration's FY2019 budget request continued the across-the-board modernization of the U.S. strategic arsenal that had been launched by the Obama Administration. Within that program, the initial House and Senate versions of H.R. 6157 funded the major initiatives with some changes, many of which reflected routine budget oversight. (See Table 5 .) The enacted version of the bill adds a total of more than $300 million to the amounts requested to develop three new long-range weapons. Specifically it adds: $69.4 million to the $345.0 million requested for a new, nuclear-armed intercontinental ballistic missile (ICBM) to replace Minuteman III missiles deployed in the 1970s, an increase conferees said would meet an unspecified "unfunded requirement"; $203.5 million for "program acceleration" to the $263.4 million requested to develop Conventional Prompt Global Strike weapon sufficiently accurate to strike a target at great range with a conventional (i.e., non-nuclear) warhead; and $50 million, also to meet an unspecified "unfunded requirement," to the $614.9 million requested to develop a Long-Range Stand-Off (LRSO) weapon to replace the nuclear-armed air-launched cruise missile (ALCM) carried by long-range bombers. Ballistic Missile Defense Systems The act supports the general thrust of the administration's funding request for ballistic missile defense, with the sort of funding adjustments that are routine in the appropriations process. For so-called mid-c ourse defense, intended to protect U.S. territory against a relatively small number of intercontinental-range warheads, the Administration's program would expand the fleet of interceptor missiles currently deployed in Alaska and California, while developing an improved version of that interceptor. The program also is deploying shorter-range THAAD, Aegis, and Patriot missiles to provide a so-called terminal defense intended to protect U.S. allies and forces stationed abroad and to provide a second-layer of protection for U.S. targets. (See Table 6 .) Accounting for a FY2018 Windfall The act cuts a total $301.7 million from the amounts requested for various projects associated with mid-course defense of U.S. territory on grounds that these funds were intended for purposes Congress already had funded in the FY2018 defense appropriations act ( P.L. 115-141 ). That measure was enacted two months after the FY2019 budget request was sent to Congress, reiterating the request for the funds in question. Missile Defense in South Korea The act adds more than $400 million to the amounts requested to develop and acquire missile defenses for South Korea and U.S. forces stationed there. North Korea has tested long-range and short-range ballistic missiles as well as nuclear weapon. The increase includes $284.4 million to develop a network linking THAAD interceptor missiles and shorter-range Patriot missiles based in South Korea and Japan with sensors that could track incoming North Korean missiles. The act also adds $140 million to the $874 million requested to procure THAAD interceptors that are deployed in Guam, in the Middle East, and in South Korea. Military Space Programs While Congress and the Administration weighed alternative ways to organize a new organization – a Space Force – to address long-standing criticisms of DOD's acquisition of space satellites and associated launchers, the debate was not cited by the House and Senate Appropriations Committees in their reports on the FY2019 defense appropriations bill. Nor was it cited by House and Senate conferees in their Joint Explanatory Statement to accompany the conference report on the bill. The enacted bill funded – with largely modest changes – the Administration's requests for several major defense-related space programs. (See Table 7 .) The most sizeable departure from the Administration's request was the addition of $200 million to the $245.4 million requested in R&D funding associated with the Evolved Expendable Launch Vehicle (EELV), which is the program for acquiring satellite launch rockets and launch services for relatively heavy DOD space payloads. Ground Combat Systems The act supports the general thrust of the Administration's program to beef up the capacity of Army and Marine Corps units to prevail in full-scale, high-tech combat with the forces of near-peer adversaries, namely Russia and China. The increased DOD emphasis on conventional combat with major powers is rooted in the 2018 National Defense Strategy of which DOD published an unclassified synopsis on January 19, 2018. In addition to modernizing the ground forces' existing capabilities, the Administration's FY2019 budget request included stepped-up investments to improve two capabilities the Army identifies as among its top modernization priorities: mobile defenses against cruise missiles and drone aircraft; and improved firepower and mobility for infantry units. While taking some reductions from the amounts requested for some programs – cuts based on program delays, the availability of prior-year funds, and so forth – the bills would provide funding above the requested level to accelerate other programs. (See Table 8 .) Existing Capabilities15 The act funded most of the roughly $2.5 billion requested to continue upgrading the Army's fleet of M-1 tanks, built between 1980 and 1996. For the program to continue modernizing the service's Bradley armored troop carriers – which is roughly contemporary with the tank fleet – it would cut nearly a quarter of the $1.04 billion requested, mostly on grounds of a "change of acquisition strategy." The act provided more funds than requested in order to accelerate modernization of two other components of the Army's current combat vehicle fleet, adding: $110.0 million to the $310.8 million requested to replace the chassis and powertrain of the M-109 Paladin self-propelled with the more powerful and robust chassis of the Bradley troop carrier; and $94.0 million to the $265.3 million requested to replace the flat underside of many types of Stryker wheeled combat vehicles with a V-shaped bottom intended to more effectively deflect the explosive force of buried landmines. The act generally funded programs to replace two older types of tracked vehicles, providing: $447.5 million (of $479.8 million requested) to continue procurement of the Advanced Multi-Purpose Vehicle (AMPV), intended to replace the Vietnam War-vintage M-113 tracked personnel carrier; and $167.5 million, as requested, for procurement of the Amphibious Combat Vehicle (ACV), a successor to the Marine Corps' equally dated AAV-7 amphibious troop carrier. Infantry Firepower and Mobility The Administration requested a total of $449 million to develop and begin purchasing vehicles intended to boost the lethality and mobility of Army infantry units – that is, forces not equipped with M-1 tanks and other armored vehicles. Nearly 90% of those funds were for development of a relatively light-weight tank (designated Mobile Protected Firepower or MPF) with the balance of the money intended 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 funds the three programs with some relatively small reduction reflecting concerns that their development or testing schedules are unrealistically ambitious. Anti-Aircraft Defense The FY2019 budget request includes nearly $450 million for programs intended to beef up mobile Army defenses against aircraft, including unmanned aerial systems and cruise missiles. These include a Stryker combat vehicle equipped to launch Stinger missiles (designated IM-SHORAD) and a larger, truck-mounted missile launcher (designated IFPC). The act cut the total R&D request for the programs by nearly 25% for various, relatively typical rationales including development program delays. National Guard and Reserve Force Equipment Following what has long been the usual practice, the act adds to the DOD budget $2.35 billion for procurement of aircraft, ground vehicles, and other equipment for National Guard or other reserve component units. These funds are provided in addition to the $3.64 billion worth of equipment for Guard and reserve forces that was included in the Administration's FY2019 budget request. The increase includes a total of $1.30 billion in the National Guard and Reserve Equipment Account (NGREA) which is allocated among the six reserve force components: the Army and Air National Guard, and the Army, Navy, Marine Corps, and Air Force Reserve. In their Joint Explanatory Statement on the final version of the bill, House and Senate conferees directed the funds to be used "for priority equipment that may be used for combat and domestic response missions." Amounts are not earmarked for specific purchases, but conferees on the defense bill directed that "priority consideration" in using the funds be given to 18 types of items. The 18 categories range in specificity from "digital radar warning receivers for F-16s" to "cold-weather and mountaineering gear and equipment." Other congressional initiatives include specific increases for National Guard equipment: $640 million for 8 C-130J cargo planes; $168 million for 6 AH-64E attack helicopters; $156 million for 8 UH-60 Black Hawk helicopters; and $100 million for HMMWV ("Hum-vee") vehicles. Naval Systems The act funds the major elements of the Administration's shipbuilding program, which aims at enlarging and modernizing the Navy's fleet. The stated goals of the program are to improve the Navy's ability to respond to increasingly assertive military operations by China in the Western Pacific and Indian Oceans, and to halt, if not reverse, the decline in the technological edge that U.S. forces have enjoyed for decades. (See Table 9 .) Carrier 'Block Buy' The Administration's $1.60 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. The act, which provides nearly the total amount requested, includes a provision that allows the Navy – under certain conditions – to use the funds for a block buy contract that would fund procurement of components for both CVN-80 and the planned fourth ship of the Ford class, designated CVN-81. Proponents of such an arrangement contend that it could accelerate the delivery of the fourth ship and reduce the overall cost of the two vessels. Before the funds could be used for a block buy, DOD would have to certify to Congress an analysis demonstrating that the approach would save money, as required by Section 121 of the companion FY2019 National Defense Authorization Act, H.R. 5515 ( P.L. 115-232 ). Amphibious Landing Ships The act adds to the Administration's request $1.1 billion to accelerate the planned production of ships to support amphibious landings and large air-cushion craft to haul tanks and other combat equipment ashore. This total includes: $350 million to begin construction of an LHA-class helicopter carrier; $350 million to begin construction of either an LPD-17-class amphibious landing transport or a variant of that ship designated LX(R); $225 million for an Expeditionary Fast Transport, a catamaran that can carry a few hundred troops and their gear hundreds of miles at 40 mph; and $182.5 million to buy eight air-cushion landing craft (instead of the five requested) to haul tanks and other equipment ashore from transport ships. Aviation Systems Generally speaking, the act funds the Administration's requests for military aircraft acquisition, subject to relatively minor cuts reflecting routine congressional oversight. The major departures from the request were increased funds to accelerate production of the F-35 Joint Strike fighter and the addition of funds to buy helicopters and C-130 cargo planes for the National Guard. F-35 Joint Strike Fighter The act's largest addition to the Administration's request for a single weapons program is the addition of $1.70 billion to acquire 16 F-35 Joint Strike Fighters to the 77 F-35s funded in the budget request. The additional funds provides eight more aircraft in addition to the 48 requested for the Air Force, two more of the short-takeoff, vertical-landing (STOVL) F-35s for the Marine Corps (in addition to the 20 requested), and six more of the aircraft carrier-adapted version – four for the Navy (in addition to the nine requested), and two for the Marine Corps. Other notable funding increases in the bill for procurement of combat aircraft include: $65.0 million to extend the life of A-10 ground-attack planes by replacing their wings; and $100.0 million to begin acquisition of a relatively low-tech (and relatively inexpensive) ground-attack plane designated OA-X for use against other-than-top-tier adversaries. Appendix. Following are the full citations of CRS products identified in tables by reference number only. CRS Reports CRS Report RS22103, VH-71/VXX Presidential Helicopter Program: Background and Issues for Congress , by Jeremiah Gertler CRS Report RS20643, Navy Ford (CVN-78) Class Aircraft Carrier Program: Background and Issues for Congress , by Ronald O'Rourke CRS Report RL31384, V-22 Osprey Tilt-Rotor Aircraft Program , by Jeremiah Gertler CRS Report RL32418, Navy Virginia (SSN-774) Class Attack Submarine Procurement: 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 RL33745, Navy Aegis Ballistic Missile Defense (BMD) Program: Background and Issues for Congress , by Ronald O'Rourke CRS Report RL34398, Air Force KC-46A Tanker Aircraft Program , by Jeremiah Gertler CRS Report R41129, Navy Columbia (SSBN-826) Class Ballistic Missile Submarine Program: Background and Issues for Congress , by Ronald O'Rourke CRS Report R41464, Conventional Prompt Global Strike and Long-Range Ballistic Missiles: Background and Issues , by Amy F. Woolf CRS Report R42723, Marine Corps Amphibious Combat Vehicle (ACV): Background and Issues for Congress , by Andrew Feickert 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 R43618, C-130 Hercules: Background, Sustainment, Modernization, Issues for Congress , by Jeremiah Gertler and Timrek Heisler CRS Report R44463, Air Force B-21 Raider Long-Range Strike Bomber , by Jeremiah Gertler 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 Insight, 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

The FY2019 Department of Defense Appropriations Act, enacted as Division A of P.L. 115-245 , provides $667.3 billion in new budget authority to fund all activities of the Department of Defense (DOD) except for the construction of military facilities and the operation of military family housing complexes. While the total amount appropriated for DOD for FY2019 was nearly equal to the Administration's request, the act provides more funding than requested for dozens of weapons acquisition programs, with the gross increase exceeding $10 billion. Those additions are offset by hundreds of reductions made elsewhere within the budget request. In effect, these reductions allowed Congress to add billions of dollars to the Administration's DOD budget request without exceeding the cap on defense spending that arose from the Bipartisan Budget Act of 2018 ( P.L. 115-123 ). That cap applies to discretionary appropriations for DOD's base budget —that is, appropriations designated by Congress and the President as funding for emergencies or for Overseas Contingency Operations (OCO). OCO activities include current operations in Afghanistan and Syria, and any other operations which are so designated by Congress and the President. A House-Senate conference committee reported a version of the bill on September 13, 2018. The Senate approved the conference report on September 18 by a vote of 93-7 and the House did likewise on September 26 by a vote of 361-61. President Donald J. Trump signed the bill into law ( P.L. 115-245 ) on September 28, 2018. As enacted, H.R. 6157 funds the Administration's major defense initiatives, including an increase of 16,500 active-duty military personnel. Among the weapons procurement programs for which the bill provides substantial additions add to the amounts requested are the F-35 Joint Strike Fighter used by the Air Force, Navy, and Marine Corps (77 aircraft requested and 93 funded) and the Navy's Littoral Combat Ship (one requested and three funded).

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Introduction The Department of Defense (DOD) obligates more than $300 billion annually to pay for goods and services (including research and development). Most of these acquisitions are governed by numerous statutes and regulations found in Title 10 of the United States Code, the Federal Acquisition Regulation (FAR), and the Defense Federal Acquisition Regulation Supplement (DFARS). DOD can also enter into certain transactions without triggering most of the standard acquisition statutes and regulations by using other transaction (OT) authorities. In recent years, Congress has expanded these authorities and DOD is increasingly using OTs for research, prototyping, and production. This report examines (1) how OTs work, (2) why they were established, (3) potential benefits and risks of using OTs, and (4) whether there are data available against which to measure their effectiveness. Appendix A provides a legislative history of DOD's other transaction authorities. Background On October 4, 1957, the Soviet Union triggered a space race with the United States when it successfully launched Sputnik I into orbit, becoming the first nation to send a man-made satellite into space. Congress, concerned that the United States was falling behind in space, held a series of hearings on an "emergency" effort to respond to the Soviet launch of Sputnik. At the same time, a bill was introduced in the Senate to create an agency with the means to quickly and efficiently develop a national space program. These efforts led to passage of the National Aeronautics and Space Act of 1958 (Space Act, P.L. 85-568) in July 1958, which established the National Aeronautics and Space Administration (NASA). In an effort to give the new agency "the necessary freedom to carry on research, development, and exploration ... to insure the full development of these peaceful and defense uses without unnecessary delay," the Space Act granted NASA broad authority to "enter into and perform such contracts, leases, cooperative agreements, or other transactions as may be necessary" to accomplish its mission of research and exploration (emphasis added). Congress extended different variations of OT authorities to other select agencies, granting the authority to DOD in the FY1990 & 1991 National Defense Authorization Act (NDAA, P.L. 101-189 ). For an analysis of which non-DOD agencies can use OTs and how the authorities differ by agency, see Appendix B . What Are Other Transaction Authorities? Other transactions are legally binding contracts that are generally exempt from federal procurement laws and regulations such as the Competition in Contracting Act and the Federal Acquisition Regulation. In contrast, traditional procurement contracts must adhere to the procurement rules set forth in statute and regulation. Generally, DOD can use other transaction authorities for three purposes: 1. conduct research, 2. develop prototypes, or 3. contract for follow-on production of a successful prototype project. DOD's other transaction authorities are found in two sections of law: 10 U . S . C . 2371 grants DOD the authority to use other transactions to carry out basic, applied, and advanced research projects. DOD regulations treat these projects as financial assistance instruments, not as contracts. 10 U . S . C . 2371b permits the use of other transactions to conduct prototype projects and follow-on production. OTs can only be used for prototypes if one of the following applies: at least one nontraditional defense contractor significantly participating in the project; all significant participants are small businesses or nontraditional defense contractors; at least one-third of the total cost of the prototype project is provided by nongovernment participants; or the senior procurement acquisition official provides in writing an explanation of the exceptional circumstances justifying an OT. Follow-on production can only be conducted when the underlying prototype OT was competitively awarded, and the prototype project was successfully completed. 10 U . S . C . 2373 , while generally not considered an o ther t ransaction authority , allows DOD to buy certain items and designs for experimental or test purposes without having to adhere to the procurement laws set forth in Chapter 137 of Title 10. How Do Other Transactions Work? OT authorities grant government officials the flexibility to include, amend, or exclude contract clauses and requirements that are mandatory in traditional procurements (e.g., termination clauses, payments, audit requirements, intellectual property, and contract disputes). OTs can be structured in numerous ways, including a direct relationship between a single government agency and a single provider; joint ventures; partnerships; multiple agencies joining together to fund an agreement encompassing multiple providers; or through a consortium. Consortia One common application of OTs is to forge an agreement with a consortium. A consortium is an organized group— it can consist of nonprofits, academic institutions, or contractors— focusing on a specific technology area. Generally, a lead entity coordinates and directs a consortium's activities. Consortia have consisted of a handful to as many as 1,000 members. Consortia can act to facilitate multiparty agreements whereby each member is akin to its own co-prime contractor with the government. In such a case, the government articulates the need or problem it is trying to solve, and the various members of the consortium can submit white papers for consideration. In this scenario, OTs can serve as an efficient way for all members to send unsolicited technology suggestions and solutions to solve a defined challenge. Consortia can also be used to develop an ecosystem of entities working together on a project, whereby members of a consortium pool resources and collaborate with DOD. A number of analysts argue that using consortia in this way gives the federal government a unique ability to leverage and pool the technological expertise and innovation of multiple entities in a particular sector, thereby strengthening and advancing a sector of the industrial base that may have defense applications. Seen like this, OTs can be considered a mechanism to promote defense technology and the defense industrial base, with the potential added benefit of advancing the domestic commercial technology base. Some analysts, however, have argued that many of today's consortia do not operate as collaborative organizations, but function more like managed multiple award task order contracts. These analysts argue that DOD should seek to foster more collaboration in consortia. Some analysts have argued that consortia reduce competition, since only members of the consortium under contract can participate in the project or submit white papers for consideration and funding. Others counter that even when an OT is signed with a single consortium, competition could be increased, since all members of the consortium are notified of the opportunity (expanding the pool of potential competitors aware of the opportunity), and the OT will foster internal competition among consortium members. What Laws and Regulations Apply to OT? OTs are not procurement contracts and thus are exempt from numerous procurement statutes and regulations, including the statutes in Chapter 137 of Title 10 ( Procurement Generally ). They are, however, bound by standard contract and other select laws and regulations. Examples of laws that do not apply include the Truth in Negotiations Act, Competition in Contracting Act, Cost Accounting Standards, Contract Disputes Act, and select intellectual property statutes such as the Bayh-Dole Act. A number of these laws are aimed at oversight and protecting the interests of taxpayers. While the Competition in Contracting Act does not apply, 10 U.S.C. 2371b requires that research and prototype projects be competed "to the maximum extent practicable." DOD policy mirrors the statutory language, stating "[C]ompetition is a good thing. It helps keep prices low, quality high, and gives the government leverage in negotiations." To the extent that OTs induce nontraditional contractors to work with DOD, OTs can be viewed as promoting competition among (and within) entities that would not normally compete for DOD contracts. However, the lack of explicitly defined competition requirements could result in less competition for certain OTs. OTs are not free from all legislative and regulatory requirements. Generally, statutes and regulations that are not procurement-specific apply, including the Trade Secrets Act, (18 U.S.C. 1905); the Economic Espionage Act (18 U.S.C. 1831-39); elements of the Freedom of Information Act (5 U.S.C. 552); and fiscal and property laws, such as the Anti-deficiency Act (31 U.S.C. 1341); and the Tucker Act (28 U.S.C. 1491). As can be seen by these citations, many of these statutes are not located in the procurement titles of Title 10 or Title 41. Protests and GAO Audits The Government Accountability Office (GAO) has held that OTs are not procurement contracts, and therefore it will not review protests of such an award or solicitation. However, GAO will review "a timely protest that an agency is improperly using its other transaction authority." OT contracts can be protested to the Court of Federal Claims, although there is debate as to the extent of the court's jurisdiction. The limited protest jurisdiction of GAO is appealing to many government procurement officials. One senior Air Force official reportedly stated that OTs are "just so much faster and so much more attuned to getting something that we want today and not have to spend a couple of years going through a protest, going through this huge process to get something we wanted two years ago." It generally does not take that long to go through a GAO protest. By statute, GAO must issue an opinion on a protest within 100 days of the protest being filed, and 70% of cases are resolved in less than 60 days. While exempt from GAO bid protests, OTs are not exempt from GAO audits. Generally, OTs that include government payments exceeding $5 million are required to include a clause granting GAO the right to examine the records of any related party. However, this requirement has a number of limitations. Potential Benefits and Risks of Using OTs Used properly, OTs can provide significant benefits to DOD. Along with the potential benefits come certain risks. Potential Benefits Some of the potential benefits to OTs highlighted by analysts and officials include providing a mechanism to pool R&D resources with industry to facilitate development of, and obtain "the latest state-of-the-art, dual use technologies"; attracting nontraditional contractors with promising technological capabilities to work with DOD; lowering costs by eliminating requirements associated with the Federal Acquisition Regulations (i.e., costs associated with required reporting and administrative activities) or sharing costs with industry; and "speeding up" the acquisition process. A number of experts argue that OTs provide a unique mechanism for DOD to invest in, and influence the direction of, technology development even when the end result is not directly tied to a military capability. As one observer noted, the real benefit to DOD may be that [t]he R&D has been accomplished and is available to the technical and scientific communities. As a result, a subsequent phase of research can begin or a particular approach can be demonstrated to be of no value. Some argue that OTs have particular import today. Drawing parallels to the space race, these analysts argue that DOD is engaged in a defense technology race. According to the 809 Panel: DoD is now in a period during which the time a particular technology is a dominant force on the battlefield is getting increasingly shorter, disruptive technologies are emerging at a faster pace, and these technologies are more widely dispersed…In a world with rapidly changing technology, time is a valuable resource that must not be taken for granted. It is difficult to predict what capabilities DoD will need 5 to 10 years from now—biotechnology, nanotechnology, artificial intelligence, robotics, or a new technology area not even known today. It also is unclear on what plane the military will conduct warfare—traditional battlefields, space, cyberspace, or some other domain. The current acquisition system lacks the agility needed to adapt to new paradigms. These analysts argue that OTs and similar rapid acquisition authorities are critical for DOD to compete in such a fast-paced global environment where technology and innovation are no longer driven by DOD, but by industry and foreign competitors. In 1960, the United States accounted for 69% of global R&D, with U.S. defense-related R&D alone accounting for more than one-third of global R&D. The federal government funded approximately twice as much R&D as U.S. business. However, from 1960 to 2016, the U.S. share of global R&D fell to 28%, and the federal government's share of total U.S. R&D fell from 65% to 24%, while business's share more than doubled from 33% to 67%. As a result of these global, national, and federal trends, federal defense R&D's share of total global R&D fell to 3.7% in 2016. Given the shift in the global R&D landscape, and the diminishing influence of DOD as a market mover, analysts suggest that the current procurement system is overburdened by regulations and bureaucratic processes that slow the system, increase costs, and dissuade companies from doing business with DOD. In contrast, OTs are viewed as faster, attracting companies that would otherwise forgo working with DOD and promoting broader investment in critical defense capabilities. As one analyst wrote: OTAs are currently the only way to remove the barriers necessary to get these nontraditional sources of innovation to do business with the military. Properly constructed, OTAs help speed up the process, respect a company's IP through negotiation rather than regulatory fiat, and result in contracting under commercial terms and conditions. Congress also appears to have shifted its view on appropriate use of other transactions. In the FY1999 conference report, Congress stated that [OT] authority should only be used in the exceptional cases where it can be clearly demonstrated that a normal contract or grant will not allow sufficient access to affordable technologies. By comparison, in the FY2018 NDAA, Congress expanded OT authorities and stated the following: In the execution of science and technology and prototyping programs, the Secretary of Defense shall establish a preference, to be applied in circumstances determined appropriate by the Secretary, for using transactions other than contracts, cooperative agreements, and grants. Potential Risks Along with the potential benefits come potential risks, including that of diminished oversight and exemption from laws and regulations designed to protect government and taxpayer interests. Some analysts, while acknowledging the important role of OTs, raise concerns over transparency and how these agreements are being employed. As one industry official stated, OTs are a contracting method, not a substitute for good acquisition practices. Discussing a particular OT for cloud services that was protested and ultimately cancelled by DOD, one observer argued The cloud contract provides a teachable moment for procurement reform-minded officials in the Pentagon and Capitol Hill. The problem was not with the OTA mechanism, which remains an essential element of reforming Pentagon procurement. Rather, the problem was with a lack of transparency with how the mechanism was employed. Scott Amey, general counsel of the Project on Government Oversight, cautioned We have to seriously consider how we are using [OTs]; whether we are using them as intended, whether we are getting the goods and services that we really want and need, whether we are getting them at the best cost and process, and we are using this procurement vehicle as a way to just circumvent the rules and have contractors not have the administration and oversight they need to hold them accountable. I'm just afraid this is going to result in a lot of waste, fraud, and abuse in the future. Congress has expressed repeated concerns that OTs could be used to circumvent congressional intent. In the FY1999 NDAA, the committees emphasized that the authority should only be used in a limited manner. The conference report stated the following: The conferees are especially concerned that such authority not be used to circumvent the appropriate management controls in the standard acquisition and budgeting process. Congress echoed a similar concern in the FY2019 NDAA. According to the House report: The committee also urges the Department to reiterate through established guidelines that OTA is not a means for circumventing appropriate use of the Federal Acquisition Regulations, and that full and open competition should be used to the maximum extent possible to maintain a sense of integrity, fairness, and credibility in the Federal Procurement process. Other transactions are also exempt from many of the socioeconomic policies put in place by Congress to promote public policies, including some Buy America requirements. Some analysts have raised concerns that OTs are a way to circumvent many of the public policies enshrined in the acquisition process. A number of analysts and officials have raised concerns that if DOD uses OTs in ways not intended by Congress—or is perceived to abuse the authority—Congress could clamp down on the authority. Under Secretary of the Army Ryan McCarthy reportedly stated that the military department is "trying to be very judicious about this authority so we don't lose it." Some analysts argue that Congress is already clamping down on the use of OTs. These analysts point to language in the FY2019 NDAA and FY2019 appropriations legislation ( P.L. 115-245 ) requiring additional reporting and notification (see Appendix A ). Such notification and reporting requirements, however, are not new; when Congress expanded OT authorities in the past, reporting and notification requirements were commonly included. The reporting requirements may also be a result of congressional frustration with a lack of transparency and data on how DOD uses OTs. DOD Currently Lacks Sufficient Data to Measure and Evaluate the Use of Other Transaction Authority DOD lacks authoritative data that can be used to assess OT effectiveness and better understand broader trends associated with these agreements. The most frequently cited source for such data is the Federal Procurement Data System-Next Generation (FPDS-NG), which is the primary source for tracking data on contract obligations, including other transactions for prototypes and follow-on production. FPDS-NG is configured to track data on cost-sharing, other transaction award type, and prevalence of nontraditional contractors. Obligations connected to OTs for research are tracked by the Defense Assistance Awards Data System, which is primarily used to track grants and cooperative agreements. This bifurcation of how OT data are tracked makes it more difficult to get a consolidated view of OT data. According to DOD, all OT data will be reported through FPDS-NG starting in late 2019. The procurement data in FPDS-NG are not fully reliable. There are quality issues relating to accuracy, completeness, and timeliness of data. CRS reviewed FPDS-NG data for prototype OT agreements signed or modified between FY2015 and FY2017 and found similar data inconsistencies. DOD officials acknowledge that they do not have sufficiently reliable data upon which to conduct analysis on the use of OTs and are taking steps to try to improve the data. The analyses below reflect CRS's effort to analyze DOD's use of other transaction authority based on the best available data. How Often Are OTs used? According to FPDS-NG, in FY2017, DOD obligated $2.1 billion—and received $360 million in cost-share contributions—on prototype other transaction agreements, representing less than 1% of DOD's total FY2017 contract obligations (approximately $320 billion). Despite the small percentage of obligations, OTs are growing quickly and are expected to continue to grow at a rapid pace. From FY2013 to FY2017, the number of new prototype agreements increased from 12 to 94, an increase of over 650% (see Table 1 ). DOD's Defense Innovation Unit (DIU, formerly known as the Defense Innovation Unit Experimental, or DIUx) was involved with approximately half of the prototype agreements executed in 2017. DOD officials have stated their intent to further increase the department's use of OTs. Officials say that this increase is due to Congress expanding the statutory authority. The Army executed more than 66% of the prototype OT agreements between FY2013 and FY2017, often on behalf of other military departments and components (see Table 2 ). Army Contracting Command-New Jersey at Picatinny Arsenal executes many of these agreements. DIU currently uses Picatinny Arsenal to execute all of its other transaction agreements. Are OTs Attracting Nontraditional Defense Contractors and Entities? A number of private sector companies do not pursue federal government contracts because they are unwilling to forfeit intellectual property rights or adhere to some of the procurement regulations. One of the goals of OTs is to expand the defense marketplace by creating a mechanism for access to technologies and services of companies that would not otherwise work with DOD, particularly startups and companies developing innovative technology. As one industry representative stated: Because they are "outside" the FAR, OT agreements do not require such cumbersome oversight and audit requirements such as those imposed by the Truth in Negotiations Act, cost and pricing data or an expensive Cost Accounting System (CAS) qualified financial system. CAS compliant financial systems can cost a company millions of dollars to implement and maintain — and are therefore a significant, if not potentially fatal, barrier to government market entry for startups and small, innovative companies. These requirements tend to reinforce the "legacy advantage" of large traditional contractors, who can afford to hire and staff these requirements with large staffs of accountants and lawyers. A number of nontraditional companies told CRS that they are more likely to work with DOD because of the department's other transaction authorities. Despite these claims, some observers question whether OTs are effectively bringing nontraditional contractors into the defense marketplace. A DOD Inspector General report examining other transactions from FY1994 to FY2001 found that OTs did not attract significant numbers of nontraditional defense contractors to do business with DOD. The report found that of the 209 prototype agreements examined, traditional defense contractors received 95% of the $5.7 billion in funds awarded. A recent analysis of FPDS-NG data by Federal News Network had similar findings. According to the report, from FY2015 to FY2017, while nontraditional defense contractors were awarded most of the new OTs (66% vs. 33% for traditional defense contractors), the dollar value of the OTs favored traditional contractors ($20.8 billion vs. $7.4 billion for nontraditional contractors). Some observers have questioned the accuracy of the data published by Federal News Network. According to Charlie McBride, president of Consortium Management Group (which manages two consortia working with DOD through OTs), 88% of the total dollar value of awards to CMG Group has gone to nontraditional prime contractors, and nontraditional entities have participated in the remaining 12%. This debate highlights the lack of authoritative data on OTs. The currently available data may not accurately reflect the extent to which nontraditional contractors are engaged in OT agreements. FPDS-NG does not collect data regarding subcontractors or consortia composition, making it difficult to determine the nature and extent to which nontraditional defense contractors and entities may be working under OT agreements with DOD directly or as subcontractors. Are OTs Fostering Collaborative Research and Sharing of Resources Between DOD and the Private Sector? When Congress extended OT authority to DOD, it authorized inserting a clause requiring a person or entity to make payments to DOD as a condition of receiving support under the agreement. Such funds were to be merged into an account dedicated to support DARPA advanced research projects. The intent of this provision was to permit DARPA to "recoup the fruits of such arrangements, when there is a 'dual use' potential for commercial application" and reinvest the funds to develop other technologies. In addition to the recoupment authority, DOD can share costs with other parties under an OT. Using this approach, the amount of each party's share is negotiated and incorporated into the agreement. Congress believed that OTs and cooperative agreements were ideal vehicles for promoting DOD-industry collaboration in developing dual-use technologies. For example, the FY1992 & 1993 NDAA ( P.L. 102-190 ) authorized DOD to enter into cooperative and other transaction agreements to develop critical dual-use technologies as set forth in the Defense Critical Technologies Plan. According to the Senate report: ... the United States tends to underinvest in dual-use technologies. National security requirements alone often do not justify major DOD support, and market prospects alone often appear to be too long-term or high risk to justify US industry carrying the entire development burden.... The committee encourages use of cooperative agreements and other transactions in lieu of grants or contracts.... The provision would require that at least 50 percent of funding over the life of a partnership derive from non-federal sources but would allow for a smaller industry share at the start. In the 1990s, some DARPA OTs required participants to share costs because the types of work completed generally involved R&D that was mutually beneficial to government needs and industry commercial goals. In certain instances, present-day OTs have cost-sharing requirements that foster collaborative research. Some analysts believe that DOD is not always realizing all the benefits that OTs have to offer, such as sufficiently leveraging private capital or forming true consortia of multiple parties pooling resources. Some of these analysts believe that DOD does not sufficiently use consortia to leverage private investment through the pursuit of collaborative, mutually beneficial, dual-use technologies. Some observers argue that as the legislation on OTs has evolved, the cost-sharing provision for prototype projects has come to create an unfair playing field biased against traditional defense contractors. For prototype projects, traditional contractors generally are required to assume one-third of costs whereas nontraditional defense contractors and small businesses generally do not have to cost share. From a fairness perspective, these observers argue that traditional contractors should not have a mandatory cost share. These observers also point out that some nontraditional defense contractors are companies with billions of dollars of revenue that should not be granted a competitive cost advantage. Putting traditional defense contractors at a competitive disadvantage could deny DOD access to those companies with the most experience working on defense products, potentially depriving the military of access to leading defense-related research and technology. Other observers argue that the cost share as currently structured is appropriate: traditional defense contractors hold a significant competitive edge in their understanding of, and have the systems in place to manage, traditional contracts. In contrast, nontraditional and small businesses, which generally cannot compete with the traditional defense contractors, need the exemption from the cost-share requirement to be able to work with DOD. These observers also argue that traditional contractors are awarded the majority of dollars obligated to OTs, proving how difficult it is for nontraditional suppliers to break into the defense marketplace. Additionally, traditional contractors could avoid the cost-sharing requirement by teaming with a nontraditional contractor. DOD has not effectively tracked data on cost sharing. A 2017 report to Congress indicated that in FY2016 DOD obligated $1 billion for prototype agreements and received $68 million in cost-share contributions. A CRS review found numerous concerns with the data underlying the report, and with DOD's analytical conclusions. See Appendix C for further discussion. Are OTs Being Competed? A number of analysts and industry officials have raised concerns that DOD could use OTs to avoid competitions, as OTs are exempt from the Competition in Contracting Act. According to statute, follow-on production using other transaction authority can only be awarded if the underlying R&D agreement was competed. In addition, 10 U.S.C. 2371b states that "to the maximum extent practicable" OTs must be competed. Determining whether OTs are being used to circumvent competition requires a two-step analysis: 1. Are OTs competed less often that traditional contracts? 2. Is there a benefit to these OTs being competed? Available FPDS-NG data suggest that DOD is broadly complying with 10 U.S.C. 2371b's competition mandate. Between FY2013 and FY2017, approximately 89% of all new OT prototype agreements were competed in some fashion. Are OTs Faster? Many observers and analysts believe that OT agreements can be executed substantially faster, sometimes in a matter of weeks, compared to the months or years it typically takes to execute traditional contracts. Based in part on this belief, some officials and analysts are touting OTs as a new model for conducting acquisitions and the answer to many of the problems in defense acquisition. These analysts argue that in a world of increasingly fast technology development, DOD acquisitions must go faster or risk being left behind. Many acquisition professionals argue that OT contracts are not inherently faster than traditional contracting; instead, they are executed faster because they are not encumbered by the reviews, protests, and bureaucratic layers that have been overlaid on traditional contracting. According to these officials, OTs take just as long as traditional contracts if the same execution and oversight processes are applied. And because all terms are negotiable, complex negotiations could make OTs take longer to execute than traditional contracts that have required, nonnegotiable conditions. The Other Transactions Guide states The OT award process will not always be faster than the traditional procurement processes and sometimes can be as long or longer. The speed of award is tied to many factors, many of which are internal to the organization. DOD has not tracked data on the relative time it takes to execute OTs vs. traditional contracts, making it impossible to objectively assess these claims. What Is the Role of the Workforce in Executing OTs? Analysts and officials generally agree that the workforce plays a critical role in determining the success or failure of an acquisition. Because there are fewer predefined requirements, OTs can be more difficult to negotiate than traditional contracts, putting DOD at greater risk of not getting what it wants at a reasonable price. The complexity and difficulty of negotiations is particularly high when there are intellectual property/patent rights issues, as is the case with most OTs. Given these challenges, OTs often require more experienced and capable government representatives to ensure implementation of agreements that are in the government's best interest. Some analysts question the extent to which the workforce is sufficiently trained and equipped to negotiate OTs. In response to this concern, in the FY2018 NDAA, Congress required workforce education and training for OTs, and required DOD to establish a cadre of intellectual property experts to advise, assist, and provide resources to program offices that are developing intellectual property strategies for contracts and agreements (see Appendix A ). DOD officials acknowledge that more training and education is required. Given the complexity of OTs and the limited extent to which they are used, some analysts and industry officials suggested that there may be a benefit to establishing a centralized office within DOD responsible for executing or overseeing all other transaction agreements. Such a structure could help ensure that those members of the acquisition workforce engaged in other transactions are sufficiently experienced, trained, and qualified. DOD Efforts to Improve the Use of OTs A number of analysts have argued that DOD should take steps to improve its use of OTs. Many of these analysts have suggested that data are not consistently and accurately tracked, regulations and guidance on when and how to use OTs are vague or insufficient, and the workforce is not sufficiently prepared to effectively use OTs. A number of officials have acknowledged these shortcomings and DOD is reportedly taking steps to address them. For example, in December 2018, DOD issued an updated Other Transactions Guide , a comprehensive guide containing best practices, case studies, and a clarification of myths related to other transaction authorities. In addition, Defense Acquisition University developed new course materials addressing OTs and is working to expand its offerings of relevant training and classes. However, numerous acquisition officials question whether it is possible, or even desirable, to try to quickly implement training aimed at preparing the thousands of DOD acquisition officials to execute OTs. Some of these officials have suggested it might be appropriate to only allow a limited and vetted number of acquisition professionals to be OT agreements officers. Issues for Congress How Far Should OT Authority Extend? Some argue that OTs are just one "tool in the tool box," appropriate for only specific types of contracts, and should not be used to avoid the statutory and regulatory framework or to try to accelerate the process just for the sake of speed. Others have suggested that OTs should be used to cut through bureaucracy, speed up the acquisition process, avoid regulations and bid protests, and perhaps eventually supplant the regular FAR-based contracting process. Given the benefits and risks associated with OTs, questions for Congress include the following: 1. To what extent and in what circumstances do the potential benefits of OTs in terms of cost, schedule, and added capabilities outweigh concerns over potential fraud, waste, abuse, diminished oversight, and other public policy objectives? 2. Should OT authorities be extended further, curtailed, or maintained? What Data May Be Beneficial to Congress in Evaluating OTs? The FY2019 NDAA required DOD to submit a report annually through 2021, summarizing DOD's use of OTs, including organizations involved; number of transactions; amounts of payments; and purpose, description, and status of projects. The NDAA also required the Defense Innovation Unit to submit a report to Congress, to include the number of traditional and nontraditional defense contractors with DOD contracts or other transactions resulting directly from the unit's initiatives. The conference report for the FY2019 defense appropriations bill included language expressing the conferees' "[concern] with the lack of transparency surrounding the employment of OTA, particularly for follow-on production." The conferees directed DOD to provide quarterly reports to the House and Senate appropriations committees listing each active OT, and to include additional information for each agreement. The conferees also directed GAO to review DOD's use of OTs to determine whether the "employment of this authority conforms to applicable statutes and guidelines, to include the identification of any potential conflicts." GAO was also required to report on the extent to which OTs have been used since FY2016. The multitude of reporting requirements, and the questionable reliability of the available data, raise a number of questions that Congress may wish to explore, such as the following: 1. To what extent, if any, should the current reporting requirements be consolidated to create a more streamlined and consistent flow of information to Congress? 2. What specific data does Congress need in these reports to effectively conduct oversight? For example, what percentage of research OTs result in prototype projects and follow-on production? 3. To what extent are the data sufficiently reliable, and will such data be easily retrievable in the future, to allow Congress to conduct effective, timely, and ongoing oversight? If the data are not sufficiently reliable or accessible in the future, what other data collection and tracking methods could Congress mandate to ensure ongoing access to reliable data? 4. How are OTs being used? Where and when in the acquisition lifecycle is the authority being used? To what extent is the requirements process being circumvented when DOD awards an OT follow-on production contract for a major system? Should DOD Establish an Acquisition Innovation Lab or Center of Excellence to Manage and Execute OTs? One analyst suggested that "no efficiency is lost if only the most able personnel are authorized to procure and administer" OT agreements and further argued that expanding the use of OTs would increase the training costs by expanding the number of people who can "weave complex agreements in a relatively unstructured environment." Congress may consider whether DOD should establish an acquisition innovation lab or center of excellence responsible for overseeing, executing, and approving all OTs across the department. Such a lab or center could be staffed and supported by a cadre of professionals with experience across the acquisition lifecycle who have a willingness and ability to embrace new ideas and rethink existing practices. Alternatively, such labs or centers could be established in the military departments. Having centers in each organization could allow for consideration of the different missions and business approaches of the departments and help educate the workforce on a more systematic basis. Proponents argue that such an office would help ensure that only experienced and capable officials, with the appropriate training, use OT authorities. Such an office could also help protect against layering internal DOD policies and bureaucracies onto OTs by placing OTs outside of the traditional bureaucratic acquisition process. Proponents could further argue that such an office could better propagate best practices and ensure that OTs are used appropriately and are consistent with guidance and legislation. Having a single office responsible for executing or approving all OTs could also help ensure more timely and accurate information, giving Congress more visibility into DOD's use of other transaction authorities. To the extent that a single, high-level official is responsible for managing and overseeing all OTs, Congress might wish to consider repealing or modifying existing statutory approval requirements. If such an office was able to provide timely and accurate information, Congress might also consider some of the current reporting requirements unnecessary, and may choose to repeal some of the reporting requirements. Opponents of such a proposal argue that centralizing OTs would have the opposite effect, increasing bureaucracy by adding yet another office within DOD. Opponents also argue that such an office could make it more time-consuming to get a project underway and may discourage program offices from attempting or suggesting OTs. Some also argue that a single office may not have the resources to execute and approve agreements in a timely manner, and would inhibit spreading expertise on how to execute OT agreements more broadly across the acquisition workforce. Alternative Options for Establishing Such an Office Even proponents who might in theory support establishing such an office could raise significant concerns regarding how such an office would function in practice. A number of alternative options could be pursued to address concerns raised by opponents of establishing a centralized office. Some of these alternative options include the following: Granting such an office primary, but not exclusive, authority to execute OTs. For example, agreement officers specifically authorized to do so could execute OTs, with the centralized office conducting a peer review. Under this construct, the office could also be charged with providing information and expertise/consulting services on the use of OTs to program offices contemplating using the authorities. Establishing centers within each military department, with a designated office in OSD serving a coordinating function (with nondelegable approval authority residing in the military department office designated for OTs). Creating the office as a pilot program for three years, to help DOD manage OTs until such time as the workforce becomes more experienced and proficient in using these agreements. Appendix A. Legislative History Other transaction authority first appeared in the National Aeronautics and Space Act of 1958. Since then, Congress has extended OT authorities to 11 federal agencies and a number of other federal offices (see Appendix B for information on other federal entities with similar authorities). This appendix traces the legislative history of OT authorities and select related statutes applicable to DOD. To read the full text of the three statutory provisions related to OTs (10 U.S.C. 2371, 2371b, and 2373), see Appendix D . National Aeronautics and Space Act of 1958 (P.L. 85-568) Creation of Other Transaction Authority On July 29, 1958 President Dwight D. Eisenhower signed into law the National Aeronautics and Space Act (P.L. 85-568), which established the National Aeronautics and Space Administration (NASA). The purpose of the act included the expansion of human knowledge, preservation of the role of the United States as a leader in space science and technology, and pursuing the most effective utilization of the scientific and engineering resources of the United States. Section 203(b)(5) of the Space Act provided NASA the authority (emphasis added) to enter into and perform such contracts, leases, cooperative agreements, or other transactions as may be necessary in the conduct of its work and on such terms as it may deem appropriate, with any instrumentality of the United States ... or with any person, firm, association, corporation, or educational institution. To the maximum extent practicable and consistent with the accomplishments of the purpose of this Act, such contracts, leases, agreements, and other transactions shall be allocated by the Administrator in a manner which will enable small-business concerns to participate equitably and proportionately in the conduct of the work of the Administration. Intellectual Property Rights The Space Act specifically addressed NASA's "property rights in inventions." Section 305 stated that any invention made in the performance of any work under any contract is the exclusive property of the United States "unless the Administrator waives all or any part of the rights." This was true even when the person who created the invention "was not employed or assigned to perform research, development, or exploratory work, but the invention is nevertheless related to the contract" and was made during working hours, or with a contribution of the government. The act granted the Administrator wide latitude to "waive all or any part of the rights of the United States under this section" if doing so was deemed to be in the best interests of the United States. When such rights were waived, NASA retained an irrevocable, nonexclusive, nontransferable royalty-free license by or on behalf of the United States. National Defense Authorization Act for FY1990 & FY1991 ( P.L. 101-189 ) The FY1990 & FY1991 NDAA granted DARPA temporary authority to enter into "cooperative agreements and other transactions" for the purpose of conducting advanced research projects. The statute clarified that OTs should only be used when "the use of standard contracts or grants is not feasible or appropriate." Congress restricted funding for OTs and cooperative agreements to $25 million of appropriated funds for FY1990 and FY1991, and set the authority to expire on September 30, 1991. Cost Sharing The FY1990 & FY1991 NDAA permitted OTs (or cooperative agreements) to include a clause requiring a person or entity to make payments to DOD as a condition of receiving support under the agreement. Such funds were to be merged into an account dedicated to supporting DARPA advanced research projects using cooperative agreements and other transactions. The act required, to the extent practicable, that funds provided by the government not exceed the total amount provided by the other parties to the project. According to the Senate report, one of the intents of the cost-sharing provision was to permit DARPA to "recoup the fruits of such arrangements, when there is a 'dual use' potential for commercial application" and to reinvest the funds to develop other technologies. Reporting Requirements The FY1990 & FY1991 NDAA required DOD to submit an annual report on the use of OTs and cooperative agreements, to include a description of each agreement and the technologies involved, the potential military and commercial utility of the technology, the reasons a contract or grant was not feasible to support the research, and the amount of payments, if any, received by the federal government under the agreement. National Defense Authorization Act for FY1991 ( P.L. 101-510 ) Section 244 increased the funds authorized for cooperative agreements and OTs from $25 million to $50 million. However, no such funding was appropriated. Reporting and Notification Requirements The conference report required DOD to submit to Congress a report listing the cooperative agreements and consortia intended to be used in FY1991-1992. The conference report also required DOD to provide the armed services and appropriations committees 30 days' notice prior to DOD signing a cooperative agreement or agreement with a consortia under OT authority. The Senate report focused on consortia as a method to pool resources, share research among numerous participants, and promote critical dual-use technology. Department of Defense Appropriations Act, 1992 ( P.L. 102-172 ) Limitations on the Use of OTs Section 8113A of P.L. 102-172 placed temporary limitations on the use of agreements undertaken pursuant to 10 U.S.C. 2371: Section 8113A limited the use of OTs and cooperative agreements exclusively to DARPA (to the exclusion of the rest of DOD) for FY1992. Section 8113A limited DARPA to obligating or expending no more than $37.5 million in FY1992 for cooperative agreements or OTs undertaken pursuant to 10 U.S.C. 2371. Section 8113A further established that no more than $75 million could be obligated or expended by DARPA in FY1992 for DOD dual-use critical technology partnerships. National Defense Authorization Act for FY1992 & FY1993 ( P.L. 102-190 ) Expanded Authority Section 826 extended other transaction authority to the military departments, and established separate fund accounts in each department for cost sharing. Section 826 also repealed the sunset for cooperative agreements and OTs, making the authorities permanent. Section 821 authorized DOD to enter into cooperative and other transaction agreements to develop critical dual-use technologies as set forth in the Defense Critical Technologies Plan. According to the Senate report ... the United States tends to underinvest in dual-use technologies. National security requirements alone often do not justify major DOD support, and market prospects alone often appear to be too long-term or high risk to justify US industry carrying the entire development burden.... The committee encourages use of cooperative agreements and other transactions in lieu of grants or contracts.... The provision would require that at least 50 percent of funding over the life of a partnership derive from non-federal sources but would allow for a smaller industry share at the start. The conference report stated that the partnerships should focus on programs that fit into the security needs within DARPA. The conference report also stated that OTs are appropriate for those cases where the "regulations applicable to the allocation of patent and data rights under the procurement statutes may not be appropriate to partnership arrangements in certain cases." National Defense Authorization Act for FY1993 ( P.L. 102-484 ) Cost Sharing Section 4221 established 10 U.S.C. 2511, which required DOD to establish cooperative arrangements with industry, educational institutions, federal labs, and other entities, to pursue research, development, and application of dual-use technologies. The section authorized DOD to use grants, contracts, cooperative agreements, or OTs to create these partnerships, and that the Federal government should not contribute more than 50% of the costs related to projects under this authority. National Defense Authorization Act for FY1994 ( P.L. 103-160 ) Expanded Authority Section 827 established 10 U.S.C. 2358, which gave the Secretary of Defense and the Secretaries of the military departments the authority to conduct basic, advanced, and applied research through the use of contracts, cooperative agreements, grants, and OTs. Previously, OTs were only authorized for advanced research. Prototype Authorities Section 845 granted DARPA the authority to use OTs for prototype projects directly related to weapons or weapon systems proposed to be acquired by DOD. Section 845 required that "to the maximum extent practicable," prototypes be competitively awarded. This authority was set to terminate after three years. Section 845 remained as a note to 10 U.S.C. 2371 until separately codified as 10 U.S.C. 2371b in the FY2016 NDAA ( P.L. 114-92 ). Federal Acquisition Streamlining Act of 1994 ( P.L. 103-355 ) Section 1301 redesignated the language in 10 U.S.C. 2358 (granting the authority to use OTs) to 10 U.S.C. 2371. Reporting Requirements Section 1301 also required DOD to submit an annual report to the armed services committees, to include a general description of the other transactions, including the technologies involved in the research, the potential military and, if any, commercial utility of such technologies, the reasons for not using a contract or grant to provide support for such research, and the amount of payments, if any, received during the fiscal year pursuant to a clause in the other transactions and to what accounts such payments were credited. National Defense Authorization Act for FY1997 ( P.L. 104-201 ) Section 203 required that a senior DOD official be designated in OSD, and that the officials' sole responsibility be developing policy related to, and ensuring implementation of, DOD's dual-use technology program. This section authorized DOD to use OTs (as well as contracts, cooperative agreements, and grants) for dual-use projects only if the project "is entered into through the use of competitive procedures." Section 743 granted DOD the authority to use OTs to conduct research on Gulf War Syndrome, to determine its relationship to possible exposures of members of the Armed Forces to chemical warfare agents and hazardous materials, and the use of inoculations and new drugs. Expanded Prototype Authorities Section 804 amended Section 845 of the FY1994 NDAA by extending to the military departments and officials designated by the Secretary of Defense, the authority to use OTs for certain prototype projects. This authority, originally granted solely to DARPA and set to expire after three years, was given a new termination date of September 30, 1999. Reporting Requirements Section 267 modified elements of the annual report to the armed services committees. National Defense Authorization Act for FY1998 ( P.L. 105-85 ) Section 832 amended 10 U.S.C. 2371 by clarifying that certain information submitted to DOD (i.e. a proposal, business plan, technical information) be protected from disclosure pursuant to 5 U.S.C. 552 for a period of five years. Strom Thurmond National Defense Authorization Act for FY1999 ( P.L. 105-261 ) Section 241 extended the sunset day for the authority to use OTs for prototypes from September 30, 1999, to September 30, 2001. Section 817 amended Section 2371 of Title 10, United States Code, clarifying that information submitted by outside parties in cooperative agreements for basic, applied, and advanced research is protected from disclosure under Section 552 of Title 5, United States Code. Department of Defense Appropriations Act, 1999 ( P.L. 105-262 ) While the enacted FY1999 defense appropriations bill ( P.L. 105-262 ) did not include legislative language addressing OTs, H.Rept. 105-591 , which accompanied the House-reported version of H.R. 4103 , included language expressing the House Appropriations Committee's "serious reservations" regarding the Air Force's then-proposed use of an OT agreement—instead of a contract— to develop the Evolved Expendable Launch Vehicle (EELV) program. The committee noted that "under [OTs] traditional safeguards which protect the government's interest in large acquisition programs are largely absent," and required the Under Secretary of Defense for Acquisition, Technology, and Logistics (now the Under Secretary of Defense for Acquisition and Sustainment) and the DOD Inspector General to certify to the congressional defense committees that the use of an OT was appropriate for the EELV program, and that "adequate safeguards exist[ed] to protect the government's interest and monitor program performance." National Defense Authorization Act for FY2000 ( P.L. 106-65 ) Section 801 required that for prototypes using OT authorities, DOD ensure that GAO, under its audit authority, have access to records relating to other transaction prototype agreements exceeding $5 million. Section 801 allowed for a waiver to GAO access and exempted entities that over the last year have not entered into an agreement with DOD that provided for audit access by a government entity. According to the Senate report: Senior DOD officials have sought legislation to extend other transaction authority to production contracts. Under current authority, there is some debate about whether GAO has audit access to other transactions. As the size, costs, and complexity of programs being funded using other transactions increases, the committee wants to ensure that the GAO has audit access in relation to the higher levels of spending and added risks. Reporting Requirements The Senate report also addressed reporting requirements and congressional intent to review the use of OTs. The report stated the following: The committee is assessing the utility of other transaction prototype authority. The statement of managers accompanying the Strom Thurmond National Defense Authorization Act of 1999 directed the Secretary of Defense to report on the use of this authority to the congressional defense committees, no later than March 1, 1999. In addition, both the Department of Defense Inspector General and the General Accounting Office are reviewing the use of other transaction prototype authority and will report to Congress in the coming year. The committee is interested in the extent that new commercial firms are entering the DOD marketplace through the use of other transaction authority, as well as the degree of cost sharing between the government and non-federal government parties. The committee is also interested in any lessons learned from the broad exemptions to federal law provided by other transaction authority. For example, other transactions are exempt from the Competition in Contracting Act, Truth in Negotiations Act, Contract Disputes Act, Antikickback Act of 1986, Procurement Integrity Act, Service Contract Act, Buy American Act, and chapter 137 of title 10, United States Code. Questions have been raised about whether the government's interest is adequately protected in the absence of the applicability of these statutes. Conversely, advocates of the view that the government should take advantage of the flexibility of other transactions have championed proposals to extend other transaction authority to production. The committee directs the Secretary of Defense to provide a new report that updates information in the March 1999 report on the use of other transaction prototype authority to the congressional defense committees by February 1, 2000. National Defense Authorization Act for FY2001 ( P.L. 106-398 ) Limitations on the Use of OTs Section 803 limited the use of OTs for prototype projects to only those circumstances when at least one nontraditional defense contractor significantly participates in the project, one-third of the total cost of the project is paid out of funds provided by parties to the transaction other than the federal government, or the senior procurement executive determines in writing that exceptional circumstances justify use of an OT. Nontraditional defense contractor was defined as an entity that for a period of one year has not entered into or performed "any contract that is subject to full coverage under the cost accounting standards" or "any other contract in excess of $500,000 to carry out prototype projects or to perform basic, applied, or advanced research projects for a Federal agency, that is subject to the Federal Acquisition Regulation.'' Section 803 also extended the authority to use OTs for prototypes from September 30, 2001, to September 30, 2004. According to the Senate report, the intent of using OTs for prototypes is to attract companies that typically do not do business with the Department of Defense and encourage cost sharing and experimentation in potentially more efficient ways of doing business with traditional defense contractors. Other transaction authority is an important acquisition tool that can facilitate the incorporation of commercial technology into military weapon systems. In an environment where, in many areas, commercial technology is now more advanced than defense technology, it is imperative that the Department continue to have the flexibility to use innovative contractual instruments that provide access to this technology. There are, however, improvements that can be made in managing and overseeing these contractual arrangements. Section 804 clarified the extent of GAO's access to records in instances where the party in question has only done business with the government in the preceding year through an OT or cooperative agreement. National Defense Authorization Act for FY2002 ( P.L. 107-107 ) Expanded Authority—Follow-on Production Section 822 of the FY2002 NDAA granted DOD the authority to award a follow-on production contract for prototype projects when at least one-third of the total cost of the prototype project is to be paid out of funds provided by non-federal government sources. Under this authority, such a follow-on contract could be awarded without competition if the prototype project was successfully completed, the number of units in the production contract does not exceed the number of units specified in the underlying prototype agreement, and the price for each unit does not exceed the price specified in the underlying transaction. Department of Defense and Emergency Supplemental Appropriations for Recovery from and Response to Terrorist Attacks on the United States Act, 2002 ( P.L. 107-117 ) Establishment of Army Venture Capital Initiative (AVCI) Section 8150 designated $25 million of the FY2002 funds made available for Army Research, Development, Test, and Evaluation (RDT&E) to be made available to the Secretary of the Army for the purpose of funding a venture capital investment corporation established pursuant to 10 U.S.C. 2371. A 2014 RAND report stated that OT authorities were used only to form the AVCI, and were not used to acquire products or services: "While OT authorities were used to form [AVCI] itself, any volume of the Army's purchase of products and services from [AVCI] companies is conducted under the FAR." National Defense Authorization Act for FY2004 ( P.L. 108-136 ) Expanded Authority Section 847 of the FY2004 NDAA extended the authority to use an OT for developing prototypes to improve weapons or weapon systems currently in use by the Armed Forces. Previously, such authority was restricted to prototypes "directly relevant to weapons or weapon systems proposed to be acquired or developed" by DOD. Section 847 also established a pilot program for transitioning prototypes to follow-on contracts for production for nontraditional defense contractors. Under the pilot program, such a follow-on contract could be treated as a commercial item or an item developed with both federal and private sector funds (for purposes of negotiating intellectual property rights). The pilot program was restricted to contracts with nontraditional defense contractors, where the value of the contract does not exceed $50 million (approximately $70 million in FY2018 dollars), and that are firm-fixed price or fixed price with economic adjustment. The pilot program was set to sunset September 30, 2008. Section 1441 authorized any agency that engages in basic, applied, or advanced research and development projects that facilitated defense against or recovery from terrorism or nuclear, biological, chemical, or radiological attack to exercise the same general authority given to DOD as found in 10 U.S.C. 2371 (including for prototype projects). Reporting Requirements Section 1031 sunset the annual reporting requirement for OT after the report covering FY2006 was submitted. National Defense Authorization Act for FY2006 ( P.L. 109-163 ) Restricted Authority and Notification Requirements Section 212 of the FY2006 NDAA directed the Army to procure the Future Combat System using contract procedures set forth in part 15 of the Federal Acquisition Regulation, in lieu of an OT. Section 823 extended ethics requirements to OT prototype authority and required the congressional defense committees be notified in writing at least 30 days before such authority is exercised. Certification Requirements Section 823 also amended Section 845 of the FY1994 NDAA, requiring a written determination by a senior procurement executive for other transaction prototype projects estimated between $20 million and $100 million, and for a written determination by the Under Secretary of Defense for Acquisition, Technology, and Logistics for prototype projects that exceed $100 million. According to the Senate report: Section 845 was intended to be used for limited prototype projects, particularly those in which the Department seeks to engage nontraditional defense contractors that may be averse to the requirements imposed by a standard Department procurement contract. For this reason, the statement of managers accompanying the Strom Thurmond National Defense Authorization Act for Fiscal Year 1999 (Public Law 105–261) states: The conferees continue to believe that the section 845 authority should only be used in the exceptional cases where it can be clearly demonstrated that a normal contract or grant will not allow sufficient access to affordable technologies. The conferees are especially concerned that such authority not be used to circumvent the appropriate management controls in the standard acquisition and budgeting process. …. The committee does not believe that the $20.9 billion agreement entered between the Army and the Lead Systems Integrator for the FCS program is consistent with the language and intent of section 845 authority. Section 845 authority is intended to be used for limited prototype projects, particularly those in which the Department of Defense seeks to engage nontraditional defense contractors that may be averse to the requirements imposed by a standard Department contract. Department of Defense Appropriations Act, 2007 ( H.R. 5631 ) Reporting Requirement The FY2007 defense appropriations bill ( P.L. 109-289 ) did not include language addressing OTs. The conference report ( H.Rept. 109-676 ) included language expressing the conferees' "[concern] with the continued use of OTA contracts by the Missile Defense Agency," as such contracts "lack the customary safeguards found under FAR-based contracts for organizational conflict of interest, truth in negotiations and submission of cost and pricing data." The conferees "strongly encourage[d]" the Missile Defense Agency to convert "large development and procurement contracts using OTA to FAR-based contracts," and directed the Missile Defense Agency to submit a report to the congressional defense committees on the use of OTs, to include the number, value, and justification for the use of such agreements. National Defense Authorization Act for FY2008 ( P.L. 110-181 ) Section 823 extended the authority for prototype projects for five more years, from September 30, 2008, to September 30, 2013. National Defense Authorization Act for FY2009 ( P.L. 110-417 ) Section 822 required DOD to issue guidance on rights in technical data under non-FAR agreements, including OTs. Section 822 also required that appropriate provisions relating to rights in technical data be included in non-FAR agreements, consistent with policy guidance. This requirements is in statute at 10 U.S.C. 2320 note. Section 824 expanded the scope of the pilot program for transition to follow-on contracts for certain prototype projects to include research projects carried out under 10 U.S.C. 2371. Authority to use the pilot program, set to expire September 30, 2008, was extended to September 30, 2010. Section 874 required OT data be included in the Federal Procurement Data System. National Defense Authorization Act for FY2011 ( P.L. 111-383 ) Section 866 changed the definition of nontraditional defense contractor, conforming the definition to that found in 10 U.S.C. 2302(9). National Defense Authorization Act for FY2013 ( P.L. 112-239 ) Section 863 extended the authority for using OTs for prototype projects from September 30, 2013, to September 30, 2018. Carl Levin and Howard P. "Buck" McKeon National Defense Authorization Act for FY2015 ( P.L. 113-291 ) Expanded Authority Section 812 expanded the authority to use OT for prototypes, to include those "directly related to enhancing the mission effectiveness of military personnel and the supporting platforms, systems, components, or materials proposed to be acquired or developed by the Department of Defense, or to improvement of platforms, systems, components, or materials in use by the Armed Forces." Prior to the FY2015 NDAA, OTs could only be used for prototypes relating to weapons or weapon systems proposed to be developed, or for the improvement of weapons or weapon systems currently in use. Reporting Requirements Section 1071 repealed the reporting requirement language found in 10 U.S.C. 2371, relating to OTs for research projects. National Defense Authorization Act for FY2016 ( P.L. 114-92 ) Until the FY2016 NDAA, the prototyping and follow-on production authority established in Section 845 of the FY1994 NDAA (as amended) was found in 10 U.S.C. 2371 note. Section 815 of the FY2016 NDAA simultaneously repealed Section 845 of the FY1994 NDAA and put the repealed language into the newly created 10 U.S.C. 2371b. The FY2016 NDAA also modified 2371b by making the authority permanent. Expanded Authority and Small Business The authorities in Section 2371b were expanded to allow their use when "all significant participants in the transaction other than the Federal government are small businesses or nontraditional contractors" and when the agency determines that using an OT would expand the defense supply base in a manner that could not be accomplished through a contract. Section 815 eased the restriction on follow-on production contracts or transactions. Section 815 amended the definition of a nontraditional defense contractor found in 10 U.S.C. 2302 to be an entity that is not currently performing, and for one year prior to an OT has not performed on any contract or subcontract that is subject to full coverage under the cost accounting standards pursuant to Section 1502 of Title 41, U.S.C. Section 815 also required DOD to update its guidance to reflect changes in the statute. The conference report stated that Congress believed OTs are an attractive option for firms and organizations that do not usually participate in government contracting due to typical overhead burdens and the "one size fits all" rules governing defense acquisition. The report also stated that OTs could support DOD's effort to access new sources of technological innovation, specifically with Silicon Valley startup firms and small commercial firms. National Defense Authorization Act for FY2018 ( P.L. 115-91 ) Expanded Authority Section 216 of the FY2018 NDAA authorized nonprofit research institutions to enter into OTs with DOD for prototype projects. Section 862 amended 10 U.S.C. 2358, granting the Secretary of Defense and the military departments the authority to pursue basic research, applied research, advanced research, and development projects under the OT authorities granted in Sections 2371 and 2371b of Title 10. Workforce Section 802 required DOD to establish a cadre of intellectual property experts to advise, assist, and provide resources to program offices who are developing intellectual property strategies for contracts and agreements. Section 863 required training and education for personnel involved in OTs and other innovative contracting methods. Certification Requirements and Small Business Section 864 adjusted the language of the statute to state that the dollar threshold relates to the specific transaction for a prototype project and not for the value of the entire project. Section 864 defined a transaction for follow-on production to include "all individual prototype sub-projects awarded under the transaction to a consortium of United States industry and academic institutions." Section 864 also increased the dollar thresholds for required approvals and defined the term small business to include small businesses under Section 9 of the Small Business Act to ensure that companies participating in the Small Business Innovation Research and Small Business Technology Transfer programs were considered small businesses for the purposes of the cost-sharing requirements. Miscellaneous Section 867 required the Secretary of Defense to establish a preference for OTs in the "execution of science and technology and prototyping programs." Section 1711 required DOD to carry out a pilot program to "assess the feasibility and advisability of increasing the manufacturing capability of the defense industrial base." Pursuant to the pilot, Section 1711 authorized DOD to use OTs to support production capabilities in small and medium-sized manufacturers. John S. McCain National Defense Authorization Act for FY2019 ( P.L. 115-232 ) Section 211 of the FY2019 NDAA clarified that follow-on production of a prototype or subproject within a consortium may occur if the individual prototype or subproject is complete; all projects associated with the consortium do not need to be completed before follow-on production of a specific prototype. Expanded Authority The FY2019 NDAA authorized the use of OTs to develop enhanced personal protective equipment (Section 226) and to carry out research under the Explosive Ordnance Disposal Defense Program (Section 311). Reporting Requirements Section 244 required the Defense Innovation Unit to submit a report to Congress, to include the number of traditional and nontraditional defense contractors with DOD contracts or other transactions resulting directly from the unit's initiatives. Section 873 required DOD to submit an annual report through 2021, summarizing DOD's use of OTs, including organizations involved; number of transactions; amounts of payments; and purpose, description, and status of projects. Department of Defense Appropriations Act, 2019 ( P.L. 115-245 ) Reporting Requirements While the enacted FY2019 defense appropriations bill did not include legislative language addressing OTs, the conference report included language expressing the conferees' "[concern] with the lack of transparency surrounding the employment of OTA, particularly for follow-on production." The conferees directed DOD to provide quarterly reports to the House and Senate appropriations committees listing each active OT, and to include the following information on each agreement: funding military service or DOD component; major command (if applicable); contracting activity; appropriation title; budget line item; minimum and maximum award value; vendor; obligations and expenditures to date; product service code; period of performance; and indication if the OT agreement included an option for follow-on production (with a description of the scope of anticipated follow-on production). The conferees also directed GAO to review DOD's use of OTs to determine whether the "employment of this authority conforms to applicable statutes and guidelines, to include the identification of any potential conflicts." GAO was also required to report on the extent to which OTs have been used since FY2016. Notification Requirements The House report to accompany H.R. 6157 acknowledged OTs as an "important tool to provide flexibility and agility for cutting-edge research and development projects and prototypes." However, the report stated its concern "with the lack of transparency on the use of OTA authority for follow-on production procurements," and directed that no funds could be obligated or expended for a follow-on production contract or a transaction carried out under 10 U.S.C. 2371b, until 30 days after the Secretary of Defense provides the congressional defense committees with a notification of the proposed contract or transaction, to include a justification of why an OT is being used for production. Appendix B. Non-DOD Federal Agencies with Agency-Wide OT or Related Authorities A number of agencies have varying other transaction or similar authorities, as reflected in Table B-1 . The table below is not a comprehensive or definitive listing of every federal government entity with OT or related authorities. In some instances, offices, agencies, commissions, and other federal government entities have OT or related authorities that are only associated with certain programs or projects, such as the National Institutes of Health (which has OT authority for such specific activities such as the National Heart, Blood Vessel, Lung, and Blood Diseases and Blood Resources Program [42 U.S.C. §285b-3] and the Cures Acceleration Network [42 U.S.C. §287a]). Appendix C. Reliability of Data on Other Transactions All data have imperfections and limitations. FPDS-NG data can be used to identify broad trends and produce rough estimates, or to gather information about specific contracts. Some observers say that despite their shortcomings, FPDS-NG data are substantially more comprehensive than what is available in most other countries in the world. Understanding the limitations of government procurement data—including knowing when, how, and to what extent to rely on data—can help policymakers incorporate FPDS-NG data more effectively into their decisionmaking process. FPDS-NG OT Data Quality and Accuracy Issues Decisionmakers should be cautious when using data from FPDS-NG to develop policy or otherwise draw conclusions, especially with respect to OTs. In some cases, the data themselves may not be reliable. In other instances, a query for particular data may return differing results, depending on the parameters and timing of the analysis. In particular, all DOD data entered into FPDS-NG are subject to a 90-day delay, and updates to "data, including new actions, modifications, and corrections are made on a regular basis," which could result in changes to "data ... for current and/or prior fiscal years." Inconsistencies in FPDS-NG Data Within FPDS-NG, two primary collections of obligation data exist: one associated with standard government procurement contracts or modifications to such contracts, and the other associated with prototype OT agreements or modifications to such agreements. FPDS-NG's collection of prototype OT data allows for the input of additional data elements—such as nongovernment dollars associated with cost-share prototype OT agreements—not included in FPDS-NG's collection of standard government procurement contract data. More consequentially, FPDS-NG's prototype OT data include two similar data elements that allow users to identify the fiscal year a prototype OT agreement was signed or modified. One, labeled in the database as "Fiscal Year," appears to allow users entering data into the system to manually assign a fiscal year to a transaction. FPDS-NG users entering data into the system appear to have interpreted this data element in various, conflicting ways. For example, a Department of the Air Force OT agreement was signed in February 2016 for the development of rocket propulsion system prototypes under the Evolved Expendable Launch Vehicle (EELV) program. FPDS-NG records an obligation of $115 million in FY2020 for this agreement. Fiscal law bars DOD from obligating money now for future fiscal years that have not yet occurred. The second, labeled "Contract Fiscal Year," appears to be based on the date the prototype OT agreement was signed or modified. See Table C-1 for a comparison of the "Fiscal Year" and "Contract Fiscal Year" elements for selected new prototype OT agreements signed between FY2013 and FY2017. If a user selects the Fiscal Year data element when attempting to review high-level data on recent trends in the use of prototype OT agreements within DOD—such as the total amount obligated for prototype OT agreements on an annual basis—that user will obtain a substantially different result than if he or she selects the Contract Fiscal Year data element for a similar analysis. See Table C-2 for a comparison of action obligations and nongovernment contributions using the Fiscal Year and Contract Fiscal Year data elements for new prototype OT agreements signed between FY2013 and FY2017. DOD OT Data Analysis Methodological Issues in Congressional Reports A March 2017 report to Congress entitled "An Assessment of Cost-Sharing in Other Transaction Agreements for Prototype Projects," completed by the Office of the Under Secretary of Defense for Acquisition, Technology, and Logistics indicated that In FY2016, DOD obligated (Note: Two outliers in 2016 excluded) $1 billion in section 2371b awards and received $68 million in cost-share contributions after excluding two significant trend outliers. DOD cited FPDS-NG as the source for its analysis, and defined the "significant trend outliers" excluded as "two $40 million OTAs with total cost-share of $270 million," likely referring to two DARPA prototype OT agreements conducted on a cost-share basis initiated in FY2016. However, a CRS analysis of the same FPDS-NG data identified numerous inconsistencies in DOD's methodological approach. Recreation of DOD Methodology Specifically, DOD appears to have conducted its analysis using the "Fiscal Year" data element referenced in this report's discussion of FPDS-NG OT data quality and accuracy issues, which would attribute some prototype OT activities to the wrong fiscal year for the purposes of comparative trend analysis. DOD also compared two disparate transaction types: the reported "$1 billion in Section 2371b awards" includes all action obligations associated with ongoing prototype OT activities in FY2016, including transactions associated with prototype OT indefinite delivery contracts, while the "$68 million in cost-share contributions" includes only cost-share contributions associated with new prototype OT agreements. If DOD used the "Contract Fiscal Year" data element, excluded the identified "trend outliers," and focused on all action obligations and cost-share contributions associated with ongoing prototype OT activities, it would have found instead that the department obligated $1.4 billion for prototype OT agreements in FY2016, with an additional $313.5 million in cost-share contributions from the private sector. On the other hand, if DOD used the "Contract Fiscal Year" data element, excluded the identified "trend outliers," and focused on only action obligations and cost-share contributions associated with new prototype OT agreements, it would have found instead that the department obligated $400 million for prototype OT agreements in FY2016, with an additional $272.1 million in cost-share contributions from the private sector. Appendix D. Other Transaction Authority Statutes 10 U.S.C. §2371. Research projects: transactions other than contracts and grants (a) ADDITIONAL FORMS OF TRANSACTIONS AUTHORIZED.— The Secretary of Defense and the Secretary of each military department may enter into transactions (other than contracts, cooperative agreements, and grants) under the authority of this subsection in carrying out basic, applied, and advanced research projects. The authority under this subsection is in addition to the authority provided in Section 2358 of this title to use contracts, cooperative agreements, and grants in carrying out such projects. (b) EXERCISE OF AUTHORITY BY SECRETARY OF DEFENSE.— In any exercise of the authority in subsection (a), the Secretary of Defense shall act through the Defense Advanced Research Projects Agency or any other element of the Department of Defense that the Secretary may designate. (c) ADVANCE PAYMENTS.— The authority provided under subsection (a) may be exercised without regard to Section 3324 of Title 31. (d) RECOVERY OF FUNDS.— (1) A cooperative agreement for performance of basic, applied, or advanced research authorized by Section 2358 of this title and a transaction authorized by subsection (a) may include a clause that requires a person or other entity to make payments to the Department of Defense or any other department or agency of the Federal Government as a condition for receiving support under the agreement or other transaction. (2) The amount of any payment received by the Federal Government pursuant to a requirement imposed under paragraph (1) may be credited, to the extent authorized by the Secretary of Defense, to the appropriate account established under subsection (f). Amounts so credited shall be merged with other funds in the account and shall be available for the same purposes and the same period for which other funds in such account are available. (e) CONDITIONS.— (1) The Secretary of Defense shall ensure that- (A) to the maximum extent practicable, no cooperative agreement containing a clause under subsection (d) and no transaction entered into under subsection (a) provides for research that duplicates research being conducted under existing programs carried out by the Department of Defense; and (B) to the extent that the Secretary determines practicable, the funds provided by the Government under a cooperative agreement containing a clause under subsection (d) or a transaction authorized by subsection (a) do not exceed the total amount provided by other parties to the cooperative agreement or other transaction. (2) A cooperative agreement containing a clause under subsection (d) or a transaction authorized by subsection (a) may be used for a research project when the use of a standard contract, grant, or cooperative agreement for such project is not feasible or appropriate. (f) SUPPORT ACCOUNTS.— There is hereby established on the books of the Treasury separate accounts for each of the military departments and the Defense Advanced Research Projects Agency for support of research projects and development projects provided for in cooperative agreements containing a clause under subsection (d) and research projects provided for in transactions entered into under subsection (a). Funds in those accounts shall be available for the payment of such support. (g) EDUCATION AND TRAINING.—The Secretary of Defense shall— (1) ensure that management, technical, and contracting personnel of the Department of Defense involved in the award or administration of transactions under this section or other innovative forms of contracting are afforded opportunities for adequate education and training; and (2) establish minimum levels and requirements for continuous and experiential learning for such personnel, including levels and requirements for acquisition certification programs. (h) REGULATIONS.— The Secretary of Defense shall prescribe regulations to carry out this section. (i) Protection of Certain Information From Disclosure.-(1) Disclosure of information described in paragraph (2) is not required, and may not be compelled, under Section 552 of Title 5 for five years after the date on which the information is received by the Department of Defense. (2)(A) Paragraph (1) applies to information described in subparagraph (B) that is in the records of the Department of Defense if the information was submitted to the Department in a competitive or noncompetitive process having the potential for resulting in an award, to the party submitting the information, of a cooperative agreement for performance of basic, applied, or advanced research authorized by Section 2358 of this title or another transaction authorized by subsection (a). (B) The information referred to in subparagraph (A) is the following: (i) A proposal, proposal abstract, and supporting documents. (ii) A business plan submitted on a confidential basis. (iii) Technical information submitted on a confidential basis. 10 U.S.C. §2371b. Authority of the Department of Defense to carry out certain prototype projects (a) AUTHORITY.— (1) Subject to paragraph (2), the Director of the Defense Advanced Research Projects Agency, the Secretary of a military department, or any other official designated by the Secretary of Defense may, under the authority of Section 2371 of this title, carry out prototype projects that are directly relevant to enhancing the mission effectiveness of military personnel and the supporting platforms, systems, components, or materials proposed to be acquired or developed by the Department of Defense, or to improvement of platforms, systems, components, or materials in use by the armed forces. (2) The authority of this section- (A) may be exercised for a transaction (for a prototype project) that is expected to cost the Department of Defense in excess of $100,000,000 but not in excess of $500,000,000 (including all options) only upon a written determination by the senior procurement executive for the agency as designated for the purpose of Section 1702(c) of Title 41, or, for the Defense Advanced Research Projects Agency or the Missile Defense Agency, the director of the agency that- (i) the requirements of subsection (d) will be met; an d (ii) the use of the authority of this section is essential to promoting the success of the prototype project; and (B) may be exercised for a transaction (for a prototype project) that is expected to cost the Department of Defense in excess of $500,000,000 (including all options) only if- (i) the Under Secretary of Defense for Acquisition, Technology, and Logistics determines in writing that- (I) the requirements of subsection (d) will be met; an d (II) the use of the authority of this section is essential to meet critical national security objectives; and (ii) the congressional defense committees are notified in writing at least 30 days before such authority is exercised. (3) The authority of a senior procurement executive or director of the Defense Advanced Research Projects Agency or Missile Defense Agency under paragraph (2)(A), and the authority of the Under Secretary of Defense for Acquisition, Technology, and Logistics under paragraph (2)(B), may not be delegated. (b) EXERCISE OF AUTHORITY.— (1) Subsections (e)(1)(B) and (e)(2) of such Section 2371 shall not apply to projects carried out under subsection (a). (2) To the maximum extent practicable, competitive procedures shall be used when entering into agreements to carry out projects under subsection (a). (c) COMPTROLLER GENERAL ACCESS TO INFORMATION.— (1) Each agreement entered into by an official referred to in subsection (a) to carry out a project under that subsection that provides for payments in a total amount in excess of $5,000,000 shall include a clause that provides for the Comptroller General, in the discretion of the Comptroller General, to examine the records of any party to the agreement or any entity that participates in the performance of the agreement. (2) The requirement in paragraph (1) shall not apply with respect to a party or entity, or a subordinate element of a party or entity, that has not entered into any other agreement that provides for audit access by a Government entity in the year prior to the date of the agreement. (3) (A) The right provided to the Comptroller General in a clause of an agreement under paragraph (1) is limited as provided in subparagraph (B) in the case of a party to the agreement, an entity that participates in the performance of the agreement, or a subordinate element of that party or entity if the only agreements or other transactions that the party, entity, or subordinate element entered into with Government entities in the year prior to the date of that agreement are cooperative agreements or transactions that were entered into under this section or Section 2371 of this title. (B) The only records of a party, other entity, or subordinate element referred to in subparagraph (A) that the Comptroller General may examine in the exercise of the right referred to in that subparagraph are records of the same type as the records that the Government has had the right to examine under the audit access clauses of the previous agreements or transactions referred to in such subparagraph that were entered into by that particular party, entity, or subordinate element. (4) The head of the contracting activity that is carrying out the agreement may waive the applicability of the requirement in paragraph (1) to the agreement if the head of the contracting activity determines that it would not be in the public interest to apply the requirement to the agreement. The waiver shall be effective with respect to the agreement only if the head of the contracting activity transmits a notification of the waiver to Congress and the Comptroller General before entering into the agreement. The notification shall include the rationale for the determination. (5) The Comptroller General may not examine records pursuant to a clause included in an agreement under paragraph (1) more than three years after the final payment is made by the United States under the agreement. (d) APPROPRIATE USE OF AUTHORITY.— (1) The Secretary of Defense shall ensure that no official of an agency enters into a transaction (other than a contract, grant, or cooperative agreement) for a prototype project under the authority of this section unless one of the following conditions is met: (A) There is at least one nontraditional defense contractor or nonprofit research institution participating to a significant extent in the prototype project. (B) All significant participants in the transaction other than the Federal Government are small businesses (including small businesses participating in a program described under Section 9 of the Small Business Act (15 U.S.C. 638)) or nontraditional defense contractors. (C) At least one third of the total cost of the prototype project is to be paid out of funds provided by sources other than other than the Federal Government. (D) The senior procurement executive for the agency determines in writing that exceptional circumstances justify the use of a transaction that provides for innovative business arrangements or structures that would not be feasible or appropriate under a contract, or would provide an opportunity to expand the defense supply base in a manner that would not be practical or feasible under a contract. (2) (A) Except as provided in subparagraph (B), the amounts counted for the purposes of this subsection as being provided, or to be provided, by a party to a transaction with respect to a prototype project that is entered into under this section other than the Federal Government do not include costs that were incurred before the date on which the transaction becomes effective. (B) Costs that were incurred for a prototype project by a party after the beginning of negotiations resulting in a transaction (other than a contract, grant, or cooperative agreement) with respect to the project before the date on which the transaction becomes effective may be counted for purposes of this subsection as being provided, or to be provided, by the party to the transaction if and to the extent that the official responsible for entering into the transaction determines in writing that- (i) the party incurred the costs in anticipation of entering into the transaction; and (ii) it was appropriate for the party to incur the costs before the transaction became effective in order to ensure the successful implementation of the transaction. (e) Definitions.—In this section: (1) The term "nontraditional defense contractor" has the meaning given the term under Section 2302(9) of this title. (2) The term "small business" means a small business concern as defined under Section 3 of the Small Business Act (15 U.S.C. 632). (f) FOLLOW-ON PRODUCTION CONTRACTS OR TRANSACTIONS.— (1) A transaction entered into under this section for a prototype project may provide for the award of a follow-on production contract or transaction to the participants in the transaction. A transaction includes all individual prototype subprojects awarded under the transaction to a consortium of United States industry and academic institutions. (2) A follow-on production contract or transaction provided for in a transaction under paragraph (1) may be awarded to the participants in the transaction without the use of competitive procedures, notwithstanding the requirements of Section 2304 of this title, if - (A) competitive procedures were used for the selection of parties for participation in the transaction; and (B) the participants in the transaction successfully completed the prototype project provided for in the transaction. (3) Contracts and transactions entered into pursuant to this subsection may be awarded using the authority in subsection (a), under the authority of Chapter 137 of this title, or under such procedures, terms, and conditions as the Secretary of Defense may establish by regulation. (g) AUTHORITY TO PROVIDE PROTOTYPES AND FOLLOW-ON PRODUCTION ITEMS AS GOVERNMENT-FURNISHED EQUIPMENT.— An agreement entered into pursuant to the authority of subsection (a) or a follow-on contract or transaction entered into pursuant to the authority of subsection (f) may provide for prototypes or follow-on production items to be provided to another contractor as Government-furnished equipment. (h) APPLICABILITY OF PROCUREMENT ETHICS REQUIREMENTS.— An agreement entered into under the authority of this section shall be treated as a Federal agency procurement for the purposes of Chapter 21 of Title 41. 10 U.S.C. §2373. Procurement for experimental purposes (a) AUTHORITY.— The Secretary of Defense and the Secretaries of the military departments may each buy ordnance, signal, chemical activity, transportation, energy, medical, space-flight, and aeronautical supplies, including parts and accessories, and designs thereof, that the Secretary of Defense or the Secretary concerned considers necessary for experimental or test purposes in the development of the best supplies that are needed for the national defense. (b) PROCEDURES.— Purchases under this section may be made inside or outside the United States and by contract or otherwise. Chapter 137 of this title applies only when such purchases are made in quantities greater than necessary for experimentation, technical evaluation, assessment of operational utility, or safety or to provide a residual operational capability.

The Department of Defense (DOD) obligates more than $300 billion annually to buy goods and services, and to support research and development. Most of these acquisitions are governed by procurement statutes and regulations found in Title 10 (and parts of other select titles) of the United States Code, the Federal Acquisition Regulation (FAR), and the Defense Federal Acquisition Regulation Supplement. Under certain circumstances, DOD can enter into an other transaction (OT) agreement instead of a traditional contract. OT agreements are generally exempt from federal procurement laws and regulations. These exemptions grant government officials the flexibility to include, amend, or exclude contract clauses and requirements that are mandatory in traditional procurements (e.g., termination clauses, cost accounting standards, payments, audit requirements, intellectual property, and contract disputes). OT authorities also grant more flexibility to structure agreements in numerous ways, including joint ventures; partnerships; consortia; or multiple agencies joining together to fund an agreement encompassing multiple providers. Other transaction agreements are legally binding contracts; they are referred to as agreements to distinguish them from the traditional procurement contracts governed by the FAR and procurements laws. Other transaction authorities are set forth in two sections of law: 10 U.S.C. 2371—granting authority to use OTs for basic, applied, and advanced research projects. 10 U.S.C. 2371b—granting authority to use OTs for prototype projects and follow-on production. Under this authority, a prototype project can only be conducted if at least one nontraditional defense contractor significantly participates in the project; all significant participants are small businesses or nontraditional defense contractors; at least one-third of the total cost of the prototype project is provided by nongovernment participants; or the senior procurement acquisition official provides a written justification for using an OT. Follow-on production can only be conducted when the underlying prototype OT was competitively awarded, and the prototype project was successfully completed. OTs have the potential to provide significant benefits to DOD, including attracting nontraditional contractors with promising technological capabilities to work with DOD, establishing a mechanism to pool resources with other entities to facilitate development of, and obtain, state-of-the-art dual-use technologies, and offering a unique mechanism for DOD to invest in, and influence the direction of, technology development. A number of analysts warn that along with the potential benefits come significant risks, including potentially diminished oversight and exemption from laws and regulations designed to protect government and taxpayer interests. In FY2017, DOD obligated $2.1 billion on prototype OT agreements, representing less than 1% of contract obligations for the year. However, the use of OTs is expected to grow at a rapid pace, due in part to recent statutory changes expanding other transaction authorities. A number of analysts and officials have raised concerns that if DOD uses OTs in ways not intended by Congress—or is perceived to abuse the authority—Congress could clamp down on the authority. Generally, DOD lacks authoritative data that can be used to measure and evaluate the use of other transaction authorities.

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Background: Broadband and Rural America The broadband loan and grant programs at RUS are intended to accelerate the deployment of broadband services in rural America. "Broadband" refers to high-speed internet access and advanced telecommunications services for private homes, commercial establishments, schools, and public institutions. Currently in the United States, residential broadband is primarily provided via cable modem (from the local provider of cable television service), fiber-optic cable, mobile wireless (e.g., smartphones), or over the copper telephone line (digital subscriber line or "DSL"). Other broadband technologies include fixed wireless and satellite. Broadband access enables a number of beneficial applications to individual users and to communities. These include ecommerce, telecommuting, voice service (voice over the internet protocol or "VOIP"), distance learning, telemedicine, public safety, and others. It is becoming generally accepted that broadband access in a community can play an important role in economic development. Access to affordable broadband is viewed as particularly important for the economic development of rural areas because it enables individuals and businesses to participate fully in the online economy regardless of geographical location. For example, aside from enabling existing businesses to remain in their rural locations, broadband access could attract new business enterprises drawn by lower costs and a more desirable lifestyle. Essentially, broadband potentially allows businesses and individuals in rural America to live locally while competing globally in an online environment. A 2016 study from the Hudson Institute found that rural broadband providers directly and indirectly added $24.1 billion to the U.S. economy in 2015. The rural broadband industry supported 69,595 jobs in 2015, both through its own employment and the employment that its purchases of goods and services generated. Given the large potential impact broadband may have on the economic development of rural America, concern has been raised over a "digital divide" between rural and urban or suburban areas with respect to broadband deployment. While there are many examples of rural communities with state-of-the-art telecommunications facilities, recent surveys and studies have indicated that, in general, rural areas tend to lag behind urban and suburban areas in broadband deployment. For example According to the Federal Communications Commission's (FCC's) Communications Marketplace Report , "As of year-end 2017, 94% of the overall population had coverage [of fixed terrestrial broadband at speeds of 25 Mbps/3 Mbps], up from 91.9% in 2016. Nonetheless, the gap in rural and Tribal America remains notable: 24% of Americans in rural areas and 32% of Americans in Tribal lands lack coverage from fixed terrestrial 25 Mbps/3 Mbps broadband, as compared to only 1.5% of Americans in urban areas. The data demonstrate, however, that the gap between urban and rural or Tribal areas has narrowed each year over the last five years." Also according to the FCC's Communications Market Report , rural areas continue to lag behind urban areas in mobile broadband deployment. Although evaluated urban areas saw an increase of 10 Mbps/3 Mbps mobile LTE from 81.9% in 2014 to 92.6% in 2017, such deployment in evaluated rural areas remained relatively flat at about 70%. According to January 2018 survey data from the Pew Research Center, 58% of adults in rural areas said they have a high-speed broadband connection at home, as opposed to 67% of adults in urban areas and 70% of adults in suburban areas. A November 2017 Census Bureau survey reported by the National Telecommunications and Information Administration (NTIA) Digital Nation Data Explorer showed 72.9% of rural residents reporting using the internet, versus 78.5% of urban residents. According to NTIA, the data "indicates a fairly constant 6-9 percentage point gap between rural and urban communities' internet use over time." The comparatively lower population density of rural areas is likely the major reason why broadband is less deployed than in more highly populated suburban and urban areas. Particularly for wireline broadband technologies—such as cable modem, fiber, and DSL—the greater the geographical distances among customers, the larger the cost to serve those customers. Thus, there is often less incentive for companies to invest in broadband in rural areas than, for example, in an urban area where there is more demand (more customers with perhaps higher incomes) and less cost to wire the market area. The terrain of rural areas can also be a hindrance, in that it is more expensive to deploy broadband technologies in a mountainous or heavily forested area. An additional added cost factor for remote areas can be the expense of "backhaul" (e.g., the "middle mile"), which refers to the installation of a dedicated line that transmits a signal to and from an internet backbone, which is typically located in or near an urban area. Another important broadband availability issue is the extent to which there are multiple broadband providers offering competition and consumer choice. Typically, multiple providers are more prevalent in urban than in rural areas. Rural Broadband Programs at the Rural Utilities Service Because private providers are unlikely to earn enough revenue to cover the costs of deploying and operating broadband networks in many unserved rural areas, it is unlikely that private investment alone will bring service to these areas. In 2000, given the lagging deployment of broadband in rural areas, Congress and the Administration acted to initiate pilot broadband loan and grant programs within the Rural Utilities Service of the U.S. Department of Agriculture. While RUS had long maintained telecommunications loan and grant programs (Rural Telephone Loans and Loan Guarantees, Rural Telephone Bank, and more recently, the Distance Learning and Telemedicine Loans and Grants), none were exclusively dedicated to financing rural broadband deployment. Title III of the FY2001 agriculture appropriations bill ( P.L. 106-387 ) directed USDA/RUS to conduct a "pilot program to finance broadband transmission and local dial-up Internet service in areas that meet the definition of 'rural area' used for the Distance Learning and Telemedicine Program." Subsequently, on December 5, 2000, RUS announced the availability of $100 million in loan funding through a one-year pilot program "to finance the construction and installation of broadband telecommunications services in rural America." The broadband pilot loan program was authorized under the authority of the Distance Learning and Telemedicine Program (7 U.S.C. 950aaa), and was available to "legally organized entities" not located within the boundaries of a city or town having a population in excess of 20,000. The FY2002 agriculture appropriations bill ( P.L. 107-76 ) designated a loan level of $80 million for broadband loans, and on January 23, 2002, RUS announced that the pilot program would be extended into FY2002, with $80 million in loans made available to fund many of the applications that did not receive funding during the previous year. Meanwhile, the FY2002 agriculture appropriations bill ( P.L. 107-76 ) allocated $20 million for a pilot broadband grant program, also authorized under the Distance Learning and Telemedicine Program. On July 8, 2002, RUS announced the availability of $20 million for a pilot grant program for the provision of broadband service in rural America. The program was specifically targeted to economically challenged rural communities with no existing broadband service. Grants were made available to entities providing "community-oriented connectivity," which the RUS defined as those entities "who will connect the critical community facilities including the local schools, libraries, hospitals, police, fire and rescue services and who will operate a community center that provides free and open access to residents." The pilot program was extended into FY2003, as the Consolidated Appropriations Resolution of 2003 ( P.L. 108-7 ) allocated $10 million for broadband grants. Currently, RUS has four ongoing programs that have been established to incentivize and subsidize broadband infrastructure investment in unserved and underserved rural areas. These include the following: Rural Broadband Access Loan s —funds the costs of construction, improvement, or acquisition of facilities and equipment needed to provide service in eligible rural areas. Community Connect Grants —funds broadband deployment into rural communities where it is not yet economically viable for private sector providers to deliver service. Telecommunications Infrastructure Loans and Loan Guarantees —funds the construction, maintenance, improvement, and expansion of telephone service and broadband in extremely rural areas with a population of 5,000 or less. Distance Learning and Telemedicine Grants —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. In addition, a new broadband loan and grant pilot program—the ReConnect Program—has been established and funded at $600 million by the Consolidated Appropriations Act, 2018 ( P.L. 115-141 ). Table A-1 in the Appendix shows the total amount and number of awards provided by the RUS broadband programs for each state between FY2009 and FY2016. In its April 2017 report, Rural Broadband Deployment: Improved Consistency with Leading Practices Could Enhance Management of Loan and Grant Programs , GAO reported that (according to RUS data) since FY2004, RUS has approved 704 broadband projects totaling almost $8.6 billion in loans and $144.8 million in grants to deploy telecommunications or broadband infrastructure networks in rural areas. Rural Broadband Access Loan and Loan Guarantee Program Building on the pilot broadband loan program at RUS, 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 a 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. Section 6103 made available, from the funds of the Commodity Credit Corporation (CCC), a total of $100 million through FY2007. P.L. 107-171 also authorized any other funds appropriated for the broadband loan program. The program was subsequently reauthorized by Section 6110 of the Food, Conservation, and Energy Act of 2008 ( P.L. 110-246 ), and by Section 6104 of the Agricultural Act of 2014 ( P.L. 113-79 ). Beginning in FY2004, Congress annually blocked mandatory funding from the CCC. Thus—starting in FY2004—the program was funded as part of annual appropriations in the Distance Learning and Telemedicine account within the Department of Agriculture appropriations bill. Every fiscal year, Congress approves an appropriation (loan subsidy) and a specific loan level (lending authority) for the Rural Broadband Access Loan and Loan Guarantee Program. Table 1 shows—for the life of the program to date—loan subsidies and loan levels (lending authority) set by Congress in annual appropriations bills. The Rural Broadband Access Loan and Loan Guarantee Program is codified as 7 U.S.C. 950bb. On July 30, 2015, the RUS published in the Federal Register the interim rule (7 C.F.R. part 1738) implementing the Rural Broadband Access Loan and Loan Guarantee Program as reauthorized by the enactment of the Agricultural Act of 2014 ( P.L. 113-79 ), and the interim rule was made final on June 9, 2016. Entities eligible to receive loans include corporations, limited liability companies, cooperative or mutual organizations, Indian tribes or tribal organizations, and state or local governments. Eligible areas for funding must be completely contained within a rural area (or composed of multiple rural areas). Additionally, at least 15% of the households in the proposed funded service areas must be unserved, no part of the proposed service area can have three or more incumbent service providers, and no part of the proposed service area can overlap with the service area of current RUS borrowers or of grantees that were funded by RUS. The latest Notice of Solicitation of Applications (NOSA) announced that RUS is now accepting applications on a rolling basis through September 30, 2019, which will give RUS the ability to request additional information and modifications to submitted applications if necessary. RUS will evaluate the submitted applications every 90 days, and anticipates at least two evaluation periods for FY2019. The minimum loan amount is $100,000, while the maximum loan amount is $25 million. The NOSA has maintained its definition of broadband service and broadband lending speed at no less than 25 Mbps download and 3 Mbps upload for both mobile and fixed services. The 2018 farm bill, which was signed by the President on December 20, 2018 ( P.L. 115-334 , Agriculture Improvement Act of 2018), adds a grant component to the broadband loan program, increases the annual authorization level from $25 million to $350 million, and changes the proposed service area threshold from 15% to 50%. RUS will issue a revised regulation that implements the changes made by the 2018 farm bill. For up to one year after enactment, the Secretary shall use the previously existing rules and regulations for the broadband loan program until a final rule is issued. For the latest application information, see http://www.rd.usda.gov/programs-services/farm-bill-broadband-loans-loan-guarantees . Community Connect Broadband Grants The Consolidated Appropriations Act of 2004 ( P.L. 108-199 ) appropriated $9 million "for a grant program to finance broadband transmission in rural areas eligible for Distance Learning and Telemedicine Program benefits authorized by 7 U.S.C. 950aaa." Essentially operating the same as the pilot broadband grants, the program provides grant money to applicants proposing to provide broadband on a "community-oriented connectivity" basis to currently unserved rural areas for the purpose of fostering economic growth and delivering enhanced health care, education, and public safety services. Funding for the broadband grant program is provided through annual appropriations in the Distance Learning and Telemedicine account within the Department of Agriculture appropriations bill. Table 2 shows a history of appropriations for the Community Connect Broadband Grants. Eligible applicants for broadband grants include most state and local governments, federally recognized tribes, nonprofits, and for-profit corporations. Funded projects must serve a rural area where broadband service above a specified minimum speed does not exist, deploy free broadband service for at least two years to all community facilities, and offer broadband to residential and business customers. Up to 10% of the grant may be used for the improvement, expansion, construction, or acquisition of a community center that provides online access to the public. On May 3, 2013, RUS issued a new final rule for Community Connect grants in the Federal Register . The final rule changes previous requirements related to matching funds, eligible communities, and application scoring criteria. The final rule also removes the previous definition of broadband service speed (200 kbps). A new threshold for broadband service speed and broadband grant speed (the speed the grantee must deliver) will be provided in an annual Notice of Funding Availability (NOFA) in the Federal Register . The NOFA will also specify the deadline for applications, the total amount of funding available, and the maximum and minimum amount of funding available for each grant. In February 2019, RUS issued a Funding Opportunity Announcement (FOA) establishing an application window for FY2019 Community Connect grants through April 15, 2019. The FOA set a minimum threshold for speeds constituting broadband service at 10 Mbps download and 1 Mbps upload for both fixed and mobile broadband. The minimum broadband speed that an applicant must propose to deliver is 25 Mbps download, 3 Mbps upload for both fixed and mobile service to the customer. The minimum grant is $100,000 and the maximum is $3 million. Further information, including application materials and guidelines, is available at http://www.rd.usda.gov/programs-services/community-connect-grants . The 2018 farm bill ( P.L. 115-334 ) codifies the Community Connect Grant Program and authorizes the program at $50 million for each of fiscal years 2018 through 2023. Telecommunications Infrastructure Loans and Loan Guarantees The Telecommunications Infrastructure Loan and Loan Guarantee Program provides loans and loan guarantees for the construction, maintenance, improvement, and expansion of telephone service and broadband in rural areas. The program was first authorized in 1949 to finance rural telephone service. Since 1995, RUS has required that networks funded by this program offer broadband service as well. Loans and loan guarantees are available only to rural areas and towns with a population of 5,000 or less. Eligible areas are those without telecommunications facilities or areas where the applicant is the recognized telecommunications provider. Funded projects cannot duplicate existing services. The program is authorized to provide several different types of financing, including direct Treasury rate loans, which bear interest at the government's cost of money (or the current Treasury rate). Thus, the interest charged varies with the Treasury rate. As Treasury rates increase, so does the cost to the borrower for these loans. guaranteed loans, which are provided to borrowers of a nongovernment lender or from the Federal Financing Bank (FFB). The interest rate charged on FFB loans is the Treasury rate plus an administrative fee of one-eighth of 1%. The terms of these loans may vary significantly and allow borrowers more flexibility in meeting their financing needs. hardship direct loans, which bear interest at a fixed rate of 5% per year. These loans are intended only for borrowers with extremely high investment costs in terms of per subscriber service. These borrowers also have a very low number of subscribers for each mile of telecommunications line constructed. This low subscriber density inherently increases the cost to serve the most sparsely populated rural areas. Because of the high cost of the investment needed, these borrowers cannot typically afford higher interest rate loans. The annual loan level for the Telecommunications Infrastructure Loan and Loan Guarantee Program is $690 million. Currently, the 5% hardship loans are not offered—because of low interest rates, the Treasury and FFB loans can currently offer lower interest rates than the 5% offered by hardship loans. Distance Learning and Telemedicine Program The Distance Learning and Telemedicine (DLT) Program was established by the 1996 farm bill—the Federal Agriculture Improvement and Reform Act of 1996 ( P.L. 104-127 ). Though initially providing both grants and loans, since FY2009 only DLT grants have been awarded by RUS. DLT grants serve as initial capital assets for equipment and software that operate via telecommunications to rural end-users of telemedicine and distance learning. DLT grants do not support connectivity. Grant funds may be used for audio, video, and interactive video equipment; terminal and data terminal equipment; computer hardware, network components, and software; inside wiring and similar infrastructure; acquisition of instructional programming; broadband facilities; and technical assistance. 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 2018 farm bill ( P.L. 115-334 ) reauthorizes the DLT program through FY2023 at $82 million per year and sets aside 20% of DLT grant funding for applications related to substance use disorder treatment services. ReConnect Program An Interagency Task Force on Agriculture and Rural Prosperity was created on April 25, 2017, by Executive Order 13790 and was charged with identifying legislative, regulatory, and policy changes to promote agriculture, economic development, job growth, infrastructure improvements, technological innovation, energy security, and quality of life in rural America. The first recommendation of the Task Force's report to the President was to expand e-connectivity in rural and tribal areas. To help implement this recommendation, the Administration requested $500 million in a discretionary add-on to the FY2018 appropriation which would fund a combination grant/loan program at USDA/RUS to deploy broadband in rural and tribal areas. Section 779 of the Consolidated Appropriations Act, 2018 ( P.L. 115-141 ) appropriated $600 million to RUS to "conduct a new broadband loan and grant pilot program." The law states that the funding is to "remain available until expended," and that at least 90% of the households to be served by a project receiving a loan or grant under the pilot program shall be in a rural area without sufficient access to broadband, defined for this pilot program as 10 Mbps downstream, and 1 Mbps upstream, which shall be reevaluated and redetermined, as necessary, on an annual basis by the Secretary of Agriculture; an entity to which a loan or grant is made under the pilot program shall not use the loan or grant to overbuild or duplicate broadband expansion efforts made by any entity that has received a broadband loan from RUS; in addition to other available funds, not more than 4% of the funds can be used for administrative costs to carry out the pilot program and up to 3% may be utilized for technical assistance and predevelopment planning activities to support the most rural communities; and RUS shall adhere to the notice, reporting, and service area assessment requirements previously established in the 2014 farm bill. The Explanatory Statement that accompanied the FY2018 Consolidated Appropriations Act states The agreement reiterates that funding should be prioritized to areas currently lacking access to broadband service, and investments in broadband shall consider any technology that best serves the goals of broadband expansion. Lastly, the agreement restates the importance of coordination among federal agencies in expanding broadband deployment and adoption and expects the Department to take caution to maximize these limited resources and not overbuild or duplicate existing broadband capable infrastructure. The Consolidated Appropriations Act, 2019 ( P.L. 116-6 ) provides $550 million in FY2019 for the pilot broadband loan and grant program, now called the Ru ral eConnectivity Pilot Program, or ReConnect Rural Broadband Program. The $550 million includes $125 million in direct appropriation, plus $425 million to be reprogrammed from the cushion of credit subaccount (7 U.S.C. 940c). Division B, Section 779 direct s the Secretary of Agriculture to ensure that applicants determined to be ineligible for the ReConnect Program have a means of appealing or otherwise challenging that determination in a timely fashion. The law also directs the Secretary, in determining whether an entity may overbuild or duplicate broadband expansion efforts made by an entity that has received an RUS broadband loan, to not consider loans that were rescinded or defaulted on, or loans the terms and conditions of which were not met, if the entity under consideration has not previously defaulted on, or failed to meet the terms and conditions of, a Rural Utilities Service loan or had a Rural Utilities Service loan rescinded. On December 14, 2018, RUS released the Funding Opportunity Announcement ( FOA ) and solicitation of applications for the ReConnect Program. As set forth in the statute, at least 90% of the households to be served by a project receiving a loan or grant under the pilot program shall be in a rural area without sufficient access to broadband at a minimum speed of 10 Mbps/1 Mbps. RUS defines "sufficient access to broadband" as any rural area that has fixed, terrestrial broadband service delivering at least 10 Mbps downstream and 1 Mbps upstream. Mobile and satellite service will not be considered in making the determination that households in the proposed funded service area do not have sufficient access to broadband. With the government shutdown delaying the rollout of the ReConnect Program, on February 25, 2019, RUS released an amendment and clarification to the December FOA , with revised application deadlines. Approximately $600 million has been set aside for funding opportunities under the FOA, with additional budget authority available for a reserve which may be used for additional loans or grants. Award recipients must complete projects within five years. Entities eligible for awards are states or local governments, U.S. territories, an Indian tribe, nonprofit entities, for-profit corporations, limited liability companies, and cooperative or mutual organizations. This includes telecommunications companies, rural electric cooperatives and utilities, internet service providers, and municipalities. Funds will be awarded for projects that have financially sustainable business models that will bring broadband to rural homes, businesses, farms, ranches, and community facilities such as first responders, health care facilities, and schools. The ReConnect Program consists of three funding categories. 100% loan Up to $200 million is available. The maximum amount that can be requested is $50 million. Interest rate is set at a fixed 2%. Eligible areas are where 90% of households do not have sufficient access to broadband at 10 Mbps/1 Mbps. Applicants must propose to build a network capable of providing service to every premise in the proposed funded service area at a minimum speed of 25 Mbps/3 Mbps. Applications accepted on a rolling basis through July 12, 2019. 50% loan/50% grant combination Up to $200 million is available. The maximum amount that can be requested is $25 million for the loan and $25 million for the grant. Loan and grant amounts will always be equal. Interest rate for the loan will be set at the Treasury rate. Eligible areas are where 90% of households do not have sufficient access to broadband at 10 Mbps/1 Mbps. Applicants must propose to build a network capable of providing service to every premise in the proposed funded service area at a minimum speed of 25 Mbps/3 Mbps Applications accepted on a rolling basis through June 21, 2019. 100% grant Up to $200 million is available. The maximum amount that can be requested is $25 million. Applicants must provide a matching contribution equal to 25% of the cost of the overall project. Eligible areas are where 100% of households do not have sufficient access to broadband at 10 Mbps/1 Mbps. Applicants must propose to build a network capable of providing service to every premise in the proposed funded service area at a minimum speed of 25 Mbps/3 Mbps. Applications accepted on a rolling basis through May 31, 2019. More information on the ReConnect Program is available at https://reconnect.usda.gov . Impact of Universal Service Reform on RUS Broadband Loan Programs RUS has three programs that provide or have provided loans for broadband infrastructure projects: the Rural Broadband Access Loan and Loan Guarantee program (also known as the Farm Bill broadband loan program), the Broadband Initiatives Program (BIP under the ARRA), and the Telecommunications Infrastructure Loan Program (established in 1949 as the Rural Telephone Loan and Loan Guarantee program). Whereas RUS broadband loans are used as up-front capital to invest in broadband infrastructure, the Federal Communications Commission's (FCC's) Universal Service Fund (USF)—specifically, the high cost fund—has functioned as an ongoing subsidy to keep the operation of telecommunications networks in high cost areas profitable for providers. Many RUS telecommunications and broadband borrowers (loan recipients) receive high cost USF subsidies. In many cases, the subsidy received from USF helps provide the revenue necessary to keep the loan viable. The Telecommunications Infrastructure Loan Program is highly dependent on high cost USF revenues, with 99% (476 out of 480 borrowers) receiving interstate high cost USF support. This is not surprising, given that the RUS Telecommunications Infrastructure Loans are available only to the most rural and high cost areas (towns with populations less than 5,000). Regarding broadband loans, 60% of BIP (stimulus) borrowers draw from state or interstate USF support mechanisms, while 10% of Farm Bill (Rural Broadband Access Loan and Loan Guarantee Program) broadband borrowers receive interstate high cost USF support. The FCC, in an October 2011 decision, adopted an order that calls for the USF to be transformed, in stages, over a multiyear period—from a mechanism to support voice telephone service to one that supports the deployment, adoption, and use of both fixed and mobile broadband. More specifically, the high cost program is being phased out and a new fund, the Connect America Fund (CAF), which includes the targeted Mobility Fund and new Remote Areas Fund, is replacing it. During this transition, the uncertainty surrounding the FCC's proposed methodology for distributing Connect America Fund monies has led many small rural providers to postpone or cancel investment in broadband network upgrades. According to RUS, "demand for RUS loans dropped to roughly 37% of the total amount of loan funds appropriated by Congress in FY2012," and "[c]urrent and prospective RUS borrowers have communicated their hesitation to increase their outstanding debt and move forward with planned construction due to the recently implemented reductions in USF support and Inter-Carrier Compensation (ICC) payments." Appropriations The Rural Broadband Access Loan and Loan Guarantee Program, the Community Connect Grant Program, the Telecommunications Infrastructure Loan and Loan Guarantee program, the Rural Broadband ReConnect Program, and the Distance Learning and Telemedicine grant program are funded through the annual Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Act. The appropriations provided to the broadband loan programs are loan subsidies which support a significantly higher loan level. Table 3 shows recent and proposed appropriations for the rural broadband programs in the Rural Utilities Service. FY2018 The Administration's FY2018 budget proposal requested the following for RUS broadband programs: Rural Broadband Access Loans—$4.5 million in budget authority to subsidize a broadband loan level of $27 million. According to the budget proposal, this funding level will provide for approximately 3 loans in FY2018. Telecommunications Infrastructure Loans—$0.863 million in budget authority to subsidize a loan level of $690 million ($345 million for Treasury loans and $345 million for FFB loans). The subsidy is for Treasury loans. According to the budget proposal, this funding level will provide for approximately 40 loans in FY2018. Community Connect and DLT grants—for FY2018, the Administration is proposing transferring Community Connect and DLT grants into a new $162 million "Rural Economic Infrastructure Program," which will also include Rural Development Community Facilities grants and Home Repair grants. Up to $80 million will be directed toward the Appalachian region. According to the Administration, the new account "combines the Rural Development grant programs into one account to provide the Administration with the flexibility to place resources where significant impact can be made for economic infrastructure development." On July 12, 2017, the House Appropriations Committee approved the Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Act, 2018 ( H.R. 3268 ; H.Rept. 115-232 ). The bill provided $4.521 million to subsidize a loan level of $26.991 million for the broadband loan program. Funding provided for the broadband loan program was intended to promote availability in those areas where there is not otherwise a business case for private investment in a broadband network. The committee directed RUS to focus expenditures on projects that bring broadband service to underserved households and areas. The House bill provided $122.692 million for the new Rural Economic Infrastructure Account (24% below the Administration request), which would include both Community Connect and DLT grants, along with Community Facilities grants and Home Repair grants. The bill included language requiring at least 15% of the account resources ($18.4 million) be allocated to each program area. The committee noted that tribal communities continue to struggle with gaining access to broadband service, and encouraged the Secretary to provide a report that identifies the specific challenges Indian Tribal Organizations (ITOs) have in gaining access to broadband service and provide a plan for addressing these challenges, including how the Community Connect program can assist ITOs. Regarding telecommunications loans, the House matched the Administration proposal, providing a loan level of $690 million ($345 million in direct Treasury loans and $345 million in FFB loans) with an appropriation of $0.863 million to subsidize direct Treasury loans. Additionally, the House Appropriations Committee report directed USDA to continue coordinating with the FCC, NTIA, and other related federal agencies to ensure that policies tied to one federal program do not undermine the objectives and functionality of another. The committee directed the department to prepare a report, in collaboration with the FCC and DOC, detailing areas of responsibility toward addressing rural broadband issues. The report shall include, but not be limited to, how the programs work complimentarily to one another; how they address broadband issues in unserved and underserved areas, including tribal lands; identify barriers to infrastructure investment in rural areas and tribal lands; data speeds which fixed, wireless, and mobile broadband users in rural areas and tribal lands experience; and cost estimates to increase speeds to 25 Mbps in unserved communities and communities currently being served by speeds less than 25 Mbps. On July 20, 2017, the Senate Appropriations Committee approved its version of the FY2018 agriculture appropriations bill ( S. 1603 ; S.Rept. 115-131 ). The bill provided $4.53 million to subsidize a loan level of $27.043 million for the broadband loan program, $30 million for the Community Connect grant program, and $26.6 million for DLT grants. Unlike the House and the Administration request, the committee did not include funding for Rural Economic Infrastructure grants. For telecommunications loans, the Senate matched the House bill and the Administration proposal, providing a loan level of $690 million ($345 million in direct Treasury loans and $345 million in FFB loans) with an appropriation of $0.863 million to subsidize direct Treasury loans. Regarding the broadband loan program, the committee encouraged RUS to focus expenditures on projects that bring broadband service to currently unserved households, and directed RUS to report back to the committee on administrative efforts to eliminate duplicative or overbuilding of broadband technology. The committee also recommended that USDA explore a pilot grant program to demonstrate the use of multistrand fiber-optic cable that exists as part of electrical transmission infrastructure to provide state-of-the-art broadband services to currently underserved rural schools and medical centers within a mile of the existing cable. The Consolidated Appropriations Act, 2018 ( P.L. 115-141 ) provided $5 million to subsidize a broadband loan level of $29.851 million, $30 million to Community Connect broadband grants, and $49 million for DLT grants, which included an additional $20 million to address the opioid epidemic in rural America. P.L. 115-141 also appropriated $600 million to RUS to "conduct a new broadband loan and grant pilot program." FY2019 The Administration's FY2019 budget proposal requested the following for RUS broadband programs: Rural Broadband Access Loans—$4.5 million in budget authority to subsidize a broadband loan level of $23.149 million. According to the budget proposal, this funding level will provide for approximately three loans in FY2019. Telecommunications Infrastructure Loans and Loan Guarantees—$0.863 million in budget authority to subsidize a loan level of $690 million ($172.6 million for Treasury loans and $517.4 million for FFB loans). The subsidy is for Treasury loans. According to the budget proposal, this funding level will provide for approximately 30 loans in FY2019. Community Connect Grants—$30 million, which will support approximately 13 broadband grants in FY2019. Distance Learning and Telemedicine Grants—$23.6 million, which will support approximately 72 projects in FY2019. On May 16, 2018, the House Appropriations Committee approved the FY2019 Agriculture Appropriations bill ( H.R. 5961 ; H.Rept. 115-706 ). The bill would provide the following: Rural Broadband Access Loans—$5.83 million in budget authority to subsidize a broadband loan level of $29.851 million. Telecommunications Infrastructure Loans and Loan Guarantees—$1.125 million in budget authority to subsidize direct Treasury loans set at a level of $465 million. Along with a loan level $225 million for FFB guaranteed loans, the total loan level is $690 million. Community Connect Grants—$30 million. Distance Learning and Telemedicine Grants—$32 million. ReConnect Program—$550 million. This appropriation would continue the pilot broadband loan and grant program that was funded (at $600 million) in the FY2018 Consolidated Appropriations Act, 2018 ( P.L. 115-141 ). In the committee report, the committee expressed its view that "it is important for Departments to avoid efforts that could duplicate existing networks built by private investment or those built leveraging and utilizing other federal programs." As such, the committee "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 pilot program are being targeted to areas that are currently unserved." The committee directed USDA to use the NTIA's assessment of the current state of broadband access nationwide, and to explore using all broadband technologies, including, but not limited to, fiber, cable modem, fixed wireless, and television white space. The committee also noted that tribal communities continue to struggle with gaining access to broadband service, and encouraged the Secretary to provide a report that identifies the specific challenges Indian Tribal Organizations (ITOs) have in gaining access to broadband service and provide a plan for addressing these challenges, including how the Community Connect program can assist ITOs. On May 24, 2018, the Senate Appropriations Committee approved its FY2019 Agriculture Appropriations bill ( S. 2976 ; S.Rept. 115-259 ). The bill would provide the following: Rural Broadband Access Loans—$5.83 million in budget authority to subsidize a broadband loan level of $29.851 million. Telecommunications Infrastructure Loans and Loan Guarantees—$1.725 million in budget authority to subsidize direct Treasury loans set at a level of $345 million. Along with a loan level of $345 million for FFB guaranteed loans, the total loan level is $690 million. Community Connect Grants—$30 million. Distance Learning and Telemedicine Grants—$50 million (including $20 million to help address the opioid epidemic in rural America). ReConnect Program—$425 million. The committee encouraged RUS to focus expenditures on projects that bring broadband service to currently unserved households, and directed RUS to report back to the committee on administrative efforts to eliminate duplicative or overbuilding of broadband technology. The committee also recommended that USDA explore a pilot grant program to demonstrate the use of multistrand fiber-optic cable that exists as part of electrical transmission infrastructure to provide state-of-the-art broadband services to currently underserved rural schools and medical centers within a mile of the existing cable; encouraged RUS to coordinate with the FCC and other relevant federal entities when making determinations of sufficient broadband access, to ensure the most accurate and up-to-date broadband coverage data are used, while being cognizant of potential problems of overbuilding; encouraged the Secretary to utilize appropriate grant program funds to locate buried, antiquated infrastructure facilities prior to construction of new utilities infrastructure financed by RUS; and urged RUS to ensure the agency's criteria and application processes provide for fair consideration of open access projects by accounting for the unique structures and opportunities such projects present in advancing broadband deployment in unserved and underserved communities. On February 15, 2019, the Consolidated Appropriations Act, 2019 was signed into law ( P.L. 116-6 ). The FY2019 appropriations and levels are as follows: Rural Broadband Access Loans—$5.83 million in budget authority to subsidize a broadband loan level of $29.851 million. Telecommunications Infrastructure Loans and Loan Guarantees—$1.725 million in budget authority to subsidize direct Treasury loans set at a level of $345 million. Along with a loan level of $345 million for FFB guaranteed loans, the total loan level is $690 million. Community Connect Grants—$30 million. Distance Learning and Telemedicine Grants—$47 million (including $16 million to address the opioid epidemic in rural America). ReConnect Program—$550 million ($125 million direct appropriation plus $425 million to be reprogrammed from the cushion of credit account). P.L. 116-6 also directs USDA rural development programs, including the broadband programs, to allocate (to the maximum extent feasible) at least 10% of funds to projects in persistent poverty counties. The conference report ( H.Rept. 116-9 ) contains language directing USDA 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 to coordinate with the FCC and NTIA to ensure wherever possible that broadband loans and grants are targeted to areas that are currently unserved. In particular, the conference agreement directs USDA to use the NTIA's assessment of the current state of broadband access nationwide. USDA is also directed, in implementing a strategy for broadband deployment to unserved communities, to explore using all technologies, including but not limited to, fiber, cable modem, fixed wireless, and television white space. FY2020 The Administration's FY2020 budget proposal requested the following for RUS broadband programs: Rural Broadband Access Loans—Zero funding. According to the budget proposal, the elimination of funding will be offset by continued access by most eligible borrowers to the ReConnect Program (broadband pilot loan and grants). ReConnect Program—$200 million, which, according to the budget proposal, will support approximately eight loans, grants, or loan/grant combinations in FY2020. Telecommunications Infrastructure Loans and Loan Guarantees—$1.933 million in budget authority to subsidize a loan level of $690 million ($175.7 million for Treasury loans and $514.3 million for FFB loans). The subsidy is for the Treasury loans. According to the budget proposal, this funding level will provide for approximately 20 loans in FY2020. Community Connect Grants—$30 million, which will support approximately 13 broadband grants in FY2020. Distance Learning and Telemedicine Grants—$43.6 million, which will support approximately 90 projects in FY2020. Past Criticisms of RUS Broadband Programs RUS broadband programs have been awarding funds to entities serving rural communities since FY2001. Since their inception, a number of criticisms have emerged. Loan Approval and Application Process Perhaps the major criticism of the broadband loan program was that not enough loans are approved, thereby making it difficult for rural communities to take full advantage of the program. The loan application process has been criticized as being overly complex and burdensome, requiring applicants to spend months preparing costly market research and engineering assessments. Many applications are rejected because the applicant's business plan is deemed insufficient to support a commercially viable business. The biggest reason for applications being returned has been insufficient credit support, whereby applicants do not have sufficient cash-on-hand (one year's worth is required in most cases). The requirement for cash-on-hand is viewed as particularly onerous for small start-up companies, many of whom lack sufficient capital to qualify for the loan. Such companies, critics assert, may be those entities most in need of financial assistance. In report language to the FY2006 Department of Agriculture Appropriations Act ( P.L. 109-97 ), the Senate Appropriations Committee ( S.Rept. 109-92 ) directed the RUS "to reduce the burdensome application process and make the program requirements more reasonable, particularly in regard to cash-on-hand requirements." The committee also directed USDA to hire more full-time employees to remedy delays in application processing times. At a May 17, 2006, hearing held by the Senate Committee on Agriculture, Nutrition, and Forestry, the Administrator of the RUS stated that RUS is working to make the program more user friendly, while at the same time protecting taxpayer investment: As good stewards of the taxpayers' money, we must make loans that are likely to be repaid. One of the challenges in determining whether a proposed project has a reasonable chance of success is validating the market analysis of the proposed service territory and ensuring that sufficient resources are available to cover operating expenses throughout the construction period until such a time that cash flow from operations become sufficient. The loan application process that we have developed ensures that the applicant addresses these areas and that appropriate resources are available for maintaining a viable operation. According to RUS, the loan program was initially overwhelmed by applications (particularly during a two-week period in August 2003), and as the program matured, application review times have dropped. On May 11, 2007, RUS released a Proposed Rule which sought to revise regulations for the broadband loan program. In the background material accompanying the Proposed Rule, RUS stated that the average application processing time in 2006 was almost half of what it was in 2003. Eligibility Criteria Since the inception of the broadband grant and loan programs, the criteria for applicant eligibility have been criticized both for being too broad and for being too narrow. An audit report released by USDA's Office of Inspector General (IG) found that the "programs' focus has shifted away from those rural communities that would not, without Government assistance, have access to broadband technologies." Specifically the IG report found that the RUS definition of rural area has been "too broad to distinguish usefully between suburban and rural communities," with the result that, as of March 10, 2005, $103.4 million in loans and grants (nearly 12% of total funding awarded) had been awarded to 64 communities located near large cities. The report cited examples of affluent suburban subdivisions qualifying as rural areas under the program guidelines and receiving broadband loans. On the other hand, eligibility requirements have also been criticized as too narrow. For example, the limitation of assistance only to communities of 20,000 or less in population excludes small rural towns that may exceed this limit, and also excludes many municipalities seeking to deploy their own networks. Similarly, per capita income requirements can preclude higher income communities with higher costs of living (e.g., rural Alaska), and the limitation of grant programs only to underserved areas excludes rural communities with existing but very limited broadband access. Loans to Communities With Existing Providers The IG report found that RUS too often has given loans to communities with existing broadband service. The IG report found that "RUS has not ensured that communities without broadband service receive first priority for loans," and that although RUS has a system in place to prioritize loans to unserved communities, the system "lacks a cutoff date and functions as a rolling selection process—priorities are decided based on the applicants who happen to be in the pool at any given moment." The result is that a significant number of communities with some level of preexisting broadband service have received loans. According to the IG report, of 11 loans awarded in 2004, 66% of the associated communities served by those loans had existing service. According to RUS, 31% of communities served by all loans (during the period 2003 through early 2005) had preexisting competitive service (not including loans used to upgrade or expand existing service). In some cases, according to the IG report, "loans were issued to companies in highly competitive business environments where multiple providers competed for relatively few customers." At the May 1, 2007, hearing before the House Subcommittee on Specialty Crops, Rural Development, and Foreign Agriculture, then-RUS Administrator James Andrews testified that of the 69 broadband loans awarded since the program's inception, 40% of the communities approved for funding were unserved at the time of loan approval, and an additional 15% had only one broadband provider. Awarding loans to entities in communities with preexisting competitive service raised criticism from competitors who already offer broadband to those communities. According to the National Cable and Telecommunications Association (NCTA), "RUS loans are being used to unfairly subsidize second and third broadband providers in communities where private risk capital already has been invested to provide broadband service." Critics argued that providing loans in areas with preexisting competitive broadband service creates an uneven playing field and discourages further private investment in rural broadband. In response, RUS stated in the IG report that its policies are in accordance with the statute, and that they address "the need for competition to increase the quality of services and reduce the cost of those services to the consumer." RUS argued that the presence of a competitor does not necessarily mean that an area is adequately served, and additionally, that in order for some borrowers to maintain a viable business in an unserved area, it may be necessary for that company to also be serving more densely populated rural areas where some level of competition already exists. Follow-Up Audit by USDA Office of Inspector General In 2008, as directed by the House Appropriations Committee ( H.Rept. 110-258 , FY2008 Agriculture appropriations bill), the IG reexamined the RUS broadband loan and loan guarantee program to determine whether RUS had taken sufficient corrective actions in response to the issues raised in the 2005 IG report. The IG concluded "the key problems identified in our 2005 report—loans being issued to suburban and exurban communities and loans being issued where other providers already provide access—have not been resolved." Specifically, the follow-up IG report found that between 2005 and 2008, RUS broadband borrowers providing services in 148 communities were within 30 miles of cities with 200,000 inhabitants, including communities near very large urban areas such as Chicago and Las Vegas. The IG report also found that since 2005 "RUS has continued providing loans to providers in markets where there is already competing service." Of the 37 applications approved since September 2005, 34 loans were granted to applicants in areas where one or more private broadband providers already offered service. These 34 borrowers received $873 million to service 1,448 communities. The IG report found that since 2005, 77% of communities which were expected to receive service from a project financed by an approved RUS broadband loan had at least one existing broadband provider present, 59% had two or more existing providers, and 27% had three or more existing providers. In an official response to the follow-up IG report, RUS fundamentally disagreed with the IG criticisms, stating that the loans awarded between 2005 and 2008 were provided "in a way entirely consistent with the statutory requirements of the underlying legislation governing administration of the program, the regulations and guidance issued by the Department to implement the statute, and the intent of Congress." Specifically, RUS argued that its May 11, 2007, Proposed Rule, and the subsequent changes to the broadband loan and loan guarantee statute made by the 2008 farm bill, both addressed concerns over loans to nonrural areas and to communities with preexisting broadband providers. However, the Final Rule based on the Proposed Rule and the 2008 farm bill had not yet been released and implemented during the 2005-2008 period examined by the IG, and RUS was compelled by law to continue awarding broadband loans under the existing law and rules. During 2009 and 2010, the Rural Broadband Access Loan and Loan Guarantee program was in hiatus while RUS implemented the Broadband Initiatives Program (Recovery Act grants and loans) and developed new regulations implementing the 2008 farm bill. On March 14, 2011, the new rules were released. According to then-RUS Administrator Jonathan Adelstein, "this regulation and other measures taken by the agency have addressed all the concerns raised by the OIG," and on March 24, 2011, "the OIG notified RUS that it has closed its audits of the RUS broadband loan program." 2014 GAO Report In May 2014, GAO released its report, USDA Should Evaluate the Performance of the Rural Broadband Loan Program . In the report, GAO analyzed rural broadband loans awarded between the years 2003 and 2013. GAO found that of the 100 loans awarded (worth $2 billion), 43% were no longer active due to 25 loans rescinded and 18 defaulted (RUS rejected 149 of the 249 applications received); that RUS loans can help promote limited broadband deployment and economic development, but performance goals do not fully align with the program's purpose; and that FCC reforms of the Universal Service Fund and intercarrier compensation have created temporary uncertainty that may be hindering investment in broadband. To address its findings, GAO made two recommendations to the Secretary of Agriculture: evaluate loans made by RUS through the broadband loan program to identify characteristics of loans that may be at risk of rescission or default; and align performance goals under the "enhance rural prosperity" strategic objective in the Annual Performance Report to the broadband loan program's purpose, to the extent feasible. Broadband Loan Reauthorization in the Farm Bill The Rural Broadband Access Loan and Loan Guarantee program is authorized by Section 601 of the Rural Electrification Act of 1936. Since the program was established in the 2002 farm bill, it has been subsequently reauthorized and modified by the 2008 and 2014 farm bills. The 2018 farm bill seeks to again reauthorize and modify the program, as well as addressing other RUS broadband programs and issues. 2008 Farm Bill The 110 th Congress considered reauthorization of the Rural Broadband Access Loan and Loan Guarantee program as part of the 2008 farm bill. The following are some key issues which were considered during the debate over reauthorization of the RUS broadband loan and loan guarantee program. Restricting Applicant Eligibility The RUS broadband program was criticized for excluding too many applicants due to stringent financial requirements (e.g., the requirement that an applicant have a year's worth of cash-on-hand) and an application process—requiring detailed business plans and market surveys—that some viewed as overly expensive and burdensome to complete. During the reauthorization process, Congress considered whether the criteria for loan eligibility should be modified, and whether a more appropriate balance could be found between the need to make the program more accessible to unserved and often lower-income rural areas, and the need to protect taxpayers against bad loans. Definition of "Rural Community" The definition of which communities qualify as "rural" had been changed twice by statute since the broadband loan program was initiated. Under the pilot program, funds were authorized under the Distance Learning and Telemedicine Program, which defines "exceptionally rural areas" (under 5,000 inhabitants), "rural areas" (between 5,000 and 10,000), and "mid-rural areas" (between 10,000 and 20,000). RUS determined that communities of 20,000 or less would be eligible for broadband loans in cases where broadband services did not already exist. In 2002, this definition was made narrower by the Farm Security and Rural Investment Act ( P.L. 107-171 ), which designated eligible communities as any incorporated or unincorporated place with fewer than 20,000 inhabitants, and which was outside any standard metropolitan statistical area (MSA). The requirement that communities not be located within MSA's effectively prohibited suburban communities from receiving broadband loans. However, in 2004, the definition was again changed by the FY2004 Consolidated Appropriations Act ( P.L. 108-199 ). The act broadened the definition, keeping the population limit at 20,000, but eliminating the MSA prohibition, thereby permitting rural communities near large cities to receive loans. Thus the current definition used for rural communities is the same as what was used for the broadband pilot program, except that loans can now be issued to communities with preexisting service. The definition of what constitutes a "rural" community is always a difficult issue for congressional policymakers in determining how to target rural communities for broadband assistance. On the one hand, the narrower the definition the greater the possibility that deserving communities may be excluded. On the other hand, the broader the definition used, the greater the possibility that communities not traditionally considered "rural" or "underserved" may be eligible for financial assistance. A related issue is the scope of coverage proposed by individual applications. While many of the loan applications propose broadband projects offering service to multiple rural communities, RUS identified a trend toward larger regional and national proposals, covering hundreds or even more than 1,000 communities. The larger the scope of coverage, the greater the complexity of the loan application and the larger the possible benefits and risks to taxpayers. Preexisting Broadband Service Loans to areas with competitive preexisting service—that is, areas where existing companies already provide some level of broadband—sparked controversy because loan recipients are likely to compete with other companies already providing broadband service. During reauthorization, Congress was asked to more sharply define whether and/or how loans should be given to companies serving rural areas with preexisting competitive service. On the one hand, some argued that the federal government should not be subsidizing competitors for broadband service, particularly in sparsely populated rural markets which may be able only to support one provider. Furthermore, keeping communities with preexisting broadband service eligible may divert assistance from unserved areas that are most in need. On the other hand, many suburban and urban areas currently receive the benefits of competition between broadband providers—competition which can potentially drive down prices while improving service and performance. It is therefore appropriate, others argued, that rural areas also receive the benefits of competition, which in some areas may not be possible without federal financial assistance. It was also argued that it may not be economically feasible for borrowers to serve sparsely populated unserved communities unless they are permitted to also serve more lucrative areas which may already have existing providers. Technological Neutrality The 2002 farm bill ( P.L. 107-171 ) directed RUS to use criteria that are "technologically neutral" in determining which projects to approve for loans. In other words, RUS is prohibited from typically valuing one broadband technology over another when assessing loan applications. As of November 10, 2008, 37% of approved and funded projects employed fiber-to-the-home technology, 17% employed DSL, 25% fixed wireless, 19% hybrid fiber-coaxial (cable), and 2% broadband over powerlines (BPL). No funding has been provided for projects utilizing satellite broadband. While decisions on funded projects were required to be technologically neutral, RUS (through the Secretary of Agriculture) had the latitude to determine minimum required data transmission rates for broadband projects eligible for funding. According to the statute, "the Secretary shall, from time to time as advances in technology warrant, review and recommend modifications of rate-of-data transmission criteria for purposes of the identification of broadband service technologies." Some argued that the minimum speed thresholds should be raised to ensure that rural areas receive "next-generation" broadband technologies with faster data rates capable of more varied and sophisticated applications. On the other hand, significantly raising minimum data rates could exclude certain technologies—for example, typical data transmission rates for fiber and some wireless technologies exceed what is offered by "current generation" technologies such as DSL and cable. Proponents of keeping the minimum threshold at a low level argued that underserved rural areas are best served by any broadband technology that is economically feasible to deploy, regardless of whether it is "next" or "current" generation. P.L. 110-246 The Food, Conservation, and Energy Act of 2008 became law on June 18, 2008 ( P.L. 110-246 ). Section 6110, "Access to Broadband Telecommunications Services in Rural Areas," reauthorized the RUS broadband loan and loan guarantee program and addressed many of the criticisms and issues raised during the reauthorization process. The following summarizes broadband-related provisions that changed previous law. Eligibility and Selection Criteria Defines rural area as any area other than (1) a city or town that has a population of greater than 20,000 and (2) an urbanized area contiguous and adjacent to a city or town with a population greater than 50,000. The Secretary may, by regulation only, consider not to be rural an area that consists of any collection of census blocks contiguous to each other with a housing density of more than 200 housing units per square mile and that is contiguous with or adjacent to an existing boundary of a rural area. Provides that the highest priority is to be given to applicants that offer to provide broadband service to the greatest proportion of households currently without broadband service. Eligible entities are required to submit a proposal to the Secretary that meets the requirements for a project to offer to provide service to a rural area and agree to complete build out of the broadband service within three years. Prohibits any eligible entity that provides telecommunications or broadband service to at least 20% of the households in the United States from receiving an amount of funds under this section for a fiscal year in excess of 15% of the funds authorized and appropriated for the broadband loan program. Directs the Secretary of Agriculture "from time to time as advances in technology warrant," to review and recommend modifications in rate-of-data-transmission criteria for the purpose of identifying eligible broadband service technologies. At the same time, the Secretary is prohibited from establishing requirements for bandwidth or speed that have the effect of precluding the use of evolving technologies appropriate for use in rural areas. Loans to Communities With Existing Providers Prohibits the Secretary from making a loan in any area where there are three or more incumbent service providers unless the loan meets all of the following requirements: (1) the loan is to an incumbent service provider that is upgrading service in that provider's existing territory; (2) the loan proposes to serve an area where not less than 25% of the households are offered service by not more than 1 provider; and (3) the applicant is not eligible for funding under another provision of the Rural Electrification Act. Incumbent service provider is defined as an entity providing broadband service to not less than 5% of the households in the service territory proposed in the application. Also prohibits the Secretary from making a loan in any area where not less than 25% of the households are offered broadband service by not more than one provider unless a prior loan has been made in the same area. Financial Requirements Directs the Secretary to consider existing recurring revenues at the time of application in determining an adequate level of credit support. Requires the Secretary to ensure that the type, amount, and method of security used to secure a loan or loan guarantee is commensurate to the risk involved with the loan or loan guarantee, particularly when the loan or loan guarantee is issued to a financially healthy, strong, and stable entity. The Secretary is also required, in determining the amount and method of security, to consider reducing the security in areas that do not have broadband service. Allows the Secretary to require an entity to provide a cost-share in an amount not to exceed 10% of the amount of the loan or loan guarantee. Retains the current law rate of interest for direct loans—which is the rate equivalent to the cost of borrowing to the Department of the Treasury for obligations of comparable maturity or 4%. Directs that loan or loan guarantee may have a term not to exceed 35 years if the Secretary determines that the loan security is sufficient. In case of substantially underserved trust areas (for example, Indian lands), where the Secretary determines a high need exists for the benefits of the program, the Secretary has the authority to provide loans with interest rates as low as 2% and may waive nonduplication restrictions, matching fund requirements, credit support requirements, or other regulations. Loan Application Requirements Allows the Secretary to require an entity that proposes to have a subscriber projection of more than 20% of the broadband service market in a rural area to submit a market survey. However, the Secretary is prohibited from requiring a market survey from an entity that projects to have less than 20% of the broadband market. Requires public notice of each application submitted, including the identity of the applicant, the proposed area to be served, and the estimated number of households in the application without terrestrial-based broadband. Authorizes the Secretary to take steps to reduce the costs and paperwork associated with applying for a loan or loan guarantee under this section by first-time applicants, particularly those who are smaller and start-up internet providers. Allows the Secretary to establish a preapplication process under which a prospective applicant may seek a determination of area eligibility. Provides that an application, or a petition for reconsideration of a decision on such an application, that was pending on the date 45 days before enactment of this act and that remains pending on the date of enactment of this act is to be considered under eligibility and feasibility criteria in effect on the original date of submission of the application. Other Provisions Authorizes the Rural Broadband Access Loan and Loan Guarantee program at $25 million to be appropriated for each of fiscal years 2008 through 2012. Requires that the Secretary annually report to Congress on the rural broadband loan and loan guarantee program. The annual report is to include information pertaining to the loans made, communities served and proposed to be served, speed of broadband service offered, types of services offered by the applicants and recipients, length of time to approve applications submitted, and outreach efforts undertaken by USDA. Section 6111 provides for a National Center for Rural Telecommunications Assessment. The center is to assess the effectiveness of broadband loan programs, work with existing rural development centers to identify appropriate policy initiatives, and provide an annual report that describes the activities of the center, the results of research carried out by the center, and any additional information that the Secretary may request. An appropriation of $1 million is authorized for each of the fiscal years 2008 through 2012. Section 6112 directs the Chairman of the Federal Communications Commission (FCC), in coordination with the Secretary, to submit to Congress a report describing a comprehensive rural broadband strategy. Requires the report to be updated during the third year after enactment. Implementation of P.L. 110-246 During 2009 and 2010, the Farm Bill Broadband Loan Program was on hiatus as RUS implemented the Broadband Initiatives Program (BIP) established under the American Recovery and Reinvestment Act of 2009 ( P.L. 111-5 ). At the same time, final regulations implementing the broadband loan program as reauthorized by the 2008 farm bill were on hold and were being refined to reflect, in part, RUS experience in implementing BIP. Subsequently, on March 14, 2011, an Interim Rule and Notice was published in the Federal Register setting forth the rules and regulations for the broadband loan program as reauthorized by P.L. 110-246 . While the rule was immediately effective, RUS accepted public comment before ultimately releasing a final rule. Meanwhile, pursuant to Section 6112 of P.L. 110-246 , the FCC released on May 22, 2009, its report on rural broadband strategy, entitled Bringing Broadband to Rural America . The report made a series of recommendations including improved coordination of rural broadband efforts among federal agencies, states, and communities; better assessment of broadband needs, including technological considerations and broadband mapping and data; and overcoming challenges to rural broadband deployment. 2014 Farm Bill On January 27, 2014, the conference report for the Agricultural Act of 2014 was filed ( H.Rept. 113-333 ). The conference agreement was approved by the House on January 29, approved by the Senate on February 4, and signed into law ( P.L. 113-79 ) by the President on February 7, 2014. P.L. 113-79 amended Section 601 of the Rural Electrification Act of 1936 (7 U.S.C. 950bb) to reauthorize the Rural Broadband Access Loan and Loan Guarantee Program through FY2018. P.L. 113-79 also included provisions to redefine project area eligibility with respect to existing broadband service, increase the program's transparency and reporting requirements, define a minimum level of broadband service, require a study on the gathering and use of address-level data, and establish a new Rural Gigabit Network Pilot Program. The conference agreement did not include a Senate bill proposal ( S. 954 ) to create a new grant component to the existing broadband loan and loan guarantee program, nor did the conference agreement adopt the Senate bill's broadening of the definition for eligible rural areas. Specifically, Section 6104 of P.L. 113-79 made the following changes to the Rural Broadband Access Loan and Loan Guarantee program: Project area eligibility—provides that an eligible area is one where not less than 15% of the households in the proposed service territory are unserved or have service levels below the minimum acceptable level of broadband service (which is set at 4 Mbps/1 Mbps). Priority—directs RUS to give the highest priority to applicants that offer to provide broadband service to the greatest proportion of unserved households or households that do not have residential broadband service that meets the minimum acceptable level of broadband service, as certified by the affected community, city, county, or designee; or demonstrated on the broadband map of the affected state if the map contains address-level data, or the National Broadband Map if address-level data are unavailable. RUS shall provide equal consideration to all qualified applicants, including those that have not previously received grants, loans, or loan guarantees. Also gives priority to applicants that offer to provide broadband service not predominantly for business service, but if at least 25% of customers in the proposed service territory are commercial interests. Evaluation period—directs RUS to establish not less than two evaluation periods for each fiscal year to compare loan and loan guarantee applications and to prioritize loans and loan guarantees to all or part of rural communities that do not have residential broadband service that meets the minimum acceptable level of broadband service. Market survey requirement—provides that survey information must be certified by the affected community, city, county, or designee; and demonstrated on the broadband map of the affected state if the map contains address-level data, or the National Broadband Map if address-level data are unavailable. Notice requirement—directs RUS to maintain a fully searchable database on the internet that contains a list of each entity that has applied for assistance, the status of each application, and a detailed description of each application. For each entity receiving assistance, the database shall provide the name of the entity, the type of assistance being received, the purpose for which the entity is receiving the assistance, and each semiannual report submitted. Reporting—requires semiannual reports from loan recipients for three years after completion of the project describing in detail the use of the assistance, and the progress toward fulfilling project objectives. Default and deobligation—directs RUS to establish written procedures for recovering funds from loan defaults, deobligating awards that demonstrate an insufficient level of performance or fraudulent spending, awarding those funds to new or existing applicants, and minimizing overlap among programs. Service area assessment—directs RUS to promptly post on its website a list of the census block groups that an applicant proposes to service. RUS will provide not less than 15 days for broadband service providers to voluntarily submit information about the broadband services that the providers offer in the groups or tracts listed so that RUS may assess whether the applications submitted meet the eligibility requirements. If no broadband service provider submits this information, RUS will consider the number of providers in the group or tract to be established by reference to the most current National Broadband Map or any other data RUS may collect or obtain through reasonable efforts. Definition of broadband service—establishes "the minimum acceptable level of broadband service" as at least 4 Mbps downstream and 1 Mbps upstream. At least once every two years, the Secretary shall review and may adjust this speed definition and may consider establishing different minimum speeds for fixed and mobile (wireless) broadband. Terms and conditions—in determining the terms and conditions of assistance, the Secretary may consider whether the recipient would be serving an area that is unserved (or has service levels below the minimum acceptable level of broadband service), and if so, can establish a limited initial deferral period or comparable terms necessary to achieve the financial feasibility and long-term sustainability of the project. Report to Congress—adds requirements to the content of the annual report to Congress, including the number of residences and businesses receiving new broadband services; network improvements, including facility upgrades and equipment purchases; average broadband speeds and prices on a local and statewide basis; any changes in broadband adoption rates; and any specific activities that increase high-speed broadband access for educational institutions, health care providers, and public safety service providers. Reauthorization—reauthorizes the broadband loan and loan guarantee program through FY2018 at the current level of $25 million per year. Study on providing effective data for the National Broadband Map—directs USDA, in consultation with DOC and the FCC, to conduct a study of the ways data collected by RUS could most effectively be shared with the FCC to support the development and maintenance of the National Broadband Map. The study shall include a consideration of the circumstances under which address-level data could be collected by RUS and appropriately shared with the FCC. In addition, Section 6105 authorized a new Rural Gigabit Network Pilot Program. Specifically, USDA was authorized to provide grants, loans, or loan guarantees for projects that would extend ultra-high-speed broadband service (defined as 1 gigabit per second downstream capacity) to rural areas where ultra-high-speed service is not provided in any part of the proposed service territory. The pilot program was authorized at $10 million per year for the years FY2014 through FY2018. However, no funding was appropriated for this pilot program over that period, and the Rural Gigabit Network Pilot Program was not implemented. Implementation of P.L. 113-79 On July 30, 2015, the RUS published in the Federal Register the interim rule (7 C.F.R. part 1738) implementing the Rural Broadband Access Loan and Loan Guarantee Program as reauthorized by the February 7, 2014, enactment of the Agricultural Act of 2014 ( P.L. 113-79 ). Publication of the interim rule allowed the program to go forward, initially with two application periods per year. The interim rule was made final on June 9, 2016. 2018 Farm Bill With the 2014 farm bill expiring on September 30, 2018, the 115 th Congress considered reauthorization of the RUS broadband loan and loan guarantee program and other broadband-related provisions in the 2018 farm bill. House On April 12, 2018, H.R. 2 , the Agriculture and Nutrition Act of 2018, was introduced by Representative Conaway. Subtitle B of Title VI ("Connecting Rural Americans to High Speed Broadband") would reauthorize the Rural Broadband Access Loan and Loan Guarantee Program and make a number of changes to the RUS rural broadband programs. On April 18, 2018, the House Agriculture Committee approved H.R. 2 ( H.Rept. 115-661 ) with amendments. On June 21, 2018, the House passed H.R. 2 . Senate On June 11, 2018, the 2018 Senate farm bill, S. 3042 , was introduced by Senator Roberts. The Agriculture Improvement Act of 2018 was approved on June 13, 2018, by the Committee on Agriculture, Nutrition, and Forestry and ordered to be reported with an amendment in the nature of a substitute favorably. On June 28, 2018, the Senate passed its version of H.R. 2 . Key Differences Between House and Senate Bills The following are some key differences between the House and Senate bills with respect to the rural broadband loan and loan guarantee program. Eligible Projects Under current law, projects eligible for rural broadband loans and loan guarantees can only (with some exceptions) serve areas in which 15% or more of households are unserved or have service levels below the minimum acceptable level of broadband service. Additionally, under current law, an eligible service area can have no more than two incumbent broadband service providers. The House bill does not change the current service area eligibility threshold for rural broadband loans and loan guarantees. On the other hand, the Senate bill would require that rural broadband loans, loan guarantees, and grants can only serve areas in which 90% or more of households are unserved or have service levels below the minimum acceptable level of broadband service. The Senate bill also provides that an eligible service area can have no more than one incumbent broadband service provider. Grant Authority Both the House and Senate bills add a grant component to the current farm bill broadband loan and loan guarantee program. In the House bill, grants are only available in combination with associated loans under the rural broadband, electric infrastructure, and telecommunications infrastructure loan and loan guarantee programs. Additionally, project areas must serve hard-to-reach communities—specifically areas with a density of less than 12 service points per road mile and where no incumbent provider delivers fixed terrestrial broadband service at or above the minimum broadband speed. The maximum federal share of a total project cost varies by the density of the project service area, ranging from a 25% to 75% federal share. In the Senate bill, grants are subject to the same service area eligibility criteria as broadband loans and loan guarantees (no less than 90% unserved, no more than one incumbent). The maximum federal share for a grant is 50%, although USDA can adjust the federal share up to 75% if the Secretary determines that the project would serve particularly remote, unserved, and low-income areas. Definition of Minimum Broadband Service Both the House and Senate bills set the minimum broadband service speed at 25 Mbps (download)/3 Mbps (upload), to be reviewed by the Secretary at least once every two years. Additionally, the House bill requires USDA to establish projections of minimum acceptable standards of broadband service for 5, 10, 15, 20, and 30 years into the future. Unless cost prohibitive, projects eligible for a rural broadband loan or loan guarantee must provide broadband service at the minimum level, and must be determined capable of meeting future minimum speed standards over the life of the loan or loan guarantee. Middle Mile Projects The House bill authorizes RUS to make rural broadband loans or loan guarantees to middle mile infrastructure projects, which are defined as any broadband infrastructure that does not connect directly to end user locations (including anchor institutions) and may include interoffice transport, backhaul, internet connectivity, data centers, or special access transport to rural areas. The Senate bill does not contain a middle mile infrastructure provision. Reauthorization Levels For rural broadband loans and loan guarantees, the House bill sets an authorization level of $150 million for each of fiscal years 2019 through 2023. Additionally, the House bill provides $350 million for each of fiscal years 2019 to 2023 for grants to be available in combination with associated loans and loan guarantees. The Senate bill sets an authorization level for broadband loans, loan guarantees, and grants of $150 million for each of fiscal years 2019 through 2023. P.L. 115-334 On December 10, 2018, the conference report ( H.Rept. 115-1072 ) accompanying H.R. 2 , the Agriculture Improvement Act of 2018, was filed. The conference report was agreed to in the House and Senate on December 11 and December 12 respectively. On December 20, 2018, the President signed the bill ( P.L. 115-334 ). The following summarizes the major provisions relevant to RUS broadband programs. Section 6201. Rural Broadband Access Grant, Loan, and Loan Guarantee Program Adds a grant component to the existing program, which is now authorized to provide grants, loans, loan guarantees, and loan/grant combinations. Priority —directs the Secretary to give the highest priority to applications proposing to serve rural communities that do not have any residential broadband service of at least 10 Mbps/1 Mbps. Also receiving high priority are projects that provide the maximum level of broadband service to the greatest proportion of rural households in the proposed service area. Additional priority factors include rural communities with a high percentage of low-income residents, with populations under 10,000, that are experiencing outmigration, that are isolated from other population centers, or that propose to provide broadband for use in various applications of precision agriculture. Projects will also receive priority if they are developed or funded by two or more stakeholders (for example, public-private partnerships). Grant Eligibility and Cost-Sharing —projects eligible for grants (including grant/loan combinations) must be carried out in a proposed service territory in which not less than 90% of the households are unserved. Grants shall not exceed 75% of the total project cost to an area with a density fewer than 7 people per square mile, 50% to an area with a density of 7 to 12 people per square mile, and 25% to an area with a density of 12 to 20 people per square mile. However, the Secretary has the authority to adjust the federal share of a grant up to 75% for an area of rural households without any 10 Mbps/1 Mbps broadband service, or rural communities that are under 10,000 in population, with a high percentage of low-income residents, experiencing outmigration, that are isolated from other population centers, or that are proposing broadband deployment for precision agriculture applications. Additionally, the Secretary may make modifications of the density thresholds to ensure that funds are best utilized to provide broadband service in communities that are the most rural in character. Loan Eligibility —for broadband loans or loan guarantees, eligible proposed service areas must have not less than 50% of households unserved or below the minimum acceptable level (set at 25 Mbps/3 Mbps) of fixed broadband service, whether terrestrial or wireless. P.L. 115-334 raises the previous eligibility threshold from 15% to 50%. Left unchanged is the eligibility requirement that broadband service cannot be provided in any part of the proposed service territory by three or more incumbent service providers. Broadband Buildout Requirements —allows five years for applicants to complete the buildout of a project (up from three years). Requires the Secretary to set a current minimum acceptable standard of broadband service of 25 Mbps/3 Mbps, and to establish projections of minimum acceptable standards of broadband service of a project for 5 to 10 years, 11 to 15 years, 16 to 20 years, and more than 20 years into the future. The Secretary shall review and may adjust those minimum levels at least once every two years. Projects eligible for a rural broadband loan or loan guarantee must provide broadband service at the minimum level, and must be determined capable of meeting future minimum speed standards over the life of the loan or loan guarantee. However, if an applicant shows that it would be cost prohibitive to meet the minimum acceptable level of broadband service for the entirety of a proposed service territory due to its unique characteristics, the Secretary and the applicant may agree to utilize substitute standards for any unserved portion of the project. Technical Assistance and Training —the Secretary may provide to eligible applicants technical assistance and training to prepare applications, including required reports and surveys, and to improve financial management relating to the proposed project. Only applicants proposing to serve communities without residential broadband service of at least 10 Mbps/1 Mbps are eligible for technical assistance and training. Not less than 3% and not more than 5% of the annual appropriation for the broadband grant, loan, and loan guarantee program shall be used for technical assistance and training. Guaranteed Loan Fees —requires the Secretary to charge lenders of guaranteed loans a fee to offset subsidy costs. Fees shall be in such amounts as to bring down the cost of subsidies for guaranteed loans, but that do not act as a bar to participation in the program. Payment Assistance for Certain Loan and Grant Recipients —allows the Secretary to award grant funding—subject to agreed project milestones, objectives, and other considerations—that would allow a loan recipient to receive the benefit of a subsidized loan (with reduced interest rates) or a payment assistance loan. Authorization —sets an authorization level of $350 million for each of fiscal years 2019 through 2023 (up from $25 million per year), and delays the termination of authority to make loans and loan guarantees until September 30, 2023. Section 6202. Expansion of Middle Mile Infrastructure into Rural Areas Authorizes $10 million for each of fiscal years 2018 through 2023 for grants, loans, and loan guarantees toward middle mile infrastructure projects. Middle mile infrastructure connects underserved rural areas to the internet backbone; it does not connect directly to end-user locations. A project is eligible if at least 75% of the interconnection points serve eligible rural areas. A grant cannot exceed 20% of the total project cost. Section 6203. Modifications to the Rural Gigabit Program Renames the Rural Gigabit Network Pilot Program (which was authorized in the 2014 farm bill but never funded through appropriations) as the Innovative Broadband Advancement Program, which is authorized to provide a grant, a loan, or both to an eligible entity to demonstrate innovative broadband technologies or methods of broadband deployment that significantly decrease the cost of deployment and provide substantially faster broadband speeds than are available in a rural area. The program is authorized at $10 million for each of fiscal years 2018 through 2023. Section 6204. Community Connect Grant Program Codifies the existing Community Connect Grant Program and authorizes the program at $50 million for each of fiscal years 2018 through 2023. Defines an eligible service area as having broadband service capacity less than speeds of 10 Mbps download and 1 Mbps upload. Section 6205. Outdated Broadband Systems Requires the Secretary, beginning on October 1, 2020, to consider any portion of a service territory subject to an outstanding grant agreement as unserved for the purposes of broadband loan programs if broadband service is not provided at a minimum of 10 Mbps/1 Mbps, unless the broadband provider has begun or already constructed broadband facilities in that area which would meet the minimum acceptable broadband service standard. Section 6206. Default and Deobligation; Deferral Requires the Secretary to establish written procedures for all broadband programs to recover funds from loan and grant defaults, deobligate awards that demonstrate an insufficient level of performance or fraudulent spending, award those funds on a competitive basis to new or existing applicants, and minimize overlap among programs. The Secretary may establish a deferral period of not shorter than the buildout period established for the project in order to support the financial feasibility and long-term sustainability of the project. Section 6207. Public Notice, Assessments, and Reporting Requirements Public Notice —requires the Secretary to make available to the public a fully searchable database on the RUS website that contains information on all broadband projects provided assistance or for which assistance is sought. Service Area Assessment —after giving public notice for a particular project seeking assistance, the Secretary shall provide 45 days for providers to voluntarily submit information indicating their presence in a proposed service area. If no existing provider submits such information, the Secretary may collect or obtain through reasonable efforts any other data on existing providers. In the case of applications requesting funding for unserved rural areas, the Secretary shall confirm unserved rural areas by conferring with the FCC and NTIA, reviewing any other source relevant to service data validation, and performing site-specific testing to verify the unavailability of any retail broadband service. Reporting —the Secretary shall require entities receiving assistance to provide an annual report for three years after completion of the project that describes the use by the entity of the assistance and the progress toward fulfilling the objectives of the project. Middle mile project recipients are required to submit a semiannual report for five years after project completion. The recipient of assistance shall also provide complete, reliable, and precise geolocation information that indicates the location of new broadband service that is being provided. The Secretary is also required to submit an annual report to Congress that describes the extent of participation in the RUS broadband assistance programs for the preceding fiscal year. Section 6208. Environmental Reviews The Secretary may obligate, but not disperse, funds before the completion of otherwise required environmental, historical, or other types of reviews if the Secretary determines that a subsequent site-specific review shall be adequate and easily accomplished for the location of towers, poles, or other broadband facilities in the service area of the borrower without compromising the project or the required reviews. Section 6209. Use of Loan Proceeds to Refinance Loans for Deployment of Broadband Service The proceeds of any loan or loan guarantee may be used by the recipient for the purpose of refinancing an outstanding obligation on another telecommunications loan. Section 6210. Smart Utility Authority for Broadband Allows a recipient of grants, loans, or loan guarantees provided by the Office of Rural Development to use not more than 10% of the amount for rural broadband infrastructure projects, including both retail and nonretail activities, except for a recipient who is seeking to provide retail broadband service in any area where such service is available at the minimum broadband speeds. Additionally allows a recipient of electric grants, loans, or loan guarantees to set aside not more than 10% of the amount for retail broadband service, for use only in an area that is not being provided with the minimum acceptable level of broadband service. The funding cannot result in competitive harm to any existing grant, loan, or loan guarantee under the Rural Electrification Act of 1936. Section 6211. Refinancing of Telephone Loans Clarifies that the Secretary, through the RUS telephone loan program, may refinance loans of persons furnishing telephone service in rural areas, including indebtedness of recipients on another telecommunications loan made under the Rural Electrification Act. Also strikes the current law limitation that the refinancing may not constitute more than 40% of the loan. Section 6212. Federal Broadband Coordination Consultation between USDA and NTIA —USDA shall consult with NTIA to assist in the verification of eligibility for USDA broadband programs. To this end, NTIA shall make available its broadband assessment and mapping capabilities. Consultation between USDA and FCC —USDA shall consult with the FCC before providing broadband assistance for a project to serve an area with respect to which another entity is receiving Connect America Fund or Mobility Fund support. The FCC shall consult with USDA before offering Connect America Fund or Mobility Fund support to serve an area with respect to which another entity has received RUS broadband assistance. Report to Congress —USDA, the FCC, and NTIA shall submit to Congress a report on how best to coordinate federally supported broadband programs and activities in order to achieve various objectives regarding long-term broadband service needs of rural residents. Section 6213. Transition Rule Provides that for one year after enactment, the Secretary shall use the previously existing rules and regulations for the broadband loan and Community Connect grant program until a final rule is issued. Section 6214. Rural Broadband Integration Working Group Establishes an interagency Rural Broadband Integration Working Group that shall consult with a wide spectrum of stakeholders to identify, assess, and determine possible actions relating to barriers and opportunities for broadband deployment in rural areas. Not later than 60 days after enactment, the Working Group shall publish a comprehensive survey of federal programs that currently support or could reasonably be modified to support broadband deployment and adoption; and all federal agency policies and rules with the direct or indirect effect of facilitating or regulating investment in, or deployment of, wired and wireless broadband networks. The Working Group will submit to the President a list of actions that federal agencies can take to support broadband deployment and adoption, including timelines to complete a list of priority actions and rulemakings. Other Broadband-Related Provisions Section 6101 sets aside 20% of DLT grant funding for applications related to substance use disorder treatment services; Section 6102 reauthorizes the DLT program through FY2023 at $82 million per year; Section 6418 requires the Secretary to collect fees on loan guarantees in amounts that when combined with any appropriated funds equal the subsidy on such guarantees. The Secretary shall charge and collect from the lender fees in such amounts as to bring down the costs of subsidies for the guaranteed loan, except that the fees shall not act as a bar to participation in the program nor be inconsistent with current practices in the marketplace; and Section 12511 establishes the Task Force for Reviewing the Connectivity and Technology Needs of Precision Agriculture in the United States. The Task Force will develop policy recommendations to promote deployment of broadband on unserved agricultural land, with a goal of achieving reliable capabilities on 95% of agricultural land in the United States by 2025. Other Legislation in the 115th Congress Aside from the 2018 farm bills and annual appropriations legislation, the following bills were introduced into the 115 th Congress seeking to impact the RUS broadband programs: H.R. 800 (Huffman), introduced on February 1, 2017, as the New Deal Rural Broadband Act of 2017, would establish an Office of Rural Broadband within USDA; authorize a "Breaking Ground on Rural Broadband Program" to make grants, loans, or loan guarantees to eligible entities for serving rural and underserved areas ($20 billion to remain available until September 30, 2022); establish a Tribal Broadband Assistance Program ($25 million for each of fiscal years 2017 through 2022); establish a broadband grant program to accompany the Rural Broadband Loan program; modify the Telecommunications Infrastructure Loan program by raising the threshold for an eligible rural area from 5,000 to 20,000 population and by permitting RUS to give preference to loan applications that support regional telecommunications development; and direct USDA to establish and maintain an inventory of any real property that is owned, leased, or otherwise managed by the federal government on which a broadband facility could be constructed, as determined by the Under Secretary for Rural Broadband Initiatives. Referred to the Committee on Agriculture, and in addition to the Committees on Natural Resources and Energy and Commerce. H.R. 1084 (Kelly of Illinois), introduced on February 15, 2017, as the Today's American Dream Act, would direct GAO to submit to Congress a report on the efficiency and effectiveness of efforts by federal agencies to expand access to broadband service, including the RUS telecommunications and broadband programs. Referred to the Committee on Ways and Means, and in addition to the Committees on Education and the Workforce, Agriculture, Financial Services, Small Business, Energy and Commerce, the Judiciary, and Oversight and Government Reform. H.R. 4232 (Pocan), introduced on November 2, 2017, as the Broadband Connections for Rural Opportunities Program (BCROP) Act, would amend Section 601 of the Rural Electrification Act of 1936 (7 U.S.C. 950bb) to establish a broadband grant program to accompany the Rural Broadband Loan program. Also would raise the broadband loan program authorization from $25 million to $50 million. Referred to the Committees on Energy and Commerce and on Agriculture. H.R. 4291 (Stefanik), introduced on November 7, 2017, as the Precision Farming Act, would utilize Rural Utilities Service loans and loan guarantees under the rural broadband access program to provide broadband service for agricultural producers, and would provide universal service support for installation charges for broadband service for agricultural producers in order to improve precision farming and ranching. Referred to the Committees on Energy and Commerce and on Agriculture. H.R. 4308 (Lujan Grisham), introduced on November 8, 2017, as the Rural Broadband Expansion Act, would authorize the Rural Utility Service's Community Connect broadband grant program at $100 million for each of fiscal years 2019 through 2023. Referred to the Committees on Agriculture and on Energy and Commerce. H.R. 5172 (O'Halleran), introduced on March 6, 2018, would assist Indian tribes in maintaining, expanding, and deploying broadband systems. Referred to the Committee on Agriculture, and in addition to the Committee on Energy and Commerce. H.R. 5213 (Hartzler), introduced on March 8, 2018, would prohibit the Rural Utilities Service from providing assistance for the provision of broadband service with a download speed of less than 25 megabits per second or an upload speed of less than 3 megabits per second, and clarify the broadband loan and loan guarantee authority provided in Section 601 of the Rural Electrification Act of 1936. Referred to the Committee on Agriculture, and in addition to the Committee on Energy and Commerce. H.R. 6073 (Cramer), introduced on June 12, 2018, as the RURAL Broadband Act of 2018, would prohibit USDA from providing broadband loans or grants for projects that overbuild or otherwise duplicate broadband networks operated by another provider that have received universal service support from the FCC or previous broadband assistance from RUS. Referred to the Committee on Agriculture, and in addition to the Committee on Energy and Commerce. S. 1676 (Gillibrand), introduced on July 31, 2017, as the Broadband Connections for Rural Opportunities Program (BCROP) Act, would amend Section 601 of the Rural Electrification Act of 1936 (7 U.S.C. 950bb) to establish a broadband grant program to accompany the Rural Broadband Loan program. Also would raise the broadband loan program authorization from $25 million to $50 million. Referred to the Committee on Agriculture, Nutrition, and Forestry. S. 2654 (Smith), introduced on April 12, 2018, as the Community Connect Grant Program Act of 2018, would amend the Rural Electrification Act of 1936 to authorize the Community Connect Grant Program at an annual level of $50 million per year. Defines "eligible broadband service" as operating at or above the applicable minimum download and upload speeds established by the FCC in defining the term "advanced telecommunications capability." Referred to Committee on Agriculture, Nutrition, and Forestry. S. 2970 (Daines), introduced on May 24, 2018, as the RURAL Broadband Act of 2018, would prohibit USDA from providing broadband loans or grants for projects that overbuild or otherwise duplicate broadband networks operated by another provider that have received universal service support from the FCC or previous broadband assistance from RUS. Referred to the Committee on Agriculture, Nutrition, and Forestry. S. 3080 (Murkowski), introduced on June 18, 2018, as the Food Security, Housing, and Sanitation Improvements in Rural, Remote, and Frontier Areas Act of 2018, would amend the Rural Electrification Act of 1936 to include a satellite project or technology within the definition of broadband service. Referred to the Committee on Agriculture, Nutrition, and Forestry. S. 3360 (Wyden), introduced August 21, 2018, as the Broadband Internet for Small Ports Act, would establish priority for small harbors to receive RUS broadband funding. Referred to the Committee on Agriculture, Nutrition, and Forestry. Appendix. Rural Development Telecom Awards

Given the large potential impact broadband access may have on the economic development of rural America, concern has been raised over a "digital divide" between rural and urban or suburban areas with respect to broadband deployment. While there are many examples of rural communities with state-of-the-art telecommunications facilities, recent surveys and studies have indicated that, in general, rural areas tend to lag behind urban and suburban areas in broadband deployment. According to the Federal Communications Commission's Communications Marketplace Report, as of 2017, 24% of Americans in rural areas lacked coverage from fixed terrestrial 25 Mbps/3 Mbps broadband, as compared to only 1.5% of Americans in urban areas. The comparatively lower population density of rural areas is likely a major reason why broadband is less deployed than in more highly populated suburban and urban areas. Particularly for wireline broadband technologies—such as cable modem and fiber—the greater the geographical distances among customers, the larger the cost to serve those customers. The Rural Utilities Service (RUS) at the U.S. Department of Agriculture (USDA) houses three ongoing assistance programs exclusively created and dedicated to financing broadband deployment: the Rural Broadband Access Loan and Loan Guarantee Program, the Community Connect Grant Program, and the ReConnect Program. Additionally, the Telecommunications Infrastructure Loan and Loan Guarantee Program (previously the Telephone Loan Program) funds broadband deployment in rural areas. Distance Learning and Telemedicine (DLT) grants—while not principally supporting connectivity—fund equipment and software that operate via telecommunications to rural end-users of telemedicine and distance learning applications. The Consolidated Appropriations Act, 2019 (P.L. 116-6) provided $5.83 million to subsidize a rural broadband loan level of $29.851 million, $30 million to Community Connect broadband grants, $47 million for DLT grants, and $1.725 million in loan subsidies for a total loan level of $690 million for the Telecommunications Infrastructure Loan and Loan Guarantee Program. P.L. 116-6 also provided $550 million for the ReConnect Program, which is in addition to the $600 million provided in the 2018 Consolidated Appropriations Act. The Administration's FY2020 budget proposal requested zero funding for Rural Broadband Access Loans, $200 million for the ReConnect Program, $1.933 million in budget authority to subsidize a loan level of $690 million for Telecommunications Infrastructure Loans and Loan Guarantees, $30 million for Community Connect Grants, and $43.6 million for Distance Learning and Telemedicine Grants. On December 20, 2018, the President signed the 2018 farm bill (P.L. 115-334, Agriculture Improvement Act of 2018). Regarding the RUS broadband programs, the act includes provisions authorizing a grant component in combination with the broadband loan program; increasing 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. In the 116th Congress, appropriations will determine the extent to which these programs will be funded.

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Introduction The leaders of the eight legislative branch agencies and entities—the Government Accountability Office, the Library of Congress, the Government Publishing Office (formerly Government Printing Office), the Office of the Architect of the Capitol, the U.S. Capitol Police, the Congressional Budget Office, the Congressional Research Service, and the Office of Compliance—are appointed in a variety of manners. The first four agencies are led by a person appointed by the President, with the advice and consent of the Senate. The next two are appointed by Congress, the next by the Librarian of Congress, and the last by a board of directors. Congress has periodically examined the procedures used to appoint legislative branch officers with the aim of protecting the prerogatives of, and ensuring accountability to, Congress within the framework of the advice and consent appointment process established in Article II, Section 2 of the Constitution. Legislation to alter the appointment process for legislative branch agencies and entities has periodically been introduced for many years. Questions remain about various reform proposals, including the ability of Congress to remove the President from the appointment process for some of these positions. These may depend upon the implication or interpretation of the Appointments Clause of the Constitution, the definition of an "officer of the United States," the specific office or agency in question, and whether or not a change in appointing authority would require any revision in the powers and duties of legislative branch agency leaders. Some previous reforms and proposals have also attempted to find a role for the House of Representatives, which does not play a formal role in the confirmation of presidential nominees, in the search for legislative branch officials. The report also briefly addresses legislation considered, but not enacted, in the 115 th Congress to change the appointment process for the Register of Copyrights. Overview by Legislative Branch Agency or Entity The following sections contain information on the legislative branch agency heads' appointment processes, length of tenures (if terms are set), reappointment or removal provisions (if any), salaries and benefi ts, and most recent appointments. Information is provided on each agency and summarized in Table 1 . Architect of the Capitol Pursuant to the Legislative Branch Appropriations Act, 1990, the Architect is "appointed by the President by and with the advice and consent of the Senate for a term of 10 years." The act also established a congressional commission responsible for recommending individuals to the President for the position of Architect of the Capitol. The commission, originally consisting of the Speaker of the House of Representatives, the President pro tempore of the Senate, the majority and minority leaders of the House of Representatives and the Senate, and the chairs and the ranking minority Members of the Committee on House Administration and the Senate Committee on Rules and Administration, was expanded in 1995 to include the chairs and ranking minority Members of the House and Senate Appropriations Committees. Prior to 1989, the Architect was selected by the President for an unlimited term without any formal involvement of Congress. The FY1990 act, however, followed numerous attempts dating at least to the 1950s to alter the appointment procedure to provide a role for Congress. The proposals included requiring the advice and consent of the Senate, establishing a commission to recommend names to the President, and removing the appointment process from the President and instead making the Architect appointed solely by Congress. In the 111 th Congress, two measures ( H.R. 2185 and H.R. 2843 ) were introduced to remove the President from the Architect appointment process and shift it to congressional leaders and chairs and ranking Members of specific congressional committees. Under both measures, the Architect would still serve a 10-year term. Under H.R. 2843 , as reported, the Architect would have been appointed jointly by the same 14-member panel, equally divided between the House and Senate, that currently is responsible for recommending candidates to the President. This bill was reported by the Committee on House Administration ( H.Rept. 111-372 ) on December 10, 2009. The Committee on Transportation and Infrastructure was discharged from further consideration the same day. The House agreed to the bill, as amended to include an 18-member panel, also equally divided between the House and Senate, by voice vote on February 3, 2010. H.R. 2843 was received in the Senate and referred to the Committee on Rules and Administration, although no further action was taken. Under the earlier bill ( H.R. 2185 , 111 th Congress), which was introduced on April 30, 2009, the Architect would have been appointed jointly by the Speaker of the House, the Senate majority leader, the minority leaders in the House and Senate, the chairs and ranking minority Members of the House and Senate Committees on Appropriations, and the chairs and ranking minority Members of the Committee on House Administration and Senate Committee on Rules and Administration. This bill followed similar legislation ( H.R. 6656 , 110 th Congress), with the same 12-member appointing panel, introduced on July 30, 2008. Both bills were referred to two committees, but no further action was taken. The Architect of the Capitol is compensated at an "annual rate which is equal to the lesser of the annual salary for the Sergeant at Arms of the House of Representatives or the annual salary for the Sergeant at Arms and Doorkeeper of the Senate." Most Recent Appointment Stephen T. Ayers was nominated by President Obama for a 10-year term on February 24, 2010. He was the second Architect nominated pursuant to the new commission procedure. The nomination was referred to the Senate Committee on Rules and Administration. The committee held a hearing on April 15, 2010, and Ayers was confirmed by unanimous consent in the Senate on May 12, 2010. Ayers was previously the Deputy Architect/Chief Operating Officer and had served as Acting Architect of the Capitol following the February 4, 2007, retirement of former Architect of the Capitol Alan Hantman. Upon the retirement of Ayers on November 23, 2018, Christine Merdon, the Deputy Architect of the Capitol/Chief Operating Officer, became the Acting Architect of the Capitol. Government Accountability Office Pursuant to 31 U.S.C. 703(a)(1), the Comptroller General shall be "appointed by the President, by and with the advice and consent of the Senate." This procedure dates to the establishment of the agency in 1921. Additionally, a commission procedure established in 1980 recommends individuals to the President in the event of a vacancy. The commission consists of the Speaker of the House, the President pro tempore of the Senate, the majority and minority leaders of the House and Senate, the chairs and ranking minority Members of the Senate Committee on Homeland Security and Governmental Affairs and the House Committee on Oversight and Government Reform. The commission is to recommend at least three individuals for this position to the President, although the President may request additional names. The Comptroller General is appointed to a 15-year term and may not be reappointed. The Comptroller General may be removed by "(A) impeachment; or (B) joint resolution of Congress, after notice and an opportunity for a hearing" and only by reason of permanent disability; inefficiency; neglect of duty; malfeasance; or a felony or conduct involving moral turpitude. The salary of the Comptroller General is equal to Level II of the Executive Schedule. Additionally, a law enacted in 1953 established a separate retirement system for the Comptroller General. Most Recent Appointment Gene L. Dodaro, then-Chief Operating Officer at GAO, became the acting Comptroller General on March 13, 2008, upon the resignation of David M. Walker, who had previously been confirmed on October 21, 1998. The White House announced Dodaro's nomination to a 15-year term as Comptroller General on September 22, 2010. The Senate Committee on Homeland Security and Governmental Affairs held a hearing on the nomination on November 18, 2010, and Dodaro was confirmed by the Senate by unanimous consent on December 22, 2010. Government Publishing Office The Government Publishing Office (formerly Government Printing Office) was established in 1861. The U.S. Code , at 44 U.S.C. 301, states that the President "shall nominate and, by and with the advice and consent of the Senate, appoint a suitable person to take charge of and manage the Government Publishing Office. The title shall be Director of the Government Publishing Office." The current appointment language was enacted in 2014, although the use of the advice and consent procedure for this position can be traced back much further. There is no set term of office for the Director. The Director's pay is equivalent to Level II of the Executive Schedule. Most Recent Appointment Robert C. Tapella was nominated to be Director of the Government Publishing on June 18, 2018. The nomination was referred to the Committee on Rules and Administration. No further action was taken prior to the end of the 115 th Congress, and the nomination was returned to the President pursuant to Senate Rule XXXI. President Trump renominated Tapella on January 16, 2019. The nomination was referred to the Committee on Rules and Administration. Previously, Tapella served in this role from October 4, 2007 (confirmed by the Senate by voice vote) until December 28, 2010. GPO's Chief Administrative Officer, Herbert H. Jackson Jr., has served as Acting Deputy Director since July 1, 2018, following the retirement of Andrew M. Sherman. Sherman, formerly GPO's Chief of Staff, had been serving as Acting Deputy Director since the retirement of Acting GPO Director Jim Bradley on March 6, 2018. Bradley, previously the GPO Deputy Director, had assumed this role following the departure of the previous Director, Davita Vance-Cooks, in November 2017. Vance-Cooks had been nominated by President Obama on May 9, 2013, to be Public Printer, as the head of the GPO was then known, and confirmed by the Senate by voice vote on August 1, 2013. Library of Congress The Library of Congress was established in 1800. The U.S. Code , at 2 U.S.C. 136, states: "The Librarian of Congress shall make rules and regulations for the government of the Library." Until an act of February 19, 1897, which made the appointment subject to the advice and consent of the Senate, the Librarian was appointed solely by the President. Recent changes to the appointment statute, at 2 U.S.C. 136-1, amended the tenure of the Librarian. The Librarian of Congress Succession Modernization Act of 2015, S. 2162 , was introduced in the Senate on October 7, 2015, and agreed to the same day by unanimous consent. It was agreed to in the House without objection on October 20 and signed by President Obama on November 5, 2015 ( P.L. 114-86 ). The act establishes a term limit of 10 years, with the possibility of reappointment by the President, by and with the advice and consent of the Senate. Previously, there was no set term of office for the Librarian. The U.S. Code , at 2 U.S.C. 136a-2, states: "the Librarian of Congress shall be compensated at an annual rate of pay which is equal to the annual rate of basic pay payable for positions at Level II of the Executive Schedule under section 5313 of title 5." Most Recent Appointment Carla D. Hayden was nominated to a 10-year term as Librarian of Congress by President Obama on February 24, 2016. The Senate Committee on Rules and Administration held a hearing on the nomination on April 20, 2016, and ordered the nomination favorably reported on June 9. Hayden was confirmed as the 14 th Librarian of Congress on July 13, 2016 (74-18, record vote number 128). Hayden succeeded James H. Billington who retired effective September 30, 2015. Billington had been confirmed as Librarian of Congress by the Senate on July 24, 1987. Congressional Research Service The Legislative Reorganization Act of 1970 provides that the Librarian of Congress appoint the Director of the Congressional Research Service (CRS) "after consultation with the Joint Committee on the Library." The basic rate of pay for the director is equivalent to Level III of the Executive Schedule. There is no set term of office. Most Recent Appointment Mary B. Mazanec, who served as Acting Director of CRS following the retirement of former Director Daniel P. Mulhollan on April 2, 2011, was appointed Director by the Librarian of Congress on December 5, 2011. U.S. Capitol Police 2 U.S.C. 1901 states: "There shall be a captain of the Capitol police and such other members with such rates of compensation, respectively, as may be appropriated for by Congress from year to year. The Capitol Police shall be headed by a Chief who shall be appointed by the Capitol Police Board and shall serve at the pleasure of the Board." The last sentence was inserted in 1979, struck by the FY2003 Consolidated Appropriations Resolution, and restored in 2010 by the U.S. Capitol Police Administrative Technical Corrections Act. Pursuant to the FY2003 act, the chief of the Capitol Police receives compensation "equal to $1,000 less than the lower of the annual rate of pay in effect for the Sergeant-at-Arms of the House of Representatives or the annual rate of pay in effect for the Sergeant-at-Arms and Doorkeeper of the Senate." Pay for the chief has been adjusted multiple times in recent years: it formerly was (1) equal to Level IV of the Executive Schedule under 1979 legislation, (2) linked to the Senior Executive Service under an act from 2000, and (3) equal to $2,500 less than these officers pursuant to a 2002 law. Most Recent Appointment On February 24, 2016, the Capitol Police Board announced the appointment of Matthew R. Verderosa as the new Chief of the U.S. Capitol Police, effective March 20, 2016. Previously, Chief Kim Dine was sworn in on December 17, 2012. Congressional Budget Office The director of the Congressional Budget Office (CBO) has been appointed wholly by Congress since the creation of the post with the passage of the Congressional Budget Act in 1974. The act stipulates that the director is appointed for a four-year term "by the Speaker of the House of Representatives and the President pro tempore of the Senate after considering recommendations received from the Committees on the Budget of the House and the Senate, without regard to political affiliation and solely on the basis of his fitness to perform his duties." The director may be reappointed, and either chamber can remove the director by simple resolution. Additionally, a director appointed "to fill a vacancy prior to the expiration of a term shall serve only for the unexpired portion of that term" and an "individual serving as Director at the expiration of a term may continue to serve until his successor is appointed." The director of CBO receives compensation at an annual rate that is equal to the lower of the highest annual rate of compensation of any officer of the House or any officer of the Senate. Most Recent Appointment Keith Hall, the current director of CBO, began his service on April 1, 2015. He follows Douglas W. Elmendorf, who began his term on January 22, 2009. Office of Compliance 2 U.S.C. 1382 states that the chair of the board of directors of the Office of Compliance, "subject to the approval of the Board, shall appoint and may remove an Executive Director. Selection and appointment of the Executive Director shall be without regard to political affiliation and solely on the basis of fitness to perform the duties of the Office." The executive director must be "an individual with training or expertise in the application of laws referred to in section 1302(a)" of Title II of the U.S. Code . The FY2008 Consolidated Appropriations Act altered the compensation for the Office's statutorily established positions, including that of the executive director. The chair of the board may fix the annual rate of pay for the executive director, although the level may not exceed the lesser of House or Senate officers. Prior to the FY2008 act, the maximum pay for this position had been Level V of the Executive Schedule. Separate legislation, P.L. 110-164 , amended the Congressional Accountability Act and altered eligibility and tenure restrictions for the executive director by allowing current or former Office of Compliance employees to serve in this capacity. The legislation also permits the executive director, deputy executive directors, and general counsel, who formerly were limited to one five-year term in their positions, to serve up to two terms. Most Recent Appointment Susan Tsui Grundmann was appointed to a five-year term as executive director commencing January 2017. She succeeded Barbara J. Sapin, who was appointed in 2013. Proposals Related to the Register of Copyrights in the 115th Congress During the 115 th Congress, the House and Senate considered legislation that would alter the appointment of one position within one of these agencies—the Register of Copyrights. Under current law pertaining to the copyright office (17 U.S.C. 701): All administrative functions and duties ... are the responsibility of the Register of Copyrights as director of the Copyright Office of the Library of Congress. The Register of Copyrights, together with the subordinate officers and employees of the Copyright Office, shall be appointed by the Librarian of Congress, and shall act under the Librarian's general direction and supervision. H.R. 1695 and S. 1010 , the Register of Copyrights Selection and Accountability Act, would have made the Register of Copyrights a presidential appointment, subject to the advice and consent of the Senate. The legislation would have established a seven-person panel to recommend at least three candidates for this position to the President. The panel would consist of the Speaker of the House, President pro tempore of the Senate, majority and minority leaders in the House and Senate, and Librarian of Congress. The bills would have established a 10-year term of office for the Register. H.R. 1695 was reported by the House Judiciary Committee on April 20, 2017 ( H.R. 1695 , H.Rept. 115-91 ), and passed in the House, as amended, on April 26 (378–48, Roll no. 227). The Senate Committee on Rules and Administration held a hearing on September 26, 2018. A Senate committee markup of S. 1010 initially scheduled for December 12, 2018, was postponed. No further action was taken during the 115 th Congress. The office is currently led by Acting Register of Copyrights Karyn A. Temple, who was named to the position by Librarian of Congress Carla Hayden on October 21, 2016.

The leaders of the legislative branch agencies and entities—the Government Accountability Office (GAO), the Library of Congress (LOC), the Congressional Research Service (CRS), the Government Publishing Office (GPO, formerly Government Printing Office), the Office of the Architect of the Capitol (AOC), the U.S. Capitol Police (USCP), the Congressional Budget Office (CBO), and the Office of Compliance—are appointed in a variety of manners. Four agencies are led by a person appointed by the President, with the advice and consent of the Senate; two are appointed by Congress; one is appointed by the Librarian of Congress; and one is appointed by a board of directors. Congress has periodically examined the procedures used to appoint these officers with the aim of protecting the prerogatives of, and ensuring accountability to, Congress within the framework of the advice and consent appointment process established in Article II, Section 2 of the Constitution. This report contains information on the legislative branch agency heads' appointment processes, length of tenures (if terms are set), reappointment or removal provisions (if any), salaries and benefits, and most recent appointments. This report also briefly addresses legislation considered, but not enacted, in the 115th Congress to change the appointment process for the Register of Copyrights.

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Background U.S. Code, Title 10, Section 5063, United States Marine Corps: Composition and Functions, dated October 1, 1986, states the following: The Marine Corps will be organized, trained and equipped to provide an amphibious and land operations capability to seize advanced naval bases and to conduct naval land campaigns. In this regard, the Marines are required by law to have the necessary equipment to conduct amphibious operations and land operations. The ACV and MPC were considered integral systems by the Department of Defense (DOD) and Marine Corps to meet this legal requirement, as well as providing critical capabilities to execute the nation's military strategy. On January 6, 2011, after spending approximately $3 billion in developmental funding, the Marine Corps—with "encouragement" from DOD—cancelled the Expeditionary Fighting Vehicle (EFV) program. The EFV was intended to replace the 40-year-old Amphibious Assault Vehicle (AAV), which currently transports Marines from ships to shore under hostile conditions. The Marine Corps cancelled the EFV due to excessive cost growth and poor performance in operational testing. Recognizing the need to replace the AAV, the Pentagon pledged to move quickly to develop a "more affordable and sustainable" vehicle to take the place of the EFV. The Amphibious Combat Vehicle (ACV) is intended to replace the AAV, incorporating some EFV capabilities but in a more practical and cost-efficient manner. In concert with the ACV, the Marines were developing the Marine Personnel Carrier (MPC) to serve as a survivable and mobile platform to transport Marines when ashore. At present, the Marines do not have a wheeled armored fighting vehicle that can operate as a dedicated infantry carrier with Marine maneuver forces inland. The MPC was not intended to be amphibious like an AAV, EFV, or the ACV but instead would be required to have a swim capability for inland waterways such as rivers, lakes, and other water obstacles such as shore-to-shore operations in the littorals. Because of a perceived amphibious "redundancy," some have questioned the need for both the ACV and MPC. In June 2013, citing budgetary pressures, the Marines reportedly put the MPC program "on ice" and suggested that it might not be resurrected for about 10 years. Although some have questioned why the Marines cannot simply "adopt" a U.S. Army personnel carrier, Marine requirements for a personnel carrier reflect the need for this vehicle to be compatible with amphibious assault craft, as well as to have an enhanced amphibious capability, which is not necessarily an Army requirement. With the Marines involved in decades-long land conflicts in Iraq and Afghanistan and proliferating anti-access technologies such as guided missiles, some analysts questioned whether the Marines would ever again be called on to conduct a large-scale amphibious assault operation. In response to these questions and the perceived need to examine the post-Iraq and Afghanistan Marine Corps, the Department of the Navy and DOD studied the requirement to conduct large-scale amphibious operations and in early 2012 released a strategic vision for how amphibious operations will be conducted in the future. The primary assertion of this study is that the Marine Corps' and Navy's amphibious capabilities serve a central role in the defense of the global interests of a maritime nation. The need to maintain an amphibious assault capability is viewed by Marine Corps leadership as establishing the requirement for the ACV and MPC (as discussed in greater detail below). Significance for Congress Congress is responsible for authorizing and appropriating funds for all weapon systems programs, including the ACV. In its oversight role, Congress could be concerned about how the ACV enables the Marines to conduct not only amphibious operations but also operations ashore. Another possible congressional concern is to what extent a robust amphibious assault capability is a necessary component of U.S. national security. Cost is another issue of interest to Congress. The Marines' Justification for the ACV and MPC ACV At present, the Marines use the AAV-7A1 series amphibious assault vehicle to move Marines from ship to shore. The Marines have used the AAV since 1971 and expect to continue to use it until replaced by the ACV or a similar vehicle. Over the years, the Marines have claimed the AAV has become increasingly difficult to operate, maintain, and sustain. As weapons technology and threat capabilities have evolved since the early 1970s, the AAV—despite upgrades—is viewed as having capabilities shortfalls in the areas of water and land mobility performance, lethality, protection, and network capability. The AAV's two-mile ship-to-shore range is viewed by many as a significant survivability issue not only for the vehicle itself but also for naval amphibious forces. MPC Although the AAV has some armor protection and can operate inland to a limited extent, it is not intended for use as an infantry combat vehicle. The Marines do have the LAV-25, Light Armored Vehicle-25, an eight-wheeled armored vehicle that carries a crew of three and six additional marines. The LAV-25 is armed with a 25 mm chain gun and a 7.62 mm machine gun but is not fully amphibious, as it cannot cross a surf zone and would get to the beach via some type of connector such as the Landing Craft, Air Cushioned (LCAC). The LAV-25 has been in service since 1983. According to the Marine Program Executive Office (PEO) Land Systems, the LAV is not employed as an armored personnel carrier and usually carries a four-person Marine scout/reconnaissance team in addition to its crew. In this regard, the MPC was viewed as necessary by Marine leadership for the transport and enhanced armor protection of Marine infantry forces. Desired Operational Capabilities ACV4 The Marines' 2011 Request for Information (RFI) to industry provides an overview of the operational requirements for the ACV. These requirements include the following: The proposed vehicle must be able to self-deploy from amphibious shipping and deliver a reinforced Marine infantry squad (17 marines) from a launch distance at or beyond 12 miles with a speed of not less than 8 knots in seas with 1-foot significant wave height and must be able to operate in seas up to 3-foot significant wave height. The vehicle must be able to maneuver with the mechanized task force for sustained operations ashore in all types of terrain. The vehicle's road and cross-country speed as well as its range should be greater than or equal to the M-1A1. The vehicle's protection characteristics should be able to protect against direct and indirect fire and mines and improvised explosive device (IED) threats. The vehicle should be able to accommodate command and control (C2) systems that permit it to operate both at sea and on land. The vehicle, at a minimum, should have a stabilized machine gun in order to engage enemy infantry and light vehicles. MPC6 The Marine Corps' 2011 Request for Information (RFI) to industry provided an overview of the operational requirements for the MPC. These requirements included the following: The vehicle must accommodate nine marines and two crew members and have a "robust tactical swim capability (shore-to-shore [not designed to embark from an amphibious ship]) and be capable of operating at 6 knots in a fully developed sea." The vehicle must be able to operate on land with M-1A1s in mechanized task forces across the Marine Corps' mission profile. The vehicle shall provide protection for the occupants from the blasts, fragments, and incapacitating effects of attack from kinetic threats, indirect fire, and improvised explosive devices and mines. The vehicle shall be capable of firing existing Marine anti-structure and anti-armor missiles and should be able to accommodate existing command and control (C2) systems. Expeditionary Advance Base Operations (EABO) Defense officials have noted the Marine Corps is "not currently organized, trained and equipped to face a peer adversary in the year 2025" and enemies with advanced air and shore defense will make amphibious operations even riskier. To counter this, the Navy is developing the Expeditionary Advance Base Operations (EABO) operational concept to address these concerns. EABO is described as follows: Expeditionary Advance Base Operations is a naval operational concept that anticipates the requirements of the next paradigm of US Joint expeditionary operations. The concept is adversary based, cost informed and advantage focused. EABO calls for an alternative, difficult to target forward basing infrastructure that will enable US naval and joint forces to create a more resilient forward based posture to persist, partner and operate within range of adversary long range precision fires. The alternative forward posture enabled by Expeditionary Advance Bases (EABs) is designed to mitigate the growing threat posed by the abundant quantity, expanded range and enhanced precision of potential adversary weaponry—particularly ballistic and cruise missiles designed to attack critical joint fixed forward infrastructure and large platforms. EABs provide a dispersed and largely mobile forward basing infrastructure that enables a persistent alternative force capability set that is similarly designed to be difficult to target and inherently resilient. The resilient, reduced signature infrastructure of EABs, combined with naval forces designed and structured to persist and operate within the arc of adversary anti-access/aerial denial (A2AD) capabilities enables naval commanders to conduct Expeditionary Advance Base Operations to support Joint Force Maritime Component Commander (JFMCC), and Fleet Commanders in the fight for sea control, by exploiting the opportunities afforded by key maritime terrain, particularly in close and confined seas. EABO advances, sustains and maintains the naval and joint sensor, shooter and sustainment capabilities of dispersed forces to leverage the decisive massed capabilities of the larger joint force with enhanced situational awareness, augmented fires and logistical support. The EABO Concept enables US naval forces to exercise 21 st Century naval operational art, meet new enemy A2AD threats with new capabilities and operate and thrive in and around close and confined seas. In terms of Marine Corps amphibious assault operations, the adoption of EABO could reportedly result in "an entirely different approach to amphibious assaults as well as new weapon systems." Noting that "missiles can now hit ships and landing craft while they are hundreds of miles from shore, making it far too dangerous for Marines to storm a beach with current capabilities," Marine officials are reportedly exploring ways to create temporary "bubbles" where Marines can get ashore. In response to these challenges, current and planned weapons systems might need to be modified to accommodate EABO operational concepts. Past Programmatic Activities 2013 Decision to "Shelve" the MPC As previously noted, in June 2013, citing budgetary pressures, the Marines reportedly put the MPC program "on ice" and suggested it might not be resurrected for about 10 years. At the time of the decision, the Marines' acquisition priorities were refocused to the ACV as well as the Joint Light Tactical Vehicle (JLTV). Although the Marines refocused budgetary resources to the ACV, difficulties in developing an affordable high water speed capability for the ACV continued to confront Marine leadership. MPC Becomes ACV 1.115 In what was described as a "drastic shift," the Marines decided in March 2014 to "resurrect" the MPC and designate it as ACV Increment 1.1 and initially acquire about 200 vehicles. The Marines also plan to develop ACV Increment 1.2, a tracked version, and to acquire about 470 vehicles and fund an ongoing high water speed study. Although ACV Increment 1.1 will have a swim capability, a connector will be required to get the vehicles from ship to shore. Plans called for ACV Increment 1.1 to enter the acquisition cycle at Milestone B (Engineering and Manufacturing Development) in FY2016, award prototype contracts leading to a down select to one vendor in FY2018, and enter low-rate initial production. Marines Release Request for Information (RFI) for ACV Increment 1.116 On April 23, 2014, the Marines released an RFI for ACV Increment 1.1. Some of the required capabilities included the following: ... operate in a significant wave height of two feet and sufficient reserve buoyancy to enable safe operations; a high level of survivability and force protection; operate in four to six feet plunging surf with ship-to-shore operations and launch from amphibious ships as an objective; land mobility, operate on 30 percent improved surfaces and 70 percent unimproved surfaces; ability to integrate a .50 calibre remote weapon station (RWS) with growth potential to a dual mount 40 mm/.50 calibre RWS or a 30 mm cannon RWS; carrying capacity to include three crew and 10 embarked troops as the threshold, 13 embarked troops as the objective, carry mission essential equipment and vehicle ammunition; and the ability to integrate a command, control and communications suite provided as government furnished equipment ... The RFI included a requirement for industry to deliver 16 prototype vehicles nine months after contract award in April 2016 at a rate of 4 vehicles per month. The Marines estimated ACV Increment 1.1 would cost about $5 million to $6 million per vehicle, about $10 million less than what the previous ACV version was expected to cost. Marines Release Draft Request for Proposal (RFP) for ACV Increment 1.120 On November 5, 2014, the Marines reportedly released a draft RFP for ACV Increment 1.1. The Marines were looking for information from industry regarding program milestones, delivery schedules, and where in the program cost savings could be achieved. Plans were for two companies to build 16 prototype vehicles each for testing. Companies who competed for the two contracts included BAE Systems, General Dynamics Land Systems (GDLS), Lockheed Martin, and Scientific Applications International Corporation (SAIC). Additional Details on 2015 ACV 1.1 RFP22 Under the provisions of the RFP, the ACV 1.1 was envisioned as an eight-wheeled vehicle capable of carrying 10 Marines and a crew of 3 that would cost between $4 million to $7.5 million per copy—a change from the RFI estimate of $5 million to $6 million per vehicle. In terms of mobility, the ACV 1.1 would need to be able to travel at least 3 nautical miles from ship to shore, negotiate waves up to at least 2 feet, travel 5 to 6 knots in calm seas, and be able to keep up with the M-1 Abrams tank once ashore. Proposals were due in April 2016 and the Marines reportedly planned to award two EMD contracts for 16 vehicles each to be delivered in November 2016. In 2018, the Marines would then down select to one vendor and start full production. ACV 1.1 Fielding Plan23 The Marines reportedly plan to acquire 204 ACV 1.1s, to be allocated as follows: 1 st Marine Expeditionary Force, Camp Pendleton, CA— 67 ; 2 nd Marine Expeditionary Force, Camp Lejeune, NC— 46 ; 3 rd Marine Expeditionary Force, Okinawa, Japan— 21 ; Assault Amphibian School, Camp Pendleton, CA— 25 ; Exercise Support Division, Marine Corps Air Ground Combat Center, Twenty Nine Palms, CA— 25 ; and Program Manager, Quantico, VA, and Amphibious Vehicle Test Branch, Camp Pendleton, CA— 20 . In April 2016 testimony to the Senate Armed Services Committee, the Deputy Commandant for Combat Development and Integration testified that the Marines' Acquisition Objective for the ACV 1.1 remained at 204 vehicles, which would provide lift for two infantry battalions. Full Operational Capability (FOC) for ACV 1.1 is planned for FY2020. Marines Award ACV 1.1 Contracts26 On November 24, 2015, the Marine Corps awarded BAE Systems and SAIC contracts to develop ACV 1.1 prototypes for evaluation. BAE's contract was for $103.8 million and SAIC's for $121.5 million, and each company is to build 16 prototypes. The Marines expect to down select to a single vendor in 2018. Initial operational capability (IOC) was expected by the end of 2020, and all ACV 1.1 vehicles are planned to be fielded by summer 2023. Plans are to equip six battalions with ACV 1.1s and 392 existing upgraded AAVs. Both BAE and SAIC reportedly have a long history related to amphibious vehicles, as BAE built the Marines' original AAV and SAIC has built hundreds of Terrex 1 vehicles used by Singapore, and both companies had Marine Corps contracts to modernize AAVs. ACV 1.1 is intended to have some amphibious capability but would rely on ship-to-shore connectors. ACV 1.2 is intended to have greater amphibious capability, including greater water speed and the ability to self-deploy from amphibious ships. BAE planned to team with Italian manufacturer Iveco (which owns Chrysler and Ferrari). BAE's prototype would accommodate 13 Marines and travel 11.5 miles at about 7 miles per hour (mph) in surf and 65 mph on land. BAE's version would incorporate a V hull design intended to protect passengers from underside blasts and have external fuel tanks for increased safety. BAE intends to produce its prototypes at its York, PA, facility. SAIC planned to team with Singapore Technology Kinetics to develop its prototype based on an existing design called Terrex. SAIC's version is said to travel 7 mph in water and incorporates a V hull design as well as blast-mitigating seats. It would carry a crew of 3 and can accommodate 11 Marines. SAIC's version plans for a Common Remote Weapons System (CROWS) (.50 calibre machine gun and a 30 mm cannon), which could be operated from inside the vehicle while buttoned up, therefore not exposing crewmen to hostile fire. General Dynamics Land Systems (GDLS) Protests Contract Awards to the Government Accountability Office (GAO)27 On December 7, 2015, it was reported that GDLS would protest the award of the ACV 1.1 contract to BAE and SAIC, claiming the Marines asked for particular capabilities and then evaluated vendors by a different set of standards. GAO Denies GDLS Protest28 On March 15, 2016, GAO denied GDLS's protest, noting that "the Marine Corps' evaluation was reasonable and consistent with the evaluation scheme identified in the solicitation." The Marines reportedly stated that the protest put the ACV 1.1 program about 45 days behind schedule but anticipated the ACV 1.1 would still be fielded on time. BAE Systems and SAIC Deliver ACV 1.1 Prototypes Early and EMD Testing Begins31 BAE and SAIC reportedly delivered their ACV 1.1 prototypes, with BAE delivering its first prototype in December 2016 and SAIC delivering its prototype in February 2017. This early delivery could potentially result in an unspecified incentive fee award for both companies. EMD testing began the week of March 13 and was scheduled to last eight months. Marine Corps Down Select Final Proposals32 In early December 2017, the Marines reportedly sent the ACV 1.1 down select request for proposals to BAE and SAIC. Plans called for operational testing to start in January 2018, with the Marines anticipating announcing a contract winner in June 2018 for the delivery of 204 ACV 1.1s over a four-year period. Annual Required GAO Report on the ACV Program33 In accordance with the provisions of the FY2014 National Defence Authorization Act ( P.L. 113-66 ) Section 251, GAO submitted its annual report to Congress on the ACV program in April 2018. GAO reviewed program cost estimates, updated schedules, and program assessments of test results and production readiness, and compared ACV acquisition efforts to DOD guidance and GAO-identified best practices. GAO found the following: The first version of the Amphibious Combat Vehicle (ACV 1.1) is on track to meet development cost goals with no additional anticipated delays for major acquisition milestones. With regard to costs, the development phase of ACV 1.1 is on pace to not exceed cost goals that were established at the start of development, based on a recent Navy estimate, the ACV program office, and reporting from the contractors. GAO recommended that the Marine Corps (1) not enter the second year of low rate production for ACV 1.1 until after the contractor has achieved an overall Manufacturing Readiness Level (MRL) of 8 and (2) not enter full-rate production until achieving an overall MRL of 9. DOD partially concurred with this recommendation but noted that it was "reasonable to proceed at lower MRL levels if steps are taken to mitigate risks." BAE Wins ACV Competition38 On June 19, 2018, the Marine Corps selected BAE Systems to produce the ACV. Reportedly, the initial contract—valued at $198 million—will be for low-rate production of 30 vehicles to be delivered by the autumn of 2019. Eventually, 204 vehicles are to be delivered under the ACV 1.1 phase of the project. BAE will also produce the ACV 1.2 variant and, all told, the entire ACV 1.1 and 1.2 project is expected to deliver 700 vehicles, and, if all options are exercised, the total contract will reportedly be worth $1.2 billion. Navy Awards BAE Contract for ACV Lot 239 In December 2018, the Navy reportedly awarded BAE Systems a $140 million contract modification to build 30 Low Rate Initial Production (LRIP) ACVs as part of Lot 2, with the first vehicles expected to be delivered in the summer of 2020. Lot 1 is reportedly still scheduled to start delivery in the summer of 2019. Director, Operational Test and Evaluation (DOT&E) FY2018 Annual Report40 In DOT&E's December 2018 FY2018 Annual Report, it was noted During the operational evaluation (OA), the ACV-equipped unit demonstrated the ability to maneuver to an objective, conduct immediate action drills, and provide suppressive fires in support of dismounted infantry maneuver in a desert environment. The ACV-equipped unit was able to maneuver in the littorals; embark aboard a landing craft air cushioned (LCAC), transit the open ocean and surf zone, and debark from the LCAC. The ACV demonstrated water mobility and the ability to self-deploy from the beach, cross the surf zone, enter the ocean, swim, and return to the beach. Based on data from the OA, reliability is below the program reliability growth curve (58 hours Mean Time Between Operational Mission Failures [MTBOMF]). BAE vehicles demonstrated 24.9 hours MTBOMF. There were no systemic problems identified that indicate a major redesign is required. The ACV section was successful in 15 of 16 missions and demonstrated the capability to negotiate terrain in the desert and littorals, operate with tanks and light armored vehicles, and maneuver to achieve tactical advantage over the opposing threat force. ACV crews, supported infantry, and the opposing force noted that the vehicles performed better than the legacy vehicle in a wide variety of areas. In terms of recommendations, DOT&E noted the Program Manager, Advanced Amphibious Assault should do the following: Modify the infantry troop commander's station to make it easier to move between the hatch and seat. Assess the capability of all existing Marine Corps recovery assets to recover the ACV. Investigate options for preventing damage to steering/suspension when encountering battlefield debris, such as concertina wire. ACV 1.2 Requirements Ship-to-Shore Requirements for the Next ACV Version43 According to reports, the Marines envisioned that the successor to ACV 1.1—the ACV 1.2—would have a threshold requirement of 12 miles from ship-to-shore. If this threshold can be achieved, it could help to reduce the vulnerability of U.S. naval vessels supporting Marine amphibious operations to enemy shore fire. ACV 1.1 and ACV 1.2 Consolidated44 On April 10, 2019, during testimony to the Subcommittee on Seapower of the Senate Armed Services Committee, Navy and Marine Corps leadership noted During the fall of 2018, ACV 1.1 prototypes demonstrated satisfactory water mobility performance in high surf conditions, and in doing so met the full water mobility transition requirement for ACV 1.2 capability. Subsequently, the Milestone Decision Authority Assistant Secretary of the Navy for Research, Development and Acquisition (ASN (RD&A)) approved the consolidation of increments one and two into a single program to enable continuous production of ACVs to completely replace the AAV. The next key acquisition event is the Full Rate Production decision scheduled for the third quarter of FY 2020 following Initial Operational Test & Evaluation. ACV remains on schedule to achieve Initial Operational Capability in the fourth quarter of FY 2020. With the consolidation of ACV variants into a single variant, there will likely be a number of programmatic changes and potential ramifications for the ACV and ACV 2.0 programs. ACV 2.045 Reportedly, the Marines plan to develop an ACV 2.0, capable of carrying 10 to 13 Marines plus crew, capable of high water speeds and deployment from ships far from the coast. ACV 2.0 is planned to be capable of operating on land alongside tanks and light armored vehicles. According to the Marines ACV 2.0 serves as a conceptual placeholder for a future Decision Point (~ 2025, or sooner) at which time knowledge gained in the fielding and employment of the first phase of ACV (1.1 and 1.2), the state of the naval connector strategy, and science & technology work towards a high water speed capable self-deploying vehicle will support an informed decision. Department of Defense FY2020 Budget Request47 The FY2020 presidential budget request includes RDT&E and Procurement funding requests in the Base Budget, as well as FY2020 requested quantities. The Marines did not request ACV Overseas Contingency operations (OCO) funding in FY2020. According to DOD, the FY2020 ACV budget request will fund The ACV 1.1 Full Rate Production (FRP) Lot 3 of 56 vehicles, plus procurement of related items such as production support, systems engineering, program management, Engineering Change Orders (ECOs), Government Furnished Equipment (GFE), and integrated logistics support. Research and Development efforts include the procurement of ACV 1.2 MRV test articles, associated GFE, and initiation of a Vehicle Protective System trade study and integration efforts. Potential Issues for Congress The Consolidation of the ACV 1.1 and ACV 1.2 Programs While from an overall programmatic perspective, the consolidation of the ACV 1.1 and ACV 1.2 variants could be viewed as a favourable programmatic outcome, there are likely ramifications that might be of interest to policymakers. Potential issues include the following: Will the consolidation of ACV 1.1 and ACV 1.2 result in an overall cost savings? Will this consolidation permit the acquisition of additional ACVs because of potential cost savings? With the consolidation and the stated intent to replace AAVs, what is the revised timeline for the replacement of AAVs and will this result in cost savings from not having to upgrade and maintain AAVs longer than previously intended? How will the consolidation of ACV 1.1 and ACV 1.2 affect the ACV 2.0 program? Expeditionary Advance Base Operations and the ACV If the Navy and Marine Corps decide to adopt Expeditionary Advance Base Operations (EABO) as an operational concept, it could possibly have implications for the ACV program, including the following: At the weapon systems level, would EABO require any changes to the vehicles themselves, such as enhanced survivability, lethality, or Command, Control, Communications, Computer, Intelligence, Surveillance, and Reconnaissance (C4ISR) features? If changes are required to facilitate EABO, how would this affect the program's overall acquisition timeline and cost? If EABO does not require any technical changes in the ACV program, would the adoption of EABO modify the Marines' current procurement quantities of ACVs? If EABO requires different procurement quantities for the different ACV versions (more or fewer), how might this affect program timelines and program costs?

On January 6, 2011, after spending approximately $3 billion in developmental funding, the Marine Corps cancelled the Expeditionary Fighting Vehicle (EFV) program due to poor reliability demonstrated during operational testing and excessive cost growth. Because the EFV was intended to replace the 40-year-old Amphibious Assault Vehicle (AAV), the Pentagon pledged to move quickly to develop a "more affordable and sustainable" vehicle to replace the EFV. The Amphibious Combat Vehicle (ACV) is intended to replace the AAV, incorporating some EFV capabilities but in a more practical and cost-efficient manner. In concert with the ACV, the Marines were developing the Marine Personnel Carrier (MPC) to serve as a survivable and mobile platform to transport Marines when ashore. The MPC was not intended to be amphibious like an AAV, EFV, or the ACV but instead would be required to have a swim capability for inland waterways such as rivers, lakes, and other water obstacles such as shore-to-shore operations in the littorals. Both vehicles were intended to play central roles in future Marine amphibious operations. On June 14, 2013, Marine leadership put the MPC program "on ice" due to budgetary pressures but suggested the program might be resurrected some 10 years down the road when budgetary resources might be more favorable. In what was described as a "drastic shift," the Marines decided to "resurrect" the MPC in March 2014. The Marines designated the MPC as ACV Increment 1.1 and planned to acquire about 200 vehicles. The Marines also plan to develop ACV Increment 1.2, a tracked, fully amphibious version, and at the time planned to acquire about 470 vehicles and fund an ongoing high water speed study. Although ACV Increment 1.1 is to have a swim capability, another mode of transport (ship or aircraft) would be required to get the vehicles from ship to shore. The Marines are reportedly exploring the possibility of developing a high water speed ACV 2.0, which could accompany tanks and light armored vehicles into combat. On November 5, 2014, the Marines released a draft Request for Proposal (RFP) for ACV Increment 1.1. On November 24, 2015, the Marine Corps awarded BAE Systems and SAIC contracts to develop ACV 1.1 prototypes for evaluation. BAE's contract was for $103.8 million and SAIC's for $121.5 million, and each company was to build 16 prototypes to be tested over the next two years. Both BAE and SAIC delivered their prototypes early, and Engineering and Manufacturing Development (EMD) testing began mid-March 2017. In early December 2017, the Marines reportedly sent the ACV 1.1 down select request for proposals to BAE and Science Applications International Corporation (SAIC). On June 19, 2018, the Marine Corps selected BAE Systems to produce the ACV. The initial contract—valued at $198 million—was for low-rate production of 30 vehicles to be delivered by the autumn of 2019. On April 10, 2019, during testimony to the Senate Armed Services Committee, Navy and Marine Corps leadership announced that during the fall of 2018, ACV 1.1 prototypes demonstrated satisfactory water mobility performance in high surf conditions and, in doing so, met the full water mobility transition requirement for ACV 1.2 capability. As a result, ACV 1.1 and ACV 1.2 were to be consolidated into a single variant—the ACV—which is intended to replace all AAVs. Potential issues for Congress include the potential ramifications of the consolidation of the ACV 1.1 and ACV 1.2 programs and how the possible adoption of the Expeditionary Advance Base Operations (EABO) operational concept could affect the ACV program.

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Introduction Congress appropriates foreign affairs funding primarily through annual Department of State, Foreign Operations, and Related Programs (SFOPS) appropriations. Prior to FY2008, however, Congress provided funds for the Department of State and international broadcasting within the Commerce, Justice, and State, the Judiciary, and Related Agencies appropriations (CJS) and separately provided foreign aid funds within Foreign Operations, Export Financing, and Related Programs appropriations. The transition between the different alignments occurred in the 109 th Congress, with a change in appropriations subcommittee jurisdiction. For that Congress, the House of Representatives appropriated State Department funds separately from foreign aid, as in earlier Congresses, but the Senate differed by appropriating State and foreign aid funds within one bill—the Department of State, Foreign Operations, and Related Programs Appropriations. Both the House and Senate began jointly funding Department of State and foreign aid appropriations within the Department of State, Foreign Operations and Related Programs Appropriations in the Consolidated Appropriations Act, 2008 ( P.L. 110-161 ). SFOPS appropriations currently include State Department Operations (including accounts for Embassy Security, Construction, and Maintenance, and Education and Cultural Affairs, among others); Foreign Operations (including USAID administration expenses, bilateral economic assistance, international security assistance, multilateral assistance, and export assistance); various international commissions; and International Broadcasting (including VOA, RFE/RL, Cuba Broadcasting, Radio Free Asia, and Middle East Broadcasting Networks). While the distribution varies slightly from year to year, Foreign Operations funding is typically about twice as much as State Operations funding. In addition to regular, enduring SFOPS appropriations, Congress has approved emergency supplemental funding requested by Administrations to address emergency or otherwise off-cycle budget needs. Since FY2012, Congress has also appropriated Overseas Contingency Operations (OCO) funding requested within the regular budget process for Department of State and USAID war-related expenses. This report lists the legislative and funding history of SFOPS appropriations and includes funding trends. Legislative History Nearly all foreign affairs appropriations within the past 25 years were passed within omnibus, consolidated, or full-year continuing resolutions, rather than in stand-alone bills, and usually after the start of the new fiscal year. Many foreign policy experts contend that stand-alone appropriations legislation would allow for a more rigorous debate on specific foreign policy activities and improve the ability to introduce or fund new programs, or cancel and defund existing programs. Such experts assert that the frequent practice of passing continuing resolutions and delaying passage of appropriations well into the next fiscal year has hindered program planning (not just in foreign affairs) and has reduced the ability to fund programs that did not exist in the previous cycle. In addition to annual appropriations, several laws require Congress to authorize State and foreign operations funding prior to expenditure. Before 2003, Congress typically provided authorization in a biannual Foreign Relations Authorization bill. This practice not only authorized funding for obligation and expenditure, but also provided a forum for more rigorous debate on specific foreign affairs and foreign aid policies and a legislative vehicle for congressional direction. In recent years, the House and Senate have separately introduced or considered foreign relations and foreign aid authorization bills, but none have been enacted. Table 1 below provides a 25-year history of enacted foreign affairs appropriations laws (excluding short-term continuing resolutions and supplemental appropriations), including the dates they were sent to the President and signed into law. Some observations follow: Since FY1995, Congress appropriated foreign affairs funding in on-time, freestanding bills once—in 1994 for the FY1995 appropriations year. The last time Congress passed foreign affairs funding on time, but not in freestanding legislation, was for FY1997. Congress included foreign affairs funding within an omnibus, consolidated, or full-year continuing resolution 21 of the past 25 years. FY2006 was the last time Congress enacted freestanding State Department and foreign operations appropriations bills. Six times over the past 25 years, Congress sent the State and foreign operations appropriations to the President in March, April, or May—six to eight months into the fiscal year. Funding History Since realignment of the foreign affairs appropriations legislation in FY2008, SFOPS appropriations measures have included State Department Operations, Foreign Operations, various international commissions, and International Broadcasting. For a full list of the accounts included in the FY2019 SFOPS, see Table 2 . 20-Year Funding Trends Table 3 and Figure 1 provide the funding levels for enduring funds and Supplemental/OCO funds in the Department of State, Foreign Operations and Related Programs for FY2001-2020 request (in current dollars). Although current funding for State-Foreign Operations generally has grown since FY2001, there was a spike in funding in FY2004 that can, in large part, be attributed to supplemental funding for the Iraq Relief and Reconstruction Fund, which provided additional funds in that year. The creation of the Millennium Challenge Corporation (MCC) and the President's Emergency Plan for AIDS Relief (PEPFAR) added to growing funding levels from FY2004-FY2009. OCO became a regular part of foreign affairs funding as of FY2012. Supplemental funding for Ebola in FY2015, Zika in FY2016, and OCO in FY2017 contributed to the rise in funding levels during those years (see Figure 2 ). The constant dollar trend line generally continues to increase, although at a slower pace than current dollars. FY2004 remains the peak year in constant dollars. The introduction of OCO funding in FY2012 briefly elevated SFOPS funding, but in the following years, funding levels off at nearly the same amount as the FY2012 level. After removing inflation, funding for FY2013 through the FY2020 request declines below that level, suggesting that the Budget Control Act of 2011 (BCA) has kept foreign affairs funding below the rate of inflation. Enduring vs. Supplemental/OCO Appropriations The Administration distinguishes between enduring (also called base, regular, or ongoing), emergency supplemental, and Overseas Contingency Operations (OCO) funds. Funds designated as emergency or OCO are not subject to procedural limits on discretionary spending in congressional budget resolutions, or the statutory discretionary spending limits provided through the Budget Control Act of 2011 for FY2011-FY2021 (BCA, P.L. 112-25 ). Prior to FY2012, the President typically submitted to Congress additional funding requests (after the initial annual budget request), referred to as emergency supplementals. Supplemental funding packages have historically been approved to address emergency, war-related, or otherwise off-cycle budget needs. The Obama Administration requested emergency supplemental appropriations for urgent unexpected expenses, such as the U.S. international responses to Ebola, the Zika virus, and famine relief to Syria, Yemen, Somalia, and Northeast Nigeria. The Trump Administration has not requested supplemental funding for unexpected international crises. In contrast to emergency supplemental appropriations, the Obama Administration included within the regular budget request in FY2012 what it described as short-term, temporary, war-related funding for the frontline states of Iraq, Afghanistan, and Pakistan—designated as Overseas Contingency Operations funds, or OCO. Congress had used the OCO designation in earlier years for Department of Defense appropriations to distinguish between ongoing versus war-related expenditures. In response to the FY2012 SFOPS OCO request, Congress appropriated OCO funds for the Department of State and USAID activities beyond the requested level and for more than just activities in Iraq, Afghanistan, and Pakistan. In FY2012, Congress included OCO funds for the three frontline states as well as for Yemen, Somalia, Kenya, and the Philippines. The Obama Administration first requested OCO funds for a country other than the three frontline states in FY2015, when it requested OCO funds for Syria. In FY2018, the Trump Administration requested OCO funds for the Department of State and USAID activities in Iraq, Afghanistan, and Pakistan, as well as "High Threat/High Risk" areas. These included Syria, Yemen, Nigeria, Somalia, and South Sudan, among others. The Administration's initial FY2019 request included OCO funds for the Department of State and USAID, but after passage of the Bipartisan Budget Act of 2018 (BBA 2018, P.L. 115-123 ), the Administration requested that all previously requested SFOPS OCO funds be moved to enduring funds. For FY2020, the Trump Administration again requested no OCO funds for foreign affairs agencies. Since FY2012, OCO has ranged from a low of 14% of the total budget request in FY2014 to a high of 36% in FY2017, when the Bipartisan Budget Act of 2015 (BBA 2015, P.L. 114-74 ) set nonbinding OCO minimums for FY2016 and FY2017. The Bipartisan Budget Act of 2018 (BBA 2018, P.L. 115-123 ) raised discretionary spending limits for FY2018 and FY2019 and extended direct spending reductions through FY2027. With the raised spending limits, the Trump Administration's FY2019 budget request did not include the OCO designation for any foreign assistance funds. However, Congress has continued to appropriate OCO funds, including $8.0 billion in FY2019. The Administration's FY2020 budget request also does not request OCO funds for State-Foreign Operations appropriations. The BCA and BBAs have had an effect on foreign affairs funding levels and may have future implications. The Budget Control Act of 2011 sets limits on discretionary spending through FY2021 for defense and nondefense funding categories. Because OCO funds are not counted against the discretionary spending limits, the BCA has put downward pressure on SFOPS enduring/base funds, while OCO has increasingly funded other foreign affairs activities. In addition, the 2015 BBA significantly increased FY2016 and FY2017 OCO funding for foreign affairs over the requested funding levels in FY2015 and FY2016, further encouraging a migration of funds for ongoing activities into OCO-designated accounts. However, the 2018 BBA has had the opposite effect on foreign affairs OCO, allowing lawmakers to shift OCO funding back into enduring/base accounts.

Congress currently appropriates most foreign affairs funding through annual Department of State, Foreign Operations, and Related Programs (SFOPS) appropriations. Prior to FY2008, however, Congress provided funding for the Department of State, international broadcasting, and related programs within the Commerce, Justice, State, the Judiciary, and Related Agencies appropriations. In those years, Congress separately appropriated funding for the U.S. Agency for International Development (USAID) and foreign aid within the Foreign Operations, Export Financing, and Related Programs appropriations. The 110th Congress aligned the two foreign affairs appropriations into the SFOPS legislation. SFOPS appropriations since FY2001 have included enduring appropriations (ongoing or base funding), emergency supplemental appropriations, and Overseas Contingency Operations (OCO) appropriations. Total SFOPS funding levels in both current and constant dollars show a general upward trend, with FY2004 as the peak largely as a result of emergency supplemental appropriations for Iraq Relief and Reconstruction Funds. When adjusted for inflation, annual foreign affairs appropriations have yet to surpass the FY2004 peak. The Budget Control Act (BCA) of 2011 and the Bipartisan Budget Acts (BBA) of 2015 and 2018 appear to have had an impact on both enduring and OCO funding levels. The legislative history of SFOPS appropriations shows that nearly all foreign affairs appropriations measures within the past 25 years were passed within omnibus, consolidated, or full-year continuing resolutions, rather than in stand-alone bills. Moreover, many appropriations were passed after the start of the new fiscal year, at times more than half way into the new fiscal year. In many fiscal years, SFOPS appropriations included emergency supplemental funding or, since FY2012, OCO funding.

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Introduction On a daily basis, the restaurants, cafeterias, and carryout facilities operated by the House of Representatives and the Senate serve Members of Congress, congressional employees, constituents, and other visitors to the Capitol, House office buildings, and Senate office buildings. The House and Senate restaurant systems have existed since the early 1800s and have grown and modernized over time. Although many of their services may seem similar, food operations are separately administered and managed for the House, for the Senate, and for the Capitol Visitor Center (CVC). By meeting congressional dining needs during workdays that frequently can be unpredictable, the restaurant systems help facilitate the legislative and representational work of Congress. Because many Members and staff visit these restaurants every day, they remain a subject of ongoing congressional interest. House Restaurant System Operations Present Vendor and Oversight for House Restaurants Since 1994, the House restaurants have been operated by a private vendor, with oversight provided by the House. Under the Rules of the House of Representatives, the House restaurants fall under the jurisdiction of the Committee on House Administration, which delegates much of the daily oversight and financial management of the restaurant system to the Chief Administrative Officer (CAO) of the House. On June 9, 2015, the CAO announced that Sodexo Government Services would be the new food service provider for the House. The contract with Sodexo is for an initial term of four years. Starting in 2019, six two-year options may extend the contract for up to 12 additional years. A comprehensive survey of House food service needs, based on analysis of restaurant records, and the experiences of secret shoppers, focus groups, and surveys, had been commissioned during fall 2013 to help inform the vendor selection process. The CAO issued a request for proposals (RFP) for vendors interested in running any or all of the House restaurants in October 2014. Prospective contractors were notified that "the House will have no financial responsibility or liability under the terms of the contract," and that the contractor selected would pay the House a monthly commission, determined by an agreed-upon percentage of gross receipts. The CAO encouraged ideas from vendors to improve operations in the Members' dining room and also initiated service schedule changes. Food service providers would not be required to operate the Members' dining room when late votes were scheduled in the evenings, on weekends, or on holidays, and instead, the room would be available for hosting catered events. To address some of the suggestions from the 2013 food service study, the RFP required that contractors include three-tier pricing strategies (value, standard, and premium) for all areas except vending. Once prices were set, any price increases would be prohibited for the first two years of service. Vendors were also required to introduce a minimum of two branded eatery concepts that would suit the needs of House customers. Catering requirements and responsibilities for different locations in the Capitol and office buildings were detailed, and the new contractor would be expected to "successfully execute events with less than four (4) hours' notice." The new contractor would be required to conduct at least one formal focus group per year to help ensure long-term customer satisfaction and was encouraged to "utilize a variety of assessment tools" to appraise customer service. Individuals from outside of the CAO's office were included on the panel that reviewed and evaluated vendor proposals, and the panel also included a staff member from a Member office. To aid in the service transition, once Sodexo was chosen as the new vendor, it designated a community relations officer, a position unique to its House operation, to help address comments and resolve problems raised by House dining patrons. It is not publicly known whether or not the past provider, Restaurant Associates, submitted a bid to renew its contract. Sodexo assumed its responsibilities as the House vendor on August 7, 2015, and immediately began renovations and other changes related to the transition, some of which continued in 2016. Services Available in the House Restaurant System Currently, 10 dining areas and carryouts in the House of Representatives and the House office buildings are operated by Sodexo as part of the House food services. Additionally, Sodexo is responsible for in-house catering services and most vending machines for the House. Sodexo introduced SoGo Cards, a new form of payment, for House staff to use in the House cafeterias. The cards are available at the cash registers of the dining facilities, can be reloaded with funds online, and provide a reward program regular customers may enroll in. All the House food service facilities, including the vending machines, are required to accept all major credit and debit cards, and many vending machines also accept Apple Pay and Google Pay. Additional "pop-up" lunch options in the O'Neill House Office Building main lobby operate through a partnership with Fooda on certain weekdays, featuring foods from local restaurants. The facilities operated under the House restaurant system are listed in Table 1 . With the arrival of Sodexo in 2015, the CAO announced several major changes to House dining operations, including the following: For lunch and dinner, the Members' dining room would replace a la carte service with a buffet. The introduction of an online system that allows users to preorder their food items and pick them up in the Longworth Cafeteria. The replacement of some eateries with popular branded restaurant concepts. Members of the House Appropriations Subcommittee on Legislative Branch expressed continuing concerns about food quality, high prices, and poor service in the House restaurants under Sodexo during the House of Representatives FY2018 budget hearing in May 2017. At the hearing, the CAO stated that a quality assurance surveillance team, comprised of five CAO employees, had been created to continually appraise contractor performance in a number of areas. According to the CAO, observations and feedback from the surveillance team during its first two months had led to some improvements in food quality and changes in restaurant management personnel. A new chef was brought in to the Members' dining room and some table service was reintroduced in response to feedback. Several branded restaurant concepts have been introduced to the House dining facilities, beginning with a Dunkin' Donuts/Baskin Robbins in the Longworth House Office Building and a Subway in the Rayburn House Office Building, which opened in 2016. In January 2018, a food service survey conducted within the House community by the CAO "indicated a strong desire for both cafeteria and branded food options," and the legislative branch conference report for FY2019 "encourage[d] the CAO to continue exploring opportunities to add more [branded concepts]" throughout the House restaurant system. Beginning in 2018, "pop-up restaurants" have been featured on a weekly basis in the Longworth cafeteria, offering food options from branded restaurant chains. Three additional branded concepts have opened or are scheduled to open in the House during 2019: an &pizza in Rayburn, an Au Bon Pain in Cannon, and a Steak 'n Shake in Rayburn. The FY2019 legislative branch appropriations conference report also directed the CAO to explore applying a "branded option concept" to the Members' dining room "in an effort to provide consistent service, better food selection, and quality food to Members and their guests." Beginning in September 2018, the Members' dining room also began providing service to congressional employees. Senate Restaurant System Operations Present Vendor and Oversight for Senate Restaurants Since 2008, food services in the Senate have been provided by a private contractor, under the jurisdiction of the AOC and subject to policy directives from the Committee on Rules and Administration. Rule XXV of the Standing Rules of the Senate grants the committee authority over "Services to the Senate, including the Senate restaurant." The food service vendor selected for the Senate in 2008 was Restaurant Associates, part of Compass Group, which was selected again under a new seven-year contract, signed December 18, 2015. A 2016 Department of Labor investigation revealed wage-related infractions that could lead to contract renegotiations sooner than 2022. Under current arrangements, additional food vendors may be subcontracted to provide some Senate restaurant services. In 2012, for example, requests to bring kosher meals to the Dirksen cafeterias were ultimately fulfilled by Bubbie's Gourmet; the decision was authorized by the Senate Rules and Administration Committee, and Restaurant Associates was responsible for selecting the subcontractor and overseeing its operations. In 2001, a coffee shop and cafe owned by a local family, Cups & Company, opened in the Russell Senate Office Building and remains independently operated. Services Available in Senate Restaurants In the Senate and its office buildings, 12 dining areas and carryouts are operated as a part of the Senate Restaurant System, along with additional vending areas. The facilities included in the Senate Restaurant System are listed in Table 2 . Restaurant Associates also provides in-house catering services, including a "Café to Go" option that can serve groups of 40 or less with advance notice of 24 hours. Issues Related to Congressional Restaurants Some of the issues affecting the restaurant systems are unique to the House and others are unique to the Senate, resulting from the fact that each chamber administers its own restaurant services. Other issues affect the restaurants in both chambers or are typical challenges in any food service operation. This section focuses on current issues related to the congressional restaurants, but many of the challenges the House and Senate restaurants face today are similar to issues they have faced in the past. For more background on these topics, see CRS Report R44600, History of House and Senate Restaurants: Context for Current Operations and Issues , by Sarah J. Eckman. Financial Challenges in Operating Restaurants Throughout history, the House and Senate restaurants have faced financial challenges. In part, this is a consequence of the operating practices adopted by the House and Senate restaurants tending to reflect the needs of Congress, even when these choices sometimes hurt the ability of the restaurants to break even. This approach illustrates the view that the restaurants should operate as a necessary service rather than a profit-generating enterprise—a perspective that originated with the earliest congressional restaurants in an underdeveloped Washington, DC, and persisted long after. Although more dining options exist in the Capitol Hill neighborhood today, the dining facilities in the Capitol and congressional office buildings often remain a more convenient option for Members, staff, and visitors. The operating hours of the House and Senate restaurants are one factor that, historically, have contributed to their financial challenges. The House and Senate restaurants, for example, operate primarily for breakfast and lunch service during weekdays, whereas some claim that typical restaurants often rely on dinner service and weekend customers to generate much of their revenue. The cost of labor associated with staffing the restaurants during nonpeak operating hours has often been a significant expense for the restaurant systems. While the restaurants were under congressional management during much of the 20 th century, their finances were particularly affected by legislative measures that established the wages and benefits of federal or congressional employees. Some dining establishments in each chamber have been consistently more profitable than others. Eateries that serve a smaller number of patrons, close when Congress is out of session, or offer full table service can be more expensive to operate. Over the years, the restaurant systems have sometimes operated at a net loss; in other years, revenue from catering or the cafeterias can help offset losses from other establishments to help the overall system break even or make a profit. Obtaining a complete picture of the House and Senate restaurant system finances has always been difficult, given that restaurant responsibilities have often been distributed across multiple actors. When the House and Senate managed their own restaurants, multiple congressional entities were involved in the restaurants' operation, which created challenges for obtaining a complete financial picture. Since the restaurants have been run by private contractors, many business records are not subject to the same public disclosure requirements that government entities would be. This ambiguity has sometimes led to incomplete reports about restaurant finances. The House and Senate restaurants today receive commission-based fees from the food service providers, but more detail is unavailable, since most of the financial records regarding the restaurants are maintained by the vendors and are not publicly accessible. Pricing of Menu Items Attempts to improve House and Senate restaurant finances over the years have frequently involved food price increases. Many of these price increases have been minimal adjustments required to keep up with increasing costs of food, energy, and labor, while others have been larger adjustments. Sometimes, the relatively small increase to revenue from price increases has not been sufficient to completely offset increased expenses. Contract agreements with vendors sometimes prohibit price increases for a specified amount of time, which can make it difficult for vendors to adjust and compensate for unexpected increases in their operating expenses. Thus, when price changes do occur, the restaurants are often adjusting for several years of increased costs, which can appear as a large jump to customers. In the transition to Sodexo in the House during 2015, for example, the CAO acknowledged that prices on many menu items would increase, explaining that while prices on many items will increase when the new contract takes effect, no price increases have been approved in House food service facilities over the past six years. Bidders were required to propose pricing comparable to similar government and corporate food service facilities. The new contract limits any future increases to changes in a subset of the Producer Price Index, with a three percent annual cap. Complaints about restaurant prices have persisted over the history of the restaurant systems, and the 2013 study of dining operations in the House suggested that many customers, particularly staff and visitors, remain price-conscious. When possible, customers may be willing to trade the convenience of on-site services for off-site alternatives if the dining options in the Capitol complex are not perceived as good values. Meeting Evolving Expectations for Quality and Services In addition to reasonable prices, the House and Senate restaurants are expected to meet other customer standards, often related to food quality, nutrition, and variety. Food service vendors, through their experience in the broader restaurant industry, are often aware of current consumer interests, and the House and Senate restaurants solicit customer feedback to help ascertain what needs and values their particular customers have. When the current vendor, Sodexo, was selected for the House restaurants, the CAO acknowledged that providing quick dining options was a main priority for the restaurant service, although the quality of food, nutrition, and customer service were also considerations. The requirement for two branded restaurant concepts also reflected customer preferences. On its website for Senate dining, Restaurant Associates has, at times, highlighted its initiatives in "sustainability as well as social and environmental responsibility." These include its efforts to provide organic food, locally produced food, sustainable seafood, cage-free eggs, and no trans-fats. Maintenance of Restaurant Facilities To continue to meet expectations for food quality and safety, efficiency in service, and customer satisfaction, dining facilities may require more frequent updates and renovations than other areas within the Capitol complex. Many of the most significant changes to the restaurant facilities occur during or soon after the transition to a new restaurant system vendor, but upgrades to equipment may be an ongoing concern. The age of the rooms that house dining services may present additional construction challenges and safety concerns. In January 2016, for example, the Longworth Cafeteria was evacuated and temporarily closed after several employees reported feeling ill from possible exposure to lead paint dust stirred up by ongoing nighttime kitchen renovations. In addition to periodic updates to the restaurants themselves, large-scale renovations are sometimes necessary to improve and maintain the Capitol, House, and Senate facilities. Any closures to particular buildings can have an impact on House and Senate restaurant services, which are spread throughout these locations. The closure of a cafeteria with a full kitchen may require additional resources for other cafeterias, or a greater reliance on prepackaged food items prepared elsewhere in the restaurant system or off-site. The Cannon Renewal Project, for example, necessitated the closure of the Cannon Café in December 2014, and it was replaced with a convenience store, Cannon Twelve, which is expected to operate until the renovation is complete. The Longworth Cafeteria operated under limited hours and periodically closed while major renovations were undertaken between July and November of 2016. Because many customers value convenience, the temporary reorganization of congressional office space due to renovations may also shift demand for cafeterias or carryouts from one building to another. Oversight and Restaurant Management The degree to which Congress can and should be involved in the daily management of the House and Senate restaurants is a question that has persisted over time. Both chambers currently use private food service vendors to run the day-to-day operations of the restaurants, while retaining general authority for oversight of the restaurant systems. This, however, has not always been the case; the House operated its own restaurants as recently as 1994, and the Senate operated its own restaurants until 2008. The reasons given in support of congressional management or private management have varied over time and often overlap, as each side has claimed that its approach would be financially advantageous, benefit employees, and improve the quality of food services provided. Those who have advocated for private management note that modern restaurant systems are larger and more complex than many of the internal operations managed by the House or the Senate. Food service requires consistent quality, safety, and efficiency, and some believe professional contractors familiar with the business of running large institutional restaurants are better able to achieve these objectives. Those who have supported congressional management, however, believe that each chamber has sufficient administrative means to operate the restaurants, and that Congress better understands the unique needs of the House and Senate restaurant systems and the constraints under which they operate. Private management may also raise oversight challenges for Congress if company financial records are not made available for review. Some Members have expressed concerns that contractors do not have to follow the same guidelines for personnel or procurement that the federal government does, even though the restaurants operate within the Capitol complex. Employee Salaries and Benefits Issues related to employee wages and benefits affected the House and Senate restaurants during the 114 th Congress (2015-2016). A new contract for the House restaurants went into effect in August 2015, and a new contract for the Senate restaurants went into effect in December 2015. This created an opportunity for employees and others to advocate for changes, including higher wages for all restaurant employees and union representation for Senate restaurant employees, that they hoped to see before the terms of the new agreements were settled upon in each chamber. A summary of these recent events and ongoing concerns is below. House Restaurant Employee Wages and Union Wages for House restaurant employees are a concern expressed by some House Members. While the search for a new vendor was underway in 2015, Representative Debbie Wasserman Schultz proposed an amendment during the committee markup of the FY2016 Legislative Branch Appropriations Bill that would affect House restaurant employee wages. The proposal "directed the [CAO] to solicit and select a food service contractor who provides a livable wage to its employees to meet basic needs for food and shelter," using local economic indices to determine an appropriate wage amount. In a 21-29 vote, the amendment was not agreed to. The CAO noted that its office shares the "understandable desire to ensure that the people who provide services to the House are compensated fairly," and indicated that the new House vendor was chosen, in part, based on "the signals that Sodexo sent regarding the value it places on a strong, effective, fairly compensated workforce." When Sodexo took over the House restaurants in August 2015, it announced plans to voluntarily follow the D.C. Displaced Workers Protection Act of 1994, which guaranteed that no employees would be laid off for at least 90 days after the contractor change. Sodexo also agreed to recognize the restaurant employees' union, UNITE HERE Local 23, and signed a collective bargaining agreement. Many provisions in the collective bargaining agreement with Sodexo remain similar to those that applied to the previous House vendor, Restaurant Associates, including the pay scale, annual and sick leave, health insurance, short-term disability benefits, life insurance, and union pension. Workers who received higher wages or benefit levels based on their service under past House restaurant employer agreements continue to receive these levels. Sodexo provided starting wages for new employees ranging from $10.15 to $19.00 an hour, with a $0.20 per hour increase scheduled for June 1, 2016, and an additional $0.25 per hour increase to follow on December 1, 2016. Additionally, Sodexo offers House Restaurant System employees the option to enroll in a 401(k) plan and will match $0.35 of every dollar an employee contributes, up to 6% of the employee's earnings. Senate Restaurant Employee Wages and Interest in Unionizing Concerns have been raised about wages and benefits for Senate restaurant employees. A number of protests and advocacy initiatives occurred during late 2014 and throughout 2015 addressing pay and union representation for Senate restaurant employees. On April 22, 2015, approximately 40 Senate contract workers, some of whom were restaurant employees, participated in what was characterized as a strike with other workers and activists, calling for an executive order giving preference to federal contractors who would provide an hourly wage of at least $15 for their workers. Other labor action occurred during the summer and fall months, and an additional strike occurred on December 8, 2015. In addition to higher wages, some Senate restaurant employees also sought to form a union. Some Senators indicated their support for the restaurant employees' concerns. On April 27, 2015, nine Senators signed a letter to the Senate Rules and Administration Committee, arguing that it was wrong for "American taxpayers [to] subsidize these contractors by allowing them to pay low wages that must be augmented by taxpayer-funded benefits." The Senators also wanted federal contractors to provide healthcare and other benefits. Another letter, reiterating these goals and advocating further executive action to "[make] the government a 'model employer,'" was signed by 18 Senators and sent to the President of the United States on May 15. An additional letter was sent on August 5 to the Rules and Administration Committee, advocating for higher restaurant employee wages, signed by 40 Senators. A group of 34 Senators signed a letter on November 13 to the CEO of Compass Group, the parent company of Restaurant Associates, asking the company to recognize a union if a majority of the restaurant employees wanted to unionize. Some Senators and congressional staffers also participated in the protests and advocacy for restaurant employees, including Wednesday "sit-in" lunches or "brown bag boycotts" throughout the fall in the Dirksen cafeteria. Senate restaurant employees maintained that, given the high costs of living in the Washington, DC, area, a wage increase was needed so they could live above the poverty line and provide for their families. The new seven-year contract with Restaurant Associates went into effect January 2016. It included pay increases, reportedly raising the average hourly wage from $11.50 to $14.50 and the minimum starting wage to $13.30. Workers received additional benefits for health insurance, retirement savings, or transportation amounting to $4.27 per hour. Department of Labor Investigation of Senate Job Title Changes On July 26, 2016, the Department of Labor (DOL) found that Restaurant Associates, and its subcontractor, Personnel Plus, owed $1,008,302 in back wages to 674 Senate restaurant employees. DOL found that many Senate restaurant workers were improperly classified into lower paying job categories and were required to work without compensation prior to their scheduled start times, which also resulted in underestimated overtime pay. This finding has led to renewed calls by some Senators to terminate the Senate's contract with Restaurant Associates. Restaurant Associates stated that the error was due to "administrative technicalities," and that it had paid the workers in full. The DOL investigation began after Good Jobs Nation, an advocacy group, filed a complaint on behalf of the restaurant employees with DOL on January 14, 2016. After the AOC's December 2015 contract with Restaurant Associates went into effect, employees alleged that job misclassification had occurred. Federal contractor worker occupational titles and job descriptions are set forth under the Service Contract Act of 1965, and the contract with Restaurant Associates specified particular minimum wages for different occupational titles in the Senate restaurant system. Employees were supposed to receive raises under the new contract, but if the employee's title changed from a higher-paying position to a lower-paying position when the contract took effect, the employee could receive little or no pay increase. The AOC identified some of the misclassified employees through its own internal investigation in early 2016 and worked with Restaurant Associates to provide back pay for these workers and correct the misclassifications. On March 15, 2016, the AOC spoke at a Senate Appropriations Legislative Branch Subcommittee hearing, noting that "we thought that we were doing a good thing [by including a pay raise in the new contract], only to be surprised just a week or two later ... that the pay rates that we had adjusted to were not being implemented." The AOC also indicated that he believed Restaurant Associates' reclassifications did constitute a violation of the contract terms. A subsequent Government Accountability Office (GAO) review between December 2016 and May 2017 found that "[t]he AOC's oversight of the Senate food services contract with Restaurant Associates has been consistent with its established oversight policies and practices in the AOC contracting manual." In addition to providing back pay to affected employees, DOL reports that Restaurant Associates agreed to retain an independent compliance monitor (at its own expense) and will not bid on any new federal service contracts for two years. DOL also reports that Restaurant Associates "is taking additional proactive steps to ensure future compliance," including the appointment of a compliance manager and compliance supervisors and the creation of a confidential telephone hotline for employees or managers to report issues. Concluding Observations In many regards, the House and Senate food services operate like many large, institutional cafeterias do. Similar to many office cafeterias, House and Senate food services primarily serve breakfast, lunch, and snacks during regular workday business hours, and provide vending options for patrons who may be on-site during other times. Recognizing the availability of other dining options, the House and Senate food service providers attempt to provide convenient service, keep their prices competitive, and offer the types of menu items that customers enjoy. Some aspects of House and Senate dining operations, however, are necessarily unique, given the congressional environment in which they exist. The Members' dining rooms, for example, provide an ambiance not typically found in workplace eateries. In addition to their historic and architectural value, these dining rooms also provide Members of Congress and staff members a more formal and private setting in which to meet with guests or one another. Another feature House and Senate dining operations must account for is that the schedule of Congress can be less predictable than that of other institutions, which can have a variety of effects on food services. An unscheduled recess, for example, can significantly reduce the number of customers the House and Senate dining services can expect. This often results in higher costs to the restaurants, which have to account for lost food and sometimes pay employees; as a result, recesses can also lead to temporary worker layoffs or reduced hours. Conversely, when Congress is in session, House and Senate food services must be able to handle high volumes of customers with a variety of needs. Because events like hearings or briefings can be added to, or moved around, the congressional schedule, food service providers, and catering in particular, must to be able to accommodate last-minute requests and changes. The House and Senate restaurants are operated by private food service contractors who handle most of the day-to-day concerns. Despite this delegation, the House and Senate remain responsible for food service oversight. This shared administration resulted from how the congressional restaurant systems developed and grew over time. As a result, many of the issues faced by the restaurants today are addressed by the contractors themselves. Other issues are addressed by the House Administration Committee, Senate Rules and Administration Committee, or other congressional support offices. Together, these entities strive to meet the needs of the Members and staff who rely upon congressional dining services to help them carry out their daily legislative and representational work.

Dining facilities in the Capitol and in House and Senate office buildings provide an essential convenience for Members of Congress and congressional staff, enabling them to easily obtain meals, beverages, and snacks, and quickly return to work. By providing an efficient way to meet congressional dining needs during unpredictable workdays, the restaurant systems help facilitate the legislative and representational work of Congress. These restaurants also provide spaces for constituents and other visitors to meet with staff and Members of Congress, or to purchase refreshments. House and Senate restaurant services are also available to provide catering to Members of Congress when they host events on Capitol grounds. The restaurants remain a subject of ongoing congressional interest, as many Members and staff visit them on a daily basis. Those involved with restaurant administration in the House and Senate have often considered how management choices affect operating costs, services available, oversight, and other elements of the restaurant systems. For much of their histories, the House and Senate operated their own restaurants, but since 1994 in the House and since 2008 in the Senate, private vendors have run the restaurants. In August 2015, the House entered an agreement with Sodexo to operate the 17 facilities in the House restaurant system, subject to direction from the Chief Administrative Officer (CAO) and the Committee on House Administration. In December 2015, the Senate entered a new contract with Restaurant Associates to operate the 12 facilities in the Senate restaurant system, subject to direction from the Architect of the Capitol (AOC) and the Committee on Rules and Administration. Many argue that this professional restaurant management experience is necessary to meet the variety of customer needs in the House and Senate restaurants in a cost-effective manner. Numerous nearby eateries compete with the congressional restaurants for customers. Often, an advantage the House and Senate restaurants are able to provide is convenience for Members, staff, and visitors. This advantage, however, may be undermined if the restaurants are not responsive to customer input and are unable to provide consistent food quality, sufficient variety, or reasonably priced service, relative to their competitors. Food and price issues, along with other day-to-day operational issues, including personnel matters, are largely the responsibility of the restaurant contractors. Some Members and observers have raised concerns about the degree of accountability for the House and Senate restaurant contractors, believing that the restaurants' administration reflects upon Congress and that the restaurants should set an example for other businesses to follow. Although the House and Senate are responsible for restaurant oversight, the delegation of restaurant operations to private contractors means the chambers have less control over employee wages and benefits, procurement, or other business decisions that affect the restaurant systems. The combination of entities involved in House and Senate dining operations creates a unique organizational arrangement, unlike other institutional dining systems. Other features of Congress also distinguish the House and Senate restaurants from similar-seeming restaurant operations. The restaurants' business volume, for example, is highly contingent on the congressional calendar, consisting of a fairly constant weekday breakfast and lunch business, but experiencing substantial, and sometimes unexpected, decreases if Congress adjourns for a recess. Information specific to the House and Senate restaurant systems may therefore be of particular interest to those concerned with their operations. Additional background and context on House and Senate restaurant operations is found in CRS Report R44600, History of House and Senate Restaurants: Context for Current Operations and Issues, by Sarah J. Eckman.

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Overview The low-income housing tax credit (LIHTC) was created by the Tax Reform Act of 1986 ( P.L. 99-514 ) to provide an incentive for the development and rehabilitation of affordable rental housing. These federal housing tax credits are awarded to developers of qualified projects via a competitive application process administered by state housing finance authorities (HFAs). Developers either use the credits or sell them to investors to raise capital for real estate projects, which, in turn, reduces the debt or equity contribu tion that would otherwise be required of developers. With lower financing costs, tax credit properties can potentially expand the supply of affordable rental housing. The LIHTC is estimated to cost the government an average of $9.9 billion annually. Types of Credits Two types of LIHTCs are available depending on the nature of the construction project. The so-called 9% credit is generally reserved for new construction, while the so-called 4% credit is typically used for rehabilitation projects and new construction that is financed with tax-exempt bonds. Each year, for 10 years, a tax credit equal to roughly 4% or 9% of a project's qualified basis (cost of construction) is claimed. The applicable credit rates have historically not actually been 4% and 9%. Instead, the credit rates have fluctuated in response to market interest movements so that the program has delivered a subsidy equal to 30% of the present value of a project's qualified basis in the case of the 4% credit, and 70% in the case of the 9% credit. For both the 4% and 9% credit it is the subsidy levels (30% or 70%) that are explicitly specified in the Internal Revenue Code (IRC), not the credit rates. Since 1986, the 4% rate has ranged between 3.15% and 3.97%, and the 9% credit between 7.35% and 9.27%. Since 2008, however, there has been a floor under the 9% credit below which the new construction credit rate cannot fall. An Example A simplified example may help in understanding how the LIHTC program is intended to encourage affordable housing development. Consider a new affordable housing apartment complex with a qualified basis of $1 million. Since the project involves new construction it will qualify for the 9% credit and generate a stream of tax credits equal to $90,000 (9% × $1 million) per year for 10 years, or $900,000 in total. Under the appropriate interest rate the present value of the $900,000 stream of tax credits should be equal to $700,000, resulting in a 70% subsidy. The subsidy is intended to incentivize the development of affordable housing that otherwise may not be financially feasible or attractive relative to alternative investments. The situation would be similar if the project involved rehabilitated construction except the developer would be entitled to a stream of tax credits equal to $40,000 (4% × $1 million) per year for 10 years, or $400,000 in total. The present value of the $400,000 stream of tax credits should be equal to $300,000, resulting in a 30% subsidy. The Allocation Process The process of allocating, awarding, and then claiming the LIHTC is complex and lengthy. The process begins at the federal level with each state receiving an annual LIHTC allocation in accordance with federal law. State housing agencies then allocate credits to developers of rental housing according to federally required, but state created, allocation plans. The process typically ends with developers selling allocated credits to outside investors in exchange for equity. A more detailed discussion of each level of the allocation process is presented below. Federal Allocation to States LIHTCs are first allocated to each state according to its population. In 2019, states received an LIHTC allocation of $2.75625 per person, with a minimum small population state allocation of $3,166,875. These amounts reflect a temporary increase in the amount of credits each state received 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. The state allocation limits do not apply to the 4% credits which are automatically packaged with tax-exempt bond financed projects. The administration of the tax credit program is typically carried out by each state's Housing Finance Agency (HFA). State Allocation to Developers State HFAs allocate credits to developers of rental housing according to federally required, but state created, Qualified Allocation Plans (QAPs). Federal law requires that the QAP give priority to projects that serve the lowest-income households and that remain affordable for the longest period of time. Many states have two allocation periods per year. Developers apply for the credits by proposing plans to state agencies. Types of developers include nonprofit organizations, for-profit organizations, joint ventures, partnerships, limited partnerships, trusts, corporations, and limited liability corporations. An allocation to a developer does not imply that all allocated tax credits will be claimed. An allocation simply means tax credits are set aside for a developer. Once a developer receives an allocation it has several years to complete its project. Credits may not be claimed until a project is completed and occupied, also known as "placed in service." Tax credits that are not allocated by states are added to a national pool and then redistributed to states that apply for the excess credits. To be eligible for an excess credit allocation, a state must have allocated its entire previous allotment of tax credits. This use-or-lose feature gives states an incentive to allocate all of their tax credits to developers. In order to be eligible for an LIHTC allocation, properties are required to meet certain tests that restrict both the amount of rent that is assessed to tenants and the income of eligible tenants. Historically, the "income test" for a qualified low-income housing project has required project owners to irrevocably elect one of two income level tests, either a 20-50 test or a 40-60 test. In order to satisfy the first test, at least 20% of the units must be occupied by individuals with income of 50% or less of the area's median gross income, adjusted for family size. To satisfy the second test, at least 40% of the units must be occupied by individuals with income of 60% or less of the area's median gross income, adjusted for family size. The 2018 Consolidated Appropriations Act ( P.L. 115-141 ) added a third income test option that allows owners to average the income of tenants. Specifically, under the income averaging option, the income test is satisfied if at least 40% of the units are occupied by tenants with an average income of no greater than 60% of AMI, and no individual tenant has an income exceeding 80% of AMI. Thus, for example, renting to someone with an income equal to 80% of AMI would also require renting to someone with an income no greater than 40% of AMI, so the tenants would have an average income equal to 60% of AMI. In addition to the income test, a qualified low-income housing project must also meet the "gross rents test" by ensuring rents do not exceed 30% of the elected 50% or 60% of area median gross income, depending on which income test option the project elected. The types of projects eligible for the LIHTC are apartment buildings, single-family dwellings, duplexes, and townhouses. Projects may include more than one building. Tax credit project types also vary by the type of tenants served. Housing can be for families or special needs populations including the elderly. Enhanced LIHTCs are available for difficult development areas (DDAs) and qualified census tracts (QCTs) as an incentive to developers to invest in more distressed areas: areas where the need is greatest for affordable housing, but which can be the most difficult to develop. In these distressed areas, the LIHTC can be claimed for 130% (instead of the normal 100%) of the project's total cost excluding land costs. This also means that available credits can be increased by up to 30%. HERA ( P.L. 110-289 ) enacted changes that allow an HFA to classify any nontax exempt bond financed LIHTC project as difficult to develop, and hence, eligible for the enhanced credit. Developers and Investors Upon receipt of an LIHTC allocation, developers typically exchange the tax credits for equity. For-profit developers can either retain tax credits as financing for projects or sell them to investors; nonprofit developers sell tax credits. Taxpayers claiming the tax credits are usually investors, not developers. The tax credits cannot be claimed until the real estate development is complete and operable. This means that more than a year or two could pass between the time of the tax credit allocation and the time the credit is claimed. If, for example, a project were completed in July of 2018, depending on the filing period of the investor, the tax credits may not begin to be claimed until sometime in 2019. Trading tax credits, or selling them, refers to the process of exchanging tax credits for equity investment in real estate projects. Developers recruit investors to provide equity to fund development projects and offer the tax credits to those investors in exchange for their commitment. When credits are sold, the sale is usually structured with a limited partnership between the developer and the investor, and sometimes administered by syndicators who must adhere to the complex provisions of the tax code. As the general partner, the developer has a very small ownership percentage but maintains the authority to build and run the project on a day-to-day basis. The investor, as a limited partner, has a large ownership percentage with an otherwise passive role. Syndicators charge a fee for overseeing the investment transactions. Typically, investors do not expect their equity investment in a project to produce income. Instead, investors look to the credits, which will be used to offset their income tax liabilities, as their return on investment. The return investors receive is determined in part by the market price of the tax credits. The market price of tax credits fluctuates, but in normal economic conditions the price typically ranges from the mid-$0.80s to low-$0.90s per $1.00 tax credit. The larger the difference between the market price of the credits and their face value ($1.00), the larger the return to investors. The investor can also receive tax benefits related to any tax losses generated through the project's operating costs, interest on its debt, and deductions such as depreciation. The type of tax credit investor has changed over the life of the LIHTC. Upon the introduction of the LIHTC in 1986, public partnerships were the primary source of equity investment in tax credit projects, but diminished profit margins have driven some syndicators out of the retail investment market. Although there are individual tax credit investors, in recent years, the vast majority of investors have come from corporations, either investing directly or through private partnerships. Different types of investors have different motivations for investing in tax credits. Some investors are motivated by the Community Reinvestment Act (CRA), which considers LIHTC investments favorably. Other investors include real estate, insurance, utility, and manufacturing firms, many of which list the rate of return on investment as their primary purpose for investing in tax credits. Tax sheltering is the second-most highly ranked purpose for investing. The LIHTC finances part of the total cost of many projects rather than the full cost and, as a result, must be combined with other resources. The financial resources that may be used in conjunction with the LIHTC include conventional mortgage loans provided by private lenders and alternative financing and grants from public or private sources. Individual states provide financing as well, some of which may be in the form of state tax credits modeled after the federal provision. Additionally, some LIHTC projects may have tenants who receive other government subsidies such as housing vouchers. Recent Legislative Developments In late 2017, there was a revision to the Internal Revenue Code ( P.L. 115-97 ) that substantially changed the federal tax system. The revision did not directly alter the LIHTC program; however, the reduction in corporate taxes, along with the limits on deducting net operating losses that were part of the act, led affordable housing advocates at the time to voice concern about a reduction in the demand for LIHTCs. Most recently, the 2018 Consolidated Appropriations Act ( P.L. 115-141 ) made two changes to the LIHTC program. As was discussed in the " The Allocation Process " section, the act modified the so-called "income test" to allow for income averaging across tenants, and also increased the amount of credits available to states each year by 12.5% for years 2018 through 2021. These changes may have helped alleviate some concerns stemming from the 2017 tax revision's potential effect on LIHTC development. Still, it is not yet clear what, if any, impact there may be on the affordable housing supply in the long run as the result of these recent changes to the federal tax code.

The low-income housing tax credit (LIHTC) program is one of the federal government's primary policy tools for encouraging the development and rehabilitation of affordable rental housing. These nonrefundable federal housing tax credits are awarded to developers of qualified rental projects via a competitive application process administered by state housing finance authorities. Developers typically sell their tax credits to outside investors in exchange for equity in the project. Selling the tax credits reduces the debt developers would otherwise have to incur and the equity they would otherwise have to contribute. With lower financing costs, tax credit properties can potentially offer lower, more affordable rents. The LIHTC is estimated to cost the government an average of approximately $9.9 billion annually. In late 2017, there was a revision to the Internal Revenue Code (P.L. 115-97) that substantially changed the federal tax system. The revision did not directly alter the LIHTC program; however, there had been early reports of downward pressure on tax credit demand stemming from the 2017 tax revision. Most recently, the 2018 Consolidated Appropriations Act (P.L. 115-141) made two changes to the LIHTC program. First, the act modified the so-called "income test," which determines the maximum income an LIHTC tenant may have. Previously, each individual tenant was required to have an income below one of two threshold options (either 50% or 60% of area median gross income, depending on an election made by the property owner). With the modification, property owners may use a third income test option that allows them to average the income of tenants when determining whether the income restriction is satisfied. Second, the act also increased the amount of credits available to states each year by 12.5% for years 2018 through 2021. This report will be updated as warranted by legislative changes.

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Introduction Federal law houses hundreds of offenses punishable by a mandatory minimum term of imprisonment. Although only a handful of these mandatory minimum offenses are prosecuted with any regularity, drug trafficking offenses accounted for over two-thirds of the total. Congress has created three procedures that make punishment for these offenses a little less mandatory. One, the so-called safety valve (18 U.S.C. § 3553(f)), permits a sentencing court to disregard a statutory minimum sentence for the benefit of a low-level, nonviolent, cooperative defendant with a minimal prior criminal record, convicted under several mandatory minimum controlled substance offenses. The other two, 18 U.S.C. § 3553(e) and Rule 35(b) of the Federal Rules of Criminal Procedure, afford a sentencing court comparable latitude but only on the motion of the prosecutor, based on the defendant's substantial assistance to the government, and without regard to the offense charged. In October 2009, Congress instructed the U.S. Sentencing Commission to prepare a report on the mandatory minimum sentencing provisions under federal law. In early 2010, the commission conducted a survey of federal district court judges regarding their views on mandatory minimum sentencing. A majority of those responding endorsed amendments to the safety valve and substantial assistance exceptions. The commission also held a public hearing at which several witnesses urged adjustments in the safety valve and substantial assistance provisions. The commission subsequently recommended that Congress consider expanding the safety valve to cover other offenses and to reach offenders with a slightly more extensive prior criminal record. The First Step Act authorized safety-valve relief for convictions under the Maritime Drug Enforcement Act and for defendants with slightly more extensive prior criminal records. Safety Valve Background Low-level drug offenders can escape some of the otherwise applicable mandatory minimum sentences if they qualify for the safety valve. Congress created the safety valve after it became concerned that the mandatory minimum sentencing provisions could have resulted in equally severe penalties for both the more and the less culpable offenders. It is available to qualified offenders convicted of violations of the drug trafficking, simple possession, attempt, or conspiracy provisions of the Controlled Substances or Controlled Substances Import and Export acts. It is not available to avoid the mandatory minimum sentences that attend some of the other controlled substance offenses, even those closely related to the covered offenses. For instance, not covered are convictions under the statute that proscribes drug trafficking near schools, playgrounds, or public housing facilities and that sets the penalties for violation at twice those set for simple drug trafficking. In addition, until the First Step Act, safety valve relief was not available to those convicted under the Maritime Drug Law Enforcement Act (MDLEA), even though the MDLEA proscribes conduct closely related to the smuggling and trafficking activities outlawed in the Controlled Substances Import and Export Act. The prosecution need not prove that a defendant is ineligible for safety valve relief. The Supreme Court did hold in Alleyne v. United States "that any fact that increases the mandatory minimum is an 'element' [of the offense] that must be submitted to the jury" and proved beyond a reasonable doubt. Subsequent lower appellate courts, however, have held that Alleyne does not require a jury verdict or application of the reasonable doubt standard. Thus, for the convictions to which the safety valve applies, the defendant must convince the sentencing court by a preponderance of the evidence that he satisfies each of the safety valve's five requirements. He may not have a disqualifying criminal history point total. He may not have used violence or a dangerous weapon in connection with the offense. He may not have been an organizer or leader of the drug enterprise. He must have provided the government with all the information and evidence at his disposal. Finally, the offense may not have resulted in serious injury or death. Disqualifying Criminal History Point Total [T]he defendant does not have – (A) more than 4 criminal history points, excluding any criminal history points resulting from a 1-point offense, as determined under the sentencing guidelines; (B) a prior 3-point offense, as determined under the sentencing guidelines; and (C) a prior 2-point violent offense, as determined under the sentencing guidelines. 18 U.S.C. § 3553(f)(1). The criminal history point disqualification refers to the defendant's prior criminal record. The Sentencing Guidelines assign criminal history points based on a defendant's past criminal record. Prior sentences of imprisonment or juvenile detention of less than 60 days are assigned a single criminal history point . Prior sentences of imprisonment or juvenile detention of from 60 days up to a year and a month are assigned two criminal history points ; as are sentences imposed for offenses committed while the defendant was in prison, was an escaped prisoner, or was on probation, parole, or supervised release. Prior sentences of imprisonment for a year and a month or more are assigned three criminal history points . A number of convictions do not count, including the following: Stale convictions 15-year-old, three-point convictions, 10-year-old, one- or two-point convictions, or 5-year-old, one- or two-point juvenile adjudications; Summary court-martial convictions; Foreign convictions; Tribal convictions; Expunged, reversed, vacated, or invalidated convictions; and Certain petty offenses or minor misdemeanors: Hunting and fishing violations, juvenile truancy, and the like, regardless of the sentence imposed. Gambling, prostitution, and the like if the offender was sentenced no more severely than to imprisonment for 30 days or less or to probation for less than a year. Similar offenses to those listed "by whatever name they are known." Only the Nonviolent [T]he defendant did not use violence or credible threats of violence or possess a firearm or other dangerous weapon (or induce another participant to do so) in connection with the offense, 18 U.SC. 3553(f)(2). [T]he offense did not result in death or serious bodily injury to any person, 18 U.S.C. § 3553(f)(3). The safety valve has two disqualifications designed to reserve its benefits to the nonviolent. The weapon or threat-of-violence disqualification turns upon the defendant's conduct or the conduct of those he "aided or abetted, counseled, commanded, induced, procured, or willfully caused." It is not triggered by the conduct of a co-conspirator, unless the defendant aided, abetted, or counselled the co-conspirator's violence or possession. Disqualifying firearm possession may be either actual or constructive. Constructive possession is the dominion or control over a firearm or the place where one is located. Disqualification requires the threat of violence or possession of a firearm "in connection with the offense," sometimes characterized as "active possession." In many instances, possession of a firearm in a location where drugs are stored or transported, or where transactions occur, will be enough to support an inference of possession in connection with the drug offense of conviction. "[E]ven a single intimidating confrontation [is] enough to constitute a credible threat" and is consequently safety valve disqualifying. Conversely, a sentencing enhancement for a co-conspirator's possession does not automatically preclude qualification. The Sentencing Guidelines define "serious bodily injury" for purposes of Section 3553(f)(3) as an "injury involving extreme physical pain or the protracted impairment of a function of a bodily member, organ, or mental faculty; or requiring medical intervention such as surgery, hospitalization, or physical rehabilitation." On its face, the definition would include serious bodily injuries, such as hospitalization, suffered by the defendant as a result of the offense. Moreover, a defendant is more likely to be disqualified under Section 3553(f)(3) if a fellow conspirator seriously injures a victim than would be the case under Section 3553(f)(2) if the conspirator merely carries a firearm. Only Single or Low-Level Offenders [T]he defendant was not an organizer, leader, manager, or supervisor of others in the offense, as determined under the sentencing guidelines and was not engaged in a continuing criminal enterprise, as defined in Section 408 of the Controlled Substances Act, 18 U.S.C. § 3553(f)(4)(emphasis added). The defendant must also establish that he or she was not "an organizer, leader, manager, or supervisor of others in the offense." The term supervisor is construed broadly and encompasses anyone who exercises control or authority of another during the commission of the offense. The Sentencing Guidelines disqualify anyone who receives a guideline level increase for their aggravated role in the offense. Thus, by implication, it does not require a defendant to have received a guideline increase based on his minimal or minor participation in a group offense, nor does it disqualify a defendant who acted alone. Tell All [N]ot later than the time of the sentencing hearing, the defendant has truthfully provided to the Government all information and evidence the defendant has concerning the offense or offenses that were part of the same course of conduct or of a common scheme or plan, but the fact that the defendant has no relevant or useful other information to provide or that the Government is already aware of the information shall not preclude a determination by the court that the defendant has complied with this requirement, 18 U.S.C. § 3553(f)(5). At one time the most heavily contested safety valve prerequisite, Section 3553(f)(5) requires full disclosure on the part of the defendant. As in the case of the other prerequisites, the defendant here bears the burden of establishing his qualification for safety valve relief. The requirement extends not only to information concerning the crime of conviction, but also to information concerning other crimes that "were part of the same course of conduct or of a common scheme or plan," including uncharged related conduct. Neither Section 3553(f) nor the Sentencing Guidelines explain what form the defendants' full disclosure must take. At least one court has held that under rare circumstances disclosure through the defendant's testimony at trial may suffice. Most often the defendant provides the information during an interview with prosecutors or by a proffer. The defendant must disclose the information to the prosecutor, however. Disclosure to the probation officer during preparation of the presentence report is not sufficient. Moreover, a defendant does not necessarily qualify for relief merely because he has proffered a statement and invited the prosecution to identify any additional information it seeks; for "the government is under no obligation to solicit information from a defendant." The defendant must provide the government with all the relevant information in his possession. And, he must do so "no later than the time of the sentencing hearing." Information offered after the sentencing hearing does not qualify, although information offered following appellate remand for resentencing and prior to the resentencing hearing may qualify. On the other hand, past lies do not render a defendant ineligible for relief under the truthful disclosure criterion of the safety valve, although they may undermine his credibility. Substantial Assistance Background Three provisions authorize federal courts to reduce a defendant's sentence on the motion of the government for substantial assistance: Rule 35(b) of the Federal Rules of Criminal Procedure, 18 U.S.C. § 3553(e), and Section 5K1.1 of the U.S. Sentencing Guidelines. Only Section 3553(e) and Rule 35(b) authorize sentences below otherwise applicable mandatory minimums. Unlike the safety valve, neither Section 3553(e) nor Rule 35(b) is limited to mandatory minimums established for controlled substance offenses. 18 U.S.C. § 3553(e) The substantial assistance provision, 18 U.S.C. § 3553(e), passed with little fanfare in the twilight of the 99 th Congress as part of the massive Anti-Drug Abuse Act of 1986, legislation that established or increased a number of mandatory minimum sentencing provisions. The section continues in its original form virtually unchanged: (e) Limited Authority To Impose a Sentence Below a Statutory Minimum. - Upon motion of the Government, the court shall have the authority to impose a sentence below a level established by statute as a minimum sentence so as to reflect a defendant's substantial assistance in the investigation or prosecution of another person who has committed an offense. Such sentence shall be imposed in accordance with the guidelines and policy statements issued by the Sentencing Commission pursuant to section 994 of title 28, United States Code. The section passed between the date authorizing creation of the Sentencing Guidelines and the date they became effective. Rather than replicate the language of Section 3553(e), the guidelines contain an overlapping section that authorizes a sentencing court to depart from the minimum sentence called for by the guidelines. "Upon the Motion of the Government" As a general rule, a defendant is entitled to a sentence below an otherwise applicable statutory minimum under the provisions of Section 3553(e) only if the government and the court agree. The courts have acknowledged that due process or equal protection or other constitutional guarantees may provide a narrow exception. "Thus, a defendant would be entitled to relief if a prosecutor refused to file a substantial-assistance motion, say, because of the defendant's race or religion." A defendant is entitled to relief if the government's refusal constitutes a breach of its plea agreement. A defendant is also "entitled to relief if the prosecutor's refusal to move was not rationally related to any legitimate Government end." Some courts have suggested that a defendant is entitled to relief if the prosecution refuses to move under circumstances that "shock the conscience of the court," or that demonstrate bad faith, or for reasons unrelated to substantial assistance. A majority of the judges who answered the Sentencing Commission's survey agreed that relief under Section 3553(e) should be available even in the absence of motion from the prosecutor. Despite their similarities, Section 3553(e) and U.S.S.G. Section 5K1.1 are not the same. A motion under Section 3553(e) authorizes a sentence beneath the mandatory minimum, and a motion under U.S.S.G. Section 5K1.1 authorizes a sentence beneath the applicable Sentencing Guideline range. Thus, a motion under Section 5K1.1 will ordinarily not be construed as a motion under Section 3553(e), in order to permit a court sentence below an otherwise applicable mandatory minimum sentencing requirement. "To Reflect a Defendant's Substantial Assistance" Any sentence imposed below the statutory minimum by virtue of Section 3553(e) must be based on the extent of the defendant's assistance; it may not reflect considerations unrelated to such assistance. It has been suggested, however, that a court may use the Section 5K1.1 factors for that determination, that is, "(1) the court's evaluation of the significance and usefulness of the defendant's assistance, taking into consideration the government's evaluation of the assistance rendered; (2) the truthfulness, completeness, and reliability of any information or testimony provided by the defendant; (3) the nature and extent of the defendant's assistance; (4) any injury suffered, or any danger or risk of injury to the defendant or his family resulting from his assistance; [and] (5) the timeliness of the defendant's assistance." The substantial assistance exception makes possible convictions that might otherwise be unattainable. Yet, it may also lead to "inverted sentencing," that is, a situation in which "the more serious the defendant's crimes, the lower the sentence—because the greater his wrongs, the more information and assistance he had to offer to a prosecutor"; while in contrast the exception is of no avail to the peripheral offender who can provide no substantial assistance. Perhaps for this reason, most of the judges who responded to the Sentencing Commission survey agreed that a sentencing court should not be limited to assistance-related factors and should be allowed to use the generally permissible sentencing factors when calculating a sentence under Section 3553(e). Rule 35(b) In the before-and-after sentencing tale of avoiding a statutory mandatory minimum for substantial assistance, Rule 35(b) is the after. It is available only after sentencing. If the defendant's sentence is vacated on appeal, a Section 3553(e) motion rather than a Rule 35(b) motion is the appropriate vehicle for relief during resentencing. The rule features a two-pronged postsentence authorization for sentence reduction at the behest of the government. First, the government may always file a motion for sentence reduction including reduction below an otherwise applicable mandatory minimum if it does so within a year of sentencing. Second, the government may file a comparable motion a year after sentencing, but only under narrow circumstances that excuse the failure to make a more timely motion. Here, too, a motion by the government is a prerequisite to relief, and the government's decision to refuse to move can be overcome only where the government's silence is unconstitutionally grounded or based on some rationale not reasonably related to a legitimate government end. A district court, faced with a Rule 35(b) motion, must determine whether the defendant in fact rendered substantial assistance and if so what level of reduction, if any, is warranted. As part of its assessment, the court may, but is not required to, consider the general sentencing factors found in 18 U.S.C. § 3553(a). There is some authority for the proposition that the defendant has no right to notice and hearing following the submission of a Rule 35(b) motion. Moreover, Rule 35(b) does not authorize a court to reduce the amount of restitution previously ordered.

Federal law requires a sentencing judge to impose a minimum sentence of imprisonment following conviction for any of a number of federal offenses. Congress has created three exceptions. Two are available in any case where the prosecutor asserts that the defendant has provided substantial assistance in the criminal investigation or prosecution of another. The other, commonly referred to as the safety valve, is available, without the government's approval, for a handful of the more commonly prosecuted drug trafficking and unlawful possession offenses that carry minimum sentences. Qualification for the substantial assistance exceptions is ordinarily only possible upon the motion of the government. In rare cases, the court may compel the government to file such a motion when the defendant can establish that the refusal to do so was based on constitutionally invalid considerations, or was in derogation of a plea bargain obligation or was the product of bad faith. Qualification for the safety valve exception requires a defendant to satisfy five criteria. His past criminal record must be minimal; he must not have been a leader, organizer, or supervisor in the commission of the offense; he must not have used violence in the commission of the offense, and the offense must not have resulted in serious injury; and prior to sentencing, he must tell the government all that he knows of the offense and any related misconduct. In response to a congressional request, the U.S. Sentencing Commission recommended expansion of the safety valve. The First Step Act, P.L. 115-391, broadened the safety valve for the benefit of (1) defendants with slightly more serious criminal records and (2) defendants convicted under the Maritime Drug Enforcement Act.

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Background1 The JLTV is an Army-led, multiservice initiative to develop a family of future light tactical vehicles to replace many of the High Mobility, Multi-Wheeled Vehicles (HMMWVs) used by the armed services today. HMMWVs, which first entered service in 1985, were developed during the Cold War when improvised explosive devices (IEDs) and other antivehicle explosive devices were not a major factor in military planning. The HMMWVs' demonstrated vulnerability to IEDs and the difficulties and costs experienced in "up-armoring" HMMWVs already in the inventory have led to renewed emphasis on vehicle survivability. DOD officials have emphasized that JLTVs are not intended to replace HMMWVs "one for one." The JLTV Program What Is the JLTV?3 The JLTV program is a joint Army/Marine Corps effort to develop and produce both vehicles and associated trailers. The JLTV family of vehicles consists of two mission categories: the JLTV Combat Tactical Vehicle (CTV), which seats four passengers, and the JLTV Combat Support Vehicle (CSV), which seats two passengers. The JLTV Combat Tactical Vehicle has a 3,500 lb. payload capacity and comes in three variants: the General Purpose (GP) variant; the Heavy Guns Carrier (HGC) variant; and the Close Combat Weapon carrier (CCWC) variant. The JLTV Combat Support Vehicle has a 5,100 lb. payload capacity and comes in one variant: the Utility (UTL) Prime Mover variant, which can accommodate a shelter. As planned, JLTVs would be mechanically reliable, maintainable (with on-board diagnostics), all-terrain mobile, and equipped to link into current and future tactical data nets. Survivability and strategic and operational transportability by ship and aircraft are also key JLTV design requirements. Program Structure7 The JLTV is an Acquisition Category (ACAT) 1D program. The Army bears the overall responsibility for developing the JLTV through its Joint Program Office, which reports to the Program Executive Office (PEO) for Combat Support & Combat Service Support (PEO CS&CSS) in Warren, MI, which reports to the Assistant Secretary of the Army for Acquisition, Logistics, and Technology (ASA [AL&T]). Marine participation is centered on a program office under the supervision of the Program Executive Officer Land Systems (PEO LS) Marine Corps at Quantico, VA. Past Program History In November 2006, the Joint Chiefs of Staff's Joint Requirement Oversight Council (JROC) approved the JLTV program. On December 22, 2007, the Under Secretary of Defense for Acquisition, Technology, and Logistics USD (AT&L) signed an Acquisition Decision Memorandum (ADM) directing the JLTV Program to move from the Concept Refinement Phase into the Technology Development (TD) Phase of the DOD System Acquisition Process. The Army and Marines had intended to issue a Request for Proposal (RFP) for Technology Development Phase as early as October 2007. Concerned with funding adequacy, technical maturity, and shifting requirements, the Pentagon's acquisition executive disapproved the issuance of the RFP and directed the Army and Marines to "go back to the drawing board and develop a robust technology development phase." On February 5, 2008, an RFP for Technology Development Phase was issued to industry. The RFP stated the government desired to award three contracts for the JLTV Technology Development Phase. The RFP stipulated that proposals would be due April 7, 2008, and the TD Phase would last 27 months. Contractors would build four test subconfigurations during the first 15 months, followed by 12 months of testing. Technology Development Contracts Awarded11 On October 28, 2008, three awards were made for the JLTV TD Phase for a total of $166 million. The three industry teams were (1) BAE Systems Land and Armaments, Ground Systems Division, Santa Clara, CA, and NAVISTAR Defense, Warrenville, IL; (2) General Tactical Vehicles, Sterling Heights, MI—a joint venture between General Dynamics Land Systems and AM General; and (3) Lockheed Martin Systems Integration, Oswego, NY, BAE Systems, Alcoa Defense, Pittsburgh, PA, and JWF Defense Systems, Johnstown, PA. JLTV Contracts Protested On November 7 and November 12, 2008, protests were filed with the Government Accountability Office (GAO) against the TD contract awards by the Northrop Grumman-Oshkosh team and the Textron-Boeing-SAIC team alleging there were "unintended discrepancies" in how the government rated bids in terms of the criteria of systems maturity, logistics, and costs. As a result of that protest, work on the JLTV program by the three winning teams was suspended. On February 17, 2009, GAO rejected the JLTV protests and the stop-work orders were lifted. Change in Requirements, Program Schedule, and Variants13 In February 2011, the JLTV Program Office announced the award of the EMD contract would be delayed until January or February 2012 because the Army changed requirements for the JLTV to have the same level of under-body protection as the Mine-Resistant, Ambush-Protected All-Terrain Vehicle (M-ATV). DOD had planned to award two contracts for the EMD phase, which was scheduled to last 24 months, but instead opted for a 48-month-long EMD phase before awarding Production and Deployment contracts in the second quarter of FY2016. It was decided that there would be two variants—a Combat Tactical Vehicle (CTV), which can transport four passengers and carry 3,500 pounds, and a Combat Support Vehicle (CSV), which can transport two passengers and carry 5,100 pounds. Army Issues RFP for EMD Phase15 On January 26, 2012, the Army issued the RFP for the JLTV's EMD Phase. Industry proposals for the EMD contract were to have been filed with the Army by March 13, 2012. The RFP stipulated that up to three EMD contracts could be awarded, and contract award occurred in June 2012. These contracts would be capped at $65 million per contract. The duration of the EMD performance period would be 27 months starting with contract award. Vendors would be required to provide 22 prototypes for testing 12 months after contract award, and the target cost for the base vehicle configuration was $250,000 (FY2011 constant dollars), excluding add-on armor kits and other kits identified in the RFP. JLTV EMD Contracts Awarded On August 22, 2012, the Army announced the award of three firm-fixed price JLTV EMD contracts totaling approximately $185 million. The three companies awarded the EMD contracts were AM General, LLC (South Bend, IN); Lockheed Martin Corporation (Grand Prairie, TX); and Oshkosh Corporation (Oshkosh, WI). The period of performance was for 27 months, with each contractor receiving initial funding between $28 million and $36 million per contractor, with the balance of funding up to the full contract amount being provided in FY2013 and FY2014. In 12 months, each team was required to deliver 22 prototypes and contractor support for a 14-month comprehensive government testing program, which included blast, automotive, and user evaluation testing. The overall EMD Phase was scheduled to last 33 months. According to the Army, "the EMD Phase is designed to test and prepare the next-generation vehicles for a Limited User Test, Capabilities Production Document and Milestone C procurement decision in FY 2015." Unsuccessful bidders Navistar Defense, BAE Systems, and General Tactical Vehicles (a team of General Dynamics and AM General) were permitted to continue developing JLTV candidate vehicles at their own risk and expense, if they notified the government within 30 days of the EMD contract award. Reports suggested some bidders considered continuing development of JLTV candidates for submission for production source selection. Army Releases Final RFP for JLTV Full-Rate Production20 On December 12, 2014, the Army reportedly released the final RFP for JLTV low-rate initial production and full-rate production and gave competitors until February 10, 2016, to refine and submit their bids. The Army—on behalf of itself and the Marines—planned to select a winner and issue a single contract award in late summer 2016. The winning contractor would build approximately 17,000 JLTVs for the Army and Marines during three years of low-rate initial production, followed by five years of full-rate production. The first Army unit would be equipped with JLTVs in FY2018, and the Army's complete acquisition of JLTVs would be completed in 2040. The Marines would begin acquiring their 5,500 JLTVs at the beginning of production and would be completed by FY2022. Bids Submitted for JLTV Low-Rate Initial Production (LRIP)21 It was reported that the three companies who were picked in 2012 to build prototypes—Oshkosh, Lockheed Martin, and AM General—submitted their bids for the LRIP contract by the February 10, 2015, deadline. It was also reported that none of the three competitors had said publicly if they included in their proposals an option for the Army to purchase a technical data package for their vehicles. If the Army acquired the technical data package, theoretically the Army could use that data for future production runs, which could enhance competition and possibly result in better prices for the government. Army Awards JLTV Contract22 On August 25, 2015, the Army awarded Oshkosh a $6.7 billion low rate initial production (LRIP) contract with eight options to procure the initial 16,901 vehicles for the Army and Marines. The JLTV is to be produced in Oshkosh, WI. A full rate production decision was planned for FY2018, and called for the production of 49,100 JLTVs for the Army and 5,500 for the Marine Corps. Lockheed Martin's JLTV Protest Lockheed Martin Files Protest with the Government Accountability Office (GAO)24 On September 8, 2015, Lockheed Martin reportedly planned a protest with GAO, with a program spokesman stating the following: After evaluating the data provided at our debrief, Lockheed Martin has filed a protest of the award decision on the JLTV program. We firmly believe we offered the most capable and affordable solution for the program. Lockheed Martin does not take protests lightly, but we are protesting to address our concerns regarding the evaluation of Lockheed Martin's offer. Army Stops Work on the JLTV Contract26 On September 10, 2015, the Army reportedly issued a stop-work order to Oshkosh, with a GAO spokesman noting, "The Federal Acquisition Regulation requires contracting officers to automatically suspend performance on an awarded contract, following appropriate notification of a protest from GAO." On December 11, 2015, Lockheed Martin informed GAO that it would file its JLTV protest instead with the U.S. Court of Federal Claims. On December 15, 2015, GAO closed Lockheed Martin's protest "without further action." With the GAO protest dismissed, the Army lifted its stop-work order to Oshkosh on December 15, 2015. The U.S. Court of Federal Claims denied Lockheed Martin's stop-work request on February 11, 2016, meaning Oshkosh could continue work associated with the JLTV contract until the court resolved the contract award dispute. Lockheed Martin Withdraws JLTV Protest from United States Court of Federal Claims30 On February 17, 2016, Lockheed Martin reportedly withdrew its JLTV protest in the U.S. Court of Federal Claims. JLTV LRIP Production Begins31 On March 22, 2016, the Army reportedly placed a $243 million order with Oshkosh Defense to build 657 JLTVs, as well as 2,977 installation kits and related vehicle support LRIP items. The first JLTVs were delivered in September 2016. Delay in JLTV Initial Operating Capability (IOC)33 Primarily due to program disruption resulting from the Lockheed Martin protest, the JLTV will not reach IOC in mid-2019 as originally planned. Instead, the Army anticipates a six-month delay in IOC until the end of 2019, and the Marine Corps IOC, originally expected for the fourth quarter of FY2018, will now be a year later in the first quarter of FY2020. Although these delays are significantly longer than the protest period, officials from both services noted their respective IOCs were adjusted to reflect delays in scheduled testing. Army Places $100 Million Order for JLTVs34 The Army reportedly ordered 258 JLTVs and 1,727 associated components in December 2017 for a total of $100.1 million, with the estimated contract completion date May 31, 2019. According to Oshkosh Defense, it had delivered more than 1,000 vehicles since October 2016, and soldiers and Marines were expected to start receiving JLTVs for operational use in FY2019. Also in FY2019, a full-rate production decision is expected, with an Army and Marine Initial Operating Capability (IOC) expected in early FY2020. Recent JLTV Program-Related Developments Army Selects JLTV to Serve as Its Interim Light Reconnaissance Vehicle (LRV)35 The Army reportedly decided to use the JLTV as the platform for its upcoming Light Reconnaissance Vehicle (LRV) program, instead of procuring a new system. Army officials note the JLTV is an interim solution, largely based on costs associated with developing a new system, and, in the future, the Army could opt to pursue an original design for its LRV. It is not known whether additional JLTVs will need to be acquired under the Army's JLTV contract to meet LRV requirements. Reportedly, some Army officials want JLTVs that will serve as an LRV to have two more seats to accommodate scouts as well as a weapon larger than a .50 caliber machine gun, such as a 30 mm cannon. These modifications are viewed as necessary to increase the effectiveness of scout platoons as well as provide sufficient firepower to destroy enemy reconnaissance formations. Air Force JLTV Acquisition37 In the near term, the Air Force plans to replace HMMWVs with JLTVs in its security forces, explosive ordnance disposal, pararescue, tactical air control, and special tactics units. Reportedly, the Air Force eventually would like to replace its entire 3,270 HMMWV fleet with JLTVs, but Air Force budget documents detail JLTV procurement only from FY2019 through FY2022. Marines Increase JLTV Requirement to 9,091 Vehicles38 The Marines reportedly plan to increase their JLTV requirement from 5,500 vehicles to 9,091 vehicles—about a 65% increase over the Marines' original approved acquisition objective. Marine leadership reportedly wanted to acquire these additional vehicles as quickly as possible, budget permitting. In June 2017, Marine Corps officials reportedly noted it would take "a couple of years" to formally adjust their approved acquisition objective (AAO), meaning that eventually, JLTVs would account for approximately half of the Marines' light tactical vehicle fleet. British Foreign Military Sales (FMS) Purchase of JLTV39 The British Army will reportedly acquire 2,747 JLTVs, valued at more than $1 billion, through the Foreign Military Sales (FMS) process. The sale also includes an armor kit, spare tires, and fording gear, as well as training for vehicle operators and maintainers. JLTV Procurement Extended One Year and Increased Total Program Cost41 DOD reports both the Army and Marines have extended their procurement profiles due to program strategy changes, primarily due to updating the mix of vehicle variants and kits. The Army now plans to conclude its procurement in FY2036 and the Marines in FY2023. Total program costs have also increased to $28.03 billion (a 10.9% increase), primarily due to the increase in procurement profiles, increase in Marine Corps quantities to 9,091 vehicles, updates in vehicle configuration and kit mix for the Army, updates in vehicles and kits based on the vehicle configuration mix for the Marines, and an increase in other support and initial spares for the Army and Marines. DOD Inspector General (IG) Report and JLTV Production42 A redacted May 2, 2018, DOD IG report notes that, while the Army and Marine Corps developed adequate test plans, the services have not demonstrated effective test results to prepare the JLTV program for full rate production. The IG's review of test results in August and September of 2017 determined the JLTV failed to meet all maintenance-related performance requirements. The IG suggested certain capabilities be developed to address the shortfall, but specifics were redacted in the public version of the report. The JLTV Program Executive Office (PEO) noted in response that the program would equip all JLTVs with the unspecified capability cited in the IG's report. First Units Receive JLTV43 On January 28, 2019, the first JLTVs were delivered to the 1 st Armored Brigade Combat Team (ABCT), 3 rd Infantry Division at Ft. Stewart, GA. Plans call for the 1 st ABCT to be equipped with about 500 JLTVs by the end of March 2019. It is not known if the 500 JLTVs have been fielded as of the date of this report. The Marines started fielding JLTVs at Camp Pendleton, CA, in February 2019, with initial operational capability planned for late summer 2019. Director, Operational Test and Evaluation (DOT&E)44 FY2018 Annual Report Among other things, DOT&E's FY2018 Annual Report contends the following: The JLTV General Purpose (GP), Heavy Guns Carrier (HGC), and Utility (UTL) variants are operationally effective for employment in combat and tactical missions. The JLTV Close Combat Weapons Carrier (CCWC) is not operationally effective for use in combat and tactical missions. The CCWC provides less capability to engage threats with the Tube-launched, Optically tracked, Wire-guided (TOW) missiles over the fielded High Mobility Multipurpose Wheeled Vehicle (HMMWV). The missile reload process is slow and difficult for crews. All JLTVs are not operationally suitable because of deficiencies in reliability, maintainability, training, manuals, crew situational awareness, and safety. JLTV Full-Rate Decision Delayed46 Reportedly, the Army has decided to delay JLTV full-rate production, previously scheduled for December 2018, until the early summer of 2019, in order to assess options for vehicle design changes suggested by soldiers and marines during testing, potentially resulting in a program schedule breach. Reportedly, the full-rate production decision can be delayed until June 2019, but beyond that, it could trigger a Nunn-McCurdy breach, requiring, among other things, a report to Congress and a new program schedule. Marine Corps Addresses DOT&E Concerns and JLTV Fielding Plans48 Marine Corps program officials reportedly have worked through a number of the problems addressed in DOT&E's FY2018 Annual Report. They suggest that many of the problems identified in the report can be addressed through improved tactics, techniques, and procedures and that some of the issues identified, such as insufficient training manuals, were a result of program decisions resulting from budget restrictions placed on the service. Marine officials also noted that legacy HMMWVs had similar challenges identified during testing in 1986, but these issues were resolved after fielding. In terms of reliability and maintainability, Marine officials noted HMMWVs go between 500 to 600 miles between operational mission failures, compared to the JLTV's requirement of 2,400 miles before operational mission failure, which the JLTV has surpassed during its developmental testing. Compared to HMMWVs, the JLTV is said to be less burdensome in terms of maintenance, although JLTV maintenance may take a little longer due to a need to remove armored panels and a more complex engine. The Marines reportedly plan to field its first 55 JLTVs to support units at training locations, including the School of Infantry West, School of Infantry East, and the Motor Transport Maintenance Instructional Company, by the end of May 2019. Beginning in July 2019, operational units are planned to receive their first vehicles (3 rd Battalion, 8 th Marines at Camp Lejeune, NC), which will also signify the Marines Initial Operational capability (IOC). By the end of FY2019, all three Marine Expeditionary Forces (MEFs)—1 st MEF in Camp Pendleton, CA; 2 nd MEF in Camp Lejeune, NC; and 3 rd MEF in Okinawa, Japan—will have received some combination of all variants. Army Reduces Overall JLTV Acquisition49 On March 13, 2019, Army leadership reportedly announced the Army was considering lowering its overall requirement for JLTVs. In order to free up funding for modernization, the Army decided to cut funding over the next five years for 93 programs—including the JLTV. Army officials noted the service already has 55,000 HMMWVs and 800 Infantry Squad Vehicles (ISVs), contending the Army "has more capability than we need." Army officials reportedly were looking to lower the overall requirement for JLTVs and would determine "a new top line requirement soon." On March 14, 2019, it was reported the Army planned to buy 1,900 fewer JLTVs than originally planned, reducing program funding by nearly $800 million over the Future Years Defense Plan (FYDP). Department of Defense (DOD) FY2020 Budget Request53 The FY2020 presidential budget request includes RDT&E and procurement funding requests, as well as FY2020-requested quantities in the base budget and Overseas Contingency Operations (OCO) budget request. Potential Issues for Congress DOD Inspector General's Report and DOT&E's FY2018 Annual Report Findings and Full-Rate JLTV Production A redacted May 2, 2018, DOD Inspector General's (IG's) report notes the Army and Marine Corps had not demonstrated effective test results to prepare the JLTV program for full-rate production. The IG's review of test results in August and September of 2017 determined the JLTV failed to meet all maintenance-related performance requirements. The IG suggested certain capabilities be developed to address the shortfall, but specifics were redacted in the public version of the report. DOT&E's FY2018 Annual Report noted the following: All JLTVs are not operationally suitable because of deficiencies in reliability, maintainability, training, manuals, crew situational awareness, and safety. The JLTV Close Combat Weapons Carrier (CCWC) is not operationally effective for use in combat and tactical missions. The CCWC provides less capability to engage threats with the Tube-launched, Optically tracked, Wire-guided (TOW) missiles over the fielded High Mobility Multipurpose Wheeled Vehicle (HMMWV). The missile reload process is slow and difficult for crews. Military officials involved with the JLTV program appear to be minimizing these findings, reportedly suggesting some of these unspecified problems are "minor improvements identified by soldiers and Marines during testing." Another report alleges the Army "did not respond to questions about the production decision nor the recent DOT&E report, which detailed several JLTV problems." The Army's decision to delay full-rate JLTV production affects not just the Army, but the other services as well, and can be considered a significant programmatic decision. To reconcile possible concerns, a detailed look at the DOD IG's and DOT&E's findings and the actions that will be required to rectify identified deficiencies could be in order. Such an examination could help policymakers determine if these deficiencies are minor in nature, or if more extensive and potentially time-consuming and expensive corrective actions will be required. What Are Potential Consequences of a Delayed Full-Rate JLTV Production Decision? While it is not yet known how any delay in full-rate JLTV production will affect the program, it might be considered prudent for policymakers to examine the potential consequences of a delayed full-rate production decision. While a minor delay not invoking a Nunn-McCurdy breach may be inconsequential or have a minimal impact, a longer delay, potentially triggering a Nun-McCurdy breach, could have significant consequences in terms of program schedule; program cost; service allocation of JLTVs; overall fielding plan; training and readiness of units receiving JLTVs; and potential Foreign Military Sales (FMS). Such an examination could prove useful to policymakers in the event that a full-rate production decision is significantly delayed, particularly in terms of both program oversight and FY2020 defense authorizations and appropriations discussions. Implications of the New Top-Line JLTV Requirement The Army's March 14, 2019, announcement that it was planning to reduce its overall requirement for JLTVs by 1,900 vehicles to help free up funding for modernization raises potential issues for Congress. With the Army reportedly suggesting it has more light tactical vehicle capability than it needs with existing HMMWVs and ISVs, questions could arise as to the accuracy of the Army's original JLTV requirements process. Other questions could arise as well: With a revised overall JLTV requirement, what is the Army's new fielding plan to units? With fewer JLTVs to be fielded, what is the overall operational impact to the force? With an overall JLTV reduction, will the Army's Reserve Components receive fewer JLTVs than originally planned? Finally, will this new revised JLTV requirement be final, or is it possible the Army might again reduce overall JLTV requirements to free up funding for other higher-priority programs, or if future budget reductions are imposed on the Army?

The Joint Light Tactical Vehicle (JLTV) is being developed by the Army and the Marine Corps as a successor to the High Mobility, Multi-Wheeled Vehicle (HMMWV), which has been in service since 1985. On October 28, 2008, awards were made for the JLTV Technology Development (TD) Phase to three industry teams: (1) BAE Systems, (2) the team of Lockheed Martin and General Tactical Vehicle, and (3) AM General and General Dynamics Land Systems. On January 26, 2012, the Army issued the Request for Proposal (RFP) for the JLTV's Engineering Manufacturing Development (EMD) phase. Up to three EMD contracts scheduled for June could have been awarded. The period of performance for EMD contracts was 27 months, and the overall EMD phase was scheduled to last 33 months. Vendors were required to provide 22 JLTV prototypes for testing 12 months after contract award. The target cost for the base vehicle was $250,000, excluding add-on armor and other kits. On August 22, 2012, the Army announced the award of three firm-fixed price JLTV EMD contracts totaling approximately $185 million. The three companies awarded the EMD contracts were AM General, LLC (South Bend, IN); Lockheed Martin Corporation (Grand Prairie, TX); and Oshkosh Corporation (Oshkosh, WI). On September 3, 2013, the Army began JLTV testing at Aberdeen Proving Ground, MD; Yuma, AZ; and Redstone Arsenal, AL. The Army planned to select a single vendor by 2015, with the first Army brigade being equipped with JLTVs by 2018. FY2015 program plans anticipated a Milestone C (Production and Deployment Phase Approval) decision in the fourth quarter of FY2015, followed by Low Rate Initial Production (LRIP). On August 25, 2015, it was announced the Army had awarded Oshkosh a $6.7 billion low rate initial production (LRIP) contract with eight options to procure the initial 16,901 vehicles for the Army and Marines. The JLTV is being produced in Oshkosh, WI. It is also reported the Army plans to use the JLTV as the interim platform for its upcoming Light Reconnaissance Vehicle (LRV) program instead of procuring a new system. The British Army is reportedly trying to acquire 2,747 JLTVs through Foreign Military Sales (FMS). The Marines have also reportedly increased their JLTV requirement for a total of 9,091 JLTVs. The Air Force and Navy are also procuring a limited number of JLTVs for use. A redacted May 2, 2018, DOD Inspector General (IG) report noted the services have not demonstrated effective test results to prepare the JLTV program for full rate production, but the JLTV Program Office has plans to address this concern. The Director, Operational Test and Evaluation (DOT&E) FY2018 Annual Report notes among other findings that JLTVs are not operationally suitable because of deficiencies in reliability, maintainability, training, manuals, crew situational awareness, and safety. Reportedly, the Army has decided to delay JLTV full-rate production, previously scheduled for December 2018, until the early summer of 2019 in order to assess options for vehicle design changes. On March 14, 2019, Army leadership reportedly announced the Army was lowering its overall requirement for JLTVs by 1,900 vehicles in order to free up funding for modernization. The FY2020 Research, Development, Test and Evaluation (RDT&E) and Procurement JLTV budget request for all four services is $1.641 billion for 4,090 vehicles. Potential issues for Congress include (1) the possible examination of the DOD Inspector General's Report and DOT&E's FY2018 Annual Report findings and full-rate JLTV production, (2) the potential consequences of a delayed full-rate JLTV production decision, and (3) implications of the Army's new top-line JLTV requirement.

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Introduction The U.S. merchandise trade deficit with the People's Republic of China (China) remains a major source of bilateral tension. Some Members of Congress and other U.S. government officials often point to the bilateral trade imbalance as evidence that China is not competing fairly in the global market. In March 2018, the Trump Administration reportedly asked China to develop a plan to reduce the bilateral trade deficit by $100 billion. On March 31, 2017, President Trump issued Executive Order 13786, which states: Within 90 days of the date of this order, the Secretary of Commerce and the United States Trade Representative (USTR), in consultation with the Secretaries of State, the Treasury, Defense, Agriculture, and Homeland Security, and the heads of any other executive departments or agencies with relevant expertise, as determined by the Secretary of Commerce and the USTR, shall prepare and submit to the President an Omnibus Report on Significant Trade Deficits (Report). President Trump also issued Executive Order 13796, "Addressing Trade Agreement Violations and Abuses," on April 29, 2017, which, among other things, requires the Secretary of Commerce and the USTR to "conduct comprehensive performance reviews" of "all trade relations with countries governed by the rules of the World Trade Organization with which the United States does not have free trade agreements but with which the United States runs significant trade deficits in goods." China is one such country. Despite the priority the Trump Administration has placed on reducing bilateral trade deficits in general, and with China in particular, according to official U.S. trade statistics, the overall U.S. merchandise trade deficit and the bilateral deficit with China increased in 2017 and 2018. The overall deficit rose from $736.6 billion in 2016 to $795.7 billion in 2017, and $878.7 billion in 2018. The bilateral deficit with China accounted for 47.1%, 47.2%, and 47.7% of the total merchandise trade deficit for the last three years, respectively. Debate over this trade deficit is hampered by disagreement between the two countries on how large the deficit actually is. According to official U.S. figures, China has surpassed Canada as the largest supplier of U.S. imports, running up a bilateral merchandise trade surplus in 2018 of $419.2 billion. However, according to official Chinese figures, China's trade surplus with the United States in 2018 was $323.9 billion—$95.9 billion less than the U.S. figure (see Table 1 ). The U.S. trade deficit with China plays a role, directly and indirectly, in proposed legislation addressing bilateral trade relations. The Fair Trade with China Enforcement Act ( H.R. 704 and S. 2 ), for example, refers to "a severely imbalanced trading relationship" with China, and would impose restrictions on Chinese investment in the United States "due to its negative effect on the United States trade deficit and wages of workers in the United States." The United States Reciprocal Trade Act ( H.R. 764 ) finds, "The lack of reciprocity in tariff levels and nontariff barriers contributes to the large and growing United States trade deficit in goods, which is a drag on economic growth and undermines economic prosperity." The act would authorize the President to negotiate an agreement with a country that has higher tariff or nontariff barriers than the United States, or impose additional duties on that country's exports to the United States. Comparison of U.S. and Chinese Merchandise Trade Data Table 1 lists the official trade statistics from the United States and China for the years 2001 to 2018, using official trade data. From the U.S. perspective, its bilateral trade deficit with China more than quintupled in value over the last 18 years, from just over $83 billion in 2001 to over $419 billion in 2018. However, from the Chinese view, its bilateral trade surplus with the United States increased more than 11-fold, from about $28 billion in 2001 to more than $323 billion in 2018. Table 1 reveals that most of the discrepancy between the trade data from the two nations stems from significantly different figures for China's exports to the United States. The difference between the U.S. and Chinese figures for U.S. exports to China was generally less than $10 billion until 2011, but the discrepancy has been rising in recent years. China's figures for its exports to the United States differed from U.S. figures by $48.3 billion in 2001 and $61.1 billion in 2018. Delving into the Data: Examining HS Code The most widely used international system for classifying traded goods is the Harmonized Commodity Description and Coding System, commonly referred to as the Harmonized System or simply HS Code. Every product traded is classified into a 10-digit code. The first two digits of the product's code correspond to one of the 98 HS "chapters," that classify all goods in general categories. The U.S. International Trade Commission maintains the U.S. version of the HS Code, officially called the "Harmonized Tariff Schedule of the United States," or HTS. Since both the United States and China use the same HS chapters, it is possible to compare the trade data at this level. Table 2 lists in rank order the top five HS chapters where the value of U.S. imports from China exceeds the value of Chinese exports to the United States for 2018. The top five HS chapters—footwear (64), machinery (84), electrical machinery (85), optical and medical instruments (90), and toys and sporting goods (95)—account for more than 94% of the difference between the U.S. and Chinese figures for U.S. imports from China (or Chinese exports to the United States). All five of these chapters also ranked high according to both countries in terms of their absolute value of trade. Machinery (84), electrical machinery (85), and toys and sporting goods (95) were among the top five ranked chapters in terms of the value of imports from China, according to the United States, and accounted for 54.7% of the total value of imports in 2018. The same three chapters were among the top five sources of exports to the United States, according to China, and accounted for 50.5% of the total value of exports in 2018. In addition, China's export value for four chapters exceeded U.S. import value by more than $1 billion (in order): Railway equipment (86) - $2.856 billion; knit apparel (61) - $2.840 billion; woven apparel (62) - $1.618 billion; and non-railway vehicles (87) - $1.130 billion. On the other side of the trade equation, there were 10 chapters where China's imports exceeded U.S. exports by more than $1 billion: miscellaneous grains (12); mineral fuel (27); pharmaceutical products (30); miscellaneous chemical products (38); plastic (39); precious stones and metals (71); machinery (84); electrical machinery (85); non-railway vehicles (87); and optical and medical equipment (90). In one chapter—railway equipment (86)—U.S. exports exceeded Chinese imports by more than $1 billion. On both sides of the trade balance equation, two of the greatest differences in the official trade statistics of the two nations occurred in the same HS chapters—machinery (84) and electrical machinery (85). The discrepancies between the official trade statistics for these two types of goods have been consistently large for flows in both directions since 2001, indicating a systemic difference in the evaluation of the bilateral trade of these goods. Explaining the Differences: Literature Summary The question as to why China's official statistics (on trade flows) are routinely much lower in value than the official U.S. trade statistics has been and continues to be the subject of analysis by scholars, government officials, and other interested parties. Nor is the issue unique to the United States; Canada also reports bilateral trade statistics that differ significantly from China's reported figures, and has investigated the reasons for those differences. The following is a short review of some of the key explanations provided in this literature, categorized into "technical" and "non-technical" explanations. "Technical" explanations refer to procedural or administrative causes for the discrepancies; "non-technical" explanations include causes arising from non-procedural or non-administrative sources. Technical Explanations Official Definitions of Exports and Imports In its official statistics, China evaluates exports using the more commonly used "free on board" (F.O.B.) terms, and evaluates imports using "cost, insurance, and freight" (C.I.F.) terms. The use of F.O.B. for exports and C.I.F. for imports is a common, but not universal, international practice. The United States, however, reports its exports using "free alongside" (F.A.S.) terms and values imports using a customs definition. As a result, official U.S. trade data place a lower value on both U.S. exports to China and imports from China than the official Chinese data. In addition, direct comparisons of the official U.S. and Chinese trade balances reported in the media are potentially misleading, because the goods trades are being evaluated using different methods. For more accurate direct comparisons, the trade data for both nations should be evaluated using the same terms. Definition of Territory The United States includes Puerto Rico and the U.S. Virgin Islands in its trade data; China does not. China treats Puerto Rico and the U.S. Virgin Islands as separate customs territories. According to most studies, this is a comparatively minor source of difference in the trade figures. Timing Because of the distance between China and the United States, it takes time between the export of the goods from China and their import in the United States. Goods in transit at the end of the year are counted as exports by China, but not as imports by the United States. However, the lag between shipments occurs at the beginning and the end of the year, thus minimizing the effect of timing on the overall trade balance difference. Declaration of Country of Origin The current practice of U.S. Customs is to rely on the declaration of the importer to determine the country of origin. Some analysts believe that importers are misidentifying a significant amount of imports as Chinese. Exchange Rates Because China's currency, the renminbi (RMB), is allowed to fluctuate within a small range, the exchange rate between the renminbi and the U.S. dollar changes over time. The value of a shipment may change between the date it leaves China and the date it arrives in the United States due to changes in the exchange rate. Although the renminbi has appreciated against the U.S. dollar over the last decade, exchange rate changes are generally not considered a major factor in the discrepancy in the trade figures. Non-Technical Explanations Value Differences in Direct Trade According to two joint China-U.S. studies (see " Joint China-U.S. Studies of Discrepancies " below), about half of the merchandise trade discrepancy between U.S. imports from China and Chinese exports to the United States—or eastbound trade—is attributable to changes in the values of the export price in China and the import value in the United States for goods shipped directly between the two countries. Part of the difference may be caused by mid-shipment transfers in ownership resulting in the new owner adding a markup in the price. Another possible explanation is intentional under-invoicing of exports (see below). Under-Invoicing Some analysts believe that Chinese importers may intentionally under-value imports from the United States to lower the import tariff due on the shipment. In addition, some analysts believe that Chinese exporters may intentionally under-value exports to the United States to maximize their net proceeds overseas for various tax and regulatory reasons. More recently, bilateral trade figures may have been distorted by "phantom goods" shipments from China to the United States (and other locations) used to disguise attempts to move financial capital offshore. Due to the "hidden nature" of under-invoicing, it is difficult to assess how much, if at all, this may be contributing to the differences in the trade data. Intermediation Although estimates vary, many analysts agree that a large portion of China's exports arrive in the United States via a third party, Hong Kong being the most commonly identified location. The intermediation of shipments raises two sources of discrepancies. First, the exporter from China may not know that the goods eventually will be shipped to the United States, and may therefore list the third party (e.g., Hong Kong) as its destination, but U.S. Customs may list the source of shipment as being China, based on U.S. laws and regulations. Second, the value of the shipment may change—with or without any actual change in the goods—between its arrival in and departure from the third location. The joint China-U.S. study of discrepancies in merchandise trade statistics determined that value differences account for about half of the differences between Chinese and U.S. trade statistics. Joint China-U.S. Studies of Discrepancies In April 2004, the 15 th JCCT established a statistical working group, with representatives of China's Ministry of Commerce and General Administration of Customs, and the U.S. Department of Commerce and Office of the USTR. The initial focus of the working group was to examine the "unusually large and growing statistical discrepancies in the bilateral merchandise trade data officially published by [the] two countries." The Working Group subsequently decided to conduct a reconciliation study to determine the causes of the discrepancies. However, the Working Group stated that the results of the study were not intended to imply errors in either nation's statistical systems and/or methods of calculating official merchandise trade data. Under the auspices of the U.S.-China Joint Commission on Commerce and Trade (JCCT), China's Ministry of Commerce and the U.S. Department of Commerce and Office of the U.S. Trade Representative (USTR) have conducted two studies to determine the causes of the statistical discrepancies in the official merchandise trade data reported by both nations. The first report was released in October 2009; the second in December 2012. The main conclusions of the two studies are largely the same. The greatest discrepancy is in the "eastbound trade" data, which accounts for 80%-90% of the overall difference in annual trade balance. Roughly half of the "eastbound trade" data discrepancy can be attributed to goods that "leave China, enter the commerce of intermediate countries or regions, and then [are] re-exported to the United States." Implications for Congress The release of the official U.S. annual trade figures has been frequently followed by expressions of concern about the size of U.S. bilateral trade deficit with China. According to official U.S. trade figures, the bilateral trade deficit with China in 2017 was more than five times the size of the next largest bilateral trade deficit (Mexico, $71.1 billion) and greater than the sum of the next eight largest bilateral trade deficits. China has not accepted the "accuracy" of the official U.S. figure for the Sino-U.S. trade balance for at least two decades. A 1997 White Paper issued by China's State Council, "On Sino-US Trade Balance," states, "Statistics and analyses prove it true that Sino-US trade has been in favour of China in recent years, but it is obvious that the size of the US deficit has been largely exaggerated by the US side." In 2007, China's Foreign Ministry spokeswoman, Jiang Yu, said, "imbalances in China-U.S. trade are an objective fact, but this is also related to the two sides' different statistical methods." Also, when considering means or actions designed to reduce the U.S. trade deficit with China, it is useful to know which goods are the main sources of discrepancies between Chinese and U.S. trade figures, and how important they are in the overall trade flow between the two nations, so that "trade remedies" may be better targeted at the perceived problem. According to this report, the main problems appear to be in the trade figures for electrical machinery, machinery, and toys and sporting goods. For those causes of the differences resulting from data compilation—such as misidentification of value or country of origin of imports—Congress may choose through oversight or other means to encourage the responsible U.S. agency to examine and adjust its procedures for compiling trade data. In addition, Congress may decide to press or otherwise encourage China's customs services to conduct a similar review of its trade compilation procedures. In other cases, more detailed analysis of the trade data may be helpful in persuading China to amend or alter its laws, regulations, and policies pertaining to the import or export of goods to the United States. Selected Bibliography on the Differences Between U.S. and Chinese Bilateral Trade Figures "Accounting for Discrepancies in Bilateral Trade: The Case of China, Hong Kong, and the United States," by Michael J. Ferrantino and Zhi Wang, China Economic Review , vol. 19 (2008), pp. 502-520. Adjusted Estimates of United States-China Bilateral Trade Balances—An Update . K.C. Fung, Lawrence J. Lau and Yangyan Xiong. June 2006. Stanford Center for International Development, Working Paper No. 278. Comparing Canada's and China's Bilateral Trade Data . China-Canada Joint Working Group on Trade Statistics Reconciliation. August 29, 2018. Methodology of U.S.-China-Hong Kong Triangular Merchandise Trade Statistic Reconciliation . Alexander Hammer, Lin Jones, and Zhi Wang. August 2013. Office of Economics Research Note, U.S. International Trade Commission, No. RN-2013-08A. Report on the Statistical Discrepancy of Merchandise Trade Between the United States and China, Report by the Joint Commission on Commerce and Trade Statistical Working Group, October 2009. The Second Phase Report on the Statistical Discrepancy of Merchandise Trade between the United States and China , Report by the Joint Commission on Commerce and Trade Statistical Working Group, December 2012. Statistical Differences in Sino-US Trade Balance . February 12, 2007. China Online. http://chinaculture.about.com/library/china/whitepaper/blstrade2.htm . The U.S.-China Bilateral Trade Balance: Its Size and Determinants . Robert C. Feenstra, Wen Hai, Wing T. Woo, and Shunli Yao. May 1998. Paper presented at the UNDP-HIID Conference on China's Integration in the Global Economy, January 17, 1998. The U.S.-China Trade Imbalance: How Big Is It Really? Sarah Y. Tong. March 2005. China: An International Journal. Volume 3, No. 1, pp. 131-154.

The size of the U.S. bilateral trade deficit with China has been and continues to be an important issue in bilateral trade relations. President Trump and some Members of Congress view the deficit as a sign of unfair economic policies in China. The Trump Administration has reportedly asked China to develop a plan to reduce the bilateral trade deficit by $100 billion. In the 116th Congress, the Fair Trade with China Enforcement Act (H.R. 704 and S. 2) and the United States Reciprocal Trade Act (H.R. 764) mention U.S. trade deficits as a reason for the proposed legislation. There is a large and growing difference between the official trade statistics released by the United States and the People's Republic of China. According to the United States, the 2018 bilateral merchandise trade deficit with China was $419.2 billion. According to China, its trade surplus with the United States was $323.3 billion—a $95.9 billion difference. This report examines the differences in the trade data from the two nations in two ways. First, it compares the trade figures using the Harmonized Commodity Description and Coding System (Harmonized System) to discern any patterns in the discrepancies between the U.S. and Chinese data. This comparison reveals that more than 94% of the difference in the value of China's exports to the United States in 2018 was attributable to five types of goods. Those five types of goods, in order of the size of the discrepancy, were electrical machinery, machinery, toys and sporting goods, optical and medical equipment, and footwear. The second approach to examining the differing trade data involves a review of the existing literature on the technical and non-technical sources of the trade data discrepancies. The literature reveals that the leading sources of the discrepancies are differences in the list value of shipments when they leave China and when they enter the United States, and differing attributions of origin and destination of Chinese exports that are transshipped through a third location (such as Hong Kong) before arriving in the United States. In light of the differences in the official bilateral merchandise trade data, the U.S.-China Joint Commission on Commerce and Trade (JCCT) established a statistical working group in 2004. The working group has released two reconciliation studies (in 2009 and 2012) to identify the causes of the statistical discrepancies. The Working Group stated that the adjustments contained in the two studies are not meant to imply errors in the official statistics of either country. This report is updated annually, after the release of official trade data by China and the United States.

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Introduction Charging fees for grazing private livestock on federal lands is statutorily authorized and has been the policy of the Forest Service (FS, Department of Agriculture) since 1906, and of the Bureau of Land Management (BLM, Department of the Interior) since 1936. Today, fees are charged for grazing on BLM and FS land basically under a fee formula established in the Public Rangelands Improvement Act of 1978 (PRIA) and continued administratively. BLM manages a total of 245.7 million acres, primarily in the West. Of total BLM land, 154.1 million acres were available for livestock grazing in FY2017. The acreage used for grazing during 2017 was 138.7 million acres. FS manages a total of 192.9 million acres. Although this land is predominantly in the West, FS manages more than half of all federal lands in the East. Of total FS land, more than 93 million acres were available for grazing in FY2017, with 74 million used for livestock grazing. For both agencies, the acreage available for livestock grazing reflects lands within grazing allotments. However, the acreage in those allotments that is capable of forage production is substantially less, according to the FS, because some lands lack forage (e.g., are forested or contain rockfalls). In addition, for both agencies, acreage used for grazing is less than the acreage available due to voluntary nonuse for economic reasons, resource protection needs, and forage depletion caused by drought or fire, among other reasons. Because BLM and FS are multiple-use agencies, lands available for livestock grazing generally are also available for other purposes. On BLM rangelands, in FY2017, there were 16,357 operators authorized to graze livestock, and they held 17,886 grazing permits and leases. Under these permits and leases, a maximum of 12,333,568 animal unit months (AUMs) of grazing potentially could have been authorized for use. Instead, 8,820,617 AUMs were authorized for use. BLM defines an AUM, for fee purposes, as a month's use and occupancy of the range by one animal unit, which includes one yearling, one cow and her calf, one horse, or five sheep or goats. On FS rangelands, in FY2017, there were 5,725 permit holders permitted (i.e., allowed) to graze commercial livestock, with a total of 6,146 active permits. A maximum of 8,238,429 head-months (HD-MOs) of grazing were under permit and thus potentially could have been authorized for use. Instead, 6,803,425 HD-MOs were authorized for use. FS uses HD-MO as its unit of measurement for use and occupancy of FS lands. This measurement is nearly identical to AUM as used by BLM for fee purposes. Hereinafter, AUM is used to cover both HD-MO and AUM. BLM and FS are charging a 2019 grazing fee of $1.35 per AUM. This annual fee is in effect from March 1, 2019, through February 29, 2020. This is the minimum fee allowed. (See " The Fee Formula " section, below.) BLM and FS typically spend more managing their grazing programs than they collect in grazing fees. For example, $79.0 million was appropriated to BLM for rangeland management in FY2017. Of that amount, $32.4 million was used for administration of livestock grazing, according to the agency. The remainder was used for other range activities, i ncluding weed management, habitat improvement, and water development. For the same fiscal year, BLM collected $18.3 million in grazing fees. The FY2017 appropriation for FS for grazing management was $56.9 million. The funds are used primarily for grazing permit administration and planning. FS collected $7.6 million in grazing fees during FY2017. Grazing fees have been contentious since their introduction. Generally, livestock producers who use federal lands want to keep fees low. They assert that federal fees are not comparable to fees for leasing private rangelands because public lands often are less productive; must be shared with other public users; and often lack water, fencing, or other amenities, thereby increasing operating costs. They fear that fee increases may force many small and medium-sized ranchers out of business. Conservation groups generally assert that low fees contribute to overgrazing and deteriorated range conditions. Critics assert that low fees subsidize ranchers and contribute to budget shortfalls because federal fees are lower than private grazing land lease rates and do not cover the costs of range management. They further contend that, because some of the collected fees are used for range improvements, higher fees could enhance the productive potential and environmental quality of federal rangelands. Current Grazing Fee Formula and Distribution of Receipts The Fee Formula The fee charged by BLM and FS is based on the grazing on federal rangelands of a specified number of animals for one month. PRIA establishes a policy of charging a grazing fee that is "equitable" and prevents economic disruption and harm to the western livestock industry. The law requires the Secretaries of Agriculture and the Interior to set a fee annually that is the estimated economic value of grazing to the livestock owner. The fee is to represent the fair market value of grazing, beginning with a 1966 base value of $1.23 per AUM. This value is adjusted for three factors based on costs in western states of (1) the rental charge for pasturing cattle on private rangelands, (2) the sales price of beef cattle, and (3) the cost of livestock production. Congress also established that the annual fee adjustment could not exceed 25% of the previous year's fee. PRIA required a seven-year trial (1979-1985) of the formula while BLM and FS undertook a study to help Congress determine a permanent fee or fee formula. President Reagan issued Executive Order 12548 (February 14, 1986) to continue indefinitely the PRIA fee formula, and established the minimum fee of $1.35 per AUM. The 2019 grazing fee of $1.35 per AUM represents a 4% decrease from the 2018 fee. Since 1981, BLM and FS have been charging the same fee, as shown in Table 1 . The fee has ranged from $1.35 per AUM (for about half of the years during the 39-year period) to $2.31 per AUM (for 1981). The fee averaged $1.55 per AUM over the period. Distribution of Receipts Fifty percent of grazing fees collected by each agency, or $10.0 million—whichever is greater—go to a range betterment fund in the Treasury. BLM and FS grazing receipts are deposited separately. Monies in the fund are subject to appropriations. BLM typically has requested and received an annual appropriation of $10.0 million for the fund. FS generally requests and receives an appropriation that is less than the $10.0 million minimum authorized in law. For instance, for FY2017, the agency received an appropriation of $4.2 million, roughly half the fees collected. The agencies use the range betterment fund for range rehabilitation, protection, and improvement, including grass seeding and reseeding, fence construction, weed control, water development, and fish and wildlife habitat. Under law, one-half of the fund is to be used as directed by the Secretary of the Interior or of Agriculture, and the other half is authorized to be spent in the district, region, or forest that generated the fees, as the Secretary determines after consultation with user representatives. Agency regulations contain additional detail. For example, BLM regulations provide that half of the fund is to be allocated by the Secretary on a priority basis, and the rest is to be spent in the state and district where derived. Forest Service regulations provide that half of the monies are to be used in the national forest where derived, and the rest in the FS region where the forest is located. In general, FS returns all range betterment funds to the forest that generated them. The agencies allocate the remaining 50% of the collections differently. For FS, 25% of the funds are deposited in the Treasury and 25% are subject to revenue-sharing requirements. The revenue-sharing payments are made to states, but the states do not retain any of the funds. The states pass the funds to specified local governmental entities for use at the county level (16 U.S.C. §500; see Figure 1 ). For BLM, states receive 12.5% of monies collected from lands defined in Section 3 of the Taylor Grazing Act and 37.5% is deposited in the Treasury. Section 3 lands are those within grazing districts for which BLM issues grazing permits. (See Figure 2 .) By contrast, states receive 50% of fees collected from BLM lands defined in Section 15 of the Taylor Grazing Act. Section 15 lands are those outside grazing districts for which BLM leases grazing allotments. (See Figure 3 .) For both agencies, any state share is to be used to benefit the counties that generated the receipts. History of Fee Evaluation and Reform Attempts PRIA directed the Interior and Agriculture Secretaries to report to Congress, by December 31, 1985, on the results of their evaluation of the fee formula and other grazing fee options and their recommendations for implementing a permanent grazing fee. The Secretaries' report included (1) a discussion of livestock production in the western United States; (2) an estimate of each agency's cost for implementing its grazing programs; (3) estimates of the market value for public rangeland grazing; (4) potential modifications to the PRIA formula; (5) alternative fee systems; and (6) economic effects of the fee system options on permittees. A 1992 revision of the report updated the appraised fair market value of grazing on federal rangelands, determined the costs of range management programs, and recalculated the PRIA base value through the application of economic indexes. The study results, criticized by some as using faulty evaluation methods, were not adopted. In the 1990s, grazing fee reform was considered by Congress but no change was enacted. In particular, in the 104 th Congress (1995-1996), the Senate passed a bill to establish a new grazing fee formula and alter rangeland regulations. The formula was to be derived from the three-year average of the total gross value of production for beef and no longer indexed to operating costs and private land lease rates, as under PRIA. By one estimate, the measure would have resulted in an increase of about $0.50 per AUM. In the 105 th Congress (1997-1998), the House passed a bill with a fee formula based on a 12-year average of beef cattle production costs and revenues. The formula would have resulted in a 1997 fee of about $1.84 per AUM. Since the 1990s, it appears that no major bills to alter the grazing fee have passed the chambers. Also in the 1990s—and in subsequent years—certain Presidents proposed changes to grazing fees and related policies. However, these changes were not adopted. As one example, in 1993, the Clinton Administration proposed an administrative increase in the fee and revisions of other grazing policies. The proposed fee formula started with a base value of $3.96 per AUM and was to be adjusted to reflect annual changes in private land lease rates in the West (called the Forage Value Index). The current PRIA formula is adjusted using multiple indexes. As a second example, for some fiscal years (e.g., FY2008), President George W. Bush proposed terminating the deposit of 50% of BLM's grazing fees into the range betterment fund. The fee collections would have gone instead to the General Fund of the U.S. Treasury. As a third example, for some fiscal years, President Obama proposed a grazing administrative fee for BLM and FS (e.g., of $1.00 per AUM in FY2015 and $2.50 per AUM in FY2017). These administrative fees would have been additional to the annual grazing fee, and the agencies would have used them to offset the cost of administering the livestock grazing programs. Current Issues Fee Level There is ongoing debate about the appropriate grazing fee, with several key areas of contention. First, there are differences over which criteria should prevail in setting fees: fair market value; cost recovery (whereby the monies collected would cover the government's cost of running the program); sustaining ranching, or resource-based rural economies generally; or diversification of local economies. Second, there is disagreement over the validity of fair market value estimates for federal grazing because federal and private lands for leasing are not always directly comparable. Third, whether to have a uniform fee, or varied fees based on biological and economic conditions, is an area of debate. Fourth, there are diverse views on the environmental costs and benefits of grazing on federal lands and on the environmental impact of changes in grazing levels. Fifth, it is uncertain whether fee increases would reduce the number of cattle grazing on sensitive lands, such as riparian areas. Sixth, some environmentalists assert that the fee is not the main issue, but that all livestock grazing should be barred to protect federal lands. As noted, there have been proposals to alter the grazing fee in recent years, but these proposals have not been adopted. For example, the Obama Administration's proposed grazing administration fee of $2.50 per AUM in 2017 would have been in addition to the annual fee of $2.11 per AUM. The monies would have been used for administering grazing to shift a portion of the costs to permit holders. Use of the fees would have been subject to appropriations. BLM estimated that the proposed administrative fee would have generated $16.5 million in FY2017, and FS estimated revenues of $15.0 million in FY2017. Livestock organizations, among others, opposed the proposal as an unnecessary and burdensome cost for the livestock industry. The Administration had included similar proposals in earlier budget requests; none of these proposals were enacted. As another example, in 2005, several groups petitioned BLM and FS to raise the grazing fees, asserting that the fees did not reflect the fair market value of federal forage. When the agencies did not respond to the petition, the groups sued. In addition to asserting that BLM and FS unreasonably delayed response to their petition, the petitioners argued that the agencies were required to conduct a study under the National Environmental Policy Act (NEPA) to determine the environmental impacts of the current grazing fee rate. In January 2011, BLM and FS responded to the petition, denying the request for a fee increase, and the lawsuit was settled. State and Private Grazing Fees The BLM and FS grazing fee has generally been lower than fees charged for grazing on other federal lands as well as on state and private lands, as shown in studies over the past 15 years. For instance, a 2005 Government Accountability Office (GAO) study found that other federal agencies charged $0.29 to $112.50 per AUM in 2004, when the BLM and FS fee was $1.43 per AUM. While BLM and FS use a formula to set the grazing fee, most agencies charge a fee based on competitive methods or a market price for forage. Some seek to recover the costs of their grazing programs. GAO also reported that in 2004, state fees ranged from $1.35 to $80 per AUM and private fees ranged from $8 to $23 per AUM. In 2010, when the BLM and FS fee was $1.35 per AUM, state grazing fees continued to show wide variation. They ranged from $2.28 per AUM for Arizona to $65-$150 per AUM for Texas. Moreover, some states did not base fees on AUMs, but rather had fees that were variable, were set by auction, were based on acreage of grazing, or were tied to the rate for grazing on private lands. Further, a 2018 study of state grazing fees in 11 western states continued to show widely differing fees, ranging from $3.50 per AUM for New Mexico to $65-$100 per AUM for Texas. Fees for these states were higher than the 2018 BLM and FS fee ($1.41 per AUM). For grazing on private lands in 2017, the average monthly lease rate for lands in 16 western states was $23.40 per head. Fees ranged from $11.50 in Oklahoma to $39.00 in Nebraska. For comparison, in 2017, the BLM and FS grazing fee was $1.87 per AUM. Comparing the BLM and FS grazing fee with state and private fees is complicated due to a number of factors. One factor is the varying purposes for which the fees are charged. Many states and private landowners seek market value for grazing. As noted above, PRIA established the BLM and FS fee in accordance with multiple purposes. They included preventing economic disruption and harm to the western livestock industry as well as being "equitable" and representing the fair market value of grazing. While the base fee originally reflected what was considered to be fair market value, the adjustments included in the formula have not resulted in fees comparable to state and private fees. According to GAO's 2005 study, "it is generally recognized that while the federal government does not receive a market price for its permits and leases, ranchers have paid a market price for their federal permits or leases—by paying (1) grazing fees; (2) nonfee grazing costs, including the costs of operating on federal lands, such as protecting threatened and endangered species (i.e., limiting grazing area or time); and (3) the capitalized permit value." Regarding the latter, the capitalized value of grazing permits typically is reflected in higher purchase prices that federal permit holders pay for their ranches. A second factor is the quality of resources on the lands being grazed and the number and types of services provided by the landowners. For example, in its 2005 study, GAO noted advantages of grazing on private lands over federal lands. They included generally better forage and sources of water; services provided by private landowners, such as watering, fencing, feeding, veterinary care, and maintenance; the ability of lessees to sublease, thus generating revenue; and limited public access. With regard to state lands, the study indicated that states also typically limit public access to their lands, while the quality of forage and the availability of water are more comparable to federal lands. A third factor is whether the federal grazing fee alone or other nonfee costs of operating on federal lands are considered in comparing federal and nonfederal costs. Some research suggests that ranchers might spend more to graze on federal lands than private lands when both fee and nonfee costs are considered. Nonfee costs relate to maintenance, herding, moving livestock, and lost animals, among other factors. Grazing Without Paying Fees Unauthorized grazing occurs on BLM and FS lands in a variety of ways, including when cattle graze outside the allowed areas or seasons or in larger numbers than allowed under permit. According to GAO, the frequency and extent of unauthorized grazing is not known, because many cases are handled informally by agency staff. However, during the five-year period spanning 2010 to 2014, BLM and FS documented nearly 1,500 instances of unauthorized grazing, some of which involved the livestock owners having to pay penalties and, less frequently, livestock impoundment. In many cases the unauthorized grazing is unintentional, but in other cases livestock owners have intentionally grazed cattle on federal land without getting a permit or paying the required fee. The livestock owners have claimed that they do not need to have permits or pay grazing fees for various reasons, such as that the land is owned by the public; that the land belongs to a tribe under a treaty; or that other rights, such as state water rights, extend to the accompanying forage. A particularly long-standing controversy involves cattle grazed by Cliven Bundy in Nevada. After about two decades of pursuing administrative and judicial resolutions, in April 2014, BLM and the National Park Service began impounding Mr. Bundy's cattle on the grounds that he did not have authority to graze on certain federal lands and had not been paying grazing fees for more than 20 years. BLM estimated at that time that Mr. Bundy owed more than $1 million to the federal government (including grazing fees and trespassing fees) as a result of unauthorized grazing. However, the agencies ceased the impoundment of the cattle due to fears of confrontation between private citizens opposed to the roundup and federal law enforcement officials present during the impoundment. Mr. Bundy had not been paying grazing fees to the federal government primarily on the assertion that the lands do not belong to the United States but rather to the state of Nevada, and that his ancestors used the land before the federal government claimed ownership. However, courts determined that the United States owns the lands, enjoined Mr. Bundy from grazing livestock in these areas, and authorized the United States to impound cattle remaining in the trespass areas. BLM continues to seek to resolve the issue through the judicial process. BLM estimated that during the two decades prior to the 2014 intended impoundment of Mr. Bundy's cattle, the agency had impounded cattle about 50 times. The operation to remove Mr. Bundy's cattle from federal lands in Nevada was the biggest removal effort, in terms of the number of cattle and the area involved, according to BLM.  It was also one of the most controversial, in part because of the number and role of law enforcement officials and the temporary closures of land to conduct the impoundment. Voluntary Permit Retirement There have been efforts to end livestock grazing on certain federal lands through voluntary retirement of permits and leases and subsequent closure of the allotments to grazing. This practice is supported by those who view grazing as damaging to the environment, more costly than beneficial, and difficult to reconcile with other land uses. This practice is opposed by those who support ranching on the affected lands, fear a widespread effort to eliminate ranching as a way of life, or question the legality of the process. In some cases, supporters seek to have ranchers relinquish their permits to the government in exchange for compensation by third parties, particularly environmental groups. The third parties seek to acquire the permits through transfer, and advocate agency amendments to land use plans to permanently devote the grazing lands to other purposes, such as watershed conservation. Legislation to authorize an end to grazing in particular areas through voluntary donations of the permits by the permit holders has been introduced in recent Congresses. These measures generally provide for the Secretary of the Interior and/or the Secretary of Agriculture to accept the donation of a permit, terminate the permit, and end grazing on the associated land (or reduce grazing where the donation involves a portion of the authorized grazing). Provisions authorizing such voluntary permit donations in specific areas have sometimes been enacted. Other bills have sought to establish pilot programs for livestock operators to voluntarily relinquish permits and leases in particular states. Still other measures have proposed allowing the Secretary of the Interior and the Secretary of Agriculture to accept a certain number of waived permits, such as a maximum of 100 each year. Under both types of measures, when the Secretaries accept waived permits, they would permanently retire such permits and leases and end grazing on the affected allotments (or reduce grazing where the relinquishment involves a portion of the authorized grazing). Provisions authorizing such pilot programs for particular states or authorizing acceptance of a certain number of waived permits have not been enacted. In earlier Congresses, legislation was introduced to buy out grazing permittees (or lessees) on federal lands generally or on particular allotments. Such legislation provided that permittees who voluntarily relinquished their permits would be compensated at a certain dollar value per AUM, generally significantly higher than the market rate. The allotments would have been permanently closed to grazing. Such legislation, which had been backed by the National Public Lands Grazing Campaign, was advocated to enhance resource protection, resolve conflicts between grazing and other land uses, provide economic options to permittees, and save money. According to proponents, while a buyout program would be costly if all permits were relinquished, it would save more than the cost over time. Opponents of buyout legislation include those who support grazing, others who fear the creation of a compensable property right in grazing permits, some who contend that it would be too costly, or still others who support different types of grazing reform. Extension of Expiring Permits The extension, renewal, transfer, and reissuance of grazing permits have been issues for Congress. Both BLM and FS have a backlog of permits needing evaluation for renewal. For instance, BLM's backlog has been increasing for more than a decade, with a backlog of more than 7,000 permit renewals as of September 30, 2017. To allow for continuity in grazing operations, Congress had enacted a series of temporary provisions of law allowing the terms and conditions of grazing permits to continue in effect until the agencies complete processing of a renewal. The most recent provision, P.L. 113-291 (Section 3023), made permanent the automatic renewal (until the renewal evaluation process is complete) of grazing permits and leases that expire or are transferred. Agency decisions regarding permit issuance are subject to environmental review under the National Environmental Policy Act (NEPA). That environmental review would include the identification of any additional state, tribal, or federal environmental compliance requirements, such as the Endangered Species Act (ESA), that would apply to a permitted grazing operation. P.L. 113-291 provided that the issuance of a grazing permit "may" be categorically excluded from this NEPA requirement under certain conditions. Provisions regarding categorical exclusions have been controversial. Supporters assert that they will expedite the renewal process, foster certainty of grazing operations, and reduce agency workload and expenses. Opponents have expressed concern that categorical exclusions could result in insufficient environmental review and public comment to determine range conditions.

Charging fees for grazing private livestock on federal lands is a long-standing but contentious practice. Generally, livestock producers who use federal lands want to keep fees low, whereas conservation groups believe fees should be increased. The current formula for determining the grazing fee for lands managed by the Bureau of Land Management (BLM) and the Forest Service (FS) was established in the Public Rangelands Improvement Act of 1978 (PRIA) and continued by a 1986 executive order issued by President Reagan. The fee is based on grazing of a specified number of animals for one month, known as an animal unit month (AUM). The fee is set annually under a formula that uses a base value per AUM. The base value is adjusted by three factors—the lease rates for grazing on private lands, beef cattle prices, and the cost of livestock production. For 2019, BLM and FS are charging a grazing fee of $1.35 per AUM. This fee is in effect from March 1, 2019, through February 29, 2020, and is the minimum allowed. Since 1981, when BLM and FS began charging the same grazing fee, the fee has ranged from $1.35 per AUM (for about half the years) to $2.31 per AUM (for 1981). The average fee during the period was $1.55 per AUM. In recent decades, grazing fee reform has occasionally been considered by Congress or proposed by the President, but no fee changes have been adopted. The grazing fees collected by each agency essentially are divided between the agency, Treasury, and states/localities. The agency portion is deposited in a range betterment fund in the Treasury and is subject to appropriation by Congress. The agencies use these funds for on-the-ground activities, such as range rehabilitation and fence construction. Under law, BLM and FS allocate the remaining collections differently between the Treasury and states/localities. Issues for Congress include whether to retain the current grazing fee or alter the charges for grazing on federal lands. The current BLM and FS grazing fee is generally lower than fees charged for grazing on state and private lands. Comparing the BLM and FS fee with state and private fees is complicated, due to factors including the purposes for which fees are charged, the quality of the resources on the lands being grazed, and whether the federal grazing fee alone or other nonfee costs are considered. Unauthorized grazing occurs on BLM and FS lands in a variety of ways, including when cattle graze outside the allowed areas or seasons or in larger numbers than allowed under permit. In some cases, livestock owners have intentionally grazed cattle on federal land without getting a permit or paying the required fee. The agencies have responded at times by fining the owners, as well as by impounding and selling the trespassing cattle. BLM continues to seek a judicial resolution to a long-standing controversy involving cattle grazed by Cliven Bundy on lands in Nevada. There have been efforts to end livestock grazing in specific areas through voluntary retirement of permits and leases and subsequent closure of the allotments to grazing. Congress has enacted some such proposals. Congress also has considered measures to reduce or end grazing in specified states or to allow a maximum number of permits to be waived yearly. Among other reasons, such measures have been supported to protect range resources but opposed as diminishing ranching operations. Another issue involves expiring grazing permits. Both BLM and FS have a backlog of permits needing evaluation for renewal. To allow for continuity in grazing operations, P.L. 113-291 made permanent the automatic renewal (until the evaluation process is complete) of permits and leases that expire or are transferred. The law provided that the issuance of a grazing permit "may" be categorically excluded from environmental review under the National Environmental Policy Act (NEPA) under certain conditions. NEPA categorical exclusions have been controversial.

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Overview and Total Members in History Congress is composed of 541 individuals from the 50 states, the District of Columbia, Guam, the U.S. Virgin Islands, American Samoa, the Northern Mariana Islands, and Puerto Rico. Since 1789, 12,343 individuals have served as either Representatives (11,037 individuals) or as Senators (1,983 individuals). Of these individuals, 677 have served in both chambers. An additional 178 individuals have served in the House in the roles of territorial Delegates or Resident Commissioners. The following is a profile of the 116 th Congress (2019-2020). Party Breakdown In the 116 th Congress, the current party alignments as of March 7, 2019, are as follows: House of Representatives: 239 Democrats (including 4 Delegates), 199 Republicans (including 1 Delegate and the Resident Commissioner of Puerto Rico), and 3 vacant seats. Senate: 53 Republicans, 45 Democrats, and 2 Independents, who both caucus with the Democrats. Age The average age at the beginning of the 116 th Congress was 57.6 years for Representatives and 62.9 years for Senators. Table 1 shows the average ages at the beginning of the 116 th and three previous Congresses. The U.S. Constitution requires Representatives to be at least 25 years old when they take office. The youngest Representative in the 116 th Congress, and the youngest woman ever to serve in Congress, is Alexandria Ocasio-Cortez (D-NY), born October 13, 1989, who was 29 at the beginning of the 116 th Congress. The oldest Representative is Don Young (R-AK), born June 9, 1933, who was 85. Senators must be at least 30 years old when they take office. The youngest Senator in the 116 th Congress is Josh Hawley (R-MO), born December 31, 1979, who was 39 at the beginning of the Congress. The oldest Senator in the 116 th Congress is Dianne Feinstein (D-CA), born June 22, 1933, who was 85. Occupations According to data on occupations in the CQ New Members Guide , in the 116 th Congress law ties with public service/politics as the most commonly declared profession of Senators, followed by business; for Representatives, public service/politics is first, closely followed by business, then law. Table 2 uses data from the CQ Member Profiles to present the occupational categories most frequently listed as prior careers of Members of the 116 th Congress. A closer look at the range of prior occupations and previously held public offices of Members of the House and Senate at the beginning of the 116 th Congress, as listed in their CQ Member Profiles , also shows the following: 50 Senators with previous House service; 95 Members have worked in education, including teachers, professors, instructors, school fundraisers, counselors, administrators, or coaches (75 in the House, including 2 delegates, 20 in the Senate); 3 physicians in the Senate, 13 physicians in the House, plus 5 dentists and 3 veterinarians; 2 psychologists (all in the House), an optometrist (in the Senate), a pharmacist (in the House), and 2 nurses and 1 physician assistant (in the House); 7 ordained ministers, all in the House; 41 former mayors (34 in the House, 7 in the Senate); 13 former state governors (12 in the Senate, 1 in the House) and 7 lieutenant governors (4 in the Senate, 3 in the House); 16 former judges (all but 1 in the House) and 42 prosecutors (10 in the Senate, 32 in the House) who have served in city, county, state, federal, or military capacities; 2 former Cabinet Secretaries (1 in each chamber), and 3 Ambassadors (all in the House); 246 former state or territorial legislators (43 in the Senate, 203 in the House, including 2 Delegates and the Resident Commissioner from Puerto Rico); at least 89 former congressional staffers (19 in the Senate, 70 in the House, including 3 Delegates), as well as 6 congressional pages (3 in the House and 3 in the Senate); 3 sheriffs, 1 police chief and 3 other police officers, 1 firefighter, 3 CIA employees, and 1 FBI agent (all in the House); 3 Peace Corps volunteers, all in the House; 1 physicist and 1 chemist, both in the House; 11 engineers (10 in the House and 1 in the Senate); 20 public relations or communications professionals (4 in the Senate, 16 in the House), and 10 accountants (2 in the Senate and 8 in the House); 6 software company executives in the House and 2 in the Senate; 19 management consultants (5 in the Senate, 14 in the House), 5 car dealership owners (all in the House), and 4 venture capitalists (2 in the House, 2 in the Senate); 12 bankers or bank executives (3 in the Senate, 9 in the House), 29 veterans of the real estate industry (4 in the Senate, 25 in the House), and 10 Members who have worked in the construction industry (1 in the Senate, 9 in the House); 6 social workers (2 in the Senate, 4 in the House) and 3 union representatives (all in the House); 13 nonprofit executives in the House; 3 radio talk show hosts (1 in the Senate, 2 in the House); 4 radio or television broadcasters, managers, or owners (all in the House); 6 reporters or journalists (1 in the Senate, 5 in the House), a public television producer in the House, and a newspaper publisher in each chamber; 21 insurance agents or executives (4 in the Senate, 17 in the House) and 4 Members who have worked with stocks or bonds (all in the House); 1 artist, 1 book publisher, and 2 speechwriters (all in the House), and 1 documentary filmmaker in the Senate; 6 restaurateurs (5 in the House, 1 in the Senate), as well as 2 coffee shop owners, 1 wine store owner, and 1 whiskey distiller (all in the House); 27 farmers, ranchers, or cattle farm owners (5 in the Senate, 22 in the House); 1 almond orchard owner and vintner, as well as a forester and a fruit orchard worker (all in the House); 1 flight attendant and 1 pilot, both in the House; 3 professional football players, 1 hockey player, 1 baseball player, and 1 mixed martial arts fighter (all in the House); and 9 current members of the military reserves (8 in the House, 1 in the Senate) and 7 current members of the National Guard (all in the House). Other occupations listed in the CQ Member Profiles include emergency dispatcher, letter carrier, animal nutrition specialist, cake decorator, waiter, electrician, rodeo announcer, carpenter, computer systems analyst, software engineer, R&D lab executive, and explosives expert. Education As has been true in recent Congresses, the vast majority of Members (94.8% of House Members and 100% of Senators) at the beginning of the 116 th Congress hold bachelor's degrees. Sixty-eight percent of House Members and 77% of Senators hold educational degrees beyond a bachelor's. The CQ Member Profiles at the beginning of the 116 th Congress indicate the following: 17 Members of the House have no educational degree beyond a high school diploma; 6 Members of the House have associate's degrees as their highest degrees; 99 Members of the House and 18 Senators earned a master's degree as their highest attained degrees; 161 Members of the House (36.6% of the House) and 53 Senators (53% of the Senate) hold law degrees; 21 Representatives and 4 Senators have doctoral (Ph.D., D.Phil., Ed.D., or D. Min) degrees; and 21 Members of the House and 4 Senators have medical degrees. By comparison, approximately 35 years ago in the 99 th Congress (1985-1986), 85% of House Members and 88% of Senators held bachelor's degrees. Approximately 45 years ago, in the 94 th Congress (1975-1976), 82% of House Members and 88% of Senators held bachelor's degrees. About 60 years ago, in the 87 th Congress (1961-1962), 76% of House Members and 76% of Senators held bachelor's degrees. Five Representatives and one Senator are graduates of the U.S. Military Academy, two Representatives and one Senator graduated from the U.S. Naval Academy, and one Senator graduated from the U.S. Air Force Academy. Five Representatives and one Senator were Rhodes Scholars, two Representatives were Fulbright Scholars, two Representatives were Marshall Scholars, and two Representatives and one Senator were Truman Scholars. Congressional Service The average length of service for Representatives at the beginning of the 116 th Congress was 8.6 years (4.3 House terms); for Senators, 10.1 years (1.7 Senate terms). At the beginning of the 116 th Congress, 90 of the House Members, including the Resident Commissioner for Puerto Rico (20.4% of the total House Membership), had first been elected to the House in November 2018, and 9 of the Senators (9% of the total Senate membership) had first been elected to the Senate in November 2018. These numbers are higher than at the beginning of the 115 th Congress, when 11.8% of the House and 7% of the Senate were newly elected "freshmen." At the beginning of the 116 th Congress, 144 House Members, including 1 Delegate and the Resident Commissioner (32.7% of House Members), had no more than two years of House experience, and 19 Senators (19% of Senators) had no more than two years of Senate experience. For more historical information on the tenure of Members of Congress, see CRS Report R41545, Congressional Careers: Service Tenure and Patterns of Member Service, 1789-2019 , by William T. Egar and Amber Hope Wilhelm. Religion Ninety-seven percent of the Members of the 116 th Congress report an affiliation with a specific religion. Statistics gathered by the Pew Research Center on Religion and Public Life, which studies the religious affiliation of Representatives and Senators, and CQ at the beginning of the 116 th Congress showed the following: 54.9% of Members (233 in the House, 60 in the Senate) are Protestant, with Baptist as the most represented denomination, followed by Methodist; 30.5% of Members (141 in the House, 22 in the Senate) are Catholic; 6.4% of Members (26 in the House, 8 in the Senate) are Jewish; 1.9% of Members (6 in the House, 4 in the Senate) are Mormon (Church of Jesus Christ of Latter-day Saints); 2 Members (1 in the House, 1 in the Senate) are Buddhist, 3 Representatives are Muslim, and 3 Representatives are Hindu; and other religious affiliations represented include Greek Orthodox, Pentecostal Christian, Unitarian Universalist, and Adventist. Gender and Ethnicity Women Members A record 131 women Members (24.2% of the total membership) serve in the 116 th Congress, 22 more than at the beginning of the 115 th Congress. One hundred six women, including 3 Delegates as well as the Resident Commissioner, serve in the House and 25 in the Senate. Of the 106 women in the House, 91 are Democrats, including 2 of the Delegates, and 15 are Republicans, including 1 Delegate as well as the Resident Commissioner. Of the 25 women in the Senate, 17 are Democrats and 8 are Republicans. By comparison, approximately 35 years ago in the 99 th Congress (1985-1986), 23 women served in the House, and 2 in the Senate. Approximately 45 years ago, in the 94 th Congress (1975-1976), there were 19 women in the House, and none in the Senate. African American Members There are a record 58 African American Members (10.7% of the total membership) in the 116 th Congress, 6 more than at the beginning of the 115 th Congress. Fifty-five serve in the House, including two Delegates, and three serve in the Senate. This number includes one Representative, as well as one Senator, who are of African American and Asian ancestry, and two Representatives who are of African American and Hispanic ancestry. In this report, each of these four Members is counted as belonging to two ethnic groups. Fifty-four of the African American House Members, including two Delegates, are Democrats, and one is a Republican. Two of the Senators are Democrats and one is Republican. Twenty-four African American women, including two Delegates, serve in the House, and one serves in the Senate. By comparison, approximately 35 years ago in the 99 th Congress (1985-1986), 21 African American Members served in the House, and none in the Senate. About 60 years ago, in the 87 th Congress (1961-1962), there were 4 African American Members of Congress, all serving in the House. Hispanic/Latino American Members There are 50 Hispanic or Latino Members in the 116 th Congress, 9.2% of the total membership and a record number. Forty-five serve in the House, including two delegates and the Resident Commissioner, and 5 in the Senate. These numbers include two House Members who are also of Asian descent, and two House Members also of African ancestry; these Members are counted in both ethnic categories in this report. Of the Members of the House, 37 are Democrats (including 2 Delegates) and 8 are Republicans (including the Resident Commissioner). Fourteen are women, including the Resident Commissioner. Of the five Hispanic Senators (three Republicans, two Democrats), one is a woman. By comparison, approximately 35 years ago in the 99 th Congress (1985-1986), 14 Hispanic or Latino Members served in Congress. All 14 were male Members of the House. Asian/Pacific Islander American Members A record 20 Members of the 116 th Congress (3.8% of the total membership) are of Asian, South Asian, or Pacific Islander ancestry. Seventeen of them (16 Democrats, 1 Republican) serve in the House, and 3 (all Democrats) serve in the Senate. These numbers include one House Member and one Senator who are also of African American ancestry, and another House Member of Hispanic ancestry; these Members are counted in both ethnic categories in this report. Of those serving in the House, three are Delegates. Ten of the Asian, Pacific Islander, or South Asian American Members are female: seven in the House, and all three in the Senate. By comparison, approximately 35 years ago in the 99 th Congress (1985-1986), there were five Asian/Pacific Islander Americans in the House, and two in the Senate. American Indian Members There are four American Indian (Native American) Members of the 116 th Congress; two of each party, all in the House. This is two more than in the 115 th Congress, and a record number. Foreign Birth Twenty-four Representatives and five Senators (5.3% of the 116 th Congress) were born outside the United States. Their places of birth include Canada, Cuba, Ecuador, Germany, Japan, Peru, and India. Some of these Members were born to American citizens working or serving abroad. The U.S. Constitution requires that Representatives be citizens for seven years and Senators be citizens for nine years before they take office. Military Service At the beginning of the 116 th Congress, there were 96 individuals (17.8% of the total membership) who had served or were serving in the military, 6 fewer than at the beginning of the 115 th Congress (102 Members). According to lists compiled by CQ , the House as of January 2019 had 78 veterans (including 4 female Members, as well as 1 Delegate); the Senate had 18 veterans, including 3 women. These Members served in the Vietnam War, the Persian Gulf War, and combat or peacekeeping missions in Afghanistan, Iraq, and Kosovo, as well as during times of peace. Eight House Members and one Senator are still serving in the reserves, and seven House Members are still serving in the National Guard. Four of the seven female veterans are combat veterans. The number of veterans in the 116 th Congress reflects the trend of steady decline in recent decades in the number of Members who have served in the military. For example, 64% of the Members of the 97 th Congress (1981-1982) were veterans, and in the 92 nd Congress (1971-1972), 73% of the Members were veterans. For summary information on the demographics of Members in selected past Congresses, including age trends, occupational backgrounds, military veteran status, and educational attainment, see CRS Report R42365, Representatives and Senators: Trends in Member Characteristics Since 1945 , coordinated by R. Eric Petersen.

This report presents a profile of the membership of the 116th Congress (2019-2020) as of March 7, 2019. Statistical information is included on selected characteristics of Members, including data on party affiliation, average age, occupation, education, length of congressional service, religious affiliation, gender, ethnicity, foreign birth, and military service. In the House of Representatives, there are 239 Democrats (including 4 Delegates), 199 Republicans (including 1 Delegate and the Resident Commissioner of Puerto Rico), and 3 vacant seats. The Senate has 53 Republicans, 45 Democrats, and 2 Independents, who both caucus with the Democrats. Additionally The average age of Members of the House at the beginning of the 116th Congress was 57.6 years; of Senators, 62.9 years. The overwhelming majority, 96%, of Members of Congress have a college education. The dominant professions of Members are public service/politics, business, and law. Most Members identify as Christians, and the collective majority of these affiliate with a Protestant denomination. Roman Catholics account for the largest single religious denomination, and numerous other affiliations are represented, including Jewish, Mormon, Buddhist, Muslim, Hindu, Greek Orthodox, Pentecostal Christian, Unitarian Universalist, and Adventist. The average length of service for Representatives at the beginning of the 116th Congress was 8.6 years (4.3 House terms); for Senators, 10.1 years (1.7 Senate terms). A record 131 women serve in the 116th Congress: 106 in the House, including 3 Delegates and the Resident Commissioner, and 25 in the Senate. There are 55 African American Members of the House and 3 in the Senate. This House number includes two Delegates. There are 50 Hispanic or Latino Members (a record number) serving: 45 in the House, including 2 Delegates and the Resident Commissioner, and 5 in the Senate. There are 20 Members (14 Representatives, 3 Delegates, and 3 Senators) who are Asian Americans, Indian Americans, or Pacific Islander Americans. This is also a record number. A record four American Indians (Native Americans) serve in the House. The portions of this report covering political party affiliation, gender, ethnicity, and vacant seats may be updated as events warrant. The remainder of the report will not be updated.

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Federal Debt Policy and the Debt Limit The Constitution grants Congress the power to borrow money on the credit of the United States—one part of its power of the purs e—and thus mandates that Congress exercise control over federal debt. Control of debt policy provides Congress with one means of expressing views on appropriate fiscal policies. Before 1917 Congress typically controlled individual issues of debt. In September 1917, while raising funds for the United States' entry into World War I, Congress also imposed an aggregate limit on federal debt in addition to individual issuance limits. Over time, Congress granted Treasury Secretaries more leeway in debt management. In 1939, Congress agreed to impose an aggregate limit that gave the U.S. Treasury authority to manage the structure of federal debt. The statutory debt limit applies to almost all federal debt. The limit applies to federal debt held by the public (that is, debt held outside the federal government itself) and to federal debt held by the government's own accounts. Federal trust funds, such as Social Security, Medicare, Transportation, and Civil Service Retirement accounts, hold most of this internally held debt. For most federal trust funds, net inflows by law must be invested in special federal government securities. When holdings of those trust funds increase, federal debt subject to limit will therefore increase as well. The government's on-budget fiscal balance, which excludes the net surplus or deficit of the U.S. Postal Service and the Social Security program, does not directly affect debt held in government accounts. The change in debt held by the public is mostly determined by the government's surpluses or deficits. The net expansion of the federal government's balance sheet through loan programs also increases the government's borrowing requirements. Under federal budgetary rules, however, only the net subsidy cost of those loans is included in the calculation of deficits. Current Situation The most recent suspension of the debt limit lapsed after March 1, 2019. The limit was then reset at $21.988 trillion, a level that accommodates federal obligations incurred during the suspension period. On March 4, 2019, the first business day after the debt limit suspension had lapsed, U.S. Treasury Secretary Steven Mnuchin invoked extraordinary authorities. Those extraordinary measures (described below in more detail), along with cash balances and incoming revenues, can be used to meet federal obligations in coming months. In anticipation of the lapse of the debt limit suspension, the U.S. Treasury had announced it would stop issuing state and local government securities (SLGs) on March 1, 2019. SLGs are used by state and local governments as one way of complying with IRS anti-arbitrage rules. Issuance of SLGs is expected to resume once the current debt limit episode is resolved. CBO estimates that Treasury could meet federal obligations until just before or just after October 1, 2019. One estimate suggested those resources would suffice to cover federal payments until August, if not later. Another estimate of an informed Treasury market observer suggests federal payments could be made until "just before Labor Day," albeit while noting substantial uncertainties. The current size of federal deficits, which are now higher than those in previous years, or economic uncertainty could affect that timing. Changes in the federal tax system and Internal Revenue Service (IRS) operations could also add uncertainties to projections of Treasury cash flows. In late 2017 and early 2018 the debt limit issue was tied to consideration of funding measures for FY2018. On September 8, 2017, enactment of a continuing resolution (Continuing Appropriations Act, 2018 and Supplemental Appropriations for Disaster Relief Requirements Act, 2017; P.L. 115-56 ) suspended the debt limit through December 8, 2018. Once that suspension lapsed, extraordinary measures were used to meet federal obligations. The Bipartisan Budget Act of 2018 (BBA 2018; P.L. 115-123 ), enacted on February 9, 2018, included a provision (Section 30301) that suspended the debt limit through March 1, 2019. A section near the end of this report summarizes recent debt limit activity in more detail. In January 2019, the House adopted Rule XXVIII that when the House approves a budget resolution, a measure to suspend the debt limit for the remainder of the fiscal year would be automatically engrossed and transmitted to the Senate. Debt Limit Suspensions 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 ends, the debt limit is reestablished at a level that accommodates federal spending during the suspension period. The U.S. Treasury is thus left with minimal headroom under the debt limit after a suspension ends, leaving only a cash balance similar to that when the suspension began. Therefore, the Treasury Secretary typically invokes a set of extraordinary measures, which are described below. Extraordinary Measures and Debt Issuance Suspension Periods Congress has authorized the Treasury Secretary to invoke a "debt issuance suspension period," which triggers the availability of extraordinary measures, which are special strategies to handle cash and debt management. Actions taken in the past include suspending sales of nonmarketable debt, postponing or downsizing marketable debt auctions, and withholding receipts that would be transferred to certain government trust funds. In particular, extraordinary strategies include suspending investments in Civil Service Retirement and Disability Fund (CSRDF) and the G-Fund of the Federal Employees' Retirement System (FERS), as well as redeeming a limited amount of CSRDF securities. The Treasury Secretary is also mandated to make those funds whole after the resolution of a debt limit episode. Timing Uncertainties The amount of time that extraordinary measures allow the U.S. Treasury to extend its borrowing capacity depends on the pace of deficit spending, the timing of cash receipts and outlays, and other technical factors. Tax deadlines and processing dates for some federal disbursements are scheduled, but amounts of collections and outlays depend on decisions and actions of private entities and other federal agencies, which are more difficult to predict. The effects of recent tax changes ( P.L. 115-97 ) and the possibility that further changes could occur in the 116 th Congress could also affect revenue projections. Treasury cash flow projections are therefore subject to uncertainty, which complicates attempts to estimate how long extraordinary measures would enable the federal government to meet its financial obligations. Estimates calculated by others of when Treasury would reach the debt limit and how long extraordinary measures would extend federal borrowing capacity have typically been close to Treasury's estimates. The U.S. Treasury Inspector General reported in 2012 that "the margin of error in these estimates at a 98 percent confidence level is plus or minus $18 billion for one week into the future and plus or minus $30 billion for two weeks into the future." An impending debt ceiling constraint presents more than one deadline. A first deadline is the exhaustion of borrowing capacity. The U.S. Treasury, however, could continue to meet obligations using available cash balances. As cash balances run down, however, other complications could emerge and Treasury's cash resources could fall below levels deemed prudent by outside advisors well before extraordinary measures were exhausted. Low cash balances could complicate federal debt management and Treasury auctions. The Government Accountability Office (GAO) has also noted that debt limit episodes generate severe strains for Treasury staff, especially when its room for maneuver is severely restricted. Finally, if the U.S. Treasury were to run out of cash, the Treasury Secretary would face difficult choices in how to comply simultaneously with the debt limit and the mandate to pay federal obligations in a timely fashion. Severe financial dislocation could result if the U.S. Treasury were unable to make timely payments. For example, repo lending arrangements, which rely heavily on Treasury securities for collateral, could become more expensive or could be disrupted. "Repo" is short for repurchase agreement, which provides a common means of secured lending among financial institutions. Repo lending rates rose sharply in early August 2011 during the 2011 debt limit episode, but fell to previous levels once that episode was resolved. The Federal Reserve Open Market Committee indicated in an October 16, 2013, discussion that "in the event of delayed payments on Treasury securities," discount window and other operations would proceed "under the usual terms." That statement has been taken to imply that the Federal Reserve would be "prepared to backstop the Treasury market in the event of a political deadlock." In addition, the Federal Reserve Bank of New York issued a description of contingency plans in December 2013 in the event of Treasury payment delays, but warned that such measures "only modestly reduce, not eliminate, the operational difficulties posed by a delayed payment on Treasury debt. Indeed, even with these limited contingency practices, a temporary delayed payment on Treasury debt could cause significant damage to, and undermine confidence in, the markets for Treasury securities and other assets." Recent Increases in the Debt Limit Table 1 presents debt limit changes over the past two decades. The debt limit was modified six times from 1993 through 1997. Two of those modifications were enacted to prevent the debt limit restriction from delaying payment of Social Security benefits in March 1996 before a broader increase in the debt was passed at the end of that month. After 1997, debt limit increases were unnecessary due to the appearance of federal surpluses that ran from FY1998 through FY2001. Since FY2002 the federal government has run persistent deficits, which have been ascribed to major tax cuts enacted in 2001 and 2003 and higher spending. Those deficits required a series of increases in the debt limit. Starting with passage of the BCA in August 2011, Congress has employed measures that have led to debt limit increases that occur some time after a law is enacted. Dates in the first column of Table 1 in general refer to dates of enactment, which do not match dates when debt limit increases have occurred. For instance, the debt limit was suspended when P.L. 113-83 was enacted on February 12, 2014, and was reestablished on March 16, 2015, when that suspension lapsed. One result of suspending the debt limit, as has been the practice in recent years, is that no fixed number appears in legislation and that a new debt limit level is set only when the suspension lapses. The 2011 Debt Limit Episode The 2011 debt limit episode attracted far more attention than other recent debt limit episodes. In mid-2011 several credit ratings agencies and investment banks expressed concerns about the consequences to the financial system and the economy if the U.S. Treasury were unable to fund federal obligations. Many economists and financial institutions stated that if the market associated Treasury securities with default risks, the effects on global capital markets could be significant. Debate during the 2011 debt limit episode reflected a growing concern with the fiscal sustainability of the federal government. While projections issued in 2011 indicated that federal deficits would shrink over the next half decade, deficits later in the decade were expected to rise. Without major changes in federal policies, the amount of federal debt would increase substantially. CBO has repeatedly warned that the current trajectory of federal borrowing is unsustainable and could lead to slower economic growth in the long run as debt rises as a percentage of GDP. Unless federal policies change, Congress would repeatedly face demands to raise the debt limit to accommodate the growing federal debt in order to provide the government with the means to meet its financial obligations. The next section provides a brief chronology of events from the 2011 debt limit episode. The 2011 Debt Ceiling Episode Begins On May 16, 2011, U.S. Treasury Secretary Timothy Geithner announced that the federal debt had reached its statutory limit and declared a debt issuance suspension period, which would allow certain extraordinary measures to extend Treasury's borrowing capacity until about August 2, 2011. Had the U.S. Treasury exhausted its borrowing authority, it could have used cash balances to meet obligations for some period of time. Over the course of the 2011 debt limit episode Treasury estimates of when the debt limit would begin to bind and how long extraordinary measures would suffice to meet federal obligations shifted. For instance, in April 2011 the U.S. Treasury had projected that its borrowing capacity, even using extraordinary measures, would be exhausted by about July 8, 2011. The Treasury Secretary, in a letter to Congress dated May 2, 2011, had indicated that he would declare a debt issuance suspension period on May 16, unless Congress acted beforehand, which would allow certain extraordinary measures to extend Treasury's borrowing capacity until early August 2011. On July 1, 2011, the U.S. Treasury confirmed its view that its borrowing authority would be exhausted on August 2, the date cited in Treasury Secretary Geithner's May 16, 2011, letter that invoked the debt issuance suspension period. Proposed Solutions in the Spring of 2011 A bill ( H.R. 1954 ) to raise the debt limit to $16,700 billion was introduced on May 24 and was defeated in a May 31, 2011, House vote of 97 to 318. The House passed the Cut, Cap, and Balance Act of 2011 ( H.R. 2560 ; 234-190 vote) on July 19, 2011. The measure would have increased the statutory limit on federal debt from $14,294 billion to $16,700 billion once a proposal for a constitutional amendment requiring a balanced federal budget was transmitted to the states. On July 22, the Senate tabled the bill on a 51-46 vote. Some commentators in early 2011 suggested that cutting federal spending could slow the growth in federal debt enough to avoid an increase in the debt limit. The scale of required spending reductions, as of the middle of FY2011, would have been large. For example, at the start of the third quarter of FY2011 on April 1, 2011, federal debt was within $95 billion of its limit. According to CBO baseline estimates issued at the time, the expected deficit for the remainder of FY2011 would be about $570 billion. Reaching the end of FY2011 on September 30, 2011, without an increase in the debt limit or the use of extraordinary measures would have thus required a spending reduction of at least $570 billion, or about 85% of discretionary spending for the rest of that fiscal year. Some have suggested that the Fourteenth Amendment (Section 4), which states that "(t)he validity of the public debt of the United States ... shall not be questioned," could provide the President with authority to ignore the statutory debt limit. President Obama rejected such claims, as did most legal analysts. The Budget Control Act of 2011 On July 25, 2011, the Budget Control Act of 2011 was introduced in different forms by both House Speaker Boehner (House Substitute Amendment to S. 627 ) and Majority Leader Reid ( S.Amdt. 581 to S. 1323 ). Subsequently, on August 2, 2011, President Obama signed into law a substantially revised compromise measure (Budget Control Act, BCA; P.L. 112-25 ), following House approval by a vote of 269-161 on August 1, 2011, and Senate approval by a vote of 74-26 on August 2, 2011. This measure included numerous provisions aimed at deficit reduction, and would allow a series of increases in the debt limit of up to $2,400 billion ($2.4 trillion) subject to certain conditions. These provisions eliminated the need for further increases in the debt limit until early 2013. In particular, the BCA included major provisions that imposed discretionary spending caps, enforced by automatic spending reductions, referred to as a "sequester"; established a Joint Select Committee on Deficit Reduction, whose recommendations would be eligible for expedited consideration; required a vote on a joint resolution on a proposed constitutional amendment to mandate a balanced federal budget; and instituted a mechanism allowing for the President and Treasury Secretary to raise the debt ceiling, subject to congressional disapproval. Debt Limit Increases Under the BCA The legislation provides a three-step procedure by which the debt limit can be increased. First, the debt limit was raised by $400 billion, to $14,694 billion on August 2, 2011, following a certification of the President that the debt was within $100 billion of its legal limit. A second increase of $500 billion occurred on September 22, 2011, which was also triggered by the President's certification of August 2. The second increase, scheduled for 50 days after that certification, was subject to a joint resolution of disapproval. Because such a resolution could be vetoed, blocking a debt limit increase would be challenging. The Senate rejected a disapproval measure ( S.J.Res. 25 ) on September 8, 2011, on a 45-52 vote. The House passed a disapproval measure ( H.J.Res. 77 ) on a 232-186 vote, although the Senate declined to act on that measure. The resulting increase brought the debt limit to $15,194 billion. In late December 2011, the debt limit came within $100 billion of its statutory limit, which triggered a provision allowing the President to issue a certification that would lead to a third increase of $1,200 billion. By design, that increase matched budget reductions slated to be made through sequestration and related mechanisms over the FY2013-FY2021 period. That increase was also subject to a joint resolution of disapproval. The President reportedly delayed that request to allow Congress to consider a disapproval measure. On January 18, 2012, the House passed such a measure ( H.J.Res. 98 ) on a 239-176 vote. The Senate declined to take up a companion measure ( S.J.Res. 34 ) and on January 26, 2012, voted down a motion to proceed (44-52) on the House-passed measure ( H.J.Res. 98 ), thus clearing the way for the increase, resulting in a debt limit of $16,394 billion. The third increase could also have been triggered in two other ways. A debt limit increase of $1,500 billion would have been permitted if the states had received a balanced budget amendment for ratification. A measure ( H.J.Res. 2 ) to accomplish that, however, failed to reach the constitutionally mandated two-thirds threshold in the House in a 261–165 vote held on November 18, 2011. The debt limit could also have been increased by between $1,200 billion and $1,500 billion had recommendations from the Joint Select Committee on Deficit Reduction, popularly known as the Super Committee, been reported to and passed by each chamber. If those recommendations had been estimated to achieve an amount between $1,200 billion and $1,500 billion, the debt limit increase would be matched to that figure. The Joint Select Committee, however, was unable to agree on a set of recommendations. The Debt Limit in 2013 Debt Limit Reached at End of December 2012 On December 26, 2012, the U.S. Treasury stated that the debt would reach its limit on December 31 and that the Treasury Secretary would declare a debt issuance suspension period to authorize extraordinary measures (noted above, described below) that could be used to meet federal payments for approximately two months. As predicted, federal debt did reach its limit on December 31, when large biannual interest payments, in the form of Treasury securities, were made to certain trust funds. The U.S. Treasury stressed that these extraordinary measures would be exhausted more quickly than in recent debt limit episodes for various technical reasons. A January 14, 2013, letter from Treasury Secretary Geithner also estimated that extraordinary measures would be exhausted sometime between mid-February or early March 2013. CBO had previously estimated that federal debt would reach its limit near the end of December 2012, and that the extraordinary measures could be used to fund government activities until mid-February or early March 2013. During the 112 th Congress, Speaker John Boehner had stated that a future debt limit increase should be linked to spending cuts of at least the same magnitude, a position that reflects the structure of the Budget Control Act. Suspension of the Debt Limit Until May 19, 2013 House Republicans decided on January 18, 2013, to propose a three-month suspension of the debt limit tied to a provision that would delay Members' salaries in the event that their chamber of Congress had not agreed to a budget resolution. H.R. 325 , according to its sponsor, would allow Treasury to pay bills coming due before May 18, 2013. A new debt limit would then be set on May 19. The measure would also cause salaries of Members of Congress to be held in escrow "(i)f by April 15, 2013, a House of Congress had not agreed to" a budget resolution. Such a provision, however, could raise constitutional issues under the Twenty-Seventh Amendment. On January 23, 2013, the House passed H.R. 325 , which suspended the debt limit until May 19, 2013, on a 285-144 vote. The Senate passed the measure on January 31 on a 64-34 vote; it was then signed into law ( P.L. 113-3 ) on February 4. Replenishing the U.S. Treasury's Extraordinary Measures Once H.R. 325 was signed into law on February 4, the U.S. Treasury replenished funds that had been used to meet federal payments, thus resetting its ability to use extraordinary measures. As of February 1, 2013, the U.S. Treasury had used about $31 billion in extraordinary measures. Statutory language that grants the Treasury Secretary the authority to declare a "debt issuance suspension period" (DISP), which permits certain extraordinary measures, also requires that "the Secretary of the Treasury shall immediately issue" amounts to replenish those funds once a debt issuance suspension period (DISP) is over. A DISP extends through "any period for which the Secretary of the Treasury determines for purposes of this subsection that the issuance of obligations of the United States may not be made without exceeding the public debt limit." Shortly after the declaration of a new debt issuance suspension period in February 2013, Jacob Lew was confirmed as Treasury Secretary, replacing Timothy Geithner. Debt Limit Reset and Return of Extraordinary Measures in May 2013 Once the debt limit suspension lapsed after May 18, 2013, the U.S. Treasury reset the debt limit at $16,699 billion, or $305 billion above the previous statutory limit. On May 20, 2013, the first business day after the expiration of the suspension, debt subject to limit was just $25 million below the limit. Some Members, as noted above, stated that H.R. 325 ( P.L. 113-3 ) was intended to prevent the U.S. Treasury from accumulating cash balances. The U.S. Treasury's operating cash balances at the start of May 20, 2013 ($34 billion), were well below balances ($60 billion) at the close of February 4, 2013, when H.R. 325 was enacted. Some experienced analysts had stated that the exact method by which the debt limit would be computed according to the provisions of P.L. 113-3 was not fully clear. The U.S. Treasury has not provided details of how it computed the debt limit after the suspension lapsed. Treasury Secretary Jacob Lew notified Congress on May 20, 2013, that he had declared a new debt issuance suspension period (DISP), triggering authorities that allow the Treasury Secretary to use extraordinary measures to meet federal obligations until August 2. On August 2, 2013, Secretary Lew notified Congress that the DISP would be extended to October 11, 2013. In those notifications, as well in other communications, Secretary Lew urged Congress to raise the debt limit in a "timely fashion." Debt Limit Forecasts in 2013 How long the U.S. Treasury could have continued to pay federal obligations absent an increase in the debt limit depended on economic conditions, which affect tax receipts and spending on some automatic stabilizer programs, and the pace of federal spending. Stronger federal revenue collections and a slower pace of federal outlays in 2013 reduced the FY2013 deficit compared to previous years. CBO estimates for July 2013 put the total federal deficit at $606 billion in FY2013, well below the FY2012 deficit of $1,087 billion, implying a slower overall pace of borrowing. Special dividends from mortgage giants Fannie Mae and Freddie Mac also extended the U.S. Treasury's ability to meet federal obligations. In May 2013, the investment bank Goldman Sachs projected that, with the addition of the Fannie Mae dividend and an estimated postsuspension $16.70 trillion limit, federal borrowing capacity would be exhausted in early October. Estimates of Treasury cash flows are subject to substantial uncertainty. The U.S. Treasury Inspector General reported in 2012 that "the margin of error in these estimates at a 98 percent confidence level is plus or minus $18 billion for one week into the future and plus or minus $30 billion for two weeks into the future." Fannie Mae and Freddie Mac Dividend Payments to the U.S. Treasury In September 2008, Fannie Mae and Freddie Mac entered voluntary conservatorship. As part of their separate conservatorship agreements, Treasury agreed to support Fannie Mae and Freddie Mac in return for senior preferred stock that would pay dividends. Losses for Fannie Mae and Freddie Mac while in conservatorship have totaled $123 billion, although each has been profitable since the start of 2012. For a profitable firm, some past losses can offset future tax liabilities and would be recognized on its balance sheet as a "deferred tax asset" under standard accounting practices. Fannie Mae and Freddie Mac wrote down the value of their tax assets because their return to profitability was viewed as unlikely. The return of Fannie Mae and Freddie Mac to profitability opened the possibility for a reversal of those writedowns. On May 9, 2013, Fannie Mae announced that it would reverse the writedown of its deferred tax assets. The Treasury agreements, as amended, set the dividend payments to a sweep (i.e., an automatic transfer at the end of a quarter) of Fannie Mae's and Freddie Mac's net worth. Thus a reversal of that writedown of the deferred tax assets triggered a payment of about $60 billion from Fannie Mae to the U.S. Treasury on June 28, 2013. The U.S. Treasury received $66.3 billion from Fannie Mae and Freddie Mac on that date. Fannie Mae stated that it would pay an additional $10.2 billion in September 2013. On August 7, 2013, Freddie Mac announced that it had not yet decided to write down its deferred tax assets of $28.6 billion. Treasury Secretary Lew's Message to Congress in 2013 In May 2013, Secretary Lew had notified Congress that he expects the U.S. Treasury will be able to meet federal obligations until at least Labor Day. Some private estimates suggest that the U.S. Treasury, with the assistance of extraordinary measures, would probably be able to meet federal obligations until mid-October or November 2013. By comparison, in 2011, Treasury Secretary Geithner invoked authority to use extraordinary measures on May 16, 2011, which helped fund payments until the debt ceiling was raised on August 2, 2011. On August 26, 2013, Treasury Secretary Lew notified congressional leaders that the government would exhaust its ability to borrow in mid-October according to U.S. Treasury projections. At that point, the U.S. Treasury would have only an estimated $50 billion in cash to meet federal obligations. With that cash and incoming receipts, the U.S. Treasury would be able to meet obligations for some weeks after mid-October according to independent analysts, although projecting when cash balances would be exhausted is difficult. On September 25, 2013, Secretary Lew sent another letter to Congress with updated forecasts of the U.S. Treasury's fiscal situation. According to those forecasts, the U.S. Treasury would exhaust its borrowing capacity no later than October 17. At that point, the U.S. Treasury would have about $30 billion in cash balances on hand to meet federal obligations. At the close of business on October 8, 2013, the U.S. Treasury had an operating cash balance of $35 billion. On October 3, 2013, the U.S. Treasury issued a brief outlining potential macroeconomic effects of the prospect that the federal government would be unable to pay its obligations in a timely fashion. The brief provided data on how various measures of economic confidence, asset prices, and market volatility responded to the debt limit episode in the summer of 2011. When Might the Debt Limit Have Been Binding? In the absence of a debt limit increase, the cash balances on hand when the U.S. Treasury's borrowing capacity ran out would then dwindle. At the close of business on October 11, 2013, the U.S. Treasury's cash balance was $35 billion. Those low cash balances, however, could raise two complications even before that point. First, low cash balances could have complicated federal debt management and Treasury auctions in late October or early November. Yields for Treasury bills maturing after the October 17 date mentioned in Secretary Lew's September 25 letter have increased relative to other yields on other Treasury securities. This appeared to signal reluctance among some investors to hold Treasury securities that might be affected by debt limit complications. Second, repo lending, which relies heavily on Treasury securities for collateral, could become more expensive or could be disrupted. Repo lending rates rose sharply in early August 2011 during the 2011 debt limit episode, but fell to previous levels once that episode was resolved. Market Reaction to the Impending Exhaustion of Treasury's Borrowing Capacity in October 2013 In the past, some financial markets have reacted to impending debt limit deadlines, signaling concerns about the federal government's ability to meet obligations in a timely manner. In early October 2013, the U.S. Treasury issued a brief that outlined how various measures of economic confidence, asset prices, and market volatility responded to the debt limit episode in the summer of 2011, and the prospect that the federal government might not have been able to pay its obligations in a timely fashion. Some investors expressed reluctance to hold Treasury securities that might be affected by debt limit complications. Fidelity Investments, J.P. Morgan Investment Management Inc., and certain other funds stated in October 2013 that they had sold holdings of Treasury securities scheduled to mature or to have coupon payments between October 16 and November 6, 2013. In October 2013, yields for Treasury bills maturing in the weeks after October 17—when the U.S. Treasury's borrowing capacity was projected to be exhausted—rose sharply relative to yields on Treasury securities maturing in 2014. Figure 1 shows secondary market yields on Treasury bills set to mature after the projected date when the Treasury's borrowing capacity would be exhausted. The horizontal axis shows days before the end of the DISP, and the vertical scale shows basis points (bps). For instance, the yield for the Treasury bill maturing October 24, 2013, rose from close to zero to 46 bps on October 15, 2013. Those yields are about 10 times larger than for similar bills that mature in calendar year 2014. A four-week Treasury bill auctioned on October 8, 2013, sold with a yield of 35 bps. By contrast, a four-week bill sold on September 4, 2013, sold with a yield of 2 bps. After enactment of a debt limit measure ( H.R. 2775 ; P.L. 113-46 ) on October 16, 2013, however, those yields returned to their previous levels. Debt Limit Issues in 2013 Congressional consideration of federal debt policy raised several policy issues that were explored in hearings and in broader policy discussions. Hearings in 2013 On January 22, 2013, the House Ways and Means Committee held hearings on the history of the debt limit and how past Congresses and Presidents have negotiated changes in the debt limit. On April 10, 2013, the House Ways and Means Subcommittee on Oversight held hearings on federal debt and fiscal management when the debt limit binds. The Joint Economic Committee held hearings on the economic costs of uncertainty linked to the debt limit on September 18, 2013. On October 10, 2013, the Senate Finance Committee held hearings on the debt limit and heard testimony from Treasury Secretary Jacob Lew. On the same morning, the Senate Banking Committee held hearings on the effects of a possible federal default on financial stability and economic growth, and heard testimony from heads of financial industry trade associations. Debt Prioritization and H.R. 807 On April 30, 2013, the House Ways and Means Committee reported H.R. 807 , which would grant the Treasury Secretary the authority to borrow to fund principal and interest payments on debt held by the public and the Social Security trust funds if the debt limit were reached. The Treasury Secretary would also have had to submit weekly reports to Congress after that authority were exercised. On May 9, 2013, the House passed and amended version of H.R. 807 . The House also passed a version of H.J.Res. 59 that incorporated the text of H.R. 807 on September 20. On September 27, the Senate passed an amended version of the measure that did not contain provisions from H.R. 807 . The Obama Administration indicated that it would veto H.R. 807 or H.J.Res. 59 containing similar provisions, were either to be approved by Congress. The October 2013 debt limit measure ( H.R. 2775 ; P.L. 113-46 ) contained no payment prioritization provisions. H.R. 807 would have affected one aspect of the U.S. Treasury's financial management of the Social Security program, but would not alter other aspects. If the debt limit were reached, the U.S. Treasury could still face constraints that could raise challenges in financial management. The U.S. Treasury is responsible for (1) making Social Security beneficiary payments; (2) reinvesting Social Security payroll taxes and retirement contributions in special Treasury securities held by the Social Security trust fund; and (3) paying interest to the Social Security trust funds, in the form of special Treasury securities, at the end of June and December. Those special Treasury securities, either funded via Social Security payroll receipts or biannual interest payments, are subject to the debt limit. Thus, sufficient headroom under the debt limit is needed to issue those special Treasury securities. If the debt limit were reached and extraordinary measures were exhausted, the Treasury Secretary's legal requirement to reinvest Social Security receipts by issuing special Treasury securities could at times be difficult to reconcile with his legal requirement not to exceed the statutory debt limit. Resolution of the Debt Limit Issue in October 2013 On September 25, Treasury Secretary Lew notified Congress that the government would exhaust its borrowing capacity around October 17 according to updated estimates. At that point, the U.S. Treasury would have had a projected cash balance of only $30 billion to meet federal obligations. On October 16, 2013, Congress passed a continuing resolution (Continuing Appropriations Act, 2014; H.R. 2775 ; P.L. 113-46 ) that included a provision to allow a suspension of the debt limit. That measure passed the Senate on an 81-18 vote. The House then passed the measure on a 285-144 vote. The President signed the bill ( P.L. 113-46 ) early the next morning. The measure suspended the debt limit until February 8, 2014, once the President certified that the U.S. Treasury would be unable to meet existing commitments without issuing debt. The President sent congressional leaders a certification on October 17, 2013, to trigger a suspension of the debt limit through February 7, 2014. That suspension, however, was subject to a congressional resolution of disapproval. If a resolution of disapproval had been enacted, the debt limit suspension would end on that date. Specific expedited procedures in each chamber governed the consideration of the resolution of disapproval. The resolution, if passed, was subject to veto. A resolution of disapproval ( H.J.Res. 99 ) was passed in the House on October 20, 2013, on a 222-191 vote. A similar measure, S.J.Res. 26 , was not approved by the Senate, so the debt limit increase was not blocked. The debt limit suspension ended on February 7, and a limit was set to reflect the amount of debt necessary to fund government operations before the end of the suspension. The U.S. Treasury was precluded in P.L. 113-46 from accumulating excess cash reserves that might have allowed an extension of extraordinary measures. The debt limit provisions enacted in October 2013 resemble provisions enacted in 2011 and earlier in 2013. For example, the Budget Control Act of 2011 ( P.L. 112-25 ) also provided for a congressional resolution of disapproval of a debt limit increase. The suspension of the debt limit in H.R. 2775 resembles the suspension enacted in February 2013 ( H.R. 325 ; P.L. 113-3 ). Other Proposals Regarding the Debt Limit in October 2013 Passage of the Continuing Appropriations Act, 2014 was preceded by other proposals to modify the debt limit. On October 8, 2013, Senate Majority Leader Reid introduced S. 1569 , a measure intended to ensure complete and timely payment of federal obligations. The measure would have extended the suspension of the debt limit enacted in February 2013 ( P.L. 113-3 ). On October 15, 2013, an announcement of a hearing on a proposal to amend the Senate amendment to H.J.Res. 59 appeared on the House Rules Committee website. That hearing, according to a subsequent announcement, was postponed that evening. The measure would extend the debt limit through February 15, 2014, and restrict the Treasury Secretary's ability to employ extraordinary measures through April 15, 2014. The measure would also extend discretionary funding at "sequester levels" through December 15, 2013. The Debt Limit in 2014 The resolution of the debt limit episode and the ending of the federal shutdown in October 2013 set up a subsequent episode in early 2014. Debt Limit Forecasts in Late 2013 and 2014 In late November 2013, CBO issued an analysis of Treasury cash flows and available extraordinary measures. Treasury, according to those estimates, might exhaust its ability to meet federal obligations in March. Because Treasury cash flows can be highly uncertain during tax refund season, CBO stated that that date could arrive as soon as February 2014 or as late as early June. Goldman Sachs had estimated that Treasury would probably exhaust its headroom—the sum of projected cash balances and remaining borrowing authority under the debt limit—in mid to late March, but might in fortuitous circumstances be able to meet its obligations until June. While Goldman Sachs and other independent forecasters noted that that the U.S. Treasury might possibly avoid running out of headroom in late March or early April, waiting until mid-March to address the debt limit could have raised serious risks for the U.S. government's financial situation. Treasury Secretary Lew Notifies Congress in Early 2014 As the end of the debt limit suspension neared, the U.S. Treasury continued to warn Congress of the consequences on not raising the debt limit. While the Treasury could again employ extraordinary measures after the suspension ended after February 7, 2014, its ability to continue meeting federal obligations would be limited by large outflows of cash resulting from individual income tax refunds. In December 2013, the U.S. Treasury had notified congressional leaders that according to its estimates, extraordinary measures would extend its borrowing authority "only until late February or early March 2014." On January 22, 2014, Secretary Lew called for an increase in the debt limit before the end of debt limit suspension on February 7, 2014, or the end of February. In the first week of February 2014, Secretary Lew stated that the U.S. Treasury could not be certain that extraordinary measures would last beyond February 27, 2014. Debt Limit Suspension Lapses in February 2014 On February 7, 2014, the debt limit suspension ended and the U.S. Treasury reset the debt limit to $17,212 billion. On the same day, the U.S. Treasury also suspended sales of State and Local Government Series (SLGS), the first of its extraordinary measures. On February 10, Secretary Lew notified Congress that he had declared a debt issuance suspension period (DISP) that authorizes use of other extraordinary measures. In particular, during a DISP the Treasury Secretary is authorized to suspend investments in the Civil Service and Retirement and Disability Fund and the G Fund of the Federal Employees' Retirement System. The DISP was scheduled to last until February 27. Debt Limit Again Suspended Until March 2015 Following the lapse of the debt limit suspension, Congress moved quickly to address the debt limit issue. On February 10, 2014, the House Rules Committee posted an amended version of S. 540 that would suspend the debt limit through March 15, 2015. The debt limit would be raised the following day by an amount tied to the amount of borrowing required by federal obligations during the suspension period. The U.S. Treasury would also be prohibited from creating a cash reserve above that level. The measure also would have reversed a 1% reduction in the cost-of-living adjustment for certain working-age military retirees that had been included in the Bipartisan Budget Act of 2013 (BBA; P.L. 113-67 ). In addition, sequestration of nonexempt mandatory spending would be extended from FY2023 to FY2024. CBO issued a cost estimate of the measure on February 11, 2014. On February 11, 2014, the House voted 221-201 to suspend the debt limit ( S. 540 ) through March 15, 2015. The amended measure included restrictions on Treasury debt management in the version reported by the Rules Committee, but omitted provisions to reverse reductions in cost-of-living adjustments to working-age military retiree pensions and an extension of nondefense mandatory sequestration. The Senate voted to concur in the House amendment the following day on a 55-43 vote. The President signed the measure ( P.L. 113-83 ) on February 15, 2014. Unlike previous measures that suspended the debt limit, a presidential certification was not required. A separate measure was also signed into law on the same day ( P.L. 113-82 ) to reverse reductions in cost-of-living adjustments to working-age military retiree pensions for those who entered the military before the beginning of 2014. The Debt Limit in 2015 The debt limit, which had been suspended through March 15, 2015, was reestablished the following day at $18,113 billion. The debt limit was raised, in essence, by the sum of payments made during the suspension period to meet federal obligations. Treasury's Extraordinary Measures in 2015 Treasury Secretary Lew sent congressional leaders a letter on March 6, 2015, stating that Treasury would suspend issuance of State and Local Government Series (SLGS) bonds on March 13, 2015, the last business day during the current debt limit suspension. SLGS are used by state and local governments to manage certain intergovernmental funds in a way that complies with federal tax laws. Once the most recent debt limit suspension lapsed, Treasury Secretary Lew declared a Debt Issuance Suspension Period (DISP) on March 16, 2015, which empowered him to use extraordinary measures to meet federal fiscal obligations until July 30, 2015. On July 30, 2015, Treasury Secretary Lew sent congressional leaders a letter to invoke extraordinary powers again until the end of October. Secretary Lew indicated in a separate letter, sent the previous day, that those extraordinary measures would enable the U.S. Treasury to meet federal financial obligations "for at least a brief additional period of time" after the end of October. Secretary Lew sent another letter on September 10, 2015, that reiterated those points. Cash Management Changes In May 2015, the U.S. Treasury changed its cash management policy to adopt recommendations of the Treasury Borrowing Advisory Committee and an internal review. The new policy is intended to ensure that the U.S. Treasury could continue to meet federal obligations even if its market access were disrupted for a week or so. Treasury Secretary Lew noted that an event of the scale such as "Hurricane Sandy, September 11, or a potential cyber-attack disruption" might cause a lapse in market access. The new cash management policy does not affect the date when the debt limit might constrain the U.S. Treasury's ability to meet federal obligations. U.S. Treasury's Headroom Under the Debt Limit The U.S. Treasury's headroom under the debt limit consists of remaining amounts of funds available for extraordinary measures and available cash reserves. When federal receipts exceed federal outlays, that headroom expands, except for those receipts or outlays that are linked to intragovernmental accounts such as Social Security. The headroom gained by those receipts is exactly offset because Treasury must issue special securities to the appropriate intragovernmental trust fund, and those securities are subject to the debt limit. Conversely, when outlays are funded by such intragovernmental accounts, the increase in Treasury's headroom due to redemption of special securities is offset by Treasury's need to provide funding for that redemption either by drawing down cash balances or additional borrowing. How Long Would Have Extraordinary Measures Lasted in 2015? On October 15, 2015, Secretary Lew stated that extraordinary measures would have been exhausted "no later than" November 3, 2015, although a relatively small cash reserve—projected at less than $30 billion—would be on hand. Secretary Lew had previously stated that extraordinary measures would be exhausted about November 5, 2015. Independent forecasts of when extraordinary measures would be exhausted were close to the date estimated by the U.S. Treasury. One private forecast estimated Treasury's headroom under the debt limit at $38 billion on November 5, 2015. CBO, according to an October 14, 2015, report, projected that "Treasury will begin running a very low cash balance in early November, and the extraordinary measures will be exhausted and the cash balance entirely depleted sometime during the first half of November." Figure 2 shows one recent independent estimate of Treasury's headroom that shows Treasury's available resources falling below $50 billion after the first few days of November 2015. Why Did the Estimated Date of Treasury's Exhaustion of Borrowing Capacity Move Up? Previous independent estimates of when Treasury's borrowing capacity would be exhausted suggested that leaving the debt limit at its present level would suffice until the end of November or even early December. For example, CBO's August 2015 projections had put the estimated date of exhaustion somewhere between mid-November and early December 2015. Lower than expected tax receipts during the fall of 2015 and higher than expected federal trust fund investments pushed the date back from what outside forecasters had expected earlier in the year. For example, net issuance of Government Account Series securities—which includes special Treasury securities held by federal trust funds—was about $10 billion higher on the first day of FY2016 as compared to the first day of FY2015. On October 9, 2015, the U.S. Treasury issued a summary of debt balances that provided a more detailed view of its headroom under the debt limit. According to that summary, Treasury had used $355 billion of its available $369 billion in extraordinary measures as of October 7, 2015, leaving $14 billion to meet forthcoming obligations. Secretary Lew noted in previous correspondence with Congress that projections of Treasury's ability to meet federal obligations were subject to significant uncertainty due to the variability of federal tax collections and expenditure patterns. While the U.S. Treasury's payment calendar, tax due dates, and securities auction schedule are generally regular and predictable, the amounts paid or received on a given day can fluctuate substantially. Bipartisan Budget Act of 2015 and the Resolution of the 2015 Debt Limit Episode Late on the night of October 26, 2015, text of the Bipartisan Budget Agreement of 2015 was issued. The proposal included a provision to suspend the debt limit until March 15, 2017. The debt limit would then come back into effect on the following day at a level reflecting the payment of federal obligations incurred during the suspension period. As with previous debt limit suspensions, the measure prohibits the U.S. Treasury from creating a cash reserve beyond amounts necessary to meet federal obligations during the suspension period. The Bipartisan Budget Act of 2015 would also increase statutory caps on discretionary spending for FY2016 and FY2017, along with measures aimed at offsetting those increases. On October 27, 2015, the House Rules Committee provided a summary of its provisions and put forth an amendment aimed at addressing certain scoring issues. The following day, the House concurred with a modified version of the Senate amendments to H.R. 1314 on a 266-167 vote. The Senate concurred with that version on October 30, 2015, on a 64-35 vote, sending the measure to the President, who signed it ( P.L. 114-74 ) on November 2, 2015. Enactment of the measure thus resolved the 2015 debt limit episode by suspending the debt limit until March 15, 2017. Other Developments in 2015 and 2016 On September 10, 2015, the House Ways and Means Committee reported H.R. 692 , which would grant the Treasury Secretary the authority to borrow to fund principal and interest payments on debt held by the public. The measure resembles H.R. 807 , which was considered in 2013 and is discussed above. The House passed H.R. 692 on October 21, 2015, by a 235-194 vote. The House Ways and Means Committee also reported H.R. 3442 on the same date, which would require the Treasury Secretary to appear before the House Committee on Ways and Means and the Senate Committee on Finance during a debt limit episode and to submit a report on the federal debt. The U.S. Treasury submitted two reports to Congress on extraordinary measures used during the 2015 debt limit episode. The first described actions affecting the G Fund and the second described actions taken affecting the Civil Service Retirement and Disability Fund. In May 2015, Treasury officials announced a policy shift to maintain a larger cash balance—not less than approximately $150 billion in normal circumstances—that would suffice to meet federal obligations in the event of a week-long disruption of access to capital markets. During a November 2, 2016, meeting between Treasury officials and a panel of financiers, concerns were raised that the interaction of debt limit constraints in 2017 with changes in the structure of money market funds (MMFs) that have increased demand for Treasury bills could risk disruption of short-term funding markets. Developments in 2017 and 2018 On March 7, 2017, CBO issued estimates that extraordinary measures could suffice to meet federal obligations until sometime in the fall of 2017. Such estimates are subject to substantial uncertainty due to changes in economic conditions, federal revenue flows, changes in the amounts and timing of federal payments, and other factors. On March 8, 2017, Treasury Secretary Mnuchin notified Congress that he would invoke authorities to use extraordinary measures after March 15, 2017, to ensure continued payment of federal obligations. On March 16, 2017, Secretary Mnuchin notified congressional leaders that he had indeed exercised those authorities. The debt limit on that date was reset at $19,809 billion. Administration Officials Urge Congress to Act In testimony before Congress on May 24, 2017, Administration officials urged Congress to raise the debt limit before its summer recess. Office of Management and Budget (OMB) Director Mick Mulvaney stated that the federal receipts were coming in more slowly than projected, which could imply that Treasury's capacity to meet federal obligations could be exhausted sooner than previously projected. A Goldman Sachs analysis found, however, that some major categories of tax receipts had shown stronger growth. On July 28, 2017, Treasury Secretary Mnuchin sent a letter to Congress stating that extraordinary measures would be used until September 29, 2017. Secretary Mnuchin's letter did not state that Treasury's cash reserves or borrowing capacity would be exhausted on that date, but he did describe the need for legislative action by that date as "critical." Others had estimated that the U.S. Treasury would likely be able to meet federal obligations until sometime in early October 2017. Treasury cash balances and borrowing capacity in mid-September, however, were projected to fall well below levels the U.S. Treasury has considered prudent to maintain operations in the face of significant adverse events. Debt Limit Again Suspended in September 2017 On September 3, 2017, Secretary Mnuchin argued that a debt limit measure should be tied to legislation responding to Hurricane Harvey, which caused extensive damage in southeast Texas. On September 6, 2017, outlines of an agreement on the debt limit and a continuing resolution were announced between President Trump and congressional leaders. The following day, the Senate, by an 80-17 vote, passed an amended version of H.R. 601 , which included an amendment ( S.Amdt. 808 ) to suspend the debt limit and provide funding for government operations through December 8, 2017, as well as supplemental appropriations for disaster relief. On September 8, 2017, the House agreed on a 316-90 vote to the amended measure, which the President signed the same day (Continuing Appropriations Act, 2018 and Supplemental Appropriations for Disaster Relief Requirements Act, 2017; P.L. 115-56 ). Treasury Secretary Mnuchin invoked authorities to use extraordinary measures once that debt limit suspension lapsed after December 8, 2017. He extended those authorities on January 30, 2018, through the end of February and urged congressional leaders to act on the debt limit before that time. Secretary Mnuchin did not indicate that the U.S. Treasury would exhaust its borrowing capacity or cash reserves by that date. CBO estimates and independent analysts had suggested that those extraordinary measures would have lasted until sometime in early March. In July 2018, Secretary Mnuchin issued a report to Congress detailing its use of extraordinary measures. Debt Limit Suspension Reset on March 2, 2019 On February 9, 2018, enactment of the Bipartisan Budget Act of 2018 (BBA 2018; P.L. 115-123 ) resolved the debt limit issue until 2019. BBA 2018 employed a legislative vehicle, H.R. 1892 , which had passed in both the House and Senate in different forms in 2017. On February 9, 2018, differences in the amended measure were resolved by a vote of 71 to 28 in the Senate and a vote of 240 to 186 in the House. BBA 2018 also increased statutory caps on discretionary spending, extended funding of the government until March 23, 2018 (Section 20101), and funded certain disaster assistance programs, among other provisions. Section 30301 of BBA 2018 suspended the debt limit through March 1, 2019, as noted above. The limit was reset on March 2, 2019, at $21.988 trillion, a level that accommodates federal obligations during the suspension period. On the following Monday—March 4, 2019—Treasury Secretary Steven Mnuchin invoked extraordinary authorities by declaring a debt issuance suspension period, during which the U.S. Treasury will then use its cash balances, incoming revenues, and extraordinary measures to meet federal obligations. CBO estimated that Treasury would have financial resources to meet federal obligations until just before or just after October 1, 2019. Some private forecasts have estimated Treasury's resources would be exhausted around August 2019.

The Constitution grants Congress the power to borrow money on the credit of the United States—one part of its power of the purse—and thus mandates that Congress exercise control over federal debt. Control of debt policy has at times provided Congress with a means of raising concerns regarding fiscal policies. Debates over federal fiscal policy have been especially animated in the past decade, in part because of the accumulation of federal debt in the wake of the 2007-2008 financial crisis and subsequent recession. Rising debt levels, along with continued differences in views of fiscal policy, led to a series of contentious debt limit episodes in recent years. The most recent suspension of the debt limit lapsed after March 1, 2019. The limit was then reset at $21.988 trillion, a level that accommodates federal obligations incurred during the suspension period. U.S. Treasury Secretary Steven Mnuchin invoked extraordinary authorities on March 4, 2019. CBO estimates that Treasury could meet federal obligations until just before or just after October 1, 2019. One private estimate suggests Treasury could cover federal payments until mid-August, if not later. Such estimates are subject to considerable uncertainty. The 2011 debt limit episode was resolved on August 2, 2011, when President Obama signed the Budget Control Act of 2011 (BCA; S. 365; P.L. 112-25). The BCA included provisions aimed at deficit reduction and allowing the debt limit to rise in three stages, the latter two subject to congressional disapproval. Once the BCA was enacted, a presidential certification triggered a $400 billion increase. A second certification led to a $500 billion increase on September 22, 2011, and a third, $1,200 billion increase took place on January 28, 2012. Federal debt again reached its limit on December 31, 2012. Extraordinary measures were again used to allow payment of government obligations until February 4, 2013, when H.R. 325, which suspended the debt limit until May 19, 2013, was signed into law (P.L. 113-3), which reset extraordinary measures. On October 16, 2013, enactment of a continuing resolution (H.R. 2775; P.L. 113-46) resolved a funding lapse and suspended the debt limit through February 7, 2014. On February 15, 2014, a measure to suspend the debt limit (S. 540; P.L. 113-83) through March 15, 2015, was enacted. On November 2, 2015, the Bipartisan Budget Act of 2015 (BBA2015; H.R. 1314; P.L. 114-74) was enacted, which suspended the debt limit through March 15, 2017, and relaxed some discretionary spending limits. On March 16, 2017, the debt limit was reset at $19,809 billion, and Treasury Secretary Mnuchin notified Congress that he had invoked authorities to use extraordinary measures. On September 6, 2017, an agreement on the debt limit and a continuing resolution was announced between President Trump and congressional leaders. Two days later a measure (P.L. 115-56) was enacted to implement that agreement, which included a suspension of the debt limit through December 8, 2017. Once that suspension lapsed—with a new debt limit set at $20,456 billion—Treasury Secretary Mnuchin invoked authorities to employ extraordinary measures, which estimates had suggested would last until early March. The debt limit issue was addressed when the Bipartisan Budget Act of 2018 (BBA 2018; P.L. 115-123) was enacted on February 9, 2018. Section 30301 of the BBA 2018 suspended the debt limit through March 1, 2019. Total federal debt increases when the government sells debt to the public to finance budget deficits, which adds to debt held by the public, or when the federal government issues debt to certain government accounts, such as the Social Security, Medicare, and Transportation trust funds, in exchange for their reported surpluses—which adds to debt held by government accounts; or when new federal loans outpace loan repayments. The sum of debt held by the public and debt held by government accounts is the total federal debt. Surpluses reduce debt held by the public, while deficits raise it.

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Background Congress has been interested in disaster relief since the earliest days of the republic. On February 19, 1803, the 7 th Congress passed the first known federal disaster assistance legislation, providing debt relief to the residents of Portsmouth, NH, following a December 26, 1802, fire that burned down most of the town ("A Bill for the Relief of the Sufferers by Fire, in the Town of Portsmouth," commonly known as the Congressional Act of 1803). Over the years, Congress has authorized the expansion of federal disaster assistance to individuals, businesses, and places (both for humanitarian reasons and as a means to enhance interstate commerce). For example During the 1930s, Congress passed legislation authorizing the Reconstruction Finance Corporation to make disaster loans for the repair and reconstruction of certain public facilities following an earthquake, and later, other types of disasters; and the Bureau of Public Roads to provide funding for highways and bridges damaged by natural disasters. During the 1950s, Congress passed legislation authorizing the President to respond to major disasters. During the 1960s, Congress passed legislation expanding the U.S. Army Corps of Engineers' authority to implement flood control projects. During the 1970s, Congress passed legislation authorizing federal loans and tax assistance to individuals affected by disasters, as well as federal funding for the repair and replacement of public facilities; and the establishment of the presidential disaster declaration process. During the 1980s, Congress passed legislation authorizing numerous changes to federal disaster assistance programs administered by the Federal Emergency Management Agency (FEMA), which had been created by Executive Order 12127 on March 31, 1979, to, among other activities, coordinate federal disaster relief efforts. Since the 1980s, Congress has focused on the oversight of FEMA's implementation of federal disaster relief efforts and assessing the Robert T. Stafford Disaster Relief and Emergency Assistance Act (of 1988), hereinafter the Stafford Act, as amended (42 U.S.C. 5721 et seq.) to determine if its provisions meet current needs. One such potential need is providing disaster assistance following a terrorist attack. Stafford Act Assistance in Response to Terrorism The Stafford Act authorizes the President to issue two types of declarations that could potentially provide federal assistance to states and localities in response to a terrorist attack: a "major disaster declaration" or an "emergency declaration." Major disaster declarations authorize a wide-range of federal assistance to states, local governments, tribal nations, individuals and households, and certain nonprofit organizations to aid recovery from a catastrophic event. Major disaster declarations must be requested by the state governor or tribal leader. Emergency declarations authorize a more limited range of federal assistance and are issued by the President to protect property and public health and safety and to lessen or avert the threat of a major disaster. In most cases, the state governor or tribal leader must request an emergency declaration; however, under 501(b) of the Stafford Act, the President has authority to issue an emergency declaration without a gubernatorial or tribal request under specified conditions. Examples of these types of emergency declarations with respect to terrorist incidents include the April 19, 1995, bombing of the Alfred P. Murrah Building in Oklahoma City, and the September 11, 2001, attack on the Pentagon. In each instance, the emergency declaration was followed by a major disaster declaration. While the Stafford Act has been used to provide assistance in response to terrorist attacks in the past, recent incidents such as the mass shootings that occurred in 2015 and 2016 in San Bernardino, CA, and Orlando, FL, respectively, and the 2016 vehicular attacks in Nice, France, and Ohio State University may have brought to light some potential shortcomings in the Stafford Act. That is, certain terror attacks may not meet the criteria of a major disaster for two reasons. First, depending on the mechanism used in the attack, certain terror incidents may not meet the legal definition of a major disaster. Of interest here, the Stafford Act defines a major disaster as "any natural catastrophe (including any hurricane, tornado, storm, high water, wind-driven water, tidal wave, tsunami, earthquake, volcanic eruption, landslide, mudslide, snowstorm, or drought), or, regardless of cause, any fire, flood, or explosion, in any part of the United States, which in the determination of the President causes damage of sufficient severity and magnitude to warrant major disaster assistance." The list of incidents that qualify for a major disaster declaration is specifically limited, and it is not clear if a terror attack would meet the legal definition of a major disaster if the incident involved something other than a fire or explosion. Meeting the definition of a major disaster is a necessary but insufficient condition for the receipt of major disaster assistance. The incident's cost must also be beyond the capacity of the state and local government. When an incident occurs, FEMA meets with the state to assess damage costs to affected homes and public infrastructure. Damages to public infrastructure are particularly important because this amount is compared to the state's population. This comparison is called the "per capita threshold." FEMA uses the threshold to assess state and local government capacity. In general, FEMA will recommend that the President declare a major disaster if the incident meets or exceeds the per capita threshold. It is conceivable that a terrorist incident could cause substantial loss of life but cause little or no damage to homes and public infrastructure. This lack of damage (to public infrastructure) may disqualify these incidents from receiving the wider range of assistance provided under a major disaster declaration. With respect to terrorism, some may view the Stafford Act's current framework adequate and oppose efforts to alter it. Their reasons are twofold. First, while terrorist incidents such as mass shootings can be devastating in terms of loss of life and impact on national morale, some argue that a major disaster should not be declared for terrorist incidents that do not cause enough damage to public infrastructure to warrant federal assistance. State and local governments, as well as insurance coverage, they say, should be the main sources of assistance if damages are limited. Second, they may argue that terror incidents that do not meet the criteria of a major disaster could be eligible for Stafford Act assistance under an emergency declaration. In contrast to the prescribed definition of incidents that qualify as a major disaster, an emergency is defined more broadly to include "any occasion or instance for which, in the determination of the President, federal assistance is needed to supplement State and local efforts and capabilities to save lives and to protect property and public health and safety, or to lessen or avert the threat of a catastrophe in any part of the United States." Some might argue that an emergency declaration would provide adequate assistance to individuals and households after a terrorist incident. For example, as outlined in Section 502 of the Stafford Act, an emergency declaration may include Section 408 assistance. Some examples of Section 408 assistance include FEMA's Individuals and Household Program (IHP), which provides housing and grants to individuals and families; and Other Needs Assistance (ONA) grants, which is part of the IHP program in the form of grants to families and individuals. These grants can cover items including medical and dental expenses caused by the incident as well as funeral expenses. ONA grants may also cover certain necessary expenses such as the replacement of personal property and other expenses. Others may argue that most acts of terrorism warrant the wide range of assistance provided by a major disaster declaration. They would argue that the assistance provided under an emergency declaration is too limited. For example, the Crisis Counseling program is not provided under an emergency declaration. The Crisis Counseling program may seem especially appropriate to a terrorist incident given the assistance it provides for what is likely a wrenching event for those involved. In addition, the type of declaration determines what types of Small Business Administration (SBA) disaster loans are available. In general, homeowners, renters, businesses, and nonprofit organizations become eligible for disaster loans under a major disaster declaration. In contrast, typically only private nonprofit organizations are eligible for disaster loans under an emergency declaration. Finally, beyond the monetary assistance provided by a major disaster declaration, some would argue that major disaster declarations are important symbolic gestures of federal support to states and localities. Declaration Procedure The Stafford Act requires that all major disaster declaration requests be made by state governors or tribal leaders. Such requests must be made on the basis that the incident is of such severity and magnitude that effective response is beyond the capability of the affected state and local government. The request for a declaration begins with a letter to the President from the governor or tribal leader. Included with the letter are supplemental material and any relevant information about the incident. The letter also describes what types of federal assistance is being requested. In the case of a request for a major disaster declaration, a particularly important piece of information accompanying the letter is the Preliminary Damage Assessment (PDA). PDAs provide public infrastructure damage estimates (as well as estimated damage to households). By regulation, FEMA compares this damage estimate against the state's population. In general, FEMA will make a recommendation to the President that a major disaster be declared if public infrastructure damages exceed $1.42 per capita. This formula is known as the "per capita threshold." A request for an emergency declaration follows the same basic regulatory procedures highlighted above for major disasters with some nuances. Similar to a request for a major disaster declaration, the basis for an emergency declaration is that the incident is of such severity and magnitude that effective response is beyond the capability of the affected state and local government. FEMA, however, does not apply any formulas—including the per capita threshold—in regulations to make emergency declaration recommendations to the President. While there are differences between the two types of declarations, the ultimate decision to declare and grant federal assistance for emergencies and major disasters rests solely with the President. Major Disaster Declaration Criteria In general, an incident must meet three criteria to be eligible for a major disaster declaration: (1) definition, (2) unmet need, and (3) state action. Definition The Stafford Act defines a major disaster as any natural catastrophe (including any hurricane, tornado, storm, high water, wind-driven water, tidal wave, tsunami, earthquake, volcanic eruption, landslide, mudslide, snowstorm, or drought), or, regardless of cause, any fire, flood, or explosion, in any part of the United States, which in the determination of the President causes damage of sufficient severity and magnitude to warrant major disaster assistance under this chapter to supplement the efforts and available resources of states, local governments, and disaster relief organizations in alleviating the damage, loss, hardship, or suffering caused thereby. The definition of a major disaster can be applied in several ways. The definition could be applied prescriptively. In this view, the definition would be considered as an itemized list of incidents eligible for federal assistance under the Stafford Act. As a result, certain incidents are not eligible for assistance because the definition is taken as verbatim and all inclusive. Another approach is to consider the definition as open to interpretation. In this view, the list of incidents is seen as providing examples of some of the incidents that could be considered a major disaster. Alternatively, the definition could be seen as a blend of the two approaches. The list of natural disasters might be seen as open-ended whereas human caused incidents are limited to the itemized list of "fire, flood, or explosion." Depending on the interpretation, the definition may limit certain incidents from receiving federal assistance. The discussion regarding whether an incident would be denied assistance due to definitional limitations is hypothetical. There have been incidents denied for definitional reasons (such as the Flint water contamination incident) but thus far a Governor has not requested a major disaster for a terrorist incident and denied assistance based on the definition of a major disaster. It is unclear if the definition would be fatal to a request for a major disaster declaration. Ultimately, the President has the discretion to determine what incidents that meet this definition are eligible for a major disaster declaration. Unmet Need In addition to meeting the definition of a major disaster, the incident must result in damages significant enough to exceed the capabilities and resources of state and local governments. Exceeding state and local capabilities and resources is generally considered as the state's unmet need. Under the Stafford Act: All requests for a declaration by the President that a major disaster exists shall be made by the Governor of the affected state. Such a request shall be based on a finding that the disaster is of such severity and magnitude that effective response is beyond the capabilities of the state and the affected local governments and that federal assistance is necessary. In general, FEMA assesses the degree of damage for an incident to help determine unmet need. FEMA considers six general areas: estimated cost of the assistance; localized impacts; insurance coverage; hazard mitigation; recent multiple disasters; and other federal assistance programs. While all of these factors are considered when assessing an incident's worthiness for federal assistance, the estimated cost of assistance is perhaps the most critical because it contains the per capita threshold mentioned earlier in this report, as well as the unmet needs of families and individuals. Attacks such as the 2016 Pulse nightclub shooting in Florida and the 2015 San Bernardino, CA, shooting had a high number of fatalities with relatively low damages to public infrastructure. Limited public infrastructure damages may make the per capita threshold difficult to reach—particularly for highly populated states. State Action The state or tribal nation must implement its emergency plan, dedicate sufficient resources to respond to the incident, and agree to cost-sharing requirements, as follows: As part of such request, and as a prerequisite to major disaster assistance under this chapter, the Governor shall take appropriate response action under state law and direct execution of the state's emergency plan. The Governor shall furnish information on the nature and amount of State and local resources which have been or will be committed to alleviating the results of the disaster, and shall certify that, for the current disaster, state and local government obligations and expenditures (of which state commitments must be a significant proportion) will comply with all applicable cost-sharing requirements of this chapter. As conceptualized in Figure 1 , an incident is eligible for a disaster declaration if all three criteria intersect. An incident that does not meet the definition of a major disaster, and/or does not have unmet need would not have intersecting criteria and may have more difficulty receiving a major disaster declaration. Major Disaster Assistance FEMA Assistance The assistance provided for a major disaster declaration generally takes three forms: Public Assistance (PA), Individual Assistance (IA), and Hazard Mitigation Assistance (HMA). PA addresses the state or tribe's essential needs but concentrates on repairing damage to infrastructure (public roads, buildings, etc.). IA helps families and individuals. IA can be in the form of temporary housing assistance and grants to address post-disaster needs (such as replacing furniture, clothing and other items). It may also include crisis counseling and disaster unemployment benefit. HMA provides grant funding to the state for mitigation projects. HMA does not necessarily need to mitigate risks from the type of disaster that was declared. Rather, HMA can be used for mitigation projects identified before the declaration was issued. FEMA, however, does not exclusively perform all disaster response and recovery operations for the federal government. The President has the authority to direct any federal agency to use its authorities and resources to support state and local response and recovery efforts, primarily through Sections 402, 403, and 502 of the Stafford Act. In general, when a declaration is declared, FEMA coordinates federal entities and organizations that are involved in the incident by "assigning" missions to relevant agencies to address a state's request for federal assistance or support overall federal operations pursuant to, or in anticipation of, a Stafford Act declaration. The activities carried out by other agencies through Mission Assignments are generally reimbursed by FEMA through the Disaster Relief Fund (DRF). For example, FEMA may request the Department of Health and Human Services to establish and operate a shelter co-located with a federal medical station to support non-medical caregivers and family members accompanying patients being treated at the station. SBA Disaster Loan Program Major disaster declarations also put the Small Business Administration (SBA) Disaster Loan Program into effect. The loan program provides three main types of loans for disaster-related losses: (1) Home and Personal Property Disaster Loans, (2) Business Physical Disaster Loans, and (3) Economic Injury Disaster Loans (EIDL). Home Physical Disaster Loans provide up to $200,000 to repair or replace disaster-damaged primary residences. Personal Property Loans provide up to $40,000 to replace personal items such as furniture and clothing. Business Physical Disaster Loans provide up to $2 million to help businesses of all sizes and nonprofit organizations repair or replace disaster-damaged property, including inventory and supplies. EIDLs provide up to $2 million to help meet financial obligations and operating expenses that could have been met had the disaster not occurred. Loan proceeds can only be used for working capital necessary to enable the business or organization to alleviate the specific economic injury and to resume normal operations. Loan amounts for EIDLs are based on actual economic injury and financial needs, regardless of whether the business suffered any property damage. Major disaster declarations that include both IA and PA make all three loan types available. Only private non-profit organizations are eligible for SBA physical disaster loans and EIDL, if the major disaster declaration only provides PA. It is important to note that SBA disaster loans are usually the only type of federal assistance available to businesses after a terror attack because FEMA does not provide assistance to the private sector. Emergency Declaration Criteria The three criteria for an incident to be eligible for an emergency disaster declaration include (1) definition, (2) unmet need, and (3) state action. Definition The Stafford Act defines an emergency as any occasion or instance for which, in the determination of the President, federal assistance is needed to supplement State and local efforts and capabilities to save lives and to protect property and public health and safety, or to lessen or avert the threat of a catastrophe in any part of the United States. While the definition of a major disaster includes a list of incidents that could be considered a major disaster, emergencies are defined more broadly. Consequently, a terrorist attack such as a mass shooting or other nontraditional attack (such as using a vehicle as a weapon) under consideration as an "emergency" would likely not face the definitional challenge posed by the "major disaster" definition. Federal Responsibility The Stafford Act procedure for an emergency declaration can be particularly useful when a terrorist incident involves federal property or a federal program is Section 501(b) of the act: The President may exercise any authority vested in him by section 502 or section 503 with respect to an emergency when he determines that an emergency exists for which the primary responsibility for response rests with the United States, because the emergency involves a subject area for which, under the Constitution or laws of the United States, the United States exercises exclusive or preeminent responsibility and authority. In determining whether or not such an emergency exists, the President shall consult the Governor of any affected state, if practicable. The President's determination may be made without regard to subsection (a). While Presidents have rarely invoked this authority, it could provide a path for rapid action and certain forms of terrorism might be easily and justly defined as a federal responsibility. And as noted previously, emergency declarations can later be converted to major disaster declarations. The use of Section 501(b) is infrequent and has been invoked on three occasions: (1) the Alfred P. Murrah Federal Building bombing in Oklahoma City in 1995, (2) the 2003 Space Shuttle Columbia explosion, and (3) the terrorist attack on the Pentagon on September 11, 2001. It could be argued that the usefulness of 501(b) would be limited to certain situations that involve areas of federal responsibility (e.g., federal properties or programs). It could be further argued that that the use of Section 501(b) would be inappropriate, if the incident occurred in a business setting or an area of state and local jurisdiction. Others might disagree and argue that all terrorist incidents are a federal responsibility regardless of where they occur in the United States. According to this view, the 501(b) authority could be useful in the initial stages of a terrorist event since it provides the President with the discretion to act quickly without having to wait for a gubernatorial request for assistance. Others might be concerned that Section 501(b) might be invoked too often if applied to any situation that involved terrorism. For example, they may argue that it could lead to an expansion of federal assistance if routinely used in terror-related mass shootings. Unmet Need In general, similar to a major disaster, an incident must result in damages significant enough to exceed the capabilities and resources of state and local governments. Under the Stafford Act All requests for a declaration by the President that an emergency exists shall be made by the Governor of the affected state. Such a request shall be based on a finding that the situation is of such severity and magnitude that effective response is beyond the capabilities of the state and the affected local governments and that federal assistance is necessary. As mentioned previously, the President has the authority to issue an emergency declaration in certain circumstances without a gubernatorial or tribal request. Thus, in certain circumstances, the response does not need to be beyond the capabilities of state and local governments since the response could be considered a uniquely federal responsibility. State Action As with a major disaster, the state or tribal nation must implement its emergency plan, dedicate sufficient resources to respond to the incident, and agree to cost-sharing requirements, as follows: As a part of such request, and as a prerequisite to emergency assistance under this act, the Governor shall take appropriate action under State law and direct execution of the State's emergency plan. The Governor shall furnish information describing the state and local efforts and resources which have been or will be used to alleviate the emergency, and will define the type and extent of federal aid required. Based upon such Governor's request, the President may declare that an emergency exists. As illustrated in Figure 2 , an incident is eligible for an emergency declaration if all three criteria intersect. An incident that does not meet the definition of a major disaster, or does not have unmet need would not have intersecting criteria and may have more difficulty receiving a major disaster declaration. Emergency Declaration Assistance FEMA Assistance Emergency declarations authorize activities that can help states and communities carry out essential services and activities that might reduce the threat of future damage. Emergency declarations authorize less assistance than a major disaster. Emergency declarations do not provide assistance for repairs and replacement of public infrastructure or nonprofit facilities. However, they do provide emergency services under the Stafford Act and other actions that might lessen the threat of a major disaster. As with major disaster declarations, the President has the authority under an emergency declaration to direct any federal agency to use its authorities and resources in support of state and local response and recovery efforts under 502 of the Stafford Act. Also, the emergency authority includes Section 408 which means that housing assistance and grants for individuals and families could be provided under an emergency declaration. SBA Disaster Loan Program Emergency declarations also trigger the SBA Disaster Loan Program, albeit usually on a limited basis. All three SBA disaster loan types are available when the emergency declaration includes IA. Emergency declarations, however, rarely provide IA. Typically, limited PA is provided. For example, 281 emergences were declared from 1990 to 2015. Of these, 18 included IA. SBA disaster loans are generally only available to private, non-profit organizations for "PA-only" declarations. Some may see this as a limitation. For example, if an incident affected a business (e.g., malls, movie theaters, or nightclubs), those businesses would not be eligible for an SBA disaster loan under a PA-only emergency declaration. Selected Examples of Stafford Act Assistance for Terror Incidents The following section provides information on past terror attacks that have received federal assistance under the Stafford Act, including a general description of what types of assistance was provided for the incident. It also provides information on the Orlando Pulse nightclub shooting. It is included in this discussion because the governor requested Stafford Act assistance. The San Bernardino and Ohio State attacks are not included because Stafford Act declarations were not requested. Table 1 provides a comparison of each incident. It is notable that in all but one case, the declaration was issued on the same day as the attack. Oklahoma City Bombing An emergency declaration was issued to Oklahoma for the Alfred P. Murrah Federal Building Bombing on April 19, 1995—the day of the bombing. The emergency declaration permitted FEMA to take vital actions necessary just hours following the tragedy. This principally involved bringing in FEMA's Urban Search and Rescue (USAR) teams. USAR Task Forces began arriving in Oklahoma City the afternoon of April 19, 1995. In addition, the emergency declaration also provided the sources that allowed the debris removal process to begin. Debris removal, however, was a challenging operation since the area to be cleared was also a Federal Bureau of Investigation (FBI) crime scene and new protocols were needed to accomplish response operations in that unique environment. As then-FEMA Director James Lee Witt explained: Here were two earnest, dedicated, well-trained groups working as hard as they could—and yet there was an inherent conflict between them. In clearing out the debris, the search and rescue people needed to proceed slowly, carefully. The FBI wanted to pick up the pace, to get their hands on crime evidence immediately—and they wanted that evidence not to be contaminated. Each group was under tremendous pressure. A major disaster declaration was later issued for the incident on April 26, 1995. This action permitted, at the request of the governor, the activation of the Crisis Counseling program. This program provides funding to state and local mental health authorities to provide service to survivors affected by a disaster incident. Since the great majority of damage was to federal facilities, FEMA's expenditures were limited for this event since FEMA aid under the Stafford Act is directed toward the losses of state, tribal and local governments. Aid to families and individuals (which includes crisis counseling) was the largest program expenditure at $5.5 million. SBA approved 163 disaster loans for $7.3 million. This included 71 approved home disaster loans for $452,700 and 92 business disaster loans for $6.8 million. September 11th Terrorist Attacks Following the attacks on the Twin Towers, a major disaster declaration was issued on September 11, 2001 for the state of New York. The following day an emergency was declared for Virginia, site of the Pentagon attack. Later, on September 21, 2001, a major disaster was declared for Virginia with September 11 th identified as the beginning of the incident period. The scope of the New York attacks, along with the President's declaration, resulted in legislation that appropriated $40 billion to address not only recovery for these events but security concerns, including transportation safety and initiating counter measures against terrorism. Half of the appropriated amount ($20 billion) was devoted by law ( P.L. 107-38 ) to recovery and assistance efforts in New York, Virginia, and Pennsylvania. FEMA's work involved urban search and rescue teams, debris removal, crisis counseling, and housing aid for displaced residents. FEMA's DRF expenditures in New York alone surpassed $8.7 billion. In the case of Virginia, the largest expenditures were for aid to families and individuals. More than $14.5 million was provided for these programs (including crisis counseling), while nearly $5 million was provided for emergency work and debris clearance. The two disaster declarations triggered the SBA Disaster Loan Program. For New York, SBA approved 6,384 loans for roughly $551 million. This included 412 approved home loans for roughly $6.0 million, 566 approved business loans for $37 million, and 5,406 approved EIDL loans for $507 million. For Virginia, SBA approved 256 loans for roughly $31 million. This included one approved business loan for $125,500, and 255 approved EIDL loans for approximately $31 million. Boston Marathon Bombing An emergency declaration was issued to Massachusetts on April 17, 2013, for the Boston Marathon Bombing—two days after the incident. The Boston bombing was a unique situation that resulted in a large man-hunt, the shutdown of a major city, and the eventual capture of one perpetrator and the killing of the other in a shootout with the police. Unlike some other terrorism-related incidents, this event stretched out over several days. In addition to the damage caused at the blast site, it also tested the resources of state and local first responders throughout the area. FEMA's Deputy Administrator explained FEMA's post-incident role: FEMA was authorized to provide Category B emergency protective measures to include items such as police personnel, search and rescue, and removal of health and safety hazards. FEMA also provided Public Assistance to include funding for shelters and emergency care for Norfolk and Suffolk counties, which was primarily used for residents whose homes had been impacted during the blast or could benefit from crisis counseling. Eventually, the incident period was extended, beginning on April 15, 2013, and concluding on April 22, 2013, to capture the eligible costs expended by public safety and other response personnel throughout the region. FEMA's portion of those costs (75% of the eligible amount) totaled just over $6 million. Additionally, FEMA "authorized state and local agencies in Massachusetts to use existing preparedness grant funding to support law enforcement and first responder overtime costs resulting from investigation support activities or heightened security measures." SBA approved four EIDL loans for $214,300 in the aftermath of the Boston Marathon Bombing. Other SBA disaster loan types were not available because the incident was declared an emergency (as opposed to a major disaster). Orlando Pulse Nightclub Shooting On June 13, 2016, Florida Governor Rick Scott made a request to the President to issue an emergency declaration in response to the mass shooting at Pulse nightclub in Orlando, FL, on June 12, 2016. The governor's request is the first known Stafford Act request in response to a mass shooting incident. The governor requested $5 million for emergency protective measures (Category B) under the Public Assistance program. The assistance was intended to address health and safety measures, and assistance for management, control, and reduction of immediate threats to public health and safety. According to FEMA Administrator Craig Fugate, the President denied the request for assistance partly because the Governor could not satisfactorily demonstrate that the response to the incident was beyond the capacity of the state and local governments. According to the denial letter sent by FEMA Administrator Craig Fugate to Governor Rick Scott: a presidential emergency declaration under the Stafford Act applies when federal assistance is needed to supplement state and local efforts and capabilities to save lives and to protect property and public health and safety, or to lessen or avert the threat of a catastrophe. Because your request did not demonstrate how the emergency response associated with this situation is beyond the capability of the state and affected local governments or identify any direct federal assistance needed to save lives or protect property, an emergency declaration is not appropriate for this incident. The request was also denied because other forms of federal assistance would be provided for the incident. The letter further states: although the Stafford Act is not the appropriate source of funding for those activities and this situation, several federal agencies, including the Department of Justice, the Federal Bureau of Investigation, and FEMA have resources that may help support the response to this incident absent an emergency declaration under the Stafford Act. We will work closely with you and your staff to identify these additional capabilities. Although the request for an emergency declaration was denied, FEMA approved a request from Florida to reallocate $253,000 in unspent money from the Homeland Security Grant Program to help pay for overtime costs in the wake of the shooting. SBA only provided EIDL for the attack and related investigation. This included five approved loans for $353,400. Policy Considerations It is generally agreed that the government should help victims of terrorism in times of need, but the proper scope of that assistance with respect to the Stafford Act is subject to debate. Some might question whether the fiscal responsibility resides primarily with the federal or the state government. The debate may be further complicated if the incident does not clearly meet the definition of a major disaster or does not meet certain thresholds, or both. The selected approach will likely be influenced by how policymakers view the role of the federal government in response to terrorism. Some may argue that Stafford Act assistance is warranted for all or most acts of terrorism. Others might argue that Stafford Act assistance should only be provided in cases where the incident meets the existing framework of definitions and unmet need. Major Disaster Definition As mentioned previously, the definition of a major disaster contains a list of incidents that can be considered a major disaster. One hypothetical concern is, as currently defined, certain acts of terror may not meet the definition of a major disaster. The following discussion demonstrates how Congress designed the definition to address natural disasters and human-caused incidents. The term "major disaster" was originally defined in the Federal Disaster Relief Act of 1950 as any flood, drought, fire, hurricane, earthquake, storm, or other catastrophe in any part of the United States which, in the determination of the President, is or threatens to be of sufficient severity and magnitude to warrant disaster assistance by the federal government to supplement the efforts and available resources of states and local governments in alleviating the damage, hardship, or suffering caused thereby, and respecting which the governor of any State (or the Board of Commissioners of the District of Columbia) in which such catastrophe may occur or threaten certifies the need for disaster assistance under this Act, and shall give assurance of expenditure of a reasonable amount of the funds of the government of such state, local governments therein, or other agencies, for the same or similar purposes with respect to such catastrophe. Congress expanded on the list of specific incidents when it amended the definition in the Disaster Relief Act of 1974 which defined a major disaster as any hurricane, tornado, storm, flood, high water, wind-driven water, tidal wave, tsunami, earthquake, volcanic eruption, landslide, mudslide, snowstorm, drought, fire, explosion, or other catastrophe in any part of the United States which, in the determination of the President, causes damage of sufficient severity and magnitude to warrant major disaster assistance under this Act, above and beyond emergency services by the federal government, to supplement the efforts and available resources of States, local governments, and disaster relief organizations in alleviating the damage, loss, hardship, or suffering caused thereby. It is notable that the Senate report on the bill indicated that a major disaster is defined as "any damage caused by these hazard s determined by the President to be of sufficient severity and magnitude to warrant federal assistance" to supplement state and local efforts. To some, this would support the argument that the definition should be prescriptively viewed as a list of eligible incidents. Congress amended the definition again in 1988—the year the Stafford Act was enacted. Congress designed the new definition with a subtle change in wording to limit human-caused incidents from receiving major disaster declarations. As shown in Figure 3 , Congress removed "or other catastrophe" from the definition of a major disaster and inserted "or, regardless of cause." According to the Senate report accompanying the bill, Congress removed "other catastrophe" because it had been broadly interpreted to justify federal assistance to humanly caused incidents. According to the Senate report Congress intended the [the Disaster Relief Act of 1974] to alleviate state and local conditions caused by natural catastrophes. Although non-natural catastrophes are not specifically enumerated by Section 102 of the act, the phrase "other catastrophes" has been broadly interpreted to justify federal assistance in response to humanly caused traumatic events. The expansion of legislative intent in the administration of the Disaster Relief Act has provoked recent congressional concern. The report further states that Broadening the scope of the act to cover both natural and non-natural catastrophes has strained the capacity of programs designed to respond only to natural catastrophes. Within its intended context the act has functioned relatively well. It is comprehensive and flexible legislation, well-suited to handle the full range of natural disasters for which it was designed. It was not written, however, to respond to the occasionally catastrophic consequences of social, economic, or political activity and establishes no administrative or programmatic mechanisms to do so. As demonstrated above, it appears that Congress sought to prevent the Stafford Act from being used to address an array of social issues and the specificity of the amended definition may have precluded some incidents from being declared a major disaster. For example, Michigan Governor Rick Snyder's request for a major disaster declaration for the Flint water contamination incident was denied based on the grounds that it did not meet the definition of a major disaster. The denial letter sent from the FEMA Administrator to the governor (see Appendix ) stated the incident did not meet the legal definition of a major disaster because it was "not a result of a natural disaster, nor was it caused by fire, flood, or explosion." Another potential issue related to the definition's strict enumeration of human-caused incidents is that it is hypothetically conceivable that two incidents with equal damages and loss of life with different mechanisms of destruction would be treated differently in terms of eligibility. For example, an explosion that kills 50 people could be eligible for a major disaster (if there are sufficient damages to public infrastructure) whereas if a vehicle (similar to the 2016 Nice, France, attack) was used to kill 50 people it could arguably be considered ineligible. A similar argument could be made about a sarin gas attack or a cybersecurity attack that do not involve an explosion or result in fire. Others may argue that the definition's specificity would not preclude terror incidents from being declared major disasters if the consequences merited a major disaster declaration—regardless of the mechanism. They may further argue that an incident could be recast with some ingenuity to make the incident conform to the definition. For instance, they may argue that, broadly interpreted, firing a gun or releasing gas involves a type of explosion. An arguable example of recasting incident was attempted in the unsuccessful appeal of Flint water contamination incident. The appeal letter stated that Respectfully, I appeal the determination that the event "does not meet the legal definition of a major disaster under 42 U.S.C. §5122." This unique disaster poses imminent and long-term threat to the citizens of Flint. Its severity warrants special consideration for all categories of the Individual and Public Assistance Programs, as well as the Hazard Mitigation program in order to facilitate recovery. While the definition under 44 C.F.R. §206.2(17) provides examples of what might constitute a natural disaster, I submit that this disaster is analogous to the flood category, given that the qualities within the water, over a long term, flooded and damaged the city's infrastructure in ways that were not immediately or easily detectable. This disaster is a natural catastrophe in the sense that lead contamination into water is a natural process. One concern that could emerge from broad interpretations of the definition is that it could lead to "declaration creep" wherein marginal incidents are increasingly considered major disasters. They may also argue that incidents without fire or explosions would likely not create significant damages and would therefore not warrant a major disaster declaration. An emergency declaration would be more appropriate according to this view. If Congress is concerned that the definition of a major disaster might preclude some incidents from receiving federal assistance, it could consider amending the definition to explicitly include terrorism. Since FEMA is a component agency of the Department of Homeland Security (DHS) it might be assumed that a potential definition would be the one used by DHS. There are, however, multiple definitions used by the federal government and there is no consensus on the definition of terrorism. As demonstrated in Table 2 , several U.S. governmental agencies have different definitions of terrorism. In some definitions, such as the one used by the Department of State, the act must be politically motivated whereas in other definitions it does not need to be a factor (such as the one used by the Federal Bureau of Investigation and DHS). Some might argue that definitions that rely on motivation are problematic if applied to Stafford Act assistance because they are based on the intentionality of the act rather than the act's consequences. For example, a mass shooting that is motivated by hate or brought about by mental illness might not be considered an act of terrorism while a similar incident that is politically motivated might. Perhaps an alternative approach would be expanding the types of assistance available under an emergency declaration rather than amending the definition. For example, Congress could make crisis counseling and SBA disaster loans for businesses and households available under emergency declarations. This would arguably help to address events where there is great loss of life but relatively little damage to public infrastructure. These measures may also provide a boost for public morale in such a situation as well as an assurance to state and local governments that they may receive some supplemental help. Per Capita Threshold Some may be concerned that FEMA might not recommend a major disaster declaration to the President for an act of terrorism because the incident does not meet or exceed the $1.42 per capita threshold. Using this threshold, FEMA may not recommend a declaration for an incident with a high number of casualties but limited damage to public infrastructure. For example, the Orlando Pulse nightclub attack killed 49 people but caused little damage to public property. Almost all of the damage was to the nightclub. In addition, damages to businesses are generally not considered when formulating the per capita threshold which is based on public sector damage. Even if there is substantial damage to public infrastructure, some populous states may have difficulty meeting the per capita threshold. For example, in 2013 Illinois communities were denied federal assistance after a string of tornados devastated rural communities of the state. The storms caused significant damages to the rural communities but, given the state's large population, there was not enough damage to meet the per capita threshold. Some might argue that loss of life should play a larger role when FEMA makes declaration recommendations. Others might question whether terror attacks with limited public infrastructure damage—while devastating in their own right in terms of loss of life and the impact they can have on national morale—cause enough damage to warrant a major disaster declaration. If Congress is concerned that the per capita threshold may prevent state and local governments from receiving a major disaster declaration for a terror attack, Congress could require FEMA to consider factors beyond damages to public infrastructure when formulating its recommendation to the President. One potential assessment tool is the value of statistical life (VSL) which assigns a monetary value to each fatality caused by the given incident. For example, the U.S. Department of Transportation uses $9.1 million as the VSL when evaluating risk reduction. If this VSL amount was applied to the Orlando attack, the 49 fatalities would amount to roughly $446 million in damages. Proponents might argue that evaluating a terror attack with VSL would provide objective criteria for making recommendations as to whether an incident warranted federal assistance. Others might question if altering the per capita threshold is necessary. They may point out that the per capita threshold is used solely by FEMA to make recommendations. Also, FEMA already considers damage to homes and rental properties. As noted previously, the ultimate decision to grant federal assistance for a major disaster rests solely with the President. Furthermore, the per capita threshold is designed to evaluate a state's capacity to respond to an incident. It could be argued that highly populated states should be able to fund their recovery without federal assistance because they have a higher tax base on which to draw. According to this view, adjusting the per capita threshold or applying additional factors would be unnecessary. Emergency Declarations for Acts of Terrorism Whereas Congress sought to limit the President's authority to issue major disaster declarations for human-caused incidents under the Stafford Act, the inverse might be said about emergency declarations. As demonstrated by Figure 4 , the definition of an emergency in the Disaster Relief Act of 1974 included a specific list of incidents eligible for an emergency declaration. The amended definition eliminated the list and defined emergency more broadly. It could be argued that the amended definition provides the President with a great deal of discretion to issue an emergency declaration in response to acts of terrorism. And as mentioned previously, FEMA does not use the per capita threshold formula to make emergency declaration recommendations to the President. To some, the broad definition and lack of a per capita formula make emergency declarations more suitable for certain types of terror attacks such as mass shootings. Consequently, some may argue that there is no need to change the Stafford Act to make it easier for "soft target" attacks to receive a major disaster declaration because it is relatively easier to obtain an emergency declaration. Even so, some might see the decision to issue an emergency declaration as arbitrary and question how state capacity is determined. For example, in a news release in response to the denied emergency declaration for the Orlando shooting, Governor Rick Scott stated It is incredibly disappointing that the Obama Administration denied our request for an emergency declaration. Last week, a terrorist killed 49 people, and wounded many others, which was the deadliest shooting in U.S. history. It is unthinkable that President Obama does not define this as an emergency. We are committing every state resource possible to help the victims and the community heal and we expect the same from the federal government. The press release also provided links to other incidents that were approved for emergency declarations, including President Obama's 2009 inauguration, the 2016 Flint Water crisis, the Massachusetts water main break in 2010, and the 2013 Boston Marathon bombing, among others. Some might question why these incidents warranted emergency declarations but the Pulse nightclub shooting did not. Proponents of changing the Stafford Act may also argue that, even if an incident receives an emergency declaration, the scope of the assistance is limited compared to a major disaster. For one, assistance is primarily provided to governmental entities under an emergency declaration. Individuals may receive some temporary housing assistance (which may not be applicable if the incident does not impact people's homes) and other forms of assistance such as Other Needs Assistance, which is a grant to households for necessary items damaged or destroyed by the incident, under Section 408 of the Stafford Act. But assistance to those experiencing mental health problems, generally addressed by FEMA's Crisis Counseling program, is not available under an emergency declaration. Further, as mentioned previously, SBA disaster loans are generally only available to private non-profit organizations under an emergency declaration. If Congress is concerned that emergency declarations would not provide enough assistance in response to certain types of terror attacks, it could consider expanding the types of assistance potentially available for these incidents. The expanded assistance could be tied to all emergency declarations, or designed exclusively for acts of terror. In addition, Congress could require the SBA to provide the full range of disaster loans if an emergency were declared for an act of terror. SBA Disaster Loans and CDBG Disaster Assistance SBA Disaster Loan Program This section examines how the SBA Disaster Loan programs might be used to assist businesses, individuals, and households following a terrorist attack. The section also examines a potential alternative source of federal funding that has been used to assist businesses negatively impacted by a terror attack. As previously mentioned, SBA disaster loans are usually the only type of federal assistance available to businesses affected by a terror attack. There are potentially four scenarios where the SBA Disaster Loan Program could be used to support business recovery activities following a terror attack. These include two types of presidential declarations as authorized by the Stafford Act, and two types of SBA declarations authorized by the Small Business Act. In addition to providing disaster loans for businesses, some of these declarations also make disaster loans available to individuals and households. As demonstrated below, the type of declaration determines what loans types are made available: Major Disaster or Emergency Declaration Authorizing PA and IA. The President issues a major disaster declaration, or an emergency declaration, and authorizes both IA and PA under the authority of the Stafford Act. When the President issues such declarations, Home and Personal Property Disaster Loans, and Business Physical Disaster Loans become available to homeowners, renters, businesses of all sizes, and nonprofit organizations located within the disaster area. Home and Personal Property Disaster Loans, and Business Physical Disaster Loans can be used to repair and replace items and structures damaged by an attack. EIDL may also be made available under this declaration to provide loans to businesses that suffered substantial economic injury as a result of the incident. Major Disaster or Emergency Declaration Authorizing PA O nly . The President makes a major disaster declaration or emergency declaration that only provides the state with PA. In such a case, a private nonprofit entity located within the disaster area that provides noncritical services may be eligible for a SBA physical disaster loan and EIDL. Disaster loans would not available to renters and homeowners under this type of declaration. In addition, Business Physical Disaster Loans, and EIDLs are generally not made available to businesses (unless they are a private nonprofit entity) when the declaration only provides PA. As mentioned previously, there are two scenarios under which SBA disaster loans could be provided in response to a terror attack without the issuance of presidential disaster declaration: Gubernatorial Request for Assistance . Under this scenario, the SBA Administrator issues a physical disaster declaration in response to a gubernatorial request for assistance. Under this type of declaration, SBA disaster loans would be available to eligible homeowners, renters, businesses of all sizes, and nonprofit organizations within the disaster area or contiguous counties and other political subdivisions. EIDL would also be available under this type of declaration. Gubernatorial Certification of Substantial Economic Injury . The SBA Administrator may issue an EIDL declaration when SBA receives a certification from a governor that at least five small businesses have suffered substantial economic injury as a result of a disaster. This declaration may be offered only when other viable forms of financial assistance are unavailable. Small agricultural cooperatives and most private nonprofit organizations located within the disaster area or contiguous counties and other political subdivisions are eligible for SBA disaster loans when the SBA Administrator issues an EIDL declaration. These types of loans, however, may not be used to repair damages resulting from a terror attack. Rather, loan proceeds can only be used for working capital necessary to enable the business or organization to alleviate the specific economic injury and to resume normal operations. For example, a business may suffer a dramatic decline in its business operations and revenue stream or have difficulty obtaining materials as a result of a terror attack. As illustrated above, the type of loans that are made available to individuals, homeowners, and businesses largely depends on declaration type. Some observers might be concerned that certain disaster loans may not be available following a terrorist attack. In the view of those observers, Congress could consider amending existing programs by making all SBA disaster loan types available following a terror attack for certain declarations. For example, Congress might make EIDL, home and business disaster loans available for major disaster and emergencies that only provide PA. Community Development Block Grants71 Another source of potential assistance to businesses is Department of Housing and Urban Development's (HUD's) Community Development Block Grant (CDBG) program. The CDBG program provides grants to states and localities to assist their recovery efforts following a presidentially declared disaster. Generally, grantees must use at least half of these funds for activities that principally benefit low- and moderate-income persons or areas. The program is designed to help communities and neighborhoods that otherwise might not recover due to limited resources. While the SBA Disaster Loan Program is automatically triggered by a presidential disaster declaration, CDBG is not. Instead, Congress has occasionally addressed unmet disaster needs by providing supplemental disaster-related appropriations for the CDBG program. Consequently, CDBG is not provided for all major disasters, but only at the discretion of Congress. Congress has authorized supplemental appropriations of funds in response to terror attacks through CDBG. For example In 1995, following the Alfred P. Murrah Federal Building attack in Oklahoma City, OK, Congress appropriated $12 million in supplemental CDBG funding to the City of Oklahoma City. Funds were to be used to establish a revolving loan fund only for the purposes of making loans to carry out economic development activities that would primarily benefit a designated area in the city impacted by the bombing. On November 26, 2001, two months following the terror attacks of September 11, 2001, Congress appropriated $700 million in CDBG supplemental funding to the state of New York for assistance to properties and businesses damaged by, and for economic revitalization related to the terror attack. On January 10, 2002, Congress followed that initial appropriation with a second appropriation of $2 billion in CDBG assistance to the Lower Manhattan Development Corporation (LMDC) to be used to, among other things, reimburse businesses and persons for economic losses, including funds to reimburse tourism areas adversely impacted by the attacks. On August 2, 2002, Congress appropriated an additional $783 million to the state of New York through the LMDC in cooperation with the City of New York in support of the city's economic recovery efforts. Funds were used to provide financial assistance to properties and businesses, including the redevelopment of infrastructure, and for economic revitalization activities. Most federal disaster assistance programs are funded through annual appropriations. This generally ensures that the programs have funds available when an incident occurs. As a result, these programs can provide assistance in a relatively short period of time. For example, a July 2015 SBA Office of Inspector General (OIG) study found that SBA's processing time for home disaster loans averaged 18.7 days and application processing times for business disaster loans averaged 43.3 days. CDBG disaster assistance, on the other hand, is funded through supplemental funding. In general, Congress only provides supplemental funding when disaster needs exceed the amount available through annual appropriations. This typically only occurs when a large incident takes place, such as Hurricanes Katrina and Sandy. This is because Congress must debate and pass supplemental funding. Additionally, funding for CDBG disaster assistance is not available for all incidents. Some might argue the necessity for supplemental funding would preclude smaller terror incidents from receiving CDBG disaster assistance. Others might be concerned that assistance is not timely. For example, an appropriation for CDBG disaster assistance was enacted on June 3, 2008. The allocation date for the CDBG disaster assistance was September 11, 2008—three months after the enacted appropriation. One potential option would be to fund CDBG disaster assistance through annual appropriations. Doing so would create an account with funds that could be made immediately available to help expedite CDBG disaster assistance. Congress could examine strategies to make CDBG disaster assistance available to businesses that suffered damage as a result of a terrorist incident. The assistance could be triggered by a major disaster declaration, an emergency declaration, or both. Critics of the above policy option might argue that if this approach were used, it would be necessary to determine under what situations CDBG disaster assistance would be released. Critics may also argue that determinations for CDBG disaster assistance are made by Congress. Changing the process to one based on annual appropriation might shift the determination to a (relevant) federal agency. Similarly, as mentioned previously, CDBG disaster assistance is typically only available for large-scale incidents. Creating a permanent CDBG program for disaster assistance might provide a gateway for smaller incidents to receive CDBG disaster assistance. This, in turn, might lead to increased federal expenditures for disaster assistance. Expanded FEMA Assistance Some may question whether the Stafford Act is the appropriate authority for providing assistance to terror incidents with high number of casualties and limited damage. The assistance provided under the Stafford Act is primarily for recovery purposes (i.e., repairing and replacing damaged buildings and infrastructure). Under the existing Stafford Act authorities the assistance FEMA might provide would be the Other Needs Assistance (ONA) grant program that can be used to pay funeral expenses. And even in those cases, there may be private insurance already meeting those needs. Arguably, ONA could be expanded to begin to cover other costs following a death in the family and an expansion of FEMA coverage of related emergency health care costs might be helpful to the uninsured affected by a terrorist event. Similarly, a terrorist event could also be the trigger for expanded Disaster Unemployment Assistance benefits. But beyond those areas, little of the FEMA catalogue of assistance would apply beyond the programs already being employed. Concluding Observations This report has outlined several different approaches, both definitional and administrative, that could fill in perceived gaps that have been forecast based on possible events juxtaposed against current policy parameters. One view argues that the Stafford Act should be amended to assure that terrorist attacks are eligible for major disaster assistance. Another view is that the Stafford Act is a flexible instrument that has assisted states and families and individuals through a myriad of unanticipated situations. According to this view, the Stafford Act's existing structure is sufficient to meet the potential terrorism challenges that may lie ahead. The selected approach will likely be influenced by two factors: (1) impact on federal costs, and (2) personal views concerning the appropriate nature of the federal government's role in addressing terrorism. Some might be concerned that amending the Stafford Act to assure that soft target and nonconventional terror attacks are eligible for major disaster assistance might, in their view, inappropriately shift the primary financial burden for addressing terrorism costs from the states to the federal government. Others might see these costs as minimal, particularly compared to the costs of natural disasters, such as those from major hurricanes. With respect to the appropriate role for the federal government in addressing terrorism costs, some might argue that the federal government should provide assistance for all instances of terrorism, even if those costs could be adequately handled by the state. Others might argue that federal assistance should be provided only in those cases where state and local government financial capacity is lacking. Appendix. Examples of Request and Denial Letters

The Robert T. Stafford Disaster Relief and Emergency Assistance Act (the Stafford Act) authorizes the President to issue two types of declarations that could potentially provide federal assistance to states and localities in response to a terrorist attack: a "major disaster declaration" or an "emergency declaration." Major disaster declarations authorize a wide range of federal assistance to states, local governments, tribal nations, individuals and households, and certain nonprofit organizations to recover from a catastrophic event. Major disaster declarations also make Small Business Administration (SBA) disaster loans available to eligible businesses and households. Emergency declarations authorize a more limited range of federal assistance to protect property and public health and safety, and to lessen or avert the threat of a major disaster. Only private nonprofit organizations are eligible for disaster loans under an emergency declaration. The Stafford Act has been used to provide assistance in response to terrorist attacks in the past including the 1995 bombing of the Alfred P. Murrah Building in Oklahoma City, the September 11, 2001, attacks, and the 2013 Boston Marathon attack. Nevertheless, the tactics used in recent incidents such as the 2015 San Bernardino, CA, and the 2016 Orlando, FL, mass shootings, and the 2016 Ohio State University vehicular and knife attack, have brought to light two main challenges that might prevent certain types of terrorist incidents from receiving the wider assistance provided under a major disaster declaration: the major disaster definition lists specific incident types that are eligible for federal assistance. Past terrorist incidents were considered major disasters, in part, because they resulted in fires and explosions. Incidents without a fire or an explosion may not meet the definition of a major disaster; and the Federal Emergency Management Agency's (FEMA) recommendation to the President to issue a major disaster declaration is mainly based on damage amounts to public infrastructure compared to the state's population. Terrorist incidents with a large loss of life but limited damage to public infrastructure may not meet this criterion. Some may argue that terrorist incidents warrant the wider range of assistance provided by a major disaster declaration, and advocate for changes to the Stafford Act and FEMA policies to make all acts of terrorism eligible for major disaster assistance. Others may disagree and argue that Stafford Act should not be altered for the following reasons: regardless of cause, state and local governments should be the main source of assistance if damages are limited; if the incident does not qualify for major disaster assistance, it could still be eligible for limited assistance under an emergency declaration. Advocates of changing the Stafford Act may argue that emergency declaration assistance is too limited. For example, parts of FEMA's Individual Assistance (IA) program, which provides various forms of help for families and individuals, are not available without a major disaster declaration. Another concern is the limited availability of SBA disaster loans under an emergency declaration. Advocates might therefore argue that changes to the Stafford Act are needed to make it easier for certain terror attacks to qualify for major disaster assistance. These include expanding the major disaster definition to include terror incidents that do not involve fires and explosions; requiring FEMA to use additional metrics when making major disaster recommendations; and/or extending the availability of certain IA programs and SBA disaster loans under an emergency declaration. This report provides an overview of emergency and major disaster declarations and explains how they might be used in the aftermath of a terrorist incident that does not involve a fire or an explosion, such as high casualty mass shootings or chemical gas attacks. This report also provides an overview of Stafford Act assistance provided for past terrorist incidents. This report will be updated as events warrant.

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Political and Economic Situation Political Background and Colombia's Internal Conflict Colombia, one of the oldest democracies in the Western Hemisphere and the third most populous Latin American country, has endured a multisided civil conflict for more than five decades until President Juan Ma nuel Santos declared the conflict over in August 2017 at the end of a U.N.-monitored disarmament. According to the National Center for Historical Memory 2013 report, presented to the Colombian government as part of the peace process to end the fighting, some 220,000 Colombians died in the armed conflict through 2012, 81% of them civilians. The report also provided statistics quantifying the scale of the conflict, which has taken a huge toll on Colombian society: more than 23,000 selective assassinations between 1981 and 2012; internal displacement of more than 5 million Colombians due to land seizure and violence; 27,000 kidnappings between 1970 and 2010; and 11,000 deaths or amputees from anti-personnel land mines laid primarily by Colombia's main insurgent guerrilla group, the Revolutionary Armed Forces of Colombia (FARC). To date, more than 8 million Colombians, or roughly 15% of the population, have registered as conflict victims. Although the violence has scarred Colombia, the country has achieved a significant turnaround. Once considered a likely candidate to become a failed state, Colombia, over the past two decades, has overcome much of the violence that had clouded its future. For example, between 2000 and 2016, Colombia saw a 94% decrease in kidnappings and a 53% reduction in homicides (below 25 per 100,000 in 2016). Coupled with success in lowering violence, Colombia has opened its economy and promoted trade, investment, and growth. Colombia has become one of Latin America's most attractive locations for foreign direct investment. Yet, after steady growth over several years, Colombia's economy slowed to 3.1% growth in 2015 and declined to 1.7% in 2017. Many analysts identified Colombia's dependence on oil and other commodity exports as the primary cause. Between 2012 and 2016, the Colombian government held formal peace talks with the FARC, Colombia's largest guerrilla organization. Upon taking office for a second term in August 2014, President Santos declared peace, equality, and education as his top priorities, although achieving the peace agreement remained his major focus. In August 2016, the government and FARC negotiators announced they had concluded their talks and achieved a 300-page peace agreement. The accord was subsequently narrowly defeated in a popular referendum held in early October 2016, but was revised by the Santos government and agreed to by the FARC and then ratified by the Colombian Congress at the end of November 2016. Roots of the Conflict The Colombian conflict predates the formal founding of the FARC in 1964, as the FARC had its beginnings in the peasant self-defense groups of the 1940s and 1950s. Colombian political life has long suffered from polarization and violence based on the significant disparities and inequalities suffered by landless peasants in the country's peripheral regions. In the late 19 th century and a large part of the 20 th century, the elite Liberal and Conservative parties dominated Colombian political life. Violence and competition between the parties erupted in a period of extreme violence in Colombia, known as La Violencia , set off in 1948 by the assassination of Liberal presidential candidate Jorge Gaitán. The violence continued for the next decade. After a brief military rule (1953-1958), the Liberal and Conservative parties agreed to a form of coalition governance, known as the National Front. Under the arrangement, the presidency of the country alternated between Conservatives and Liberals, each holding office in turn for four-year intervals. This form of government continued for 16 years (1958-1974). The power-sharing formula did not resolve the tension between the two historic parties, and many leftist, Marxist-inspired insurgencies took root in Colombia, including the FARC, launched in 1964, and the smaller National Liberation Army (ELN), which formed the following year. The FARC and ELN conducted kidnappings, committed serious human rights violations, and carried out a campaign of terrorist activities to pursue their goal of unseating the central government in Bogotá. Rightist paramilitary groups formed in the 1980s when wealthy ranchers and farmers, including drug traffickers, hired armed groups to protect them from the kidnapping and extortion plots of the FARC and ELN. In the 1990s, most of the paramilitary groups formed an umbrella organization, the United-Self Defense Forces of Colombia (AUC). The AUC massacred and assassinated suspected supporters of the insurgents and directly engaged the FARC and ELN in military battles. The Colombian military has long been accused of close collaboration with the AUC, accusations ranging from ignoring their activities to actively supporting them. Over time, the AUC became increasingly engaged in drug trafficking, and other illicit businesses. In the late 1990s and early 2000s, the U.S. government designated the FARC, ELN, and AUC as Foreign Terrorist Organizations (FTOs). The AUC was formally dissolved in a collective demobilization between 2003 and 2006 after many of its leaders stepped down. However, former paramilitaries joined armed groups (called criminal bands, or Bacrim, by the Colombian government) who continued to participate in the lucrative drug trade and commit other crimes and human rights abuses. When the FARC demobilized in 2017, other illegally armed groups began aggressive efforts to take control of former FARC territory and its criminal enterprises as FARC forces withdrew. (For more, see " The Current Security Environment ," below.) The Uribe Administration (2002-2010) The inability of Colombia's two dominant parties to address the root causes of violence in the country led to the election of an independent, Álvaro Uribe, in the presidential contest of 2002. Uribe, who served two terms, came to office with promises to take on the violent leftist guerrillas, address the paramilitary problem, and combat illegal drug trafficking. During the 1990s, Colombia had become the region's—and the world's—largest producer of cocaine. Peace negotiations with the FARC under the prior administration of President Andrés Pastrana (1998-2002) had ended in failure; the FARC used a large demilitarized zone located in the central Meta department (see map, Figure 1 ) to regroup and strengthen itself. The central Colombian government granted the FARC this demilitarized zone, a traditional practice in Colombian peace negotiations, but the FARC used it to launch terror attacks, conduct operations, and increase the cultivation of coca and its processing, while failing to negotiate seriously. Many analysts, noting the FARC's strength throughout the country, feared that the Colombian state might fail and some Colombian citizens thought the FARC might at some point successfully take power. The FARC was then reportedly at the apogee of its strength, numbering an estimated 16,000 to 20,000 fighters under arms. This turmoil opened the way for the aggressive strategy advocated by Uribe. At President Uribe's August 2002 inauguration, the FARC showered the event with mortar fire, signaling the group's displeasure at the election of a hardliner, who believed a military victory over the Marxist rebels was possible. In his first term (2002-2006), President Uribe sought to shore up and expand the country's military, seeking to reverse the armed forces' losses by aggressively combating the FARC. He entered into peace negotiations with the AUC. President Pastrana had refused to negotiate with the rightist AUC, but Uribe promoted the process and urged the country to back a controversial Justice and Peace Law that went into effect in July 2005 and provided a framework for the AUC demobilization. By mid-2006, some 31,000 AUC paramilitary forces had demobilized. The AUC demobilization, combined with the stepped-up counternarcotics efforts of the Uribe administration and increased military victories against the FARC's irregular forces, helped to bring down violence, although a high level of human rights violations still plagued the country. Uribe became widely popular for the effectiveness of his security policies, a strategy he called "Democratic Security." Uribe's popular support was evident when Colombian voters approved a referendum to amend their constitution in 2005 to permit Uribe to run for a second term. Following his reelection in 2006, President Uribe continued to aggressively combat the FARC. For Uribe, 2008 was a critical year. In March 2008, the Colombian military bombed the camp of FARC's second-in-command, Raul Reyes (located inside Ecuador a short distance from the border), killing him and 25 others. Also in March, another of FARC's ruling seven-member secretariat was murdered by his security guard. In May, the FARC announced that their supreme leader and founder, Manuel Marulanda, had died of a heart attack. The near-simultaneous deaths of three of the seven most important FARC leaders were a significant blow to the organization. In July 2008, the Colombian government dramatically rescued 15 long-time FARC hostages, including three U.S. defense contractors who had been held captive since 2003 and Colombian senator and former presidential candidate Ingrid Bentancourt. The widely acclaimed, bloodless rescue further undermined FARC morale. Uribe's success and reputation, however, were marred by several scandals. They included the "parapolitics" scandal in 2006 that exposed links between illegal paramilitaries and politicians, especially prominent members of the national legislature. Subsequent scandals that came to light during Uribe's tenure included the "false positive" murders allegedly carried out by the military (primarily the Colombian Army) in which innocent civilians were executed and then dressed to look like guerilla fighters to increase the military's rebel body count. In 2009, the media revealed another scandal of illegal wiretapping and other surveillance by the government intelligence agency, the Department of Administrative Security (DAS), to discredit journalists, members of the judiciary, and political opponents of the Uribe government. (In early 2012, the tarnished national intelligence agency was replaced by Uribe's successor, Juan Manuel Santos.) Despite the controversies, President Uribe remained popular and his supporters urged him to run for a third term in 2010. Another referendum was proposed to alter the constitution to allow a third term; however, it was turned down by Colombia's Constitutional Court. The Santos Administration (2010-2018) Once it became clear that President Uribe was constitutionally ineligible to run again, Juan Manuel Santos of the pro-Uribe National Unity party (or Party of the U) quickly consolidated his preeminence in the 2010 presidential campaign. Santos, a centrist, who came from an elite family that once owned the country's largest newspaper, had served as Uribe's defense minister through 2009. In 2010, Santos campaigned on a continuation of the Uribe government's approach to security and its role encouraging free markets and economic opening, calling his reform policy "Democratic Prosperity." In the May 2010 presidential race, Santos took almost twice as many votes as his nearest competitor, Antanas Mockus of the centrist Green Party, but he did not win a majority. Santos won the June runoff with 69% of the vote. Santos's "national unity" ruling coalition formed during his campaign included the center-right National Unity and Conservative parties, the centrist Radical Change Party, and the center-left Liberal party. On August 7, 2010, President Santos said in his first inauguration speech that he planned to follow in the path of President Uribe, but that "the door to [peace] talks [with armed rebels] is not locked." The Santos government was determined to improve relations with Ecuador and Venezuela, which had become strained under Uribe. Santos sought to increase cooperation on cross-border coordination and counternarcotics. He attempted to reduce tensions with Venezuela that had become fraught under Uribe, who claimed that Venezuelan President Hugo Chávez had long harbored FARC and ELN forces. During his first two years in office, President Santos reorganized the executive branch and built on the market opening strategies of the Uribe administration and secured a free-trade agreement with the United States, Colombia's largest trade partner, which went into effect in May 2012. To address U.S. congressional concerns about labor relations in Colombia, including the issue of violence against labor union members, the United States and Colombia agreed to an "Action Plan Related to Labor Rights" (Labor Action Plan) in April 2011. Many of the steps prescribed by the plan were completed in 2011 while the U.S. Congress was considering the free trade agreement. Significantly, the Santos government maintained a vigorous security strategy and struck hard at the FARC's top leadership. In September 2010, the Colombian military killed the FARC's top military commander, Victor Julio Suárez (known as "Mono Jojoy"), in a bombing raid. In November 2011, the FARC's supreme leader, Guillermo Leon Saenz (aka "Alfonso Cano") was assassinated. He was replaced by Rodrigo Londoño Echeverri (known as "Timoleón Jiménez" or "Timochenko"), the group's current leader. While continuing the security strategy, the Santos administration began to re-orient the Colombian government's stance toward the internal armed conflict through a series of reforms. The first legislative reform that moved this new vision along, signed by President Santos in June 2011, was the Victims' and Land Restitution Law (Victims' Law), to provide comprehensive reparations to an estimated (at the time) 4 million to 5 million victims of the conflict. Reparations under the Victims' Law included monetary compensation, psycho-social support and other aid for victims, and the return of millions of hectares of stolen land to those displaced. The law was intended to process an estimated 360,000 land restitution cases. The government's implementation of this complex law began in early 2012. Between 2011 and 2016, there were more than 100,000 applications for restitution and 5,000 properties, or about 5%, were resolved by judges. The Victims' Law, while not a land reform measure, tackled issues of land distribution including the restitution of stolen property to displaced victims. Given the centrality of land issues to the rural peasant-based FARC, passage of the Victims' Law was a strong indicator that the Santos government shared its interest in addressing land and agrarian concerns. In June 2012, another government initiative—the Peace Framework Law, also known as the Legal Framework for Peace—was approved by the Colombian Congress, which signaled that congressional support for a peace process was growing. In August 2012, President Santos announced he had opened exploratory peace talks with the FARC and was ready to launch formal talks. The countries of Norway, Cuba, Venezuela, and Chile each held an international support role, with Norway and Cuba serving as peace talk hosts and "guarantors." Following the formal start in Norway, the actual negotiations began a month later in mid-November 2012 in Cuba, where the FARC-government talks continued until their conclusion in August 2016. In the midst of extended peace negotiations, Colombia's 2014 national elections presented a unique juncture for the country. During the elections, the opposition Centro Democrático (CD) party gained 20 seats in the Senate and 19 in the less powerful Chamber of Representatives, and its leader, former President Uribe, became a popular senator. His presence in the Senate challenged the new ruling coalition that backed President Santos. During his second-term inaugural address in August 2014, President Santos declared three pillars—peace, equality, and education—as his focus, yet his top priority was to conclude the peace negotiations with the FARC. In February 2015, the Obama Administration provided support to the peace talks by naming Bernard Aronson, a former U.S. assistant secretary of state for Inter-American Affairs, as the U.S. Special Envoy to the Colombian peace talks. Talks with the FARC concluded in August 2016. In early October, to the surprise of many, approval of the accord was narrowly defeated in a national plebiscite by less than a half percentage point of the votes cast, indicating a polarized electorate. Regardless, President Santos was awarded the Nobel Peace Prize in December 2016, in part demonstrating strong international support for the peace agreement. In response to the voters' criticisms, the Santos government and the FARC crafted a modified agreement, which they signed on November 24, 2016. Rather than presenting this agreement to a plebiscite, President Santos sent it directly to the Colombian Congress, where it was ratified on November 30, 2016. Although both chambers of Colombia's Congress approved the agreement unanimously, members of the opposition CD party criticized various provisions in the accord that they deemed inadequate and boycotted the vote. The peace process was recognized as the most significant achievement of the Santos presidency and lauded outside of Colombia and throughout the region. Over the course of two terms, the President's approval ratings rose and fell rather significantly. His crowning achievement, the accord negotiated over 50 rounds of talks, covered five substantive topics: rural development and agricultural reform; political participation by the FARC; an end to the conflict, including demobilization, disarmament and reintegration; a solution to illegal drug trafficking; and justice for victims. A sixth topic provided for mechanisms to implement and monitor the peace agreement. A New Legislature and President in 2018 Colombians elected a new congress in March 2018 and a new president in June 2018. Because no presidential candidate won more than 50% of the vote on May 27, 2018, as required for a victory in the first round, a second-round runoff was held June 17 between the rightist candidate Iván Duque and the leftist candidate Gustavo Petro (see results for presidential contest, Figure 3 ). Duque was carried to victory with almost 54% of the vote. Runner-up Petro, a former mayor of Bogotá, a former Colombian Senator, and once a member of the M-19 guerilla insurgency, nevertheless did better than any leftist candidate in a presidential race in the past century; he won 8 million votes and nearly 42% of the votes cast. Around 4.2% were protest votes, signifying Colombian voters who cast blank ballots. Through alliance building, Duque achieved a functional majority or a "unity" government, which involved the Conservative Party, Santos's prior National Unity or Party of the U, joining the CD, although compromise was required to keep the two centrist parties in sync with the more conservative CD. In the new Congress, two extra seats, for the presidential and vice presidential runners up, became automatic seats in the Colombian Senate and House, due to a constitutional change in 2015, allowing presidential runner up Gustavo Petro to return to the Senate. The CD party, which gained seats in both houses in the March vote, won the majority in the Colombian Senate (see Figure 2 for seat breakouts by party). Duque, who was inaugurated on August 7, 2018, at the age of 42, was the youngest Colombian president elected in a century. He possessed limited experience in Colombian politics. Duque was partially educated in the United States and worked for at decade at the Inter-American Development Bank in Washington, DC. He was the handpicked candidate of former president Uribe, who vocally opposed many of Santos's policies. Disgruntled Colombians perceived Santos as an aloof president whose energy and political capital were expended accommodating an often-despised criminal group, the FARC. President Duque appeared to be technically oriented and interested in economic reform, presenting himself as a modernizer. During his campaign, Duque called for economic renewal and lower taxes, fighting crime, and building renewed confidence in the country's institutions through some reforms. On September 26, 2018, in a speech before the U.N. General Assembly, the new president outlined his policy objectives . Duque called for increasing legality, entrepreneurship, and fairness by (1) promoting peace; (2) combating drug trafficking and recognizing it as a global menace, and (3) fighting corruption, which he characterized as a threat to democracy. He also maintained that the humanitarian crisis in neighboring Venezuela, resulting in more than 1 million migrants fleeing to Colombia, was an emergency that threatened to destabilize the region. Duque proposed a leadership role for Colombia in denouncing the authoritarian government of President Nicolás Maduro and containing his government's damage. By late November 2018, 1.2 million Venezuelans already present in Colombia were putting increasing pressure on the government's finances, generating a burden estimated at nearly 0.5% of the country's gross domestic product (GDP). President Duque, along with his vice president, Marta Lucía Ramírez, who initially ran as the Conservative Party candidate in the first round, recommended that drug policy shift back to a stricter counterdrug approach rather than a model endorsed in the peace accord, which focuses on voluntary eradication and economic support to peasant farmers to transition away from illicit drug crops. Duque campaigned on returning to spraying coca crops with the herbicide glyphosate. This would reverse Colombia's decision in mid-2015 to end aerial spraying, which had been a central—albeit controversial—feature of U.S.-Colombian counter-drug cooperation for two decades. Colombians' concerns with corruption became particularly acute during the 2018 elections, as major scandals were revealed. Similar to many countries in the region, government officials, including Santos during his 2014 campaign for reelection and the opposition candidate during that campaign were accused of taking payoffs (bribes) from the Odebrecht firm, the Brazilian construction company that became embroiled in a region-wide corruption scandal. In December 2018, presidential runner up Gustavo Petro was accused of taking political contributions from Odebrecht in a video released by a CD senator, indicating that both the left and the right of the Colombian political spectrum has been tainted by corruption allegations. In June 2017, the U.S. Drug Enforcement Administration arrested Colombia's top anti-corruption official, Gustavo Moreno. In mid-September 2017, the former chief justice of Colombia's Supreme Court was arrested for his alleged role in a corruption scandal that involved other justices accused of taking bribes from Colombian congressmen, some with ties to illegal paramilitary groups. The series of corruption charges made against members of Colombia's judicial branch, politicians, and other officials made the issue a prominent one in Colombian politics and was the focus of a left-centrist candidate's campaign in the presidential contest. In late August 2018, an anti-corruption referendum was defeated by narrowly missing a high vote threshold by less than a half percentage point, although the actual vote favored all seven proposed changes on the ballot. President Duque endorsed the referendum and maintains he will seek to curb many of the abuses identified in the referendum through legislation that his administration will propose. The Duque Administration's first budget for 2019 presented in late October 2018 was linked to an unpopular tax reform that would expand a value-added tax to cover basic food and agricultural commodities (some 36 items in the basic basket of goods, such as eggs and rice, previously exempted). The 2019 budget totals $89.7 billion, providing the education, military and police, and health sectors with the biggest increases, and reducing funding for peace accord implementation. Duque's own Democratic Center party split with him on the value-added tax, which quickly sank his approval ratings from 53% in early September 2018 to a low of 27% in November 2018, among the lowest levels in the early part of a presidential mandate in recent Colombian history. Economic Background Colombia's economy is the fourth largest in Latin America after Brazil, Mexico, and Argentina. The World Bank characterizes Colombia as an upper middle-income country, although its commodities-dependent economy has been hit by oil price declines and peso devaluation related to the erosion of fiscal revenue. Between 2010 and 2014, Colombia's economy grew at an average of more than 4%, but slowed to 3.1% GDP growth in 2015. In 2017, Colombia's GDP growth slowed further to 1.7%. Despite its relative economic stability, high poverty rates and inequality have contributed to social upheaval in Colombia for decades. The poverty rate in 2005 was slightly above 45%, but declined to below 27% in 2016. The issues of limited land ownership and high rural poverty rates remain a problem. According to a United Nations study published in 2011, 1.2% of the population owned 52% of the land, and data revealed in 2016 that about 49% of Colombians continued to work in the informal economy. Colombia is often described as a country bifurcated between metropolitan areas with a developed, middle-income economy, and some rural areas that are poor, conflict-ridden, and weakly governed. The fruits of the growing economy have not been shared equally with this ungoverned, largely rural periphery. Frequently these more remote areas are inhabited by ethnic minorities or other disadvantaged groups, such as Afro-Colombians, indigenous populations, or landless peasants and subsistence farmers, who are vulnerable to illicit economies due to few connections to the formal economy. The United States is Colombia's leading trade partner. Colombia accounts for a small percentage of U.S. trade (approximately 1%), ranking 22 nd among U.S. export markets and 27 th among foreign exporters to the United States in 2017. Colombia has secured free trade agreements with the European Union, Canada, and the United States, and with most nations in Latin America. Colombian officials have worked over the past decade to increase the attractiveness of investing in Colombia, and foreign direct investment (FDI) grew by 16% between 2015 and 2016. This investment increase came not only from the extractive industries, such as petroleum and mining, but also from such areas as agricultural products, transportation, and financial services. Promoting more equitable growth and ending the internal conflict were twin goals of the two-term Santos administration. Unemployment, which historically has been high at over 10%, fell below that double-digit mark during Santos's first term and remained at 9.2% in 2016 but rose slightly to an estimated 9.6% in 2018. Although Colombia is ranked highly for business-friendly practices and has a favorable regulatory environment that encourages trade across borders, it is still plagued by persistent corruption and an inability to effectively implement institutional reforms it has undertaken, particularly in regions where government presence is weak. According to the U.S. State Department in its analysis of national investment climates, Colombia has demonstrated a political commitment to create jobs, develop sound capital markets, and achieve a legal and regulatory system that meets international norms for transparency and consistency. Despite its macroeconomic stability, several issues remain, such as a still-complicated tax system, a high corporate tax burden, and continuing piracy and counterfeiting issues. Colombia's rural-sector protestors formed strikes and blockades beginning in 2013 with demands for long-term and integrated-agricultural reform in a country with one of the most unequal patterns of land ownership. In October and November 2018, Colombian secondary and university students protested in high numbers during six large mobilizations, taking place over 60 days, to demand more funding for education. Peace Accord Implementation The four-year peace talks between the FARC and the Santos administration started in Norway and moved to Cuba where negotiators worked through a six-point agenda during more than 50 rounds of talks that produced agreements on six major topics. The final topic—verification to enact the programs outlined in the final accord—all parties knew would be the most challenging, especially with a polarized public and many Colombians skeptical of whether the FARC would be held accountable for its violence and crimes during the years of conflict. Some analysts have estimated that to implement the programs required by the commitments in the accord to ensure stable post-conflict development may require 15 years and cost from $30 billion to $45 billion. The country faces steep challenges to underwrite the post-accord peace programs in an era of declining revenues. While progress has been uneven, some programs (those related to drug trafficking) had external pressure to move forward quickly and some considered urgent received "fast track" treatment to expedite their regulation by Congress. The revised peace accord that was approved by the Colombian Congress in late 2016 was granted fast track implementation by the Colombian Constitutional Court in a ruling on December 13, 2016, particularly applied to the FARC's disarmament and demobilization. However, in May 2017, a new ruling by the high court determined that all legislation related to the implementation of the accord needed to be fully debated rather than passed in an expedited fashion, which some analysts maintain started to slow the process of implementing the accord significantly. The Kroc Institute for International Peace Studies at the University of Notre Dame is responsible for monitoring and implementing the agreement. It issued two interim reports in November 2017 and August 2018. At the end of the last reporting period (June 2018), the Kroc Institute estimated that 63% of the 578 peace accord commitments have begun implementation. In relation to other peace accords it had studied, the Kroc Institute found that the implementation of Colombia's accord was on course as about average, although that progress took place prior to President Duque's election. The first provision undertaken was the demobilization of the FARC, monitored by a U.N. mission that was approved by the U.N. Security Council to verify implementation of the accords. U.N. monitors also emptied large arm caches identified by FARC leaders, seizing the contents of more than 750 of the reported nearly 1,000 caches by the middle of 2017. With the final disarmament, President Santos declared the conflict over in mid-August 2017. The U.S. State Department reported in its Country Reports on Terrorism 201 , that by September 25, 2017, the United Nations had verified the collection of 8,994 arms, 1.7 million rounds, and more than 40 tons of explosives. The report states that the Colombian government had accredited "roughly 11,000 ex-combatants for transition to civilian life." The FARC also revealed its hidden assets in September 2017, listing more than $330 million in mostly real estate investments. This announcement drew criticism from several analysts who note that the FARC assets are likely much greater. In July 2017, the U.N. Security Council voted to expand its mandate and launch a second mission for three years to verify the reintegration of FARC guerrillas into civil society beginning September 20, 2017. One of Colombia's greatest challenges continues to be ensuring security for ex-combatants and demobilized FARC. The FARC's reintegration into civil society is a charged topic because the FARC's efforts in the 1980s to start a political party, known as the Patriotic Union, or the UP by its Spanish acronym, resulted in more than 3,000 party members being killed by rightwing paramilitaries and others. As of the end of 2018, reportedly 85 FARC members and their close relatives had been killed. In addition to unmet government guarantees of security, the FARC also has criticized the government for not adequately preparing for the group's demobilization. According to observers, the government failed to provide basic resources to FARC gathered throughout the country in specially designated zones for disarmament and demobilization (later renamed reintegration zones). The demobilization areas or cantonments had been so little prepared in early 2017 that the FARC had in many cases to construct their own housing and locate food and other provisions. Reintegration of former combatants has proceeded slowly. The Constitutional Court's May 2017 ruling to restrict fast track, and controversy about the new court to try war crimes and other serious violations, the "Special Jurisdiction of Peace" led to further delays. Peace process advocates have cited limited attention to include ethnic Colombians, such as Afro-Colombian leaders and indigenous communities, into the accord's implementation, as required by the "ethnic chapter" of the peace accord. A U.N. deputy human rights official warned in October 2017 that after a successful demobilization it would be dangerous not to reintegrate FARC former combatants by providing them realistic options for income and delaying effective reintegration could undermine peace going forward. Under the peace accord, Territorially Focused Development Programs (PDETs in Spanish) are a tool for planning and managing a broad rural development process, with the aim of transforming170 municipalities (covering 16 subregions) most affected by the armed conflict. PDETs target those municipalities in Colombia with the highest number of displacements and those that have experienced the most killings, massacres, and forced disappearances. These marginal areas generally have experienced chronic poverty, high inequality, the presence of illicit crops such as coca, and low levels of local government institutional performance. Violence and forced displacements in some of the PDET municipalities increased in the last half of 2018. Colombia's Constitutional Court determined in October 2017 that over the next three presidential terms (until 2030), Colombia must follow the peace accord commitments negotiated by the Santos administration and approved by the Colombian Congress in 2016. The Special Jurisdiction of Peace, set up to adjudicate the most heinous crimes of Colombia's decades-long armed conflict, began to hear cases in July 2018. However, Colombians remain skeptical of its capacity. A key challenge is the case of a FARC leader and lead negotiator in the peace process, Jesús Santrich, alleged to have committed drug trafficking crimes in 2017 after the accord was ratified, who has been jailed. The Current Security Environment Colombia has confronted a complex security environment of armed groups: two violent leftist insurgencies, the FARC and the ELN, and groups that succeeded the AUC following its demobilization during the Uribe administration. The FARC, whittled down by the government's military campaign against it, continued to conduct a campaign of terrorist activities during peace negotiations with the government through mid-2015, but it imposed successive temporary unilateral cease-fires that significantly reduced violence levels. In August 2016, the FARC and the government concluded negotiations on a peace accord that was subsequently approved by Congress with modifications in November 2016. Authorities and some analysts maintain that since the peace accord was ratified, 5% to 10% of the FARC have become dissidents who reject the peace settlement, although other estimates suggest a higher percentage. These armed individuals remain a threat. As agreed in the peace accord, the demobilized rebels transitioned to a political party that became known as the Common Alternative Revolutionary Force (retaining the acronym FARC) in September 2017. On November 1, 2017, the FARC announced their party's presidential ticket: current FARC leader Rodrigo Londoño (aka Timochenko) for president and Imelda Daza for vice president. The FARC Party ran several candidates in congressional races but failed to win any additional congressional race for which it competed in the March 2018 legislative elections, so the automatic seats in Congress were the only ones that it filled. The ELN, like the FARC, became deeply involved in the drug trade and used extortion, kidnapping, and other criminal activities to fund itself. The ELN, with diminished resources and reduced offensive capability, according to government estimates, declined to fewer than 2,000 fighters, although some analysts maintain in 2018 the forces grew as high as 3,400, including former FARC who were recruited to join the ELN as the larger rebel group demobilized. In 2015, ELN leadership began exploratory peace talks with the Santos government in Ecuador, although the ELN continued to attack oil and transportation infrastructures and conduct kidnappings and extortions, at least periodically. Formal talks with the ELN finally opened in February 2017 in Quito, Ecuador. After the talks moved to Cuba in May 2018, at the request of Ecuador's President Lenín Moreno, several negotiating sessions took place. The ELN's central leadership, including Nicolás Rodríguez Bautista (aka "Gabino"), arrived in Cuba to continue the talks. However, President Duque in September 2018 suspended the talks and recalled the government negotiating team. The ELN is far more regionally oriented, decentralized, and nonhierarchical in its decisionmaking than the FARC. Late in 2018, a Colombian political online magazine claimed a meeting had been held two months earlier between FARC dissident groups and the ELN in Venezuela in which the parties discussed how to increase their coordination. On January 17, 2019, a car bomb attack at a National Police academy in southern Bogotá shattered illusions that Colombia's long internal conflict with insurgents was coming to an end. The bombing, allegedly carried out by an experienced ELN bomb maker, killed 20 police cadets and the bomber and injured more than 65 others. The ELN took responsibility for the attack in a statement published on January 21. Large demonstrations took place in Bogotá protesting the return of violence to Colombia's capital city. The Duque government ended peace talks with the ELN, which had been ongoing sporadically since 2017. The Duque government then requested extradition of the ELN's delegation of negotiators to the peace talks in Cuba on terrorism charges. The Cuban government, which condemned the bombing, responded that the protocols for the peace talks required that the negotiators be returned to Colombia without arrest. The Duque government has persisted in requesting the negotiators to be extradited. The AUC, the loosely affiliated national umbrella organization of paramilitaries, officially disbanded a decade ago. The organization was removed from the State Department's Foreign Terrorist Organizations list in July 2014. More than 31,000 AUC members demobilized between 2003 and 2006, and many AUC leaders stepped down. However, as noted, many former AUC paramilitaries continued their illicit activities or re-armed and joined criminal groups—known as Bacrim . Many observers view the Bacrim as successors to the paramilitaries, and the Colombian government has characterized these groups as the biggest threat to Colombia's security since 2011. The Bacrim do not appear to be motivated by the dream of defeating the national government, but they seek territorial control and appear to provide rudimentary justice in ungoverned parts of the country. In 2013, the criminal group Los Urabeños, launched in 2006, emerged as the dominant Bacrim. Over its lifetime, the group has been referred to as the Gaitanistas, the Clan Úsuga, and most recently El Clan del Golfo, growing to about 3,000 members by 2015. The Urabeños organization is heavily involved in cocaine trafficking as well as arms trafficking, money laundering, extortion, gold mining, human trafficking, and prostitution. Early leaders of the group, such as founder Daniel Rendón Herrera (alias "Don Mario") and his brother Feddy Rendón Herrera were designated drug kingpins under the U.S. Kingpin Act in 2009 and 2010, respectively. However, because these men had been part of the AUC peace process, they could not be extradited to the United States until they had served time and paid reparations. In June 2015, the Justice Department unsealed indictments against 17 alleged Urabeños members. The Colombian government's efforts to dismantle the Urabeños and interrupt its operations began to result in the capture of top leaders and gradually to disrupt its illicit activities. The Urabeños faced an intense enforcement campaign by the Colombian police and military, especially after the Urabeños reportedly advertised and paid rewards to its subcontracted assassins to murder Colombian police. In September 2017, the Urabeños top leader, Dairo Antonio Úsuga (alias "Otoniel"), requested terms of surrender from the Santos government after the arrest of his wife and the killing or arrest of siblings and co-leaders, but this offer was never formalized. Colombia captured a vast amount of cocaine, approximately 12 metric tons, linked to the the Urabeños in November 2017. Splinter groups of the large Colombian drug cartels of the 1980s and 1990s, such as the Medellin Cartel and Cali Cartel, have come and gone in Colombia, including the powerful transnational criminal organizations (TCOs) the Norte del Valle Cartel and Los Rastrajos. The U.S. Drug Enforcement Administration's 2018 National Drug Threat Assessment maintains "large-scale Colombian TCOs" work closely with Mexican and Central American TCOs to export large quantities of cocaine out of Colombia every year. Traditionally, the FARC and ELN had cooperated with Bacrim and other Colombian crime groups in defense of drug trafficking and other illicit activities despite the groups' ideological differences. Venezuela is a major transit corridor for Colombian cocaine. According to the State Department's 2018 International Narcotics Control Strategy Report , Venezuela's porous western border with Colombia, current economic crisis, weak judicial system, sporadic international drug control cooperation, and a permissive and corrupt environment make it a preferred trafficking route for illicit drugs. A May 2018 report by Insight Crime identified more than 120 high-level Venezuelan officials who have engaged in criminal activity. The report analyzes how the Venezuelan military, particularly the National Guard, has been involved in the drug trade since 2002 and colluded with other illegally armed groups. Another Bacrim, Los Rastrojos, reportedly controls important gasoline smuggling routes between Venezuela and Colombia in 2018. Similarly, in the past year, ELN guerrillas reportedly have moved from seeking safe haven in Venezuela to taking control of illicit gold mining areas near Venezuela's border with Guyana. Both the ELN, which is still engaged in armed conflict with the Colombian government, and its rival, the Popular Liberation Army (EPL), reportedly recruit Venezuelans to cultivate coca in Colombia. Human trafficking and sexual exploitation of Venezuelan migrants throughout Colombia is prevalent. Dissident FARC guerrillas are using border areas and other remote areas in the countryside to regroup and could eventually seek to consolidate into a more unified organization or coordinate with other criminal groups sheltering in Venezuela. The State Department's 2017 terrorism report published in April 2018 maintained that the number of terrorist incidents in Colombia—carried out by the FARC and ELN—decreased significantly, by 40%, over the already much-diminished level of 2016. ELN aggression included high-impact attacks, such as launching mortars at police stations and bombing pipelines, although the report also states that ELN demobilizations and surrenders have increased. Instability in Venezuela Drives a Regional Migrant Crisis61 The humanitarian crisis in Venezuela has set in motion a mass exodus of desperate migrants, who have come temporarily (or for extended stays) to Colombia. Although Venezuela has experienced hyperinflation (the highest in the world), a rapid contraction of its economy, and severe shortages of food and medicine, as of November 2018 Venezuelan President Nicolás Maduro has refused most international humanitarian assistance. Based on estimates from the U.N. High Commissioner for Refugees (UNHCR), as of November 2018, more than 3 million Venezuelans were living outside Venezuela; of these, an estimated 2.3 million left after 2015. As conditions in Venezuela have continued to deteriorate, increasing numbers of Venezuelans have left the country. Neighboring countries, particularly Colombia, are straining to absorb a migrant population that is often malnourished and in poor health. The spread of previously eradicated diseases, such as measles, is also a major regional concern. In January 2019, the Trump Administration announced backing for the president of the Venezuelan National Assembly, Juan Guaidó, as interim president of Venezuela. The Trump Administration has called for Maduro's departure, and Colombia joined many other countries in Latin America and Europe to recognize Guaidó. U.S. Secretary of State Michael Pompeo announced that the United States was prepared to provide $20 million in humanitarian assistance to the people of Venezuela. Colombia joined 11 countries in the Lima Group that declared on February 4, 2019, their desire to hasten a return to democracy in Venezuela by working with Guaidó for a peaceful transition without the use of force. Ongoing Human Rights Concerns Colombia's multisided internal conflict over the last half century generated a lengthy record of human rights abuses. Although it is widely recognized that Colombia's efforts to reduce violence, combat drug trafficking and terrorism, and strengthen the economy have met with success, many nongovernmental organizations (NGOs) and human rights groups continue to report significant human rights violations, including violence targeting noncombatants, that involves killings, torture, kidnappings, disappearances, forced displacements, forced recruitments, massacres, and sexual attacks. The Center for Historical Memory report issued to the Colombian government in July 2013 traces those responsible for human rights violations to the guerrillas (the FARC and ELN), the AUC paramilitaries and successor paramilitary groups, and the Colombian security forces. In analyzing nearly 2,000 massacres between 1980 and 2012 documented in the center's database, the report maintains that 58.9% were committed by paramilitaries, 17.3% by guerrillas, and 7.9% by public security forces. According to the U.S. State Department's annual report on human rights covering 2017, Colombia's most serious human rights abuses centered on extrajudicial and unlawful killings; torture and detentions; rape and sexual crimes. In addition to the State Department, numerous sources report regularly on human rights conditions in Colombia. (See Appendix .) Colombia continues to experience murders and threats of violence against journalists, human rights defenders, labor union members, social activists such as land rights leaders, and others. Crimes of violence against women, children, Afro-Colombian and indigenous leaders, and other vulnerable groups continue at high rates. In December 2018, the U.N. special rapporteur on human rights defenders came out with strong criticism of heightened murders of human rights defenders, which he maintained were committed by hitmen paid no more than $100 per murder, according to reports he heard from activists and other community members whom he met with during a trip to Colombia. These ongoing issues reflect constraints of the Colombian judicial system to effectively prosecute crimes and overcome impunity. Extrajudicial Executions and "False Positives" For many years, human rights organizations have raised concerns about extrajudicial executions committed by Colombian security forces, particularly the military. In 2008, it was revealed that several young men from the impoverished community of Soacha—who had been lured allegedly by military personnel from their homes to another part of the country with the promise of employment—had been executed. When discovered, the Soacha murder victims had been disguised as guerrilla fighters to inflate military claims of enemy body counts, resulting in the term false positives . Following an investigation into the Soacha murders, the military quickly fired 27 soldiers and officers, including three generals, and the army's commander resigned. The Colombian prosecutor general's criminal investigations of soldiers and officers who allegedly participated in the Soacha executions have proceeded quite slowly. Some 48 of the military members eventually charged with involvement in the Soacha cases were released due to the expiration of the statute of limitations. Whereas some soldiers have received long sentences, few sergeants or colonels have been successfully prosecuted. In 2009, the false positive phenomenon was investigated by the U.N.'s Special Rapporteur on Extrajudicial Executions, who issued a report that concluded with no finding that such killings were a result of an official government policy. However, the Special Rapporteur did find, "the sheer number of cases, their geographic spread, and the diversity of military units implicated, indicate that these killings were carried out in a more or less systematic fashion by significant elements within the military." The majority of the cases took place between 2004 and 2008, when U.S. assistance to Colombia peaked. In recent years, the number of new alleged false positive cases declined steeply, but human rights NGOs still reported a few cases in 2012 through 2015. To address the military's human rights violations, the Santos administration proposed a change to policy that did not prevail. This reform was a constitutional change to expand the jurisdiction of military courts and, it was approved by the Colombian Congress in late December 2012 by a wide margin despite controversy. Human rights groups criticized the legislation's shift in the jurisdiction over serious human rights crimes allegedly committed by Colombia's public security forces from the civilian to the military justice system. In its review of the constitutional amendment, the Colombian Constitutional Court struck down the law over procedural issues in October 2013. Human Rights Watch in a 2015 report on the false positive cases noted that prosecutors in the Human Rights Unit of the Prosecutor General's Office conducted investigations into more than 3,000 false positive homicide cases allegedly committed by army personnel that resulted in about 800 convictions, mostly of lower-ranking soldiers. Only a few of those convictions involved former commanders of battalions or other tactical units, and none of the investigations of 16 active and retired army generals had produced charges. In 2016, the prosecutions against generals accused of responsibility for false positives continued, although a few were closed and 12 remained under investigation at year's end. Additionally, in October 2016, the Colombian prosecutor general indicted Santiago Uribe, the brother of former President Uribe, on charges of murder and association to commit crimes for his alleged role in the paramilitary group "The 12 Apostols" in the 1990s. The State Department human rights report covering 2017, maintains that during the year through July, four new cases involving "aggravated homicide" committed by security forces and 11 new convictions were reached for "simple homicide" by security force members. Human Rights Defenders and Journalists Although estimates diverge, the number of human rights defenders murdered in 2016 totaled 80 and another 51 in the first half of 2017, according to Somos Defensores ("We are Defenders"), a Colombian NGO that tracks violence against defenders and is cited by the State Department. Some groups, such as the Colombian think tank, Indepaz, say the numbers are higher, up to 117 murders in 2016. In the two years since the approval of the 2016 peace accord, social leaders, ethnic community leaders, and human rights defenders have suffered from continued high levels of violence. Human rights organizations cite the murders of more than 100 activists in 2017 and in 2018. Of the 109 human rights and civil society activists killed in 2018 through November, some were leaders of efforts to implement the 2016 peace accord. For instance, 13 social leaders were assassinated in the southwest department of Cauca in the first six months of the year, a department in Colombia with the fourth largest area devoted to coca cultivation in the country and host to several peace accord programs associated with rural development, including voluntary eradication of drug crops. Few, if any, of those accused of making threats and ordering or carrying out assassinations have been prosecuted. According to these activists, perpetrators still have little to fear of legal consequences. Since early 2012, violence against land rights activists has risen sharply with the start of implementation of the Victims' Law that authorized the return of stolen land. A September 2013 report by Human Rights Watch pointing to the rise in violence against land activists and claimants maintained that the environment had turned so threatening that claimants who had received land judgments were too frightened to return, and the government had received more than 500 serious threats against claimants in less than 18 months. According to Human Rights Watch, many of the threats and killings have been conducted by paramilitary-influenced Bacrim, although they may be operating at the behest of third-party "landowners," who are trying to protect their land from seizure. For more than a decade, the Colombian government tried to suppress violence against groups facing extraordinary risk through the National Protection Unit (UPN) programs. Colombia's UPN provides protection measures, such as body guards and protective gear, to individuals in at-risk groups, including human rights defenders, journalists, trade unionists, and others. However, according to international and Colombian human rights groups, the UPN has been plagued by corruption issues and has inadequately supported the prosecution of those responsible for attacks. According to the State Department's Report on Human Rights Practices covering 2017, the UPN protected roughly 6,067 at-risk individuals, including 575 human rights activists, with a budget of $150 million. Journalists, a group that has traditionally received protection measures from the UPN, continue to operate in a dangerous environment in Colombia. According to the Committee to Protect Journalists (CPJ), 47 journalists have been killed in work-related circumstances since 1992. Three Ecuadorian journalists were killed by a FARC dissident group close to the border of Ecuador in 2018, leading to the end of the Colombian government's peace talks with the ELN in Ecuador and their subsequent move to Cuba. To help monitor and verify that human rights were respected throughout implementation of the peace accord, the government formally renewed the mandate of the U.N.'s High Commissioner of Human Rights in 2016 for three years. Violence and Labor The issue of violence against the labor movement in Colombia has sparked controversy and debate for years. Many human rights groups and labor advocates have maintained that Colombia's poor record on protecting its trade union members and leaders from violence is one reason to avoid closer trade relations with Colombia. The U.S.-Colombia Free Trade Agreement (also known as the U.S.-Colombia Trade Promotion Agreement) could not be enacted without addressing the deep concern of many Members of Congress that Colombia must enforce basic labor standards and especially measures to mitigate the alleged violence against trade union members and bring perpetrators of such violence to justice. In April 2011, the United States and Colombia agreed to an "Action Plan Related to Labor Rights" (the Labor Action Plan, LAP), which contained 37 measures that Colombia would implement to address violence, impunity, and workers' rights protection. Before the U.S.-Colombia Free Trade Agreement entered into force in April 2012, the U.S. Trade Representative determined that Colombia had met all the important milestones in the LAP to date. Despite the programs launched and measures taken to implement the LAP, human rights and labor organizations claim that violence targeting labor union members continues. (Some analysts continue to debate whether labor activists are being targeted because of their union activities or for other reasons.) The Colombian government has acknowledged that violence and threats continue, but points to success in reducing violence generally and the number of homicides of labor unionists specifically. Violence levels in general are high in Colombia, but have steadily been decreasing. According to the data reported by the U.N. Office on Drugs and Crime (UNODC) in its annual homicide report, rates have decreased dramatically since 2002, when the homicide rate was at 68.9 per 100,000. The Colombian Ministry of Defense reported in 2016 that the homicide rate had declined to 24.4 per 100,000. In this context of an overall steady decline in homicides, the number of labor union killings has also declined. For many years, the government and the leading NGO source that tabulates these crimes did not agree on the number of labor union murders because they used different methodologies. Both sources recorded a decline, but the government generally saw a steeper decline. According to the Colombian labor rights NGO and think tank, the National Labor School ( Escuela Nacional Sindical , ENS), there has been a significant decline from 191 labor union murders in 2001 to 20 reported in 2012. In 2017, through the month of August the ENS reported 14 labor murders. Of the cases covering homicides between January 2011 and August 2017, 162 homicide cases in which victims were labor union members, were 409 convictions, 31 for cases after 2011 and 378 for cases before 2011. In addition, labor advocates note that tracking homicides does not capture the climate of intimidation that Colombian labor unions face. In addition to lethal attacks, trade union members encounter increased death threats, arbitrary detention, and other types of harassment. Measures to strengthen the judicial system to combat impunity for such crimes are also part of the Labor Action Plan. Nevertheless, many analysts maintain there remains a large backlog of cases yet to be investigated involving violent crimes against union members. Internal Displacement The internal conflict has been the major cause of a massive displacement of the civilian population that has many societal consequences, including implications for Colombia's poverty levels and stability. Colombia has one of the largest populations of internally displaced persons (IDPs) in the world. Most estimates place the total at more than 7 million IDPs, or more than 10% of Colombia's estimated population of 49 million. This number of Colombians, forcibly displaced and impoverished as a result of the armed conflict, continues to grow and has been described by many observers as a humanitarian crisis. Indigenous and Afro-Colombian people make up an estimated 15%-22% of the Colombian population. They are, however, disproportionately represented among those displaced. The leading Colombian NGO that monitors displacement, Consultancy for Human Rights and Displacement (CODHES), reports that 36% of the victims of forced displacement nationwide in 2012 came from the country's Pacific region where Afro-Colombian and indigenous people predominate. The Pacific region has marginal economic development as a result of weak central government presence and societal discrimination. (Some 84% of the land in the Pacific region is subject to collective-title rights granted to Afro-Colombian and indigenous communities. ) Illegal armed groups are active in usurping land in this region, which is valued for its proximity to a major port and drug trafficking routes, and the Afro- and indigenous communities are also caught in the middle of skirmishes between illegal groups and Colombian security forces. IDPs suffer stigma and poverty and are often subject to abuse and exploitation. In addition to the disproportionate representation of Colombia's ethnic communities among the displaced, other vulnerable populations, including women and children, have been disproportionally affected. Women, who make up more than half of the displaced population in Colombia, can become targets for sexual harassment, violence, and human trafficking. Displacement is driven by a number of factors, most frequently in more remote regions of the country where armed groups compete and seek to control territory or where they confront Colombian security forces. Violence that uproots people includes threatened or actual child recruitment or other forced recruitment by illegal armed groups, as well as physical, psychological, and sexual violence. Other contributing factors reported by NGOs include counternarcotics measures such as aerial spraying, illegal mining, and large-scale economic projects in rural areas. Inter-urban displacement is a growing phenomenon in cities such as Buenaventura and Medellin, which often results from violence and threats by organized crime groups. The Victims' Law of 2011, which began to be implemented in 2012, is the major piece of legislation to redress Colombian displacement victims with the return of their stolen land. The historic law provides restitution of land to those IDPs who were displaced since January 1, 1991. The law aims to return land to as many as 360,000 families (impacting up to 1.5 million people) who had their land stolen. The government notes that some 50% of the land to be restituted has the presence of land mines and that the presence of illegally armed groups in areas where victims have presented their applications for land restitution has slowed implementation of the law. Between 2011 and 2016, 100,000 applications for land restitution were filed and approximately 5,000 properties (roughly 5% of applications) were successfully returned following judgements on the cases. With the international support from U.S. Agency for International Development (USAID) and other donors, a Victims Unit was established to coordinate the range of services for victims, including financial compensation and psychosocial services, provided by a host of government agencies. The 2011 Victims' Law is considered a model and particularly the implementation of a Victims' registry, which was supported by USAID. Through its Victims Unit, the Colombian government had provided financial reparations to over 800,000 victims and psychosocial support to 700,000 as of October 2018. The Global Report on Internal Displacement from the Internal Displacement Monitoring Centre (IDMC) reported, however, displacement inside Colombia continued with more than 171,000 internally displaced in 2016. As the political crisis in Venezuela has grown, a wave of refugees and migrants have come across the border into Colombia reversing an earlier trend. Venezuelans were fleeing political instability and economic turmoil in Colombia's once-wealthy neighboring nation. Venezuela's economic crisis worsened throughout 2018, prompting a sharp increase in migrants seeking to escape into Colombia. In response to the growing flood of Venezuelans, former President Santos initially announced that he would impose stricter migratory controls and deploy thousands of new security personnel along the frontier. Nevertheless, he acknowledged that Venezuela had once served as a vital escape valve for Colombian refugees fleeing their half century internal conflict, for which he was grateful. Regional Relations Colombia shares long borders with neighboring countries, and some of these border areas have been described as porous to illegal armed groups that threaten regional security. Colombia has a 1,370-mile border with Venezuela, approximately 1,000-mile borders with both Peru and Brazil, and shorter borders with Ecuador and Panama. Much of the territory is remote and rugged and suffers from inconsistent state presence. Although all of Colombia's borders have been problematic and subject to spillover effects from Colombia's armed conflict, the most affected are Venezuela, Ecuador, and Panama. Over the years, Colombia's relations with Venezuela and Ecuador have been strained by Colombia's counterinsurgency operations, including cross-border military activity. The FARC and ELN insurgents have been present in shared-border regions and in some cases the insurgent groups used the neighboring countries to rest, resupply, and shelter. Former President Uribe accused the former Venezuelan government of Hugo Chávez of harboring the FARC and ELN and maintained that he had evidence of FARC financing the 2006 political campaign of Ecuador's leftist President Rafael Correa. Relations between Ecuador and Colombia remained tense following the Colombian military bombardment of a FARC camp inside Ecuador in March 2008. Ecuador severed diplomatic relations with Colombia for 33 months. Also in 2008, Ecuador filed a suit against Colombia in the International Court of Justice (ICJ), claiming damages to Ecuadorian residents affected by spray drift from Colombia's aerial eradication of drug crops. In September 2013, Colombia reached an out-of-court settlement awarding Ecuador $15 million. Once in office, President Santos reestablished diplomatic ties with both countries and in his first term (2010-2014) cooperation greatly increased between Colombia and Venezuela on border and security issues and with Ecuador's Correa. However, concerns about Venezuelan links to the FARC and the continued use of Venezuela by the FARC and ELN as a safe haven to make incursions into Colombia remained an irritant in Colombian-Venezuelan relations. Nevertheless, the Venezuelan and Colombian governments committed to jointly combat narcotics trafficking and illegal armed group activities along the porous Venezuelan-Colombian border and Venezuela remained a supporting government of the FARC-government peace talks (along with Chile, Norway, and Cuba) through 2016, even after former President Chávez died in office in March 2013. Ecuador's government hosted exploratory talks between the ELN and the Santos government beginning in 2015, which became formal talks hosted in Quito in February 2017, although Ecuador's president requested that the talks move to Cuba in May 2018, due to a spate of border violence that could have been related to the ELN. For many years, the region in Panama that borders Colombia, the Darien, was host to a permanent presence of FARC soldiers who used the remote area for rest and resupply as well to transit drugs north. By 2015, according to the State Department, the FARC was no longer maintaining a permanent militarized presence in Panamanian territory, in part due to effective approaches taken by Panama's National Border Service in coordination with Colombia. Nevertheless, the remote Darien region still faces challenges from smaller drug trafficking organizations and criminal groups such as Bacrim and experiences problems with human smuggling with counterterrorism implications. Colombia's Role in Training Security Personnel Abroad When Colombia hosted the Sixth Summit of the Americas in April 2012, President Obama and President Santos announced a new joint endeavor, the Action Plan on Regional Security Cooperation. This joint effort, built on ongoing security cooperation, addresses hemispheric challenges, such as combating transnational organized crime, bolstering counternarcotics, strengthening institutions, and fostering resilient communities. The Action Plan focuses on capacity building for security personnel in Central America and the Caribbean by Colombian security forces (both Colombian military and police). To implement the plan, Colombia undertook several hundred activities in cooperation with Panama, Costa Rica, El Salvador, Honduras, Guatemala and the Dominican Republic, and between 2013 and 2017 trained almost 17,000 individuals (see Figure 4 ). The Colombian government notes that this program grew dramatically from 34 executed activities in 2013 to 441 activities planned for 2018. Colombia has increasingly trained military and police from other countries both under this partnership and other arrangements, including countries across the globe. According to the Colombian Ministry of Defense, around 80% of those trained were from Mexico, Central America, and the Caribbean. U.S. and Colombian officials maintain that the broader effort is designed to export Colombian expertise in combating crime and terrorism while promoting the rule of law and greater bilateral and multilateral law enforcement cooperation. Critics of the effort to "export Colombian security successes" maintain that human rights concerns have not been adequately addressed. Some observers question the portion of these activities that are funded by the U.S. government and want to see more transparency. In one analysis of the training, a majority of the training was provided by Colombian National Police rather than the Colombian Army, in such areas as ground, air, maritime, and river interdiction; police testimony; explosives; intelligence operations; psychological operations; and Comando JUNGLA, Colombia's elite counternarcotics police program. Other analysts praise the Colombian training and maintain that U.S. assistance provided in this way has helped to improve, professionalize, and expand the Colombian military, making it the region's second largest. As that highly trained military shifts from combating the insurgency and the Colombian National Police take the dominant role in guaranteeing domestic security, Colombia may play a greater role in regional security and even in coalition efforts internationally. In September 2017, President Trump announced that he had considered designating Colombia in noncompliance with U.S. counternarcotics requirements, but noted that he had not proceeded with the step in part because of Colombian training efforts to assist others in the region with combating narcotics and related crime. U.S. Relations and Policy Colombia is a key U.S. ally in the region. With diplomatic relations that began in the 19 th century following Colombia's independence from Spain, the countries have enjoyed close and strong ties. Because of Colombia's prominence in the production of illegal drugs, the United States and Colombia forged a close partnership over the past 16 years. Focused initially on counternarcotics, and later counterterrorism, a program called Plan Colombia laid the foundation for a strategic partnership that has broadened to include sustainable development, human rights, trade, regional security, and many other areas of cooperation. Between FY2000 and FY2016, the U.S. Congress appropriated more than $10 billion in assistance from U.S. State Department and Department of Defense (DOD) accounts to carry out Plan Colombia and its follow-on strategies. During this time, Colombia made notable progress combating drug trafficking and terrorist activities and reestablishing government control over much of its territory. Its economic and social policies have reduced the poverty rate and its security policies have lowered the homicide rate. Counternarcotics policy has been the defining issue in U.S.-Colombian relations since the 1980s because of Colombia's preeminence as a source country for illicit drugs. Peru and Bolivia were the main global producers of cocaine in the 1980s and early 1990s. However, successful efforts there in reducing supply pushed cocaine production from those countries to Colombia, which soon surpassed both its Andean neighbors. The FARC and other armed groups in the country financed themselves primarily through narcotics trafficking, and that lucrative illicit trade provided the gasoline for the decades-long internal armed conflict at least since the 1990s. Colombia emerged to dominate the cocaine trade by the late 1990s. National concern about the crack cocaine epidemic and extensive drug use in the United States led to greater concern with Colombia as a source. As Colombia became the largest producer of coca leaf and the largest exporter of finished cocaine, heroin produced from Colombian-grown poppies was supplying a growing proportion of the U.S. market. Alarm over the volumes of heroin and cocaine being exported to the United States was a driving force behind U.S. support for Plan Colombia at its inception. The evolution of Plan Colombia took place under changing leadership and changing conditions in both the United States and Colombia. Plan Colombia was followed by successor strategies such as the National Consolidation Plan, described below, and U.S.-Colombia policy has reached a new phase anticipating post-conflict Colombia. Plan Colombia and Its Follow-On Strategies Announced in 1999, Plan Colombia originally was a six-year strategy to end the country's decades-long armed conflict, eliminate drug trafficking, and promote development. The counternarcotics and security strategy was developed by the government of President Andrés Pastrana in consultation with U.S. officials. Colombia and its allies in the United States realized that for the nation to gain control of drug trafficking required a stronger security presence, the rebuilding of institutions, and extending state presence where it was weak or nonexistent. Initially, the U.S. policy focus was on programs to reduce the production of illicit drugs. U.S. support to Plan Colombia consisted of training and equipping counternarcotics battalions in the Colombian Army and specialized units of the Colombian National Police, drug eradication programs, alternative development, and other supply reduction programs. The original 1999 plan had a goal to reduce "the cultivation, processing, and distribution of narcotics by 50%" over the plan's six-year timeframe. The means to achieve this ambitious goal were a special focus on eradication and alternative development; strengthening, equipping, and professionalizing the Colombian Armed Forces and the police; strengthening the judiciary; and fighting corruption. Other objectives were to protect citizens from violence, promote human rights, bolster the economy, and improve governance. U.S. officials expressed their support for the program by emphasizing its counterdrug elements (including interdiction). The focus on counternarcotics was the basis for building bipartisan support to fund the program in the U.S. Congress because some Members of Congress were leery of involvement in fighting a counterinsurgency, which they likened to the "slippery slope" of the war in Vietnam. President George W. Bush came to office in 2001 and oversaw some changes to Plan Colombia. The primary vehicle for providing U.S. support to Plan Colombia was the Andean Counterdrug Initiative, which was included in foreign operations appropriations. The Bush Administration requested new flexibility so that U.S.-provided assistance would back a "unified campaign against narcotics trafficking, terrorist activities, and other threats to [Colombia's] national security" due to the breakdown of peace talks between the FARC and the Pastrana government in February 2002. Congress granted this request for a unified campaign to fight drug trafficking and terrorist organizations as Members of Congress came to realize how deeply intertwined the activities of Colombia's terrorist groups were with the illicit drug trade that funded them. However, Congress prohibited U.S. personnel from directly participating in combat missions. Congress placed a legislative cap on the number of U.S. military and civilian contractor personnel who could be stationed in Colombia, although the cap was adjusted to meet needs over time. The current limit (first specified in the FY2015 National Defense Authorization Act, as amended) caps total military personnel at 800 and civilian contractors at 600, although numbers deployed have been far below the 1,400-person cap for years and now total fewer than 200. President Uribe (2002-2010) embraced Plan Colombia with an aggressive strategy toward the insurgent forces that prioritized citizen security. His Democratic Security Policy, implemented first in a military campaign called Plan Patriota, relied on the military to push FARC forces away from the major cities to remote rural areas and the borderlands. Like his predecessor, President Pastrana, Uribe continued to expand the Colombian military and police. He enhanced the intelligence capacity, professionalization, and coordination of the forces, in part with training provided by U.S. forces. His strategy resulted in expanded state control over national territory and a significant reduction in kidnappings, terrorist attacks, and homicides. In 2007, the Uribe administration announced a shift to a "Policy of Consolidation of Democratic Security." The new doctrine was based on a "whole-of-government" approach to consolidate state presence in marginal areas that were historically neglected—vulnerable to drug crop cultivation, violence, and control by illegal armed groups. Called a strategic leap forward by then-Defense Minister Juan Manuel Santos, in 2009 the new strategy came to be called the National Consolidation Plan (see below). Colombian support for Plan Colombia and for the nation's security program grew under Uribe's leadership. President Uribe levied a "wealth tax" to fund Colombia's security efforts, taxing the wealthiest taxpayers to fund growing defense and security expenditures. Overall U.S. expenditures on Plan Colombia were only a modest portion of what Colombians spent on their own security. By one 2009 estimate, U.S. expenditures were not more than 10% of what Colombians invested in their total security costs. In 2000, Colombia devoted less than 2% of its GDP to military and police expenditures and in 2010 that investment had grown to more than 4% of GDP. One assessment notes "in the end there is no substitute for host country dedication and funding" to turn around a security crisis such as Colombia faced at the beginning of the millennium. In 2008, congressional support for Plan Colombia and its successor programs also shifted. Some Members of Congress believed that the balance of programming was too heavily weighted toward security. Prior to 2008, the emphasis had been on "hard side" security assistance (to the military and police) compared with "soft side" traditional development and rule of law programs. Members debated if the roughly 75%/25% mix should be realigned. Since FY2008, Congress has reduced the proportion of assistance for security-related programs and increased the proportion for economic and social aid. As Colombia's security situation improved and Colombia's economy recovered, the United States also began turning over to Colombians operational and financial responsibility for efforts formerly funded by the U.S. government. The Colombian government "nationalized" the training, equipping, and support for Colombian military programs, such as the counterdrug brigade, Colombian Army aviation, and the air bridge denial program. U.S. funding overall began to decline. The nationalization efforts were not intended to end U.S. assistance, but rather to gradually reduce it to pre-Plan Colombia levels, adjusted for inflation. A key goal of Plan Colombia was to reduce the supply of illegal drugs produced and exported by Colombia but the goals became broader over time. Bipartisan support for the policy existed through three U.S. Administrations—President Bill Clinton, President George W. Bush, and President Barack Obama. Plan Colombia came to be viewed by some analysts as one of the most enduring and effective U.S. policy initiatives in the Western Hemisphere. Some have lauded the strategy as a model. In 2009, William Brownfield, then-U.S. Ambassador to Colombia, described Plan Colombia as "the most successful nation-building exercise that the United States has associated itself with perhaps in the last 25-30 years." Other observers, however, were critical of the policy as it unfolded. Many in the NGO and human rights community maintained the strategy, with its emphasis on militarization and security, was inadequate for solving Colombia's persistent, underlying problems of rural violence, poverty, neglect and institutional weakness. Nevertheless, it appears that improvements in security conditions have been accompanied by substantial economic growth and a reduction in poverty levels over time. National Consolidation Plan and Peace Colombia The National Consolidation Plan first launched during the Uribe Administration, (renamed the National Plan for Consolidation and Territorial Reconstruction), was designed to coordinate government efforts in regions where marginalization, drug trafficking, and violence converge. The whole-of-government consolidation was to integrate security, development, and counternarcotics to achieve a permanent state presence in vulnerable areas. Once security forces took control of a contested area, government agencies in housing, education, and development would regularize the presence of the state and reintegrate the municipalities of these marginalized zones into Colombia. The plan had been restructured several times by the Santos government. The United States supported the Colombian government's consolidation strategy through an inter-agency program called the Colombia Strategic Development Initiative (CSDI). CSDI provided U.S. assistance to "fill gaps" in Colombian government programming. At the U.S. Embassy in Colombia, CSDI coordinated efforts of the U.S. Agency for International Development (USAID), the State Department's Narcotics Affairs Section, the U.S. Military Group, and the Department of Justice to assist Colombia in carrying out the consolidation plan by expanding state presence and promoting economic opportunities in priority zones. It combined traditional counternarcotics assistance for eradication, interdiction, alternative development, and capacity building for the police, military, and justice sector institutions with other economic and social development initiatives. As the peace agreement between the FARC and the government moved forward into implementation, the focus of U.S. assistance to Colombia has shifted again. With a foundation of the work done to advance consolidation, U.S. assistance has begun to aid in post-conflict planning and support Colombia's transition to peace by building up democratic institutions, protecting human rights and racial and ethnic minorities, and promoting economic opportunity. USAID's country cooperation strategy for 2014-2018 anticipated the Colombian government reaching a negotiated agreement with the FARC, but remained flexible if an agreement was not signed. It recognized early implementation efforts, especially in the first 24 months after signature, would be critical to demonstrate or model effective practices. In the next five years, it envisioned Colombia evolving from aid recipient to provider of technical assistance to neighbors in the region. Consolidating state authority and presence in the rural areas with weak institutions remains a significant challenge following the FARC's disarmament in the summer of 2017. Reintegration of the FARC and possibly other insurgent forces, such as the ELN, will be expensive and delicate. In particular, critics of the consolidation efforts of the Colombian government maintain that the Santos administration often lacked the commitment to hand off targeted areas from the military to civilian-led development and achieve locally led democratic governance. Consolidation efforts suffered from low political support, disorganization at the top levels of government, and failure to administer national budgets effectively in more remote areas, among other challenges. In August 2018, shortly after President Duque took office, USAID announced a framework of priorities for U.S. economic development assistance to Colombia. Some of these priorities include promoting and supporting a whole-of-government strategy to include the dismantling of organized crime; increasing the effectiveness of Colombia's security and criminal justice institutions; promoting enhanced prosperity and job creation through trade; improving the investment climate for U.S. companies; and advancing Colombia's capacity to strengthen governance and transition to sustainable peace, including reconciliation among victims, ex-combatants, and other citizens. Funding for Plan Colombia and Peace Colombia The U.S. Congress initially approved legislation in support of Plan Colombia in 2000, as part of the Military Construction Appropriations Act of 2001 ( P.L. 106-246 ). Plan Colombia was never authorized by Congress, but it was funded annually through appropriations. From FY2000 through FY2016, U.S. funding for Plan Colombia and its follow-on strategies exceeded $10 billion in State Department and Defense Department programs. From FY2000 to FY2009, the United States provided foreign operations assistance to Colombia through the Andean Counterdrug Program (ACP) account, formerly known as the Andean Counterdrug Initiative, and other aid accounts. In FY2008, Congress continued to fund eradication and interdiction programs through the ACP account, but funded alternative development and institution building programs through the Economic Support Fund (ESF) account. In the FY2010 request, the Obama Administration shifted ACP funds into the International Narcotics Control and Law Enforcement (INCLE) account. Since FY2008, U.S. assistance has gradually declined because of tighter foreign aid budgets and nationalized Plan Colombia-related programs. In FY2014, in line with other foreign assistance reductions, funds appropriated to Colombia from State Department accounts declined to slightly below $325 million. In FY2015, Congress appropriated $300 million for bilateral assistance to Colombia in foreign operation. The FY2016 Omnibus Appropriations bill ( P.L. 114-113 ) provided Colombia from U.S. State Department and U.S. Agency for International Development accounts, slightly under $300 million, nearly identical to that appropriated in FY2015 (without P.L. 480, the Food for Peace account, the total for FY2016 was $293 million as shown in Table 1 ). In FY2017, Congress funded a program the Obama Administration had proposed called "Peace Colombia" to re-balance U.S. assistance to support the peace process and implementation of the accord. In May 2017, Congress approved a FY2017 omnibus appropriations measure, the Consolidated Appropriations Act, 2017 ( P.L. 115-31 ), which funded the various programs of Peace Colombia at $391.3 million. In the FY2017 legislation, Congress appropriated the following: The ESF account increased to $187 million (from $134 million in FY2016) to build government presence, encourage crop substitution to replace drug crops, and provide other assistance to conflict victims, including Afro-Colombian and indigenous communities. However, only $180 million was subsequently allocated. INCLE funding increased to $143 million with a focus on manual eradication of coca crops, support for the Colombian National Police, and judicial reform efforts. INCLE funding also included $10 million for Colombian forces' training to counterparts in other countries. $38.5 million in Foreign Military Financing (FMF); and $21 million in Nonproliferation, Anti-Terrorism, Demining, and Related Programs (NADR), which was a relatively large increase from under $4 million in FY2016 to focus on the demining effort. How the Trump Administration will engage with the issues of supporting post-conflict stability in Colombia has not been clearly defined by either the State Department or other executive departments. For example, the Trump Administration's proposed foreign aid budget for FY2018 would have reduced assistance to Colombia to $251 million. However, the FY2018 omnibus appropriations measure, approved by Congress in March 2018 ( P.L. 115-114 ), again included $391.3 million to support Colombia's transition to peace. The Trump Administration's FY2019 budget request for Colombia is $265 million, approximately a 32% reduction from the $391.3 million appropriated by Congress in FY2018. However, the House and Senate appropriations bills, H.R. 6385 and S. 3108 , again would support the funding level of $391.3 million. The FY2019 Administration request would reduce post-conflict recovery programs and place greater emphasis on counternarcotics and security. Below, Table 1 provides account data from the annual international affairs congressional budget justification documents. The information about DOD-funded programs was provided to the Congressional Research Service by DOD analysts in December 2015 and October 2017 (and has not been updated). The breakout of DOD assistance to Colombia is shown in Table 2 . . Colombia also has received additional U.S. humanitarian funding to help it cope with more than 1 million Venezuelan migrants. As of September 30, 2018, U.S. government humanitarian funding for the Venezuela response totaled approximately $96.5 million for both FY2017 and FY2018 combined, of which $54.8 million was for Colombia. (Humanitarian funding is drawn primarily from the global humanitarian accounts in annual Department of State/Foreign Operations appropriations acts.) In addition, the U.S. Navy hospital ship USNS Comfort is on an 11-week medical support mission deployed through the end of 2018 to work with government partners, in part to assist with arrivals from Venezuela. In Colombia, the U.S. response aims to help the Venezuelan arrivals as well as the local Colombian communities that are hosting them. In addition to humanitarian assistance, the United States is providing $37 million in bilateral assistance to support medium- and longer-term efforts by Colombia. Human Rights Conditions on U.S. Assistance Some Members of Congress have been deeply concerned about human rights violations in Colombia—especially those perpetrated by any recipients or potential recipients of U.S. assistance. In Colombia's multisided, 50-year conflict, the FARC and ELN, the paramilitaries and their successors, and Colombia's security forces have all committed serious violations. Colombians have endured generations of noncombatant killings, massacres, kidnappings, forced displacements, forced disappearances, land mine casualties, and acts of violence that violate international humanitarian law. The extent of the crimes and the backlog of human rights cases to be prosecuted have overwhelmed the Colombian judiciary, which some describe as "inefficient" and overburdened. The United Nations and many human rights groups maintain that although some prosecutions have gone forward, most remain unresolved and the backlog of cases has been reduced slowly. In addition to the problem of impunity for such serious crimes, continued violations remain an issue. Since 2002, Congress has required in the annual foreign operations appropriations legislation that the Secretary of State certify annually to Congress that the Colombian military is severing ties to paramilitaries and that the government is investigating complaints of human rights abuses and meeting other human rights statutory criteria. (The certification criteria have evolved over time. ) For several years, certification was required before 30% of funds to the Colombian military could be released. The FY2014 appropriations legislation requires that 25% of funding under the Foreign Military Financing (FMF) program be held back pending certification by the Secretary of State. Some human rights groups have criticized the regular certification of Colombia, maintaining that evidence they have presented to the State Department has contradicted U.S. findings. However, even some critics have acknowledged the human rights conditions on military assistance to Colombia to be "a flawed but useful tool" because the certification process requires that the U.S. government regularly consult with Colombian and international human rights groups. Critics acknowledge that over time, conditionality can improve human rights compliance. Additional tools for monitoring human rights compliance by Colombian security forces receiving U.S. assistance are the so-called "Leahy Law" restrictions, which Congress first passed in the late 1990s prior to the outset of Plan Colombia. First introduced by Senator Patrick Leahy, these provisions deny U.S. assistance to a foreign country's security forces if the U.S. Secretary of State has credible information that such units have committed "a gross violation of human rights." The provisions apply to security assistance provided by the State Department and DOD. The Leahy Law under the State Department is authorized by the Foreign Assistance Act (FAA) of 1961, as amended, and is codified at 22 U.S.C. 2378d (§520M of the FAA). The DOD Leahy provisions, which for years applied just to DOD training, now include a broader range of assistance, as modified in the FY2014 appropriations legislation. The provision related to the Leahy Laws for DOD assistance is codified at 10 U.S.C. 362, and prohibits "any training, equipment, or other assistance," to a foreign security force unit if there is credible information that the unit has committed a gross violation of human rights. Both the State Department and DOD Leahy provisions require the State Department to review and clear—or vet—foreign security forces to determine if any individual or unit is credibly believed to be guilty of a gross human rights violation. Leahy vetting is typically conducted by U.S. embassies and State Department headquarters. Reportedly on an annual basis about 1% of foreign security forces are disqualified from receiving assistance under the Leahy provisions, although many more are affected by administrative issues and are denied assistance until those conditions are resolved. Tainted security force units that are denied assistance may be remediated or cleared, but the procedures for remediation differ slightly between the DOD and State (or FAA) provisions. Because of the large amount of security assistance provided to Colombian forces (including the military and police), the State Department reportedly vets more candidates for assistance in Colombia than in any other country. In the late 1990s, poor human rights conditions in Colombia were a driving concern for developing the Leahy Law provisions. The U.S. Embassy in Bogotá, with nearly two decades of experience in its vetting operations, has been cited as a source of best practices for other embassies seeking to bring their operations into compliance or enhance their performance. State Department officials have cited Colombia as a model operation that has helped Colombia to improve its human rights compliance. However, some human rights organizations are critical of the Leahy vetting process in Colombia, and cite the prevalence of extrajudicial executions allegedly committed by Colombian military units as evidence that these restrictions on U.S. assistance have failed to remove human rights violators from the Colombian military. A human rights nongovernmental organization, Fellowship of Reconciliation, has published reports alleging an association between false positive killings and Colombian military units vetted by the State Department to receive U.S. assistance. However, some have questioned the group's methodology. Some human rights organizations contend that the U.S. government has tolerated abusive behavior by Colombian security forces without taking action or withholding assistance. Assessing the Programs of Plan Colombia and Its Successors123 Measured exclusively in counternarcotics terms, Plan Colombia has been a mixed success. Colombia remains the dominant producer of cocaine and in the DEA's National Drug Threat Assessment for 2017 continued to be the source for 95% of cocaine seized in the United States. Enforcement, eradication, and improved security squeezed production in Colombia, so that in 2012, Peru reemerged as the global leader in cocaine production, surpassing Colombia, for a year or so. In the early 2000s, given Colombia's predominance as the source of cocaine destined for U.S. markets and its status as the second-largest producer of heroin consumed in the United States, eradication of coca bush and opium poppy (from which heroin is derived) was an urgent priority and became the preferred tool for controlling the production of these drugs. Another critical component of the drug supply reduction effort was alternative development programs funded by the U.S. Agency for International Development (USAID) to assist illicit crop cultivators with transitioning to licit crop production and livelihoods. Trends in Colombia's Coca Cultivation Analysts have long debated how effective Plan Colombia and its follow-on strategies were in combating illegal drugs. Although Plan Colombia failed to meet its goal of reducing the cultivation, processing, and distribution of illicit drugs by 50% in its original six-year time frame, Colombia has sustained significant reductions in coca cultivation in recent years. According to U.S. estimates, cultivation of coca declined from 167,000 hectares in 2007 to 78,000 hectares in 2012. (Poppy cultivation declined by more than 90% between 2000 and 2009.) According to U.S. government estimates, Colombia's potential production of pure cocaine fell to 170 metric tons in 2012, the lowest level in two decades. However, it started to rise slightly in 2013, and more dramatically in 2014 through 2016. In those years, cultivation of coca and production of cocaine grew significantly in part due to ending the aerial eradication of coca crops. In 2015, following a U.N. agency determination that the herbicide used to spray coca crops was probably carcinogenic, Colombia's minister of health determined that aerial eradication of coca was not consistent with requirements of Colombia's Constitutional Court. In 2016, as noted above, the U.S. DEA reported that 95% of cocaine seized in the United States originated in Colombia. According to U.S. Office of National Drug Control Policy, Colombia in 2017 cultivated an unprecedented 209,000 hectares of coca, from which cocaine is derived, capable of generating 921 metric tons of cocaine. The United Nations estimates for 2017, which typically differ in quantity but follow the same trends as U.S. estimates, maintained that Colombia's potential production of cocaine reached nearly 1,370 metric tons, 31% above its 2016 estimate. Even with Colombia's economic stability and improving security, cocaine exports (primarily to the U.S. market) remain a major concern for U.S. lawmakers. However, in drug interdiction, Colombia has set records for many years and is considered a strong and reliable U.S. partner. The United Nations Office on Drugs and Crime ( Table 4 ), shows Colombia cultivating 146,000 hectares of coca in 2016, a 52% increase over 2015 and another increase to 171,000 hectares, a 17% increase, in 2017. Although cocaine seizures were quite high in both years, the interdiction of cocaine was insufficient to counter the large increases in production. Drug Crop Eradication and Other Supply Control Alternatives Both manual eradication and aerial eradication were central components of Plan Colombia to reduce coca and poppy cultivation. Manual eradication is conducted by teams, usually security personnel, who uproot and kill the plant. Aerial eradication involves spraying the plants from aircraft with an herbicide mixture to destroy the drug crop, but it may not kill the plants. In the context of Colombia's continuing internal conflict, manual eradication was far more dangerous than aerial spraying. U.S. and Colombian policymakers recognized the dangers of manual eradication and, therefore, employed large-scale aerial spray campaigns to reduce coca crop yields, especially from large coca plantations. Colombia is the only country globally that aerially sprayed its illicit crops, and the practice has been controversial for health and environmental reasons, resulting in a Colombian decision to end aerial eradication in 2015. Since 2002, as a condition of fully funding the spraying program, Congress has regularly directed the State Department, after study and consultation with the U.S. Environmental Protection Agency and other relevant agencies, to certify that the spraying did not "pose unreasonable risks or adverse effects to humans or the environment." This certification requirement was included most years in the annual foreign operations appropriations legislation. Some analysts have also raised questions about the monetary and collateral costs of aerial eradication compared with other drug supply control strategies, its effectiveness, and its limited effect on the U.S. retail price of cocaine. U.S. State Department officials attribute Colombia's decline in coca cultivation after 2007 and prior to 2013 to the persistent aerial eradication of drug crops in tandem with manual eradication where viable. Between 2009 and 2013, Colombia aerially sprayed roughly 100,000 hectares annually. In 2013, however, eradication efforts declined. Colombia aerially eradicated roughly 47,000 hectares. It manually eradicated 22,120 hectares, short of the goal of 38,500 hectares. This reduction had a number of causes: the U.S.-supported spray program was suspended in October 2013 after two U.S. contract pilots were shot down, rural protests in Colombia hindered manual and aerial eradication efforts, and security challenges limited manual eradicators working in border areas. In late 2013, Ecuador won an out-of-court settlement in a case filed in 2008 before the International Court of Justice in The Hague for the negative effects of spray drift over its border with Colombia. In negotiations with the FARC, the government and the FARC provisionally agreed in May 2014 that voluntary manual eradication would be prioritized over forced eradication. Aerial eradication remained a viable tool in the government's drug control strategy, according to the agreement, but would be permitted only if voluntary and manual eradication could not be conducted safely. In April 2015, the Santos administration determined that glyphosate, a broad-spectrum, nonselective herbicide used commercially, but in Colombia sprayed on coca plants to eradicate them, was "probably carcinogenic" to humans in a review published by a World Health Organization (WHO) affiliate. In October 2015, the government ended spraying operations and began to implement a new public health approach toward illicit drugs, one that proponents suggested would reduce human rights violations. On the supply side, Colombia's new drug policy gives significant attention to expanding alternative development and licit crop substitution while intensifying interdiction efforts. The State Department in its 2015 International Narcotics Control Strategy Report (INCSR), however, warned that illicit cultivation was expanding in areas long off-limits to aerial spraying, including national parks, a buffer zone with Ecuador where aerial eradication has been restricted, and in indigenous or protected Afro-Colombian territories. Colombian interdiction practices are deemed some of the most effective in the world. The Colombian government reported seizing more than 207 metric tons (mt) of cocaine base in 2014 and that seizure total doubled by 2017 with capture of 442 mt of cocaine. According to the U.S. State Department's 2018 INCSR , Colombia also seized 197 mt of marijuana, 348 kilograms of heroin, and destroyed more than 3,400 cocaine base and hydrochloride labs. USAID funds and runs alternative development programs in Colombia to assist communities with transitioning from a dependency on illicit crops to licit employment and livelihoods. Alternative development was once focused narrowly on crop substitution and assistance with infrastructure and marketing. Since the Colombian government's shift to a consolidation strategy, USAID has supported "consolidation and livelihoods" programming in 40 of the 58 strategically located, conflict-affected municipalities targeted by the government's National Consolidation Plan. To facilitate economic development, USAID funds initiatives that assist farmers and others with shifting from coca growing to licit economic opportunities. These programs are designed to strengthen small farmer producer organizations, improve their productivity, and connect them to markets. Some observers maintain that poor and unsustainable outcomes from alternative development programs while the Colombian conflict was still under way resulted from ongoing insecurity and lack of timeliness or sequencing of program elements. The renewed commitment to alternative development and crop substitution in the 2016 peace accord with the FARC may be similarly challenged. Formal implementation of the peace accord on drug eradication and crop substitution began in late May 2017 with collective agreements committing communities to replace their coca crops with licit crops. In some regions, the program is extended to families who cultivate coca and also to producers of legal crops and landless harvesters. The Colombian government also committed to a combined approach of both voluntary and forced manual eradication. The government's goal set for 2017 was eradicating 100,000 hectares of coca, 50,000 through forced manual eradication and 50,000 through "crop substitution" accords reached with coca farming households who would voluntary eradicate. At the U.S.-Colombia High Level Dialogue held in Bogotá in March 2018, a renewed commitment to the enduring partnership between the United States and Colombia was announced. A major outcome was a U.S.-Colombia pledge to reduce illegal narcotics trafficking through expanded counternarcotics cooperation. The new goal set was to reduce Colombia's estimated cocaine production and coca cultivation to 50% of current levels by 2023. In addition, a memorandum of understanding was signed to combat the illegal gold mining that funds transnational criminal organizations. New Developments Under the Duque Administration Although President Duque appears determined to pursue a more aggressive approach to drug policy, he has not clearly stated how his approach to counternarcotics will differ from that of his predecessor. The government may restart aerial eradication, a strategy that ended in 2015 due to the Colombian Health Ministry's concerns over cancer-causing potential of the herbicide glyphosate, but no precise plans for restarting the program have been announced in the Duque Administration's first three months in office. Experimentation with delivering glyphosate by drones (rather than planes) began in June 2018 under the Santos Administration and is continuing under the Duque government. On October 1, 2018, President Duque authorized police to confiscate and destroy any quantity of drugs found on persons in possession of them, resulting in the seizure of more than 7 metric tons of drugs in less than two weeks. This enforcement measure may violate a 1994 Colombian Constitutional Court ruling, however, in which Colombians may carry small doses of drugs for personal use, including marijuana, hashish, and cocaine. Several court challenges have been filed that seek to nullify the Duque decree on constitutional grounds of protected personal use. Drug trafficking continues to trigger conflict over land in Colombia while affecting the most vulnerable groups, including Afro-Colombian, peasant, and indigenous populations. Some analysts warn that national and international pressure for drug eradication could also lead to increased human rights violations, including health consequences by reviving aerial spraying of drug crops and government actions to forcibly break up demonstrations by coca producers who resist eradication. Some analysts have advocated that investments to lower drug supply need to go beyond eradication, which has not been a lasting approach to reducing drug crop cultivation. For instance, the government could provide economic and education opportunities to at-risk youth to enhance their role in peace building and to prevent their recruitment into the drug trade and other illegal activity. U.S.-Colombia Trade Relations, OECD, and the Pacific Alliance Economic relations between Colombia and the United States have deepened. The U.S.-Colombia Free Trade Agreement (FTA) entered into force in May 2012. By 2020, it will phase out all tariffs and other barriers to bilateral trade between Colombia and the United States, its largest trade partner. Since the U.S.-Colombia FTA went into force, the stock of U.S. investment in Colombia surpassed $7 billion in 2014 but dropped to $6.2 billion in 2016 (on a historical cost basis), concentrated mostly in mining and manufacturing. According to the U.S. Department of Commerce, U.S. exports to Colombia exceeded $26.8 billion in 2016 and Colombia was the 22 nd -largest market for U.S. exports; however, U.S. imports from Colombia declined between 2015 and 2016. Major U.S. exports to Colombia include oil (noncrude oil products including gasoline), machinery, cereals, organic chemicals, and plastic. Because 65% of U.S. imports from Colombia are crude oil imports, much of the decline in value was caused by the sharp fall in oil prices that began in 2014. Major U.S. imports beside crude oil, include gold, coffee, cut flowers, and fruits. Congressional interest in Colombia now extends far beyond security and counternarcotics and has grown in the area of bilateral trade following implementation of the U.S.-Colombia FTA, (also known at the U.S.-Colombia Trade Promotion Agreement). Colombia is a founding member of the Pacific Alliance, along with Chile, Mexico, and Peru, and has sought to deepen trade integration and cross-border investment with its partners in the alliance while reducing trade barriers. The Pacific Alliance aims to go further by creating a common stock market, allowing for the eventual free movement of businesses and persons, and serving as an export platform to the Asia-Pacific region. Colombia's leadership role in the Pacific Alliance and Colombia's accession to the Organization for Economic Cooperation and Development (OECD) in May 2018, following a review of the country's macroeconomic policies and changes, are major new developments. The accession to the OECD was approved by Colombia's lower house in October 2018 and the Senate in November 2018, but it remained under final review by Colombia's Constitutional Court in early February 2019. The Santos administration pushed to meet the criteria required for OECD membership because it maintained that such recognition signified Colombia's attainment of world-class development standards and policies. Colombia has made progress on trade issues such as copyright, pharmaceuticals, fuel and trucking regulations, and labor concerns (including subcontracting methods and progress on resolving cases of violence against union activists). Outlook Congress remains interested in Colombia's future because the country has become one of the United States' closest allies. With 17 years of investment in Colombia's security and stability, some maintain that there has already been a strong return on U.S. investment. Plan Colombia and its successor strategies broadened from counternarcotics to include humanitarian concerns, efforts to bolster democratic development and human rights protections, and trade and investment to spark growth. The record expansion of Colombia's coca crop and increasing cocaine exports to the United States, however, may significantly hinder the effort to consolidate peace in Colombia and could potentially increase corruption and extortion. A significant portion of the Colombian public remains skeptical of the peace process and the FARC's role in Colombia's democracy. Other Colombians maintain that support for peace programs in Colombia is important not only to benefit former FARC or other demobilized combatants but also to fulfill promises the government made in the peace accords to the country's 8.6 million victims of the five-decade conflict. As President Duque concluded his first 100 days in office, his government faced overlapping challenges: (1) an upsurge in illicit drug crops, which had set records in 2016 and 2017; (2) implementation of provisions of the peace accord negotiated by former president Santos but marred by slow implementation, attacks on land and human rights activists, and projected budgetary shortfalls; (3) renewed violent competition among criminal groups in rural areas, some of which reportedly are sheltering in Venezuela; and (4) Venezuela's humanitarian crisis, which resulted in a surge of migrants fleeing to or through Colombia. The annual level of foreign assistance provided by the U.S. Congress for Colombia began to decline in FY2008 and then gradually increased in FY2017 and FY2018 to support peace and implementation of the FARC-government peace accord. Some Members of Congress may want to build on cooperation with Colombian partners to continue to train Central Americans and other third-country nationals in counternarcotics and security, including programs in citizen security, crime prevention and monitoring, military and police capacity building, and hostage negotiation and cybersecurity. Congress may continue to closely monitor Colombia's domestic security situation. It also may continue to oversee issues such as drug trafficking; Colombia's effort to combat other illegal armed groups such as Bacrim; the status of human rights protections; and the expansion of health, economic, environmental, energy, and educational cooperation. Congress may seek to foster Colombian leadership in the region to counter growing political instability in Venezuela. The U.S. Congress has been interested in expanding investment and trade opportunities both bilaterally with Colombia and within regional groupings, such as the Pacific Alliance. Some analysts contend that U.S.-Colombian trade improvements rest on the strength of the overall relationship between Colombia and the United States. Appendix. Selected Online Human Rights Reporting on Colombia

A key U.S. ally in the Latin American region, Colombia endured an internal armed conflict for half a century. Drug trafficking fueled the violence by funding both left-wing and right-wing armed groups. Some analysts feared Colombia would become a failed state in the late 1990s, but the Colombian government devised a new security strategy, known as Plan Colombia, to counter the insurgencies. Originally designed as a 6-year program, Plan Colombia ultimately became a 17-year U.S.-Colombian bilateral effort. The partnership focused initially on counternarcotics and later on counterterrorism; it then broadened to include sustainable development, human rights, trade, regional security, and many other areas of cooperation. Between FY2000 and FY2016, the U.S. Congress appropriated more than $10 billion to help fund Plan Colombia and its follow-on programs. For FY2018, Congress appropriated $391.3 million in foreign aid for Colombia, including assistance to promote peace and end the conflict. President Juan Manuel Santos (2010-2018) made concluding a peace accord with the Revolutionary Armed Forces of Colombia (FARC)—the country's largest leftist guerrilla organization—his 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 11,000 FARC disarmed and demobilized. This figure included FARC who had been held in prison for crimes of rebellion and those making up FARC militias, who were accredited by the Colombian government as eligible to demobilize. On August 7, 2018, Iván Duque, a senator from the conservative Democratic Center party, was inaugurated to a four-year presidential term. Duque, who also worked at the Inter-American Development Bank in Washington, DC, and is Colombia's youngest president in a century, campaigned as a critic of the peace accord with the FARC. His party objected to specific measures concerning justice and political representation. Some observers maintain that his election has generated uncertainty for implementation of the accord. Shortly after taking office, Duque suspended peace talks with the National Liberation Army (ELN), the country's second-largest rebel group, which had begun under President Santos. Since the ratification of the peace accord, Colombia's long-term strategy has evolved from defeating insurgents to post-conflict stabilization. Many considered Plan Colombia and its successor strategies a remarkable advance, given the country's improvements in security and economic stability. Nevertheless, recent developments have called into question Colombia's progress. The FARC's demobilization has triggered open conflict among armed actors (including FARC dissidents and transnational criminal groups), which seek to control drug cultivation and trafficking, illegal mining, and other illicit businesses that the demobilized FARC abandoned. The ongoing lack of governance in remote rural areas recalls the conditions that originally gave rise to the FARC and other armed groups. Many observers continue to raise concerns about the country's human-rights conditions, sharp increases in coca cultivation and cocaine production, and problems stemming from the failing authoritarian government of neighboring Venezuela, which shares a nearly 1,400-mile border with Colombia. Venezuela's humanitarian crisis has set in motion an exodus of migrants, many of whom have sought temporary residence (or extended stays) in Colombia. Political upheaval has added yet more uncertainty after the United States and many other Western Hemisphere and European nations, including Colombia, called for a democratic transition in Venezuela and recognized the president of the Venezuelan National Assembly, Juan Guaidó, as the country's interim president in January 2019. The U.S.-Colombia Trade Promotion Agreement went into force in May 2012. The United States remains Colombia's top trade partner. After several years of annual growth exceeding 4%, one of the steadiest expansion rates in the region, Colombia grew by an estimated 2.7% in 2018. The FARC-government peace accord is projected to cost more than $40 billion to implement over 15 years, adding to the polarization over the controversial peace process. For additional background, see CRS In Focus IF10817, Colombia's 2018 Elections, CRS Report R44779, Colombia's Changing Approach to Drug Policy, CRS Report R42982, Colombia's Peace Process Through 2016, and CRS Report RL34470, The U.S.-Colombia Free Trade Agreement: Background and Issues.

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Introduction This report provides background information and potential oversight issues for Congress on the Gerald R. Ford (CVN-78) class aircraft carrier program. The Navy's proposed FY2019 budget requests a total of $2,347 million (i.e., about $2.3 billion) in procurement funding for the CVN-78 program. Congress's decisions on the CVN-78 program could substantially affect Navy capabilities and funding requirements and the shipbuilding industrial base. The Navy's FY2020 budget submission also proposed to not fund the mid-life nuclear refueling overhaul (called a Refueling Complex Overhaul, or RCOH) for the aircraft carrier CVN-75 ( Harry S. Truman ), and to instead retire the ship around FY2024 and also deactivate one of the Navy's carrier air wings at about the same time. On April 30, 2019, however, the Administration announced that it was effectively withdrawing this proposal from the Navy's FY2020 budget submission. The Administration now supports funding the CVN-75 RCOH and keeping CVN-75 (and by implication its associated air wing) in service past FY2024. For additional discussion of this withdrawn budget proposal, see Appendix A . For an overview of the strategic and budgetary context in which the CVN-78 class program and other Navy shipbuilding programs may be considered, see CRS Report RL32665, Navy Force Structure and Shipbuilding Plans: Background and Issues for Congress , by Ronald O'Rourke. Background Current Navy Aircraft Carrier Force The Navy's current aircraft carrier force consists of 11 nuclear-powered ships, including 10 Nimitz-class ships (CVNs 68 through 77) that entered service between 1975 and 2009, and one Gerald R. Ford (CVN-78) class ship that was commissioned into service on July 22, 2017. Statutory Requirements for Numbers of Carriers and Carrier Air Wings Requirement to Maintain Not Less Than 11 Carriers 10 U.S.C. 8062(b) requires the Navy to maintain a force of not less than 11 operational aircraft carriers. The requirement for the Navy to maintain not less than a certain number of operational aircraft carriers was established by Section 126 of the FY2006 National Defense Authorization Act ( H.R. 1815 / P.L. 109-163 of January 6, 2006), which set the number at 12 carriers. The requirement was changed from 12 carriers to 11 carriers by Section 1011(a) of the FY2007 John Warner National Defense Authorization Act ( H.R. 5122 / P.L. 109-364 of October 17, 2006). Requirement to Maintain a Minimum of Nine Carrier Air Wings 10 U.S.C. 8062(e), which was added by Section 1042 of the FY2017 National Defense Authorization Act ( S. 2943 / P.L. 114-328 of December 23, 2016), requires the Navy to maintain a minimum of nine carrier air wings. Navy Force-Level Goal of 12 Carriers 12-Carrier Goal Established December 2016 In December 2016, the Navy released a force-level goal for achieving and maintaining a fleet of 355 ships, including 12 aircraft carriers —one more than the minimum of 11 carriers required by 10 U.S.C. 8062(b). This was the first Navy force-level goal to call for 12 (rather than 11) carriers since a 2002-2004 Navy force-level goal for a fleet of 375 ships. Planned and Potential Dates for Achieving 12-Carrier Force Given the time needed to build a carrier and the projected retirement dates of existing carriers, increasing the carrier force from 11 ships to 12 ships on a sustained basis would take a number of years: Procuring carriers on 3-year centers—that is, procuring one carrier every three years—would achieve a 12-carrier force on a sustained basis by about 2030, unless the service lives of one or more existing carriers were substantially extended. Procuring carriers on 3.5-year centers (i.e., a combination of 3- and 4-year centers) would achieve a 12-carrier force on a sustained basis no earlier than about 2034, unless the service lives of one or more existing carriers were substantially extended. Procuring carriers on 4-year centers would achieve a 12-carrier force on a sustained basis by about 2063—almost 30 years later than under 3.5-year centers—unless the service lives of one or more existing carriers were substantially extended. Under the Navy's FY2020 30-year shipbuilding plan, as under the Navy's FY2019 30-year shipbuilding plan, carrier procurement would shift from 5-year centers to 4-year centers after the procurement of CVN-82 in FY2028, and a 12-carrier force would be achieved on a sustained basis in the 2060s. The projected size of the carrier force in the Navy's FY2020 30-year (FY2020-FY2049) shipbuilding plan reflected the Navy's now-withdrawn FY2020 budget proposal to not fund the RCOH for the aircraft carrier CVN-75 ( Harry S. Truman ), and to instead retire the ship around FY2024. With the withdrawal of this budget proposal, the projected size of the carrier force is now, for the period FY2022-FY2047, one ship higher than what is shown in the Navy's FY2020 budget submission. The newly adjusted force-level projection, reflecting the withdrawal of the proposal to retire CVN-75 around FY2024, is as follows: The force is projected to include 11 ships in FY2020-FY2021, 12 ships in FY2022-FY2024, 11 ships in FY2025-FY2026, 10 ships in FY2027, 11 ships in FY2028-FY2039, 10 ships in FY2040, 11 ships in FY2041, 10 ships in FY2042-FY2044, 11 ships in FY2045, 10 ships in FY2046-FY2047, 9 ships in FY2048, and 10 ships in FY2049. Incremental Funding Authority for Aircraft Carriers Under incremental funding, some of the funding needed to fully fund a ship is provided in one or more years after the year in which the ship is procured. In recent years, Congress has authorized DOD to use incremental funding for procuring certain Navy ships, most notably aircraft carriers: Section 121 of the FY2007 John Warner National Defense Authorization Act ( H.R. 5122 / P.L. 109-364 of October 17, 2006) granted the Navy the authority to use four-year incremental funding for CVNs 78, 79, and 80. Under this authority, the Navy could fully fund each of these ships over a four-year period that includes the ship's year of procurement and three subsequent years. Section 124 of the FY2012 National Defense Authorization Act ( H.R. 1540 / P.L. 112-81 of December 31, 2011) amended Section 121 of P.L. 109-364 to grant the Navy the authority to use five-year incremental funding for CVNs 78, 79, and 80. Since CVN-78 was fully funded in FY2008-FY2011, the provision in practice applied to CVNs 79 and 80. Section 121 of the FY2013 National Defense Authorization Act ( H.R. 4310 / P.L. 112-239 of January 2, 2013) amended Section 121 of P.L. 109-364 to grant the Navy the authority to use six-year incremental funding for CVNs 78, 79, and 80. Since CVN-78 was fully funded in FY2008-FY2011, the provision in practice applies to CVNs 79 and 80. Section 121(c) of the John S. McCain National Defense Authorization Act for Fiscal Year 2019 ( H.R. 5515 / P.L. 115-232 of August 13, 2018) authorized incremental funding to be used for making payments under the two-ship block buy contract for the construction of CVN-80 and CVN-81. This provision does not limit the total number of years across which incremental funding may be used to procure either ship. Aircraft Carrier Construction Industrial Base All U.S. aircraft carriers procured since FY1958 have been built by Huntington Ingalls Industries/Newport News Shipbuilding (HII/NNS), of Newport News, VA. HII/NNS is the only U.S. shipyard that can build large-deck, nuclear-powered aircraft carriers. The aircraft carrier construction industrial base also includes roughly 2,000 supplier firms in 46 states. Gerald R. Ford (CVN-78) Class Program Overview The Gerald R. Ford (CVN-78) class carrier design ( Figure 1 ) is the successor to the Nimitz -class carrier design. The Ford -class design uses the basic Nimitz -class hull form but incorporates several improvements, including features permitting the ship to generate more aircraft sorties per day, more electrical power for supporting ship systems, and features permitting the ship to be operated by several hundred fewer sailors than a Nimitz -class ship, reducing 50-year life-cycle operating and support (O&S) costs for each ship by about $4 billion compared to the Nimitz -class design, the Navy estimates. Navy plans call for procuring at least four Ford-class carriers—CVN-78, CVN-79, CVN-80, and CVN-81. CVN-78 (Gerald R. Ford) CVN-78, which was named Gerald R. Ford in 2007, was procured in FY2008. The Navy's proposed FY2020 budget estimates the ship's procurement cost at $13,084.0 million (i.e., about $13.1 billion) in then-year dollars. The ship received advance procurement (AP) funding in FY2001-FY2007 and was fully funded in FY2008-FY2011 using congressionally authorized four-year incremental funding. To help cover cost growth on the ship, the ship received an additional $1,394.9 million in FY2014-FY2016 and FY2018 cost-to-complete procurement funding. (This $1,394.9 million is included in the above-mentioned estimated procurement cost of $13,084.0 million.) The ship was delivered to the Navy on May 31, 2017, and was commissioned into service on July 22, 2017. The Navy is currently working to complete construction, testing, and certification of the ship's 11 weapons elevators. CVN-79 (John F. Kennedy) CVN-79, which was named John F. Kennedy on May 29, 2011, was procured in FY2013. The Navy's proposed FY2020 budget estimates the ship's procurement cost at $11,327.4 million (i.e., about $11.3 billion) in then-year dollars. The ship received AP funding in FY2007-FY2012, and was fully funded in FY2013-FY2018 using congressionally authorized six-year incremental funding. The ship is being built with an improved shipyard fabrication and assembly process that incorporates lessons learned from the construction of CVN-78. A key aim of this improved process is to substantially reduce the real (i.e., inflation-adjusted) construction cost of CVN-79 compared to that of CVN-78. CVN-79 is scheduled for delivery to the Navy in September 2024. Two-Ship Block Buy Contract for CVN-80 and CVN-81 CVN-80 ( Enterprise ) and CVN-81 (not yet named) are being procured under a two-ship block buy contract that was authorized by Section 121(a)(2) of the John S. McCain National Defense Authorization Act for Fiscal Year 2019 ( H.R. 5515 / P.L. 115-232 of August 13, 2018). The provision permitted the Navy to add CVN-81 to the existing contract for building CVN-80 after the Department of Defense (DOD) made certain certifications to Congress. DOD made the certifications on December 31, 2018, and the Navy announced the award of the contract on January 31, 2019. Compared to the estimated procurement costs for CVN-80 and CVN-81 in the Navy's FY2019 budget submission, the Navy estimates under its FY2020 budget submission that the two-ship block buy contract will reduce the cost of CVN-80 by $246.6 million and the cost of CVN-81 by $2,637.3 million, for a combined reduction of $2,883.9 million (i.e., about $2.9 billion). (DOD characterizes the combined reduction as "nearly $3 billion." ) Using higher estimated baseline costs for CVN-80 and CVN-81 taken from a December 2017 Navy business case analysis, the Navy estimates under its FY2020 budget submission that the two-ship contract will reduce the cost of CVN-80 by $770.9 million and the cost of CVN-81 by $3,086.3 million, for a combined reduction of $3,857.2 million (i.e., about $3.9 billion). (DOD characterizes the combined reduction as $4 billion.) These figures are all expressed in then-year dollars, meaning dollars that are not adjusted for inflation. Regarding the difference between a savings of about $2.9 billion from the figures in the Navy's FY2019 budget submission and a savings of about $3.9 billion from the December 2017 Navy business case analysis, a February 5, 2019, press report quoted a Navy spokesman as stating that the Navy's FY2019 budget submission "already accounted for at least $1B [$1 billion] of potential savings, a two-CVN buy would save an additional $3B [$3 billion]." This suggests that the Navy, in preparing its FY2019 budget submission, may have anticipated that it would receive from Congress authority for implementing some kind of combined purchase (such as, perhaps, a combined purchase of materials) for CVN-80 and CVN-81. For additional background information on the two-ship block buy contract, see Appendix B . CVN-80 (Enterprise) CVN-80, which was named Enterprise on December 1, 2012, was procured in FY2018. The Navy's proposed FY2020 budget estimates the ship's procurement cost at $12,335.1 million (i.e., about $12.3 billion) in then-year dollars. The ship received AP funding in FY2016 and FY2017, and the Navy plans to fully fund the ship in FY2018-FY2025 using incremental funding authorized by Section 121(c) of P.L. 115-232 . The Navy's proposed FY2020 budget requests $1,062.0 million in procurement funding for the ship. The ship is scheduled for delivery to the Navy in March 2028. CVN-81 (Not Yet Named) Prior to the awarding of the two-ship block buy contract, CVN-81, which has not yet been named, was scheduled to be procured in FY2023. Following the awarding of the two-ship block buy contract, the Navy has chosen to show CVN-81 in its FY2020 budget submission as a ship to be procured in FY2020 (as opposed to a ship that was procured in FY2019). The Navy's FY2020 budget submission estimates the ship's procurement cost at $12,450.7 million (i.e., about $12.5 billion) in then-year dollars. The Navy plans to fully fund the ship beginning in FY2019 and extending beyond FY2026 using incremental funding authorized by Section 121(c) of P.L. 115-232 . The Navy's proposed FY2020 budget requests $1,285.0 million in procurement funding for the ship. The ship is scheduled for delivery to the Navy in February 2032. Program Procurement Funding Table 1 shows procurement funding for CVNs 78, 79, 80, and 81 through FY2026+ (meaning FY2026 and some number of years after FY2026). Program Procurement Cost Cap Congress has established procurement cost caps for CVN-78 class aircraft carriers: Section 122 of the FY2007 John Warner National Defense Authorization Act ( H.R. 5122 / P.L. 109-364 of October 17, 2006) established a procurement cost cap for CVN-78 of $10.5 billion, plus adjustments for inflation and other factors, and a procurement cost cap for subsequent Ford-class carriers of $8.1 billion each, plus adjustments for inflation and other factors. The conference report ( H.Rept. 109-702 of September 29, 2006) on P.L. 109-364 discusses Section 122 on pages 551-552. Section 121 of the FY2014 National Defense Authorization Act ( H.R. 3304 / P.L. 113-66 of December 26, 2013) amended the procurement cost cap for the CVN-78 program to provide a revised cap of $12,887.0 million for CVN-78 and a revised cap of $11,498.0 million for each follow-on ship in the program, plus adjustments for inflation and other factors (including an additional factor not included in original cost cap). Section 122 of the FY2016 National Defense Authorization Act ( S. 1356 / P.L. 114-92 of November 25, 2015) further amended the cost cap for the CVN-78 program to provide a revised cap of $11,398.0 million for each follow-on ship in the program, plus adjustment for inflation and other factors, and with a new provision stating that, if during construction of CVN-79, the Chief of Naval Operations determines that measures required to complete the ship within the revised cost cap shall result in an unacceptable reduction to the ship's operational capability, the Secretary of the Navy may increase the CVN-79 cost cap by up to $100 million (i.e., to $11.498 billion). If such an action is taken, the Navy is to adhere to the notification requirements specified in the cost cap legislation. Section 121(a) of the FY2018 National Defense Authorization Act ( H.R. 2810 / P.L. 115-91 of December 12, 2017) further amended the cost cap for the CVN-78 program to provide a revised cap of $12,568.0 million for CVN-80 and subsequent ships in the program, plus adjustment for inflation and other factors. (The cap for CVN-79 was kept at $11,398.0 million, plus adjustment for inflation and other factors.) The provision also amended the basis for adjusting the caps for inflation, and excluded certain costs from being counted against the caps. In an August 2, 2017, letter to the congressional defense committees, then-Acting Secretary of the Navy Sean Stackley notified the committees that under subsection (b)(7) of Section 122 of P.L. 114-92 as amended by Section 121 of P.L. 113-66 —a subsection allowing increases to the cost cap for CVN-78 for "the amounts of increases or decreases in costs of that ship that are attributable solely to an urgent and unforeseen requirement identified as a result of the shipboard test program"—he had increased the cost cap for CVN-78 by $20 million, to $12,907.0 million. In a May 8, 2018, letter to the congressional defense committees, Secretary of the Navy Richard Spencer notified the committees that under subsections (b)(6) and (b)(7) of Section 122 of P.L. 114-92 as amended by Section 121 of P.L. 113-66 —subsections allowing increases to the cost cap for CVN-78 for "the amounts of increases or decreases to cost required to correct deficiencies that may affect the safety of the ship and personnel or otherwise preclude the ship from safe operation and crew certification" and for "the amounts of increases or decreases in costs of CVN 78 that are attributable solely to an urgent and unforeseen requirement identified as a result of the shipboard test program," respectively—he had increased the cost cap for CVN-78 by $120 million, to $13,027 million. Changes in Estimated Unit Procurement Costs Since FY2008 Budget Table 2 shows changes in the estimated procurement costs of CVNs 78, 79, 80, and 81 since the budget submission for FY2008—the year of procurement for CVN-78. Withdrawn Proposal to Not Fund CVN-75 RCOH The Navy's FY2020 budget submission proposed to not fund the mid-life nuclear refueling overhaul (called a Refueling Complex Overhaul, or RCOH) for the aircraft carrier CVN-75 ( Harry S. Truman ), and to instead retire the ship around FY2024 and also deactivate one of the Navy's carrier air wings at about the same time. On April 30, 2019, however, the Administration announced that it was effectively withdrawing this proposal from the Navy's FY2020 budget submission. The Administration now supports funding the CVN-75 RCOH and keeping CVN-75 (and by implication its associated air wing) in service past FY2024. For additional discussion of this withdrawn budget proposal, see Appendix A . Issues for Congress for FY2020 Navy Decision to Show CVN-81 as a Ship to Be Procured in FY2020 One issue for Congress concerns DOD's decision to show CVN-81 in its FY2020 budget submission as a ship to be procured in FY2020, instead of a ship that was procured in FY2019. Grounds for showing CVN-81 as a ship that was procured in FY2019 would include the following: Within Section 121 of the John S. McCain National Defense Authorization Act for Fiscal Year 2019 ( H.R. 5515 / P.L. 115-232 of August 13, 2018)—the provision that authorized the two-ship block buy contract for CVN-80 and CVN-81—subsection (a)(1) specifically authorizes a contract for the procurement of CVN-81 "beginning with the fiscal year 2019 program year." The header for subsection (a)(1) is "Procurement Authorized." Consistent with Section 121(a)(1), the funding table for the Navy's shipbuilding account in the conference report ( H.Rept. 115-874 of July 25, 2018) on H.R. 5515 shows a quantity of "1" in line 002 of the FY2019 SCN (Shipbuilding and Conversion, Navy) appropriation account. Line 002 is the line item for procurement (not advance procurement [AP]) funding for the CVN-78 program. A notation in the table for line 002 states that the procurement funding authorized for this line item is for "Authorize CVN81—One ship." The funding table does not authorize any funding for line 003 of the FY2019 SCN account—the line item for AP funding for the CVN-78 program. (AP funding is funding for the procurement of a ship to be procured in a future fiscal year.) Consistent with the two above points, the paragraph in the FY2019 DOD appropriations act (Division A of H.R. 6157 / P.L. 115-245 of September 28, 2018) that makes appropriations for the SCN account makes procurement (not AP) appropriations for the CVN-78 program. This paragraph also states that "the funds made available by this Act for the Carrier Replacement Program (CVN-80) may be available to modify or enter into a new contract for the procurement of a Ford-class aircraft carrier designated CVN–81 pursuant to section 121 of the John S. McCain National Defense Authorization Act for Fiscal Year 2019." Consistent with this bill language, the funding table for the SCN account in the joint explanatory statement for H.R. 6157 shows that this funding was provided for line 2 of the FY2019 SCN account (CVN-78 program procurement funding), not line 3 of the FY2019 SCN account (CVN-78 program AP funding). Consistent with all of the above points (and as reflected in Table 1 of this CRS report), the Navy's FY2020 budget submission shows the $618 million in FY2019 funding for CVN-81 as full funding (meaning funding for a procured ship), rather than AP funding (meaning funding for a ship to be procured in a future fiscal year). DOD's decision to show CVN-81 in its FY2020 budget submission as a ship to be procured in FY2020, instead of a ship that was procured in FY2019, affects the comparison of numbers of ships procured in FY2019 and FY2020. If DOD had decided to show CVN-81 in its FY2020 budget submission as a ship that was procured in FY2019, then the total number of ships procured in FY2019 would be 14, and the total number requested for FY2020 would be 11—3 ships, or 21%, fewer than the FY2019 total of 14. Showing CVN-81 in the FY2020 budget submission as an FY2020 ship changes the FY2019 and FY2020 totals to 13 ships and 12 ships, respectively, making number FY2020 closer to the FY2019 number. DOD's decision to show CVN-81 in its FY2020 budget submission as a ship to be procured in FY2020, instead of a ship that was procured in FY2019, also affects the aircraft carrier procurement profile shown in the Navy's FY2020 30-year (FY2020-FY2049) 30-year shipbuilding plan. If DOD had decided to show CVN-81 in its FY2020 budget submission as a ship that was procured in FY2019, the ship-procurement table in the 30-year plan would show the procurement of no carriers for the first eight years (FY2020-FY2027) of the 30-year period. Showing CVN-81 in the FY2020 budget submission as an FY2020 ship changes the presentation to show the procurement of an aircraft carrier in the first year of the 30-year period. Potential oversight questions for Congress include the following: Compliance with c ongressional intent . Is DOD's decision to show CVN-81 as a ship to be procured in FY2020, rather than as a ship that was procured in FY2019, consistent with congressional intent as shown in bill and report language for P.L. 115-232 and P.L. 115-245 ? Can DOD's decision be viewed as a challenge to Congress's Article 1 power to authorize and appropriate funds for the construction of Navy ships? If DOD's decision regarding the year of procurement for CVN-81 is accepted, would this set a precedent for the executive branch regarding its future compliance with Congressional decisions for authorizing and funding of other federal programs? Executability of FY2019 procurement funds for CVN-81. FY2019 SCN-account funding for the CVN-78 program was appropriated by Congress, and shows in the Navy's FY2020 budget-justification books, as procurement funding (meaning funding for one or more procured ships) rather than AP funding (meaning funding for one or more ships to be procured in a future fiscal year). If CVN-81 is accepted as a ship to be procured in FY2020, what implications, if any, might that have for the executability of the $618 million in FY2019 procurement (as opposed to AP) funds for CVN-81 shown in the Navy's FY2020 budget submission (as reflected in Table 1 of this CRS report)? Executability of CVN-81 during portion of FY2020 under a CR. Navy officials have testified that if the Navy operates under a continuing resolution (CR) for some part of FY2020, then absent a special legislative provision in the CR known as an anomaly, the Navy during that period likely would not be able to proceed with CVN-81, because CRs typically prevent year-to-year quantity increases in procurement programs, and treating CVN-81 as a ship to be procured in FY2020 would mean that the CVN-78 program would have a year-to-year quantity increase of zero ships in FY2019 followed by one ship in FY2020. If work on CVN-81 were to not proceed for some part of FY2020 because the Navy during that period were to operate under a CR, what impact would that have on the implementation and status of the two-ship contract for building CVN-80 and CVN-81? FY2019 and FY2020 numbers of ships procured and 30-year shipbuilding plan. What effect, if any, did considerations regarding the comparison of numbers of ships procured in FY2019 and FY2020 and the aircraft carrier procurement profile during the initial years of the 30-year shipbuilding plan have on DOD's decision to show CVN-81 in its FY2020 budget submission as a ship to be procured in FY2020, instead of a ship that was procured in FY2019? Treatment in FY2020 legislation. Since P.L. 115-232 shows CVN-81 as authorized in FY2019, how should the House and Senate Armed Services committees act on the request in the Navy's FY2020 budget submission to authorize an aircraft carrier in FY2020? If the FY2020 national defense authorization act authorizes the procurement of an aircraft carrier in FY2020, and the authorization for the procurement of an aircraft carrier in FY2019 were not rescinded, would that create confusion as to whether the ship being authorized in FY2020 was CVN-81 or CVN-82, the latter being a ship currently planned for procurement in FY2028? If the FY2019 authorization for CVN-81 were rescinded, what implications, if any, would that have for the implementation of Section 121 of P.L. 115-232 , including the award of the two-carrier contract on January 31, 2019 (i.e., during FY2019)? CVN-82 Not Accelerated from FY2028 to an Earlier Year Another issue for Congress concerns the Navy's decision, as part of its FY2020 budget submission, to not accelerate the scheduled procurement of CVN-82 from FY2028 to an earlier fiscal year. The Navy's FY2020 budget submission shows that, as a result of the two-carrier contract, the scheduled delivery date for CVN-81 has been accelerated by seven months, to February 2032, compared to September 2032 in the Navy's FY2019 budget submission. The scheduled year of procurement for CVN-82 has not been changed—in the Navy's FY2020 budget submission, it shows as a ship to be procured in FY2028, as it did in the Navy's FY2019 budget submission. The accelerated delivery date for CVN-81, combined with the unchanged year of procurement for CVN-82, suggests that the interval between the construction of CVN-81 and construction of CVN-82 has been increased by something like seven months. Other things held equal, this increased interval could result in increased loss of learning in shifting from construction of CVN-81 to construction of CVN-82, and possibly in reduced spreading of shipyard fixed overhead costs during the construction of CVN-82. Both of these effects could increase the procurement cost of CVN-82. Potential oversight questions for Congress include the following: What impact, if any, will the accelerated delivery of CVN-81 under the two-carrier contract, combined with the unchanged year of procurement for CVN-82, have on the procurement cost of CVN-82? How might the procurement cost of CVN-82 change in real (i.e., inflation-adjusted) terms if its year of procurement were accelerated to an earlier year, such as FY2027? FY2020 Funding Request Another issue for Congress is whether to approve, reject, or modify the Navy's FY2020 procurement funding requests for CVN-78 program. In assessing this question, Congress could consider various factors, including whether the Navy has properly scheduled and accurately priced the work it is proposing to do on the CVN-78 program in FY2020, particularly in the context of implementing the two-carrier contract for CVN-80 and CVN-81. Date for Achieving a 12-Carrier Force Another issue for Congress concerns the date for achieving the Navy's 12-ship force-level goal for aircraft carriers. As noted earlier, under the Navy's FY2020 30-year shipbuilding plan, carrier procurement would shift from 5-year centers to 4-year centers after the procurement of CVN-82 in FY2028, and a 12-carrier force would be achieved on a sustained basis in the 2060s. As also noted earlier, shifting carrier procurement to 3- or 3.5-year centers could achieve a 12-carrier fleet as soon as the 2030s, unless the service lives of one or more existing carriers were substantially extended. Other things held equal, procuring carriers on 3- or 3.5-year centers rather than 4-year centers would increase Navy funding requirements during the period of the 30-year shipbuilding plan for procuring aircraft carriers and for operating and supporting a 12-carrier force rather than a force of 11 or fewer carriers. Cost Growth and Managing Costs within Program Cost Caps Overview For the past several years, cost growth in the CVN-78 program, Navy efforts to stem that growth, and Navy efforts to manage costs so as to stay within the program's cost caps have been continuing oversight issues for Congress on the CVN-78 program. As shown in Table 2 , the estimated procurement costs of CVN-78, CVN-79, and CVN-80 have grown 24.7%, 23.2%, and 15.1%, respectively, since the submission of the FY2008 budget. Cost growth on CVN-78 required the Navy to program $1,394.9 million in cost-to-complete procurement funding for the ship in FY2014-FY2016 and FY2018 (see Table 1 ). As also shown in Table 2 , however, cost growth on CVN-78, CVN-79, and CVN-80 more or less stopped in FY2013 and FY2014: while the estimated cost of CVN-78 grew considerably between the FY2008 budget (the budget in which CVN-78 was procured) and the FY2014 budget, since the FY2014 budget, it has grown by only a small amount (about 2%); while the estimated cost of CVN-79 grew considerably between the FY2008 budget and the FY2013 budget (in part because the procurement date for the ship was deferred by one year in the FY2010 budget), since the FY2013 budget it has declined by a small amount (less than 1%); and while the estimated cost of CVN-80 grew considerably between the FY2008 budget and the FY2013 budget (in part because the procurement date for the ship was deferred by two years in the FY2010 budget), since the FY2013 budget it has declined by about 11%. Recent Related Legislative Provisions Section 128 of the FY2016 National Defense Authorization Act ( S. 1356 / P.L. 114-92 of November 25, 2015) states the following: SEC. 128. Limitation on availability of funds for U.S.S. John F. Kennedy (CVN–79). (a) Limitation.—Of the funds authorized to be appropriated by this Act or otherwise made available for fiscal year 2016 for procurement for the U.S.S. John F. Kennedy (CVN–79), $100,000,000 may not be obligated or expended until the date on which the Secretary of the Navy submits to the congressional defense committees the certification under subsection (b)(1) or the notification under paragraph (2) of such subsection, as the case may be, and the reports under subsections (c) and (d).... (c) Report on costs relating to CVN–79 and CVN–80.— (1) IN GENERAL.—Not later than 90 days after the date of the enactment of this Act, the Secretary of the Navy shall submit to the congressional defense committees a report that evaluates cost issues related to the U.S.S. John F. Kennedy (CVN–79) and the U.S.S. Enterprise (CVN–80). (2) ELEMENTS.—The report under paragraph (1) shall include the following: (A) Options to achieve ship end cost of no more than $10,000,000,000. (B) Options to freeze the design of CVN–79 for CVN–80, with exceptions only for changes due to full ship shock trials or other significant test and evaluation results. (C) Options to reduce the plans cost for CVN–80 to less than 50 percent of the CVN–79 plans cost. (D) Options to transition all non-nuclear Government-furnished equipment, including launch and arresting equipment, to contractor-furnished equipment. (E) Options to build the ships at the most economic pace, such as four years between ships. (F) A business case analysis for the Enterprise Air Search Radar modification to CVN–79 and CVN–80. (G) A business case analysis for the two-phase CVN–79 delivery proposal and impact on fleet deployments. Section 126 of the FY2017 National Defense Authorization Act ( S. 2943 / P.L. 114-328 of December 23, 2016) states the following: SEC. 126. Limitation on availability of funds for procurement of U.S.S. Enterprise (CVN–80). (a) Limitation.—Of the funds authorized to be appropriated by this Act or otherwise made available for fiscal year 2017 for advance procurement or procurement for the U.S.S. Enterprise (CVN–80), not more than 25 percent may be obligated or expended until the date on which the Secretary of the Navy and the Chief of Naval Operations jointly submit to the congressional defense committees the report under subsection (b). (b) Initial report on CVN–79 and CVN–80.—Not later than December 1, 2016, the Secretary of the Navy and the Chief of Naval Operations shall jointly submit to the congressional defense committees a report that includes a description of actions that may be carried out (including de-scoping requirements, if necessary) to achieve a ship end cost of— (1) not more than $12,000,000,000 for the CVN–80; and (2) not more than $11,000,000,000 for the U.S.S. John F. Kennedy (CVN–79). (c) Annual report on CVN–79 and CVN–80.— (1) IN GENERAL.—Together with the budget of the President for each fiscal year through fiscal year 2021 (as submitted to Congress under section 1105(a) of title 31, United States Code) the Secretary of the Navy and the Chief of Naval Operations shall submit a report on the efforts of the Navy to achieve the ship end costs described in subsection (b) for the CVN–79 and CVN–80. (2) ELEMENTS.—The report under paragraph (1) shall include, with respect to the procurement of the CVN–79 and the CVN–80, the following: (A) A description of the progress made toward achieving the ship end costs described in subsection (b), including realized cost savings. (B) A description of low value-added or unnecessary elements of program cost that have been reduced or eliminated. (C) Cost savings estimates for current and planned initiatives. (D) A schedule that includes— (i) a plan for spending with phasing of key obligations and outlays; (ii) decision points describing when savings may be realized; and (iii) key events that must occur to execute initiatives and achieve savings. (E) Instances of lower Government estimates used in contract negotiations. (F) A description of risks that may result from achieving the procurement end costs specified in subsection (b). (G) A description of incentives or rewards provided or planned to be provided to prime contractors for meeting the procurement end costs specified in subsection (b). Section 121(b) of the FY2018 National Defense Authorization Act ( H.R. 2810 / P.L. 115-91 of December 12, 2017) states the following: SEC. 121. Aircraft carriers. ... (b) Waiver on limitation of availability of funds for CVN–79.—The Secretary of Defense may waive subsections (a) and (b) of section 128 of the National Defense Authorization Act for Fiscal Year 2016 (Public Law 114–92; 129 Stat. 751) after a period of 60 days has elapsed following the date on which the Secretary submits to the congressional defense committees a written notification of the intent of the Secretary to issue such a waiver. The Secretary shall include in any such notification the following: (1) The rationale of the Secretary for issuing the waiver. (2) The revised test and evaluation master plan that describes when full ship shock trials will be held on Ford-class aircraft carriers. (3) A certification that the Secretary has analyzed and accepted the operational risk of the U.S.S. Gerald R. Ford deploying without having conducted full ship shock trials, and that the Secretary has not delegated the decision to issue such waiver. Sources of Risk of Cost Growth and Navy Actions to Control Cost Sources of risk of cost growth on CVN-78 included, among other things, certain new systems to be installed on CVN-78 whose development, if delayed, could delay the completion of the ship. These systems included a new type of aircraft catapult called the Electromagnetic Launch System (EMALS), a new aircraft arresting system called the Advanced Arresting Gear (AAG), and the ship's primary radar, called the Dual Band Radar (DBR). Congress has followed these and other sources of risk of cost growth for years. In July 2016, the DOD Inspector General issued a report critical of the Navy's management of the AAG development effort. In January 2017, it was reported that after conducting a review of potential alternative systems, the Navy had decided to continue stay with its plan to install EMALs and AAG on the first three Ford-class carriers. Section 125 of the FY2017 National Defense Authorization Act ( S. 2943 / P.L. 114-328 of December 23, 2016) limited the availability of funds for the AAG program until certain conditions are met. Navy officials have stated that they are working to control the cost of CVN-79 by equipping the ship with a less expensive primary radar, by turning down opportunities to add features to the ship that would have made the ship more capable than CVN-78 but would also have increased CVN-79's cost, and by using a build strategy for the ship that incorporates improvements over the build strategy that was used for CVN-78. These build-strategy improvements, Navy officials have said, include the following items, among others: achieving a higher percentage of outfitting of ship modules before modules are stacked together to form the ship; achieving "learning inside the ship," which means producing similar-looking ship modules in an assembly line-like series, so as to achieve improved production learning curve benefits in the production of these modules; and more economical ordering of parts and materials including greater use of batch ordering of parts and materials, as opposed to ordering parts and materials on an individual basis as each is needed. For additional background information on cost growth in the CVN-78 program, Navy efforts to stem that growth, and Navy efforts to manage costs so as to stay within the program's cost caps, see Appendix C and Appendix D . CVN-78 Weapons Elevators Another oversight issue for Congress concerns Navy efforts to complete the construction, testing, and certification of the weapons elevators on CVN-78. (The ship's weapons elevators transport missiles and bombs from the ship's weapon magazines to the ship's flight deck, so that they can be loaded onto aircraft that are getting ready to take off from the ship.) A November 2, 2018, press report states the following: The $13 billion Gerald R. Ford aircraft carrier, the U.S. Navy's costliest warship, was delivered last year without elevators needed to lift bombs from below deck magazines for loading on fighter jets. Previously undisclosed problems with the 11 elevators for the ship built by Huntington Ingalls Industries Inc. add to long-standing reliability and technical problems with two other core systems—the electromagnetic system to launch planes and the arresting gear to catch them when they land. The Advanced Weapons Elevators, which are moved by magnets rather than cables, were supposed to be installed by the vessel's original delivery date in May 2017. Instead, final installation was delayed by problems including four instances of unsafe "uncommanded movements" since 2015, according to the Navy. While progress was being made on the carrier's other flawed systems, the elevator is "our Achilles heel," Navy Secretary Richard Spencer told reporters in August without providing details.... The Navy says that the first carrier will be fully combat-capable, including the elevators, by July—the end of its current 12-month pier-side shakedown period in Virginia. Navy weapons buyer James Geurts cited what he called "considerable progress" on the Ford, including on the elevators, in a July 6 memo to Pentagon acquisition head Ellen Lord. The Navy in May requested permission from Congress in May to increase the Ford's cost cap by $120 million, partly to fix elevator issues "to preclude any effect on the safety of the ship and personnel." The safety issues related to the uncommanded movements, the Navy said in an email.... Beci Brenton, a spokeswoman for Newport News, Virginia-based Huntington Ingalls, said "all the elevators are installed." She said the weapons elevator is among "the most advanced technologies being incorporated into" the carrier and "its completion has been delayed due to a number of first-in-class issues," Brenton said. "We are committed to working through the remaining technical challenges," she said. William Couch, a spokesman for the Naval Sea Systems Command, said the elevators are "in varying levels of construction and testing." Six are far enough along to be operated by the shipbuilder, and testing has started on two of those, he said. All 11 "should have been completed and delivered with the ship delivery," according to Couch. He said the contractor has corrected "all issues," including the "four uncommanded movements over the last three years that were discovered during the building, operational grooming, or testing phases."... A November 2010 program on PBS's "Nova" science series extolled the "Elevator of Tomorrow" being developed by Federal Equipment Co., a Cincinnati-based subcontractor to Huntington Ingalls. Doug Ridenour, president of Federal Equipment Co., said the elevator's key technologies "have been consistently demonstrated for years" in a test unit in the company's plant and any programming or software-related issues have been fixed. But "shipboard integration involves many other technology insertions not controlled by" his company, he said. At a November 27, 2018, hearing on Navy shipbuilding programs before the Seapower subcommittee of the Senate Armed Services Committee, the following exchange occurred: SENATOR TIM KAINE (continuing): There have been challenges with the advanced weapons elevators on the CVN, some of the technical difficult[ies] seem similar to those that were experienced earlier on both the [aircraft] launch and arresting systems. I think that the Navy put together independent review teams to tackle those issues and provide solutions. Are we at a point where that may be needed on the weapons elevators or are we in a position where we think the progress on the weapons elevators is satisfactory? JAMES F. GEURTS, ASSISTANT SECRETARY OF THE NAVY FOR RESEARCH, DEVELOPMENT AND ACQUISITION: Yes, sir. So there are 11 weapons elevators [and] each one of them we have to produce, test and then certify. The first two of those have been produced, the first one's been through test and certification. The second one is about 94 percent through test. We are making progress to get through all of the elevators during this availability. I am likely to do an independent review team not on the immediate construction for CVN-78 but looking at the longer-term sustainability, resilience, reliability to make sure we are in a position to support those elevators for the long term, that we've got all of the training and all of the reliability built into those. We've done so many independent reviews for the [CVN-]78 elevator design as they are so we won't do one on the current efforts on [CVN-]78. We've got a dedicated team working our way through those issues. KAINE: And is your timing on that testing and certification on [CVN-]78—you have this 12-month period where you are testing—[do] you think you will get through the testing and certification of all of the 11 elevators in that year one? GEURTS: My current assessment is we will get through all of the production and much of the testing. We may have some of the certification issues to go. I am watching it very closely and we will keep you and your staff informed on progress there. A December 5, 2018, press report stated the following: The Navy plans to complete installation and testing of the 11 elevators before the Ford completes its post-delivery shakedown phase in July, Captain Danny Hernandez, a Navy spokesman, said in an email. Six will also be certified for use by then, but five won't be completed until after July, he said. "A dedicated team is engaged on these efforts and will accelerate this certification work and schedule where feasible," he said. Huntington spokeswoman Beci Brenton said via email that company officials had a "very productive meeting" with Inhofe that included both the elevators and benefits of a two-carrier contract. The elevator's completion "has been delayed due to a number of first-in-class issues associated with the first-time installation, integration and test of this new technology," she said. "However, we are making substantial substantial progress in resolving the remaining technical challenges." A January 6, 2019, press report stated the following: The Navy Secretary has committed that the service and its industry partners will have working weapons elevators on aircraft carrier USS Gerald R. Ford (CVN-78) by the end of the summer—and the secretary's job is now on the line over that issue. The Navy accepted delivery of the first-in-class carrier and commissioned it into the fleet without any functioning weapons elevators. The carrier is now in its post-shakedown availability at builder Newport News Shipbuilding, after spending a year at sea running the ship to discover any potential flaws. Though the Navy already said the elevators would be addressed during this PSA period, the stakes are now higher: Navy Secretary Richard V. Spencer told President Donald Trump that the elevators would be installed and working by the time the carrier returns to sea, or else the president can use his famous "you're fired" line on the service secretary. Spencer said this morning at an event hosted by the Center for a New American Security that he spoke to Trump at length last month at the Army-Navy football game in Philadelphia. "I asked him to stick his hand out; he stuck his hand out. I said, let's do this like corporate America. I shook his hand and said, the elevators will be ready to go when she pulls out or you can fire me," Spencer said, adding that someone had to take accountability over the ongoing elevator challenges. "We're going to get it done. I know I'm going to get it done. I haven't been fired yet by anyone; being fired by the president really isn't on the top of my list."... The elevator issue has plagued the carrier for years, even if it garnered less attention than other high-profile new technologies on the carrier, such as the new Electromagnetic Aircraft Launch System (EMALS) and the Advanced Arresting Gear, both of which had their own fair share of technical problems. In 2016, the late Sen. John McCain (R-Ariz.), who then chaired the Senate Armed Services Committee, railed against the Ford-class program, noting that Ford was already overdue to be delivered to the Navy and still was facing ongoing technical difficulties. "The Navy's announcement of another two-month delay in the delivery of CVN-78 further demonstrates that key systems still have not demonstrated expected performance. The advanced arresting gear (AAG) cannot recover airplanes. Advanced weapons elevators cannot lift munitions. The dual-band radar cannot integrate two radar bands. Even if everything goes according to the Navy's plan, CVN-78 will be delivered with multiple systems unproven," McCain said in a July 2016 hearing. A month later the Pentagon announced a 60-day review of the Ford program, with a specific focus on five technology areas, including the elevators. Ford ultimately delivered to the Navy in June 2017 and commissioned a month later, still without working weapons elevators. In July 2018, when Ford entered PSA, the Navy said the maintenance availability had been extended from a planned eight months to a full year, to accommodate both the typical work that arises in PSA but also deferred work such as the construction and installation of weapons elevators and an upgrade to the AAG, whose technical challenges greatly contributed to the delayed delivery and commissioning of the ship. A January 16, 2019, press report stated the following: The Navy's newest aircraft carrier, USS Gerald R. Ford (CVN 78), closed out 2018 on a high note with the acceptance of the ship's first advanced weapons elevator (AWE), setting the tone for more positive developments in the year ahead. AWE Upper Stage #1 was turned over to the ship on Dec. 21, following testing and certification by engineers at Huntington Ingalls Industries-Newport News Shipbuilding, where the ship is currently working through its post-shakedown availability (PSA). The acceptance marks a major milestone for the ship and the Ford-class of aircraft carriers to follow.... Though the first elevator has been accepted, work still remains on the remaining 10. Currently, all shipboard installation and testing activities of the AWEs are due to be completed prior to the end of Ford's PSA, scheduled for July. However, some remaining certification documentation will be performed for five of the 11 elevators after PSA completion. A March 6, 2019, press report stated the following: Nearly one month following the acceptance of its first advanced weapons elevator (AWE), the Navy's newest aircraft carrier, USS Gerald R. Ford (CVN 78), has accepted its second. AWE Upper Stage #3 was turned over to the ship February 14, following testing and certification by engineers at Huntington Ingalls Industries-Newport News Shipbuilding (NNS), where the ship is currently working through its post-shakedown availability (PSA). According to Ford's Weapons Officer, Cmdr. Joe Thompson, acceptance of the second AWE offers an opportunity for Ford Sailors to become acquainted with the equipment during the PSA. "This gives us more time to learn and become subject matter experts," explained Thompson. "All of us are learning on brand new systems and brand new concepts. This acceptance gives us the opportunity to have that 'run time' on the physical aspects of the elevator, but also in evaluating the technical manuals, and learning the maintenance required to keep them operational." With two elevators in hand, Thompson explained that Sailors training on these new systems will be able to apply the lessons learned from the first elevator, Upper Stage #1, and apply them to Upper Stage #3, thereby streamlining the learning process and lessening the learning curve. "This is going to allow us to progress faster," he explained. "As we get smarter on one, we move on to the next and apply the lessons learned not only with regard to elevator operation, but also in the testing and certification, and maintenance processes."… Acceptance of the elevator was accelerated due to a merging of the test programs between NNS and the Naval Surface Warfare Center (NSWC), which removed redundant steps and moved certification up by 10 days. The team has identified other areas where redundancy can be removed to make the acceptance timelines more efficient. Issues Raised in December 2018 DOT&E Report Another oversight issue for Congress concerns CVN-78 program issues raised in a December 2018 report from DOD's Director, Operational Test and Evaluation (DOT&E)—DOT&E's annual report for FY2018. Regarding the CVN-78 program, the report stated the following in part: Assessment • The delays in the ship development and initial trials pushed both phases of initial operational testing until FY21 and FY22. The delay in the ship's delivery and development added approximately 2 years to the timeline. As noted in previous annual reports, the CVN 78 test schedule has been aggressive, and the development of EMALS [Electromagnetic Aircraft Launch System], AAG [Advanced Arresting gear], AWE [Advanced Weapons Elevator], DBR [Dual Band Radar], and the Integrated Warfare System delayed the ship's first deployment to FY22. Reliability • Four of CVN 78's new systems stand out as being critical to flight operations: EMALS, AAG, DBR, and AWEs. Overall, the poor reliability demonstrated by AAG and EMALS and the uncertain reliability of DBR and AWEs could delay CVN 78 IOT&E [Initial Operational Test and Evaluation]. The Navy continues to test all four of these systems in their shipboard configurations aboard CVN 78. Reliability estimates derived from test data for EMALS and AAG are discussed in following subsections. For DBR and AWE, only engineering reliability estimates have been provided. EMALS • Testing to date involved 747 shipboard launches and demonstrated EMALS capability to launch aircraft planned for the CVN 78 Air Wing. • Through the first 747 shipboard launches, EMALS suffered 10 critical failures. This is well below the requirement of 4,166 Mean Cycles Between Critical Failures, where a cycle represents the launch of one aircraft. • The reliability concerns are exacerbated by the fact that the crew cannot readily electrically isolate EMALS components during flight operations due to the shared nature of the Energy Storage Groups and Power Conversion Subsystem inverters onboard CVN 78. The process for electrically isolating equipment is time-consuming; spinning down the EMALS motor/generators takes 1.5 hours by itself. The inability to readily electrically isolate equipment precludes EMALS maintenance during flight operations. AAG • Testing to date included 763 attempted shipboard landings and demonstrated AAG capability to recover aircraft planned for the CVN 78 air wing. • The Program Office redesigned major components that did not meet system specifications during land-based testing. Through the first 763 attempted shipboard landings, AAG suffered 10 operational mission failures (which includes one failure of the barricade system). This reliability estimate falls well below the re-baselined reliability growth curve and well below the requirement of 16,500 Mean Cycles Between Operational Mission Failures, where a cycle represents the recovery of one aircraft. • The reliability concerns are magnified by the current AAG design that does not allow electrical isolation of the Power Conditioning Subsystem equipment from high power buses, limiting corrective maintenance on below-deck equipment during flight operations. Combat System • Results of SBDT [sea-based developmental testing] events indicate good SSDS [ship self-defense system] performance in scheduling and launching simulated RAMs [Rolling Airframe Missiles] and ESSMs [Evolved Sea Sparrow Missiles], as well as scheduling DBR directives for ESSM acquisition and target illumination. Insufficient interoperability testing with a CEC [Cooperative Engagement Capability] network and Link 16 prevents an estimate of performance in this area. It is unknown if the integration problems between SSDS and Surface Electronic Warfare Improvement Program (SEWIP) Block 2 identified during engineering testing at Wallops Island have been resolved because SEWIP Block 2 was not installed on the ship during these SBDT events. • CVN 78's combat system testing on the SDTS [self-defense test ship] is at risk due to schedule constraints, lack of funding, and insufficient planned developmental testing. DBR • Throughout the five CVN 78 SBDTs, DBR was plagued by extraneous false and close-in dual tracks adversely affecting its performance. • Integration of the DBR electronic protection capabilities remains incomplete and unfunded. With modern threats, a lack of electronic protection places the ship in a high-risk scenario if deployed to combat. • The Navy analysis noted that DBR performance needs to be improved to support carrier air traffic control center certification. Sortie Generation Rate • CVN 78 is unlikely to achieve its SGR [sortie generation rate] requirement. The target threshold is based on unrealistic assumptions including fair weather and unlimited visibility, and that aircraft emergencies, failures of shipboard equipment, ship maneuvers, and manning shortfalls will not affect flight operations. During the 2013 operational assessment, DOT&E conducted an analysis of past aircraft carrier operations in major conflicts. The analysis concludes that the CVN 78 SGR requirement is well above historical levels. • DOT&E plans to assess CVN 78 performance during IOT&E by comparing it to the SGR requirement as well as to the demonstrated performance of the Nimitz-class carriers. • Poor reliability of key systems that support sortie generation on CVN 78 could cause a cascading series of delays during flight operations that would affect CVN 78's ability to generate sorties. The poor or unknown reliability of these critical subsystems represents the most risk to the successful completion of CVN 78 IOT&E. Manning • Based on current expected manning, the berthing capacity for officers and enlisted will be exceeded by approximately 100 personnel with some variability in the estimates. This also leaves no room for extra personnel during inspections, exercises, or routine face-to-face turnovers. • Planned ship manning requires filling 100 percent of the billets. This is not the Navy's standard practice on other ships, and the personnel and training systems may not be able to support 100 percent manning. Additionally, workload estimates for the many new technologies such as catapults, arresting gear, radar, and weapons and aircraft elevators are not yet well understood. Electromagnetic Compatibility • Developmental testing identified significant EMI [electromagnetic interference] and radiation hazard problems. The Navy continues to characterize and develop mitigation plans for the problems, but some operational limitations and restrictions are expected to persist into IOT&E and deployment. The Navy will need to develop capability assessments at differring levels of system utilization in order for commanders to make informed decisions on system employment. Live Fire Test & Evaluation • The vulnerability of CVN 78's many new critical systems to underwater threat-induced shock is unknown. The program plans to complete shock testing on EMALS, AAG, and the AWE components during CY19, but because of a scarcity of systems, shock testing of DBR components lags and will likely not be completed before the FSSTs [full ship shock trials]. • The Vulnerability Assessment Report provides an assessment of the ship's survivability to air-delivered threat engagements. The classified findings in the report identify the specific equipment that most frequently would lead to mission capability loss. In FY19, the Navy is scheduled to deliver additional report volumes that will assess vulnerability to underwater threats and compliance with Operational Requirements Document survivability criteria. Recommendations The Navy should: 1. Provide schedule, funding, and an execution strategy for assessing SGR. This strategy should specify which testing will be accomplished live, a process for accrediting the Seabasing/Seastrike Aviation Model for operational testing, and a method for comparing CVN 78 performance with that of the Nimitz class. 2. Continue to characterize the electromagnetic environment onboard CVN 78 and develop operating procedures to maximize system effectiveness and maintain safety. As applicable, the Navy should utilize the lessons learned from CVN 78 to inform design modifications for CVN 79 and future carriers. 3. Develop and implement DBR electronic protection to enhance ship survivability against modern threats. 4. Submit an updated TEMP. Issues Raised in May 2019 GAO Report Another oversight issue for Congress concerns CVN-78 program issues raised in the 2019 edition of the Government Accountability Office's (GAO's) annual report surveying selected DOD weapon acquisition programs. Some of these issues raised by GAO overlap with issues discussed in previous sections of this CRS report. Regarding the CVN-78 program, the report stated the following: Technology Maturity, Design Stability, and Production Readiness The Navy accepted delivery of the lead ship, CVN 78, in May 2017 despite challenges related to immature technologies and struggles to demonstrate the reliability of mature systems. The Navy reports that 10 of the Ford Class's 12 critical technologies are fully mature—the advanced arresting gear (AAG) and one of the ship's missile systems are not yet mature. The advanced weapons elevators are among the systems deemed mature by the Navy; however, according to Navy officials, only 2 of the 11 elevators installed on the ship can bring munitions to the flight deck—a key element of operational flights. The shipbuilder is working to correct the system during its first post-delivery maintenance period, now scheduled to end in October 2019, and the Navy plans to create a land-based site to test the elevators, which will come at an additional cost. Shipboard testing is ongoing for several critical systems and could delay future operational testing. Those systems include the electromagnetic aircraft launch system (EMALS), AAG, and dual band radar (DBR). Although the Navy is testing EMALS and AAG on the ship with aircraft, the reliability of those systems remains a concern. If these systems cannot function safely, CVN 78 will not demonstrate it can rapidly deploy aircraft—a key requirement for these carriers. Recent shipboard testing revealed that the Navy is struggling to get DBR to operate as planned. Moreover, DBR poses a greater radiation hazard to personnel and systems on an aircraft carrier than the Navy anticipated, which could restrict certain types of flight operations. The remaining challenges the Navy faces in maturing CVN 78's critical technologies could lead to their redesign or replacement on later ships. This would include CVN 79, which is currently 55 percent complete, as well as the third and fourth ships, CVNs 80 and 81. CVN 79 repeats the CVN 78 design with some modifications and replaces DBR with the Enterprise Air Surveillance Radar (EASR), which is in development. The Navy does not identify this new system as a critical technology in the Ford Class program because it derives from the pre-existing Air and Missile Defense Radar (AMDR) program. However, EASR is a different size and performs a different mission than the AMDR systems, which are designed for destroyers. Therefore, EASR may still require design and development efforts to function on the carrier. The Navy plans to procure two EASR units for CVNs 79 and 80 and install the CVN 79 unit during that ship's second phase of delivery. CVNs 80 and 81 will repeat the design of CVN 79. Other Program Issues CVN 78's procurement costs increased by 23 percent over its initial cost cap and as a result of continuing technical deficiencies, the Navy may still require more funding to complete this ship. The Navy increased the current $12.9 billion cost cap for CVN 78 by $120 million in May 2018 to account for additional post-delivery work, but added work and cost changes may result in an additional cost increase. Costs for CVN 79 are also likely to increase as a result of optimistic cost and labor targets, putting the ship at risk of exceeding its $11.4 billion cost cap. The CVN 79 cost estimate assumes unprecedented construction efficiency—labor hours will be 18 percent lower than CVN 78. However, our analysis shows the shipbuilder is not meeting this goal and is unlikely to improve performance enough to meet cost and labor targets. Congress raised the cost cap for CVN 80 and later ships to $12.6 billion and approved the Navy's plans to buy two carriers—CVNs 80 and 81—at the same time, based on the shipbuilder's estimate that this strategy will save the Navy over $2 billion. However, it is unclear whether the Navy can meet this cost cap, even with the estimated savings from a two-ship buy, because it assumes further reductions in subsystem costs, construction change orders, and labor hours. The Navy projects a further reduction in labor hours compared to CVN 79—about 25 percent fewer labor hours than CVN 78—will contribute to cost savings for these ships. The program office indicated that it does not separately track or report information on software development to integrate the various subsystems of the ship. These subsystems include CVN 78's combat control systems, which rely on integrating systems through software intensive development. Program Office Comments We provided a draft of this assessment to the program office for review and comment. The program office provided technical comments, which we incorporated where appropriate. The program office stated that, in July 2018, CVN 78 entered a year-long maintenance period. It also said that, as of February 2019, two advanced weapons elevators are operating, and it continues to improve developmental system reliability. The program also stated that, with CVN 79 construction 55 percent complete, shipbuilder cost performance remains stable, but slightly below the level needed to achieve production labor hour reduction targets. The program stated that the shipbuilder continues to work through the effects of material shortfalls that disrupted performance. The program said that the Navy plans to deliver a complete, deployable ship as scheduled and within the cost cap to maintain an 11-carrier fleet. The program office also stated that the Navy awarded the CVN 80/81 procurement contract in January 2019 and expects to save $4 billion, compared to if it had purchased each ship individually. According to the program, the contract limits the Navy's liability and incentivizes the shipyard's best performance. Navy Study on Smaller Aircraft Carriers Overview Another oversight issue for Congress is whether the Navy should shift at some point from procuring large-deck, nuclear-powered carriers like the CVN-78 class to procuring smaller aircraft carriers. The issue has been studied periodically by the Navy and other observers over the years. To cite one example, the Navy studied the question in deciding on the aircraft carrier design that would follow the Nimitz (CVN-68) class. Advocates of smaller carriers argue that they are individually less expensive to procure, that the Navy might be able to employ competition between shipyards in their procurement (something that the Navy cannot do with large-deck, nuclear-powered carriers like the CVN-78 class, because only one U.S. shipyard, HII/NNS, can build aircraft carriers of that size), and that today's aircraft carriers concentrate much of the Navy's striking power into a relatively small number of expensive platforms that adversaries could focus on attacking in time of war. Supporters of large-deck, nuclear-powered carriers argue that smaller carriers, though individually less expensive to procure, are less cost-effective in terms of dollars spent per aircraft embarked or aircraft sorties that can be generated, that it might be possible to use competition in procuring certain materials and components for large-deck, nuclear-powered aircraft carriers, and that smaller carriers, though perhaps affordable in larger numbers, would be individually less survivable in time of war than large-deck, nuclear-powered carriers. Navy Study Initiated in 2015 At a March 18, 2015, hearing on Navy shipbuilding programs before the Seapower subcommittee of the Senate Armed Services Committee, the Navy testified that it had initiated a new study on the question. At the hearing, the following exchange occurred: SENATOR JOHN MCCAIN, CHAIRMAN, SENATE ARMED SERVICES COMMITTEE, ATTENDING EX OFFICIO: And you are looking at additional options to the large aircraft carrier as we know it. SEAN STACKLEY, ASSISTANT SECRETARY OF THE NAVY FOR RESEARCH, DEVELOPMENT,AND ACQUISITION: We've initiated a study and I think you've discussed this with the CNO [Chief of Naval Operations] and that's with the frontend of that study. Yes, sir. Later in the hearing, the following exchange occurred: SENATOR ROGER WICKER, CHAIRMAN, SEAPOWER SUBCOMMITTEE: Well, Senator McCain expressed concern about competition [in Navy shipbuilding programs]. And I think that was with, in regard to aircraft carriers. SEAN J. STACKLEY, ASSISTANT SECRETARY OF THE NAVY FOR RESEARCH, DEVELOPMENT,AND ACQUISITION: Yes, Sir. WICKER: Would you care to respond to that? STACKLEY: He made a generic comment that we need competition to help control cost in our programs and we are absolutely in agreement there. With specific regards to the aircraft carrier, we have been asked and we are following suit to conduct a study to look at alternatives to the Nimitz and Ford class size and type of aircraft carriers, to see if it make sense. We've done this in the past. We're not going to simply break out prior studies, dust them off and resubmit it. We're taking a hard look to see is there—is there a sweet spot, something different other than today's 100,000 ton carrier that would make sense to provide the power projection that we need, that we get today from our aircraft carriers, but at the same time put us in a more affordable position for providing that capability. WICKER: OK. But right now, he's—he's made a correct factual statement with regard to the lack of competition. STACKLEY: Yes, Sir. There is—yes, there is no other shipyard in the world that has the ability to construct a Ford or a Nimitz nuclear aircraft carrier other than what we have in Newport News and the capital investment to do that is prohibitive to set up a second source, so obviously we are—we are content, not with the lack of competition, but we are content with knowing that we're only going to have one builder for our aircraft carriers. On March 20, 2015, the Navy provided the following additional statement to the press: As indicated in testimony, the Navy has an ongoing study to explore the possible composition of our future large deck aviation ship force, including carriers. There is a historical precedent for these type[s] of exploratory studies as we look for efficiencies and ways to improve our war fighting capabilities. This study will reflect our continued commitment to reducing costs across all platforms by matching capabilities to projected threats and Also [sic] seeks to identify acquisition strategies that promote competition in naval ship construction. While I can't comment on an ongoing study, what I can tell you is that the results will be used to inform future shipbuilding budget submissions and efforts, beyond what is currently planned. Report Required by Section 128 of P.L. 114-92 Section 128 of the FY2016 National Defense Authorization Act ( S. 1356 / P.L. 114-92 of November 25, 2015) states the following: SEC. 128. Limitation on availability of funds for U.S.S. John F. Kennedy (CVN–79). (a) Limitation.—Of the funds authorized to be appropriated by this Act or otherwise made available for fiscal year 2016 for procurement for the U.S.S. John F. Kennedy (CVN–79), $100,000,000 may not be obligated or expended until the date on which the Secretary of the Navy submits to the congressional defense committees the certification under subsection (b)(1) or the notification under paragraph (2) of such subsection, as the case may be, and the reports under subsections (c) and (d).... (d) Report on future development.— (1) IN GENERAL.—Not later than April 1, 2016, the Secretary of the Navy shall submit to the congressional defense committees a report on potential requirements, capabilities, and alternatives for the future development of aircraft carriers that would replace or supplement the CVN–78 class aircraft carrier. (2) ELEMENTS.—The report under paragraph (1) shall include the following: (A) A description of fleet, sea-based tactical aviation capability requirements for a range of operational scenarios beginning in the 2025 timeframe. (B) A description of alternative aircraft carrier designs that meet the requirements described under subparagraph (A). (C) A description of nuclear and non-nuclear propulsion options. (D) A description of tonnage options ranging from less than 20,000 tons to greater than 100,000 tons. (E) Requirements for unmanned systems integration from inception. (F) Developmental, procurement, and lifecycle cost assessment of alternatives. (G) A notional acquisition strategy for the development and construction of alternatives. (H) A description of shipbuilding industrial base considerations and a plan to ensure opportunity for competition among alternatives. (I) A description of funding and timing considerations related to developing the Annual Long-Range Plan for Construction of Naval Vessels required under section 231 of title 10, United States Code. The report required by Section 128(d) of P.L. 114-92 , which was conducted for the Navy by the RAND Corporation, was delivered to the congressional defense committees in classified form in July 2016. An unclassified version of the report was then prepared and issued in 2017 as a publicly released RAND report. The executive summary of that report states the following (emphasis as in original): We analyzed the feasibility of adopting four aircraft carrier concept variants as follow-ons to the Ford-class carrier following USS Enterprise (CVN 80) or the as-yet-unnamed CVN 81. Among these options are two large-deck carrier platforms that would retain the capability to launch and recover fixed-wing aircraft using an on-deck catapult and arresting gear system and two smaller carrier platforms capable of supporting only short takeoff and vertical landing (STVOL) aircraft. Specifically, the four concept variants are as follows: • a follow-on variant continuing the current 100,000-ton Ford-class carrier but with two life-of-the-ship reactors and other equipment and system changes to reduce cost (we refer to this design concept as CVN 8X) • a 70,000-ton USS Forrestal–size carrier with an updated flight deck and hybrid nuclear-powered integrated propulsion plant with capability to embark the current large integrated air wing but with reduced sortie generation capability, survivability, and endurance compared with the Ford class (we refer to this design concept as CVN LX) • a 43,000-ton variant of the USS America–class, fossil fuel–powered and arranged to support only STOVL operations but at a higher tempo than the current LHA 6 (USS America) (we refer to this design concept as CV LX). This variant would incorporate the larger ship's beam excursion the Navy examined in the LHA 8–class flight 1 studies. • a 20,000-ton variant that will resemble escort carriers that some allied navies currently operate (we refer to this design concept as CV EX). Similar to the 43,000-ton variant, it will be conventionally powered and will operate STOVL aircraft.... Our analyses of the carrier variants illuminated capability shortfalls in some instances. Our overall findings are as follows: • The CVN 8X, the descoped Ford-class carrier, offers similar warfighting capability to that of the Ford-class carrier today. There might be opportunities to reduce costs by eliminating costly features that only marginally improve capability, but similar tradeoffs are likely to be made in the current program as well. • The CVN LX concept variant offers an integrated, current air wing with capabilities near current levels but with less organic mission endurance for weapons and aviation fuel. It will not generate the same SGR as the Ford-class carrier, but this is not a significant limitation for stressing warfighting scenarios. It will be less survivable in some environments and have less redundancy than the Ford program-of-record ship, and these factors might drive different operation concepts. Although we do not characterize the impact of decreased survivability, this is an important limitation that will have to be weighed against the potential cost savings. The major means of reducing cost is through engineering redundancy, speed, and air wing fuel capacity, and these could affect mobility and theater closure. • The concept variant CV LX, which is a version of the LHA 6 platforms, might be a low-risk, alternative pathway for the Navy to reduce carrier costs if such a variant were procured in greater numbers than the current carrier shipbuilding plan; our analysis suggests a two-to-one replacement. Over the long term, however, as the current carrier force is retired, the CV LX would not be a viable option for the eventual carrier force unless displaced capabilities were reassigned to new aircraft or platforms in the joint force, which would be costly. This platform would be feasible for a subset of carrier missions but, even for those missions, could require an increase in the number of platforms. This concept variant might, if procured in sufficient numbers, eventually enable the Navy to reduce the number of Ford-class carriers in the overall force structure, but more-extensive analysis of missions, operations, and basing of such a variant and the supported air combat element is required. • The smallest concept variants reviewed, the CV EX 20,000-ton sea-based platforms, do not provide either a significant capacity or an integrated air wing and, thus, force reliance on other legacy platforms or land-based assets to provide key elements of capability—in particular, AEW. As a result, this concept variant is not really a replacement for current aircraft carrier capability and would require other platforms, aircraft, weapons, and capabilities in the joint force. These platforms would be a viable pathway only in broad fleet architecture transformation providing a narrow mission set, perhaps regionally, and would require extensive analysis. Given that such a concept variant is not a viable replacement for an aircraft carrier, such analysis would be required to see whether any adjustment on the current aircraft carrier program would be feasible.... The overall results of our cost comparison are as follows: • The descoped Ford-class carrier, the CVN 8X, might generate fewer sorties than the current key performance parameter values for the Ford class and might have only incremental reduction in overall platform cost . The analysis examining cost reduction with transition to a life-of-the-ship reactor, such that being done on submarine programs, does not appear to be cost effective. Between the developmental costs and a reduced service life, there is little cost advantage in this variant. • The CVN LX concept would allow considerable savings across the ship's service life and appears to be a viable alternative to consider for further concept exploration . Construction costs would be lower; design changes and life-cycle costs would reflect the lessons already applied in the Ford class. The reliance on hybrid drive with fewer mechanical parts than legacy platforms is likely to further reduce maintenance cost. However, CVN LX would be a new design that would require a significant investment in nonrecurring engineering in the near term to allow timely delivery in the 2030s. • CV LX, although it requires a larger force structure to maintain air capabilities, might still reduce overall construction costs if large carrier numbers were reduced. But, as described in the report, reducing carrier numbers with the resulting loss of capability should not be pursued without extensive further analysis for all displaced missions in the joint force execution of warfighting scenarios and, potentially, regional basing and narrowly focused missions for these platforms. Any cost savings would likely be offset to an unknown degree by requirements for additional systems to mitigate loss of capability associated with this variant. • CV EX, the smallest variant, is not a practical variant at all without considerable revision of the Navy warfighting concept of operations. Although the same is to a degree true with CV LX, the impact of an even larger number of low-sortie ships with small and limited air wings is even more pronounced with this variant. CV EX has all of the shortfalls of CV LX and will pose even greater issues of mutual support and logistics sustainment.... Conclusions Our analysis points to potential options for replacing the Nimitz-class carrier as these ships reach expected service life that have lower procurement costs than the Ford-class carriers. However, most of these options come with reduced capability that might require changes in the concept of operations to deliver sea-based aircraft capability comparable to that of carriers in the fleet today. If a new platform is introduced in the mid-2030s, the Navy's force structure will still contain a large legacy force of Nimitz- and Ford-class carriers, at least until the mid-2050 time frame, which might lower the risks of introducing a new carrier for some period of time. But, ultimately, if a new carrier variant is selected, it will define the carrier force and constitute the supported capability available to the Navy. Capability shortfalls can be mitigated, to some degree, with changes in operational concepts or by adding additional platforms to the force structure—which introduces additional cost that might offset anticipated cost savings. In addition, if the Navy stops procuring large-deck nuclear carriers, the ability to reconstitute the industrial base at some time in the future comes with substantial risk. Although SGR [sortie generation rate] was a central variable in comparing the carrier variants, our analysis suggests that there is room to make trade-offs in aircraft sortie rate capacity between the Ford-class carrier and a lower-cost platform. However, it is important to consider that, whatever threats complicate carrier operations, they might even more significantly affect land-based tactical air operations. Carriers can move; have defensive support from escorts; can readily replenish; and might, in fact, be more survivable than their land-based counterparts. This is an important factor for Congress and the Department of Defense to consider before a trade-off is made to give up the supported air wing sortie generation capacity in the overall sea-based force. The question of whether to shift to smaller aircraft carriers was also addressed in three studies on future fleet architecture that were required by Section 1067 of the FY2016 National Defense Authorization Act ( S. 1356 / P.L. 114-92 of November 25, 2015). These three studies are discussed in more detail in another CRS report. February 2019 Press Report A February 15, 2019, press report stated the following: Under Secretary of the Navy Thomas Modly said now that the Navy found a way to build two new Gerald R. Ford-class aircraft carriers while saving money it is starting to look at future carrier procurement, which might be very different.… Modly said Secretary of the Navy Richard Spencer sees $13 billion carriers as not sustainable going forward and the service will be looking at ways to further reduce costs or keep the carrier capabilities more affordable in future ship procurements. "There was general conclusion that those two for sure would be built" and once that was determined "that was going to happen," Modly said during the AFCEA West 2019 conference here [in San Diego].… After the CVN-80 and -81 [procurement] decision was made, "I think a lot of derivative decisions still need to be made. So the secretary [Spencer] would like to take a look at 'O.K. now that we made that decision, and that second one that comes will be in quite a few years from now, we need to start thinking now about what's the next one look like.'" Modly told reporters they are asking questions like "Is it going to be advanced as this one? Or is it going to be smaller or are we going to buy two smaller ones or maybe shift air power to other forms of delivery. And we don't know the answers of that but we're looking at this." Shock Trial An earlier oversight issue for Congress for the CVN-78 program was whether to conduct the shock trial for the CVN-78 class in the near term, on the lead ship in the class, or years later, on the second ship in the class. For background information on that issue, see Appendix E . Legislative Activity for FY2020 Summary of Congressional Action on FY2020 Funding Request Table 3 summarizes congressional action on the FY2020 procurement funding request for the CVN-78 program. As shown in Table 1 , of the $2,347.0 million requested for FY2020, $1,062 million is for CVN-80 and $1,285 million is for CVN-81. Appendix A. Withdrawn Proposal to Not Fund CVN-75 RCOH The Navy's FY2020 budget submission proposed to not fund the mid-life nuclear refueling overhaul (called a Refueling Complex Overhaul, or RCOH) for the aircraft carrier CVN-75 ( Harry S. Truman ), and to instead retire the ship around FY2024 and also deactivate one of the Navy's carrier air wings at about the same time. On April 30, 2019, however, the Administration announced that it was effectively withdrawing this proposal from the Navy's FY2020 budget submission. The Administration now supports funding the CVN-75 RCOH and keeping CVN-75 (and by implication its associated air wing) in service past FY2024. This appendix presents, for reference purposes, additional background information on this withdrawn budget proposal. Following the Administration's April 30 withdrawal of its proposal to not fund the CVN-75 RCOH, the Navy states that the CVN-75 RCOH can no longer begin in FY2024, as planned prior to the Navy's FY2020 budget submission, because the Navy spent the months prior to April 30 planning for the ship's deactivation rather than for giving it an RCOH. As a result, the Navy states, the CVN-75 will now begin a year later, in FY2025. As a consequence of this one-year shift in the schedule for the RCOH, the Navy states, the funding stream for the CVN-75 shown in Table A-1 will also now shift one year to the right, and the CVN-75 RCOH can be reinstated without any funding in FY2020, because FY2020 is now effectively the same as FY2019 in Table A-1 . Performing an RCOH on a carrier is needed for the carrier to be able to operate for the second half of its intended 50-year service life. Not performing an RCOH on CVN-75 would mean that, instead of remaining in service for the second half of its intended 50-year service life, the ship would be decommissioned, permanently removed from service, and eventually dismantled. (CVN-75 was commissioned into service on July 25, 1998, and will be 26 years old in 2024.) The Navy's FY2020 budget submission shows that, for the period FY2022-FY2047, this would have reduced the size of the carrier force by one ship compared to what it would otherwise be. More specifically, the Navy's FY2020 30-year (FY2020-FY2049) shipbuilding plan, reflecting the proposal to not fund the CVN-75 RCOH, projected that the carrier force would remain at 11 ships through FY2024, decline to 10 ships in FY2025, and remain at 10 ships for the remainder of the 30-year period, except for a few years (FY2027, FY2040, FY2042-FY2044, and FY2046-FY2048) when it would temporarily decline to 9 ships. Consequently, beginning in FY2025 and extending through the end of the 30-year period, the carrier force would not be in compliance with the requirement under 10 U.S.C. 8062(b) for the Navy to maintain a force of not less than 11 operational aircraft carriers. As an associated action, the Navy's FY2020 budget submission also proposed deactivating one of the Navy's carrier air wings around FY2024. This would reduce the number of carrier air wings from nine to eight, meaning that the Navy beginning around FY2024 would no longer be in compliance with the requirement under 10 U.S.C. 8062(e) to maintain a minimum of nine carrier air wings. Table A-1 shows funding for the CVN-75 RCOH in the Navy's FY2019 budget submission. As shown in the table, the estimated total cost of the CVN-75 RCOH in the FY2019 budget submission was $5,578 million (i.e., about $5.6 billion). The figure of about $5.6 billion shown in Table A-1 does not include the cost of the two nuclear fuel cores that would be installed as part of the RCOH. (CVN-75, like all Nimitz-class carriers, has two nuclear reactors, each of which would receive a new fuel core as part of an RCOH.) Fuel cores for aircraft carrier RCOHs are procured through the Other Procurement, Navy (OPN) appropriation account. The Navy states that it procured the cores for the CVN-75 RCOH—one of them in FY2008 and the other in FY2011—for a total cost of about $538 million. Adding this $538 million cost to the total cost shown in Table A-1 would increase the total estimated cost of the CVN-75 RCOH to about $6.1 billion. The fuel cores for the planned future RCOHs for CVN-76 and CVN-77 (the final two Nimitz-class carriers) have also been procured—the CVN-76 RCOH cores were funded in FY2012 and FY2013, and the CVN-77 RCOH cores were funded in FY2015 and FY2019. Thus, if CVN-75 were to not receive an RCOH, and if it were not possible or cost effective to rescind the funding for the core funded in FY2019, then two of the six Nimitz-class fuel cores that have been procured since FY2008 for anticipated use in RCOHs would not in the end be used in an RCOH and would in effect become surplus to the RCOH effort. The Navy indicated that if that were to occur, these two cores would be placed in storage for potential future use as emergency replacement cores for a Nimitz-class ship until all Nimitz-class ships complete their service lives. If CVN-75 were to not receive an RCOH and is instead be decommissioned, the savings from not funding the RCOH would be partially offset by the cost to deactivate and dismantle CVN-75. The Navy estimated the cost to deactivate and dismantle CVN-75 at about $1.5 billion. The initial increments of this approximate $1.5-billion cost would have occurred in FY2023 ($130.3 million) and FY2024 ($247.2 million). The estimated net savings from not funding the RCOH and instead deactivating and dismantling the ship would thus have been about $4.1 billion (i.e., about $5.6 billion less about $1.5 billion). The Navy stated that there would also be 20 to 25 years of additional annual savings of about $1 billion per year in the form of avoided annual operation and support (O&S) costs for CVN-75 and the deactivated carrier air wing. DOD officials reportedly wanted to redirect the estimated net RCOH-related savings of about $4.1 billion and the estimated recurring savings of about $1 billion per year to Navy investments for technologies that will add to future Navy capabilities. RCOHs are done primarily by Huntington Ingalls Industries/Newport News Shipbuilding (HII/NNS) in Newport News, VA, and form a significant part of HII/NNS's business base, along with construction of new nuclear-powered aircraft carriers and construction of new nuclear-powered submarines. RCOHs in recent years have been scheduled in a more-or-less heel-to-toe fashion at HII/NNS—when one RCOH is done, the next one is scheduled to begin soon thereafter. RCOHs are done in a particular dry dock at HII/NNS, so a carrier undergoing an RCOH in that dry dock must be ready to depart the dry dock before the following carrier can be moved into the dry dock for its RCOH. Until it was withdrawn, the proposal in the Navy's FY2020 budget submission to not fund CVN-75's RCOH and instead decommission the ship (and a carrier air wing) raised a number of potential oversight issues for Congress, including the following: Compliance with congressional direction. The central purposes of 10 U.S.C. 8062(b) and 8062(e) are to act as mandates to the executive branch to support a force of not less than 11 carriers and a minimum of 9 carrier air wings in executive branch planning. They represent directions from Congress for the Navy to provide the funding needed to maintain an 11-carrier, 9-carrier-air-wing force, regardless of limitations on the Navy's overall budget or other considerations. A proposed budget from the Navy that is inconsistent with these provisions might thus be viewed as a challenge to Congress's Article 1 power to set policy and to determine the composition of federal spending (i.e., Congress's constitutional power of the purse). If DOD were to treat the requirements in 10 U.S.C. 8062(b) and 8062(e) as optional matters rather than mandates, would this create a precedent for the executive branch to treat similar provisions in the U.S. Code as optional matters rather than mandates? For example, would it create a precedent for DOD, if it so desired, to begin treating as an optional matter the long-standing requirement in 10 U.S.C. 8063(a) that the Marine Corps "shall be so organized as to include not less than three combat divisions and three air wings, and such other land combat, aviation, and other services as may be organic therein?" If the executive branch were to begin treating statutory provisions like 10 U.S.C. 8062(b) and 8062(e) as optional matters rather than mandates, what implications might this have for policy and program execution, for Congress's power to legislatively establish policy and program goals, and for Congress's power of the purse? Alternative capabilities to be funded ; net impact on Navy capabilities . What were OSD's plans for redirecting the savings associated with deactivating CVN-75 and a carrier air wing around FY2024? What types of capabilities would have been created or maintained by these redirected funds? How would these capabilities compare in nature and timing to the capabilities that are to be provided by the continued operation of CVN-75 and the carrier air wing? Taking these factors into account, what would have been the net operational impact for the Navy of deactivating CVN-75 and a carrier air wing around FY2024 and redirecting the resulting savings toward these other investments? Requirement for 12-carrier force. The Navy's 2016 Force Structure Assessment (FSA) led to a Navy force-level requirement for a fleet of 355 ships that includes 12 aircraft carriers. OSD allowed the Navy to present that FSA to the Congress, and to program shipbuilding and other actions in support of achieving the 355-ship force-level goal. OSD did not publicly object to the FSA's 12-carrier requirement (or any other part of the 355-ship force-level goal). What was the analytical basis for an action that would reduce the size of the carrier from 11 to 10, instead of helping it to eventually increase from 11 to 12? Next Force Structure Assessment (FSA). The Navy states that it is currently conducting a new FSA as the successor to the 2016 FSA, and that this new FSA is to be completed by the end of 2019. This new FSA could change the 355-ship figure, the planned mix of ships, or both. Did the Navy's proposal to not fund the CVN-75 RCOH, and thereby reduce the carrier force from 11 ships to 10 ships, prejudge the outcome of the new FSA? Would the new FSA be tainted by the knowledge that the Navy had already proposed reducing the carrier force to 10 ships? How well could the analysts performing the new FSA have avoided being influenced by the Navy's proposed action? Was the Navy prepared to go ahead with the CVN-75 RCOH if the new FSA concludes that there is a requirement for 11 or more carriers? Likelihood of need for emergency replacement cores. How likely was it that the Nimitz-class program would need to use an emergency replacement set of fuel cores during the remainder of the Nimitz-class life cycle? What set of circumstances might lead to a need for an emergency replacement set of fuel cores? How often have such circumstances previously arisen for a nuclear-powered U.S. Navy ship whose fuel cores are intended to be sufficient for powering the ship for at least one-half of its expected service life? Given the assessed likelihood of the Nimitz-class program needing to use an emergency replacement set of fuel cores during the remainder of the Nimitz-class life cycle, what would have been the government's resulting return on investment of the several hundred million dollars used to procure the two fuel cores that would be placed in storage? Acting Secretary of Defense. The proposal to not fund the CVN-75 RCOH and to deactivate a carrier air wing represented a notable change from prior DOD force-structure planning and budgeting. Was it appropriate for such a change to be proposed by DOD during a time when DOD has an acting Secretary of Defense rather than a Secretary who was confirmed specifically for that position? Impact on industrial base and cost of other work. What would have been the impact on HII/NNS and the other parts of the aircraft carrier industrial base if CVN-75 were inactivated rather than given an RCOH? What impact, if any, would this have had on the cost of other work performed at HII/NNS and other parts of the aircraft carrier industrial base during these years, and on the eventual cost of the CVN-76 RCOH? For further reference, it can be noted that the Navy's FY2015 budget submission proposed not funding the RCOH for the aircraft carrier CVN-73 ( George Washington ). The proposal raised oversight issues for Congress broadly similar to those listed above. Congress, in acting on the Navy's proposed FY2015 budget, rejected the proposal to not fund CVN-73's RCOH. The RCOH was funded and is currently underway. Appendix B. Background Information on Two-Ship Block Buy for CVN-80 and CVN-81 This appendix presents additional background information on the two-ship block buy contract for CVN-80 and CVN-81. The option for procuring two CVN-78 class carriers under a two-ship block buy contract had been discussed in this CRS report since April 2012. In earlier years, the discussion focused on the option of using a block buy contract for procuring CVN-79 and CVN-80. In more recent years, interest among policymakers focused on the option of using a block buy contract for procuring CVN-80 and CVN-81. On March 19, 2018, the Navy released a request for proposal (RFP) to Huntington Ingalls Industries/Newport News Shipbuilding (HII/NNS) regarding a two-ship buy of some kind for CVN-80 and CVN-81. A March 20, 2018, Navy News Service report stated the following: The Navy released a CVN 80/81 two-ship buy Request for Proposal (RFP) to Huntington Ingalls Industries—Newport News Shipbuilding (HII-NNS) March 19 to further define the cost savings achievable with a two-ship buy. With lethality and affordability a top priority, the Navy has been working with HII-NNS over the last several months to estimate the total savings associated with procuring CVN 80 and CVN 81 as a two-ship buy. "In keeping with the National Defense Strategy, the Navy developed an acquisition strategy to combine the CVN 80 and CVN 81 procurements to better achieve the Department's objectives of building a more lethal force with greater performance and affordability," said James F. Geurts, Assistant Secretary of the Navy, Research Development and Acquisition. "This opportunity for a two-ship contract is dependent on significant savings that the shipbuilding industry and government must demonstrate. The Navy is requesting a proposal from HII-NNS in order to evaluate whether we can achieve significant savings." The two-ship buy is a contracting strategy the Navy has effectively used in the 1980s to procure Nimitz-class aircraft carriers and achieved significant acquisition cost savings compared to contracting for the ships individually. While the CVN 80/81 two-ship buy negotiations transpire, the Navy is pursuing contracting actions necessary to continue CVN 80 fabrication in fiscal year (FY) 2018 and preserve the current schedule. The Navy plans to award the CVN 80 construction contract in early FY 2019 as a two-ship buy pending Congressional approval and achieving significant savings. Section 121(a)(2) of the John S. McCain National Defense Authorization Act for Fiscal Year 2019 ( H.R. 5515 / P.L. 115-232 of August 13, 2018) permitted the Navy, after the Department of Defense (DOD) made certain certifications to Congress, to add CVN-81 to the existing contract for building CVN-80. DOD provided the required certification on December 31, 2018. On January 31, 2019, the Navy announced that it had awarded a two-ship fixed-price incentive (firm target) (FPIF) contract for CVN-80 and CVN-81 to HII/NNS. The two-ship contract for CVN-80 and CVN-81 can be viewed as a block buy contract because the two ships are being procured in different fiscal years (CVN-80 was procured in FY2018 and CVN-81 is shown in the Navy's FY2020 budget submission as a ship procured in FY2020). The Navy's previous two-ship aircraft carrier procurements occurred in FY1983 (for CVN-72 and CVN-73) and FY1988 (for CVN-74 and CVN-75). In each of those two earlier cases, however, the two ships were fully funded within a single fiscal year, making each of these cases a simple two-ship purchase (akin, for example, to procuring two Virginia-class attack submarines or two DDG-51 class destroyers in a given fiscal year) rather than a two-ship block buy (i.e., a contract spanning the procurement of end items procured across more than one fiscal year). Compared to DOD's estimate that the two-ship block buy contract for CVN-80 and CVN-81 would produce savings of $3.9 billion (as measured from estimated costs for the two ships in the December 2017 Navy business case analysis), DOD states that "the Department of Defense's Office of Cost Assessment and Program Evaluation (CAPE) developed an Independent Estimate of Savings for the two-ship procurement and forecast savings of $3.1 billion ([in] Then-Year [dollars]), or approximately 11 percent.... The primary differences between [the] CAPE and Navy estimates of savings are in Government Furnished Equipment and production change orders." Within the total estimated combined reduction in cost, HII/NNS reportedly expects to save up to $1.6 billion in contractor-furnished equipment. A November 2018 DOD report to Congress that was submitted as an attachment to DOD's December 31, 2018, certification stated the following regarding the sources of cost reduction for the two-ship contract: The CVN 80 and CVN 81 two-ship buy expands and improves upon the affordability initiatives identified in the Annual Report on Cost Reduction Efforts for JOHN F. KENNEDY (CVN 79) and ENTERPRISE (CVN 80) as required by section 126(c) of the National Defense Authorization Act for Fiscal Year 2017 ( P.L. 114-328 ). Production saving initiatives for single-ship buys included use of unit families in construction, pre-outfitting and complex assemblies which move work to a more efficient workspace environment, reduction in the number of superlifts, and facility investments which improve the shipbuilder trade effectiveness. A two-ship buy assumes four years between ship deliveries which allows more schedule overlap, and therefore more shop-level and assembly-level production efficiencies than two single-ship buys. Procuring two ships to a single technical baseline reduces the requirement for engineering labor hours when compared to single-ship estimates. The ability to rollover production support engineering and planning products maximizes savings while recognizing the minimum amount of engineering labor necessary to address obsolescence and regulatory changes on CVN 81. The two-ship agreement with the shipbuilder achieves a 55 percent reduction in construction support engineering hours on CVN 81 and greater than 18 percent reduction in production support and planning hours compared to single ship procurements. The two-ship procurement strategy allows for serial production opportunities that promote tangible learning and reduced shop and machine set-up times. It allows for efficient use of production facilities, re-use of production jigs and fixtures, and level loading of key trades. The continuity of work allows for reductions in supervision, services and support costs. The result of these efficiencies is a production man-hours step down that is equivalent to an 82 percent learning curve since CVN 79. Key to achieving these production efficiencies is Integrated Digital Shipbuilding (iDS). The Navy's Research, Development, Test, and Evaluation (RDT&E) and the shipbuilder's investment in iDS, totaling $631 million, will reduce the amount of production effort required to build FORD Class carriers. The two-ship buy will accelerate the benefits of this approach. The ability to immediately use the capability on CVN 81 would lead to a further reduction in touch labor and services in affected value streams. The two-ship agreement with the shipbuilder represents a production man-hours reduction of over seven percent based on iDS efficiencies. Contractual authority for two ships allows the shipbuilder to maximize economic order quantity material procurement. This allows more efficient ordering and scheduling of material deliveries and will promote efficiencies through earlier ordering, single negotiations, vendor quotes, and cross program purchase orders. These efficiencies are expected to reduce material costs by about six percent more when compared to single-ship estimates. Improved material management and flexibility will prevent costly production delays. Furthermore, this provides stability within the nuclear industrial base, de-risking the COLUMBIA and VIRGINIA Class programs. The two-ship buy would provide economic stability to approximately 130,000 workers across 46 States within the industrial base. Change order requirements are likewise reduced as Government Furnished Equipment (GFE) providers will employ planning and procurement strategies based on the common technical baseline that minimize configuration changes that must be incorporated on the follow ship. Change order budget allocations have been reduced over 25 percent based on two-ship strategies. In addition to the discrete savings achieved with the shipbuilder, the two-ship procurement authority provides our partner GFE providers a similar opportunity to negotiate economic order quantity savings and achieve cross program savings when compared to single-ship estimates. An April 16, 2018, press report stated the following: If the Navy decides to buy aircraft carriers CVN-80 and 81 together, Newport News Shipbuilding will be able to maintain a steady workload that supports between 23,000 and 25,000 workers at the Virginia yard for the next decade or so, the shipyard president told reporters last week. Part of the appeal of buying the two carriers together is that the Navy would also buy them a bit closer together: the ships would be centered about three-and-a-half or four years apart, instead of the five-year centers for recent carrier acquisition, Newport News Shipbuilding President Jennifer Boykin told reporters. Boykin said the closer ship construction centers would allow her to avoid a "labor valley" where the workforce levels would dip down after one ship and then have to come back up, which is disruptive for employees and costly for the company. If this two-carrier buy goes through, the company would avoid the labor valley altogether and ensure stability in its workforce, Boykin said in a company media briefing at the Navy League's Sea Air Space 2018 symposium. That workforce stability contributes to an expected $1.6 billion in savings on the two-carrier buy from Newport News Shipbuilding's portion of the work alone, not including government-furnished equipment.... Boykin said four main things contribute to the expected $1.6 billion in savings from the two-carrier buy. First, "if you don't have the workforce valley, there's a labor efficiency that represents savings." Second, "if you buy two at once, my engineering team doesn't have to produce two technical baselines, two sets of technical products; they only have to produce one, and the applicability is to both, so there's savings there. When we come through the planning, the build plan of how we plan to build the ship, the planning organization only has to put out one plan and the applicability is to both, so there's savings there." The third savings is a value of money over time issue, she said, and fourth is economic order quantity savings throughout the entire supply chain. Discussions of the option of using a block buy contract for procuring carriers have focused on using it to procure two carriers in part because carriers have been procured on five-year centers, meaning that two carriers could be included in a block-buy contract spanning six years—the same number of years originally planned for the two block buy contracts that were used to procure mnay of the Navy's Littoral Combat Ships. It can be noted, however, that there is no statutory limit on the number of years that a block buy contract can cover, and that the LCS block buy contracts were subsequently amended to cover LCSs procured in a seventh year. This, and the possibility of procuring carriers on 3- or 3.5-year centers, raises the possibility of using a block buy contract to procure three aircraft carriers: For example, if procurement of aircraft carriers were shifted to 3- or 3.5-year centers, a block buy contract for procuring CVN-80, CVN-81, and CVN-82 could span seven years (with the first ship procured in FY2018, and the third ship procured in FY2024) or eight years (with the first ship procured in FY2018 and the third ship procured in FY2025). The percentage cost reduction possible under a three-ship block buy contract could be greater than that possible under a two-ship block buy contract, but the offsetting issue of reducing congressional flexibility for changing aircraft carrier procurement plans in coming years in response to changing strategic or budgetary circumstances could also be greater. Appendix C. Cost Growth and Managing Costs Within Program Cost Caps This appendix presents additional background information on cost growth in the CVN-78 program, Navy efforts to stem that growth, and Navy efforts to manage costs so as to stay within the program's cost caps. October 2018 CBO Report An October 2018 CBO report on the potential cost of the Navy's 30-year shipbuilding plan states the following regarding the CVN-78 program: The Navy's current estimate of the total cost of the Gerald R. Ford , the lead ship of the CVN-78 class, is $13.0 billion in nominal dollars appropriated over the period from 2001 to 2018, an amount that is equal to the cost cap set in law. CBO used the Navy's inflation index for naval shipbuilding to convert that figure to $15.5 billion in 2018 dollars, or 23 percent more than the corresponding estimate when the ship was first authorized in 2008. Neither the Navy's nor CBO's estimate includes the $5 billion in research and development costs that apply to the entire class. Because construction of the lead ship is finished, CBO used the Navy's estimate for that ship to estimate the cost of successive ships in the class. But not all of the cost risk has been eliminated; in particular, the ship's power systems and advanced arresting gear (the system used to recover fixed-wing aircraft landing on the ship) are not yet working properly. It is not clear how much those problems will cost to fix, but current Navy estimates suggest that it will be several tens of millions of dollars or more. CBO does not have enough information to estimate those final repair costs. The next carrier after the CVN-78 will be the CVN-79, the John F. Kennedy . Funding for that ship began in 2007, the Congress officially authorized its construction in 2013, and the planned appropriations for it were completed in 2018. The shipbuilder expects to complete construction of the CVN-79 in 2024 and deploy it for the first time in 2026. The Navy estimates that the ship will cost $11.3 billion in nominal dollars (or $11.6 billion in 2018 dollars). The Navy's selected acquisition report on the CVN-79 states that "the Navy and shipbuilder have made fundamental changes in the manner in which the CVN 79 will be built to incorporate lessons learned from CVN 78 and eliminate the key contributors to cost performance challenges realized in the construction of CVN 78." Nevertheless, the Navy informed CBO that there is a greater than 60 percent chance that the ship's final cost will be more than the current estimate. Although CBO expects the Navy to achieve a considerable cost reduction in the CVN-79 compared with the CVN-78, as is typical with the second ship of a class, CBO's estimate is higher than the Navy's. Specifically, CBO estimates that the ship will cost $11.7 billion in nominal dollars (or $12.0 billion in 2018 dollars), about 4 percent more than the Navy's estimate. In 2018, the Congress authorized the third carrier of the class, the Enterprise (CVN-80). Appropriations for that ship began in 2016 and are expected to be complete by 2023. The Navy estimates that the ship will cost $12.6 billion in nominal dollars (or $11.5 billion in 2018 dollars). However, as with CVN-79, the Navy told CBO that there is a greater than 60 percent chance that the ship's final cost will be more than the current estimate. CBO estimates that the ship will cost $13.0 billion in nominal dollars (or $11.8 billion in 2018 dollars), about 3 percent more than the Navy's estimate. The Navy estimates an average cost of $12.4 billion (in 2018 dollars) for the 7 carriers (CVN-81 through CVN-87) in the 2019 shipbuilding plan. CBO's estimate is $12.8 billion per ship.... The gap between the estimates has narrowed since the 2017 plan: The Navy's has increased by $500 million per ship, and CBO's has dropped by $200 million per ship. It is not clear why the Navy's estimates increased, but CBO's estimates fell mainly because the agency projects somewhat less growth in real costs of the shipbuilding industry in future years. August 2018 Press Report An August 17, 2018, press report states the following: Huntington Ingalls Industries Inc., the sole U.S. builder of aircraft carriers, continues to fall short of the Navy's demand to cut labor expenses to stay within an $11.39 billion cost cap mandated by Congress on the second in a new class of warships. With about 47 percent of construction complete on the USS John F. Kennedy, Navy figures show the contractor isn't yet meeting the goal it negotiated with the service: reducing labor hours by 18 percent from the first carrier, the USS Gerald Ford.... It took about 49 million hours of labor to build the Ford, according to the U.S. Government Accountability Office. The Navy's goal for the Kennedy is to reduce that to about 40 million hours. Huntington Ingalls's performance "remains stable at approximately 16 percent" less, William Couch, spokesman for the Naval Sea Systems Command, said in an email. He said "key production milestones and the ship's preliminary acceptance date remain on track" and there are "ample opportunities" for improvement "with nearly four years until contract delivery and over 70 percent of assembly work" remaining on the vessel's superstructure. But the Pentagon's naval warfare division, which reports to Ellen Lord, the Defense Department's chief weapons buyer, is less sanguine. It said in a July assessment that Huntington Ingalls "is unlikely to fully recover the needed 18 percent" reduction.... On the effort to meet the 18 percent labor-hour reduction for the Kennedy, the Navy's program manager "assesses that although difficult, the shipbuilder can still attain" it, Couch said. Beci Brenton, a spokeswoman for Newport News, Virginia-based Huntington Ingalls, said "we are seeing the benefits associated with significant build strategy changes and incorporation of lessons learned" from the first vessel. Brenton said "the current production performance" is 16 percent less than the Ford's estimate at the time of contract award for the second vessel but the reduction is 17 percent when compared with the first vessel's current cost.... But Shelby Oakley, a director with the GAO who monitors Navy shipbuilding, said "with so much of the program underway, it is unlikely that the Navy will regain efficiency." In later phases of a shipbuilding contract, she said, "performance typically degrades, not improves." It's also "unclear how the lessons learned" from the first ship "could help regain efficiency when they are already baked in to the Navy's overly optimistic estimate for the program," she said. June 2018 Press Report A June 19, 2018, press report stated the following: Huntington Ingalls Industries Inc. is asking General Electric Co. to compensate it for damage caused by flawed workmanship during installation of propulsion system components on the U.S. Navy's $13 billion aircraft carrier Gerald R. Ford. The problem, which forced the most expensive U.S. warship back to port in January, has yet to be fully resolved although the carrier is once again at sea.... Huntington Ingalls, a shipbuilder based in Newport News, Virginia, "has notified the original manufacturer of the shipyard's intent to seek compensation," Naval Sea Systems Command spokesman William Couch said in an email. Beci Brenton, a spokeswoman for Huntington said, "We continue to work with appropriate stakeholders to support resolution of this situation." Perry Bradley, a spokesman for Boston-based GE, said "we're not going to comment on specifics other than to say" that "GE is working closely with" Huntington's Newport News Shipyard unit and "the U.S. Navy to resolve the issue."... The episode in January was the second failure in less than a year with a "main thrust bearing" that's part of the carrier's propulsion system. The first occurred in April 2017, during sea trials a month before the vessel's delivery. The ship has been sailing in a shakedown period to test systems and work out bugs. It's now scheduled to be ready for initial combat duty in 2022. The Navy's carrier program office said in an assessment that an inspection of the carrier's four main thrust bearings after the January failure revealed "machining errors" by GE workers at a Lynn, Massachusetts, facility during the original manufacturing as "the actual root cause." The bearing overheated, the Navy said in a March 8 memo to Congress, and "after securing the equipment to prevent damage, the ship safely returned to port." A failure review board is identifying "modifications required to preclude recurrence," it said. The bearing is one of four that transfers thrust from the ship's four propeller shafts. "The costs associated with repairing" the thrust bearings "are currently being assessed" and "this will include recovery of costs from the manufacturer of the Main Reduction Gear, General Electric (Lynn), as appropriate," the Navy said in the memo. Couch said the Navy doesn't expect similar propulsion problems with the next vessel in the class, the John F. Kennedy, because a different manufacturer made that carrier's propulsion train components. "Any propulsion train deficiencies identified" with the Ford "will be corrected and implemented" in "future ships of the class as necessary," he said. May 2018 Press Report A May 11, 2018, press report stated the following: The Navy's costliest vessel ever just got pricer, breaching a $12.9 billion cap set by Congress by $120 million, the service told lawmakers this week. The extra money for the U.S.S. Gerald R. Ford built by Huntington Ingalls Industries Inc. is needed to replace faulty propulsion components damaged in a January failure, extend the vessel's post-delivery repair phase to 12 months from the original eight months and correct deficiencies with the "Advanced Weapons Elevators" used to move munitions from deep in the ship to the deck. The elevators on the ship, designated CVN 78, need to be fixed "to preclude any effect on the safety of the ship and personnel," the Naval Sea Systems Command said in a statement to Bloomberg News on Friday. "Once the adjustment is executed, the cost for CVN 78 will stand at $13.027" billion, the Navy said. In addition to informing Congress that the spending lid has been breached, the Navy will have to let lawmakers know how it will shift funds to make up the difference. Navy officials didn't disclose the propulsion failure or elevator problems during budget hearings before Congress in recent weeks, and House and Senate lawmakers didn't ask about it.... The Ford's propulsion system and elevator flaws are separate from reliability issues on its troubled aircraft launch and recovery systems. After its delivery last May, the ship operated for 70 days and completed 747 shipboard aircraft launches and recoveries, exceeding the goal of about 400, the Navy said. None of the 11 weapons elevators are operational but at least two are being used for testing "to identify many of the remaining developmental issues for this first-of-class system," the Navy has said. The command said all 11 elevators "should have been complete and delivered with the ship delivery" in May 2017. April 2018 Press Report An April 16, 2018, press report stated the following: Huntington Ingalls Industries' Newport News Shipbuilding President Jennifer Boykin provided an update on the various stages of construction on several major Navy shipbuilding programs during the Navy League's Sea Air Space Expo last week. The future USS John F. Kennedy (CVN-79) is about 43 percent complete, with launch planned for the fourth quarter of 2019 and delivery set for 2022. Boykin said the company has achieved about 75 percent of the ship erected and they are on track for an 18 percent man-hour budget reduction. Boykin provided these updates during a press briefing at the conference. Boykin revealed that undocking of CVN-79 in the fourth quarter of 2019 will occur three months earlier than originally planned. September 2017 Press Report A September 26, 2017, press report states the following: Huntington Ingalls Industries Inc. is falling short of a U.S. Navy goal to reduce hours of labor on the second ship in the new Ford class of aircraft carriers in a drive to reduce costs, according to service documents. With 34 percent of construction complete on the USS John F. Kennedy, Huntington Ingalls estimates it will be able to reduce labor hours by 16 percent from the hours needed to construct the first vessel, the Gerald R. Ford. That's less than the 17 percent reduction reported at the end of last year and the 18 percent goal the Navy negotiated in the primary construction contract for the carrier. The "recent degradation in cost performance stems largely from the delayed availability of certain categories of material," such as pipe fittings, controllers, actuators and valves, according to the Navy's annual report on the program and updated figures obtained by Bloomberg News.... "We acknowledge that the cost reduction target for CVN-79," relative to the first carrier, "is challenging," Huntington Ingalls spokeswoman Beci Brenton said in an email, referring to the Kennedy by its Navy designation. "While it is still early in the ship's schedule, we are seeing positive results from" new initiatives to keep costs in check, she said.... Navy Secretary Richard Spencer told reporters last week that he will stay involved in monitoring the CVN-79's construction trends. "This is my personal approach—the CEO has to be involved." A close watch is required "because there are so many moving parts and so many opportunities to do things in a more efficient manner," Spencer said. The Navy has been working with the contractors "to mitigate technical risks and impacts of late material," Navy spokesman Victor Chen in an email. "The overall volume of late material items and associated impact to construction performance is declining. The Navy has hired third-party experts who are working collaboratively with the shipbuilder to identify manufacturing opportunities for efficiency gains" and to assist in implementing improvements.... The 18 percent reduction in labor hours was "quite optimistic" from the start, Michele Mackin, a Government Accountability Office director who oversees its shipbuilding assessments, said in an email. "Even based on that assumption, the $11.4 billion cost cap was unlikely to be met," she said. "If those labor-hour efficiencies are in fact not materializing, costs will go higher. Also, "with the ship being over 30 percent complete, it's unlikely the shipbuilder can get back enough efficiencies to further reduce labor hours—the more complicated work is yet to come," she said. June 2017 Navy Testimony At a June 15, 2017, hearing before the Senate Armed Services Committee on the Department of the Navy's proposed FY2018 budget, the following exchange occurred: SENATOR JOHN MCCAIN (CHAIRMAN) (continuing): Secretary Stackley, the Navy broached a cost cap for CVN-78. Do you believe that it has? SEAN STACKLEY, ACTING SECRETARY OF THE NAVY: Sir, right now our estimate for CVN-78, we're trying to hold it within the $12.887 billion number that was established several years ago. We have included a $20 million [procurement funding] request in this budget pending our determination regarding repairs that required for the... MCCAIN: Is that a breach of Nunn-McCurdy? STACKLEY: Not at this point in time, sir, we're continuing to evaluate whether that additional funding will be required. We're doing everything we can to stay within the existing cap and we'll keep Congress informed as we complete our post-delivery assessment. MCCAIN: Problem is we haven't been informed. So either you bust the cap and breach Nunn-McCurdy—Nunn-McCurdy or you notify us. You haven't done either one. STACKLEY: Sir, we've been submitting monthly reports regarding the carrier, we've alerted the concern regarding the repairs that are being required for the motor turbine generator set and we've acknowledged the risk associated with those repairs. However, what we're trying to do is not incur those costs, avoid cost by other means, and as of right now we're not ready to trip that cost cap. MCCAIN: Well, it's either not allowable or it's allowable. It's not allowable, then you take a certain course of action. If it's allowable then you're required to notify Congress. You have done neither. STACKLEY: If we need to incur those costs, they will be allowable costs. We're trying to avoid that at this stage of time, sir. MCCAIN: I agree, but we were supposed to be notified—OK. I can tell you that you are either in violation of Nunn-McCurdy or you are in violation of the requirement that we be notified. You have done neither. There's two scenarios. STACKLEY: Sir, we have not broached the cost cap. If it becomes apparent that we'll need to go above the cost cap, we will notify Congress within—within the terms that you all have established. MCCAIN: OK. Well, I'll get it to you in writing but you still haven't answered the question because when there's a $20 million cost overrun, it's either allowable and then we have to be notified in one way. If it's not allowable, Nunn-McCurdy is—is reached. But anyway, maybe you can give us a more satisfactory explanation in writing, Mr. Secretary. June 2017 GAO Report A June 2017 GAO report states the following: The cost estimate for the second Ford-Class aircraft carrier, CVN 79, is not reliable and does not address lessons learned from the performance of the lead ship, CVN 78. As a result, the estimate does not demonstrate that the program can meet its $11.4 billion cost cap. Cost growth for the lead ship was driven by challenges with technology development, design, and construction, compounded by an optimistic budget estimate. Instead of learning from the mistakes of CVN 78, the Navy developed an estimate for CVN 79 that assumes a reduction in labor hours needed to construct the ship that is unprecedented in the past 50 years of aircraft carrier construction.... After developing the program estimate, the Navy negotiated 18 percent fewer labor hours for CVN 79 than were required for CVN 78. CVN 79's estimate is optimistic compared to the labor hour reductions calculated in independent cost reviews conducted in 2015 by the Naval Center for Cost Analysis and the Office of Cost Assessment and Program Evaluation. Navy analysis shows that the CVN 79 cost estimate may not sufficiently account for program risks, with the current budget likely insufficient to complete ship construction. The Navy's current reporting mechanisms, such as budget requests and annual acquisition reports to Congress, provide limited insight into the overall Ford Class program and individual ship costs. For example, the program requests funding for each ship before that ship obtains an independent cost estimate. During an 11-year period prior to 2015, no independent cost estimate was conducted for any of the Ford class ships; however, the program received over $15 billion in funding. In addition, the program's Selected Acquisition Reports (SAR)—annual cost, status, and performance reports to Congress—provide only aggregate program cost for all three ships currently in the class, a practice that limits transparency into individual ship costs. As a result, Congress has diminished ability to oversee one of the most expensive programs in the defense portfolio. February 2016 Navy Testimony The Navy testified in 2016 that The Navy is committed to delivering the lead ship of the class, Gerald R Ford (CVN 78) within the $12.887 billion congressional cost cap. Sustained efforts to identify cost reductions and drive improved cost and schedule performance on this first-of-class aircraft carrier have resulted in highly stable cost performance since 2011. Based on lessons learned on CVN 78, the approach to carrier construction has undergone an extensive affordability review and the Navy and the shipbuilder have made significant changes on CVN 79 to reduce the cost to build the ship. The benefits of these changes in build strategy and resolution of first-of-class impacts experienced on CVN 78 are evident in early production labor metrics on CVN 79. These efforts are ongoing and additional process improvements continue to be identified. Alongside the Navy's efforts to reduce the cost to build CVN 79, the FY 2016 National Defense Authorization Act reduced the cost cap for follow ships in the CVN 78 class from $11,498 million to $11,398 million. To this end, the Navy has further emphasized stability in requirements, design, schedule, and budget, in order to drive further improvement to CVN 79 cost. The FY 2017 President's Budget requests funding for the most efficient build strategy for this ship and we look for Congress' full support of this request to enable CVN 79 procurement at the lowest possible cost.... ... The Navy will deliver the CVN 79 within the cost cap using a two-phased strategy wherein select ship systems and compartments that are more efficiently completed at a later stage of construction - to avoid obsolescence or to leverage competition or the use of experienced installation teams - will be scheduled for completion in the ship's second phase of production and test. Enterprise (CVN 80) began construction planning and long lead time material procurement in January 2016 and construction is scheduled to begin in 2018. The FY 2017 President's Budget request re-phases CVN 80 funding to support a more efficient production profile, critical to performance, below the cost cap. CVN 80 planning and construction will continue to leverage class lessons learned to achieve cost and risk reduction, including efforts to accelerate production work to earlier phases of construction, where work is more cost efficient. October 2015 Senate Armed Services Committee Hearing Cost growth and other issues in the CVN-78 program were reviewed at an October 1, 2015, hearing before the Senate Armed Services Committee. Below are excerpts from the prepared statements of the witnesses at the hearing. OSD ASD Testimony The prepared statement of the Assistant Secretary of Defense (Acquisition) within the Office of the Secretary of Defense (OSD) states the following in part: By 2000, the CVN(X) Acquisition Strategy that had been proposed by the Navy was an evolutionary, three-step development of the capabilities planned for the CVN. This evolutionary strategy intending to mature technology and align risk with affordability originally involved using the last ship of the CVN 68 NIMITZ Class, USS GEORGE H. W. BUSH (CVN 77), as the starting point for insertion of some near term technology improvements including information network technology and the new Dual Band Radar (DBR) system from the DD(X) (now DDG 1000) program, to create an integrated warfare system that combined the ship's combat system and air wing mission planning functions. However, the then incoming Secretary of Defense Donald Rumsfeld in 2002 directed re-examination of the CVN program, among others, to reduce the overall spend of the department and increase the speed of delivery to the warfighters. As a result of the SECDEF's direction, the Navy proposed to remove the evolutionary approach and included a new and enlarged flight deck, an increased allowance for future technologies (including electric weapons), and an additional manpower reduction of 500 to 800 fewer sailors to operate. On December 12, 2002, a Program Decision Memorandum approved by then Deputy Secretary of Defense Paul Wolfowitz codified this Navy proposal and gave this direction back to the DOD enterprise. The ship was renamed the CVN-21 to highlight these changes. By Milestone B in April 2004, the Navy had evaluated the technologies intended for three ships, removed some of them, and consolidated the remaining ones into a single step of capability improvement on the lead ship. The new plan acknowledged technological, cost, and schedule challenges were being put on a single ship, but assessed this was achievable. The Acting USD AT&L (Michael Wynne) at that milestone also directed the Navy to use a hybrid of the Service Cost Position and Independent Cost Estimate (ICE) to baseline the program funding in lieu of the ICE, (although one can easily argue even the ICE was optimistic given these imposed circumstances). By 2004, DOD and Congressional leadership had lost confidence in the acquisition system, and Deputy Secretary of Defense Gordon England established the Defense Acquisition Performance Assessment (DAPA) panel to conduct a sweeping and integrated assessment of "every aspect" of acquisition. The result was the discovery that the Industrial Base had consolidated, that excessive oversight and complex acquisition processes were cost and schedule drivers, and a focus on requirements stability was key to containing costs. From this, a review of the requirements of the CVN resulted in a revised and solidified "single ship" Operational Requirements Document (ORD) for the FORD Class as defined today, with the CVN 78 as lead ship. On the heels of a delay because of the budgetary constraints in 2006, the start of the construction of CVN 78 was delayed until 2008, but the schedule for delivery was held constant, further compounding risks and costs. The Navy's testimony covers these technical and schedule risks and concurrency challenges well. By 2009, this Committee had issued a floor statement in support of the Weapon Systems Acquisition Reform Act (WSARA). Congress was now united in its pursuit of acquisition reform and, in concert, USD AT&L re-issued and updated the Department of Defense's acquisition instruction (DoDI 5000.2) in 2008. WSARA included strengthening of the 'Nunn-McCurdy" process with requires DOD to report to Congress when cost growth on a major program breaches a critical cost growth threshold. This legislation required a root-cause assessment of the program and assumed program termination within 60 days of notification unless DOD certified in writing that the program remained essential to national security. WSARA had real impact on the CVN 78, as by 2008 and 2009 the results of all the previous decisions were instantiated in growth of cost and schedule. Then USD AT&L John Young required the Navy to provide a list of descoping efforts and directed the Navy to have an off-ramp back to steam catapults if the Electromagnetic Aircraft Launching System (EMALS) remained a problem for the program. He also directed an independent review of all of the CVN 78 technologies by a Defense Support Team (DST). Prior to the DST, the Navy had chartered a Program Assessment Review (PAR) with USD (AT&L) participation of EMALS/Advanced Arresting Gear (AAG) versus steam. One of the key PAR findings was converting the EMALS and AAG production contracts to firm, fixed price contracts to cap cost growth and imposed negative incentives for late delivery. The Dual Band Radar (DBR) cost and risk growth was a decision by-product of the DDG 1000 program Nunn-McCurdy critical unit cost breach in 2010. Faced with a need to reduce cost on the DDG 1000 program and the resultant curtailment of the program, the expectation of development costs being borne by the DDG 1000 program was no longer the case and all of the costs associated with the S-band element development and a higher share of the X-band element then had to be supported by the CVN 78 program. The design problems encountered with AAG development have had the most deleterious effects on CVN 78 construction of any of the three major advanced technologies including EMALS and DBR. Our view of AAG is that these engineering design problems are now in the past and although delivery of several critical components have been delayed, the system will achieve its needed capabilities before undergoing final operational testing prior to deployment of the ship. Again, reliability growth is a concern, but this cannot be improved until a fully functional system is installed and operating at the Lakehurst, New Jersey land based test site, and on board CVN 78. With the 2010 introduction by then USD AT&L Ashton Carter (now in its third iteration by under USD AT&L Frank Kendall) of the continuous process improvement initiative that was founded in best business practices and WSARA called "Better Buying Power," the CVN underwent affordability, "Should Cost," and requirements assessment. Navy's use of the "Gate" process has stabilized the cost growth and reset good business practices. However, there is still much to do. We are in the testing phase of program execution prior to deployment and we had been concerned about the timing of the Full Ship Shock Trial (FSST). After balancing the operational and technical risks, the Department decided to execute FSST on CVN 78 prior to deployment. EMALS and AAG are also a concern with regard to final operational testing stemming from the development difficulties that each experienced. The Navy still needs to complete a significant amount of land-based testing to enable certification of the systems to launch and recover the full range of aircraft that it is required to operate under both normal and emergency conditions. This land-based testing is planned to complete before the final at-sea operational testing for these systems begins.... USD AT&L continues to work with Navy to tailor the program and ensure appropriate oversight at both the Navy Staff level as well as OSD. Our review of the Navy's plan for maintaining control of the cost for CVN 79 included an understanding of the application of lessons learned from the construction of CVN 78 along with the application of a more efficient construction plan for the ship including introduction of competition where possible. We have established an excellent relationship with the Navy to work together to change process and policies that have impacted the ability of the program to succeed, to include revitalizing the acquisition workforce and their skills. We are confident in the Navy's plan for CVN 79 and CVN 80 and, as such, Under Secretary Kendall recently authorized the Navy to enter into the detail design and construction phase for CVN 79 and to enter into advanced procurement for long lead time materials for CVN 80 construction. OSD and the Navy are committed to delivering CVN 79 within the limits of the cost cap legislated for this ship. OSD DOT&E Testimony The prepared statement of the Director, Operational Test & Evaluation (DOT&E), within OSD states the following in part: The Navy intends to deliver CVN 78 early in calendar year 2016, and to begin initial operational test and evaluation (IOT&E) in late calendar year 2017. However, the Navy is in the process of developing a new schedule, so some dates may change. Based on the current schedule, between now and the beginning of IOT&E, the CVN 78 program is proceeding on an aggressive schedule to finish development, testing, troubleshooting, and correction of deficiencies for a number of new, complex systems critical to the warfighting capabilities of the ship. Low or unknown reliability and performance of the Advanced Arresting Gear (AAG), the Electromagnetic Aircraft Launch System (EMALS), the Dual Band Radar (DBR), and the Advanced Weapons Elevators (AWE) are significant risks to a successful IOT&E and first deployment, as well as to achieving the life-cycle cost reductions the Navy has estimated will accrue for the Ford-class carriers. The maturity of these systems is generally not at the level that would be desired at this stage in the program; for example, the CVN 78 test program is revealing problems with the DBR typical of discoveries in early developmental testing. Nonetheless, AAG, EMALS, DBR, and AWE equipment is being installed on CVN 78, and in some cases, is undergoing shipboard checkout. Consequently, any significant issues that testing discovers before CVN 78's schedule-driven IOT&E and deployment will be difficult, or perhaps impossible, to address. Resolving the uncertainties in the reliability and performance of these systems is critical to CVN 78's primary function of conducting combat operations. CVN 78 has design features intended to enhance its ability to launch, recover, and service aircraft. EMALS and AAG are key systems planned to provide new capabilities for launching and recovering aircraft that are heavier and lighter than typically operated on Nimitz-class carriers. DBR is intended to enhance radar coverage on CVN 78 in support of air traffic control and ship self-defense. DBR is planned to reduce some of the known sensor limitations on Nimitz-class carriers that utilize legacy radars. The data currently available to my office indicate EMALS is unlikely to achieve the Navy's reliability requirements. (The Navy indicates EMALS reliability is above its current growth curve, which is true; however, that growth curve was revised in 2013, based on poor demonstrated performance, to achieve EMALS reliability on CVN 78 a factor of 15 below the Navy's goal.) I have no current data regarding DBR or AWE reliability, and data regarding the reliability of the re-designed AAG are also not available. (Poor AAG reliability in developmental testing led to the need to re-design components of that system.) In addition, performance problems with these systems are continuing to be discovered. If the current schedule for conducting the ship's IOT&E and first deployment remain unchanged, reliability and performance shortfalls could degrade CVN 78's ability to conduct flight operations. Due to known problems with current aircraft carrier combat systems, there is significant risk CVN 78 will not achieve its self-defense requirements. Although the CVN 78 design incorporates several combat system improvements relative to the Nimitz-class, these improvements (if achieved) are unlikely to correct all of the known shortfalls. Testing on other ships with similar combat systems has highlighted deficiencies in weapon employment timelines, sensor coverage, system track management, and deficiencies with the recommended engagement tactics. Most of these limitations are likely to affect CVN 78 and I continue to view this as a significant risk to the CVN 78's ability to defend itself against attacks by the challenging anti-ship cruise missile and other threats proliferating worldwide. The Navy's previous decision to renege on its original commitment to conduct the Full Ship Shock Trial (FSST) on CVN 78 before her first deployment would have put CVN 78 at risk in combat operations. This decision was reversed in August 2015 by the Deputy Secretary of Defense. Historically, FSSTs for new ship classes have identified for the first time numerous mission-critical failures the Navy had to address to ensure the new ships were survivable in combat. We can expect that CVN 78's FSST results will have significant and substantial implications on future carriers in the Ford-class and any subsequent new class of carriers. I also have concerns with manning and berthing on CVN 78. The Navy designed CVN 78 to have reduced manning to reduce life-cycle costs, but Navy analyses of manning on CVN 78 have identified problems in manning and berthing. These problems are similar to those seen on other recent ship classes such as DDG 1000 and the Littoral Combat Ship (LCS).... There are significant risks to the successful completion of the CVN 78 IOT&E and the ship's subsequent deployment due to known performance problems and the low or unknown reliability of key systems. For AAG, EMALS, AWE and DBR, systems that are essential to the primary missions of the ship, these problems, if uncorrected, are likely to affect CVN 78's ability to conduct effective flight operations and to defend itself in combat. The CVN 78 test schedule leaves little or no time to fix problems discovered in developmental testing before IOT&E begins that could cause program delays. In the current program schedule, major developmental test events overlap IOT&E. This overlap increases the likelihood problems will be discovered during CVN 78's IOT&E, with the attendant risk to the successful completion of that testing and to the ship's first deployment. The inevitable lessons we will learn from the CVN 78 FSST will have significant implications for CVN 78 combat operations, as well as for the construction of future carriers incorporating the ship's advanced systems; therefore, the FSST should be conducted on CVN 78 as soon as it is feasible to do so. Navy Testimony The prepared statement of the Navy witnesses at the hearing states the following in part: In June 2000, the Department of Defense (DOD) approved a three-ship evolutionary acquisition approach starting with the last NIMITZ Class carrier (CVN 77) and the next two carriers CVNX1 (later CVN 78) and CVNX2 (later CVN 79). This approach recognized the significant risk of concurrently developing and integrating new technologies into a new ship design incrementally as follows: • The design focus for the evolutionary CVN 77 was to combine information network technology with a new suite of multifunction radars from the DDG 1000 program to transform the ship's combat systems and the air wing's mission planning process into an integrated warfare system. • The design focus for the evolutionary CVNX1 (future CVN 78) was a new Hull, Mechanical and Electrical (HM&E) architecture within a NIMITZ Class hull that included a new reactor plant design, increased electrical generating capacity, new zonal electrical distribution, and new electrical systems to replace steam auxiliaries under a redesigned flight deck employing new Electromagnetic Aircraft Launch System (EMALS) catapults together with aircraft ordnance and fueling "pit-stops". Design goals for achieving reduced manning and improved maintainability were also defined. • The design focus for the evolutionary CVNX2 (future CVN 79) was a potential "clean-sheet" design to "open the aperture" for capturing new but immature technologies such as the Advanced Arresting Gear (AAG) and Advanced Weapons Elevators (AWE) that would be ready in time for the third ship in the series; and thereby permit the experience gained from design and construction of the first two ships (CVN 77 and CVN 78) to be applied to the third ship (CVN 79). Early in the last decade, however, a significant push was made within DOD for a more transformational approach to delivering warfighting capability. As a result, in 2002, DOD altered the program acquisition strategy by transitioning to the new aircraft carrier class in a single transformational leap vice an incremental three ship strategy. Under the revised strategy, CVN 77 reverted back to a "modified-repeat" NIMITZ Class design to minimize risk and construction costs, while delaying the integrated warfare system to CVN 78. Further, due to budget constraints, CVN 78 would start construction a year later (in 2007) with a NIMITZ Class hull form but would entail a major re-design to accommodate all the new technologies from the three ship evolutionary technology insertion plan. This leap ahead in a single ship was captured in a revised Operational Requirements Document (ORD) in 2004, which defined a new baseline that is the FORD Class today, with CVN 78 as the lead ship. The program entered system development and demonstration, containing the shift to a single ship acquisition strategy. The start of CVN 78 construction was then delayed by an additional year until 2008 due to budget constraints. As a result, the traditional serial evolution of technology development, ship concept design, detail design, and construction – including a total of 23 developmental systems incorporating new technologies originally planned across CVN 77, CVNX1, CVNX2 - were compressed and overlapped within the program baseline for the CVN 78. Today, the Navy is confronting the impacts of this compression and concurrency, as well as changes to assumptions made in the program planning more than a decade ago.... Given the lengthy design, development, and build span associated with major warships, there is a certain amount of overlap or concurrency that occurs between the development of new systems to be delivered with the first ship, the design information for those new systems, and actual construction. Since this overlap poses cost and schedule risk for the lead ship of the class, program management activities are directed at mitigating this overlap to the maximum extent practicable. In the case of the FORD Class, the incorporation of 23 developmental systems at various levels of technical maturity (including EMALS, AAG, DBR, AWE, new propulsion plant, integrated control systems) significantly compounded the inherent challenges associated with accomplishing the first new aircraft carrier design in 40-years. The cumulative impact of this high degree of concurrency significantly exceeded the risk attributed to any single new system or risk issue and ultimately manifested itself in terms of delay and cost growth in each element of program execution; development, design, material procurement (government and contractor), and construction.... Shipbuilder actions to resolve first-of-class issues retired much of the schedule risks to launch, but at an unstable cost. First-of-class construction and material delays led the Navy to revise the launch date in March 2013 from July 2013 to November 2013. Nevertheless, the four-month delay in launch allowed increased outfitting and ship construction that were most economically done prior to ship launch, such as completion of blasting and coating operations for all tanks and voids, installation of the six DBR arrays, and increased installations of cable piping, ventilation, electrical boxes, bulkheads and equipment foundations. As a result, CVN 78 launched at 70 percent complete and 77,000 tons displacement – the highest levels yet achieved in aircraft carrier construction. This high state of completion at launch enabled improved outfitting, compartment completion, an efficient transition into the shipboard test program, and the on-time completion of key milestones such as crew move aboard. With the advent of the shipboard test program, first time energization and grooming of new systems have required more time than originally planned. As a result, the Navy expects the sea trial schedule to be delayed about six to eight weeks. The exact impact on ship delivery will be determined based on the results of these trials. The Navy expects no schedule delays to CVN 78 operational testing and deployability due to the sea trials delay and is managing schedule delays within the $12.887 billion cost cap. Additionally, at delivery, AAG will not have completed its shipboard test program. The program has not been able to fully mitigate the effect of a two-year delay in AAG equipment deliveries to the ship. All AAG equipment has been delivered to the ship and will be fully installed on CVN 78 at delivery. The AAG shipboard test and certification program will complete in time to support aircraft launch and recovery operations in summer 2016.... The Navy, in coordination with the shipbuilder and major component providers, implemented a series of actions and initiatives in the management and oversight of CVN 78 that crossed the full span of contracting, design, material procurement, GFE, production planning, production management and oversight. The Secretary of the Navy directed a detailed review of the CVN 78 program build plan to improve end-to-end aircraft carrier design, material procurement, production planning, build and test, the results of which are providing benefit across all carriers. These corrective measures include: • CVN 78 design was converted from a 'level of effort, fixed fee' contract to a completion contract with a firm target and incentive fee. Shipbuilder cost performance has been on-target or better since this contract change. • CVN 78 construction fee was reduced, consistent with contract provisions. However, the shipbuilder remains incentivized by the contract shareline to improve upon current cost performance. • Contract design changes are under strict control; authorized only for safety, damage control, and mission-degrading deficiencies. • Following a detailed "Nunn-McCurdy-like" review in 2008-2009, the Navy converted the EMALS and AAG production contract to a firm, fixed price contract, capping cost growth to each system. • In 2011, Naval Sea Systems Command completed a review of carrier specifications with the shipbuilder, removing or improving upon overly burdensome or unneeded specifications that impose unnecessary cost on the program. Periodic reviews continue. Much of the impact to cost performance was attributable to shipbuilder and government material cost overruns. The Navy and shipbuilder have made significant improvements upon material ordering and delivery to the shipyard to mitigate the significant impact of material delays on production performance. These actions include: • The Navy and shipbuilder instituted optimal material procurement strategies and best practices (structuring procurements to achieve quantity discounts, dual-sourcing to improve schedule performance and leveraging competitive opportunities) from outside supply chain management experts. • The shipbuilder assigned engineering and material sourcing personnel to each of their key vendors to expedite component qualifications and delivery to the shipyard. • The shipbuilder inventoried all excess material procured on CVN 78 for transfer to CVN 79. • The Program Executive Officer (Carriers) has conducted quarterly Flag-level GFE summits to drive cost reduction opportunities and ensure on-time delivery of required equipment and design information to the shipbuilder. The CVN 78 build plan, consistent with the NIMITZ Class, had focused foremost on completion of structural and critical path work to support launching the ship on-schedule. Achieving the program's cost improvement targets required that CVN 78 increase its level of completion at launch, from 60 percent to 70 percent. To achieve this and drive greater focus on system completion: • The Navy fostered a collaborative build process review by the shipbuilder with other Tier 1 private shipyards in order to benchmark its performance and identify fundamental changes that are yielding marked improvement. • The shipbuilder established specific launch metrics by system and increased staffing for waterfront engineering and material expediters to support meeting those metrics. This ultimately delayed launch, but drove up pre-outfitting to the highest levels for CVN new construction which has helped stabilize cost and improve test program and compartment completion performance relative to CVN 77. • The shipbuilder linked all of these processes within a detailed integrated master schedule that has provided greater visibility to performance and greater ability to control cost and schedule performance across the shipbuilding disciplines. These initiatives, which summarize a more detailed list of actions being implemented and tracked as a result of the end-to-end review, were accompanied by important management changes. • In 2011, the Navy assigned a second tour Flag Officer with considerable carrier operations, construction, and program management experience as the new Program Executive Officer (PEO). • The new PEO established a separate Program Office, PMS 379, to focus exclusively on CVN 79 and CVN 80, which enables the lead ship Program Office, PMS 378, to focus on cost control, schedule performance and the delivery of CVN 78. • In 2012, the shipbuilder assigned a new Vice President in charge of CVN 78, a new Vice President in charge of material management and purchasing, and a number of new general ship foremen to strengthen CVN 78 performance. • The new PEO and shipyard president began conducting bi-weekly launch readiness reviews focused on cost performance, critical path issues and accomplishment of the targets for launch completion. These bi-weekly reviews will continue through delivery. • Assistant Secretary of the Navy (Research, Development, and Acquisition) (ASN (RD&A)) conducts quarterly reviews of program progress and performance with the PEO and shipbuilder to ensure that all that can be done to improve on cost performance is being done. The series of actions taken by the Navy and the shipbuilder are achieving the desired effect of arresting cost growth, establishing stability, and have resulted in no changes in the Government's estimate at completion over the past four years. The Department of the Navy is continuing efforts to identify cost reductions, drive improved cost and schedule performance, and manage change. The Navy has established a rigorous process with the shipbuilder that analyzes each contract change request to approve only those change categories allowed within the 2010 ASN(RD&A) change order management guidance. This guidance only allows changes for safety, contractual defects, testing and trial deficiencies, statutory and regulatory changes that are accompanied by funding and value engineering change proposals with instant contract savings. While the historical average for contractual change level is approximately 10 percent of the construction cost for the lead ship of a new class, CVN 78 has maintained a change order budget of less than four percent to date despite the high degree of concurrent design and development. Finally, the Navy has identified certain areas of the ship whose completion is not required for delivery, such as berthing spaces for the aviation detachment, and has removed this work from the shipbuilder's contract. This deferred work will be completed within the ship's budgeted end cost and is included within the $12,887 million cost estimate. By performing this deferred work in the post-delivery period using CVN 78 end cost funding, it can be competed and accomplished at lower cost and risk to the overall ship delivery schedule.... The CVN 79 cost cap was established in 2006 and adjusted by the Secretary of the Navy in 2013, primarily to address inflation between 2006 and 2013 plus $325 million of the allowed increase for non-recurring engineering to incorporate design improvements for the CVN 78 Class construction. The Navy and the shipbuilder conducted an extensive affordability review of carrier construction and made significant changes to deliver CVN 79 at the lowest possible cost. These changes are focused on eliminating the largest impacts to cost performance identified during the construction of CVN 78 as well as furthering improvements in future carrier construction. The Navy outlined cost savings initiatives in its Report to Congress in May, 2013, and is executing according to plan. Stability in requirements, design, schedule, and budget, are essential to controlling and improving CVN 79 cost, and therefore is of highest priority for the program. Requirements for CVN 79 were "locked down" prior to the commencement of CVN 79 construction. The technical baseline and allocated budget for these requirements were agreed to by the Chief of Naval Operations and ASN(RD&A) and further changes to the baseline require their approval, which ensures design stability and increases effectiveness during production. At the time of construction contract award, CVN 79 has 100 percent of the design product model complete (compared to 65 percent for CVN 78) and 80 percent of initial drawings released. Further, CVN 79 construction benefits from the maturation of virtually all new technologies inserted on CVN 78. In the case of EMALS and AAG, the system design and procurement costs are understood, and CVN 79 leverages CVN 78 lessons learned.... A completed FORD Class design enabled the shipbuilder to fully understand the "whole ship" bill of materials for CVN 79 construction and to more effectively manage the procurement of those materials with the knowledge of material lead times and qualified sources accrued from CVN 78 construction. The shipbuilder is able to order ship-set quantities of material, with attendant cost benefits, and to ensure CVN 79 material will arrive on time to support construction need. Extensive improvements have been put in place for CVN 79 material procurement to drive both cost reductions associated with more efficient procurement strategies and production labor improvements associated with improved material availability. Improved material availability is also a critical enabler to many construction efficiency improvements in CVN 79. The shipbuilder has developed an entirely new material procurement and management strategy for CVN 79. This new strategy consists of eight separate initiatives.... The shipbuilder and the Navy have performed a comprehensive review of the build strategy and processes used in construction of CVN 78 Class aircraft carriers as well as consulted with other Navy shipbuilders on best practices. As a result, the shipbuilder has identified and implemented a number of changes in the way they build aircraft carriers, with a dedicated focus on executing construction activities where they can most efficiently be performed. The CVN 79 build sequence installs 20 percent more parts in shop, and 30 percent more parts on the final assembly platen, as compared to CVN 78. This work will result in an increase in pre-outfitting and work being pulled to earlier stages in the construction process where it is most efficiently accomplished.... In conjunction with the Navy and the shipbuilder's comprehensive review of the build strategy and processes used in construction of CVN 78 Class aircraft carriers, a number of design changes were identified that would result in more affordable construction. Some of these design changes were derived from lessons learned in the construction of CVN 78 and others seek to further simplify the construction process and drive cost down.... In addition to the major focus discussed above, the shipbuilder continues to implement capital improvements to facilities that serve to reduce risk and improve productivity.... To enhance CVN 79 build efficiency and affordability, the Navy is implementing a two-phase delivery plan. The two-phase strategy will allow the basic ship to be constructed and tested in the most efficient manner by the shipbuilder (Phase I) while enabling select ship systems and compartments to be completed in Phase II, where the work can be completed more affordably through competition or the use of skilled installation teams.... The CVN 80 planning and construction will continue to leverage class lessons learned in the effort to achieve cost and risk reduction for remaining FORD Class ships. The CVN 80 strategy seeks to improve on CVN 79 efforts to frontload as much work as possible to the earliest phases of construction, where work is both predictable and more cost efficient.... While delivery of the first-of-class FORD has involved challenges, those challenges are being addressed and this aircraft carrier class will provide great value to our Nation with unprecedented and greatly needed warfighting capability at overall lower total ownership cost than a NIMITZ Class CVN. The Navy has taken major steps to stem the tide of increasing costs and drive affordability into carrier acquisition. GAO Testimony The prepared statement of the GAO witness at the hearing states the following in part: The Ford-class aircraft carrier's lead ship began construction with an unrealistic business case. A sound business case balances the necessary resources and knowledge needed to transform a chosen concept into a product. Yet in 2007, GAO found that CVN 78 costs were underestimated and critical technologies were immature—key risks that would impair delivering CVN 78 at cost, on-time, and with its planned capabilities. The ship and its business case were nonetheless approved. Over the past 8 years, the business case has predictably decayed in the form of cost growth, testing delays, and reduced capability—in essence, getting less for more. Today, CVN 78 is more than $2 billion over its initial budget. Land-based tests of key technologies have been deferred by years while the ship's construction schedule has largely held fast. The CVN 78 is unlikely to achieve promised aircraft launch and recovery rates as key systems are unreliable. The ship must complete its final, more complex, construction phase concurrent with key test events. While problems are likely to be encountered, there is no margin for the unexpected. Additional costs are likely. Similarly, the business case for CVN 79 is not realistic. The Navy recently awarded a construction contract for CVN 79 which it believes will allow the program to achieve the current $11.5 billion legislative cost cap. Clearly, CVN 79 should cost less than CVN 78, as it will incorporate lessons learned on construction sequencing and other efficiencies. While it may cost less than its predecessor, CVN 79 is likely to cost more than estimated. As GAO found in November 2014, the Navy's strategy to achieve the cost cap relies on optimistic assumptions of construction efficiencies and cost savings—including unprecedented reductions in labor hours, shifting work until after ship delivery, and delivering the ship with the same baseline capability as CVN 78 by postponing planned mission system upgrades and modernizations until future maintenance periods. Today, with CVN 78 over 92 percent complete as it reaches delivery in May 2016, and the CVN 79 on contract, the ability to exercise oversight and make course corrections is limited. Yet, it is not too late to examine the carrier's acquisition history to illustrate the dynamics of shipbuilding—and weapon system—acquisition and the challenges they pose to acquisition reform. The carrier's problems are by no means unique; rather, they are quite typical of weapon systems. Such outcomes persist despite acquisition reforms the Department of Defense and Congress have put forward—such as realistic estimating and "fly before buy." Competition with other programs for funding creates pressures to overpromise performance at unrealistic costs and schedules. These incentives are more powerful than policies to follow best acquisition practices and oversight tools. Moreover, the budget process provides incentives for programs to be funded before sufficient knowledge is available to make key decisions. Complementing these incentives is a marketplace characterized by a single buyer, low volume, and limited number of major sources. The decades-old culture of undue optimism when starting programs is not the consequence of a broken process, but rather of a process in equilibrium that rewards unrealistic business cases and, thus, devalues sound practices. July 2015 Press Report A July 2, 2015, press report states the following: The Navy plans to spend $25 million per year beginning in 2017 as a way to invest in lowering the cost of building the services' new Ford-class aircraft carriers, service officials said. "We will use this design for affordability to make new improvements in cost cutting technologies that will go into our ships," said Rear Adm. Michael Manazir, Director, Air Warfare.... "We just awarded a contract to buy long lead item materials [for CVN-79] and lay out an allocated budget for each of the components of that ship. We want to build the ship in the most efficient manner possible," Rear Adm. Thomas Moore, Program Executive Officer, Carriers, said. Navy leaders say the service is making positive strides regarding the cost of construction for the USS Kennedy and plans to stay within the congressional cost cap of $11.498 billion.... The $25 million design for affordability initiative is aimed at helping to uncover innovative shipbuilding techniques and strategies that will accomplish this and lower costs. Moore said the goal of the program is to, among other things, remove $500 million from the cost of the third Ford-class carrier, the USS Enterprise, CVN 80. "It is finding a million here and a million there and eventually that is how you get a billion dollars out of the ship from (CVN) 78 to (CVN) 79. The goal is to get another $500 million out of CVN 80. The $25 million dollars is a pretty prudent investment if we can continue to drive the cost of this class of ship down," Moore told reporters recently. Moore explained that part of the goal is to get to the point where a Ford-class carrier can be built for the same amount of man-hours it took to build their predecessor ships, the Nimitz-class carriers. "We want to get back to the goal of being able to build it for historical Nimitz class levels in terms of man hours for a ship that is significantly more capable and more complex to build," Moore added. The money will invest in new approaches and explore the processes that a shipyard can use to build the ship, Moore added. "They've made a significant investment in these new welding machines. These new welding machines allow the welder to use different configurations. This has significantly improved the throughput that the shipyard has," Moore said, citing an example of the kind of thing the funds would be used for. The funds will also look into whether new coatings for the ship or welding techniques can be used and whether millions of feet of electrical cabling can be installed in a more efficient manner, Moore added. Other cost saving efforts assisted by the funding include the increased use of complex assemblies, common integrated work packages, automated plate marking, weapons elevator door re-design and vertical build strategies, Navy officials said. Shipbuilders could also use a new strategy of having work crews stay on the same kind of work for several weeks at a time in order to increase efficiency, Moore said. Also, some of the construction work done on the USS Ford while it was in dry dock is now being done in workshops and other areas to improve the building process, he added. June 2015 Press Reports A June 29, 2015, press report states the following: Newport News Shipbuilding will see cost reduction on the order of 18 percent fewer man hours overall from the first Ford-class aircraft carrier to the second, according to a company representative. Ken Mahler, Newport News vice president of Navy programs, touted the shipyard's cost savings on the John F. Kennedy (CVN-79) during a June 15 interview with Inside the Navy . This reduction was facilitated by the investments the shipyard is making in carrier construction, as well as lessons learned from the first ship, the Gerald R. Ford (CVN-78), which will deliver next year. A June 23, 2015, press report states the following: The Pentagon's cost-assessment office now says the Navy's second aircraft carrier in a new class will exceed a congressionally mandated cost cap by $235 million. That's down from an April estimate that the USS John F. Kennedy, the second warship in the new Ford class, would bust a $11.498 billion cap set by lawmakers by $370 million. The Navy maintains that it can deliver the ship within the congressional limit. "The original figure was a draft based on preliminary information," Navy Commander Bill Urban, a spokesman for the Pentagon's Cost Assessment and Program Evaluation office, said in an e-mail. As better information, such as updated labor rates, became available, the office "revised its estimate to a more accurate number," he said. A June 15, 2015, press report states the following: [Rear Admiral Tom] Moore [program executive officer for aircraft carriers]. said the program would save a billion dollars by decreasing the man hours needed to construct the ship by 18 percent from CVN-78 to 79—down to about 44 million manhours. He said this reduction is only a first step in taking cost ouot of the carrier program. The future Enterprise (CVN-80) will take about 4 million manhours out, or another 10 percent reduction, for a savings of about $500 million. But beyond seeking ways to take cost out, the contract itself reduces the risk to the government, Moore said. "The main construction of the ship is now in a fixed price environment, so that switchover really limits the government's liability," he said. Without getting into specific dollar amounts due to business sensitivities, Moore explained that "this is the lowest target fee we've ever had on any CVN new construction. Look at tghe shape of the share [government-contractor cost] share lines, because the share lines at the end of the day are a measure of risk. So where we'd like to get quickly to [a] 50/50 [share line], in past carrier contracts we've been out at 85/15, 90/10—which basically means for every dollar over [the target cost figure, up to the ceiling cost figure], the government picks up 85 cents on the dollar. And this contract very quickly gets to 50/50. The other thing is ceiling price—on a fixed-price contract, the ceiling price is the government's maximum liability. And on this particular contract, again, it is the lowest ceiling price we've ever had [for a CVN]." February 2015 Navy Testimony At a February 25, 2015, hearing on Department of the Navy acquisition programs, Department of the Navy officials testified the following: The Navy is committed to delivering CVN 78 within the $12.887 billion Congressional cost cap. Sustained efforts to identify cost reductions and drive improved cost and schedule on this first-of-class aircraft carrier have resulted in highly stable performance since 2011. Parallel efforts by the Navy and shipbuilder are driving down and stabilizing aircraft carrier construction costs for the future John F Kennedy (CVN 79) and estimates for the future Enterprise (CVN 80). As a result of the lessons learned on CVN 78, the approach to carrier construction has undergone an extensive affordability review. The Navy and the shipbuilder have made significant changes on CVN 79 to reduce the cost to build the ship as detailed in the 2013 CVN 79 report to Congress. The benefits of these changes in build strategy and resolution of first-of-class impacts on CVN 79 are evident in metrics showing significantly reduced man-hours for completed work from CVN 78. These efforts are ongoing and additional process improvements continue to be identified. The Navy extended the CVN 79 construction preparation contract into 2015 to enable continuation of ongoing planning, construction, and material procurement while capturing lessons learned associated with lead ship construction and early test results. The continued negotiations of the detail design and construction (DD&C) contract afford an opportunity to incorporate further construction process improvements and cost reduction efforts. Award of the DD&C contract is expected in third quarter FY 2015. This will be a fixed price-type contract. Additionally, the Navy will deliver the CVN 79 using a two-phased strategy. This enables select ship systems and compartments to be completed in a second phase, wherein the work can be completed more efficiently through competition or the use of skilled installation teams responsible for these activities. This approach, key to delivering CVN 79 at the lowest cost, also enables the Navy to procure and install shipboard electronic systems at the latest date possible. The FY 2014 NDAA adjusted the CVN 79 and follow ships cost cap to $11,498 million to account for economic inflation and non-recurring engineering for incorporation of lead ship lessons learned and design changes to improve affordability. In transitioning from first-of-class to first follow ships, the Navy has maintained Ford class requirements and the design is highly stable. Similarly, we have imposed strict interval controls to drive changes to the way we do business in order to ensure CVN 79 is delivered below the cost cap. To this same end, the FY 2016 President's Budget request aligns funding to the most efficient build strategy for this ship and we look for Congress' full support of this request to enable CVN 79 to be procured at the lowest possible cost. Enterprise (CVN 80) will begin long lead time material procurement in FY 2016. The FY 2016 request re-phases CVN 80 closer to the optimal profile, therefore reducing the overall ship cost. The Navy will continue to investigate and will incorporate further cost reduction initiatives, engineering efficiencies, and lessons learned from CVN 78 and CVN 79. Future cost estimates for CVN 80 will be updated for these future efficiencies as they are identified. May 2013 Navy Testimony In its prepared statement for a May 8, 2013, hearing on Navy shipbuilding programs before the Seapower subcommittee of the Senate Armed Services Committee, the Navy stated that In 2011, the Navy identified spiraling cost growth [on CVN-78] associated with first of class non-recurring design, contractor and government furnished equipment, and ship production issues on the lead ship. The Navy completed an end-to-end review of CVN 78 construction in December 2011 and, with the shipbuilder, implemented a series of corrective actions to stem, and to the extent possible, reverse these trends. While cost performance has stabilized, incurred cost growth is irreversible.... As a result of lessons learned on CVN 78, the approach to carrier construction has undergone an extensive affordability review; and the Navy and the shipbuilder have made significant changes on CVN 79 that will reduce the cost to build the ship. CVN 79 construction will start with a complete design, firm requirements, and material economically procured and on hand in support of production need. The ship's build schedule also provides for increased completion levels at each stage of construction with resulting improved production efficiencies.... Inarguably, this new class of aircraft carrier brings forward tremendous capability and life-cycle cost advantages compared to the NIMITZ-class it will replace. However, the design, development and construction efforts required to overcome the technical challenges inherent to these advanced capabilities have significantly impacted cost performance on the lead ship. The Navy continues implementing actions from the 2012 detailed review of the FORD-Class build plan to control cost and improve performance across lead and follow ship contracts. This effort, taken in conjunction with a series of corrective actions with the shipbuilder on the lead ship, will not recover costs to original targets for GERALD R. FORD [CVN-78], but should improve performance on the lead ship while fully benefitting CVN 79 and following ships of the class. In the discussion portion of the hearing, Sean Stackley, the Assistant Secretary of the Navy for Research, Development and Acquisition (i.e., the Navy's acquisition executive), testified that First, the cost growth on the CVN-78 is unacceptable. The cost growth dates back in time to the very basic concepts that went into take in the Nimitz-class and doing a total redesign of the Nimitz class to get to a level of capability and to reduce operating and support cost for the future carrier. Far too much risk was carried into the design of the first of the Ford-class. Cost growth stems to the design was moving at the time production started. The vendor base that was responsible for delivering new components and material to support the ship production was (inaudible) with new developments in the vendor base and production plan do not account for the material ordering difficulties, the material delivery difficulties and some of the challenges associated with building a whole new design compared to the Nimitz.... Sir, for CVN-79, we have—we have held up the expenditures on CVN-79 as we go through the details of—one, ensuring that the design of the 78 is complete and repeated for the 79s [sic] that we start with a clean design. Two, we're going through the material procurement. We brought a third party into assessment material-buying practices at Newport News to bring down the cost of material. And we're metering out the dollars for buying material until it hits the objectives that we're setting for CVN-79 through rewriting the build plan on CVN-79. If you take a look at how the 78 is being constructed, far too much work is being accomplished late in the build cycle. So we are rewriting the build plan for CVN-79, do more work in the shops where it's more efficient, more work in the buildings where it's more efficient, less work in the dry dock, less work on the water. And then we're going after the rates—the labor rates and the investments needed by the shipbuilder to achieve these efficiencies. Later in the hearing, Stackley testified that the history in shipbuilding is since you don't have a prototype for a new ship, the first of class referred to as the lead ship is your prototype. And so you carry a lot of risk into the construction of that first of class. Also, given the nature that there's a lengthy design development and build span associated with ships, so there is a certain amount of overlap or concurrency that occurs between the development of new systems that need to be delivered with the first ship, the incorporation of the design of those new systems and the actual construction. And so to the extent that there is change in a new ship class then the risk goes up accordingly. In the case of the CVN-78, the degree of change compared to the Nimitz was fairly extraordinary all for good reasons, good intentions, increased capability, increased survivability, significant reduction in operating and support costs. So there was a determination that will take on this risk in order to get those benefits, and the case of the CVN-78, those risks are driving a lot of the cost growth on the lead ship. When you think about the follow ships, now you've got a stable design, now your vendor base has got a production line going to support the production. Now you've got a build plan and a workforce that has climbed up on the learning curve to drive cost down. So you can look at—you can look at virtually every shipbuilding program and you'll see a significant drop-off in cost from that first of class to the follow ships. And then you look for a stable learning curve to take over in the longer term production of a ship class. Carriers are unique for a number of reasons, one of which we don't have an annual procurement of carriers. They're spread out over a five and, in fact, in the case of 78 as much as seven-year period. So in order to achieve that learning, there are additional challenges associated with achieving that learning. And so we're going at it very deliberately on the CVN-79 through the build plan with the shipbuilder to hit the line that we've got to have—the cost reductions that we've got to have on the follow ships of the class. March 2013 Navy Report A March 2013 report to Congress on the Navy's plan for building CVN-79 that was released to the public on May 16, 2013, states the following in its executive summary: As a result of the lessons learned on CVN 78, the approach to carrier construction has undergone an extensive affordability review and the Navy and the shipbuilder have made significant changes on CVN 79 that will significantly reduce the cost to build the ship. These include four key construction areas: —CVN 79 construction will start with a complete design and a complete bill of material —CVN 79 construction will start with a firm set of stable requirements —CVN 79 construction will start with the development complete on a host of new technologies inserted on CVN 78 ranging from the Electromagnetic Aircraft Launch System (EMALS), the Dual Band Radar, and the reactor plant, to key valves in systems throughout the ship —CVN 79 construction will start with an 'optimal build' plan that emphasizes the completion of work and ship outfitting as early as possible in the construction process to optimize cost and ultimately schedule performance. In addition to these fundamentals, the Navy and the shipbuilder are tackling cost through a series of other changes that when taken over the entire carrier will have a significant impact on construction costs. The Navy has also imposed cost targets and is aggressively pursuing cost reduction initiatives in its government furnished systems. A detailed accounting of these actions is included in this report. The actions discussed in this report are expected to reduce the material cost of CVN 79 by 10-20% in real terms from CVN 78, to reduce the number of man-hours required to build the CVN 79 by 15-25% from CVN 78, and to reduce the cost of government furnished systems by 5-10% in real terms from CVN 78. For the full text of the Navy's report, see the Appendix D . March 2012 Navy Letter to Senator McCain Secretary of the Navy Ray Mabus, in a letter with attachment sent in late March 2012 to Senator John McCain on controlling cost growth in CVN-78, stated the following: Dear Senator McCain: Thank you for your letter of March 21, 2012, regarding the first-of-class aircraft carrier, GERALD R. FORD (CVN 78). Few major programs carry greater importance or greater impact on national security, and no other major program comprises greater scale and complexity than the Navy's nuclear aircraft carrier program. Accordingly, successful execution of this program carries the highest priority within the Department of the Navy. I have shared in the past my concern when I took office and learned the full magnitude of new technologies and design change being brought to the FORD. Requirements drawn up more than a decade prior for this capital ship drove development of a new reactor plant, propulsion system, electric plant and power distribution system, first of kind electromagnetic aircraft launching system, advanced arresting gear, integrated warfare system including a new radar and communications suite, air conditioning plant, weapons elevators, topside design, survivability improvements, and all new interior arrangements. CVN 78 is a near-total redesign of the NIMITZ Class she replaces. Further, these major developments, which were to be incrementally introduced in the program, were directed in 2002 to be integrated into CVN 78 in a single step. Today we are confronting the cost impacts of these decisions made more than a decade ago. In my August 29, 2011 letter, I provided details regarding these cost impacts. At that time, I reported the current estimate for the Navy's share of the shipbuilder's construction overrun, $690 million, and described that I had directed an end-to-end review to identify the changes necessary to improve cost for carrier design, material procurement, planning, build and test. The attached white paper provides the findings of that review and the steps we are taking to drive affordability into the remaining CVN 78 construction effort. Pending the results of these efforts, the Navy has included the 'fact of life' portion of the stated overrun in the Fiscal Year 2013 President's Budget request. The review also highlighted the compounding effects of applying traditional carrier build planning to a radically new design; the challenges inherent to low-rate, sole-source carrier procurement; and the impact of external economic factors accrued over 15 years of CVN 78 procurement—all within the framework of cost-plus contracts. The outlined approach for ensuring CVN 79 and follow ship affordability focuses equally upon tackling these issues while applying the many lessons learned in the course of CVN 78 procurement. As always, if I may be of further assistance, please let me know. Sincerely, [signed] Ray Mabus Attachment: As stated Copy to: The Honorable Carl Levin, Chairman [Attachment] Improving Cost Performance on CVN 78 CVN 78 is nearing 40 percent completion. Cost growth to-date is attributable to increases in design, contractor furnished material, government furnished material (notably, the Electromagnetic Aircraft Launching System (EMALS), Advanced Arresting Gear (AAG), and the Dual Band Radar (DBR)), and production labor performance. To achieve the best case outcome, the program must execute with zero additional cost growth in design and material procurement, and must improve production performance. The Navy and the shipbuilder have implemented a series of actions and initiatives in the management and oversight of CVN 78 that cross the full span of contracting, design, material procurement, government furnished equipment, production planning, production, management and oversight. CVN 78 is being procured within a framework of cost-plus contracts. Within this framework, however, the recent series of action taken by the Navy to improve contract effectiveness are achieving the desired effect of incentivizing improved cost performance and reducing government exposure to further cost growth. CVN 78 design has been converted from a 'level of effort, fixed fee' contract to a completion contract with a firm target and incentive fee. Shipbuilder cost performance has been on-target or better since this contract was changed. CVN 78 construction fee has been retracted, consistent with contract performance. However, the shipbuilder is incentivized by the contract shareline to improve upon current performance to meet agreed-to cost goals. Contract design changes are under strict control; authorized only for safety, damage control, mission-degrading deficiencies, or similar. Adjudicated changes have been contained to less than 1 percent of contract target price. The Navy converted the EMALS and AAG production contract to a firm, fixed price contract, capping cost growth to that system and imposing negative incentives for late delivery. Naval Sea Systems Command is performing a review of carrier specifications with the shipbuilder, removing or improving upon overly burdensome or unneeded specifications that impose unnecessary cost on the program. The single largest impact to cost performance to-date has been contractor and government material cost overruns. These issues trace to lead ship complexity and CVN 78 concurrency, but they also point to inadequate accountability for carrier material procurement, primarily during the ship's advance procurement period (2002-2008). These effects cannot be reversed on CVN 78, but it is essential to improve upon material delivery to the shipyard to mitigate the significant impact of material delays on production performance. Equally important, the systemic material procurement deficiencies must be corrected for CVN 79. To this end, the Navy and shipbuilder have taken the following actions. The Navy has employed outside supply chain management experts to develop optimal material procurement strategies. The Navy and the shipbuilder are reviewing remaining material requirements to employ these best practices (structuring procurements to achieve quantity discounts, dual-sourcing to improve schedule performance and leverage competitive opportunities, etc.). The shipbuilder has assigned engineering and material sourcing personnel to each of their key vendors to expedite component qualifications and delivery to the shipyard. The shipbuilder is inventorying all excess material procured on CVN 78 for transfer to CVN 79 (cost reduction to CVN 78), as applicable. The Program Executive Officer (Carriers) is conducting quarterly flag-level government furnished equipment summits to drive cost reduction opportunities and ensure on-time delivery of required equipment and design information to the shipbuilder. The most important finding regarding CVN 78 remaining cost is that the CVN 78 build plan, consistent with the NIMITZ class, focuses foremost on completion of structural and critical path work to support launching the ship on-schedule. This emphasis on structure comes at the expense of completing ship systems, outfitting, and furnishing early in the build process and results in costly, labor-intensive system completion activity during later; more costly stages of production. Achieving the program's cost improvement targets will require that CVN 78 increase its level of completion at launch, from current estimate of 60 percent to no less than 65 percent. To achieve this goal and drive greater focus on system completion: the Navy fostered a collaborative build process review by the shipbuilder with other Tier 1 private shipyards in order to benchmark its performance arid identify fundamental changes that would yield marked improvement; the shipbuilder has established specific launch metrics by system (foundations, machinery, piping, power panels, vent duct, lighting, etc.) and increased staffing for waterfront engineering and material expediters to support meeting these metrics; the shipbuilder has linked all of these processes within a detailed integrated master schedule, providing greater visibility to current performance and greater ability to control future cost and schedule performance across the shipbuilding disciplines; the Navy and shipbuilder are conducting Unit Readiness Reviews of CVN 78 erection units to ensure that the outfitted condition of each hull unit being lifted into the dry-dock contains the proper level of outfitting. These initiatives, which summarize a more detailed list of actions being implemented and tracked as result of the end-to-end review, are accompanied by important management changes. The shipbuilder has assigned a new Vice President in charge of CVN 78, a new Vice President in charge of material management and purchasing, and a number of new general shop foreman to strengthen CVN 78 performance. The Navy has assigned a second tour Flag Officer with considerable carrier operations, construction, and program management experience as the new Program-Executive Officer (PEO). The PEO and shipyard president conduct bi-weekly launch readiness reviews focusing on cost performance, critical path issues and accomplishment of the target for launch completion. The Assistant Secretary of the Navy (Research, Development, and Acquisition) conducts a monthly review of program progress and performance with the PEO and shipbuilder, bringing to bear the full weight of the Department, as needed, to ensure that all that can be done to improve on cost performance is being done. Early production performance improvements can be traced directly to these actions, however, significant further improvement is required. To this end, the Navy is conducting a line-by-line review of all 'cost to-go' on CVN 78 to identify further opportunity to reduce cost and to mitigate risk. Improving Cost Performance on CVN 79 CVN 79 Advance Procurement commenced in 2007 with early construction activities following in 2011. Authorization for CVN 79 procurement is requested in Fiscal Year 2013 President's Budget request with the first year of incremental funding. Two years have been added to the CVN 79 production schedule in this budget request, afforded by the fact that CVN 79 will replace CVN 68 when she inactivates. To improve affordability for CVN 79, the Navy plans to leverage this added time by introducing a fundamental change to the carrier procurement approach and a corresponding shift to the carrier build plan, while incorporating CVN 78 lessons learned. The two principal 'documents' which the Navy and shipbuilder must ensure are correct and complete at the outset of CVN 79 procurement are the design and the build plan. Design is governed by rules in place that no changes will be considered for the follow ship except changes necessary to correct design deficiencies on the lead ship, fact of life changes to correct obsolescence issues, or changes that will result in reduced cost for the follow ship. Exceptions to these rules must be approved by the JROC, or designee. Accordingly, the Navy is requesting procurement authority for CVN 79 with the Design Product Model complete and construction drawings approximately 95 percent complete (compared to approximately 30 percent complete at time of lead ship authorization). As well, first article testing and certification will be complete for virtually all major new equipments introduced in the FORD Class. At this point in time, the shipbuilder has developed a complete bill of material for CVN 79. The Navy is working with the shipbuilder to ensure that the contractor's material estimates are in-line with Navy 'should cost' estimates; eliminating non-recurring costs embedded in lead ship material, validating quantities, validating escalation indices, incorporating lead ship lessons learned. The Navy has increased its oversight of contractor furnished material procurement, ensuring that material procurement is competed (where competition is available); that it is fixed priced; that commodities are bundled to leverage economic order quantity opportunities; and that the vendor base capacity and schedule for receipt supports the optimal build plan being developed for production. In total, the high level of design maturity and material certification provides a stable technical baseline for material procurement cost and schedule performance, which are critical to developing and executing an improved, reliable build plan. In order to significantly improve production labor performance, based on timely receipt of design and material, the Navy and shipbuilder are reviewing and implementing changes to the CVN 79 build plan and affected facilities. The guiding principles are: maximize planned work in the shops and early stages of construction; revise sequence of structural unit construction to maximize learning curve performance through 'families of units' and work cells; incorporate design changes to improve FORD Class producibility; increase the size of erection units to eliminate disruptive unit breaks and improve unit alignment and fairness; increase outfitting levels for assembled units prior to erection in the dry-dock; increase overall ship completion levels at each key event. The shipbuilder is working on detailed plans for facility improvements that will improve productivity, and the Navy will consider incentives for capital improvements that would provide targeted return on investment, such as: increasing the amount of temporary and permanent covered work areas; adding ramps and service towers for improved access to work sites and the dry-dock; increasing lift capacity to enable construction of larger, more fully outfitted super-lifts: An incremental improvement to carrier construction cost will fall short of the improvement necessary to ensure affordability for CVN 79 and follow ships. Accordingly, the shipbuilder has established aggressive targets for CVN 79 to drive the game-changing improvements needed for carrier construction. These targets include: 75 percent Complete at Launch (15 percent> [i.e., 15 percent greater than] FORD); 85-90 percent of cable pulled prior to Launch (25-30 percent> FORD); 30 percent increase in front-end shop work (piping details, foundations, etc); All structural unit hot work complete prior to blast and paint; 25 percent increase to work package throughput; 100 percent of material available for all work packages in accordance with the integrated master schedule; zero delinquent engineering and planning products; resolution of engineering problems in < 8 [i.e., less than 8] hours. In parallel with efforts to improve shipbuilder costs, the PEO is establishing equally aggressive targets to reduce the cost of government furnished equipment for CVN 79; working equipment item by equipment item with an objective to reduce overall GFE costs by ~$500 million. Likewise, the Naval Sea Systems Command is committed to continuing its ongoing effort to identify specification changes that could significantly reduce cost without compromising safety and technical rigor. The output of these efforts comprises the optimal build plan for CVN 79 and follow, and will be incorporated in the detail design and construction baseline for CVN 79. CVN 79 will be procured using a fixed price incentive contract. Appendix D. March 2013 Navy Report to Congress on Construction Plan for CVN-79 This appendix reprints a March 2013 Navy report to Congress on the Navy's construction plan for CVN-79. Appendix E. Shock Trial An earlier oversight issue for Congress for the CVN-78 program was whether to conduct the shock trial for the CVN-78 class in the near term, on the lead ship in the class, or years later, on the second ship in the class. This appendix presents background information on that issue. A shock trial, known formally as a full ship shock trial (FSST) and sometimes called a shock test, is a test of the combat survivability of the design of a new class of ships. A shock trial involves setting off one or more controlled underwater charges near the ship being tested, and then measuring the ship's response to the underwater shock caused by the explosions. The test is intended to verify the ability of the ship's structure and internal systems to withstand shocks caused by enemy weapons, and to reveal any changes that need to be made to the design of the ship's structure or its internal systems to meet the ship's intended survivability standard. Shock trials are nominally to be performed on the lead ship in a new class of ships, but there have also been cases where the shock trial for a new class was done on one of the subsequent ships in the class. The question of whether to conduct the shock trial for the CVN-78 class in the near term, on the lead ship in the class, or years later, on the second ship in the class, has been a matter of disagreement at times between the Navy and the office of the Secretary of Defense (OSD). The Navy has wanted to perform the shock trial on the second ship in the class, because performing it on the lead ship in the class, the Navy has argued, will cause a significant delay in the first deployment of the lead ship, effectively delaying the return of the carrier force to an 11-ship force level and increasing the operational strain on the other 10 carriers. The Navy has argued that the risks of delaying the shock trial on the CVN-78 to the second ship in the class are acceptable, because the CVN-78 class hull design is based on the Nimitz (CVN-68) class aircraft carrier hull design, whose survivability against shocks is understood, because systems incorporated into the CVN-78 design have been shock tested at the individual component level, and because computer modeling can simulate how the CVN-78 design as a whole will respond to shocks. OSD has argued that the risks of delaying the CVN-78 class shock trial to the second ship in the class are not acceptable, because the CVN-78 design is the first new U.S. aircraft carrier design in four decades; because the CVN-78 design has many internal design differences compared to the CVN-68 design, including new systems not present in the CVN-68 class design; and because computer modeling can only do so much to confirm how a complex new platform, such as an aircraft carrier and all its internal systems, will respond to shocks. The risk of delaying the shock trial, OSD has argued, outweighs the desire to avoid a delay in the first deployment of the lead ship in the class. OSD in 2015 directed the Navy to plan for conducting a shock trial on the lead ship. The Navy complied with this direction but has also sought to revisit the issue with OSD. The issue of the shock trial for the CVN-78 class has been a matter of legislative activity—see the provisions shown earlier in " Recent Related Legislative Provisions ," particularly the most recent such provision, Section 121(b) of the FY2018 National Defense Authorization Act ( H.R. 2810 / P.L. 115-91 of December 12, 2017). An April 5, 2018, press report states the following: The Pentagon's No. 2 civilian has said the Navy should perform shock-testing soon to determine how well its new $12.9 billion aircraft carrier—the costliest warship ever—could withstand an attack, affirming the service's recent decision to back down from a plan for delay. "We agree with your view that a test in normal sequence is more prudent and pragmatic," Deputy Defense Secretary Patrick Shanahan said in a newly released March 26 letter to Senate Armed Services Committee Chairman John McCain. The Arizona Republican and Senator Jack Reed, the panel's top Democrat, pressed for the shock-testing to go ahead as originally planned. James Guerts, the Navy's chiefs weapons buyer, told reporters last month that the Navy was acquiescing to the testing after initially asking Defense Secretary James Mattis to delay it for at least six years. In its push to maintain an 11-carrier fleet, the Navy wanted to wait and perform the test on a second carrier in the class rather than on the USS Gerald Ford.

CVN-78, CVN-79, CVN-80, and CVN-81 are the first four ships in the Navy's new Gerald R. Ford (CVN-78) class of nuclear-powered aircraft carriers (CVNs). CVN-78 (Gerald R. Ford) was procured in FY2008. The Navy's proposed FY2020 budget estimates the ship's procurement cost at $13,084.0 million (i.e., about $13.1 billion) in then-year dollars. The ship received advance procurement (AP) funding in FY2001-FY2007 and was fully funded in FY2008-FY2011 using congressionally authorized four-year incremental funding. To help cover cost growth on the ship, the ship received an additional $1,394.9 million in FY2014-FY2016 and FY2018 cost-to-complete procurement funding. The ship was delivered to the Navy on May 31, 2017, and was commissioned into service on July 22, 2017. The Navy is currently working to complete construction, testing, and certification of the ship's 11 weapons elevators. CVN-79 (John F. Kennedy) was procured in FY2013. The Navy's proposed FY2020 budget estimates the ship's procurement cost at $11,327.4 million (i.e., about $11.3 billion) in then-year dollars. The ship received AP funding in FY2007-FY2012, and was fully funded in FY2013-FY2018 using congressionally authorized six-year incremental funding. The ship is scheduled for delivery to the Navy in September 2024. CVN-80 (Enterprise) and CVN-81 (not yet named) are being procured under a two-ship block buy contract that was authorized by Section 121(a)(2) of the John S. McCain National Defense Authorization Act for Fiscal Year 2019 (H.R. 5515/P.L. 115-232 of August 13, 2018). The provision permitted the Navy to add CVN-81 to the existing contract for building CVN-80 after the Department of Defense (DOD) made certain certifications to Congress. DOD made the certifications on December 31, 2018, and the Navy announced the award of the contract on January 31, 2019. Compared to the estimated procurement costs for CVN-80 and CVN-81 in the Navy's FY2019 budget submission, the Navy estimates under its FY2020 budget submission that the two-ship block buy contract will reduce the cost of CVN-80 by $246.6 million and the cost of CVN-81 by $2,637.3 million, for a combined reduction of $2,883.9 million (i.e., about $2.9 billion). Using higher estimated baseline costs for CVN-80 and CVN-81 taken from a December 2017 Navy business case analysis, the Navy estimates under its FY2020 budget submission that the two-ship contract will reduce the cost of CVN-80 by $770.9 million and the cost of CVN-81 by $3,086.3 million, for a combined reduction of $3,857.2 million (i.e., about $3.9 billion). CVN-80 was procured in FY2018. The Navy's proposed FY2020 budget estimates the ship's procurement cost at $12,335.1 million (i.e., about $12.3 billion) in then-year dollars. The ship received AP funding in FY2016 and FY2017, and the Navy plans to fully fund the ship in FY2018-FY2025 using incremental funding authorized by Section 121(c) of P.L. 115-232. The Navy's proposed FY2020 budget requests $1,062.0 million in procurement funding for the ship. The ship is scheduled for delivery to the Navy in March 2028. Prior to the awarding of the two-ship block buy contract, CVN-81 was scheduled to be procured in FY2023. Following the awarding of the two-ship block buy contract, the Navy has chosen to show CVN-81 in its FY2020 budget submission as a ship to be procured in FY2020 (as opposed to a ship that was procured in FY2019). The Navy's FY2020 budget submission estimates the ship's procurement cost at $12,450.7 million (i.e., about $12.5 billion) in then-year dollars. The Navy plans to fully fund the ship beginning in FY2019 and extending beyond FY2026 using incremental funding authorized by Section 121(c) of P.L. 115-232. The Navy's proposed FY2020 budget requests $1,285.0 million in procurement funding for the ship. The ship is scheduled for delivery to the Navy in February 2032. The Navy's FY2020 budget submission proposed to not fund the mid-life nuclear refueling overhaul (called a Refueling Complex Overhaul, or RCOH) for the aircraft carrier CVN-75 (Harry S. Truman), and to instead retire the ship around FY2024 and also deactivate one of the Navy's carrier air wings at about the same time. On April 30, 2019, however, the Administration announced that it was effectively withdrawing this proposal from the Navy's FY2020 budget submission. The Administration now supports funding the CVN-75 RCOH and keeping CVN-75 (and by implication its associated air wing) in service past FY2024. Oversight issues for Congress for the CVN-78 program include the following: DOD's decision to show CVN-81 in its FY2020 budget submission as a ship to be procured in FY2020, instead of a ship that was procured in FY2019; the Navy's decision, as part of its FY2020 budget submission, to not accelerate the scheduled procurement of CVN-82 from FY2028 to an earlier fiscal year; whether to approve, reject, or modify the Navy's FY2020 procurement funding request for the CVN-78 program; the date for achieving the Navy's 12-ship force-level goal for aircraft carriers; cost growth in the CVN-78 program, Navy efforts to stem that growth, and Navy efforts to manage costs so as to stay within the program's cost caps; Navy efforts to complete the construction, testing, and certification of the weapons elevators on CVN-78; additional CVN-78 program issues that were raised in a December 2018 report from the Department of Defense's (DOD's) Director of Operational Test and Evaluation (DOT&E); additional CVN-78 program issues that were raised in a May 2019 Government Accountability Office (GAO) report on DOD weapon systems; whether the Navy should shift at some point from procuring large-deck, nuclear-powered carriers like the CVN-78 class to procuring smaller aircraft carriers.

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Introduction In recent years, Central American migrant families have been arriving at the U.S.-Mexico border in relatively large numbers, many seeking asylum. While some request asylum at U.S. ports of entry, others do so after attempting to enter the United States illegally between U.S. ports of entry. On May 7, 2018, then-Attorney General Jeff Sessions announced that the Department of Justice (DOJ) implemented a "zero tolerance" policy toward illegal border crossing, both to discourage illegal migration into the United States and to reduce the burden of processing asylum claims that Administration officials contend are often fraudulent. Under the zero tolerance policy, DOJ prosecuted 100% of adult aliens apprehended crossing the border illegally, making no exceptions for whether they were asylum seekers or accompanied by minor children. Illegal border crossing is a misdemeanor for a first time offender and a felony for anyone who has previously been "denied admission, excluded, deported, or removed, or has departed the United States while an order of exclusion, deportation or removal is outstanding and thereafter enters, attempts to enter or is found in the U.S." Both such criminal offenses can be prosecuted by DOJ in federal criminal courts. DOJ's "100% prosecution" policy represented a change in the level of enforcement of an existing statute rather than a change in statute or regulation. The recent Bush and Obama Administrations prosecuted illegal border crossings relatively infrequently, in part to avoid having DOJ resources committed to prosecuting sizeable numbers of misdemeanors. At different times during those Administrations, illegal entrants would be criminally prosecuted in an attempt to reduce illegal migration, but exceptions were generally made for families and asylum seekers. Illegal border crossers who are prosecuted by DOJ are detained in federal criminal facilities. Because children are not permitted in criminal detention facilities with adults, detaining adults who crossed illegally requires that any minor children under age 18 accompanying them be treated as unaccompanied alien children (UAC) and transferred to the care and custody of the Department of Health and Human Services' (HHS's) Office of Refugee Resettlement (ORR). The widely publicized family separations were therefore a consequence of the Administration's policy of 100% prosecution of illegal border crossing, and not the result of a direct policy or law mandating family separation. Since the policy was implemented, "under 3,000" children may have been separated from their parents, including at least 100 under age 5. The family separations have garnered extensive public attention. The Trump Administration and immigration enforcement advocates maintain that the zero tolerance policy was necessary to dis-incentivize migrants from coming to the United States and clogging immigration courts with fraudulent requests for asylum. Immigrant advocates contend that migrant families are fleeing legitimate threats of violence and that family separations resulting from the zero tolerance policy were cruel and violated fundamental human rights. This report briefly reviews the statutory authority for prosecuting persons who enter the United States illegally between U.S. ports of entry, and the policies and procedures for processing apprehended illegal border entrants and any accompanying children. It explains enforcement policies under past Administrations and then discusses the Trump Administration's zero tolerance policy on illegal border crossers and the attendant family separations. The report concludes by presenting varied policy perspectives on the zero tolerance policy and briefly reviews recent related congressional activity. An Appendix examines recent trends in the apprehension of family units at the U.S. Southwest border. This report describes policies and circumstances that continue to change. Information presented in it is current as of the publication date but may become outdated quickly. Enforcement and Asylum Policy for Illegal Border Crossers Aliens who wish to enter the United States may request admission legally at a U.S. port of entry or may attempt to enter illegally by crossing the border surreptitiously between U.S. ports of entry. Aliens who wish to request asylum may do so at a U.S. port of entry before an officer with the Department of Homeland Security (DHS) Customs and Border Protection (CBP) Office of Field Operations or upon apprehension between U.S. ports of entry before an agent with CBP's U.S. Border Patrol. DHS has broad statutory authority both to detain aliens not legally admitted, including asylum seekers, and to remove aliens who are found to be either inadmissible at ports of entry or removable once in the United States. Aliens requesting asylum at the border are entitled to an interview assessing the credibility of their asylum claims. Illegal U.S. Entry Aliens who enter the United States illegally between ports of entry face two types of penalties. They face civil penalties for illegal presence in the United States, and they face criminal penalties for having entered the country illegally. Both types of penalties are explained below. The Immigration and Nationality Act (INA) establishes civil penalties for persons who are in the United States unlawfully (i.e., without legal status). These penalties apply to foreign nationals who entered the United States illegally as well as those who entered legally but subsequently violated the terms of their admission, typically by "overstaying" their visa duration. Foreign nationals who are apprehended for such civil immigration violations are generally subject to removal (deportation) and are placed in formal or streamlined removal proceedings (described below in " Removal ") The INA also establishes criminal penalties for (1) persons who enter or attempt to enter the United States illegally between ports of entry, (2) persons who elude examination or inspection by immigration officers, or (3) persons who attempt to enter or obtain entry to the United States through fraud or willful misrepresentation. In addition, the INA provides criminal penalties for persons who unlawfully reenter the United States after they were previously removed from the country. Foreign nationals apprehended for criminal immigration violations are subject to prosecution by DOJ in federal criminal courts. This report only addresses criminal penalties for illegal entry and reentry between ports of entry. Foreign nationals who attempt to enter the United States without authorization often do so between U.S. ports of entry on the U.S. border. If apprehended, they are processed by CBP. They are typically housed briefly in CBP detention facilities before being transferred to the custody of another federal agency or returned to their home country through streamlined removal procedures (discussed below). All apprehended aliens, including children, are placed into removal proceedings that occur procedurally after any criminal prosecution for illegal entry. Removal proceedings generally involve formal hearings in an immigration court before an immigration judge, or expedited removal without such hearings (see " Removal " below). In general, CBP refers apprehended aliens for criminal prosecution if they meet criminal enforcement priorities (e.g., child trafficking, prior felony convictions, multiple illegal entries). Such individuals are placed in the custody of the U.S. Marshals Service (DOJ's enforcement arm) and transported to DOJ criminal detention facilities for pretrial detention. After individuals have been tried—and if convicted, have served any applicable criminal sentence—they are transferred to DHS Immigration and Customs Enforcement (ICE) custody and placed in immigration detention. ICE, which represents the government in removal hearings, commences removal proceedings. If CBP does not refer apprehended aliens to DOJ for criminal prosecution, CBP may either return them to their home countries using streamlined removal processes or transfer them to ICE custody for immigration detention while they are in formal removal proceedings. Asylum Many aliens at the U.S.-Mexico border seek asylum in the United States. Asylum is not numerically limited and is granted on a case-by-case basis. Asylum can be requested by foreign nationals who have already entered the United States and are not in removal proceedings ("affirmative" asylum) or those who are in removal proceedings and claim asylum as a defense to being removed ("defensive" asylum). The process in each case is different. Arriving aliens who are inadmissible, either because they lack proper entry documents or because they attempt U.S. entry through misrepresentation or false claims to U.S. citizenship, are put into a streamlined removal process known as expedited removal (described below in " Removal "). Aliens in expedited removal who express a fear of persecution are detained by ICE and given a "credible fear" interview with an asylum officer from DHS's U.S. Citizenship and Immigration Services (USCIS). The purpose of the interview is to determine if the asylum claim has sufficient validity to merit an asylum hearing before an immigration judge. Those who receive a favorable credible fear determination are taken out of expedited removal, placed into formal removal proceedings, and given a hearing before an immigration judge, thereby placing the asylum seeker on the defensive path to asylum. Those who receive an unfavorable determination may request that an immigration judge review the case. Aliens in expedited removal who cannot demonstrate a credible fear are promptly deported. Detention The INA provides DHS with broad authority to detain adult aliens who are in removal proceedings . However, child detention operates under different policies than that of adults. All children are detained according to broad guidelines established through a court settlement agreement (applicable to all alien children) and two statutes (applicable only to unaccompanied alien children). The 1997 Flores Settlement Agreement (FSA) established a nationwide policy for the detention, treatment, and release of all alien children, both accompanied and unaccompanied. The Homeland Security Act of 2002 charged ORR with providing temporary care and ensuring custodial placement of UAC with suitable and vetted sponsors. Finally, the William Wilberforce Trafficking Victims Protection Reauthorization Act of 2008 (TVPRA) directed DHS to ensure that all UAC be screened by DHS for possible human trafficking. The TVPRA mandated that UAC from countries other than Mexico or Canada—along with all UAC apprehended in the U.S. interior—be transferred to the care and custody of ORR, and then be "promptly placed in the least restrictive setting that is in the best interest of the child." In the course of being referred to ORR, UAC are also put into formal removal proceedings, ensuring they can request asylum or other types of immigration relief before an immigration judge. As a result of a 2015 judicial interpretation of the Flores Settlement Agreement, children accompanying apprehended adults cannot be held in family immigration detention with their parents for more than 20 days, on average. If the parents cannot be released with them, such children are typically treated as UAC and referred to ORR. Removal Under the formal removal process, an immigration judge from DOJ's Executive Office for Immigration Review (EOIR) determines whether an alien is removable. The immigration judge may grant certain forms of relief (e.g., asylum, cancellation of removal), and removal decisions are subject to administrative and judicial review. Under streamlined removal procedures, which include expedited removal and reinstatement of removal (i.e., when DHS reinstates a removal order for a previously removed alien), opportunities for relief and review are generally limited. Under expedited removal (INA §235(b)), an alien who lacks proper documentation or has committed fraud or willful misrepresentation to gain admission into the United States may be removed without any further hearings or review, unless he or she indicates a fear of persecution in their home country or an intention to apply for asylum. If apprehended foreign nationals are found to be removable, ICE and CBP share the responsibility for repatriating them.  CBP handles removals at the border for unauthorized aliens from the contiguous countries of Mexico and Canada, and ICE handles all removals from the U.S. interior and removals for all unauthorized aliens from noncontiguous countries. Prosecution of Aliens Charged with Illegal Border Crossing in Prior Administrations Prior to the Trump Administration, aliens apprehended between ports of entry who were not considered enforcement priorities (e.g., a public safety threat, repeat illegal border crosser, convicted felon, or suspected child trafficker) were typically not criminally prosecuted for illegal entry but would be placed directly into civil removal proceedings for unauthorized U.S. presence. In addition, aliens apprehended at and between ports of entry who sought asylum and were found to have credible fear generally were not held in immigration detention if DHS did not assess them as public safety risks. Rather, they were administratively placed into removal proceedings, instructed by DHS to appear at their immigration hearings, and then released into the U.S. interior. This policy became more prevalent after 2015 when a federal judge ruled that children could not be kept in immigration detention for more than 20 days. DHS officials justified the "catch and release" approach in the past because of the lack of detention bed space and the considerable cost of detaining large numbers of unauthorized aliens and family units for the lengthy periods, often stretching to years, between apprehension by CBP and removal hearings before an EOIR judge. Immigration enforcement advocates criticized the catch and release policy because of the failure of many apprehended individuals to appear subsequently for their immigration hearings. According to some observers, prior Administrations made more use of alternatives to detention that permitted DHS to monitor families who were released into the U.S. interior. Such practices are needed to monitor the roughly 2 million aliens in removal proceedings given that ICE's current budget funds less than 50,000 beds, which are prioritized for aliens who pose public safety or absconder risks. Data are not available on the rate and/or absolute number of family separations resulting from illegal border crossing prosecutions under prior Administrations, limiting the degree to which comparisons can be made with the Trump Administration's zero tolerance policy. DHS states that the agency referred an average of 21% of all illegal border crossing "amenable adults" for prosecution from FY2010 through FY2016. DHS maintains that it has an established policy of separating children from adults when it cannot determine the family relationship or otherwise verify identity, determines that the child is being smuggled or trafficked or is otherwise at risk with the parent or legal guardian, or determines that the parent or legal guardian may have engaged in criminal conduct and refers them for criminal prosecution. Prosecution of Aliens Charged with Illegal Border Crossing in the Trump Administration On April 6, 2018, then-Attorney General Jeff Sessions announced a "zero tolerance" policy under which all illegal border crossers apprehended between U.S. ports of entry would be criminally prosecuted for illegal entry or illegal reentry. This policy made no exceptions for asylum seekers and/or family units. To facilitate this policy, the Attorney General announced that he would send 35 additional prosecutors to U.S. Attorney's Offices along the Southwest border and 18 additional immigration judges to adjudicate cases in immigration courts near the Southwest border. Consequently, if a family unit was apprehended crossing illegally between ports of entry, the zero tolerance policy mandated that CBP refer all illegal adult entrants to DOJ for criminal prosecution. Accompanying children, who are not permitted to be housed in adult criminal detention settings with their parents, were to be processed as unaccompanied alien children in accordance with the TVPRA. They were transferred to the custody of ORR, which houses them in agency-supervised, state-licensed shelters. If feasible given the circumstances, ORR attempted to place them with relatives or legal guardian sponsors or place them in temporary foster care. ORR has over 100 shelters in 17 states, and during the implementation of the zero tolerance policy they were reportedly at close to full capacity. Consequently, at one point, the agency was evaluating options for housing children on Department of Defense (DOD) installations to handle the surge of separated children resulting from increased prosecution of parents crossing between ports of entry. As noted earlier, after adults have been tried in federal courts for illegal entry—and if convicted, have served their criminal sentences—they are transferred to ICE custody and placed in immigration detention. Typically, parents are then reunited in ICE family detention facilities with their children who have either remained in ORR custody or have been placed with a sponsor. Requests for asylum can also be pursued at this point. Statistics and Timeline on Family Separation In FY2017, CBP apprehended 75,622 alien family units and separated 1,065 (1.4%) of them. Of those separations, 46 were due to fraud and 1,019 were due to medical and/or security concerns. In the first five months of FY2018, prior to enactment of the zero tolerance policy, CBP apprehended 31,102 alien family units and separated 703 (2.2%), of which 191 resulted from fraud and 512 from medical and/or security concerns. Prior to Attorney General Sessions's announcement of the zero tolerance policy, the American Civil Liberties Union (ACLU) filed a lawsuit against ICE (referred to as "Ms. L. v. ICE") on behalf of two families separated at the Southwest border: a woman from the Democratic Republic of the Congo who was separated from her 6-year-old daughter at a port of entry for five months; and a woman from Brazil who had crossed into the United States illegally between ports of entry and was separated from her 14-year-old son for eight months. The lawsuit, filed in February, was subsequently expanded in March 2018 to a class-action lawsuit filed by the ACLU against ICE on behalf of all parents who were separated from their children by DHS. In the early months of the policy, the Administration repeatedly revised the number of families that had been separated. According to CBP testimony in May 2018, 658 children were separated from 638 adults who were referred for prosecution between May 7 and May 21. DHS subsequently reported that 1,995 children had been separated from their parents between April 19 and May 31. DHS updated these figures in June 2018, reporting that 2,342 children were separated from their parents between May 5 and June 9. DHS then reported that CBP had since reunited with their parents 538 children who were never sent to ORR shelters. HHS Secretary Alex Azar then reported that "under 3,000" minor children (under age 18) had been separated from their families in total, including roughly 100 under age 5. As of July 13, 2018, HHS reported that 2,551 children ages 5 to 17 remained separated. On June 20, 2018, following considerable and largely negative public attention to family separations stemming from the zero tolerance policy, President Trump issued an executive order (EO) mandating that DHS maintain custody of alien families "during the pendency of any criminal improper entry or immigration proceedings involving their member," to the extent permitted by law and appropriations. The EO instructs DOD to provide and/or construct additional shelter facilities, upon request by ORR, and it instructs other executive branch agencies to assist with housing as appropriate to implement the EO. The EO mandates that the Attorney General prioritize the adjudication of detained family cases, and it requires the Attorney General to ask the U.S. District Court for the Central District of California, which oversees the Flores Settlement Agreement, to modify the agreement to permit detained families to remain together. On June 25, 2018, CBP announced that, because of ICE's lack of family detention bed space, it had temporarily halted the policy of referring adults who cross the border illegally with children to DOJ for criminal prosecution. According to a White House announcement, the zero tolerance policy may be reinstituted once additional family detention bed space becomes available. Also on June 25, 2018, DOD announced plans to permit four of its military bases to be used by other federal agencies to shelter up to 20,000 UAC and family units. DOD subsequently announced that 12,000 persons would be housed on its facilities, before another report appeared suggesting the number was 32,000 UAC and family units. Since these announcements, no efforts have been made to house apprehended UAC or family units on military installations. On June 26, 2018, in response to the ACLU class action lawsuit, Judge Dana Sabraw of the U.S. District Court for the Southern District of California issued an injunction against the Administration's practice of separating families and ordered that all separated families be reunited within 30 days. The judge ruled that children under age 5 must be reunited with their parents within 14 days, all children must have phone contact with their parents within 10 days, children could be separated at the border only if accompanying adults presented an immediate danger to them, and parents were not to be removed unless they had been reunited with their separated children. In response to the June 26 injunction, the Trump Administration reportedly instructed DHS to provide all parents with final orders of removal and whose children were separated from them with two options. The first was to return to their countries of origin with their children. This option fulfilled the mandate from the June 26 court order to reunite families but also forced parents and children to abandon any claims for asylum. The second option was for parents to return alone to their country of origin. This option would leave the children in the United States to apply for asylum on their own. Parental decisions were to be recorded on a new ICE form. On July 9, 2018, Judge Dolly Gee of the U.S. District Court for the Central District of California, which oversees the Flores Settlement Agreement, ruled against a DOJ request to modify the agreement to permit children to remain with their parents in family detention. Judge Gee held that no basis existed for amending the court's original decision requiring the federal government to release alien minors in immigration detention after 20 days, regardless of any unlawful entry prosecution of the parents. On July 10, ICE officials reportedly indicated that parents reunited with their children would be enrolled in an alternative detention program, such as the use of ankle bracelets that permit electronic monitoring, and then released into the U.S. interior, essentially reverting to the prior policy that has been labeled by some as "catch and release." DOJ continued to maintain that its zero tolerance policy was in effect. On July 11, 2018, in response to the requirements of the ACLU lawsuit, ORR certified a list of 2,654 children that the agency stated were in its custody at the time of the June 26 injunction that it believed had been separated from their parents and whose parents met the lawsuit's class definition. According to a subsequent HHS Office of Inspector General (OIG) report, one or more data sources showed that an additional 946 children may have been separated from family members at the time of apprehension, but their family members did not meet the criteria needed for inclusion in the lawsuit. On July 16, 2018, in response to concerns expressed by the ACLU about potential abrupt deportations following family reunification, Judge Sabraw temporarily halted, for one week, the deportations of parents who had been reunited with their children. The judge issued the stay of deportations to provide parents slated for removal with a week's time to better understand their legal rights regarding asylum or other forms of immigration relief for themselves and their children. On July 16, 2018, Jonathan White, Deputy Director for Children's Programs at the Office of Refugee Resettlement, testified before Judge Sabraw that ORR had identified 2,551 separated children in its custody ages 5 to 17 and had matched 2,480 to their parents, while 71 children's parents remained unidentified. ORR was undertaking intensive background checks to ensure that separated children were reunited with their actual parents and did not face personal security risks such as child abuse. According to White, 1,609 parents of separated children remained in ICE custody. White noted that ICE was also conducting its own security checks and at that point had cleared 918 parents, failed 51 parents, and had 348 parents with pending clearances. As of July 16, 2018, ICE had approved about 300 children for release to be reunited with their parents. On July 18, 2018, HHS submitted a "Tri-Department Plan" in coordination with DHS and DOJ explaining actions the agencies were taking to reunify Ms. L v. ICE class members with their children. These steps include conducting and reviewing background checks of parents, confirming parentage, assessing child safety, interviewing parents, and reuniting families. As of July 19, 2018, the Administration had reportedly reunified 364 of the 2,551 children ages 5 to 17. Apart from the parents of those children, 1,607 parents were eligible to be reunited with their children, 719 of whom had final orders of deportation. Another 908 parents were not expected to be eligible for reunification because they possessed criminal backgrounds or required "further evaluation." On September 6, 2018, DHS and HHS proposed new regulations that would effectively terminate the Flores Settlement Agreement and replace it with formal regulations governing the "apprehension, processing, care, custody, and release" of minor children. The primary provision in these proposed regulations would be the authority to hold migrant children and their parents until their cases have been adjudicated. Whether federal courts will impose injunctions on or rule against the regulations based on their inconsistency with the Flores Settlement Agreement is not yet known. In October 2018, it was widely reported that the Administration was considering alternative immigration enforcement policies involving family separation to reduce the persistent and relatively high level of unauthorized migrants seeking asylum at the Southwest border. One of these approaches, a "binary choice" policy, would give detained parents the option of keeping their children with them in immigration detention during the pendency of their immigration cases or being separated from their children, who would be referred to ORR shelters, including possible foster care. This option gained traction as a large and expanding migrant group originating from Honduras, referred to as the migrant "caravan," garnered extensive media attention as it made its way through Central America and Mexico. As of this writing, DHS has not taken any action with regard to this proposed policy. Apart from the number of separated children who have been included in the Ms. L. v. ICE lawsuit, other figures emerged on the total number of family separations that have occurred more generally. For example, on October 12, 2018, Amnesty International (AI) published a report citing statistics provided to the organization by CBP indicating that 6,022 "family units" had been separated between April 19, 2018, and August 15, 2018. These cases, combined with the 1,768 family separations reported by DHS between October 1, 2016, and February 28, 2018 (the 1,065 in FY2017 plus the 703 in the first five months of FY2018 noted separately above) indicate that CBP has reported a total of 7,790 family separations to either CRS or AI. This total excludes an unknown number of family separations occurring between March 1 and April 18, 2018. According to AI, it also may exclude an unknown number of families that were separated after requesting asylum at U.S. ports of entry. In January 2019, HHS's OIG issued a report on ORR's challenges identifying all separated children, ultimately concluding that "the total number of children separated from a parent or guardian by immigration authorities is unknown." The report cited limitations with both its information technology system for tracking such children as well as the complexity of determining which children should be classified as separated. According to this report, ORR's review of new information acquired between July and December 2018 indicated that an additional 162 children had met the criteria to be included in the Ms. L. v. ICE lawsuit, and that 79 previously included children had not actually been separated from a parent, changing the total from 2,654 to 2,737 children in the lawsuit. On February 7, 2019, a representative from HHS's OIG testified before Congress that DHS was continuing to separate children from their parents, although at a lower rate than during the zero tolerance policy of May-June 2018. The testimony noted that while DHS routinely separates families if parents have a criminal history, DHS had not provided HHS with sufficient information to facilitate appropriate placement within the ORR shelter system. The testimony also noted that "thousands more" children were likely separated prior to June 26, 2018, but, lacking any formal system for tracking such separations, the witness could not provide more precise figures. On February 21, 2019, the Joint Status Report filed on the status of a revised total of 2,816 children (2,709 ages 5 and above and 107 under age 5) included in the Ms. L. v. ICE lawsuit indicated that 2,735 had been reunited with their parents. The statuses of the remaining children are described in the report largely as follows: being determined upon further review to have not been separated from their parents; not reunited because of potential safety issues with the parent; and not being reunited because deported parents confirmed they wanted to allow the child to remain in the United States. In addition, the report also indicated that up to 249 additional children not part of the Ms. L. v. ICE lawsuit had been separated between June 27, 2018 (the day after the lawsuit was filed), and January 31, 2019. According to ICE, the basis for separation was largely "parent criminality, prosecution, gang affiliation, or other law enforcement purpose." On February 21, 2019, Texas Civil Rights Project released a report describing the findings from interviews with 272 adults who had experienced family separation subsequent to the President's executive order. The interviewees, a subset of almost 10,000 screened immigrants who were prosecuted for immigration violations at the Southwest border, had indicated to screeners that they had been separated from their children. The data, the first on family separation collected on a large scale by an organization outside the federal government, indicated that since the zero tolerance policy was terminated, a considerable number of family separations had occurred between minor children and relatives other than parents and legal guardians. As noted above, the INA defines an unaccompanied child as an unauthorized minor under age 18 who is not in the care and custody of a parent or legal guardian. According to DHS, minor children apprehended at the border who are accompanied by older siblings, cousins, aunts, uncles, grandparents, and other relatives who are not parents or legal guardians must be treated as unaccompanied alien children, separated from their accompanying relatives, and turned over to the custody of ORR. DHS reportedly does not count such related pairs of individuals as family units in its statistics, raising concerns among advocates that current CBP statistics may not fully capture the extent of family separation among apprehended migrants. Policy Perspectives Perspectives on the zero tolerance policy generally divide into two groups. Those who support greater immigration enforcement point to recent surges in family unit migration and a substantial backlog of asylum cases that are straining DHS and DOJ resources, potentially compromising the agencies' abilities to meet their outlined missions. Those who advocate on behalf of immigrants decry the Administration's treatment of migrants as unnecessarily harsh and counterproductive. Enforcement Perspectives DHS and DOJ contend that the policy enforces existing law and is needed to reduce illegal immigration. DHS notes that foreign nationals attempting to enter the United States between ports of entry or "without inspection" are committing a crime punishable under the INA as a misdemeanor on the first occasion and a felony for every attempt thereafter. DHS maintains that it has a long-standing policy of separating children from adults when children are at risk because of threats from human trafficking or because the familial relationship is suspect. DHS also maintains that it does not have a formal policy of separating parents from children for deterrence purposes, and it follows a standard policy of keeping families together "as long as operationally possible." According to DHS, the agency has "a legal obligation to protect the best interests of the child whether that is from human smugglings, drug traffickers, or nefarious actors who knowingly break [U.S.] immigration laws and put minor children at risk." Accordingly, DHS considers it appropriate to treat children of apprehended parents as UAC. DHS posits that while family separation is an unfortunate outcome of stricter enforcement of immigration laws and criminal prosecution of illegal entry and reentry, it is no different than the family separation that occurs in the U.S. criminal justice system when parents of minor children commit a crime and are taken into criminal custody. Attorney General Sessions has stated that parents who do not want to be separated from their children should simply not attempt to cross the U.S. border illegally. DHS Secretary Nielsen justified the zero tolerance policy with statistics showing a 223% increase in illegal border crossings and inadmissible cases along the Southwest border between April 2017 and April 2018. Similar increases in monthly apprehensions between years were cited for family units and unaccompanied alien children. Secretary Nielsen also stated that while the apprehension figures "are at times higher or lower than in years past, it makes little difference," characterizing them as unacceptable either way. DHS officials cite results of policies imposed at the Border Patrol's El Paso sector (covering West Texas and New Mexico) for part of 2017, where a similar family separation policy reduced the number of illegal family border crossings by 64%. DHS notes that its policy reflects President Trump's January 2017 Executive Order 13767 on border security directing executive branch departments and agencies to "deploy all lawful means to secure the Nation's Southwest border, to prevent further illegal immigration into the United States, and to repatriate illegal aliens swiftly, consistently, and humanely." DHS further contends that parents who attempt to cross illegally into the United States with their children not only put their children at grave risk but also enrich transnational criminal organizations to whom they pay smuggling fees. DHS argues that some parents, aware of the limited amount of family detention space, intentionally use their children as shields from detention and anticipate that they will be viewed, as they had been in prior years, as low security risks. DHS points to unpublished intelligence reports describing cases where unrelated adults have used or trafficked children in order to avoid immigration detention. DHS and other observers also note that asylum requests have increased considerably, a trend that raises concerns about possible fraudulent asylum claims and the misuse of asylum claims to enter and remain in the United States. DHS notes that ICE and ORR both play a role in family reunification and characterizes the process as "well-coordinated." DHS maintains that it has procedures in place to connect separated family members and ensure that parents know the location of minors and can regularly communicate with them. Mechanisms to facilitate such communication include posted information notices in ICE detention facilities, an HHS Adult Hotline and email inquiry address, and an ICE call center and email inquiry address. DHS and ORR are using DNA testing to confirm familial ties between parents and children. Immigrant Advocacy Perspectives Immigrant advocacy organizations argue that migrant families are fleeing a well-documented epidemic of gang violence from the Northern Triangle countries of El Salvador, Guatemala, and Honduras. They have criticized the practice of family separation because it seemingly punishes people for fleeing dangerous circumstances and seeking asylum in the United States. They posit that requesting asylum is not an illegal act, Congress created laws that require DHS to process and evaluate claims for humanitarian protection, DHS must honor congressional intent by humanely processing and evaluating such claims, and many who request asylum have valid claims and compelling circumstances that merit consideration. Immigrant advocates have also criticized the Administration for creating what they consider to be a debacle of its own making, characterized by frequently changing policies and justifications, what some describe as an uncoordinated implementation process, and the absence of an effective plan to reunify separated families. In some cases, records linking parents to children reportedly may have disappeared or been destroyed, hampering efforts to establish relationships between family members. Media reports have described obstacles to reuniting families after separation, including a lack of communication between federal agencies, the absence of information about accompanying children collected by CBP at the time of apprehension, the inability of ICE detainees to receive phone calls without special arrangements, and a cumbersome vetting process to ensure children's safe placement with parents. Similar observations have since been made by government agencies. In addition, while DOJ typically detains and prosecutes parents for illegal entry at federal detention centers and courthouses near the U.S.-Mexico border, ORR houses their children at shelters geographically dispersed in 17 states, in some cases thousands of miles away from the parents. Child welfare professionals assert that family separation has the potential to cause lasting psychological harm for adults and especially for children. Some point to the findings of a DHS advisory panel as well as those of other organizations that discourage family detention as neither appropriate nor necessary for families and as not being in children's best interests. Some immigration observers question the Administration's ability to marshal resources required to prosecute all illegal border crossers given that Congress has not appropriated additional funding to support the zero tolerance policy. One news report, for example, noted that 3,769 foreign nationals were convicted of illegal entry in criminal courts during March 2018, a month in which 37,383 foreign nationals were apprehended for illegal entry. Given the relative size of the task they face, observers question how DOJ and DHS can channel fiscal resources to meet this objective without compromising their other missions. They contend that the policy is counterproductive because it prevents CBP from using risk-based strategies to pursue the most egregious crimes, thereby making the Southwest border region less safe and more prone to criminal activity. Some have suggested that the zero tolerance policy is diverting resources from, and thereby hindering, other DHS operations. Some in Congress have criticized the family separation policy because of its cost in light of alternative options, such as community-based detention programs. They cite, for example, the Family Case Management Program (FCMP), which monitored families seeking asylum and demonstrated reportedly high compliance rate with immigration requirements such as court hearings and immigration appointments. The FCMP, which began in January 2016, was terminated by the Trump Administration in April 2017. According to DHS, the FCMP average daily cost of $36 reportedly exceeded that of "intensive supervision" programs ($5-$7 daily), although both programs are considerably lower than the average daily cost of family detention ($319). More broadly, immigration advocates contend that the Administration is engaged in a concerted effort to restrict access to asylum and reduce the number of asylum claims. They caution that prosecuting persons who cross into the United States in order to present themselves before a CBP officer and request asylum raises concerns about whether the United States is abiding by human rights and refugee-related international protocols. They note a considerable current backlog of pending defensive asylum cases, which numbered almost 325,000 (45%) of the roughly 720,000 total pending immigration cases in EOIR's docket as of June 11, 2018. They also cite Attorney General Sessions's recent decision to substantially limit the extent to which immigration judges can consider gang or domestic violence as sufficient grounds for asylum. Such efforts could have the unintended effect of sustaining illegal immigration flows of desperate foreign nationals fleeing violent circumstances, particularly from Northern Triangle countries. Congressional Activity Given that this topic is developing rapidly, bills discussed below do not reflect all legislation or amendments introduced to date, or more recent developments. Instead, the bills presented here are intended to illustrate the range of legislative proposals to address family separation in the current context. 116th Congress Bills introduced during the 116 th Congress that are related to family separation are intended to prevent or limit the practice. These include H.R. 883 / S. 271 , the Families Belong Together Act, which would grant humanitarian parole and/or LPR status to separated parents and children upon request. Likewise, H.R. 541 / S. 292 , the Keep Families Together Act (similar to H.R. 6135 / S. 3036 introduced in the 115 th Congress) contains provisions to keep families together during all stages of processing following apprehension at a U.S. border, plus protections against the prosecution for illegal border crossing of asylum seekers and grantees. H.R. 1012 , the REUNITE Act, includes provisions that would facilitate the expeditious reunification of separated families. H.J.Res. 31 , the Consolidated Appropriations Act, 2019, included additional funding to increase the number of participants in Alternatives to Detention (ATD) programs; additional ICE staffing dedicated to the management of ATD immigration cases, particularly those of asylum applicants; and the Family Case Management Program (FCMP), an alternative to family detention. The legislation directs ICE to prioritize both the use of ATD programs for families and the adjudication timeline for cases of individuals enrolled in ATD, particularly those of families and asylum seekers. 115th Congress A number of bills were introduced in the 115 th Congress in response to family separation resulting from the Administration's zero tolerance policy regarding the prosecution of illegal border crossing. With the exception of H.R. 6136 , which failed to pass in the House by a vote of 121-301, none of the bills introduced saw congressional action. Bills that emphasized immigration enforcement included H.R. 6182 , the Codifying President Trump's Affording Congress an Opportunity to Address Family Separation Executive Order Act, which would have provided statutory authority for President Trump's executive order within the INA; H.R. 6173 , which would have clarified standards for family detention; and Section 3102 of H.R. 6136 , the Border Security and Immigration Reform Act of 2018, which would have permitted children accompanied by parents to remain in DHS custody during the pendency of a parent's criminal prosecution, rather than being referred to ORR and treated as UAC. On July 11, 2018, similar amendment language was included in an appropriations bill to fund the Departments of Labor, Health and Human Services, and Education, that was approved by the House Appropriations Committee. H.R. 6204 , the Families First Act of 2018, included similar provisions, asylum reforms, and provided increased funding for family unit facilities, personnel, and judges, among other provisions. Bills that intended to prevent or limit family separation included H.R. 6135 / S. 3036 , the Keep Families Together Act, and H.R. 6236 , the Family Unity Rights and Protection Act, both of which contained provisions to keep families together during all stages of processing following apprehension at a U.S. border; H.R. 6232 , the Preventing Family Separation for Immigrants with Disabilities Act, which would have prohibited family separation for individuals with developmental disabilities; and H.R. 6172 , the Reunite Children with Their Parents Act, which would have required DHS and DOJ to reunite minor children already separated from their parents. Other bills, such as H.R. 6181 / H.R. 6190 / S. 3093 , the Keep Families Together and Enforce the Law Act, would have maintained family unity by making the Flores Settlement Agreement and related laws and regulations inapplicable to children who are accompanied by adults when they are apprehended at a U.S. border. H.R. 6195 / S. 3091 , the Protect Kids and Parents Act, would have limited the separation of families seeking asylum by mandating that they be housed together, and facilitated asylum processing (e.g., by adding additional immigration judges and DHS personnel and establishing asylum processing deadlines), among other provisions. Appendix. Trends in Alien Apprehensions Increasing numbers of apprehensions of Central American families and children are occurring within the context of relatively low historical levels of total alien apprehensions ( Figure A-1 ). Apprehensions at the Southwest border had peaked at 1.62 million in 1986, the year Congress enacted the Immigration Reform and Control Act (IRCA), which gave legal status to roughly 2.7 million unauthorized aliens residing in the United States. After dropping for multiple years, apprehensions increased 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 40-year low of 327,577 in FY2011. They have fluctuated since that point, declining even further in some years. For the first four months of FY2019, apprehensions at the Southwest border reached 201,497. The national origins of apprehended aliens have shifted considerably during the past two decades ( Figure A-2 ). In FY2000, for example, almost all aliens apprehended at the Southwest border (98%) were Mexican nationals. As recently as FY2011, Mexican nationals made up 84% of all apprehensions. However, beginning in FY2012, foreign nationals from countries other than Mexico made up a growing percentage of total apprehensions and for most years after FY2013, they made up the majority. In the first four months of FY2019, "other-than-Mexicans" comprised most (78%) of total alien apprehensions on the Southwest border. Among demographic categories, persons in family units and unaccompanied children currently make up the largest share of total alien apprehensions at the Southwest border ( Figure A-3 ). According to CBP Commissioner Kevin McAleenan, single adult males made up over 90% of arriving aliens in the past. However, in the first four months of FY2019, family units and unaccompanied children comprised roughly 60% of all apprehended aliens. CBP data on family unit apprehensions at the Southwest border are publicly available starting in FY2012, when they numbered just over 11,000. Since then, family unit apprehensions have increased considerably, reaching a peak of 107,212 in FY2018. In the first four months of FY2019, CBP apprehended 99,901 family units, which, if extrapolated to the remainder of FY2019, yields a projected estimate of almost 300,000 family unit apprehensions, exceeding the annual levels of all prior fiscal years. CBP data on apprehensions of unaccompanied alien children at the Southwest border from FY2012 onward indicate a peak of 68,541 apprehensions in FY2014 and 20,123 apprehensions in the first four months of FY2019. Since FY2012, the composition of family unit apprehensions by origin country has shifted from mostly Mexican (80%) to mostly El Salvadoran, Guatemalan, and Honduran (96%) ( Figure A-4 ). Among these three Northern Triangle countries, the percentage of apprehensions from El Salvador, after increasing for several years, has recently declined, from 35% of all family unit apprehensions in FY2016 to 9% in the first four months of FY2019, while the percentage from Guatemala has increased steadily from 3% in FY2012 to 51% in FY2019. Among unaccompanied alien children apprehended at the Southwest border, a similar country-of-origin compositional shift has also occurred. The percentage of apprehended unaccompanied children originating from Mexico declined from 57% in FY2012 to 15% in the first four months of FY2019, while the percentage of apprehended unaccompanied children from the Northern Triangle countries increased from 42% to 82% over the same period.

For the last several years, Central American migrant families have arrived at the U.S.-Mexico border in relatively large numbers, many seeking asylum. While some request asylum at U.S. ports of entry, others do so after entering the United States "without inspection" (i.e., illegally) between U.S. ports of entry. On May 7, 2018, the Department of Justice (DOJ) implemented a "zero tolerance" policy toward illegal border crossing both to discourage illegal migration into the United States and to reduce the burden of processing asylum claims that Administration officials contend are often fraudulent. Under the zero tolerance policy, DOJ prosecuted all adult aliens apprehended crossing the border illegally, with no exception for asylum seekers or those with minor children. DOJ's policy represented a change in the level of enforcement of an existing statute rather than a change in statute or regulation. Prior Administrations prosecuted illegal border crossings relatively infrequently. Criminally prosecuting adults for illegal border crossing requires detaining them in federal criminal facilities where children are not permitted. While DOJ and the Department of Homeland Security (DHS) have broad statutory authority to detain adult aliens, children must be detained according to guidelines established in the Flores Settlement Agreement (FSA), the Homeland Security Act of 2002, and the Trafficking Victims Protection Reauthorization Act of 2008. A 2015 judicial ruling held that children remain in family immigration detention for no more than 20 days. If parents cannot be released with them, children are treated as unaccompanied alien children and transferred to the Department of Health and Human Services' (HHS's) Office of Refugee Resettlement (ORR) for care and custody. The widely publicized family separations were a consequence of the Trump Administration's zero tolerance policy, not the result of an explicit family separation policy. Since the zero tolerance policy was implemented, up to 3,000 children may have been separated from their parents. In addition, thousands more were separated prior to the public announcement of the policy change. Following mostly critical public reaction, President Trump issued an executive order on June 20, 2018, mandating that DHS maintain custody of alien families during the pendency of any criminal trial or immigration proceedings. DHS Customs and Border Protection (CBP) subsequently stopped referring most illegal border crossers to DOJ for criminal prosecution. A federal judge then mandated that all separated children be promptly reunited with their families. Another rejected DOJ's request to modify the FSA to extend the 20-day child detention guideline. DHS has since reverted to some prior immigration enforcement policies, and family separations continue to occur based upon DHS enforcement protocols in place prior to the 2018 zero tolerance policy. Administration officials and immigration enforcement advocates argue that measures like the zero tolerance policy are necessary to discourage migrants from coming to the United States and submitting fraudulent asylum requests. They maintain that alien family separation resulting from the prosecution of illegal border crossers mirrors that which occurs regularly under the U.S. criminal justice system policy where adults with custody of minor children are charged with a crime and may be held in jail, effectively separating them from their children. Immigrant advocates contend that migrant families are fleeing legitimate threats from countries with exceptionally high rates of gang violence, and that family separations resulting from the zero tolerance policy are cruel and violate fundamental human rights—such as the ability to request asylum. They maintain that the zero tolerance policy was hastily implemented and lacked planning for family reunification following criminal prosecutions. Some observers question the Trump Administration's capacity to marshal sufficient resources to prosecute all illegal border crossers without additional resources. Others criticize the family separation policy in light of less expensive alternatives to detention. In prior years, most individuals apprehended were single adult males. Family unit apprehensions, which increased from just over 11,000 in FY2012 to 99,901 in the first four months of FY2019, and apprehensions of unaccompanied alien children are occurring within the context of otherwise relatively low historical levels of total alien apprehensions. In addition, the national origin of recently apprehended family units and unaccompanied children has shifted to mostly Central American from long-term trends of mostly Mexican.

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Introduction In the Federalist Papers , James Madison commented that "no man is allowed to be a judge in his own case, because his interest would certainly bias his judgment, and, not improbably, corrupt his integrity. With equal, nay with greater reason, a body of men are unfit to be both judge and parties at the same time." Since the first session of Congress in 1789, the House of Representatives and the Senate have contemplated how to judge fellow Members. Investigating and judging Members of Congress continues to be an issue for Congress. In 1964, the Senate established the Select Committee on Ethics, and in 1967, the House created the Committee on Standards of Official Conduct, which was renamed the Committee on Ethics in the 112 th Congress (2011-2012). These two committees formally assumed the duties of investigating allegations of wrongdoing against Members of their respective chambers. In the House, the Committee on Ethics has had sole responsibility to investigate and recommend the discipline of Members. Self-discipline by the Committee on Ethics has, at various times, been considered problematic, as Members are dependent on one another to do their jobs, bring individual perspectives on chamber rules to investigations, and are judged by the public at the same time they are judging congressional colleagues. This creates a difficult investigative environment and often leads to closed-door investigations and media allegations of improper enforcement of chamber rules. Historically, Congress has used its ethics power neither arbitrarily nor frequently. Congress has, however, "periodically tightened its ethics codes and procedures for dealing with misconduct." In addition to amending internal congressional ethics codes and procedures, Congress has considered numerous legislative proposals since 1951 to create an independent ethics advisory body that would replace or assist the Committee on Ethics with investigations or enforcement. In the 110 th Congress (2007-2008), the House created the Office of Congressional Ethics (OCE) to review complaints, and when appropriate, refer findings of fact to the Committee on Ethics. The OCE is the first independent, outside body charged by Congress to investigate complaints against Members and refer valid complaints to the Committee on Ethics. The OCE is intended to perform an important public service for the House and the public by assuring the integrity of the chamber. It provides a way for groups and individuals to provide information about alleged misconduct by Members, officers, and employees of the House to an investigative body. The office is designed to "supplement but not supplant" the role of the House Committee on Ethics. The OCE formally opened on January 23, 2009, after adopting rules for conducting investigations and a code of conduct for its board members and staff. It has jurisdiction only over current Members, officers, and employees of the House. This report focuses only on the House of Representatives and the House ethics process. Previous Legislative Attempts for Outside or Independent Enforcement of Congressional Rules of Conduct Since the establishment of the Senate Select Committee on Ethics and the House Committee on Ethics, members of both committees have sometimes been perceived as reluctant to investigate and discipline colleagues. Seeking to be fair and not to pre-judge or prejudice the consideration of an allegation, the committees operate with little publicity. As a result they have often been criticized by the media for "failure to properly implement and enforce the internal rules of their respective house of Congress." Until 2008, these perceptions led to unsuccessful calls for investigative and enforcement mechanisms to supplement or replace the ethics committees. Over the years, proposals have been offered to create an office of public integrity, an independent ethics commission, and a public review board or office within the legislative branch, composed of former Members of Congress, retired judges, private citizens, or a combination of these. For some, having a panel of senior statesmen help investigate allegations of wrongdoing by Members of Congress is viewed as a way to strengthen Congress. Dennis Thompson, a Harvard professor of public policy and congressional scholar, has long advocated countering the institutional conflict of interest inherent in Members judging Members with an independent body such as an ethics commission. Thompson sees such an outside body as likely to reach more objective and independent judgments. It could more credibly protect members' rights and enforce institutional obligations without regard to political or personal loyalties. It would provide more effective accountability and help restore the confidence of the public. And—an advantage that should appeal to Congress—it would reduce the time members would have to spend on the chores of ethics regulation. Beginning in 1951, even before the ethics committees were created, there were legislative proposals to create an independent entity to investigate complaints in both the House and the Senate or within one house. None of these were enacted. Only the legislative proposals that prompted hearings are discussed below. Proposals receiving no committee action are listed in Table 1 and Table 2 . Congress-Wide Proposals Between 1951 and 1996, several proposals were introduced in both the House and Senate to create a bicameral independent ethics panel. In 1951, Senate hearings were held on a proposal to create a Commission on Ethics in Government. In 1993, 42 years later, the Joint Committee on the Organization of Congress held hearings on the congressional ethics process. Table 1 also lists legislation introduced to create a Congress-wide independent ethics entity. Commission on Ethics in Government In the 82 nd Congress (1951-1952), Senator J. William Fulbright introduced S.Con.Res. 21, to create a congressional commission to "strengthen the faith and confidence of the American people in their Government by assisting in the establishment of higher moral standards in the official conduct of the executive and legislative branches of the Government." The resolution was referred to the Senate Committee on Labor and Human Resources, where a special subcommittee was established to examine the resolution. Chaired by Senator Paul Douglas, the Special Subcommittee on the Establishment of a Commission on Ethics in Government held a series of hearings in June and July of 1951. In his introductory remarks, Senator Douglas summarized the importance of ethical standards and why the hearings would focus on more than just Senator Fulbright's concurrent resolution. I think the time has come for positive proposals to deal with the ethical problems of government. This should include not merely the executive agencies, but the Congress itself—because if we investigate others, we should be willing to submit ourselves to investigation—and all private citizens. We all have a great stake in lifting the standards of our governmental performance. Following the hearings, the subcommittee endorsed the passage of S.Con.Res. 21 and the creation of a commission on ethics in government. The subcommittee recommended that A Commission on Ethics in Government should be established by joint resolution of Congress. The Commission's function should be twofold, the first to investigate and report to the President and to the Congress on the moral standards of official conduct of officers and employees of the United States; the effect thereon of the moral standards in business and political activity of persons and groups doing business with the Government or seeking to influence public policy and administration; and the moral standards generally prevailing in society which condition the conduct of public affairs or which affect the strength and unity of the Nation. ... The second function of the Commission should be to recommend measures to improve and maintain at a high level moral standards of official conduct in the Federal Government and of all persons who participate in or are responsible for the conduct of public affairs. It should be noted that the Commission would not be concerned with the morals of individuals—governmental personnel or private citizens—except as they are involved in the conduct of public affairs. In addition to recommending the creation of a commission, the subcommittee also recommended amendments to the Administrative Procedure Act; mandatory disclosure of income, assets, and certain transactions by Members of Congress and certain federal officials; a thorough study of proposed changes to criminal law governing conflict of interest and bribery laws; creation of a citizens' organization to work for better government on the national level; and 12 measures related to ethics issues that merited additional study and consideration. S.Con.Res. 21 was not debated further in either the full committee or on the Senate floor. Joint Committee on the Organization of Congress In 1993, the Joint Committee on the Organization of Congress held hearings on the congressional ethics process that included former and incumbent Members of Congress, as well as academic scholars. Their testimonies dealt with the advantages and disadvantages of independent ethics entities and how an outside body might assist the ethics committees in the enforcement of congressional rules of conduct. The joint committee's final report summarized the differing opinions of witnesses on the role of an independent entity and its ramifications on Congress: While no witnesses advocated giving the entire responsibility to a group of outsiders, some wanted non-members to be able to investigate charges and recommend punishment. Representative Robert Andrews, when testifying in favor of an external ethics commission, said, "Our system purports to conduct review of ethics by our peers, but I think we misdefine what it means to be a peer. Ultimately, our peers are not fellow Representatives or Senators, ultimately our peers are ordinary citizens." Conversely, other witnesses wanted ethics proceedings to be conducted only by members. As former Senator Warren Rudman testified, "I believe that the Constitution, when it says that we ought to be the judge of our own members, means precisely what it says." A former Chairman of the Standards of Official Conduct Committee, Representative Louis Stokes was "troubled by calls for further procedural reforms, which are based on the notion that the Ethics Committee has not done its job or has not done it properly." Subsequently, the House members of the committee recommended that "the Committee on Standards of Official Conduct should be authorized to use, on a discretionary basis, a panel of non-members in ethics cases." No further action was taken on any of the ethics proposals discussed by the joint committee. House Proposals Prior to the passage of H.Res. 895 in the 110 th Congress (2007-2008), the House considered numerous proposals to create an independent ethics commission. These proposals ranged in scope and included proposals to abolish the Committee on Standards of Official Conduct, authorize an independent entity for all ethics issues, and create an independent entity to work with the committee. Prior to H.Res. 895 , none of the proposals received further consideration after being referred to committee. Table 2 lists proposals that were offered between 1988 and 2007 to create an independent ethics entity in the House. While none of the legislative proposals listed in Table 2 moved beyond introduction, in 2007, the Speaker of the House and the minority leader restarted the conversation about an independent ethics entity by creating a Special Task Force on Ethics Enforcement. The result of the task force's work was the introduction of H.Res. 895 (110 th Congress) and the creation of the Office of Congressional Ethics to collect information from the public; investigate Members, officers, and staff of the House of Representatives; and provide that information to the House Committee on Ethics. Special Task Force on Ethics Enforcement On January 31, 2007, House Speaker Nancy Pelosi and Minority Leader John Boehner announced the creation of the Special Task Force on Ethics Enforcement in the House of Representatives. Chaired by Representative Michael Capuano, the task force was charged with considering "whether the House should create an outside enforcement entity, based on examples in state legislatures and private entities." During the next eight months, the task force met 29 times in executive session to discuss the investigative process and to hear from current and former Members of Congress, academic experts, and citizen advocacy groups. The executive sessions both preceded and followed a public hearing in April 2007. Establishment of the task force was part of Speaker Nancy Pelosi's emphasis on ethics reform in the 110 th Congress and followed several congressional scandals in the previous Congresses. In January 2006, congressional Democrats from around the country joined in a Washington, DC, press conference to pledge "honest leadership and open government." At the same time, Public Citizen, a watchdog group, issued a list of six benchmarks for reform which included the establishment of an independent congressional Office of Public Integrity to monitor allegations of ethics violations and refer them to the congressional ethics committees. Public opinion also appeared to favor reform; a January 2006 CNN/USAToday/Gallup poll found that "corruption in government" was ranked as an "extremely important" or "very important" issue by 81% of respondents. Hearing On April 19, 2007, the Special Task Force on Ethics Enforcement held a public hearing to discuss "whether the House should create an independent entity relative to the ethics process, and if so, what form, makeup, authority, et cetera, that entity should be." In his opening remarks, Ranking Member Lamar Smith summarized both the positive and negative aspects of creating an independent ethics entity in the House. Today we examine proposals to create an independent ethics commission. I know there are some independent legislative ethics commissions operating ... that would have been considered a success. But I also know there are unique items at work in Washington, DC, and issues of Federal law that do not apply elsewhere. I know some see the need for a commission that operates independently of the duly elected membership of the House of Representatives. Yet I also know there are those who are concerned that the ethics enforcement entity not be so independent from duly elected members that it upsets the checks and balances. That system must exist within our Constitution which requires separation of powers among the executive, judicial and legislative branches. The task force heard from four witnesses, three in favor of an independent ethics entity and one who was opposed. Testifying in favor of an independent entity were Tom Fitton, president of Judicial Watch; Meredith McGehee, policy director of the Campaign Legal Center; and Fred Wertheimer, president of Democracy 21. They each spoke of their belief that creating an independent, impartial, and investigative entity would end the conflict of interest that exists when Members are asked to judge their colleagues. For example, Tom Fitton testified that the "House ethics process is broken and in need of reform," and that "[a]s this Task Force considers ways for the House to honor its constitutional obligation to uphold its own rules of conduct, I respectfully suggest you strongly consider an independent entity, answerable to House members, which can undertake investigations and make independent findings and recommendations for action to the appropriate House body." Testifying against an independent ethics entity was Don Wolfensberger, director of the Congress Project at the Woodrow Wilson International Center for Scholars. Mr. Wolfensberger stated, The bottom line is that the power of Congress to punish its members is rooted in the need to protect the institution from actions and behavior that would bring the body into disrepute or disarray. It is not a power that can be properly exercised, even in part, by non-members for the very reason that only members have the institutional sense, instincts, and legitimacy to exercise it correctly and effectively for the good of the House. Others would tend to confine themselves to the question of justice for the individual member accused. Mr. Wolfensberger further suggested that the House ethics process could be strengthened if the chair and ranking Member kept the full committee membership apprised of the status of all complaints filed with the committee; the full committee determined when an investigative subcommittee should be created; an investigative subcommittee was not allowed to enter into an agreement with a respondent, but instead recommended a proposed settlement that the full committee could finalize, modify, or reject; when an investigative subcommittee report did not adopt a statement of alleged violation, it should be sent to the House (and public) and not to the full committee; and the committee's authority to issue a letter of reproval or other appropriate action be available, as a matter of privilege, for possible House action. Following the hearing, Representative Capuano received a letter signed by 27 House Democrats asking the task force to "address the structural flaws that underlie the current enforcement process." Our current ethics process is also out of step with how these matters are handled in almost half the state legislatures. The experience in the states has proven that effective safeguards can be put in place to deter potential abuse of the ethics process without undermining its integrity and free of any constitutional concerns. Under such a revamped ethics process, final determination of any alleged ethical misconduct would remain the responsibility of the members, as is constitutionally required. We believe that building greater independence into the ethics enforcement process, especially in the investigatory phase, is an appropriate response to the problems of the past and will be a safeguard against any recurrences. Final Report In December 2007, the Special Task Force on Ethics Enforcement issued its final report. Only the Democratic members of the task force, however, penned their names to the report. The Republican members chose to withhold comment. The report recommended the creation of an Office of Congressional Ethics as an independent office within the House to "review information on allegations of misconduct by members, officers, and employees of the House and make recommendations to the Committee on Standards of Official Conduct for the Committee's official consideration and action." The task force proposed a six-member entity to investigate possible violations of House rules. The report stated that "[t]he new Office of Congressional Ethics will act as an origination point for independent review of possible violations of standards of conduct, but will not prevent the Standards Committee from accepting complaints filed by members." In a press release accompanying the report, Representative Capuano reported that the task force was recommending that a nonpartisan professional staff be hired by the panel, and current House Members and lobbyists not be permitted to serve on the panel; the OCE conduct preliminary reviews, then refer all matters subject to a second-phase review to the Committee on Standards for disposition; if no merit is found, the board may recommend dismissal; the OCE be given up to 30 calendar days or 5 legislative days, whichever was greater, to conduct a preliminary review, and 45 calendar days or 5 legislative days to review a matter in the second phase before referral to the Committee on Standards; the Committee on Standards be given up to 45 calendar or 5 legislative days, whichever was greater, to consider the matter as allowed pursuant to current Committee on Standards Rules 16b-16e; and the Committee on Standards be required to make a public statement, or finding, on referrals from the OCE by the end of the 45-calendar-day or 5-legislative-day period. H.Res. 895 In coordination with the release of the task force members' report recommending the creation of an independent ethics entity, Representative Capuano introduced H.Res. 895 on December 19, 2007. In preparation for a Committee on Rules hearing on H.Res. 895 , Representative Capuano sent a Dear Colleague letter in March 2008 and wrote an opinion article in Roll Call advocating adoption of the task force's recommendations for an independent ethics entity. On March 10, the Committee on Rules reported H.Res. 1031 , which provided for adoption of H.Res. 895 , as amended, with a recommendation that the resolution be adopted. The Committee on Rules report included amendments to H.Res. 895 that were to be considered as adopted. The amendments made 13 changes to the original text of H.Res. 895 . A comparison of the amendments adopted by the Committee on Rules and the original language, as proposed by Representative Capuano, can be found in the Appendix . On March 11, 2008, the House debated and agreed to H.Res. 1031 , which provided for the adoption of H.Res. 895 , as amended under a closed, self-executing rule. In his remarks following the passage of H.Res. 895 , Representative Capuano stated, Tonight's passage of H.Res. 895 establishing an Office of Congressional Ethics (OCE) represents the most dramatic progress in years in the drive to strengthen ethics enforcement in the House. It is the culmination of many months of deliberation and review by the Special Task Force on Ethics Enforcement, created jointly by Speaker Pelosi and Minority Leader Boehner. I strongly believe that the approach we have taken to ethics enforcement will improve the reputation of the House and will break the appearance of an 'old boy network' forever. The OCE brings a level of independence to the process because no current members of Congress can serve on the panel. It also brings a level of transparency that is sorely lacking in the current process by requiring that a public statement be issued on most matters reviewed by the OCE. Taken together, these two fundamental elements will go a long way toward restoring the public's confidence in the people's House. Office of Congressional Ethics The OCE held its first public meeting on January 23, 2009, and began to implement the structural requirements of H.Res. 895 . It also adopted rules of procedure, a code of conduct, and rules for the conduct of a review. The Office of Congressional Ethics was most recently reauthorized by the House as part of the rules package (H.Res. 6) adopted by the 116 th Congress on January 3, 2019. The following sections outline the structure, powers, authority, and procedures of the OCE. Structure The OCE is structured to be nonpartisan. This goal is reflected in the composition of the board's membership, leadership schema, statutory qualifications, employment status of its members and staff, and required oath (or affirmation) of office. In addition, the authorizing resolution specifies a particular hiring process and requires an oath (or affirmation) of staff that OCE information not be disclosed. Board Membership Six members and two alternates constitute the board. Each member may serve for two Congresses and may be reappointed. Three members and an alternate are appointed by the Speaker, after consultation with the minority leader. Additionally, three members and an alternate are appointed by the minority leader, after consultation with the Speaker. Vacancies on the board are filled by the most senior alternate nominated by the same congressional leader who nominated the departing member. The alternate serves on the board until a replacement is named. If a permanent replacement is not named within 90 days of the vacancy, the alternate continues to serve for the remainder of the term, and the Speaker or minority leader, as applicable, is to nominate a new alternate. The Speaker and the minority leader, acting jointly, may remove a board member for cause. The OCE membership structure is designed to create an incentive for the Speaker and the minority leader to consult when choosing board members. Because no formal confirmation process was established in H.Res. 895 , the nominations of the Speaker and the minority leader result in de facto appointments of chosen individuals to the board. Table 3 lists the members of the board for the 116 th Congress. Pursuant to H.Res. 895 (110 th Congress), Members of the OCE board were restricted to serving on the board for no more than four consecutive Congresses (two consecutive terms). In the 115 th Congress (2017-2018), the House adopted H.Res. 5 , which removed term limits for most board members. This remains in effect for the 116 th Congress. Oath of Office Before board members begin their term, they are required to sign a document agreeing not to be a candidate for the U.S. Senate or the House of Representatives and execute an oath or affirmation on disclosure of information. Copies of the signed document are retained by the Clerk of the House as part of the records of the House. The Clerk makes the documents available to the public, publishes the documents as part of the Congressional Record , and makes a cumulative list of names available on the Clerk's website. The document contains the following statement: I agree not to be a candidate for the Office of Senator or Representative in, or Delegate or Resident Commissioner to, the Congress for purposes of the Federal Election Campaign Act of 1971 until at least 3 years after I am no longer a member of the board or staff of the Office of Congressional Ethics. Additionally, board members must execute an oath or affirmation in writing prior to assuming board responsibilities. Copies of the oath or affirmation are provided to the Clerk as part of the records of the House. The text of the oath is as follows: I do solemnly swear (or affirm) that I will not disclose to any person or entity outside of the Office any information received in the course of my service with the Office, except as authorized by the board as necessary to conduct official business or pursuant to its rules. Board Leadership The board is led by a chair and a co-chair. The chair is designated by the Speaker and the co-chair is designated by the minority leader. The chair, or a majority of board members, has the authority to call a board meeting. Qualifications Board members are expected to be "individuals of exceptional public standing who are specifically qualified to serve on the board by virtue of their education, training, or experience in one or more of the following fields: legislative, judicial, regulatory, professional ethics, business, legal, and academic." Selection of board members is to be made without regard to political affiliation. Individuals are prohibited from serving as board members if they were (1) a registered lobbyist under the Lobbying Disclosure Act of 1995; (2) registered as a lobbyist during the year prior to appointment; (3) engaged in lobbying, or employed to lobby Congress; (4) an agent of a foreign principal registered under the Foreign Agents Registration Act (FARA); (5) a Member of Congress; or (6) an officer or employee of the federal government. Additionally, former Members, officers, and employees of the House cannot be appointed to the board in the year following their time as a Member, officer, or employee of the House. Restrictions on the political and outside activities of board members are designed to create the independent, nonpartisan group necessary to conduct investigations in an expeditious manner. As explained under " Investigative Procedure ," the OCE has a short time frame to conduct investigations. Employment Status Members of the OCE board are not considered officers or employees of the House, but do receive remuneration for their service. Board members receive a per diem equal to the daily equivalent of the minimum rate of basic pay for GS-15 employees of the General Schedule for each day of service, including travel time. Pay is only for time when the board member is engaged in performance of duties for the board. Staff The board, with the affirmative vote of at least four members, has the authority to hire staff and fix their compensation. Staff is prohibited from engaging in "partisan political activity directly affecting any congressional or presidential election," and may not "accept public speaking engagements or write for publication on any subject that is in any way related to [their] employment or duties with the Office without specific prior approval from the chairman and cochairman." The board can terminate an employee with an affirmative vote of at least four members. Before staff may begin employment they are required to execute an oath or affirmation on disclosure of information. Copies of the oath or affirmation are provided to the Clerk as part of the records of the House. The text of the oath is as follows: I do solemnly swear (or affirm) that I will not disclose to any person or entity outside of the Office any information received in the course of my service with the Office, except as authorized by the board as necessary to conduct official business or pursuant to its rules. Staff is required to be impartial and unbiased when conducting an investigation. If a staff member has a conflict of interest arising from "a personal or professional relationship with a subject, a subject's opponent in any election or a witness involved in an investigation, staff shall disclose that fact to the Staff Director who shall disclose it to the Board." If the board determines the investigator cannot be impartial, he or she can be terminated from that investigation. Powers The OCE is provided with specific powers to conduct investigations, hold hearings, pay witnesses, and adopt rules. Some of these powers are enumerated in the OCE's authorizing resolution, and others are detailed in rules of conduct to be approved by the OCE. Investigations The OCE's primary responsibility is to conduct investigations in an independent, nonpartisan manner, regarding allegations of misconduct against Members, officers, and staff of the House. Following the investigation, the OCE is charged with referring matters, when appropriate, to the Committee on Ethics. Investigations by the OCE are restricted to activities that occurred after March 11, 2008, where a violation of "law, rule, regulation, or other standard of conduct in effect at the time the conduct occurred and [were] applicable to the subject in the performance of his or her duties or the discharge of his or her responsibilities." In the 114 th Congress, two changes related to OCE's investigations were made with the adoption of H.Res. 5 . First, "any individual who is the subject of a preliminary review or second-phase review by the board shall be informed of the right to be represented by counsel and invoking that right should not be held negatively against them." Second, the OCE has been instructed that it "may not take any action that would deny any person any right or protection provided under the Constitution of the United States." In the 115 th and 116 th Congresses, these provisions were continued. Hearings and Evidence The OCE is authorized to conduct meetings, hold hearings, meet in executive session, solicit testimony, and receive evidence necessary to conduct investigations. Pursuant to OCE rules, documents, recordings, or physical evidence "that was obtained in violation of any law, rule, or regulation" may not be reviewed. To ensure compliance, individuals submitting evidence to the OCE are asked to affirm that the evidence was not obtained in an illegal manner. OCE rules also allow for witnesses and individuals subject to investigation to submit written comments to the OCE. The OCE is also prohibited from considering privileged evidence without a waiver from the House. Pay Witnesses The OCE is authorized to pay witnesses in the same manner as prescribed in House Rule XI, clause 5. OCE Rules The OCE is authorized to adopt rules necessary to carry out its duties. H.Res. 895 prescribes five rules that the OCE must adopt. These rules cover termination of a preliminary review on any ground, including de minimis matters; recommendations calling for the Committee on Ethics to dismiss a matter that was subject to a second-phase review on any ground, including being de minimis in nature; witness signing statements, acknowledging that the False Statements Act applies to testimony and documents provided to the OCE; prohibition of ex parte communications between board members or OCE staff and individuals who are subjects of review or interested parties, and communication between Members, officers, or employees of the House with board members or OCE staff regarding matters under review, except as authorized by the board; and an OCE code of conduct, which includes the avoidance of conflicts of interest, to govern the behavior of board members and staff. Information Disclosure The OCE is required to establish procedures to prevent the unauthorized disclosure of information received by the office. Breaches in confidentiality are to be investigated by the board. Testimony received or information obtained by the OCE may not be disclosed to any individual or group outside the OCE without the authorization of the board for purposes of conducting official business. Testimony before the Committee on Ethics by board members and staff is exempt from disclosure requirements. Prior to transmittal of recommendations or statements to the Committee on Ethics, individuals under investigation have the right to present, orally or in writing, a statement on the investigation to the board. Investigative Procedure Pursuant to the authority granted by H.Res. 895 , Section 1(c)(2)(F), the board is authorized to create an investigatory process to examine and make recommendations on cases brought to the OCE's attention. The process consists of four steps: submission of information, preliminary review, second-phase review, and referral to the Committee on Ethics for further investigation or dismissal of the complaint. Each step, with its authority pursuant to H.Res. 895 , and relevant OCE rules are detailed below. Submission of Information The OCE was established to conduct independent, nonpartisan reviews of allegations of misconduct by Members, officers, and employees of the House and, when appropriate, to refer matters to the Committee on Ethics under the Rules of the House. Accordingly, it has established procedures for the public to file information alleging wrongdoing and outlines the process for doing so on its website, http://oce.house.gov . The following should be included in any submission: (1) the name, address, telephone number and e-mail address, if any, of the person submitting the information, and the organization s/he is affiliated with, if any; (2) the full name of the subject of the allegation; (3) the date(s) the alleged conduct occurred; (4) a concise statement of facts (or, the source of the information in the event that the person submitting the information does not have first-hand knowledge of the facts); (5) the law, regulation or rule allegedly violated, if known; (6) if applicable, name(s) and contact information for any potential witness(es); (7) if applicable, copies of any documents related to the allegation; and (8) a signed declaration acknowledging that section 1001 of title 18 United States Code (popularly known as the False Statement Act) applies to the information provided. A copy of the False Statements [Act] is available on the OCE's website and can be provided on request. All information will be reviewed by the OCE; however, submitting information does not trigger an investigation. The decision to begin an investigation (preliminary review) lies solely with the Board. OCE staff is to review information submitted by the public as well as information derived from other sources, including the press. OCE staff or any board member may submit information for the board's consideration. For an investigation to proceed, at least two board members must concur. Preliminary Stage Review The first stage of an investigation is a preliminary review. The preliminary review requires a " reasonable basis to believe the allegation based on all the information then known to the board," the written concurrence of two board members (one appointed by the Speaker and one by the minority leader), and written notification by the board to the Committee on Ethics and the individual subject to the review. Once a preliminary review has begun, it must be completed within 30 calendar or 5 legislative days, whichever is later, from the receipt of the written request by a minimum of two board members. Prior to, or at the conclusion of, the 30 calendar or 5 legislative days, the board votes on whether to continue the review and advance the inquiry to a second-phase. To continue the review, the board must find " probable cause to believe the alleged violation occurred based on all the information then known to the board." An affirmative vote of at least three board members is required to proceed to a second-phase review. If the board does not vote to begin a second-phase investigation by the end of the 30-calendar- or 5-legislative-day time period, the investigation is terminated. The board, however, may vote to terminate an investigation at any time during the preliminary-phase review with the affirmative vote of at least four members. Regardless of the OCE's decision on proceeding to a second-phase review, the board must notify, in writing, both the Committee on Ethics and the individual under investigation of the board's decision to continue or terminate the investigation. If the board terminates the inquiry, it has the option of sending a report to the Committee on Ethics with its findings. Second-Phase Review Should the board vote to conduct a second-phase review, it must be completed within 45 calendar or 5 legislative days, whichever is later. Should the board determine that additional time is needed to conduct the second-phase review, the time period can be extended for an additional 14 calendar days upon a majority vote of the board. This requires the affirmative vote of at least four board members. House rules also require that "any individual who is the subject of a preliminary review or second-phase review by the board shall be informed of the right to be represented by counsel and invoking that right should not be held negatively against such individual." When the OCE completes the second-phase review, the board is required to transmit a written report, its findings, if any, and any supporting documentation to the Committee on Ethics. The referrals must be accompanied by two documents: (1) a report which recommends dismissal, further inquiry, or states that the board vote was a tie, and (2) findings. Neither document is to contain conclusions regarding the validity of the allegation or the guilt or innocence of the person subject to the review—such matters are the sole purview of the Committee on Ethics. The OCE is also obligated to transmit the findings of its investigation, if any, to the Committee on Ethics along with supporting documentation. The findings should include findings of fact; descriptions of relevant information that was not obtained and witnesses not interviewed; recommendations for the issuance of subpoenas; and citations of relevant law, rule, regulation, or standard of conduct relevant to the investigation. The findings should not include the names of cooperative witnesses, any conclusions regarding the validity of the allegations, or statements on the guilt or innocence of the investigative subject. With the findings, the OCE may submit supporting documents, and provide the subject of the investigation a copy of the written report. Like the House Committee on Ethics, the OCE does not have jurisdiction over former Members of the House. Thus, once a Member leaves office, any inquiry or investigation against him or her by either entity will cease in whatever phase a review may be. The Committee on Ethics and Its Relationship to the OCE At the conclusion of any second-phase review, the OCE is required to submit a report, and may submit findings and supporting documentation, to the Committee on Ethics for final disposition. Pursuant to Article 1, Section 5, clause 2 of the Constitution, "[e]ach House may determine the rules of its proceedings, punish its members for disorderly Behaviour, and, with the Concurrence of two thirds, expel a member." For the House of Representatives, the investigative role is generally delegated to the Committee on Ethics. Pursuant to House Rules, the Committee on Ethics can also open an investigation without an OCE referral. Pursuant to House rules, the Committee on Ethics may not receive any referral within 60 days before a federal, state, or local election in which the subject of the case is a candidate. Once the Committee on Ethics receives a referral from the OCE, it must act within 45 days. At that time, the chair must publicly release the committee's actions together with the OCE report and findings, unless the chair and ranking Member jointly decide, or the committee votes, to withhold the information for an additional 45 days. The committee is not required to release the OCE findings if it agrees with an OCE decision to dismiss a particular case or chooses to dismiss a case left unresolved by the OCE. The committee does, however, have the option of making the OCE report and findings public. If the committee decides to take the additional 45 days to consider an OCE referral, at the end of the second 45 days, the chair is required to make public the OCE written report and findings unless the committee votes to initiate an investigation. Should the committee proceed to an investigation, only that fact is announced. The announcement must include the name of the applicable Member, officer, or employee, and the alleged violation(s). If the committee deadlocks on a matter referred by the OCE, it must release the OCE's report and findings. At the end of each Congress, any reports and findings not previously related are required to be released. In the event the Committee on Ethics conducts an investigation, it is conducted pursuant to established committee rules. Pursuant to these rules, action on a case may be deferred at the request of law enforcement or regulatory authorities. Before the Committee on Ethics publicly releases OCE findings and the committee's statement and report, if any, on a referral, the committee is required to give advanced notice of one calendar day to the OCE and any Member, officer, or employee who was the subject of a referral. The Capuano task force envisioned that the Committee on Ethics and the OCE would work closely. The committee is to be notified early and throughout an OCE review. The committee may also ask the OCE to stop a review if the allegation becomes the subject of a Committee on Ethics investigation. In such an occurrence, the OCE board is required to refer the case to the committee, and to treat the matter under the same rules as other OCE referrals. If the committee does not reach a conclusion, it must notify the OCE board. The OCE board may choose to complete a suspended review. Once a matter is returned to the OCE, it must proceed according to the established process outlined above under " Investigative Procedure ." Referrals to Other Entities The OCE may also, when appropriate, refer allegations to the Office of Congressional Workplace Rights, House Office of the Inspector General, House Commission on Congressional Mail Standards, and state and federal authorities. OCE Rule 13 dictates situations under which referral to one of these entities may be made. Office of Congressional Workplace Rights123 Allegations related to laws covered by the Congressional Accountability Act may be referred to the Office of Congressional Workplace Rights. House Office of the Inspector General Allegations of "fraud, waste and abuse in the operations of the House or joint entities of Congress" may be referred to the Office of the House Inspector General. House Commission on Congressional Mailing Standards Allegations "relating to the proper use of the franking privilege" may be referred to the House Commission on Congressional Mailing Standards. State and Federal Authorities In consultation with the OCE chair and co-chair, the OCE staff can refer "information to state and federal authorities in the event that information indicates imminent harm or a threat to public safety." Implementation Funding Pursuant to H.Res. 895 , the OCE is authorized "such sums as necessary" from applicable accounts of the House. Payments made by the OCE are made on vouchers signed by the chair of the board and approved in the manner directed by the Committee on House Administration. All funds expended by the OCE are subject to regulations prescribed by the Committee on House Administration. Table 4 shows the annual appropriations for the OCE since its inception in FY2009. Public Information Since the OCE was reauthorized in January 2009, the OCE, although not mandated to do so, has issued quarterly reports. Each quarterly report provides a brief summary of OCE activities, including citizen communications, a summary of the OCE process, and a summary of board actions taken during the quarter and for the Congress. Table 5 provides a summary of the number of cases OCE has considered between 2009 and 2018. Options for Congress Creation of the OCE changed the relationship between the public and the House ethics process. Even with OCE active since 2009, there continue to be options which might further clarify the OCE's relationship with the public, rank-and-file House Members, and the Committee on Ethics. These options each have advantages and disadvantages for the structure of the OCE, its relationship to the Committee on Ethics, and the House's constitutional responsibility to investigate its Members. Consequently, careful comparison of all options for the future of the OCE may be useful to ensure that the most effective process is created while ensuring the continued enforcement of House ethics procedures. CRS takes no position on any of the options identified in this report. Create a Statutory OCE The OCE exists pursuant to H.Res. 895 (110 th Congress) and faces renewal on a biannual basis as part of the House rules package. In January 2019, the OCE was reauthorized when H.Res. 6 was agreed to. Because the OCE operates pursuant to a House resolution, a change in party control or a decision to exclude the OCE from the rules package in a future Congress might result in the elimination of the office. If the House wanted to ensure the OCE's continuation, it could create a statutory ethics entity. A permanent statutory office would not require reauthorization each Congress. If the House chose to create a statutory office, should the House desire to alter or terminate the program, subsequent legislation would be necessary to amend or terminate the program. Creation of a statutory ethics office, even if only in the House, would require the concurrence of the Senate and the President's signature. Reform Committee on Ethics to Allow Public Input Prior to the creation of the OCE, the Committee on Ethics did not allow public complaints to be to made against Members of Congress. If the House wanted to provide an opportunity for citizens to be involved in the ethics process without the creation of an independent ethics entity (either by resolution or statute), the House could amend House or committee rules to allow the Committee on Ethics to receive formal complaints or information from the general public. Allowing the public to provide information directly to the Committee on Ethics could allay constitutional concerns over the involvement of an independent entity in investigating and recommending action on internal House enforcement matters. Instead of giving power to an outside entity, the Committee on Ethics could establish mechanisms for the intake and evaluation of citizen complaints prior to investigation and potential action of the full committee. This work could be handled by a subcommittee or by the whole committee. Should the Committee on Ethics assume this responsibility, the committee's workload could increase substantially. The OCE specifies the number of contacts its staff has with the public and the number of investigations authorized as part of quarterly reports. It is possible that providing the public with direct access to the Committee on Ethics might result in more information (at least at the level currently handled by the OCE) being provided by the public. In addition, a citizen or group providing information might expect the committee to provide updates on the status of investigations. Amend OCE Authority The relationship between the OCE and the Committee on Ethics continues to evolve. Under the provisions of H.Res. 895, as the OCE completes second-phase reviews and determines that a further investigation is necessary, the OCE board forwards a report and supporting documentation to the Committee on Ethics. Subpoena Power The House could provide the OCE with limited subpoena power to enable the OCE board to conduct more thorough investigations prior to referral to the Committee on Ethics. Providing subpoena power to the OCE might reduce the workload and investigative burden of the Committee on Ethics and prevent duplicative efforts on behalf of the OCE and committee staffs. Chairman Capuano, in the task force report, explained that consideration was given to empowering the OCE with subpoena power. During the discussions, the task force sought the professional opinion of numerous experts (including the House parliamentarian, House general counsel, and the Congressional Research Service). The decision not to include subpoena authority was based on various factors, including timeliness. Challenges to a subpoena, it was felt, could hinder and complicate the OCE process and prevent a prompt investigation. Moreover, because of Congress's reluctance to delegate subpoena authority to independent entities, if the task force had recommended giving the OCE that authority, the legislative process might have been delayed while the House debated the merits of the proposal. Currently, if a subpoena is deemed necessary, the House provides the OCE with the ability to recommend to the Committee on Ethics that a subpoena be issued, as part of the authority already delegated to the committee. OCE Follow Up The House could also provide a mechanism whereby the OCE could formally follow up on investigations forwarded to the Committee on Ethics. Pursuant to current practice, the OCE has no recourse to follow a case once it is referred to the committee. Committee rules require that the committee release the OCE report under certain circumstances. Additional OCE Functions On March 5, 2009, Representative Ron Paul introduced H.Res. 216. The resolution, if agreed to by the House, would have amended House Rules to require a certain period of time to elapse between introduction of legislation and a vote by the House. Included in the resolutions provisions, Rule XXIX would be amended to allow citizens to petition the board of the Office of Congressional Ethics to investigate potential violations of the new rule. Notwithstanding any provision of these rules, any citizen who is eligible to vote and who is not an employee of the executive or judicial branch of the Government may petition the board of the Office of Congressional Ethics to investigate allegations that a member voted for any measure that violated this rule. The addition to the OCE's jurisdiction by amending House rules could be a way to involve the investigative expertise of the OCE in other House matters. H.Res. 216 implied the OCE's authority to take "complaints" from the general public. This would appear to be incongruent with OCE's current mission to take "information" from public sources and would potentially need to be clarified by the board or by Congress. Place OCE Within the House Ethics Committee An amendment to the rules of the House that would reassign the functions of the OCE to the House Ethics Committee was initially proposed to be included as part of the rules package for the 115 th Congress (2017-2018). This language, which was not included in H.Res. 5, would have created a new Office of Congressional Complaint Review, as an office within the Ethics Committee. While much of the investigative structure of OCE would have been retained by this new entity, the timeline for completing a preliminary and second-phase review would have been altered, and the use of anonymous information in review would have been prohibited. Take No Immediate Action The House might determine that the current relationship between the OCE and the Committee on Ethics is effective. Instead of creating an independent statutory ethics entity, reforming the Committee on Ethics, or amending OCE statute, the House could continue to consider the OCE as part of the rules package in subsequent Congresses. Changes to the OCE could be made on an as-needed basis through House resolutions or through changes to the rules package for subsequent Congresses. Appendix. Rules Committee Amendments toH.Res. 895

The House Office of Congressional Ethics (OCE) was established on March 11, 2008, with the passage of H.Res. 895. It was most recently reauthorized by the House as part of the rules package (H.Res. 6) adopted by the 116th Congress on January 3, 2019. The office's establishment followed years of efforts by groups within and outside Congress to create an independent entity to investigate allegations of misconduct by Members, officers, and employees of Congress. During the 110th Congress (2007-2008), Speaker of the House Nancy Pelosi and Minority Leader John Boehner created the bipartisan Special Task Force on Ethics Enforcement, chaired by Representative Michael Capuano, to consider whether the House should create an "outside" ethics-enforcement entity. The task force worked for nearly a year before issuing its recommendations for the creation of the OCE. The mandate of the OCE, which has jurisdiction only in the House, is to review information, and when appropriate, refer findings of fact to the House Committee on Ethics. Only this committee, pursuant to House rules, has the authority to recommend House discipline of Members and staff. Information of alleged wrongdoing by Members, officers, and employees of the House may be accepted by the OCE from the general public, but only the OCE board can initiate a review. The OCE is composed of six board members, and at least two alternates, each of whom serves a four-year term. The Speaker and the minority leader are each responsible for the appointment of three board members and one alternate. The chair is selected by the Speaker and a co-chair is selected by the minority leader. Current Members of the House, federal employees, and lobbyists are not eligible to serve on the board. OCE rules for the conduct of investigations and code of conduct can be found at their website, https://oce.house.gov. This report describes the history and rationale behind the creation of the OCE, its operations, its relationship with the House Committee on Ethics, and options potentially available for Congress if further amendments to the House ethics process are desired. For additional information, please refer to CRS Report RL30764, Enforcement of Congressional Rules of Conduct: A Historical Overview, by Jacob R. Straus; CRS Report RL30650, Senate Select Committee on Ethics: A Brief History of Its Evolution and Jurisdiction, by Jacob R. Straus; and CRS Report 98-15, House Committee on Ethics: A Brief History of Its Evolution and Jurisdiction, by Jacob R. Straus.

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Introduction This report provides background information and issues for Congress on the Polar Security Cutter (PSC) program—the Coast Guard's program for acquiring new polar icebreakers. The PSC program has received a total of $1,034.6 million (i.e., about $1.0 billion) in procurement funding through FY2019. The Coast Guard's proposed FY2020 budget requests $35 million in procurement funding for the PSC program, which is enough to cover FY2020 program-management costs. The issue for Congress is whether to approve, reject, or modify the Administration's FY2020 procurement funding request for the PSC program, and, more generally, whether to approve, reject, or modify the Coast Guard's overall plan for procuring new polar icebreakers. Congress's decisions on this issue could affect Coast Guard funding requirements, the Coast Guard's ability to perform its polar missions, and the U.S. shipbuilding industrial base. For a brief discussion of the Coast Guard's Great Lakes icebreakers, see Appendix E . A separate CRS report covers acquisition of general-purpose cutters for the Coast Guard. Another CRS report provides an overview of various issues relating to the Arctic. Background Missions of U.S. Polar Icebreakers Statutory Duties and Missions The permanent statute that sets forth the Coast Guard's primary duties—14 U.S.C. 102—states that among other things, the Coast Guard shall (emphasis added) "develop, establish, maintain, and operate, with due regard to the requirements of national defense, aids to maritime navigation, icebreaking facilities , and rescue facilities for the promotion of safety on, under, and over the high seas and waters subject to the jurisdiction of the United States," and "pursuant to international agreements, develop, establish, maintain, and operate icebreaking facilities on, under, and over waters other than the high seas and waters subject to the jurisdiction of the United States...." In addition, Section 888(a) of the Homeland Security Act of 2002 ( H.R. 5005 / P.L. 107-296 of November 25, 2002)—the law that established the Department of Homeland Security (DHS) and transferred the Coast Guard from the Department of Transportation to DHS—sets forth 11 specific missions for the Coast Guard (often referred to as the Coast Guard's 11 statutory missions), including the mission of "ice operations." Multiple Missions (Not Just Icebreaking) The Coast Guard's polar icebreakers do not simply break ice—they are multimission cutters that conduct a variety of other operations that are conducted in lower-latitude waters by the Coast Guard's general-purpose cutters. U.S. polar ice operations conducted in large part by the Coast Guard's polar icebreakers support 9 of the Coast Guard's 11 statutory missions. The roles of U.S. polar icebreakers can be summarized as follows: conducting and supporting scientific research in the Arctic and Antarctic; defending U.S. sovereignty in the Arctic by helping to maintain a U.S. presence in U.S. territorial waters in the region; defending other U.S. interests in polar regions, including economic interests in waters that are within the U.S. exclusive economic zone (EEZ) north of Alaska; monitoring sea traffic in the Arctic, including ships bound for the United States; and conducting other typical Coast Guard missions (such as search and rescue, law enforcement, and protection of marine resources) in Arctic waters, including U.S. territorial waters north of Alaska. Polar (Not Just Arctic) Operations The Coast Guard's large icebreakers are called polar icebreakers rather than Arctic icebreakers because they perform missions in both the Arctic and Antarctic. Operations to support National Science Foundation (NSF) research activities in both polar regions account for a significant portion of U.S. polar icebreaker operations. Supporting NSF research in the Antarctic focuses on performing an annual mission, called Operation Deep Freeze (ODF), to break through Antarctic sea ice so as to reach and resupply McMurdo Station, the large U.S. Antarctic research station located on the shore of McMurdo Sound, near the Ross Ice Shelf. The Coast Guard states that Polar Star , the Coast Guard's only currently operational heavy polar icebreaker, "spends the [northern hemisphere] winter [i.e., the southern hemisphere summer] breaking ice near Antarctica in order to refuel and resupply McMurdo Station. When the mission is complete, the Polar Star returns to dry dock [in Seattle] in order to complete critical maintenance and prepare it for the next ODF mission. Once out of dry dock, it's back to Antarctica, and the cycle repeats itself." In terms of the maximum thickness of the ice to be broken, the annual McMurdo resupply mission generally poses the greatest icebreaking challenge for U.S. polar icebreakers, though Arctic ice can frequently pose its own significant icebreaking challenges for U.S. polar icebreakers. The Coast Guard's medium polar icebreaker, Healy , spends most of its operational time in the Arctic supporting NSF research activities and performing other operations. Although polar ice is diminishing due to climate change, observers generally expect that this development will not eliminate the need for U.S. polar icebreakers, and in some respects might increase mission demands for them. Even with the diminishment of polar ice, there are still significant ice-covered areas in the polar regions, and diminishment of polar ice could lead in coming years to increased commercial ship, cruise ship, and naval surface ship operations, as well as increased exploration for oil and other resources, in the Arctic—activities that could require increased levels of support from polar icebreakers, particularly since waters described as "ice free" can actually still have some amount of ice. Changing ice conditions in Antarctic waters have made the McMurdo resupply mission more challenging since 2000. The Coast Guard's strategy document for the Arctic region, released on May 21, 2013, states that "The United States must have adequate icebreaking capability to support research that advances fundamental understanding of the region and its evolution," and that "The Nation must also make a strategic investment in icebreaking capability to enable access to the high latitudes over the long-term." Current U.S. Polar Icebreakers The operational U.S. polar icebreaking fleet currently consists of one heavy polar icebreaker, Polar Star , and one medium polar icebreaker, Healy . In addition to Polar Star , the Coast Guard has a second heavy polar icebreaker, Polar Sea . Polar Sea , however, suffered an engine casualty in June 2010 and has been nonoperational since then. Polar Sta r and Polar Sea entered service in 1976 and 1978, respectively, and are now well beyond their originally intended 30-year service lives. The Coast Guard is using Polar Sea as a source of spare parts for keeping Polar Star operational. For additional background information on current U.S. polar icebreakers and polar research ships, see Appendix A . Required Numbers of U.S. Polar Icebreakers For background information on required numbers of U.S. polar icebreakers, see Appendix B . Coast Guard Polar Security Cutter (PSC) Program Overview The PSC program was initiated in the Coast Guard's FY2013 budget submission, and envisages the acquisition of three new heavy polar icebreakers, to be followed years from now by the acquisition of up to three new medium polar icebreakers. The Coast Guard wants to begin construction of the first new heavy polar icebreaker in 2021 and have it enter service in 2024. Program Name The PSC program was previously known as the polar icebreaker (PIB) program. Changing the program's name to the PSC program is intended to call attention to the fact that the Coast Guard's polar icebreakers perform a variety of missions relating to national security, not just icebreaking. Although it is now called the PSC program, many observers, as a matter of convenience, may continue to refer to it as the polar icebreaker program. Coast Guard-Navy Integrated Program Office (IPO) The PSC program is managed by a Coast Guard-Navy Integrated Program Office (IPO). A key aim in establishing the IPO was to permit the Navy to share its ship-procurement best practices with the Coast Guard so as to help the Coast Guard reduce the time and cost needed to design and procure the PSCs. Parent Design Approach The PSC program is using the parent design approach, meaning that the design of the PSC will be based on an existing icebreaker design. A key aim in using the parent design approach is to reduce cost, schedule, and technical risk in the PSC program. Program Schedule The PSC program's schedule calls for delivering the three PSCs at 12-month intervals, at the end of the third quarters of FY2024, FY2025, and FY2026, respectively. Procurement Cost The Coast Guard and Navy estimate the procurement cost of the first PSC at $925 million to $940 million, and the total estimated procurement cost of the three-ship PSC program at about $2.95 billion. These figures include the shipbuilder's cost; the cost of government-furnished equipment (GFE), which is equipment for the ships that the government purchases and then provides to the shipbuilder for incorporation into the ship; and government program-management costs. Within these figures, the shipbuilder's contract-award cost for the first ship is $745.9 million, with options for the second and third ships that, if exercised, would increase the total value of the contract to $1,942.8 million (i.e., about $1.9 billion). Program Funding The PSC program received about $359.6 million in procurement funding through FY2018, including $300 million provided through the Navy's shipbuilding account (which is part of DOD's budget) and $59.6 million provided through the Coast Guard's procurement account (which is part of the Department of Homeland Security's [DHS's] budget). The FY2019 DHS Appropriations Act (Division A of H.J.Res. 31 / P.L. 116-6 of February 15, 2019) provided an additional $675 million for the PSC program through the Coast Guard's procurement account, including $20 million for the procurement of long leadtime materials (LLTM) for the second ship in the program. The PSC program has thus received a total of $1,034.6 million (i.e., about $1.0 billion) in procurement funding through FY2019. The Coast Guard's proposed FY2020 budget requests $35 million in procurement funding for the PSC program, which is enough to cover the PSC program's FY2020 government program-management costs. As shown in Table C-2 , the Coast Guard's FY2019 budget submission had projected that a total of $125 million in procurement funding would be requested for the PSC program in FY2020. For additional background information on funding for the PSC program, see Appendix C . Contract Award On April 23, 2019, the Coast Guard-Navy Integrated Program Office for the PSC program awarded a $745.9 million fixed-price, incentive-firm contract for the detail design and construction (DD&C) of the first PSC to VT Halter Marine of Pascagoula, MS, a shipyard owned by Singapore Technologies (ST) Engineering. VT Halter was the leader of one of three industry teams that competed for the DD&C contract; the other two bidders reportedly were Bollinger Shipyards of Lockport, Louisiana, and a partnership between Philly Shipyard of Philadelphia and Fincantieri/Marinette Marine, of Marinette, WI. The first PSC is scheduled to begin construction in 2021 and be delivered in 2024, though the DD&C contract includes financial incentives for earlier delivery. The DD&C contract includes options for building the second and third PSCs. If these options are exercised, the total value of the contract would increase to $1,942.8 million (i.e., about $1.9 billion). The figures of $745.9 million and $1,942.8 million cover the shipbuilder's costs; they do not include the cost of government-furnished equipment (GFE), which is equipment for the ships that the government purchases and then provides to the shipbuilder for incorporation into the ship, or government program-management costs. Ship Design Figure 1 , Figure 2 , and Figure 3 show three renderings of VT Halter's design for the PSC. An April 25, 2019, press report states that "the Coast Guard and Navy said VT Halter Marine's winning design for the new Polar Security Cutter (PSC) 'meets or exceeds all threshold requirements' in the ship specification" for the PSC program. A May 7, 2019, press release from VT Halter about its design for the PSC stated: VT Halter Marine is teamed with Technology Associates, Inc. [TAI] as the ship designer and, for over two years, has participated in the U.S. Coast Guard's Heavy Polar Icebreaker Industry Study. The ship design is an evolution from the mature "Polar Stern II" [German icebreaker] currently in design and construction; the team has worked rigorously to demonstrate its maturity and reliability. During the study, TAI incrementally adjusted the design and conducted a series of five ship model tank tests to optimize the design. The vessels are 460 feet ín length with a beam of 88 feet overall, a full load displacement of approximately 33,000 long tons at delivery. The propulsion will be diesel electric at over 45,204 horse power and readily capable of breaking ice between six to eight feet thick. The vessel will accommodate 186 personnel comfortably for an extended endurance of 90 days. In addition to TAI, VT Halter Marine has teamed with ABB/Trident Marine for its Azipod propulsion system, Raytheon for command and control systems integration, Caterpillar for the main engines, Jamestown Metal Marine for joiner package, and Bronswerk for the HVAC system. The program is scheduled to bring an additional 900 skilled craftsman and staff to the Mississippi-based shipyard. The German icebreaker design referred to in VT Halter's press release, Polar Stern II (also spelled Polarstern II ), is being built as the replacement for Polarstern , Germany's current polar research and supply icebreaker. A May 9, 2019, press report stated that Polar s tern II was designed by Germany's Ship Design & Consult (SDC) and is being built by German shipbuilder HDW. VT Halter's teammates on the PSC include ship designer Technology Associates, Inc. (TAI), which has been involved in the design for over two years and has made "a lot of modifications" in a number of areas to meet Coast Guard requirements, [Ronald Baczkowski, president and CEO of VT Halter Marine] said. The team went through six design spirals to refine the design and the major modifications include changes in the hull form to enhance the ship's icebreaking capabilities and keep the ice clear from the propulsors and sensors, habitability improvements for comfort particularly in open water, easier access to different areas of the ship, and maintenance and endurance capabilities…. Raytheon [RTN] is the integrator for C5I capabilities on the ship and the main engines will be supplied by Caterpillar [CAT]. Switzerland-based ABB and Netherlands-based Trident are supplying the Azipod propulsion system, Florida-based Jamestown Metal Marine is supplying the joiner package, and Netherlands-based Bronswerk the heating, ventilation and cooling system. Figure 4 shows a rendering of the SDC's concept design for Polarstern II . SDC states that its concept design for Polarstern II has a length of 133 meters (about 436.4 feet) long, a beam of 27 meters (about 88.6 feet), and a draft of 10.5 meters (about 34.4 feet), but does not provide the design's displacement. A briefing on a preliminary version of the ship's design stated that the design at that point was somewhat larger, with a length of 145 meters (about 476 feet), a beam of 27.3 meters (about 89.6 feet), a draft of about 11 meters (about 36.1 feet), and a displacement (including payload) of about 26,000 tons. These figures suggest that SDC's somewhat smaller concept design for Polarstern II might have a displacement (including payload) of something less than 26,000 tons, and perhaps closer to 23,000 tons. VT Halter's 33,000-ton design for the PSC is considerably larger than the Coast Guard's current polar icebreakers. As shown in tons Table A-1 , the Coast Guard's largest polar icebreaker, Healy , is 420 feet long and has a full load displacement of 16,000 tons. VT Halter's 460-foot design for the PSC is 40 feet longer than Healy , and its 33,000-ton displacement is more than twice that of Healy . Indeed, in terms of full load displacement, VT Halter's design will be larger than some of Russia's existing nuclear-powered Arctic icebreakers, and about the same size as new nuclear-powered Arctic icebreakers that Russia is building and a nuclear-powered icebreaker that China has announced an intention to build. The horsepower generated by the propulsion plant in VT Halter's design ("over 45,200") is roughly one-quarter less than the 60,000 shaft horsepower of the propulsion plant in the Coast Guard's heavy polar icebreaker, Polar Star . A shown in Figure 1 and Figure 2 , however, VT Halter's design includes a centerline shafted propeller flanked by two azimuthing (i.e., swiveling) podded propulsors—an arrangement that, along with other modern icebreaker hull design features, is expected to give VT Halter's design a capability for breaking ice comparable to that of Polar Star . A May 8, 2019 press report states: "We picked the most modern icebreaker that was on the market, soon to be production-level design that roughly met the Coast Guard's requirements, and we took it and modified it," Baczkowski said. "It has a contoured shape. The shape of the hull does the icebreaking. Instead of being a mass breaking ice, this actually slices the ice. The shape of the hull pushed the broken ice aside, so it doesn't interfere with your propulsion systems, with your instrumentation that's on the other side of the ship." The design of the cutter is optimized for seakeeping to support the long voyage from its homeport in Washington state to as far away as the Antarctic, he said. "It's an optimum design between icebreaking and seakeeping." "With the propulsors, with one fixed and two steerable, we were able to optimize the seakeeping capability so when you're going on long transits from Washington to Antarctica the crew is not beat to a pulp or heavily fatigued because of the stability characteristics in open water." Issues for Congress FY2020 Funding One issue for Congress is whether to approve, reject, or modify the Coast Guard's FY2020 procurement funding request for the PSC program. In considering this issue, Congress may consider, among other things, whether the Coast Guard has accurately priced the work it is proposing to do each year in the program, and whether the procurement of the second and/or third PSCs should be deferred or accelerated. As noted earlier, the $35 million in procurement funding that the Coast Guard has requested for the PSC program for FY2020 is enough to cover the program's FY2020 government program-management costs. As shown in Table C-2 , the Coast Guard's FY2019 budget submission had projected that a total of $125 million in procurement funding would be requested for the PSC program in FY2020, suggesting that the Coast Guard had projected requesting, beyond the $35 million, another $90 million or so for other costs, such as procurement of long leadtime materials (LLTM) for the second PSC. An April 15, 2019, press report states: The Coast Guard's fiscal year 2020 budget request of $35 million for its new heavy icebreaker is insufficient for the purchase of long-lead time materials to maintain the program schedule, Rep. Lou Correa (D-Calif.) said April 9th in his opening remarks at a House Homeland Security Transportation and Maritime Security Subcommittee hearing with the heads of the Coast Guard and Transportation Security Administration. Correa, chairman of the subcommittee, was referring to the advance purchase of materials for the second Polar Security Cutter (PSC). The Coast Guard is expected to award a contract for the detailed design and construction of the first PSC within a month and already has the funding. House staffers say the Coast Guard has told them it needs $100 million for long-lead materials for the second PSC or the ship's schedule will be a risk. Funding the procurement of LLTM for both the second and third PSCs in FY2020 might enable improved production economies of scale for that LLTM, which could reduce at the margin the procurement cost of the second and third PSCs. Contract with Options vs. Block Buy Contract Another potential issue for Congress is whether to use a contract with options or a block buy contract to acquire the ships. As noted earlier, the baseline plan for the PSC program calls for acquiring ships using a contract with options, but Coast Guard and Navy officials are open to the idea of instead using a block buy contract to acquire the ships, and have requested information on this possibility as part of the request for proposals (RFP) for the PSC program that was released on March 2, 2018. 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. Although a contract with options covers multiple years, it operates more like a form of annual contracting, and it does not generate the kinds of savings that are possible with a block buy contract. Compared to a contract with options, a block buy contract would reduce the government's flexibility regarding whether and when to acquire the second and third ships, and what design to build them to, and in return reduce the combined acquisition cost of the ships covered by the contract. The Navy has used block buy contracts to reduce procurement costs of Virginia-class attack submarines and (in more recent years) Littoral Combat Ships (LCSs) and John Lewis (TAO-205) class oilers. CRS estimates that compared to costs using a contract with options, using a block buy contract that included economic order quantity (EOQ) purchases (i.e., up-front batch purchases) of materials and components for three heavy polar icebreakers would reduce the combined acquisition cost of the three ships by upwards of 7%, which could equate to a savings of upwards of $150 million. A congressionally mandated July 2017 National Academies of Sciences, Engineering, and Medicine (NASEM) report on acquisition and operation of polar icebreakers states the following (emphasis as in original): 3. Recommendation: USCG should follow an acquisition strategy that includes block buy contracting with a fixed price incentive fee contract and take other measures to ensure best value for investment of public funds. Icebreaker design and construction costs can be clearly defined, and a fixed price incentive fee construction contract is the most reliable mechanism for controlling costs for a program of this complexity. This technique is widely used by the U.S. Navy. To help ensure best long-term value, the criteria for evaluating shipyard proposals should incorporate explicitly defined lifecycle cost metrics.... A block buy authority for this program will need to contain specific language for economic order quantity purchases for materials, advanced design, and construction activities. A block buy contracting program with economic order quantity purchases enables series construction, motivates competitive bidding, and allows for volume purchase and for the timely acquisition of material with long lead times. It would enable continuous production, give the program the maximum benefit from the learning curve, and thus reduce labor hours on subsequent vessels.... If advantage is taken of learning and quantity discounts available through the recommended block buy contracting acquisition strategy, the average cost per heavy icebreaker is approximately $791 million, on the basis of the acquisition of four ships. Funding Coast Guard Polar Icebreakers through Navy's Shipbuilding Account Another potential issue for Congress is whether to continue providing at least some of the procurement funding for the PSC program through the Navy's shipbuilding account, known formally as the Shipbuilding and Conversion Navy (SCN) appropriation account. A May 2018 GAO report states that agreements between DHS, the Coast Guard, and the Navy that were made following the establishment of the Coast Guard-Navy integrated program office for the PSC program "state that the program's contracting actions could be funded by either USCG or Navy appropriations, and the source of the appropriations will award the contract." As noted earlier, of the $300 million of the procurement funding that has provided for the PSC program was provided through the SCN account—$150 million in FY2017, and another $150 million in FY2018. Although providing funding for Coast Guard ships through the SCN account creates some complexity in tracking and executing funding for Coast Guard ship acquisition, and can raise a question as to whether that funding would otherwise go toward the acquisition of Navy ships, it has been used in the past for funding Coast Guard ships other than heavy polar icebreakers: Healy was funded largely (about 89%) through the SCN account. Thirty-three of the Coast Guard's 49 Island-class 110-foot patrol boats (i.e., about 67% of the boats) were procured under a Navy contract. The contract was for the construction of 21 of the boats, and included FY1990 SCN funds and prior year DOD nonexpiring funding. During the construction phase of the contract, the Navy exercised options under the contract for the construction 12 additional boats using FY1990 SCN funding. Subsections (a), (b), and (c) of Section 122 of the FY2018 National Defense Authorization Act ( H.R. 2810 / P.L. 115-91 of December 12, 2017) state the following: SEC. 122. Icebreaker vessel. (a) Authority to procure one polar-class heavy icebreaker.— (1) IN GENERAL.—There is authorized to be procured for the Coast Guard one polar-class heavy icebreaker vessel. (2) CONDITION FOR OUT-YEAR CONTRACT PAYMENTS.—A contract entered into under paragraph (1) shall provide that any obligation of the United States to make a payment under the contract for a fiscal year after fiscal year 2018 is subject to the availability of appropriations or funds for that purpose for such later fiscal year. (b) Limitation on availability of funds for procurement of icebreaker vessels.—None of the funds authorized to be appropriated by this Act or otherwise made available for the Department of Defense for any fiscal year that are unobligated as of the date of the enactment of this Act may be obligated or expended for the procurement of an icebreaker vessel other than the one polar-class heavy icebreaker vessel authorized to be procured under subsection (a)(1). (c) Contracting authority.— (1) COAST GUARD.—If funds are appropriated to the department in which the Coast Guard is operating to carry out subsection (a)(1), the head of contracting activity for the Coast Guard shall be responsible for contracting actions carried out using such funds. (2) NAVY.—If funds are appropriated to the Department of Defense to carry out subsection (a)(1), the head of contracting activity for the Navy, Naval Sea Systems Command shall be responsible for contracting actions carried out using such funds. (3) INTERAGENCY ACQUISITION.—Notwithstanding paragraphs (1) and (2), the head of contracting activity for the Coast Guard or head of contracting activity for the Navy, Naval Sea Systems Command (as the case may be) may authorize interagency acquisitions that are within the authority of such head of contracting activity. Regarding Section 122, the conference report ( H.Rept. 115-404 of November 9, 2017) on H.R. 2810 / P.L. 115-91 states the following: Icebreaker vessel (sec. 122) The House bill contained provisions (sec. 122, 123, and 1012) that would authorize the Secretary of the Navy to act as a general agent for the Secretary of the Department in which the Coast Guard is operating and enter into a contract for icebreaker vessels; prohibit funds for the Department of Defense from being used for the procurement of an icebreaker vessel; and amend section 2218 of title 10, United States Code, to authorize funds associated with the National Defense Sealift Fund for the construction of icebreaker vessels. The Senate amendment contained a similar provision (sec. 1048). The Senate recedes with an amendment that would authorize one polar-class heavy icebreaker vessel, prohibit funds for the Department of Defense from being used for the procurement of an icebreaker vessel other than this one polar-class heavy icebreaker vessel, clarify contracting authorities, and require a Comptroller General report. The conferees recognize the national importance of recapitalizing the U.S. icebreaker fleet and the extraordinary circumstances that necessitated use of Department of Defense funding to procure the first polar-class heavy icebreaker, as partially provided in the Department of Defense Appropriations Act for Fiscal Year 2017. Accordingly, the conferees support the authorization of this icebreaker in this Act. The conferees note the Undersecretary of Management in the Department of Homeland Security (DHS) serves as the Acquisition Decision Authority for the Polar Icebreaker Program and that this program is governed in accordance with DHS Acquisition Management Directive 102–01 and Instruction 102–01–001. The conferees believe maintaining clear lines of authority, responsibility, accountability, and resources with the Secretary and Acquisition Decision Authority of the department in which the U.S. Coast Guard is operating are essential to delivering icebreakers on cost and schedule. Accordingly, the conferees believe the Secretary of the Department of Homeland Security and the Undersecretary of Management in the DHS should be the officials provided with authorities and resources related to the Polar Icebreaker Program. Therefore, the conferees expect subsequent icebreakers to be authorized by the congressional committees with jurisdiction over the Coast Guard and funded using Coast Guard appropriations. (Pages 765-766) Technical, Schedule, and Cost Risk for PSC Program Another potential issue for Congress concerns technical, schedule, and cost risk in the PSC program. A September 2018 GAO report on the PSC program states that the Coast Guard did not have a sound business case in March 2018, when it established the cost, schedule, and performance baselines for its heavy polar icebreaker acquisition program, because of risks in four key areas: Design. The Coast Guard set program baselines before conducting a preliminary design review, which puts the program at risk of having an unstable design, thereby increasing the program's cost and schedule risks. While setting baselines without a preliminary design review is consistent with DHS's current acquisition policy, it is inconsistent with acquisition best practices. Based on GAO's prior recommendation, DHS is currently evaluating its policy to better align technical reviews and acquisition decisions. Technology. The Coast Guard intends to use proven technologies for the program, but did not conduct a technology readiness assessment to determine the maturity of key technologies prior to setting baselines. Coast Guard officials indicated such an assessment was not necessary because the technologies the program plans to employ have been proven on other icebreaker ships. However, according to best practices, such technologies can still pose risks when applied to a different program or operational environment, as in this case. Without such an assessment, the program's technical risk is underrepresented. Cost. The lifecycle cost estimate that informed the program's $9.8 billion cost baseline substantially met GAO's best practices for being comprehensive, well-documented, and accurate, but only partially met best practices for being credible. The cost estimate did not quantify the range of possible costs over the entire life of the program. As a result, the cost estimate was not fully reliable and may underestimate the total funding needed for the program. Schedule. The Coast Guard's planned delivery dates were not informed by a realistic assessment of shipbuilding activities, but rather driven by the potential gap in icebreaking capabilities once the Coast Guard's only operating heavy polar icebreaker—the Polar Star—reaches the end of its service life.... GAO's analysis of selected lead ships for other shipbuilding programs found the icebreaker program's estimated construction time of 3 years is optimistic. As a result, the Coast Guard is at risk of not delivering the icebreakers when promised and the potential gap in icebreaking capabilities could widen. Common Design for Heavy and Medium Polar Icebreakers Another potential issue for Congress is whether to procure heavy and medium polar icebreakers to a common basic design. As noted earlier, the DHS polar icebreaker mission need statement (MNS) states that "current requirements and future projections ... indicate the Coast Guard will need to expand its icebreaking capacity, potentially requiring a fleet of up to six icebreakers (3 heavy and 3 medium) to adequately meet mission demands in the high latitudes...." Consistent with this statement, the Coast Guard envisages procuring up to three new medium icebreakers after it procures three new heavy polar icebreakers. The question is whether to develop a separate design for the medium polar icebreakers, or instead build the medium polar icebreakers to the same basic design as the heavy polar icebreakers. A congressionally mandated July 2017 report from the National Academies of Sciences, Engineering, and Medicine (NASEM) on the acquisition and operation of polar icebreakers concluded that notional operational requirements for new medium polar icebreakers would result in ships that would not be too different in size from new heavy polar icebreakers. (As shown in Table A-1 , the Coast Guard's current medium polar icebreaker, Healy , is actually somewhat larger than the Coast Guard's heavy polar icebreaker, Polar Star .) Given what it concluded as the probable similarity in size between future U.S. heavy and medium polar icebreakers, the NASEM report recommended building a single medium polar icebreaker to the same common design as three new heavy polar icebreakers. This approach, the report concluded, would reduce the cost of the medium icebreaker by avoiding the cost of developing a new design and by making the medium polar icebreaker the fourth ship on an existing production learning curve rather than the first ship on a new production learning curve. The NASEM report stated the following (emphasis as in original): 2. Recommendation: The United States Congress should fund the construction of four polar icebreakers of common design that would be owned and operated by the United States Coast Guard (USCG). The current Department of Homeland Security (DHS) Mission Need Statement... contemplates a combination of medium and heavy icebreakers. The committee's recommendation is for a single class of polar icebreaker with heavy icebreaking capability. Proceeding with a single class means that only one design will be needed, which will provide cost savings. The committee has found that the fourth heavy icebreaker could be built for a lower cost than the lead ship of a medium icebreaker class.... The DHS Mission Need Statement contemplated a total fleet of "potentially" up to six ships of two classes—three heavy and three medium icebreakers. Details appear in the High Latitude Mission Analysis Report. The Mission Need Statement indicated that to fulfill its statutory missions, USCG required three heavy and three medium icebreakers; each vessel would have a single crew and would homeport in Seattle. The committee's analysis indicated that four heavy icebreakers will meet the statutory mission needs gap identified by DHS for the lowest cost.... 4. Finding: In developing its independent concept designs and cost estimates, the committee determined that the costs estimated by USCG for the heavy icebreaker are reasonable. However, the committee believes that the costs of medium icebreakers identified in the High Latitude Mission Analysis Report are significantly underestimated .... Although USCG has not yet developed the operational requirements document for a medium polar icebreaker, the committee was able to apply the known principal characteristics of the USCG Cutter Healy to estimate the scope of work and cost of a similar medium icebreaker. The committee estimates that a first-of-class medium icebreaker will cost approximately $786 million. The fourth ship of the heavy icebreaker series is estimated to cost $692 million. Designing a medium-class polar icebreaker in a second shipyard would incur the estimated engineering, design, and planning costs of $126 million and would forgo learning from the first three ships; the learning curve would be restarted with the first medium design. Costs of building the fourth heavy icebreaker would be less than the costs of designing and building a first-of-class medium icebreaker.... 6. Recommendation: USCG should ensure that the common polar icebreaker design is science-ready and that one of the ships has full science capability. All four proposed ships would be designed as "science-ready," which will be more cost-effective when one of the four ships—most likely the fourth—is made fully science capable. Including science readiness in the common polar icebreaker design is the most cost-effective way of fulfilling both the USCG's polar missions and the nation's scientific research polar icebreaker needs.... The incremental costs of a science-ready design for each of the four ships ($10 million to $20 million per ship) and of full science capability for one of the ships at the initial build (an additional $20 million to $30 million) are less than the independent design and build cost of a dedicated research medium icebreaker.... In briefings at its first meeting, the committee learned that the National Science Foundation and other agencies do not have budgets to support full-time heavy icebreaker access or the incremental cost of design, even though their science programs may require this capability. Given the small incremental cost, the committee believes that the science capability cited above should be included in the acquisition costs. Science-ready design includes critical elements that cannot be retrofitted cost-effectively into an existing ship and that should be incorporated in the initial design and build. Among these elements are structural supports, appropriate interior and exterior spaces, flexible accommodation spaces that can embark up to 50 science personnel, a hull design that accommodates multiple transducers and minimizes bubble sweep while optimizing icebreaking capability, machinery arrangements and noise dampening to mitigate interference with sonar transducers, and weight and stability latitudes to allow installation of scientific equipment. Such a design will enable any of the ships to be retrofitted for full science capability in the future, if necessary.... Within the time frame of the recommended build sequence, the United States will require a science-capable polar icebreaker to replace the science capabilities of the Healy upon her retirement. To fulfill this need, one of the heavy polar icebreakers would be procured at the initial build with full science capability; the ability to fulfill other USCG missions would be retained. The ship would be outfitted with oceanographic overboarding equipment and instrumentation and facilities comparable with those of modern oceanographic research vessels. Some basic scientific capability, such as hydrographic mapping sonar, should be acquired at the time of the build of each ship so that environmental data that are essential in fulfilling USCG polar missions can be collected. If policymakers decide to procure a second new medium polar icebreaker or a third new medium polar icebreaker, the same general approach recommended by the NASEM report could be followed—a second medium polar icebreaker and third medium polar icebreaker could be built to the same common design used for the three new heavy polar icebreakers and the first new medium polar icebreaker. An April 12, 2018, press report states the following: As the Coast Guard prepares to review industry bids for a new heavy polar icebreaker, the service is keeping its options open for the right number and mix of polar icebreakers it will need in the future, Adm. Paul Zukunft, the [then-]commandant of the Coast Guard, said on Wednesday [April 11]. The Coast Guard's program of record is for three heavy and three medium polar icebreakers but Zukunft said the "jury is still out" whether that will remain so. Right now, the service is aiming toward building three new heavy icebreakers, but it might make sense just to keep building these ships, he told reporters at a Defense Writers Group breakfast in Washington, D.C. Zukunft said that "when you start looking at the business case after you build three, and then you need to look at what is the economy of scale when you start building heavy icebreakers, and would it be less expensive to continue to build heavies and not mediums." He added that the heavy icebreakers provide more capability, and if the price is "affordable" and in "the same range" as building medium icebreakers, then "maybe you end up with one class of heavy icebreakers." Building only one class of ships has a number of advantages in terms of maintenance, crew familiarity, configuration management, and more, he said. A decision on what the future icebreaker fleet will consist of is "still probably several years out .... but that's one option that we want to keep open going forward," Zukunft said. Short-Term Bridge to One or More New Polar Icebreakers Overview: Two Basic Options As mentioned earlier, a new heavy polar icebreaker that begins construction in FY2019 might enter service in 2023, while Polar Star was refurbished and reentered service in December 2012 for an intended period of 7 to 10 years—a period that will end between December 2019 and December 2022. Consequently, another potential issue for Congress concerns how to bridge a potential gap in time between the end of Polar Star's current intended service life and the entry into service of one or more new heavy polar icebreakers. As testified by CRS on July 21, 2016, there are at least two options for bridging this time period: One would be to further extend the service life of Polar Star . The other would be to charter (i.e., lease) one or more other icebreakers (perhaps foreign-owned ones), if such ships are available for charter and have capabilities for performing missions performed by U.S. heavy polar icebreakers. The United States has used both of these approaches in the past to mitigate polar icebreaking capacity gaps. Coast Guard Plan is to Further Extend Life of Polar Star The Coast Guard plans to pursue the first of the two options outlined above—further extend the service life of Polar Star —and has requested funding in its FY2019 budget for service life extension work on Polar Star . A September 25, 2017, GAO report on polar icebreakers states the following: While the Coast Guard considered various options to bridge this potential heavy icebreaker gap, in a January 2017 study the Coast Guard reported that it was planning for a limited service life extension of the Polar Star to keep it operational until fiscal year 2025, at an initial cost estimate of $75 million. However, the Coast Guard has not completed a formal cost estimate for this effort and we have previously reported that the $75 million estimate may be unrealistic.... The Coast Guard's Capital Investment Plan for fiscal years 2018-2022 includes $60 million of a planned $75 million for polar icebreaker sustainment, which officials reported as being the rough estimate for the Polar Star's limited service life extension. Coast Guard officials stated that the $75 million rough estimate is based on the cost of the Polar Star's prior 7-10 year service life extension which was completed in fiscal year 2013. However, in July 2017 we reported that the Coast Guard has not completed a cost estimate for this effort, and that the $75 million estimate may be unrealistic based on the assumptions the Coast Guard used, such as continuing to use parts from the Polar Sea as has been done in previous maintenance events. A July 2018 GAO report states the following: The Coast Guard is planning a SLEP on the Polar Star to keep it operational until the first and second new heavy polar icebreakers are delivered (planned for 2023 and 2025, according to current acquisition plans) in order to bridge a potential operational gap. This approach would allow the Coast Guard to operate a minimum of two heavy icebreakers once the first polar icebreaker is delivered. The approach would also provide the Coast Guard with a self-rescue capability—the ability for one icebreaker to rescue the other if it became incapacitated while performing icebreaking operations. The Coast Guard's plan to conduct the Polar Star SLEP during its existing annual depot-level maintenance periods may not be feasible given the amount of maintenance already required on the cutter. The Polar Star's mission capable rating has been decreasing in recent years and reached a low point of 29 percent—well below the target of 41 percent—from October 2016 to September 2017. Based on mission capable data, we found this is mostly due to additional time spent in depot-level maintenance, which has increased in recent years from about 6 months in 2015 to more than 8 months in 2017. Additionally, the Polar Star has required extensions of about 3 months for its annual dry dock periods—the period of time when a cutter is removed from the water so that maintenance can be conducted—in 2016 and 2017 to complete required maintenance activities. These dry docks were originally planned to last between 2-1/2 months and 4 months. These extensions also compressed the amount of time that the crew had to prepare for its annual mission to Antarctica, which, according to members of the Polar Star crew, placed a large stress on the crew, risked the quality of work, and reduced or eliminated the crews' planned rest and personal preparation for their roughly 4-month deployment. Based on our analysis, these delays and extensions are likely to continue as the cutter ages. According to Coast Guard officials, the Polar Star's SLEP work will be conducted during the annual dry dock periods by adding an additional 1 or 2 months to the annual dry docks. However, if the work is unable to be completed during this time frame, it could force the Coast Guard to miss its commitment to conduct the annual Antarctica mission. Coast Guard maintenance officials stated that until the Polar Star completes the SLEP, its repairs will likely continue to get more expensive and time consuming. We will continue to monitor the Polar Star's SLEP through our annual review of DHS programs. As we found in July 2017, the Polar Star SLEP effort has a rough order cost estimate of $75 million, which is based on the reactivation work completed in 2013.41 However, this estimate may be unrealistic based on assumptions the Coast Guard used, such as that it would continue to use parts from the Coast Guard's other heavy polar icebreaker, the Polar Sea, which has been inactive since 2010.42 The Coast Guard's recent assessment of the Polar Star's material condition—the physical condition of the cutter, which includes the hull structure, habitability, major equipment systems, and spare parts availability—was completed in January 2018.43 The material assessment stated that many of the available parts from the Polar Sea have already been removed and installed on the Polar Star. As a result of the finite parts available from the Polar Sea, the Coast Guard may have to acquire new parts for the Polar Star that could increase the $75 million SLEP estimate. The Polar Star's recent material assessment will form the basis to determine which systems will be overhauled during the SLEP and for a more detailed cost estimate. The Coast Guard expects the program to reach the obtain phase of the acquisition life cycle by December 2019, at which time the Polar Star could reach the end of its current useful service life (currently projected to be between 2020 to 2023). This timeline contains risk that the Polar Star could be rendered inoperable before the cutter is able to undergo a SLEP. Another Option: Chartering an Icebreaker Overview The feasibility of the second of the two options outlined above—charter (i.e., lease) one or more other icebreakers—would depend on whether an icebreaker was available for charter at the time of the year when the United States would need it to perform desired missions in the Arctic or Antarctic. Foreign polar icebreakers are used by their own countries for icebreaking operations, and may not always be available for charter when the United States might want to use them. If an icebreaker were available for charter, the potential cost effectiveness of this option would then depend on the cost of the charter, the ability of the ship to perform U.S. polar icebreaker missions, and how these costs and capabilities compare to the option of extending the service life of Polar Star . The Coast Guard stated in July 2016 that NSF leased the icebreaker KRASIN from Russia from 2005-2006, ODEN from the Swedish government from 2007-2010, and VLADIMIR IGNATYUK from Russia in 2012 to support the McMurdo resupply mission. All leases were time charters, and crews were supplied with the leases. As a contingency measure, NSF obtained assurances of assistance from other vessels in the area, such as the Chinese flagged [icebreaking] vessel XUE LONG, in the event they encountered difficulty. They also hired icebreaker captains with previous McMurdo experience to supplement the crew. NSF acquired these leases through a RFP process, and had no assurances that icebreakers would be available to perform the mission, or what price would be quoted. This process came with risks, as there was no way to gauge icebreaker availability until NSF received responses to their RFP. Additionally, a foreign-flagged commercial or state vessel can become unavailable for a variety of environmental and political reasons. For example, the Swedish government abruptly terminated their contract during the spring/summer of 2011, and NSF was left without a platform to conduct its mission. NSF requested support from CGC [Coast Guard cutter] HEALY, but it was employed in the Arctic. NSF ultimately leased the Russian icebreaker VLADIMIR IGNATYUK. After that incident, NSF decided to utilize CGC POLAR STAR to support the McMurdo mission, which it has been doing since 2013. Aiviq Being Offered for Lease One ship that is being offered for lease to the Coast Guard as an interim polar icebreaker is Aiviq ( Figure 5 ), an Arctic oil-exploration support ship owned by Edison Chouest Offshore (ECO). The 361-foot-long ship was ordered in 2009, completed in 2012, and chartered by Royal Dutch Shell to support that company's effort (now ended) to explore for oil in Arctic waters. Following Shell's decision to end that effort, alternative uses for Aiviq have been sought. The ship has been modified to serve as a polar icebreaker, and it is being offered to the Coast Guard for lease as an interim polar icebreaker. It reportedly has also been offered for use as an icebreaker to the Canadian government. The possibility of leasing Aiviq as an interim polar icebreaker has been discussed at certain recent hearings about the Coast Guard. For example, at a July 25, 2017, hearing on Coast Guard capabilities before the Coast Guard and Maritime transportation subcommittee of the House Transportation and Infrastructure Committee, the following exchange occurred: REPRESENTATIVE DON YOUNG (continuing): Have you looked at, Admiral, I know this has been an ongoing battle with me and the Coast Guard over the years, the other possibility of getting an ice breaker into the arena quicker than having one constructed like leasing from another outfit? You know, I've been talking about this a long time. Have you analyzed this again? I know the last time we had a study, it was 1980. That's a long time ago. So is there a way we can put metal on the water, especially for the new shipping through and the—and the cruise ships, because that Healy is old, and—is—have you looked at that at all? ADMIRAL PAUL ZUKUNFT, [THEN-]COMMANDANT, U.S. COAST GUARD: We have. In fact, one potential vendor, we've had multiple interactions. They have a platform that has yet to complete ice trials. We—we would not want to lease something they can't demonstrate its ability to actually operate in the ice that—that Healy sees. Healy was actually beset in ice for 36 hours last year, so it's not ice free up there, and that's a medium ice breaker. This particular platform doesn't have the capability of Healy. But we would at least want to make sure that ice trials were completed. That we could actually be a good steward of taxpayer dollars, so at least a platform that would meet our requirements. So we've had multiple interactions, the last one was probably in May, and the issue of ice trials is still on the table right now. Later in the same hearing, the following exchange occurred: REPRESENATIVE DUNCAN HUNTER, CHAIRMAN: Going back to Mr. Young's question. too, about leasing. You said you—you're—you're waiting for—I'm—I'm guessing money for ice trials. That's what you said. ZUKUNFT: No real dollars have been negotiated in any of this. So... HUNTER: But in—in real terms, you're only paying for gas? I mean what—what does it cost to do ice trials. It's gas, right? You're not going to hire more Coast Guardsmen to come in and—and do it. I mean so that's a figure—your—your overhead's fixed. So what is the cost to—to go do ice trials with the (inaudible)? ZUKUNFT: That would really be for the... HUNTER: The ice—once again the only... ZUKUNFT: ... vendor to decide. HUNTER: ... existing U.S. made ice breaker in America. ZUKUNFT: Yeah. So this—this is a ship that is built with direct drive diesel. Ice breakers are typically diesel electric, which means the generators push the shaft, and they absorb that shock load every time you collide with ice. A reduction gear, fixed gear is going to that—that gear box is going to absorb all that shock. So if you're going to do ice trials, there's a likelihood you might have to replace a reduction gear. There might be real hidden costs of doing ice trials. So if I'm a vendor, I might want to protect myself from some of that risk. Now I'm not the vendor but those would be some of my thoughts of, OK, if you're really serious about this and I do ice trials and now I've just caused X number of dollars that I am now going to have to fit. And oh, by the way, you're not going to lease it because it didn't meet your requirements. I think those are some of the issues that we still have to negotiate. At a June 14, 2016, hearing on Coast Guard mission needs and resource allocation before the Coast Guard and Maritime Transportation subcommittee of the House Transportation and Infrastructure Committee, the following exchange occurred: REPRESENTATIVE HUNTER (Chairman): How do you plan on—on filling the capability gap until you get a heavy icebreaker, which is 10 years at the least based on the best projections of Congress and everybody working together? You still haven't answered that one. ADMIRAL MICHEL: Well, right—the alternatives now, since we'll provide the answer to that, and it's probably going to be either a rolling recapitalization of the Polar Star or to try to bring—let Polar Star taper off and then try to bring Polar Sea back on and bridge out to the new icebreaker. I do not know which one at this point, which path we would want to take. I'm not aware of any other—we've looked out there for vessels to lease for heavy icebreaking capabilities. There's nothing out there on planet earth that you can lease in the heavy icebreaking area. So that's kind of where we are, sir. HUNTER: Was it the—the Finns that came into my office? (UNKNOWN) Mm-hmm. HUNTER: Can't remember whether we had the Norwegians or the Finns. I mean, they—have you—you've obviously looked at that, right? MICHEL: Yes. As a matter of fact I—I traveled to Sweden and Finland... HUNTER: Yeah. MICHEL: ... and talked to them. And they do not have heavy icebreaking capability that will meet the needs as in the FedBizOpps. As a matter of fact, in—when I'm talking FedBizOpps [I mean] there's a technical package that the Coast Guard put out for our [new] heavy icebreaker [i.e., the one that the Obama Administration wanted to begin building in 2020]. It kind of lays out our basic requirements including the long pole in the tent which is the icebreaking requirement, which is six foot minimum at three knots, desirable eight-foot minimum at three knots and then 21 feet backing and ramming. When I talked to the shipbuilders over there, they said there is not a vessel like that that currently exists that will meet those requirements in the—in the FedBizOpps technical package. So you'd have to build a vessel like that. And that's the type of vessel that we're looking for. Legislative Activity for FY2020 Summary of Appropriation Action on FY2020 Funding Request The Coast Guard's proposed FY2020 budget requests $35 million in Coast Guard procurement funding for the PSC program. Table 1 summarizes congressional appropriation action on the program's FY2019 funding request. Appendix A. Current U.S. Polar Icebreakers and Polar Research Ships This appendix provides background information on current U.S. polar icebreakers and polar research ships. Three Coast Guard Polar Icebreakers Two Heavy Polar Icebreakers—Polar Star and Polar Sea Polar Star (WAGB-10) and Polar Sea (WAGB-11), sister ships built to the same general design ( Figure A-1 and Figure A-2 ), were acquired in the early 1970s as replacements for earlier U.S. icebreakers. They were designed for 30-year service lives, and were built by Lockheed Shipbuilding of Seattle, WA, a division of Lockheed that also built ships for the U.S. Navy, but which exited the shipbuilding business in the late 1980s. The ships are 399 feet long and displace about 13,200 tons. They are among the world's most powerful nonnuclear-powered icebreakers, with a capability to break through ice up to 6 feet thick at a speed of 3 knots. Because of their icebreaking capability, they are considered (in U.S. parlance) heavy polar icebreakers. In addition to a crew of 134, each ship can embark a scientific research staff of 32 people. Polar Star was commissioned into service on January 19, 1976, and consequently is now more than 10 years beyond its originally intended 30-year service life. Due to worn-out electric motors and other problems, the Coast Guard placed the ship in caretaker status on July 1, 2006. Congress in FY2009 and FY2010 provided funding to repair Polar Star and return it to service for 7 to 10 years; the repair work, which reportedly cost about $57 million, was completed, and the ship was reactivated on December 14, 2012. Polar Sea was commissioned into service on February 23, 1978, and consequently is also more than 10 years beyond its originally intended 30-year service life. In 2006, the Coast Guard completed a rehabilitation project that extended the ship's expected service life to 2014. On June 25, 2010, however, the Coast Guard announced that Polar Sea had suffered an engine casualty, and the ship was unavailable for operation after that. The Coast Guard placed Polar Sea in commissioned, inactive status on October 14, 2011. The Coast Guard transferred certain major equipment from Polar Sea to Polar Star to facilitate Polar Star' s return to service, and continues to use Polar Sea as a source of spare parts for Polar Star . One Medium Polar Icebreaker—Healy Healy (WAGB-20) ( Figure A-3 ) was funded in the early 1990s as a complement to Polar Star and Polar Sea , and was commissioned into service on August 21, 2000. The ship was built by Avondale Industries, a shipyard located near New Orleans, LA, that built numerous Coast Guard and Navy ships, and which eventually became part of Huntington Ingalls Industries (HII). (HII subsequently wound down shipbuilding activities at Avondale, and the facility is no longer building ships.) Although it is referred to (in U.S. parlance) as a medium polar icebreaker, Healy is actually larger than Polar Star and Polar Sea —it is 420 feet long and displaces about 16,000 tons. Compared to Polar Star and Polar Sea , Healy has less icebreaking capability (which is why it is referred to as a medium polar icebreaker rather than a heavy polar icebreaker), but more capability for supporting scientific research. The ship can break through ice up to 4½ feet thick at a speed of 3 knots, and embark a scientific research staff of 35 (with room for another 15 surge personnel and 2 visitors). The ship is used primarily for supporting scientific research and conducting other operations in the Arctic. Three National Science Foundation (NSF) Polar Research Ships Nathaniel B. Palmer Nathaniel B. Palmer was built for the NSF in 1992 by North American Shipbuilding, of Larose, LA. Called Palmer for short, it is operated for NSF by Edison Chouest Offshore (ECO) of Galliano, LA, a firm that owns and operates research ships and offshore deepwater service ships. Palmer is 308 feet long and has a displacement of about 6,500 tons. It has a crew of 22 and can embark a scientific staff of 27 to 37. It was purpose-built as a single-mission ship for conducting and supporting scientific research in the Antarctic. It is capable of breaking ice up to 3 feet thick at speeds of 3 knots, which is sufficient for breaking through the ice conditions found in the vicinity of the Antarctic Peninsula, so as to resupply Palmer Station, a U.S. research station on the peninsula. The ship might be considered less an icebreaker than an oceanographic research ship with enough icebreaking capability for the Antarctic Peninsula. Palmer 's icebreaking capability is not considered sufficient to perform the McMurdo resupply mission. Laurence M. Gould Like Palmer , the polar research and supply ship Laurence M. Gould was built for NSF by North American Shipping. It was completed in 1997 and is operated for NSF on a long-term charter from ECO. It is 230 feet long and has a displacement of about 3,800 tons. It has a crew of 16 and can embark a scientific staff of 26 to 28 (with a capacity for 9 more in a berthing van). It can break ice up to 1 foot thick with continuous forward motion. Like Palmer , it was built to support NSF operations in the Antarctic, particularly operations at Palmer Station on the Antarctic Peninsula. Sikuliaq Sikuli a q (see-KOO-lee-auk), which is used for scientific research in polar areas, was built by Marinette Marine of Marinette, WI, and entered service in 2015. It is operated for NSF by the College of Fisheries and Ocean Sciences at the University of Alaska Fairbanks as part of the U.S. academic research fleet through the University National Oceanographic Laboratory System (UNOLS). Sikuliaq is 261 feet long and has a displacement of about 3,600 tons. It has a crew of 22 and can embark an additional 26 scientists and students. The ship can break ice 2½ or 3 feet thick at speeds of 2 knots. The ship is considered less an icebreaker than an ice-capable research ship. Summary Table A-1 summarizes the above six ships. In addition to the ships shown in Table A-1 , another U.S.-registered polar ship with icebreaking capability— the Arctic oil-exploration support ship Aiviq —was used by Royal Dutch Shell oil company to support an oil exploration and drilling effort (now ended) in Arctic waters off Alaska. The ship, which completed construction in 2012, is owned by ECO and chartered by Royal Dutch Shell. It was used primarily for towing and laying anchors for drilling rigs, but is also equipped for responding to oil spills. Appendix B. Required Numbers of U.S. Polar Icebreakers This appendix provides background information on required numbers of U.S. polar icebreakers. June 2013 DHS Polar Icebreaker Mission Need Statement DHS in June 2013 approved a Mission Need Statement (MNS) for the polar icebreaker recapitalization project. The MNS states the following (emphasis added): This Mission Need Statement (MNS) establishes the need for polar icebreaker capabilities provided by the Coast Guard, to ensure that it can meet current and future mission requirements in the polar regions.... Current requirements and future projections based upon cutter demand modeling, as detailed in the HLMAR [High Latitude Mission Analysis Report], indicate the Coast Guard will need to expand its icebreaking capacity, potentially requiring a fleet of up to six icebreakers (3 heavy and 3 medium) to adequately meet mission demands in the high latitudes .... The analysis took into account both the Coast Guard statutory mission requirements and additional requirements for year-round presence in both polar regions detailed in the Naval Operations Concept (NOC) 2010.... The analysis also evaluated employing single and multi-crewing concepts.... Strategic home porting analysis based upon existing infrastructure and distance to operational areas provided the final input to determine icebreaker capacity demand. While the MNS can be viewed as an authoritative U.S. government statement regarding required numbers of U.S. polar icebreakers, it can be noted that the key sentence in the above-quoted passage from the MNS (i.e., the sentence in bold) includes the terms "potentially" and "up to." These terms, which are often overlooked in discussions of required numbers of U.S. polar icebreakers, make the key sentence less ironclad as a requirements statement than it would have been if the terms had not been included, and could be interpreted as an acknowledgment that the requirement might amount to something less than three heavy and three medium polar icebreakers. It can also be noted, as stated in the above-quoted passage from the MNS, that the MNS was informed by the High Latitude Mission Analysis Report (HILMAR), and that the HLMAR took into account not only Coast Guard statutory mission requirements, but additional Department of Defense (DOD) requirements for year-round presence in both polar regions as detailed in the 2010 Naval Operations Concept (NOC). This is potentially significant, because DOD appears to have subsequently dropped its 2010 requirement for year-round presence in the polar regions. The use in the MNS of the terms "potentially" and "up to," combined with DOD's decision to drop its requirement for year-round presence in the polar regions, together raise a question, other things held equal, as to whether required numbers of U.S. polar icebreakers might be something less than three heavy and three medium polar icebreakers. It is also possible, however, that there have been other changes since the MNS was issued in 2013 that would have the effect, other things held equal, of increasing U.S. requirements for polar icebreakers. The net result of this situation appears uncertain. In recent years, Coast Guard officials have tended to refer simply to a total Coast Guard requirement for three heavy and three medium polar icebreakers. For example, in the October 25, 2016, summary of a request for information (RFI) that the Coast Guard released the next day to receive industry feedback on its notional polar icebreaker acquisition approach and schedule, the Coast Guard states that "the United States Coast Guard has a need for three Heavy Polar Icebreakers and three Medium Polar Icebreakers with the priority being Heavy Polar Icebreakers." A requirement for three heavy and three medium polar icebreakers is often abbreviated as 3+3. Short of a 3+3 requirement, Coast Guard officials in the past have sometimes stated that, as a bare minimum number of heavy polar icebreakers, the Coast Guard needs two such ships. For example, at a November 17, 2015, hearing before the Europe, Eurasia, and Emerging Threats subcommittee and the Western Hemisphere subcommittee of the House Foreign Affairs Committee, then-Vice Admiral Charles Michel, the Vice Commandant of the Coast Guard, stated during the discussion portion of the hearing that the "Coast Guard needs at least two heavy icebreakers to provide year-round assured access and self-rescueability in the polar regions." Similarly, at a June 14, 2016, hearing before the Coast Guard and Maritime Transportation subcommittee of the House Transportation and Infrastructure Committee, Admiral Michel testified that "our commandant also testified that we need self-rescue capability for our heavy icebreaker and that includes the existing Polar Star that we have out there now. So that means at least two [ships], [and] the High Latitude study says three heavy polar icebreakers is what the Coast Guard's requirement is. So that's kind of where we're talking about for heavy icebreakers." A September 25, 2017, Government Accountability Office (GAO) report on polar icebreakers states that the Coast Guard has been unable to address all polar icebreaking requests since 2010. For example, the Coast Guard reported fulfilling 78 percent (25 of 32) of U.S. government agency requests for polar icebreaking services during fiscal year 2010 through 2016. Coast Guard officials cited various factors affecting the Coast Guard's ability to meet all requests, particularly the unavailability of its heavy polar icebreakers. A July 2018 GAO report stated that the Coast Guard operates one medium icebreaker, the Healy, which has an expected end of service life in 2029. Despite the requirement for three medium icebreakers, Coast Guard officials said they are not currently assessing acquisition of the medium polar icebreakers because they are focusing on the heavy icebreaker acquisition and plan to assess the costs and benefits of acquiring medium polar icebreakers at a later time. In addition to the HILMAR, a number of other studies have been conducted in recent years to assess U.S. requirements for polar icebreakers and options for sustaining and modernizing the Coast Guard's polar icebreaker fleet. Polar Icebreakers Operated by Other Countries In discussions of U.S. polar icebreakers, observers sometimes note the size of the polar icebreaking fleets operated by other countries. Table B-1 shows a Coast Guard summary of major icebreakers around the world; the figures in the table include some icebreakers designed for use in the Baltic Sea. Observers sometimes highlight the difference between the number of U.S. polar icebreakers and the much larger number of Russian polar icebreakers. In considering these relative numbers, it can be noted that Russia's Arctic coastline is much longer than the U.S. Arctic coastline, that many more people live in Russia's Arctic (about roughly 2 million) than in the U.S. Arctic (fewer than 68,000 as of July 1, 2017), and that maritime transportation along Russia's Arctic coast is critical for supporting numerous Russian Arctic communities. Countries with interests in the polar regions have differing requirements for polar icebreakers, depending on the nature and extent of their polar interests and activities. July 2017 National Academies (NASEM) Report A July 2017 report on the acquisition and operation of polar icebreakers by the National Academies of Sciences, Engineering, and Medicine (NASEM) that was directed by Congress in Section 604 of the Coast Guard Authorization Act of 2015 ( H.R. 4188 / P.L. 114-120 of February 8, 2016) concluded the following: INTRODUCTION The United States has strategic national interests in the polar regions. In the Arctic, the nation must protect its citizens, natural resources, and economic interests; assure sovereignty, defense readiness, and maritime mobility; and engage in discovery and research. In the Antarctic, the United States must maintain an active presence that includes access to its research stations for the peaceful conduct of science and the ability to participate in inspections as specified in the Antarctic Treaty. The committee's charge... was to advise the U.S. House of Representatives and the U.S. Senate on an assessment of the costs incurred by the federal government in carrying out polar icebreaking missions and on options that could minimize lifecycle costs. The committee's consensus findings and recommendations are presented below. Unless otherwise specified, all estimated costs and prices for the future U.S. icebreakers are expressed in 2019 dollars, since that is the year in which the contracts are scheduled to be made. Supporting material is found in the appendices. FINDINGS AND RECOMMENDATIONS 1. Finding: The United States has insufficient assets to protect its interests, implement U.S. policy, execute its laws, and meet its obligations in the Arctic and Antarctic because it lacks adequate icebreaking capability. For more than 30 years, studies have emphasized the need for U.S. icebreakers to maintain presence, sovereignty, leadership, and research capacity—but the nation has failed to respond....The strong warming and related environmental changes occurring in both the Arctic and the Antarctic have made this failure more critical. In the Arctic, changing sea ice conditions will create greater navigation hazards for much of the year, and expanding human industrial and economic activity will magnify the need for national presence in the region. In the Antarctic, sea ice trends have varied greatly from year to year, but the annual requirements for access into McMurdo Station have not changed. The nation is ill-equipped to protect its interests and maintain leadership in these regions and has fallen behind other Arctic nations, which have mobilized to expand their access to ice-covered regions. The United States now has the opportunity to move forward and acquire the capability to fulfill these needs.... 2. Recommendation: The United States Congress should fund the construction of four polar icebreakers of common design that would be owned and operated by the United States Coast Guard (USCG). The current Department of Homeland Security (DHS) Mission Need Statement (DHS 2013) contemplates a combination of medium and heavy icebreakers. The committee's recommendation is for a single class of polar icebreaker with heavy icebreaking capability. Proceeding with a single class means that only one design will be needed, which will provide cost savings. The committee has found that the fourth heavy icebreaker could be built for a lower cost than the lead ship of a medium icebreaker class.... The DHS Mission Need Statement contemplated a total fleet of "potentially" up to six ships of two classes—three heavy and three medium icebreakers. Details appear in the High Latitude Mission Analysis Report. The Mission Need Statement indicated that to fulfill its statutory missions, USCG required three heavy and three medium icebreakers; each vessel would have a single crew and would homeport in Seattle. The committee's analysis indicated that four heavy icebreakers will meet the statutory mission needs gap identified by DHS for the lowest cost. Three of the ships would allow continuous presence in the Arctic, and one would service the Antarctic. As noted in the High Latitude Report, USCG's employment standard is 185 days away from home port (DAFHP) for a single crew. Three heavy icebreakers in the Arctic provide 555 DAFHP, sufficient for continuous presence. In addition, the medium icebreaker USCG Cutter Healy's design service life runs through 2030. If greater capacity is required, USCG could consider operating three ships with four crews, which would provide 740 DAFHP. The use of multiple crews in the Arctic could require fewer ships while providing a comparable number of DAFHP. For example, two ships (instead of the recommended three) operating in the Arctic with multiple crews could provide a similar number of annual operating days at a lower cost, but such an arrangement may not permit simultaneous operations in both polar regions and may not provide adequate redundancy in capability. More important, an arrangement under which fewer boats are operated more often would require more major maintenance during shorter time in port, often at increasing cost. In addition, if further military presence is desired in the Arctic, USCG could consider ice-strengthening the ninth national security cutter. One heavy icebreaker servicing the Antarctic provides for the McMurdo breakout and international treaty verification. The availability of the vessel could be extended by homeporting in the Southern Hemisphere. If the single vessel dedicated to the Antarctic is rendered inoperable, USCG could redirect an icebreaker from the Arctic, or it could rely on support from other nations. The committee considers both options to be viable and believes it difficult to justify a standby (fifth) vessel for the Antarctic mission when the total acquisition and lifetime operating costs of a single icebreaker are projected to exceed $1.6 billion. Once the four new icebreakers are operational, USCG can reasonably be expected to plan for more distant time horizons. USCG could assess the performance of the early ships once they are operational and determine whether additional capacity is needed. USCG is the only agency of the U.S. government that is simultaneously a military service, a law enforcement agency, a marine safety and rescue agency, and an environmental protection agency. All of these roles are required in the mission need statement for a polar icebreaker. USCG, in contrast to a civilian company, has the authorities, mandates, and competencies to conduct the missions contemplated for the polar icebreakers. Having one agency with a multimission capability performing the range of services needed would be more efficient than potentially duplicating effort by splitting polar icebreaker operations among other agencies. The requirement for national presence is best accomplished with a military vessel. In addition, USCG is fully interoperable with the U.S. Navy and the nation's North Atlantic Treaty Organization partners. USCG is already mandated to operate the nation's domestic and polar icebreakers. Continuing to focus this expertise in one agency remains the logical approach.... Government ownership of new polar icebreakers would be less costly than the use of lease financing (see Appendix C). The government has a lower borrowing cost than any U.S.-based leasing firm or lessor. In addition, the lessor would use higher-cost equity (on which it would expect to make a profit) to cover a portion of the lease financing. The committee's analysis shows that direct purchase by the government would cost, at a minimum, 19 percent less than leasing on a net present value basis (after tax). There is also the risk of the lessor going bankrupt and compromising the availability of the polar icebreaker to USCG. For its analysis, the committee not only relied on its extensive experience with leveraged lease financing but also reviewed available Government Accountability Office reports and Office of Management and Budget rules, examined commercial leasing economics and current interest rates, and validated its analysis by consulting an outside expert on the issue.... Chartering (an operating lease) is not a viable option.... The availability of polar icebreakers on the open market is extremely limited. (The committee is aware of the sale of only one heavy icebreaker since 2010.) U.S. experience with chartering a polar icebreaker for the McMurdo resupply mission has been problematic on two prior charter attempts. Chartering is workable only if the need is short term and mission specific. The committee notes that chartering may preclude USCG from performing its multiple missions.... In the committee's judgment, an enlarged icebreaker fleet will provide opportunities for USCG to strengthen its icebreaking program and mission. Although the number of billets that require an expert is small compared with the overall number of billets assigned to these icebreakers, more people performing this mission will increase the pool of experienced candidates. This will provide personnel assignment officers with a larger pool of candidates when the more senior positions aboard icebreakers are designated, which will make icebreaking more attractive as a career path and increase the overall level of icebreaking expertise within USCG. Importantly, the commonality of design of the four recommended heavy icebreakers will reduce operating and maintenance costs over the service life of these vessels through efficiencies in supporting and crewing them. Having vessels of common design will likely improve continuity of service, build icebreaking competency, improve operational effectiveness, and be more cost-efficient.... 3. Recommendation: USCG should follow an acquisition strategy that includes block buy contracting with a fixed price incentive fee contract and take other measures to ensure best value for investment of public funds. Icebreaker design and construction costs can be clearly defined, and a fixed price incentive fee construction contract is the most reliable mechanism for controlling costs for a program of this complexity. This technique is widely used by the U.S. Navy. To help ensure best long-term value, the criteria for evaluating shipyard proposals should incorporate explicitly defined lifecycle cost metrics.... A block buy authority for this program will need to contain specific language for economic order quantity purchases for materials, advanced design, and construction activities. A block buy contracting program with economic order quantity purchases enables series construction, motivates competitive bidding, and allows for volume purchase and for the timely acquisition of material with long lead times. It would enable continuous production, give the program the maximum benefit from the learning curve, and thus reduce labor hours on subsequent vessels. The acquisition strategy would incorporate (a) technology transfer from icebreaker designers and builders with recent experience, including international expertise in design, construction, and equipment manufacture; (b) a design that maximizes use of commercial off-the-shelf (COTS) equipment, applies Polar Codes and international standards, and only applies military specifications (MIL-SPEC) to the armament, aviation, communications, and navigation equipment; (c) reduction of any "buy American" provisions to allow the sourcing of the most suitable and reliable machinery available on the market; and (d) a program schedule that allows for completion of design and planning before the start of construction. These strategies will allow for optimization of design, reduce construction costs, and enhance reliability and maintainability.... 4. Finding: In developing its independent concept designs and cost estimates, the committee determined that the costs estimated by USCG for the heavy icebreaker are reasonable. However, the committee believes that the costs of medium icebreakers identified in the High Latitude Mission Analysis Report are significantly underestimated. The committee estimates the rough order-of-magnitude (ROM) cost of the first heavy icebreaker to be $983 million. (See Appendix D, Table D-6.) Of these all-in costs, 75 to 80 percent are shipyard design and construction costs; the remaining 20 to 25 percent cover government-incurred costs such as government-furnished equipment and government-incurred program expenses. If advantage is taken of learning and quantity discounts available through the recommended block buy contracting acquisition strategy, the average cost per heavy icebreaker is approximately $791 million, on the basis of the acquisition of four ships. The committee's analysis of the ship size to incorporate the required components (stack-up length) suggests an overall length of 132 meters (433 feet) and a beam of 27 meters (89 feet). This is consistent with USCG concepts for the vessel. Costs can be significantly reduced by following the committee's recommendations. Reduction of MIL-SPEC requirements can lower costs by up to $100 million per ship with no loss of mission capability.... The other recommended acquisition, design, and construction strategies will control possible cost overruns and provide significant savings in overall life-cycle costs for the program. Although USCG has not yet developed the operational requirements document for a medium polar icebreaker, the committee was able to apply the known principal characteristics of the USCG Cutter Healy to estimate the scope of work and cost of a similar medium icebreaker. The committee estimates that a first-of-class medium icebreaker will cost approximately $786 million. The fourth ship of the heavy icebreaker series is estimated to cost $692 million. Designing a medium-class polar icebreaker in a second shipyard would incur the estimated engineering, design, and planning costs of $126 million and would forgo learning from the first three ships; the learning curve would be restarted with the first medium design. Costs of building the fourth heavy icebreaker would be less than the costs of designing and building a first-of-class medium icebreaker... . In developing its ROM cost estimate, the committee agreed on a common notional design and basic assumptions.... Two committee members then independently developed cost estimating models, which were validated internally by other committee members. These analyses were then used to establish the committee's primary cost estimate.... 5. Finding: Operating costs of new polar icebreakers are expected to be lower than those of the vessels they replace. The committee expects the operating costs for the new heavy polar icebreakers to be lower than those of USCG's Polar Star. While USCG's previous experience is that operating costs of new cutters are significantly higher than those of the vessels they replace, the committee does not believe this historical experience applies in this case. There is good reason to believe that operating costs for new ships using commercially available modern technology will be lower than costs for existing ships.... The more efficient hull forms and modern engines will reduce fuel consumption, and a well-designed automation plant will require fewer operation and maintenance personnel, which will allow manning to be reduced or freed up for alternative tasks. The use of COTS technology and the minimization of MIL-SPEC, as recommended, will also reduce long-term maintenance costs, since use of customized equipment to meet MIL-SPEC requirements can reduce reliability and increase costs. A new vessel, especially over the first 10 years, typically has significantly reduced major repair and overhaul costs, particularly during dry-dock periods, compared with existing icebreakers—such as the Polar Star—that are near or at the end of their service life.... The Polar Star has many age-related issues that require it to be extensively repaired at an annual dry-docking. These issues will be avoided in the early years of a new ship. However, the committee recognizes that new ship operating costs can be higher than those of older ships if the new ship has more complexity to afford more capabilities. Therefore, any direct comparisons of operating costs of newer versus older ships would need to take into account the benefits of the additional capabilities provided by the newer ship. USCG will have an opportunity to evaluate the manning levels of the icebreaker in light of the benefits of modern technology to identify reductions that can be made in operating costs.... 6. Recommendation: USCG should ensure that the common polar icebreaker design is science-ready and that one of the ships has full science capability. All four proposed ships would be designed as "science-ready," which will be more cost-effective when one of the four ships—most likely the fourth—is made fully science capable. Including science readiness in the common polar icebreaker design is the most cost-effective way of fulfilling both the USCG's polar missions and the nation's scientific research polar icebreaker needs.... The incremental costs of a science-ready design for each of the four ships ($10 million to $20 million per ship) and of full science capability for one of the ships at the initial build (an additional $20 million to $30 million) are less than the independent design and build cost of a dedicated research medium icebreaker.... In briefings at its first meeting, the committee learned that the National Science Foundation and other agencies do not have budgets to support full-time heavy icebreaker access or the incremental cost of design, even though their science programs may require this capability. Given the small incremental cost, the committee believes that the science capability cited above should be included in the acquisition costs. Science-ready design includes critical elements that cannot be retrofitted cost-effectively into an existing ship and that should be incorporated in the initial design and build. Among these elements are structural supports, appropriate interior and exterior spaces, flexible accommodation spaces that can embark up to 50 science personnel, a hull design that accommodates multiple transducers and minimizes bubble sweep while optimizing icebreaking capability, machinery arrangements and noise dampening to mitigate interference with sonar transducers, and weight and stability latitudes to allow installation of scientific equipment. Such a design will enable any of the ships to be retrofitted for full science capability in the future, if necessary.... Within the time frame of the recommended build sequence, the United States will require a science-capable polar icebreaker to replace the science capabilities of the Healy upon her retirement. To fulfill this need, one of the heavy polar icebreakers would be procured at the initial build with full science capability; the ability to fulfill other USCG missions would be retained. The ship would be outfitted with oceanographic overboarding equipment and instrumentation and facilities comparable with those of modern oceanographic research vessels. Some basic scientific capability, such as hydrographic mapping sonar, should be acquired at the time of the build of each ship so that environmental data that are essential in fulfilling USCG polar missions can be collected. 7. Finding: The nation is at risk of losing its heavy polar icebreaking capability—experiencing a critical capacity gap—as the Polar Star approaches the end of its extended service life, currently estimated at 3 to 7 years. The Polar Star, built in 1976, is well past its 30-year design life. Its reliability will continue to decline, and its maintenance costs will continue to escalate. Although the ship went through an extensive life-extending refit in 2011–2012, the Polar Star's useful life is estimated to end between 2020 and 2024. As USCG has recognized, the evaluation of alternative arrangements to secure polar icebreaking capacity is important, given the growing risks of the Polar Star losing its capability to fulfill its mission.... 8. Recommendation: USCG should keep the Polar Star operational by implementing an enhanced maintenance program (EMP) until at least two new polar icebreakers are commissioned. Even if the committee's notional schedule for new polar icebreakers is met, the second polar icebreaker would not be ready until July 2025.... The committee's proposed EMP could be designed with planned—and targeted—upgrades that allow the Polar Star to operate every year for its Antarctic mission. The necessary repairs could be performed in conjunction with the ship's current yearly dry-docking schedule within existing annual expenditures, estimated to average $5 million. In particular, the EMP would require improvements in the ship's operating systems, sanitary system, evaporators, main propulsion systems, and controllable pitch propellers. In the committee's judgment, the EMP could be accomplished within USCG's average annual repair expenditures for the Polar Star, which currently range between $2 million and $9 million. Coast Guard High Latitude Study Provided to Congress in July 2011 In July 2011, the Coast Guard provided to Congress a study on the Coast Guard's missions and capabilities for operations in high-latitude (i.e., polar) areas. The study, commonly known as the High Latitude Study, is dated July 2010 on its cover. The High Latitude Study concluded the following: [The study] concludes that future capability and capacity gaps will significantly impact four [Coast Guard] mission areas in the Arctic: Defense Readiness, Ice Operations, Marine Environmental Protection, and Ports, Waterways, and Coastal Security. These mission areas address the protection of important national interests in a geographic area where other nations are actively pursuing their own national goals.... The common and dominant contributor to these significant mission impacts is the gap in polar icebreaking capability. The increasing obsolescence of the Coast Guard's icebreaker fleet will further exacerbate mission performance gaps in the coming years.... The gap in polar icebreaking capacity has resulted in a lack of at-sea time for crews and senior personnel and a corresponding gap in training and leadership. In addition to providing multi-mission capability and intrinsic mobility, a helicopter-capable surface unit would eliminate the need for acquiring an expensive shore-based infrastructure that may only be needed on a seasonal or occasional basis. The most capable surface unit would be a polar icebreaker. Polar icebreakers can transit safely in a variety of ice conditions and have the endurance to operate far from logistics bases. The Coast Guard's polar icebreakers have conducted a wide range of planned and unscheduled Coast Guard missions in the past. Polar icebreakers possess the ability to carry large numbers of passengers, cargo, boats, and helicopters. Polar icebreakers also have substantial command, control, and communications capabilities. The flexibility and mobility of polar icebreakers would assist the Coast Guard in closing future mission performance gaps effectively.... Existing capability and capacity gaps are expected to significantly impact future Coast Guard performance in two Antarctic mission areas: Defense Readiness and Ice Operations. Future gaps may involve an inability to carry out probable and easily projected mission requirements, such as the McMurdo resupply, or readiness to respond to less-predictable events. By their nature, contingencies requiring the use of military capabilities often occur quickly. As is the case in the Arctic, the deterioration of the Coast Guard's icebreaker fleet is the primary driver for this significant mission impact. This will further widen mission performance gaps in the coming years. The recently issued Naval Operations Concept 2010 requires a surface presence in both the Arctic and Antarctic. This further exacerbates the capability gap left by the deterioration of the icebreaker fleet.... The significant deterioration of the Coast Guard icebreaker fleet and the emerging mission demands to meet future functional requirements in the high latitude regions dictate that the Coast Guard acquire material solutions to close the capability gaps.... To meet the Coast Guard mission functional requirement, the Coast Guard icebreaking fleet must be capable of supporting the following missions: Arctic North Patrol. Continuous multimission icebreaker presence in the Arctic. Arctic West Science. Spring and summer science support in the Arctic. Antarctic, McMurdo Station resupply. Planned deployment for break-in, supply ship escort, and science support. This mission, conducted in the Antarctic summer, also requires standby icebreaker support for backup in the event the primary vessel cannot complete the mission. Thule Air Base Resupply and Polar Region Freedom of Navigation Transits. Provide vessel escort operations in support of the Military Sealift Command's Operation Pacer Goose; then complete any Freedom of Navigation exercises in the region. In addition, the joint Naval Operations Concept establishes the following mission requirements: Assured access and assertion of U.S. policy in the Polar Regions. The current demand for this mission requires continuous icebreaker presence in both Polar Regions. Considering these missions, the analysis yields the following findings: The Coast Guard requires three heavy and three medium icebreakers to fulfill its statutory missions. These icebreakers are necessary to (1) satisfy Arctic winter and transition season demands and (2) provide sufficient capacity to also execute summer missions. Single-crewed icebreakers have sufficient capacity for all current and expected statutory missions. Multiple crewing provides no advantage because the number of icebreakers required is driven by winter and shoulder season requirements. Future use of multiple or augmented crews could provide additional capacity needed to absorb mission growth. The Coast Guard requires six heavy and four medium icebreakers to fulfill its statutory missions and maintain the continuous presence requirements of the Naval Operations Concept. Consistent with current practice, these icebreakers are single-crewed and homeported in Seattle Washington. Applying crewing and home porting alternatives reduces the overall requirement to four heavy and two medium icebreakers. This assessment of nonmaterial solutions shows that the reduced number of icebreakers can be achieved by having all vessels operate with multiple crews and two of the heavy icebreakers homeporting in the Southern Hemisphere. Leasing was also considered as a nonmaterial solution. While there is no dispute that the Coast Guard's polar icebreaker fleet is in need of recapitalization, the decision to acquire this capability through purchase of new vessels, reconstruction of existing ships, or commercial lease of suitable vessels must be resolved to provide the best value to the taxpayer. The multi-mission nature of the Coast Guard may provide opportunities to conduct some subset of its missions with non government-owned vessels. However, serious consideration must be given to the fact that the inherently governmental missions of the Coast Guard must be performed using government-owned and operated vessels. An interpretation of the national policy is needed to determine the resource level that best supports the nation's interests.... The existing icebreaker capacity, two inoperative heavy icebreakers and an operational medium icebreaker, does not represent a viable capability to the federal government. The time needed to augment this capability is on the order of 10 years. At that point, around 2020, the heavy icebreaking capability bridging strategy expires. At a July 27, 2011, hearing on U.S. economic interests in the Arctic before the Oceans, Atmosphere, Fisheries, and Coast Guard subcommittee of the Senate Commerce, Science, and Transportation Committee, the following exchange occurred: SENATOR OLYMPIA J. SNOWE: On the high latitude study, do you agree with—and those—I would like to also hear from you, Admiral Titley, as well, on these requirements in terms of Coast Guard vessels as I understand it, they want to have—I guess, it was a three medium ice breakers. Am in correct in saying that? Three medium ice breakers. ADMIRAL ROBERT PAPP, COMMANDANT OF THE COAST GUARD: I agree with the mission analysis and as you look at the requirements for the things that we might do up there, if it is in the nation's interest, it identifies a minimum requirement for three heavy ice breakers and three medium ice breakers and then if you want a persistent presence up there, it would require—and also doing things such as breaking out (inaudible) and other responsibilities, then it would take up to a maximum six heavy and four medium. SNOWE: Right. Do you agree with that? PAPP: If we were to be charged with carrying out those full responsibilities, yes, ma'am. Those are the numbers that you would need to do it. SNOWE: Admiral Titley, how would you respond to the high latitude study and has the Navy conducted its own assessment of its capability? REAR ADMIRAL DAVID TITLEY, OCEANORGRAPHER AND NAVIGATOR OF THE NAVY: Ma'am, we are in the process right now of conducting what we call a capabilities based assessment that will be out in the summer of this year. We are getting ready to finish that—the Coast Guard has been a key component of the Navy's task force on climate change, literally since day one when the Chief of Naval Operations set this up, that morning, we had the Coast Guard invited as a member of our executive steering committee. So we have been working very closely with the Coast Guard, with the Department of Homeland Security, and I think Admiral Papp—said it best as far as the specific comments on the high latitude study but we have been working very closely with the Coast Guard. January 2011 DHS Office of Inspector General Report A January 2011 report on the Coast Guard's polar icebreakers from the DHS Office of the Inspector General stated the following: The Coast Guard does not have the necessary budgetary control over its [polar] icebreakers, nor does it have a sufficient number of icebreakers to accomplish its missions in the Polar Regions. Currently, the Coast Guard has only one operational [polar] icebreaker [i.e., Healy ], making it necessary for the United States to contract with foreign nations to perform scientific, logistical, and supply activities. Without the necessary budgetary control and a sufficient number of icebreaking assets, the Coast Guard will not have the capability to perform all of its missions, will lose critical icebreaking expertise, and may be beholden to foreign nations to perform its statutory missions. The Coast Guard should improve its strategic approach to ensure that it has the long-term icebreaker capabilities needed to support Coast Guard missions and other national interests in the Arctic and Antarctic regions. Regarding current polar icebreaking capabilities for performing Arctic missions, the report states the following: The Coast Guard's icebreaking resources are unlikely to meet future demands. [The table below] outlines the missions that Coast Guard is unable to meet in the Arctic with its current icebreaking resources. The report also states the following: Should the Coast Guard not obtain funding for new icebreakers or major service life extensions for its existing icebreakers with sufficient lead-time, the United States will have no heavy icebreaking capability beyond 2020 and no polar icebreaking capability of any kind by 2029. Without the continued use of icebreakers, the United States will lose its ability to maintain a presence in the Polar Regions, the Coast Guard's expertise to perform ice operations will continue to diminish, and missions will continue to go unmet. Regarding current polar icebreaking capabilities for performing Antarctic missions, the report states the following: The Coast Guard needs additional icebreakers to accomplish its missions in the Antarctic. The Coast Guard has performed the McMurdo Station resupply in Antarctica for decades, but with increasing difficulty in recent years. The Coast Guard's two heavy-duty icebreakers [i.e., Polar Star and Polar Sea ] are at the end of their service lives, and have become less reliable and increasingly costly to keep in service.... In recent years, the Coast Guard has found that ice conditions in the Antarctic have become more challenging for the resupply of McMurdo Station. The extreme ice conditions have necessitated the use of foreign vessels to perform the McMurdo break-in.... As ice conditions continue to change around the Antarctic, two icebreakers are needed for the McMurdo break-in and resupply mission. Typically, one icebreaker performs the break-in and the other remains on standby. Should the first ship become stuck in the ice or should the ice be too thick for one icebreaker to complete the mission, the Coast Guard deploys the ship on standby. Since the Polar Sea and Polar Star are not currently in service, the Coast Guard has no icebreakers capable of performing this mission. [The table below] outlines the missions that will not be met without operational heavy-duty icebreakers. The report's conclusion and recommendations were as follows: Conclusion With an aging fleet of three icebreakers, one operational and two beyond their intended 30-year service life, the Coast Guard is at a critical crossroads in its Polar Icebreaker Maintenance, Upgrade, and Acquisition Program. It must clarify its mission requirements, and if the current mission requirements remain, the Coast Guard must determine the best method for meeting these requirements in the short and long term. Recommendations We recommend that the Assistant Commandant for Marine Safety, Security, and Stewardship: Recommendation #1: Request budgetary authority for the operation, maintenance, and upgrade of its icebreakers. Recommendation #2: In coordination with the Department of Homeland Security, request clarification from Congress to determine whether Arctic missions should be performed by Coast Guard assets or contracted vessels. Recommendation #3: In coordination with the Department of Homeland Security, request clarification from Congress to determine whether Antarctic missions should be performed by Coast Guard assets or contracted vessels. Recommendation #4: Conduct the necessary analysis to determine whether the Coast Guard should replace or perform service-life extensions on its two existing heavy-duty icebreaking ships. Recommendation #5: Request appropriations necessary to meet mission requirements in the Arctic and Antarctic. The report states that The Coast Guard concurred with all five of the recommendations and is initiating corrective actions. We consider the recommendations open and unresolved. The Coast Guard provided information on some of its ongoing projects that will address the program needs identified in the report. 2010 U.S. Arctic Research Commission Report A May 2010 report from the U.S. Arctic Research Commission (USARC) on goals and objectives for Arctic research for 2009-2010 stated the following: To have an effective Arctic research program, the United States must invest in human capital, research platforms, and infrastructure, including new polar class icebreakers, and sustained sea, air, land, space, and social observing systems.... The Commission urges the President and Congress to commit to replacing the nation's two polar class icebreakers. 2007 National Research Council Report A 2007 National Research Council (NRC) report, Polar Icebreakers in a Changing World: An Assessment of U.S. Needs , assessed roles and future needs for Coast Guard polar icebreakers. The study was required by report language accompanying the FY2005 DHS appropriations act ( H.R. 4567 / P.L. 108-334 ). The study was completed in 2006 and published in 2007. Some sources refer to the study as the 2006 NRC report. The report made the following conclusions and recommendations: Based on the current and future needs for icebreaking capabilities, the [study] committee concludes that the nation continues to require a polar icebreaking fleet that includes a minimum of three multimission ships [like the Coast Guard's three current polar icebreakers] and one single-mission [research] ship [like Palmer]. The committee finds that although the demand for icebreaking capability is predicted to increase, a fleet of three multimission and one single-mission icebreakers can meet the nation's future polar icebreaking needs through the application of the latest technology, creative crewing models, wise management of ice conditions, and more efficient use of the icebreaker fleet and other assets. The nation should immediately begin to program, design, and construct two new polar icebreakers to replace the POLAR STAR and POLAR SEA. Building only one new polar icebreaker is insufficient for several reasons. First, a single ship cannot be in more than one location at a time. No matter how technologically advanced or efficiently operated, a single polar icebreaker can operate in the polar regions for only a portion of any year. An icebreaker requires regular maintenance and technical support from shipyards and industrial facilities, must reprovision regularly, and has to effect periodic crew changeouts. A single icebreaker, therefore, could not meet any reasonable standard of active and influential presence and reliable, at-will access throughout the polar regions. A second consideration is the potential risk of failure in the harsh conditions of polar operations. Despite their intrinsic robustness, damage and system failure are always a risk and the U.S. fleet must have enough depth to provide backup assistance. Having only a single icebreaker would necessarily require the ship to accept a more conservative operating profile, avoiding more challenging ice conditions because reliable assistance would not be available. A second capable icebreaker, either operating elsewhere or in homeport, would provide ensured backup assistance and allow for more robust operations by the other ship. From a strategic, longer-term perspective, two new Polar class icebreakers will far better position the nation for the increasing challenges emerging in both polar regions. A second new ship would allow the U.S. Coast Guard to reestablish an active patrol presence in U.S. waters north of Alaska to meet statutory responsibilities that will inevitably derive from increased human activity, economic development, and environmental change. It would allow response to emergencies such as search-and-rescue cases, pollution incidents, and assistance to ships threatened with grounding or damage by ice. Moreover, a second new ship will leverage the possibilities for simultaneous operations in widely disparate geographic areas (e.g., concurrent operations in the Arctic and Antarctic), provide more flexibility for conducting Antarctic logistics (as either the primary or the secondary ship for the McMurdo break-in), allow safer multiple-ship operations in the most demanding ice conditions, and increase opportunities for international expeditions. Finally, an up-front decision to build two new polar icebreakers will allow economies in the design and construction process and provide a predictable cost reduction for the second ship.... The [study] committee finds that both operations and maintenance of the polar icebreaker fleet have been underfunded for many years, and the capabilities of the nation's icebreaking fleet have diminished substantially. Deferred long-term maintenance and failure to execute a plan for replacement or refurbishment of the nation's icebreaking ships have placed national interests in the polar regions at risk. The nation needs the capability to operate in both polar regions reliably and at will. Specifically, the committee recommends the following: The United States should continue to project an active and influential presence in the Arctic to support its interests. This requires U.S. government polar icebreaking capability to ensure year-round access throughout the region. The United States should continue to project an active and influential presence in the Antarctic to support its interests. The nation should reliably control sufficient icebreaking capability to break a channel into and ensure the maritime resupply of McMurdo Station. The United States should maintain leadership in polar research. This requires icebreaking capability to provide access to the deep Arctic and the ice-covered waters of the Antarctic. National interests in the polar regions require that the United States immediately program, budget, design, and construct two new polar icebreakers to be operated by the U.S. Coast Guard. To provide continuity of U.S. icebreaking capabilities, the POLAR SEA should remain mission capable and the POLAR STAR should remain available for reactivation until the new polar icebreakers enter service. The U.S. Coast Guard should be provided sufficient operations and maintenance budget to support an increased, regular, and influential presence in the Arctic. Other agencies should reimburse incremental costs associated with directed mission tasking. Polar icebreakers are essential instruments of U.S. national policy in the changing polar regions. To ensure adequate national icebreaking capability into the future, a Presidential Decision Directive should be issued to clearly align agency responsibilities and budgetary authorities. The Coast Guard stated in 2008 that it "generally supports" the NRC report, and that the Coast Guard "is working closely with interagency partners to determine a way forward with national polar policy that identifies broad U.S. interests and priorities in the Arctic and Antarctic that will ensure adequate maritime presence to further these interests. Identification and prioritization of U.S. national interests in these regions should drive development of associated USCG [U.S. Coast Guard] capability and resource requirements." The Coast Guard also stated the following: "Until those broad U.S. interests and priorities are identified, the current USG [U.S. Government] polar icebreaking fleet should be maintained in an operational status." Appendix C. PSC Program Funding This appendix presents additional background information on funding for the PSC program. Summary of Funding in FY2013-FY2020 Budget Submissions Table C-1 shows requested and projected funding for the PSC program in the Coast Guard's budget submissions from the initiation of the PSC program in the FY2013 submission through the FY2020 submission. The reduction in programmed five-year funding for a new polar icebreaker during the FY2014-FY2016 budget submissions shown in Table C-1 appears to have been related to the substantial reduction in the annual funding levels in the Coast Guard's Acquisition, Construction, and Improvements (AC&I) account in those budget submission that is shown in Table C-2 . Prior to the release of the Administration's September 1, 2015, fact sheet, the Coast Guard testified that if annual funding levels in the AC&I account were not increased from the reduced levels in those budget submissions, the icebreaker would be, essentially, an unfunded requirement. For example, at an April 28, 2015, hearing on Coast Guard resources and priorities before the Oceans, Atmosphere, Fisheries, and Coast Guard subcommittee of the Senate Commerce, Science, and Transportation Committee, Admiral Paul Zukunft, the then-Commandant of the Coast Guard, testified that by reactivating Polar Star, we have purchased up to 10 years of decision space to recapitalize our ice-breaking fleet. Two of those years have expired. And while I'm exploring several options to reconstitute our nation's fleet of icebreakers, I will need topline relief [i.e., an increase] in my acquisition budget to make this requirement a reality. For additional discussion of the issue of the funding level of the Procurement, Construction, and Improvements (PC&I) account, see Appendix D . Below are some additional details on each of the budget submissions since the FY2013 submission. FY2013 Submission The Administration's FY2013 budget submission initiated a new project for the design and construction of a new polar icebreaker, and included $860 million over five years for the acquisition of the ship ( Table C-1 )—enough or almost enough to fully fund the acquisition of a new polar icebreaker. (Any remaining needed funding might have been projected for FY2018 and perhaps also FY2019, which were beyond the five-year window of the FY2013 budget submission.) The submission stated that DHS anticipated awarding a construction contract for the ship "within the next five years" (i.e., by FY2018) and taking delivery on the ship "within a decade" (i.e., by 2023). FY2014 Submission The Administration's FY2014 budget submission reduced the five-year funding for a new polar icebreaker to $230 million ( Table C-1 )—a 73% reduction from the figure in the FY2013 budget submission—but still stated that DHS anticipated awarding a construction contract for the ship "within the next four years" (i.e., by FY2018). FY2015 Submission The Administration's FY2015 budget submission maintained five-year funding for a new polar icebreaker at $230 million ( Table C-1 ), but did not state when a construction contract for the ship might be awarded, creating uncertainty about the timing of the project. FY2016 Submission The Administration's FY2016 budget submission, submitted to Congress in February 2015, reduced five-year funding for a new polar icebreaker further, to $166 million ( Table C-1 )—an 81% reduction from the figure in the FY2013 budget submission—and again did not state when a construction contract for the ship might be awarded, maintaining the uncertainty about the timing of the project. On September 1, 2015, the White House issued a fact sheet in conjunction with a visit to Alaska by President Obama indicating that the Administration, in its own internal planning, had at some point over the past two years deferred acquisition of a new polar icebreaker to FY2022, but that this had been changed to FY2020. The newly announced construction start date of FY2020 was a two-year acceleration from the previously unpublicized date of FY2022, and a two-year deferral from the FY2018 date implied in the FY2013 and FY2014 budget submissions. The fact sheet states that the Administration will also "begin planning for construction of additional icebreakers" beyond the one that the Obama Administration proposed to begin building in FY2020. On January 13, 2016, the Coast Guard announced that it intended to hold an industry day for the PSC program, followed by one-on-one meetings between the Coast Guard and prospective shipbuilders and ship designers, as a part of the Coast Guard's ongoing market research for the program. The industry day was held on March 18, 2016, and the one-on-one meetings between the Coast Guard and industry officials were scheduled for March 28-31, with industry feedback to be submitted to the Coast Guard by April 5, 2016. FY2017 Submission The Coast Guard's proposed FY2017 budget requested $150 million in procurement funding for a new polar icebreaker. The figure of $150 million included $147.6 million in the polar icebreaker line of the Coast Guard's Acquisition, Construction, and Improvements (AC&I) account, and $2.4 million that was embedded in the personnel and management line in the AC&I account. The Coast Guard's FY2017-FY2021 five-year Capital Investment Plan (CIP) included a total of $780 million in procurement funding for a new polar icebreaker. As shown in Table C-1 , the $150 million requested for FY2017 was the first major increment of procurement funding requested (not just projected for a future fiscal year) for a new polar icebreaker. FY2018 Submission The Coast Guard's proposed FY2018 budget requested $19 million in procurement funding for a new polar icebreaker and includes a total of $949 million over the five-year period FY2018-FY2022. The Coast Guard states that This request supports activities to complete and release a Request for Proposal (RFP) for Detail Design and Construction in FY 2018. Specifically, this funding supports program-wide activities including open water and ice tank model testing; review of Industry Studies contract deliverables; Integrated Program Office (IPO) and Ship Design Team (SDT) support; logistics and integration development for government furnished information and equipment; and additional modeling efforts to inform the evaluation and source selection process for the Detail Design & Construction RFP.... Currently, the Program is maturing the system specification, developing the RFP for Detail Design & Construction, and completing required documentation to transition to the "Obtain" phase - planned for early FY 2018. In July 2016, the Coast Guard established an Integrated Program Office with the Navy to continue efforts to accelerate the construction timeline and leverage the expertise and best practices from shipbuilding programs in both services. Based on this collaboration and lessons learned by the Navy, the Program was able to significantly mature the acquisition approach with the incorporation of Industry Studies to identify solutions to minimize cost, schedule, production and technology risks. Industry Studies are focusing on leveraging industry perspectives, existing vessel designs, and use of mature technology to inform the iterative development of the Heavy Polar Icebreaker system specification. Future "Obtain" phase activities include award of a contract for Detail Design & Construction for the heavy polar icebreaker. FY2019 Submission The Coast Guard's proposed FY2018 budget requested $750 million in procurement funding for the PSC program and included a total of $1,805 million over the five-year period FY2019-FY2023. The request for $750 million for the PSC program was a late change to the FY2019 budget that is not reflected in Coast Guard FY2019 budget-justification documents that were printed prior to the change. In those earlier documents, the amount of funding requested for FY2019 shows as $30 million rather than $750 million, and the total amount of funding requested in the Coast Guard's PC&I account was correspondingly $720 million less than the figure of $1,886.8 million shown in Table C-2 . FY2020 Submission The Coast Guard's proposed FY2020 budget requests $35 million in procurement funding for the PSC program, which is enough to cover the PSC program's FY2020 government program-management costs. Appendix D. Funding Level in PC&I Account This appendix presents additional discussion of the funding level of the Coast Guard's Procurement, Construction, and Improvements (PC&I) account. Overview The Coast Guard has testified that funding the PC&I account at a level of about $1 billion to $1.2 billion per year—the approximate average annual funding level programmed in the FY2014, FY2015, and FY2016 budget submissions, as shown in Table C-2 —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 Offshore Patrol Cutters (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 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—and 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 procurement funding] to recapitalize—[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—a half a billion dollars—is 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—it 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—they 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—older ships and older aircraft—which 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—on 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—I'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—an acquisition budget of—of $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—of 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—I am beyond asking for help. We are taking on water. An April 13, 2017, press report states the following (emphasis added): [Then-]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 E. Great Lakes Icebreakers This appendix provides a brief discussion of the Coast Guard's Great Lakes icebreakers. The Coast Guard's current Great Lakes icebreaker fleet consists of nine cutters: one heavy icebreaker— Mackinaw (WLBB-30), a 240-foot ship displacing 3,500 tons; six 140-foot Bay -class icebreaking tugs displacing 662 tons each; and two 225-foot Juniper -class seagoing buoy tenders displacing about 2,000 tons each that have a light icebreaking capability. Although Mackinaw is referred to as a heavy icebreaker, the word heavy in this instance is being used in the context of Great Lakes icebreaking— Mackinaw is much larger and has more icebreaking capability than the eight other ships listed above. Mackinaw would not, however, qualify as a heavy polar icebreaker, as it is much smaller and has much less icebreaking capability than a heavy polar icebreaker. Coast Guard officials have stated that they do not view the procurement of additional Great Lakes icebreakers as an urgent near-term acquisition need. In support of this assessment, they cite the capabilities of the current Great Lakes icebreaking fleet, the relatively young age of Mackinaw (which entered service in 2006), service life extension work being done on the ice-breaking tugs that is designed to add 15 years to their service lives, and Canada's own Great Lakes icebreaking capabilities. A 2016 Coast Guard report to Congress on the Great Lakes icebreaking mission stated the following: The current mix of heavy and medium [Great Lakes] icebreakers is capable of managing priorities and requests for icebreaking in Tier 1 and 2 waterways. When a severe ice season stresses Coast Guard asset capabilities, the existing agreement and partnership with Canada fills the capability gap and brings in extra heavy-icebreaking resources to manage the ice.... [T]he 2014 and 2015 ice seasons were a 20-year anomaly, consuming almost twice as many cutter resource hours as in any other year since 2005. The Coast Guard cannot reliably predict the economic impact of maintaining a single heavy Great Lakes icebreaker. Additionally, given the extreme conditions when ice coverage exceeds 90 percent, it is not clear that shipping delays would be significantly mitigated by an increase in icebreaking capability. Delays can be associated with several factors such as slow transit speeds, availability of pilots, and simultaneous and competing demand signals for icebreaking services across the Great Lakes. The Coast Guard's position notwithstanding, some Members of Congress in recent years have expressed interest in the possibility of bolstering the Coast Guard's Great Lakes icebreaking fleet by procuring a second icebreaker with capabilities generally similar to those of Mackinaw . Interest in this option was reinforced by the winters of 2013-2014 and 2014-2015, which featured particularly high levels of ice coverage on the Great Lakes. The committee report language requiring the above-quoted Coast Guard report to Congress is one example of this interest. Another example is Section 820 of the Frank LoBiondo Coast Guard Authorization Act of 2018 ( S. 140 / P.L. 115-282 of December 4, 2018), which states the following: SEC. 820. Great Lakes icebreaker acquisition. (a) Icebreaking on the Great Lakes.—For fiscal years 2018 and 2019, the Commandant of the Coast Guard may use funds made available pursuant to section 4902 of title 14, United States Code, as amended by this Act, for the construction of an icebreaker that is at least as capable as the Coast Guard Cutter Mackinaw to enhance icebreaking capacity on the Great Lakes. (b) Acquisition plan.—Not later than 45 days after the date of enactment of this Act, the Commandant shall submit a plan to the Committee on Commerce, Science, and Transportation of the Senate and the Committee on Transportation and Infrastructure of the House of Representatives for acquiring an icebreaker described in subsections (a) and (b). Such plan shall include— (1) the details and schedule of the acquisition activities to be completed; and (2) a description of how the funding for Coast Guard acquisition, construction, and improvements that was appropriated under the Consolidated Appropriations Act, 2017 (Public Law 115–31) will be allocated to support the acquisition activities referred to in paragraph (1). An examination of procurement costs for Mackinaw , the National Science Foundation's ice-capable research ship Sikuliaq , new oceanographic research ships being procured for NOAA, and OPCs suggests that a new Mackinaw -sized heavy Great Lakes icebreaker built in a U.S. shipyard might have a design and construction cost between $175 million and $300 million, depending on its exact capabilities and the acquisition strategy employed. The design portion of the ship's cost might be reduced if Mackinaw's design or the design of some other existing icebreaker were to be used as the parent design. Depending on the capabilities and other work load of the shipyard selected to build the ship, the construction time for a new heavy Great Lakes icebreaker might be less than that of a new heavy polar icebreaker.

The Coast Guard Polar Security Cutter (PSC) program is a program to acquire three new heavy polar icebreakers, to be followed years from now by the acquisition of up to three new medium polar icebreakers. On April 23, 2019, the Coast Guard-Navy Integrated Program Office for the PSC program awarded a $745.9 million fixed-price, incentive-firm contract for the detail design and construction (DD&C) of the first PSC to VT Halter Marine of Pascagoula, MS, a shipyard owned by Singapore Technologies (ST) Engineering. VT Halter was the leader of one of three industry teams that competed for the DD&C contract. The first PSC is scheduled to begin construction in 2021 and be delivered in 2024, though the DD&C contract includes financial incentives for earlier delivery. The DD&C contract includes options for building the second and third PSCs. If these options are exercised, the total value of the contract would increase to $1,942.8 million (i.e., about $1.9 billion). The figures of $745.9 million and $1,942.8 million cover only the shipbuilder's costs; they do not include the cost of government-furnished equipment (GFE), which is equipment for the ships that the government purchases and then provides to the shipbuilder for incorporation into the ship, or government program-management costs. When GFE and government program-management costs are included, the total estimated procurement cost of the first PSC is between $925 million and $940 million, and the total estimated procurement cost of the three-ship PSC program is about $2.95 billion. The PSC program has received a total of $1,034.6 million (i.e., about $1.0 billion) in procurement funding through FY2019, including $300 million provided through the Navy's shipbuilding account in FY2017 and FY2018. The Coast Guard's proposed FY2020 budget requests $35 million in procurement funding for the PSC program, which is enough to cover the PSC program's FY2020 government program-management costs. The Coast Guard's FY2019 budget submission had projected that a total of $125 million in procurement funding would be requested for the PSC program in FY2020. The operational U.S. polar icebreaking fleet currently consists of one heavy polar icebreaker, Polar Star, and one medium polar icebreaker, Healy. In addition to Polar Star, the Coast Guard has a second heavy polar icebreaker, Polar Sea. Polar Sea, however, suffered an engine casualty in June 2010 and has been nonoperational since then. Polar Star and Polar Sea entered service in 1976 and 1978, respectively, and are now well beyond their originally intended 30-year service lives. The Coast Guard is using Polar Sea as a source of spare parts for keeping Polar Star operational. Issues for Congress for the PSC program include, inter alia, whether to approve, reject, or modify the Coast Guard's FY2020 procurement funding request for the program; whether to use a contract with options or a block buy contract to procure the ships; whether to continue providing at least some of the procurement funding for the PSC program through the Navy's shipbuilding account; technical, schedule, and cost risk in the PSC program; and whether to procure heavy and medium polar icebreakers to a common basic design.

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Introduction Exposure to ozone (often referred to as "smog"), regardless of where that ozone originates, has been linked to negative human health effects, including respiratory ailments and premature death. Children, the elderly, and persons with respiratory illnesses are particularly susceptible to adverse health impacts from ozone exposure. EPA estimates that ozone exposure was responsible for more than 15,000 premature deaths in the United States in 2007 based on 2006-2008 average ambient ozone concentrations. Ozone has also been linked to plant damage and decreases in crop yield. Concentrations of ozone at the ground level, originally considered a local issue, is increasingly recognized as a global challenge. Ozone is not emitted directly but is formed in the atmosphere from chemical reactions of nitrogen oxides (NO x ) with volatile organic compounds (VOCs, a type of hydrocarbon) in the presence of sunlight. NO x and VOCs are known as "precursor" emissions, and their relative contributions to the formation of ozone depends on a number of factors, including weather conditions and concentrations of other pollutants. The lifetime of ozone in the atmosphere ranges from hours to weeks, providing time—under the right conditions—for pollution emitted in one location to affect the health and welfare of populations far downwind (see Figure 2 ). While local emissions of ozone precursors are still the dominant source of ozone in many areas, state and local air quality agencies face ozone pollution arising from sources outside of their jurisdictional control ("background ozone"). As will be described and discussed in this report, potential long-range transport of air pollutants presents a challenge to downwind communities. It can also be an opportunity for cooperation among localities, states, and countries. The Clean Air Act (CAA) directs the U.S. Environmental Protection Agency (EPA) to establish National Ambient Air Quality Standards (NAAQS) to protect public health (primary standards) and welfare (secondary standards). The law directs that "the attainment and maintenance of [primary standards] are requisite to protect the public health." While the standards are set to limit adverse impacts, EPA acknowledges that these standards do not suggest that concentrations below these levels present zero risk. The NAAQS set limits for the concentrations in ambient air of six common "criteria" pollutants: lead, nitrogen oxides, sulfur dioxide, carbon monoxide, particulate matter, and ozone. There is no evidence of a safe level of ozone exposure below which no adverse health effects occur. However, uncertainty between exposure and health response increases at very low ozone concentrations—that is, below 20 parts per billion (ppb). Air quality monitoring stations in the United States measure concentrations of the six criteria pollutants, and these measurements are used to determine whether locations meet the NAAQS. If a monitor measures concentrations above the standard for any of those six pollutants for an averaging time specified in the NAAQS, the area around that monitor may face a "nonattainment" designation for that pollutant. Once designated nonattainment, the state containing that area must propose a plan to bring the area into attainment of the NAAQS. These State Implementation Plans (SIPs) require approval by EPA. State air quality regulators develop SIPs to attain NAAQS for ambient air in their states, and they have jurisdiction only over the sources of emissions within their borders. The levels of pollution flowing into nonattainment regions, generally referred to as "background pollution," may be making it more difficult for some areas of the United States to meet attainment. Congress recognized this challenge when it enacted the original CAA, adding the "good neighbor provision," which addressed interstate transport of human-caused air pollution that contributes to nonattainment. For detailed information about domestic air transport, see CRS Report R45299, The Clean Air Act's Good Neighbor Provision: Overview of Interstate Air Pollution Control , by Kate C. Shouse. The CAA also mandates EPA to review the NAAQS every five years and revise them as appropriate. EPA completed its most recent review of the ozone standard in 2015, when it lowered the standard from 75 ppb to 70 ppb. EPA reported that it has begun the next ozone NAAQS review and that it intends to complete it by 2020. The procedure for reviewing and setting the NAAQS explicitly does not consider what sources contribute to total ozone, including background sources. In 2018, EPA announced plans to streamline the NAAQS review process and obtain Clean Air Scientific Advisory Committee advice regarding background pollution and potential adverse effects from NAAQS compliance strategies. EPA's "Back-to-Basics" memorandum described concerns that background levels of pollution pose a challenge to meeting NAAQS standards. The memorandum noted a call from certain state regulators for advice on how to treat background ozone, stating that "state environmental agencies have sought this advice, citing the 'absolute need for a valid source of information about background concentrations.'" Additionally, EPA created a task force to develop "additional flexibilities for states to comply with the ozone standard." Much of the focus of ozone transport and control has historically been on upwind domestic sources. Members of Congress may have an interest in better understanding background ozone from natural and international sources, particularly as EPA reviews the 2015 ozone standard. Contributions from sources of background ozone may become important as states with nonattainment areas develop SIPs that attempt to quantify these contributions and consider ways to address them. To assist Congress in understanding these issues, this report defines background ozone , focusing on natural and international sources, and describes what is currently known about these sources. The report then goes on to discuss the limitations in the scientific community's understanding and options for deepening that understanding. Defining Background Ozone This report will discuss background air pollution primarily in the context of ground-level ozone. As of 2018, with the 2015 ozone standard set at 70 ppb, there are 52 areas in the United States designated "nonattainment" for ozone (see Figure 1 ). Current research suggests that natural sources and sources outside the United States may contribute to total ozone in those areas at certain times. Many of the issues discussed here are not unique to ozone, however, and may apply to other pollutants covered by NAAQS, and any potential actions taken to understand or reduce background ozone may also reduce background concentrations of other pollutants. This report deals exclusively with ozone measured at ground level and its adverse health and material effects. Ozone Transport 101 and Figure 2 provide additional information about ozone in different layers of the atmosphere and how each layer may interact with, or contribute to, ozone at ground level. Different Types of Background Ozone EPA defined natural background (NB) and U.S. background (USB) in the final 2015 ozone rule (the chemical notation of ozone is O 3 ): NB is defined as the O 3 that would exist in the absence of any manmade precursor emissions. USB is defined as that O 3 that would exist in the absence of any manmade emissions inside the U.S. This includes anthropogenic emissions outside the U.S. as well as naturally occurring ozone. A third term, North American background , is also defined in this report for added clarity. Each is explained in more detail below. Natural Background (NB) Natural background ozone is what the average concentration of ground-level ozone would be without any human influence. Ozone forms naturally in the lower levels of the atmosphere due to natural emissions of precursors from sources including lightning, vegetation, wildfires, and methane. Transport of ozone vertically from the stratosphere to the atmospheric layer at ground level (called stratospheric intrusions) is a fifth major source. No air pollution monitors today are able measure true present day NB because human contributions to the formation of ozone are so widespread globally. The only way to estimate NB is with global scale atmospheric chemistry simulation models with inputs representing conditions without human influence. The remainder of this section summarizes the five major contributors to NB. A key point is that t he estimated contri butions presented are uncertain and are very dependent on both location and timing . The "Challenges in Estimating Background Ozone" section discusses specific challenges and uncertainties associated with the data and the modeling projects. 1. Lightning (NO x ) . Lightning flashes cause naturally occurring nitrogen and oxygen in the atmosphere to react and generate NO x molecules. Lightning and the resulting emissions occur primarily during the warmer months and are released in the free troposphere, which is above the well-mixed ground layer (see Figure 2 ). There is data to suggest that lightning contributes to daily, as well as seasonal average, ozone concentrations in high impact areas. 2. Vegetation (VOCs) . Trees release VOCs as a byproduct of photosynthesis. Biogenic VOCs from vegetation are the largest emissions source of VOCs in the United States, making up about 70% of the total inventory. Vegetation emissions are largest during the spring and summer, when plants are actively growing. For plants and trees that have leaves only seasonally, emissions decline as leaves drop and photosynthesis ends. 3. Wildfires (VOCs and NO x ) . Wildfires release both NOx and VOCs (as well as fine particles), but the amount and the reactivity of the polluting emissions depend on the type of fuel that is burning and how quickly and how hot the fire burns. Controlled/prescribed fires tend to burn cooler and release fewer pollutants. Current research suggests that active fires contribute to daily as well as seasonal average ozone concentrations. Research to improve emissions inventories from fire events is ongoing. 4. Stratospheric intrusions . Ozone occurs naturally in the stratosphere at very high concentrations and can occasionally be transported down to lower atmospheric levels during certain weather events (see text box "Ozone Transport 101" for more information about atmospheric layers and vertical transport of ozone). Stratospheric intrusions are more likely to affect ground-level concentrations at high elevation sites in the western United States, simply because these areas are closer to the stratosphere. These events are more common in winter and spring months because the large storms that cause them are more likely to occur in late winter and spring. 5. Methane . Methane has not been traditionally considered an ozone precursor because it does not react quickly to produce ozone. Nonetheless, it will over time react and contribute to background ozone. Methane's atmospheric lifetime is on the order of a decade, compared to a timescale of months to days for other VOCs, and so it is considered well-mixed globally by the time it contributes to the formation of ozone. It is accumulating in the atmosphere as well, raising background ozone concentrations. This ozone contribution is considered approximately spatially uniform and is increasing as methane concentrations increase. The major source contributors to global methane are natural production by bacteria in anaerobic (oxygen-free) conditions in natural wetlands or in agriculture, fossil fuel emissions leaking or venting either naturally or from energy development, and incomplete combustion of biomass or carbon. North American Background (NAB) North American background (NAB) is the estimated concentration of ozone that excludes the effects of all human-caused emissions in North America. NAB includes all NB sources as well as human-caused sources of emissions from countries outside of North America. Air quality monitors located at sites on the western coast of the United States are not consistently reliable measures of NAB for two reasons: (1) Air circulation can bring continental air over the Pacific Ocean and then back into North America. (2) If meteorological conditions are favorable, ozone pollution formed from emissions in North America can have a long enough lifetime to travel all the way around the globe and re-enter North America from the west. Therefore, like NB, modeling is the best way to estimate NAB. Human-caused sources outside of North America are currently dominated by Asian emissions. Estimates of Asian contribution to background ozone in the United States are highly time- and location-specific. Asian precursor emissions, and resulting ozone, travel across the Pacific Ocean in the free troposphere (see Figure 2 ). However, because this pollution is traveling at higher elevations, it is more likely to impact cities and locations in the western United States located at higher elevations. These upper-level air flows from areas in Asia are also more likely to affect the United States in the late winter, spring, and early summer due to seasonal variability in hemisphere-scale circulation patterns. Asian emissions begin to taper off in late winter, and a July/August monsoon season in eastern China reduces formation of ozone in late summer. These features suggest that the maximum impact from Asian pollution would likely occur in late winter/early spring. U.S. Background (USB) U.S. background (USB) includes all contributions from NB and NAB plus all human-caused emissions from Mexico and Canada. In the publication of the most recent NAAQS for ozone, EPA generically defined background ozone as USB: The term "background" O 3 is often used to refer to O 3 that originates from natural sources of O 3 ( e.g., wildfires and stratospheric O 3 intrusions) and O 3 precursors, as well as from man-made international emissions of O 3 precursors. Using the term generically, however, can lead to confusion as to what sources of O 3 are being considered. Relevant to the O 3 implementation provisions of the CAA, we define background O 3 the same way the EPA defines USB: O 3 that would exist in the absence of any man-made emissions inside the U.S. Mexican and Canadian emissions primarily impact locations on the borders of those two countries, with maximum contribution estimates from one study of about 30 ppb to border cities. Model estimates of the contribution of USB to total ozone range from 25 ppb to 50 ppb, with the highest values in the inter-mountain West, based on an EPA review of model data. Challenges in Estimating Background Ozone The contribution of background ozone to total local ozone concentrations varies from location to location, day to day, and even hour to hour. These variations are driven both by changes in pollutant emissions from sources and by changing weather patterns that influence the chemistry and physical transport of the pollutants. There is also uncertainty associated with measuring or estimating these driving forces behind background ozone contributions. As mentioned, estimates of source contributions to background ozone rely on computer models that simulate atmospheric chemistry and transport and the resulting pollution. These models rely on large datasets of emissions inventories and meteorological data, both with detailed hourly and location-specific data. These input data are often not available at the temporal and spatial resolution needed, and so estimates and/or simplifications must be made, which increases uncertainty. Atmospheric measurements of ozone concentrations are then compared to model output to evaluate how well the model is performing. However, measurement data of the pollutants being modeled are also limited, which increases the challenge associated with evaluating the performance of the model in capturing ozone formation and movement. Modeling studies estimating background ozone and source attribution often present results as seasonal averages or represent time periods that may not be of specific use to regulators. See text box "Pollution Exposure Averaging Metrics" for additional information about averaging metrics. Retrospective studies face all the challenges mentioned. Forecasting studies face the additional challenge of attempting to model the future based on historical patterns and current conditions, adding another level of uncertainty. Trends in Background Ozone Contributions According to EPA, NO x emissions from electricity generating units have decreased 81% nationally compared to 1990 levels due in part to the acid rain program and ozone transport rules. While these reductions have resulted in total ozone decreases across most of the United States, models suggest that temperature increases in many areas of the United States during that same time frame have negated what would have been additional ozone benefits. Decreasing trends in total ozone concentrations measured at regulatory monitors between 1990 and 2010 generally occur in the eastern United States. Many western monitors do not show similar trends in total ozone over the same time period despite similar reductions in NO x from the power sector and individual personal vehicles. The lack of a decreasing ozone trend at many monitors in the West could be due to a number of causes: increasing seasonal average temperatures, an increase in incidents of fire since 1986, emissions from oil and gas development, increasing contributions from international transport of air pollution, and increasing global methane concentrations. According to the 2017 U.S. National Climate Assessment, on average since 1986 in the United States, the number of wildfires and the burn duration have both quadrupled. The number of acres burned has increased six-fold, compared to 1970 to 1986. The report also indicates that total NO x emissions from fire events are expected to increase with fire temperature, duration, and area burned. Figure 3 shows the annual count, and total area burned of all wildfires larger than 1,000 acres from 1984 through 2015. While emission inventories from Asia are highly uncertain—and outdated in some modeling cases—several sources of data suggest that Asian emissions, and potentially their impact on U.S. air quality, have peaked. Projections of fossil fuel combustion in Asian countries suggest uncertainty about peaking, although the Chinese government recently announced a target of a 15% reduction in NO x emissions by 2020 compared to 2015 emissions. A review of measurements of baseline ozone taken at monitors along the western coast of North America show that, after two decades of increasing trends, ozone flowing into the continental United States from the west stopped increasing in the mid-2000s and has begun to decrease. However, since about 2000, ozone levels measured at a rural site in Alaska have been increasing, with the source suspected in part to be transport of East Asian air. Regulatory Relief Options for Some "Natural Sources" Demonstrations of high ozone directly related to wildfires and stratospheric intrusions may be eligible for exclusion from an ozone attainment calculation under the Exceptional Event Rule of the CAA. In order to facilitate successful demonstrations of exceptional events, EPA released a final guidance document in 2016 for preparations of exceptional events demonstrations for wildfires. A draft guidance document was released in August 2018 covering the preparation of exceptional events demonstrations for stratospheric ozone intrusions. These documents outline expectations, but they do not provide the specific modeling platforms or tools required to conduct the successful demonstrations. State, local, and tribal co-regulators recommended to EPA that the agency develop a similar guidance document for international emissions. Under Section 179B of the CAA, a demonstration of contribution by international sources may reduce attainment demonstration requirements in SIPs but does not provide regulatory relief from a potential nonattainment designation. Issues for Congress Several issues may arise for congressional deliberations with regard to background ozone pollution. Stakeholders suggest challenges with meeting the NAAQS, in part due to the difficulty of reducing ozone in areas with potentially large contributions from background sources and in part due to lack of data availability to conduct demonstrations of those background contributions. Congress may seek to understand the progress of research on background ozone as EPA revisits the NAAQS for ozone. EPA released a state of the science background ozone white paper to stakeholders and requested feedback on major issues. The House Committee on Science, Space and Technology revisited the issue when its Subcommittee on Environment held a hearing on background ozone on June 21, 2018. The following four points summarize the opinions and policy and scientific challenges brought forth both by stakeholder responses to the EPA white paper and by the testimony from invited stakeholders at the recent background ozone hearing: 1. Some states, especially states in the western United States, have asserted that natural and non-U.S. sources of ozone and precursors have increased the ozone concentrations in their states. 2. Current statutory and regulatory options to address natural and non-U.S. sources often require technical data, modeling, and analyses that may be cost prohibitive. 3. Modeling results that attempt to quantify levels of contribution from sources are uncertain, and they represent historical, or average, impacts. 4. In most locations, especially urban locations, many studies (including the whitepaper published by EPA ) have shown that local sources contribute a large part to total local ozone. Most recently, the U.S. Court of Appeals for the D.C. Circuit considered whether EPA should take background ozone into account when setting NAAQS. The case has not been decided at the time this report was published. A potential avenue for Congress to address gaps in the scientific understanding of background ozone is through research and development. Therefore, Congress may consider funding implications of the following recommendations, made by stakeholders in the scientific and regulatory communities, that are intended to improve the understanding of contributions from background ozone: International engagement and/or cooperation at the federal level and through research collaborations that may improve understanding of non-U.S. contributions to U.S. air quality and may increase cooperation for pollution reduction goals. Increased monitoring at ground level and at higher levels in the atmosphere, through state or federal regulatory air quality monitoring projects or research campaigns, to aid in analysis of background ozone trends and improve confidence in the performance of the models used to estimate background contributions. Additional research and development into model estimates of background ozone, representing additional weather patterns (i.e., El Nino/La Nina patterns can influence background ozone), and model simplification schemes to provide more information about the variability associated with background ozone contributions. Finally, Congress may consider the role that methane plays in air quality. Methane is a precursor to ozone, and so methane emission reductions have been suggested as one option to reduce global background concentrations of ozone. Additionally, ozone itself is a strong greenhouse gas. EPA's review of the ozone NAAQS is underway and set to be completed in 2020, with background ozone contributions suggested as a topic to be addressed. Congress may conduct oversight as EPA carries out this effort.

Exposure to ozone, a common air pollutant, has been linked to early death, plant and crop damage, and damage to property. The U.S. Environmental Protection Agency (EPA) sets National Ambient Air Quality Standards (NAAQS) for ground-level ozone to protect human health and welfare with, by law, a "margin of safety." States that contain areas with ozone concentrations above these standards must develop plans to reduce emissions and improve air quality. However, states have direct control only over emission sources located within their borders. The Clean Air Act (CAA) requires EPA to re-evaluate the NAAQS every five years to include the latest science and technological advancements. Studies reporting the human health impacts of ozone increasingly suggest that ozone exposure may not be completely safe at any level. With the potential for a NAAQS re-evaluation leading to science-based recommendations for a tighter standard, some stakeholders have expressed increasing concern that future—and even current—ozone standards could be difficult to meet due to the contribution of "background ozone," which arises from a variety of sources described in this report. In some areas of the United States, background ozone may be approaching 70 parts per billion (ppb) on some days, the current level of the NAAQS. Some Members of Congress have expressed interest in adverse health effects that occur at or below the current standard, challenges some nonattainment areas may have in meeting current standards, and particularly the responsibilities for meeting the health standard, given interstate and international transport. EPA's review of the ozone NAAQS is underway and set to be completed in 2020, with background ozone contributions suggested as a topic to be addressed. Congress may have an interest in better understanding scientific capabilities, needs, and efforts to improve understanding of contributions from background sources, as well as options for regulatory responses. Defining Background Ozone Three terms are used for different types of background ozone, and distinguishing among them can be important for regulatory purposes. 1. Natural background. Ozone concentrations that would be present without any human influence or contribution from anywhere on the globe. Natural background includes contributions from wildfires, vegetation, lightning, ozone in the stratosphere, and global methane concentrations. Contributions to background ozone from wildfires and methane have been increasing over the past several decades. 2. North American background. Ozone concentrations absent human-caused emissions from North America. North American background includes all sources in natural background plus ozone from international sources outside North America. Studies suggest that Asian emissions may be contributing to ozone in the United States, especially in Western states, but that those contributions may be beginning to decrease. 3. United States background. Ozone concentrations absent human-caused emissions from the United States. U.S. background includes all sources in North American background plus ozone formed from emission sources in Mexico and Canada. Challenges in Estimating Background Ozone The CAA provides alternative regulatory options for areas that successfully demonstrate significant influence from some specific sources of natural background ozone on ozone exceedences. However, such demonstrations may be difficult to conduct and reliably assess, given data and analytical challenges: Emissions inventories. Current understanding of the amount, location, and type of pollutant emissions from many types of sources is insufficient. Therefore inventories typically provide estimations, which may not be precise enough for apportioning contributions. Weather data. Meteorological data (i.e., wind speed, wind direction, temperature, cloud cover, humidity, etc.) are not currently measured at a fine enough spatial scale to adequately represent relevant weather processes. Ambient air quality measurements. Data on pollutant concentrations are limited, which increases the challenge of understanding ozone formation and movement. Fine spatial and temporal measurements are needed both horizontally across the surface and vertically to higher levels of the atmosphere. Source contribution variability. Background ozone source contributions change by year, season, day, and hour and from location to location. This makes it difficult to project future contributions, including when contributions will be relevant to attainment status. This report provides information on sources of background ozone, presents key challenges in addressing these sources, and discusses potential options to overcome these challenges.

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Introduction This report provides background information and issues for Congress on the LPD-17 Flight II amphibious ship program. The Navy's FY2020 budget submission defers the planned procurement of the second LPD-17 Flight II ship, LPD-31, by one year, to FY2021, and requests $247.1 million in advance procurement (AP) funding for the ship. This report also discusses LHA-9, a different kind of amphibious ship that the Navy wants to procure in FY2024. The Navy's proposed FY2020 budget does not request any procurement or AP funding for this ship. Issues for Congress include whether to procure LPD-31 in FY2020 or FY2021; whether to procure LPD-31 (if it is procured in FY2020) with full funding or incremental funding; the amount of procurement or AP funding to provide for LPD-31 and LHA-9 in FY2020; and more generally whether the Navy is placing too much, too little, or about the right amount of emphasis on amphibious ships in its FY2020 budget submission, particularly compared to other Navy shipbuilding programs. Congress's decisions on these issues could affect Navy capabilities and funding requirements and the shipbuilding industrial base. For an overview of the strategic and budgetary context in which the LPD-17 Flight II program and other Navy shipbuilding programs may be considered, see CRS Report RL32665, Navy Force Structure and Shipbuilding Plans: Background and Issues for Congress , by Ronald O'Rourke. Background Amphibious Ships in General Roles and Missions Navy amphibious ships are operated by the Navy, with crews consisting of Navy personnel. The primary function of Navy amphibious ships is to lift (i.e., transport) embarked U.S. Marines and their equipment and supplies to distant operating areas, and enable Marines to conduct expeditionary operations ashore in those areas. Although amphibious ships are designed to support Marine landings against opposing military forces, they are also used for operations in permissive or benign situations where there are no opposing forces. Due to their large storage spaces and their ability to use helicopters and landing craft to transfer people, equipment, and supplies from ship to shore without need for port facilities, amphibious ships are potentially useful for a range of combat and noncombat operations. On any given day, some of the Navy's amphibious ships, like some of the Navy's other ships, are forward-deployed to various overseas operating areas. Forward-deployed U.S. Navy amphibious ships are often organized into three-ship formations called amphibious ready groups (ARGs). On average, two or perhaps three ARGs might be forward-deployed at any given time. Amphibious ships are also sometimes forward-deployed on an individual basis to lower-threat operating areas, particularly for conducting peacetime engagement activities with foreign countries or for responding to smaller-scale or noncombat contingencies. Types of Amphibious Ships Navy amphibious ships can be divided into two main groups—the so-called "big-deck" amphibious assault ships, designated LHA and LHD, which look like medium-sized aircraft carriers, and the smaller (but still sizeable) amphibious ships designated LPD or LSD, which are sometimes called "small-deck" amphibious ships. The LHAs and LHDs have large flight decks and hangar decks for embarking and operating numerous helicopters and vertical or short takeoff and landing (V/STOL) fixed-wing aircraft, while the LSDs and LPDs have much smaller flight decks and hangar decks for embarking and operating smaller numbers of helicopters. The LHAs and LHDs, as bigger ships, in general can individually embark more Marines and equipment than the LSDs and LPDs. Amphibious Lift Goal The Navy's 355-ship force-level goal, released in December 2016, calls for achieving and maintaining a 38-ship amphibious force that includes 12 LHA/LHD-type ships, 13 LPD-17 class ships, and 13 LSD/LPD-type ships (12+13+13). The goal for achieving and maintaining a force of 38 amphibious ships relates primarily to meeting wartime needs for amphibious lift. Navy and Marine Corps officials have testified that fully meeting U.S. regional combatant commander requests for day-to-day forward deployments of amphibious ships would require a force of 50 or more amphibious ships. Current and Projected Force Levels The Navy's force of amphibious ships at the end of FY2018 included 32 ships, including 9 amphibious assault ships (1 LHA and 8 LHDs), 11 LPD-17 Flight I ships, and 12 LSD-41/49 class ships. The LSD-41/49 class ships, which are the ships to be replaced by LPD-17 Flight II ships, are discussed in the next section. The Navy's FY2020 30-year (FY2020-FY2049) shipbuilding plan projects that the Navy's force of amphibious ships will increase gradually to 38 ships by FY2026, remain at a total of 36 to 38 ships in FY2027 to FY2034, decline to 34 or 35 ships in FY2035-FY2038, increase to 36 or 37 ships in FY2039-FY2046, and remain at 35 ships in FY2047-FY2049. Over the entire 30-year period, the force is projected to include an average of about 35.8 ships, or about 94% of the required figure of 38 ships, through resulting amount of lift capability provided by the ships would not necessarily equate to about 94% of the amphibious lift goal, due to the mix of ships in service at any given moment and their individual lift capabilities. Existing LSD-41/49 Class Ships The Navy's 12 aging Whidbey Island/Harpers Ferry (LSD-41/49) class ships ( Figure 1 ) were procured between FY1981 and FY1993 and entered service between 1985 and 1998. The class includes 12 ships because they were built at a time when the Navy was planning a 36-ship (12+12+12) amphibious force. They have an expected service life of 40 years; the first ship will reach that age in 2025. The Navy's FY2020 30-year shipbuilding plan projects that the 12 ships will retire between FY2026 and FY2038. LPD-17 Flight II Program Program Name The Navy decided in 2014 that the LSD-41/49 replacement ships would be built to a variant of the design of the Navy's San Antonio (LPD-17) class amphibious ships. (A total of 13 LPD-17 class ships [LPDs 17 through 29] were procured between FY1996 and FY2017.) Reflecting that decision, the Navy announced on April 10, 2018, that the replacement ships would be known as the LPD-17 Flight II ships. By implication, the Navy's original LPD-17 design became the LPD-17 Flight I design. The first LPD-17 Flight II ship is designated LPD-30. Subsequent LPD-17 Flight II ships are to be designated LPD-31, LPD-32, and so on. Whether the LPD-17 Flight II ships constitute their own shipbuilding program or an extension of the original LPD-17 shipbuilding program might be a matter of perspective. As a matter of convenience, this CRS report refers to the Flight II shipbuilding effort as a separate program. Years from now, LPD-17 Flight I and Flight II ships might come to be known collectively as either the LPD-17 class, the LPD-17/30 class, or the LPD-17 and LPD-30 classes. Design Compared to the LPD-17 Flight I design, the LPD-17 Flight II design ( Figure 2 ) is somewhat less expensive to procure, and in some ways less capable—a reflection of how the Flight II design was developed to meet Navy and Marine Corps operational requirements while staying within a unit procurement cost target that had been established for the program. In many other respects, however, the LPD-17 Flight II design is similar in appearance and capabilities to the LPD-17 Flight I design. Of the 13 LPD-17 Flight I ships, the final two (LPDs 28 and 29) incorporate some design changes that make them transitional ships between the Flight I design and the Flight II design. Procurement Quantity Consistent with the Navy's 38-ship amphibious force-level goal, the Navy wants to procure a total of 13 LPD-17 Flight II ships. Procurement Schedule The first LPD-17 Flight II ship, LPD-30, was procured in FY2018. Under the Navy's FY2019 budget submission, the second LPD-17 Flight II ship, LPD-31, was to be procured in FY2020, and the remaining 11 were to be procured at a rate of one per year starting in FY2022. The Navy's FY2020 budget submission proposes deferring the procurement of LPD-31 to FY2021 and the procurement of the third ship (LPD-32) to FY2023, with the final 10 ships to be procured at a rate of one per year starting in FY2025. As shown in Table 1 , when compared to the Navy's FY2019 budget submission, the Navy's FY2020 budget submission reduces from four to two the total number of LPD-17 Flight II ships to be procured during the period FY2020-FY2024. Procurement Cost Under the Navy's FY2020 budget submission, LPD-17 Flight II ships cost roughly $1.8 billion each to procure. Program Funding Table 2 shows LPD-17 Flight II procurement and advance procurement (AP) funding for FY2020-FY2024 as presented in the Navy's FY2020 budget submission. LHA-9 Amphibious Assault Ship The most recently procured LHA/LHD-type amphibious assault ship is LHA-8 ( Figure 3 ), which was procured in FY2017 and is scheduled under the Navy's FY2020 budget submission to be delivered in January 2024. The Navy wants to procure the next LHA/LHD-type ship, LHA-9, in FY2024. LHA/LHD-type ships are considerably larger and more expensive than LPDs. The Navy's FY2020 budget submission estimates LHA-9's procurement cost at $4,076.4 million (i.e., about $4.1 billion). Some in Congress and elsewhere are interested in the potential for accelerating the procurement of LHA-9 from FY2024 to an earlier year, such as FY2020 or FY2021, in part to achieve better production learning curve benefits in shifting from production of LHA-8 to LHA-9 and thereby reduce LHA-9's procurement cost in real (i.e., inflation-adjusted) terms. For example, the Senate Armed Services Committee's report ( S.Rept. 115-262 of June 5, 2018) on the John S. McCain National Defense Authorization Act for Fiscal Year 2019 (S. S. 2987 ) stated: The committee remains concerned with the Navy procurement profile for large deck amphibious assault ships, which includes a span of 7 years until the next large deck amphibious assault ship (LHA–9) is procured in 2024. The committee notes that efficiencies could be gained by reducing this span, which could enable a steadier workforce with an increased learning curve, material and equipment suppliers on more reliable and fixed delivery contracts, and a more effective continuous improvement schedule. The committee urges the Secretary of the Navy to accelerate procurement of LHA–9 to not later than 2021…. (Pages 82-83) As part of its action on the Navy's proposed FY2019 budget, Congress provided $350 million in unrequested AP funding for LHA-9, in part to encourage the Navy to accelerate the procurement of LHA-9 from FY2024 to an earlier fiscal year, such as FY2020 or FY2021. Under the Navy's FY2020 budget submission, the Navy continues to show LHA-9 as a ship planned for procurement in FY2024, and the Navy's proposed FY2020 budget does not request any additional procurement or AP funding for the ship. Consistent with past practice for procuring LHA/LHD-type amphibious ships, the Navy's FY2020 budget submission anticipates using two-year incremental funding (i.e., split funding) to procure LHA-9, with the bulk of the ship's procurement cost to be divided between FY2024 and FY2025. Table 3 shows FY2020-FY2024 funding for the ship under the Navy's FY2020 budget submission. Amphibious Warship Industrial Base Huntington Ingalls Industries/Ingalls Shipbuilding (HII/Ingalls) of Pascagoula, MS, is the Navy's current builder of both LPDs and LHA/LHD-type ships, although other U.S. shipyards could also build amphibious ships. The amphibious warship industrial base also includes many supplier firms in numerous U.S. states that provide materials and components for Navy amphibious ships. HII states that the supplier base for its LHA production line, for example, includes 457 companies in 39 states. Issues for Congress FY2020 Procurement and Funding Issues FY2020 procurement and funding issues for Congress for FY2020 include the following: whether to procure LPD-31 in FY2020 or FY2021; whether to procure LPD-31 (if it is procured in FY2020) with full funding or incremental funding; the amount of procurement or AP funding to provide for LPD-31 and LHA-9 in FY2020; and more generally whether the Navy is placing too much, too little, or about the right amount of emphasis on amphibious ships in its FY2020 budget submission, particularly compared to other Navy shipbuilding programs. Regarding the first issue above, supporters of procuring LPD-31 in FY2020 could argue that it could put the Navy on a path to achieving the 38-ship amphibious ship force-level goal sooner than FY2026, permit the $350 million in AP funding that Congress provided for the program in FY2019 to be executed as intended, and leave more budgetary room in FY2021 for funding other Navy programs. Supporters of procuring LPD-31 in FY2021 could argue that FY2026 is an acceptable date for achieving the 38-ship amphibious ship force-level objective, particularly given the challenges the Navy faces for meeting some of its other force-level goals in coming years (such as those for attack submarines and aircraft carriers); that in a situation of finite Navy or Department of Defense (DOD) funding, procuring LPD-31 in FY2020 might require reductions in funding for other Navy or DOD programs, with an uncertain net result on Navy or DOD capabilities; and that Congress can make the FY2019 AP funding executable by passing legislation permitting the funding to be used on an LPD-17 Flight II ship procured in FY2021. Regarding the second issue above, supporters of procuring LPD-31 with full funding could argue that it would leave more budgetary room in FY2021 and perhaps one or more years beyond that for funding other Navy programs, and that Navy surface ships other than aircraft carriers and LHA/LHD-type amphibious assault ships have generally been procured with full funding rather than incremental funding. Supporters of funding LPD-31 with incremental funding could argue that doing so would reduce FY2020 funding needs for LPD-31, preserving more FY2020 funding for other Navy or DOD programs, and that there have been a few instances over the years in which Navy surface ships other than aircraft carriers and LHA/LHD-type amphibious assault ships have been procured with incremental funding. Regarding the third issue above, factors that Congress may consider include whether the Navy has properly scheduled and accurately estimated the work on these ships it is proposing to do in FY2020, and how the type and amount of work to be done on these ships in FY2020 would change if LPD-31 were procured in FY2020 instead of FY2021, and if procurement of LHA-9 were accelerated from FY2024 to an earlier fiscal year, such as FY2020 or FY2021. Regarding the fourth issue above, supporters of amphibious ships might argue that by deferring the procurement of LPD-31 to FY2021, reducing the number of LPD-17 Flight II ships to be procured in FY2020-FY2024, and not accelerating the procurement of LHA-9 from FY2024 to an earlier fiscal year, the Navy's FY2020 budget submission is placing a reduced emphasis on amphibious ships in its shipbuilding plans, particularly compared to other type of Navy ships, such as attack submarines, destroyers, and frigates, all of which experienced additions or accelerations in FY2020 or FY2021 under the Navy's FY2020 budget submission. Amphibious ships, they could argue, are as important as these other types of ships, and are in high demand by U.S. regional combatant commanders. Other observers, while acknowledging the value of amphibious ships, might argue that within a finite Navy budget, the Navy needs to make difficult choices about what type of ships to procure; that attack submarines, destroyers, and frigates are critical for countering China's improving naval capabilities and for performing other missions; and that the Navy currently has substantial shortfalls in attack submarines, large surface combatants (such as destroyers), and small surface combatants (such as frigates) relative to its force-level goals for those types of ships. Technical Risk in LPD-17 Flight II and LHA Programs Another potential issue for Congress is technical risk in the LPD-17 Flight II and LHA programs. A May 2019 Government Accountability Office (GAO) report—the 2019 edition of GAO's annual report surveying DOD major acquisition programs—states the following about the LPD-17 Flight II program: Current Status The Navy planned to accelerate purchase of LPD 30—the first fully configured Flight II ship—after Congress appropriated $1.8 billion above the fiscal year 2018 budget request, according to program officials. The Navy reported that it awarded contracts in August 2018 for LPD 30 long lead time materials and in March 2019 for lead ship construction. The Navy based the Flight II design on Flight I, with modifications to reduce costs and meet new requirements. According to program officials, roughly 200 design changes will distinguish the two flights including replacing the composite mast with a steel stick. Officials stated that the design would not rely on any new technologies. However, the Navy plans to install a new radar, the Enterprise Air Surveillance Radar, which is still in development. The Navy expects live radar system testing through November 2019, with a complete radar prototype in February 2020. Although program officials consider these activities to be low risk, the Navy will make its decision to begin ship construction by December 2019 without incorporating lessons learned from radar testing into the design. Starting construction before stabilizing the design could require the Navy to absorb costly design changes and rework during ship construction. The Navy initially pursued a limited competition for LX(R), but now has a non-competitive acquisition strategy for LPD 17 Flight II. The Navy plans to award sole-source contracts to Huntington Ingalls—the only shipbuilder of Flight I ships—for Flight II construction. Further, the program did not request a separate independent cost estimate for Flight II prior to awarding the LPD 30 detail design and construction contract. At the same time, the Navy identified no plans to establish a cost baseline specific to Flight II. Without this baseline, the Navy would report full LPD 17 program costs—rather than Flight II specific costs—constraining visibility into Flight II. Program Office Comments We provided a draft of this assessment to the program office for review and comment. The program office provided technical comments, which we incorporated as appropriate The program office stated that LPD Flight II is included under the existing LPD 17 acquisition program baseline, and that no other viable contractor responded to a public notice regarding the Navy's plan to award Huntington Ingalls the LPD 30 construction contract. The May 2019 GAO report stated the following about the LHA program: Current Status In June 2017, the Navy exercised a contract option for detail design and construction of the LHA 8. The LHA 8 incorporates significant design changes from earlier ships in the LHA 6 class, but Navy officials were unable to quantify the changes. The Navy started construction in October 2018 and LHA 8 is scheduled to be delivered in January 2024. The LHA 8 program office has not identified any critical technologies. However, the ship is relying on technology that is currently being developed by another Navy program, the Enterprise Air Surveillance Radar (EASR), with delivery expected in August 2021. EASR, intended to provide self-defense and situational awareness capabilities, is derived from the pre-existing Air and Missile Defense Radar program, but will be a different size and will rotate. LHA 8 program officials have identified the radar as the program's highest development risk. If the radar is not delivered on schedule, Navy officials report that this could lead to out-of-sequence design and delayed installation and testing. Officials responsible for developing the radar, however, stated that the radar is approaching maturity and is on schedule to be delivered to the shipbuilder when needed. The Navy began construction with about 61 percent of the LHA 8 product model completed—an approach inconsistent with shipbuilding best practices. These best practices call for 100 percent completion of 3D product modeling prior to construction start to minimize the likelihood of costly re-work and out of sequence work that can drive schedule delays. The Navy, however, estimates that the LHA 8 shipbuilder will not complete 100 percent of the ship's 3D product model until June 2019, almost 8 months after the start of construction. Program Office Comments We provided a draft of this assessment to the program office for review and comment. The program office provided technical comments, which we incorporated where appropriate. The program office stated that the Navy understands all design changes incorporated on the LHA 8, such as reintroducing the well deck and incorporating EASR. According to the program office, the Navy does not begin construction on any section of the LHA 8 ship before completing that respective section's design. Legislative Activity for FY2020 Summary of Congressional Action on FY2020 Funding Request Table 4 summarizes congressional action on the Navy's FY2020 funding request for the LPD-17 Flight II and LHA-9 programs.

The Navy wants to procure a total of 13 LPD-17 Flight II amphibious ships. LPD-17 Flight II ships cost roughly $1.8 billion each to procure. The first LPD-17 Flight II ship, LPD-30, was procured in FY2018. As part of its action on the Navy's proposed FY2019 budget, Congress provided $350 million in unrequested advance procurement (AP) funding for a second LPD-17 Flight II ship, LPD-31, to be procured in FY2020. This was consistent with the Navy's FY2019 budget submission, under which LPD-31 was planned for procurement in FY2020 and the remainder of its procurement cost was to be requested in FY2020. The Navy's FY2020 budget submission, however, proposes deferring the procurement of LPD-31 by one year, to FY2021, and the Navy's proposed FY2020 budget, rather than requesting the remainder of LPD-31's procurement cost, instead requests $247.1 million in AP funding for the ship. Navy officials state that if no LPD-17 Flight II ship is procured in FY2020, the $350 million in FY2019 AP funding that Congress provided for the LPD-17 program would become unexecutable, because that funding was provided specifically for use in building an LPD-17 Flight II ship procured in FY2020, not an LPD-17 Flight II ship procured in FY2021. The $350 million in FY2019 AP funding can be made executable by procuring LPD-31 in FY2020 or by passing legislation permitting the FY2019 AP funding to be used for an LPD-17 Flight II ship procured in FY2021. One alternative for procuring LPD-31 in FY2020 would be to do so with full funding (i.e., with the remainder of the ship's procurement cost provided in FY2020). Another alternative would be to pass legislation giving the Navy the authority to procure LPD-31 in FY2020 using incremental funding. Navy officials state that under the latter alternative, the amount of procurement funding needed for LPD-31 in FY2020 would be, at a minimum, roughly $200 million, and not more than the requested amount of $247.1 million. As part of its action on the Navy's proposed FY2019 budget, Congress also provided $350 million in unrequested AP funding for a different kind of amphibious ship—an amphibious assault ship called LHA-9. This ship is considerably larger and more expensive than an LPD-17 Flight II ship. The Navy's FY2020 budget submission estimates LHA-9's procurement cost at $4,076.4 million (i.e., about $4.1 billion). Under the Navy's FY2019 budget submission, LHA-9 was planned for procurement in FY2024. The $350 million in FY2019 AP funding that Congress provided was intended to encourage the Navy to accelerate the procurement of LHA-9 from FY2024 to an earlier fiscal year, such as FY2020 or FY2021. Under the Navy's FY2020 budget submission, the Navy continues to show LHA-9 as a ship planned for procurement in FY2024, and the Navy's proposed FY2020 budget does not request any additional procurement or AP funding for the ship. Issues for Congress include whether to procure LPD-31 in FY2020 or FY2021; whether to procure LPD-31 (if it is procured in FY2020) with full funding or incremental funding; the amount of procurement or AP funding to provide for LPD-31 and LHA-9 in FY2020; more generally whether the Navy is placing too much, too little, or about the right amount of emphasis on amphibious ships in its FY2020 budget submission, particularly compared to other Navy shipbuilding programs; and technical risk in the LPD-17 Flight II and LHA programs.

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T he federal government pays benefits to coal miners affected by coal workers' pneumoconiosis (CWP, commonly referred to as black lung disease) and other lung diseases linked to coal mining in cases where the responsible mine operators are not able to pay. Benefit payments and related administrative expenses are paid out of the Black Lung Disability Trust Fund. The primary source of revenue for the trust fund is an excise tax on coal produced and sold domestically. If excise tax revenue is not sufficient to finance Black Lung Program benefits, the trust fund may borrow from the general fund of the Treasury, which contains federal receipts not earmarked for a specific purpose. For 2018, the tax rates on coal were $1.10 per ton of underground-mined coal or $0.55 per ton of surface-mined coal, limited to 4.4% of the sales price. Starting in 2019, under current law, these tax rates are $0.50 per ton of underground-mined coal or $0.25 per ton of surface-mined coal, limited to 2% of the sales price. This decline in the excise tax rates will likely put additional financial strain on a trust fund that already borrows from the general fund to meet obligations. The decline in domestic coal production, recent increases in the rate of CWP, and bankruptcies in the coal sector also contribute to the financial strain on the trust fund. This report provides background information and policy options to help inform the debate surrounding the coal excise tax rate, and other considerations related to the Black Lung Disability Trust Fund. The report begins with an overview of the federal black lung program, providing information on black lung disease and benefits under the program. The report proceeds to examine Black Lung Disability Trust Fund revenues, focusing on the coal excise tax and its history. The report closes with a discussion of policy options, evaluating various revenue- and benefits-related policy options that could improve the fiscal outlook of the Black Lung Disability Trust Fund. Federal Black Lung Program The Black Lung Disability Trust Fund is used to finance the payment of federal Black Lung Program benefits under Part C of the Black Lung Benefits Act (BLBA) when a responsible coal operator does not meet its obligations under the law to pay benefits. Black Lung Disease Coal workers' pneumoconiosis (CWP, commonly referred to as black lung disease) is an interstitial lung disease caused by the inhalation of coal dust. Like in other types of pneumoconioses, the inhalation of coal dust results in the scarring of the lung tissue and affects the gas-exchanging ability of the lungs to remove carbon dioxide and take oxygen into the bloodstream. Exposure to coal dust over an extended period of time can lead to CWP and continued exposure can lead to the progression from the early stages of CWP referred to as "simple CWP," to more advanced stages of scarring referred to as "complicated CWP" or progressive massive fibrosis (PMF). There is no cure for CWP and PMF. CWP can lead to loss of lung function, the need for lung transplantation, and premature death. CWP can be identified by observing light spots, or opacities, in x-ray images of the lungs and can be classified using guidelines established by the International Labour Organization (ILO). Despite technological advances in mining dust control, mandatory chest x-rays for miners, free CWP surveillance offered to miners by the National Institute for Occupational Safety and Health (NIOSH), the enactment of numerous pieces of mine safety and health legislation, and the promulgation and enforcement of mine safety and health standards by the Mine Safety and Health Administration (MSHA), CWP persists in American coal miners, especially those in the Appalachian region. After reductions in rates of PMF in the 1990s, this advanced form of CWP has recently been found in Central Appalachia at rates not seen since the early 1970s. In 2017 researchers discovered, among coal miners mostly living in Kentucky and Virginia and served by three federally funded Black Lung Clinics in Virginia, what may be the largest cluster of PMF ever recorded. This cluster of miners with PMF includes a relatively high number of miners with less than 20 years of mining experience as well as cases of PMF in current miners. The occurrence of this advanced stage of CWP in short-tenured and current miners is noteworthy since MSHA standards require that any miner with evidence of CWP be given the option, without loss of compensation or other penalty, to work in an area of the mining operation in which the average concentration of coal dust in the air is continuously maintained at or below an established level that is lower than the permissible exposure level for all miners with the goal of preventing the progression of CWP. Federal Black Lung Program The federal Black Lung Program was created in 1969 with the enactment of Title IV of the Federal Coal Mine Health and Safety Act of 1969 (Coal Act, P.L. 91-173, later renamed the Federal Mine Safety and Health Act of 1977 by P.L. 95-164 ). Section 401 of the Coal Act provides the congressional justification for the federal Black Lung Program and cites the lack of benefits for disability and death caused by CWP provided by existing state workers' compensation systems as justification for the creation of a federal program. This section also states that the program is intended to be a cooperative effort between the federal government and the states. The Coal Act also established mandatory safety and health standards for coal mines, including standards limiting exposure of miners to coal dust and giving miners with CWP the option of being moved, without loss of compensation or penalty, to an area of the mine with lower dust concentrations. The Coal Act was later amended by the Black Lung Benefits Act of 1972 (BLBA, P.L. 92-303). Part B The Coal Act established Part B of the federal Black Lung Program to provide cash benefits to miners totally disabled due to CWP and to the survivors of miners who die from CWP. Part B only applies to cases filed on or before December 31, 1973. Part B benefits are paid out of general revenue and were initially administered by the Social Security Administration (SSA). Today, with the exception of a small number of pending appellate cases, Part B benefits are administered by the Department of Labor (DOL), Office of Workers' Compensation Programs (OWCP). Part C The Coal Act established Part C of the Federal Black Lung Program for cases filed after December 31, 1973, and was later amended by the BLBA. Under Part C of the BLBA, all claims for benefits for disability or death due to CWP are to be filed with each state's workers' compensation system, but only if such systems have been determined by DOL as providing benefits that are equivalent to or greater than the cash benefits provided by the federal government under Part B of the BLBA and the medical benefits provided to disabled longshore and harbor workers under the federal Longshore and Harbor Workers' Compensation Act (LHWCA). If a state's workers' compensation system is not determined by DOL to meet these standards, then Part C benefits are to be paid by the each miner's coal employer, or, if no such employer is available to pay benefits, by the federal government. In 1973, Maryland, Kentucky, Virginia, and West Virginia submitted their state workers' compensation laws to DOL for approval, but were denied. To date, no state workers' compensation system has been approved by DOL under Part C of the BLBA. Operator Responsibility Because no state's workers' compensation system has been determined to be sufficient to pay benefits under Part C, each operator of an underground coal mine is responsible for the payment of benefits to that operator's miners. Operators are required to provide for these benefits either by purchasing insurance for benefits or through self-insurance approved by DOL. A self-insured operator is required to purchase an indemnity bond or provide another form of security (such as a deposit of negotiable securities in a Federal Reserve Bank or the establishment of a trust) in an amount specified by DOL. In order to be approved for self-insurance, federal regulations require that a mine operator have been in business for at least the three previous years and have average assets over the previous three years that exceed current liabilities by the sum of expected benefit payments and annual premiums on the indemnity bond. When a claim for benefits is approved, benefits are to be paid by the "responsible" operator, which is generally the last coal operator to employ the miner. If a company has acquired the assets of a mine operator, then that company is considered a "successor operator" and is responsible for the payment of claims related to the original operator. Federal Payment of Benefits and Expenses The federal government pays benefits in cases in which the responsible operator no longer exists and has no successor operator, or is unable to pay benefits. The federal government pays benefits when an operator has not made payment within 30 days of a determination of eligibility or when benefits are otherwise due to be paid. Initially, under Part C of the Coal Act, these federal benefits were paid out of general revenue. However, pursuant to the Black Lung Benefits Revenue Act of 1977 ( P.L. 95-227 ), these benefits are now paid from the Black Lung Disability Trust Fund established by this law and primarily financed by an excise tax on coal. If a responsible operator can later be identified, the trust fund is authorized by law to seek to recover from this operator the amount of benefits paid by the trust fund and any interest earned on these amounts. The trust fund is also used for the following federal Black Lung Program-related expenses: the payment of benefits for miners whose last coal mine employment was before January 1, 1970; reimbursement to the Treasury for the costs of Part C benefits paid from general revenue before April 1, 1978, for periods of benefit eligibility after January 1, 1974; the repayment and payment of interest on advances made from the general fund to the trust fund; the payment of administrative expenses related to Part C of the BLBA and the coal excise tax incurred after March 1, 1978; and the reimbursement of coal operators who paid Part C benefits before April 1, 1978, for miners whose last coal mine employment ended before January 1, 1970. Eligibility for Black Lung Benefits A miner is eligible for benefits if that miner is totally disabled due to pneumoconiosis arising out of coal mine employment. The survivors of a miner are eligible for benefits if the miner's death was due to pneumoconiosis arising out of coal mine employment. Benefits are only available to miners and their survivors. The BLBA defines a miner as any individual who works or has worked in or around a coal mine or coal preparation facility in the extraction or preparation of coal. Such term also includes an individual who works or has worked in coal mine construction or transportation in or around a coal mine, to the extent such individual was exposed to coal dust as a result of such employment. Thus, other workers who may be exposed to coal dust in their work, such as railroad workers or workers at coal-fired power plants are not eligible for benefits. Persons who live near coal mines or power plants are also not eligible for benefits even if they are exposed to coal dust. In addition, while a miner's family members may receive benefits as survivors and the number of family members can increase the amount of a miner's monthly benefits, family members may not claim benefits on their own due to exposure to coal dust in the home such as from cleaning the miner's soiled clothing. The BLBA defines pneumoconiosis for the purposes of benefit eligibility as "a chronic dust disease of the lung and its sequelae, including respiratory and pulmonary impairments, arising out of coal mine employment." The BLBA directs the Secretary of Labor to develop, through regulations, standards for determining if a miner is totally disabled due to pneumoconiosis or died due to pneumoconiosis. Clinical and Legal Pneumoconiosis The federal Black Lung Program regulations provide that the definition of pneumoconiosis includes medical or "clinical" pneumoconiosis and statutory or "legal" pneumoconiosis. Clinical pneumoconiosis is defined as follows: "Clinical pneumoconiosis" consists of those diseases recognized by the medical community as pneumoconioses, i.e., the conditions characterized by permanent deposition of substantial amounts of particulate matter in the lungs and the fibrotic reaction of the lung tissue to that deposition caused by dust exposure in coal mine employment. This definition includes, but is not limited to, coal workers' pneumoconiosis, anthracosilicosis, anthracosis, anthrosilicosis, massive pulmonary fibrosis, silicosis or silicotuberculosis, arising out of coal mine employment. Legal pneumoconiosis is defined as any chronic lung disease or impairment and its sequelae arising out of coal mine employment. This definition includes, but is not limited to, any chronic restrictive or obstructive pulmonary disease arising out of coal mine employment. Through these definitions, DOL has established that benefits are available not just to miners with CWP, but also to those miners with other respiratory diseases arising out of coal mine employment such as chronic obstructive pulmonary disease (COPD) even though these diseases are not pneumoconioses and may be linked to other factors unrelated to exposure to coal dust such as cigarette smoking. Eligibility Presumptions The BLBA contains five presumptions used to determine if a miner is eligible for black lung benefits. Three of these presumptions are "rebuttable," meaning that, in the absence of any contrary evidence, eligibility is presumed. One presumption is "irrebutable" and eligibility for Black Lung program benefits is established if the statutory requirements of the presumption are met. Three of these presumptions apply to current Black Lung Program claims while two apply only to cases filed before the end of 1981. Table 1 provides a summary of the following five presumptions provided by the BLBA. 1. A rebuttable presumption that the pneumoconiosis of a miner who was employed in mining for at least 10 years was caused by his or her employment. 2. A rebuttable presumption that the death of a miner who worked in mining for at least 10 years and who died of any respirable disease, was due to pneumoconiosis. This presumption does not apply to claims filed on or after January 1, 1982, the effective date of the Black Lung Benefits Amendments of 1981 ( P.L. 97-119 ). 3. An irrebuttable presumption that a miner with any chronic lung disease which meets certain statutory tests or diagnoses is totally disabled due to pneumoconiosis or died due to pneumoconiosis. 4. A rebuttable presumption that a miner employed in mining for at least 15 years, and who has a chest x-ray that is interpreted as negative with respect to certain statutory standards but who has other evidence of a totally disabling respiratory or pulmonary impairment, is totally disabled due to pneumoconiosis or died due to pneumoconiosis. This presumption may only be rebutted by the Secretary of Labor establishing that the miner does not or did not have pneumoconiosis or that the miner's respiratory or pulmonary impairment did not arise out of connection to mine employment. 5. A presumption that a miner who died on or before March 1, 1978, and who was employed in mining for at least 25 years before June 30, 1971, died due to pneumoconiosis, unless it is established that at the time of the miner's death, he or she was not at least partially disabled due to pneumoconiosis. This presumption does not apply to claims filed on or after June 29, 1982, which is 180 days after the effective date of the Black Lung Benefits Amendments of 1981. This presumption is not listed in the law as either rebuttable or irrebuttable. Affordable Care Act Amendments The Patient Protection and Affordable Care Act (commonly referred to as the Affordable Care Act (ACA), P.L. 111-148 ) included two provisions that amended the BLBA to reinstate one of the eligibility presumptions and a provision affecting survivors' benefits. The effect of these changes was to increase the opportunity to establish eligibility through the statutory presumptions and make it easier for certain survivors to receive benefits. Pursuant to Section 202(a) of the Black Lung Benefits Amendments of 1981, the fourth presumption did not apply to cases filed on or after January 1, 1982. Section 1556(a) of the ACA removed the prohibition on applying the fourth presumption to cases filed on or after January 1, 1982. It is expected that this ACA provision will increase the number of miners eligible for benefits. The BLBA provides that, for Part C claims, the survivors of a miner who was determined to be eligible to receive benefits at the time of his or her death are not required to file new claims for benefits or revalidate any claim for benefits, thus permitting the payment of survivors' benefits in these cases even if the miner's death was not caused by pneumoconiosis. Pursuant to Section 203(a)(6) of the Black Lung Benefits Amendments of 1981, this provision did not apply to claims filed on or after January 1, 1982. Section 1556(b) of the ACA removed from this provision the exception for claims filed on or after January 1, 1982. It is expected that this ACA provision will increase the number of survivors eligible for benefits. The amendments to the BLBA provided in Section 1556 of the ACA apply to any claims filed under Part B or C of the act after January 1, 2005, that were pending on or after March 23, 2010, the date of enactment of the ACA. Black Lung Program Benefits Medical Benefits Eligible miners receiving benefits under Parts B and C are entitled to medical coverage for their pneumoconiosis and related disability. This medical coverage is provided at no cost to the miner and can generally be obtained from the miner's choice of medical providers. Disability Benefits Eligible miners are also entitled to cash disability benefits. The basic benefit rate is set at 37.5% of the basic pay rate at GS-2, Step 1, on the federal pay schedule without any locality adjustment. If the miner has one dependent (a spouse or minor child) the miner is eligible for a benefit of 150% of the basic benefit. A miner with two dependents is eligible for 175% of the basic benefit and a miner with three or more dependents is eligible for 200% of the basic benefit. Benefits may also be paid to the divorced spouse of a miner if the marriage lasted at least 10 years and the divorced spouse was dependent on the miner for at least half of the spouse's support at the time of the miner's disability. A child is considered a dependent until the child marries, or reaches age 18, unless the child is either disabled using the Social Security Disability Insurance (SSDI) definition of disability or is under the age of 23 and a full-time student. The benefit rates are adjusted whenever there are changes to the federal employee pay schedules, but are not separately adjusted to reflect changes in the cost of living. Table 2 provides the benefit rates for 2019. Benefits are offset by state workers' compensation or other benefits paid on account of the miner's disability or death due to pneumoconiosis. Part C benefits, but not Part B benefits, are considered workers' compensation for the purposes of reducing a miner's SSDI benefits. The total amount paid in cash disability benefits has fallen over time, as illustrated in Figure 1 . More is paid in cash disability benefits than is paid in medical benefits. Survivors' Benefits Certain survivors of a miner whose death was due to pneumoconiosis are eligible for cash benefits. In the case of a surviving spouse or divorced spouse, the spouse's benefit is equal to what the miner would have received and is based on the number of dependents of the spouse as provided in Table 2 . If there is no surviving spouse, then benefits are awarded to the surviving minor children in equal shares. If there are no surviving minor children, then benefits can be paid to the miner's dependent parents or dependent siblings. If there are no eligible survivors, no benefits are paid upon the miner's death and benefits do not go to the miner's estate or to any other person, including a person named by the miner in a will. The number of miners and survivors receiving benefits has declined over time, as illustrated in Figure 2 . Black Lung Disability Trust Fund Revenues The primary revenue source for the Black Lung Disability Trust Fund is a per-ton excise tax on coal. Historically, the coal excise tax has not generated enough revenue to meet the trust fund's obligations. Thus, additional funds have been provided from the general fund of the Treasury. The general fund includes governmental receipts not earmarked for a specific purpose, the proceeds of general borrowing, and is used for general governmental expenditures. Excise Tax on Coal Internal Revenue Code (IRC) Section 4121 imposes the black lung excise tax (BLET) on sales or use of domestically mined coal. Generally, a producer that sells the coal is liable for the tax. Producers that use their own domestically mined coal, such as integrated utilities or steel companies, are also liable for the tax. The tax rate depends on how coal is mined. Effective January 1, 2019, the tax on underground-mined coal is the lesser of (1) $0.50 per ton, or (2) 2% of the sale price. The tax on surface-mined coal is the lesser of (1) $0.25 per ton, or (2) 2% of the sales price. Before 2019, the tax rates were $1.10 per ton for coal from underground mines or $0.55 per ton for coal from surface mines, with the tax being no more than 4.4% of the sale price. In FY2017, $229 million was collected on coal mined underground (see Figure 3 ). Nearly all of this coal was taxed at the $1.10 per ton rate. In FY2017, $200 million was collected on surface-mined coal. Just over half of this coal was taxed at the $0.55 per ton rate, with the rest subject to the 4.4% of sales price maximum tax. On January 1, 2019, the BLET rates declined to their current levels. The rates that took effect January 1, 2019, would also have taken effect if the Black Lung Disability Trust Fund had repaid, with interest, all amounts borrowed from the General Fund of the Treasury. The tax is imposed on "coal from mines located in the United States" and does not apply to imported coal. The tax is designed to support the Black Lung Disability Trust Fund for domestic miners. Very little domestically consumed coal is imported. The BLET also does not apply to exported coal under the Export Clause of the United States Constitution. A credit or refund can be claimed if coal is taxed before it is exported. Black lung excise tax collections have generally declined in recent years (see Figure 3 ). In FY2009, more than $650 million was collected from the BLET. In FY2017, collections were about $429 million. The decline in BLET collections follows the general decline in U.S. coal production. As the price of coal rose in the 2000s, coal mined underground tended to pay the tax at a fixed rate of $1.10 per ton, as opposed to paying 4.4% of the sales price. In the years beyond 2018, coal excise tax receipts are expected to fall sharply, reflecting the decrease in the coal excise tax rate (see Figure 3 ). Legislative History The excise tax on coal was established to help ensure the coal industry shared in the social costs imposed by black lung disease. Over time, the rate of the tax has been increased, in an effort to provide sufficient revenue to meet this objective. Establishing an Excise Tax on Coal The Black Lung Benefits Revenue Act of 1977 ( P.L. 95-227 ) first imposed the Section 4121 excise tax on coal. When enacted, the tax was $0.50 per ton for coal from underground mines, and $0.25 per ton for coal from surface mines. The tax was limited to 2% of the sales price. The tax was effective for sales after March 31, 1978. Before P.L. 95-227 was enacted there was considerable debate surrounding how black lung benefits programs should be financed. Various mechanisms to shift the costs of the black lung benefits program to the coal industry and its customers were considered. These debates ultimately led to the establishment of the Black Lung Disability Trust Fund and the related excise tax on coal. There was also debate about how to structure the proposed tax. Some suggested a graduated tax, with higher rates imposed on coal with a higher British thermal unit (Btu) content, as such coal was believed to be more likely to cause black lung disease. There were concerns, however, that such a tax could be difficult to administer. Other proposals suggested that coal be subject to a uniform rate, with coal mined from underground deposits subject to a higher rate than other coal (including lignite). A concern with this approach was that coal prices vary substantially per ton for different types of coal (lignite is less expensive than anthracite), meaning that the tax as a percent of the sales price could differ substantially across different types of coal. One answer to this concern is to impose an ad valorem tax, or a tax based on the sales price. Another approach that was considered was to impose a "premium rate" at a level that would fully finance the Black Lung Disability Trust Fund, giving authority to the Department of Labor to adjust the fee as necessary. The tax as enacted was the lesser of the per-unit price or the ad valorem rate of 2%. Increasing the Rate of Tax In the early 1980s, it was observed that coal excise tax revenues were not sufficient to meet the trust fund's obligations. The Black Lung Benefits Revenue Act of 1981 ( P.L. 97-119 ) doubled the excise tax rates to $1.00 per ton for coal from underground mines, and $0.50 per ton for coal from surface mines, not to exceed 4% of the sales price. The higher rates were effective January 1, 1982. The doubled rates were temporary, and scheduled to revert to the previous rates on January 1, 1996. Further, the rates could be reduced earlier if the trust fund repaid all advances and interest from the general fund of the Treasury. A stated goal of this legislation was to eliminate the Black Lung Disability Trust Fund's debt. The Consolidated Omnibus Budget Reconciliation Act of 1985 ( P.L. 99-272 ) again increased the BLET rates to $1.10 for underground-mined coal, and $0.55 for surface-mined coal, not to exceed 4.4% of the sales price. The Omnibus Budget Reconciliation Act of 1987 ( P.L. 100-203 ) extended these rates through 2013. Increased excise tax rates on coal were again extended in 2008. Current-law rates were extended through 2018 as part of the Emergency Economic Stabilization Act of 2008 (EESA; P.L. 110-343 ). When extending the increased rates, Congress reiterated the original intent of establishing trust fund financing for black lung benefits, observing that it is "to reduce reliance on the Treasury and to recover costs from the mining industry." It was also observed that the program's expenses had continued to exceed revenues over time, and that the debt to the Treasury was not likely to be paid off by 2013. For these reasons, "the Congress believe[d] that it [was] appropriate to continue the tax on coal at the increased rates beyond the expiration date." Borrowing and Debt When receipts of the trust fund are less than expenditures, advances are appropriated from the general fund of the Treasury to the trust fund. These advances are repayable, and interest charged on these advances is also payable to the general fund. The Consolidated Omnibus Budget Reconciliation Act of 1985 ( P.L. 99-272 ) provided a five-year forgiveness of interest on debt owed to the Treasury's general fund. As a result, the principal amount of trust fund debt outstanding was relatively unchanged throughout the late 1980s. The moratorium on interest payments ended September 30, 1990. Throughout the 1990s and into the 2000s, the cumulative end-of-year debt of the trust fund grew, and the trust fund continued to receive repayable advances from the general fund to cover expenses. The trust fund was subject to financial restructuring when the current excise tax rate was extended until January 1, 2019, in EESA. The Black Lung Disability Trust Fund debt was restructured in FY2009. Essentially, the partial forgiveness and restructuring allowed the trust fund to refinance outstanding repayable advances and unpaid interest on those advances. As a result of the partial forgiveness and refinancing, the cumulative debt was reduced from $10.4 billion at the end of FY2008 to $6.2 billion by the end of FY2009. At the time of the restructuring it was expected that the trust fund's debt would be fully eliminated by FY2040. The trust fund's cumulative debt has trended downward since the restructuring (see Figure 4 ). However, coal excise tax revenue has been less than anticipated in recent years. As a result, current projections suggest that the trust fund debt will rise over time when considering annual borrowing as well as legacy debt. The trust fund's debt is therefore not on a path to be eliminated. By FY2050, the Government Accountability Office (GAO) projects the trust fund's debt will be $15.4 billion without any changes in current policy. Other Revenue Sources In addition to revenue from the BLET and repayable general fund advances, the trust fund receives revenue from the collection of certain fines, penalties, and interest paid by coal operators and miners and reimbursements from responsible operators. Fines, Penalties, and Interest Part C of the BLBA authorizes the following fines and penalties for violations of the act: a civil penalty of up to $1,000 per day for a mine operator's failure to secure benefits through insurance or approved self-insurance; a fine of up to $1,000 upon conviction of the misdemeanor offense of knowingly destroying or transferring property of a mine operator with the intent to avoid the payment of benefits for which the mine operator is responsible; a fine of up to $1,000 upon conviction of the misdemeanor offense of making a false or misleading statement or representation for the purposes of obtaining benefits; and a civil penalty of up to $500 for a mine operator's failure to file a report on miners who are or may be entitled to benefits as required by DOL. The amount of these penalties and fines, as well as interest assessed, is paid into the trust fund. In FY2017, trust fund receipts from fines, penalties, and interest totaled $1.2 million. This is a small source of trust fund revenue relative to the coal excise tax, which generated $428.7 million in trust fund revenues in FY2017. Collection from Responsible Mine Operators The trust fund is authorized to begin paying benefits within 30 days if no responsible operator has begun payment. If, after paying benefits, DOL is able to identify a responsible operator, the trust fund may seek to collect from that operator the costs of benefits already paid by the trust fund and interest assessed on this amount. The amount of these collections is paid into the trust fund. In FY2017, $19.9 million was collected from responsible mine operators. The amount collected from responsible mine operators has fluctuated over time, but has averaged about 1% of total receipts since 1995. Financial Condition and Outlook Various factors have contributed to the ongoing situation of trust fund expenditures exceeding trust fund revenues. Throughout the 1980s, black lung benefit payments and administrative expenditures exceeded trust fund revenue. As a result, the trust fund accumulated debt. As discussed above, over time, various efforts have been made to improve the fiscal condition of the trust fund. However, as of the end of FY2017, the trust fund remains in debt. The trust fund's cumulative debt at the end of FY2017 was $3.1 billion. The trust fund also borrowed $1.3 billion from the general fund that same year. Projections suggest that borrowing from the general fund will increase over the next few years, even as cumulative (or legacy) debt is paid down. Under the current excise tax rates, benefit payments and administrative expenses will be approximately equal to trust fund revenues in FY2020 through FY2022 (see Figure 5 ). However, revenues are not projected to be sufficient to repay debt, and expenses are projected to rise over time when debt and interest expenses are included. Specifically, by FY2022, it is projected that the trust fund will borrow $2.6 billion in repayable advances from the general fund. Policy Issues and Options There are various policy options that Congress might consider to improve the fiscal condition of the Black Lung Disability Trust Fund. Broadly, increasing taxes on the coal industry (or maintaining 2018 rates) would pass the costs associated with paying black lung benefits onto the coal industry. Alternatively, forgiving trust fund interest or debt or financing black lung benefits out of general fund revenues would pass the costs of federal black lung benefits onto taxpayers in general. Another option would be to reduce federal black lung benefits. Revenue Options Additional revenue would likely need to be provided to the trust fund if the trust fund is to pay for past black lung benefits and maintain current benefit levels. Additional revenue may be needed even if past debt is forgiven (or assumed by the general fund), as anticipated trust fund revenues are not likely to be sufficient to cover anticipated trust fund expenditures. Change the Coal Excise Tax As discussed above, in the past, Congress and the President have opted to increase the excise tax on coal to address shortfalls in the Black Lung Disability Trust Fund. These increased rates have been temporary, and scheduled to revert back to the reduced rate if the trust fund's debt is eliminated. Congress has chosen to extend the increased rates beyond their scheduled expiration when the trust fund is in debt. One option would be to extend 2018 rates.. The GAO projects that if 2018 coal excise tax rates are extended, the trust fund will have a debt of $4.5 billion in 2050 (see "GAO Options for Improving Trust Fund Finances" below). GAO projections suggest that increasing 2018 tax rates by 25% would eliminate the trust fund's debt, leaving the trust fund with a surplus of $0.6 billion in 2050. Modify Coal Industry Tax Benefits An alternative way to raise revenue from the coal industry is to scale back or eliminate various tax expenditures, or tax preferences, from which the coal industry benefits. For example, coal producers benefit from being able to expense exploration and development costs and are able to recover costs using percentage depletion (depletion based on revenue from the sale of the mineral asset) instead of cost depletion (depletion based on the amount of the mineral asset exhausted and the amount invested in the asset). The Obama Administration regularly proposed repealing these tax incentives as part of the Administration's annual budget. It could be difficult to assign the revenues raised via the repeal of tax benefits to the trust fund. With an excise tax, it is straightforward to identify the revenue generated by the tax and earmark the revenue for a trust fund. It is not as straightforward to determine the amount of revenue that is raised through the repeal of an income tax expenditure, or direct the additional revenue raised because a certain preference is no longer in the code to a trust fund. Repeal of coal-industry tax benefits could, however, be used to offset the cost of a one-time transfer from the general fund to the trust fund. Provide Additional General Fund Revenue Revenue from various sources, including the general fund, could be used to supplement trust fund revenue generated from current sources. General fund revenues are not earmarked for a specific purpose, and there is generally no direct link between the source of general fund revenue and the government good or service provided. Black lung benefits were paid out of general revenue before the trust fund was established in 1977. Trust funds are generally established when there is a link between the government benefits or services being provided and the revenue source funding those benefits or services. The Black Lung Disability Trust Fund was established because Congress believed that the costs of the part C black lung program should be borne by the coal industry. Financing black lung benefits with general fund revenue would weaken the link between the industry and black lung benefits, while reducing the burden on the industry associated with paying for black lung benefits. Forgive Trust Fund Interest or Debt In the past the Black Lung Disability Trust Fund's fiscal outlook has been improved through interest and debt forgiveness. As discussed above, in the late 1990s, there was a five-year forgiveness of interest on debt owed to the Treasury's general fund. More recently, debt was forgiven as part of the 2008 restructuring of the trust fund's debt. The GAO projects that if all current debt were forgiven, the trust fund would accumulate $2.3 billion in new debt by 2050. If all interest were forgiven, the trust fund debt is projected to be $5.8 billion by 2050. Forgiving the trust fund's interest or debt obligations would shift the burden of paying for black lung disability benefits from the coal industry to general taxpayers. However, a one-time appropriation to forgive interest or debt is a transparent option for satisfying the trust fund's obligations to the general fund. Expenditure Options The primary expenditures of the trust fund are for the payment of Part C benefits to miners in cases in which there is no responsible operator. In order to reduce expenditures and improve the long-term financial health of the trust fund, Congress could consider several options to reduce the generosity and scope of benefits or increase the ability of the federal government to ensure that coal operators, even those who are in the bankruptcy process, pay benefits for their miners. Reduce Benefit Amounts A reduction in the amount of Part C benefits would result in lower Part C expenditures from both responsible coal operators and the trust fund. However, as compared to other workers' compensation benefits, Part C benefits are relatively low. The basic Part C benefit rate for a single miner is equal to 37.5% of the base rate of pay for federal employees at the GS-2, Step 1 level. For 2019 this benefit is just over $660 per month, or under $8,000 per year. In the majority of state workers' compensation programs, the basic benefit rate is set at two-thirds of the worker's pre-disability wage, subject to statutory minimums and maximums. The other workers' compensation programs administered by DOL, the LHWCA, and the Federal Employees' Compensation Act (FECA) use two-thirds of a worker's pre-disability wage as the basis for their benefits. A federal worker with a spouse or dependent in the FECA program is entitled to 75% of his or her pre-disability wage. The minimum benefit for total disability or death in the FECA program, 75% of GS-2, Step 1, is twice the amount of the Part C benefit rate. In addition, unlike the other federal workers' compensation programs and many state programs, there is no automatic adjustment to Part C benefits to reflect increases in the cost of living. Part C benefits instead increase only when federal pay rates are increased. Restrict Benefit Eligibility The eligibility of miners and survivors to Part C benefits could be restricted to reduce expenditures from responsible operators and the trust fund. In 1981, Congress enacted several eligibility restrictions to miners and survivors as part of the Black Lung Benefits Revenue Act of 1981, to address concerns about the financial insolvency of the trust fund. Specifically, this law removed the following three eligibility presumptions for new claims going forward: A rebuttable presumption that the death of a miner who worked in mining for at least 10 years and who died of any respirable disease, was due to pneumoconiosis (listed as presumption 2 in Table 1 ). A rebuttable presumption that a miner employed in mining for at least 15 years, and who has a chest x-ray that is interpreted as negative with respect to certain statutory standards but who has other evidence of a totally disabling respiratory or pulmonary impairment, is totally disabled due to pneumoconiosis, or died due to pneumoconiosis. This presumption may only be rebutted by the Secretary of Labor establishing that the miner does not or did not have pneumoconiosis or that the miner's respiratory or pulmonary impairment did not arise out of connection to mine employment (presumption 4 in Table 1 ). A presumption that a miner who died on or before March 1, 1978, and who was employed in mining for at least 25 years before June 30, 1971, died due to pneumoconiosis, unless it is established that at the time of the miner's death, he or she was not at least partially disabled due to pneumoconiosis (presumption 5 in Table 1 ). In addition to removing three of the five existing eligibility presumptions, the 1981 law also removed the right of the survivors of a miner who is determined to be eligible for Part C benefits at the time of his or her death to receive survivors' benefits without filing a new claim, thus permitting the payment of survivors' benefits in the case of a current beneficiary, even if the beneficiary's death is not proven to be linked to pneumoconiosis. Two of the restrictions put in place by the 1981 legislation were later removed by the ACA. The ACA reinstated the fourth eligibility presumption and expanded rights for survivors' benefits, thus expanding eligibility for both miners and certain survivors. Increase the Ability of the Federal Government to Recover Benefit Costs from Responsible Operators Under Part C of the BLBA, the federal government may recover the costs of benefits, and interest accrued on those benefits, paid by the trust fund from identified responsible operators. In addition, Part C allows the federal government to place a lien on the property and rights to property of an operator that refuses to pay the benefits and interest it owes to the trust fund. In the case of a bankruptcy or insolvency proceeding, this lien is to be treated in the same manner as a lien for taxes owed to the federal government. However, in a 2016 letter to the Comptroller General requesting a GAO review of the trust fund, Representatives Bobby Scott, Ranking Member of the House Committee on Education and the Workforce, and Sander Levin, Ranking Member of the House Committee on Ways and Means, claimed that the number of current and potential bankruptcies among coal operators is placing stress on the trust fund. Representatives Scott and Levin cited the example of Patriot Coal which, according to their letter, transferred $62 million in Part C liabilities to the trust fund when it became insolvent. In addition, this letter claims that insolvent coal operators may be able to avoid trust fund liens by continuing to make benefit payments until after the court in their bankruptcy cases has approved the sale of their assets to another company. Because the original company was never in default of its payments, no lien was filed, and these assets were able to be purchased by another company without any lien or future liability to the trust fund. Congress may examine the issue of the impact of coal operator bankruptcies and the interaction of bankruptcy law and the BLBA's lien provisions, to strengthen both the federal government's ability to ensure that responsible operators are paying for benefits and reduce the benefit expenditures of the trust fund.

The federal government pays benefits to coal miners affected by coal workers' pneumoconiosis (CWP, commonly referred to as black lung disease) and other lung diseases linked to coal mining in cases where responsible mine operators are not able to pay. In 2019, the monthly benefit for a miner with no dependents is $660.10. Benefits can be as much as $1,320.10 per month for miners with three or more dependents. Medical benefits are provided separately from disability benefits. Benefit payments and related administrative expenses in cases in which the responsible operators do not pay are paid out of the Black Lung Disability Trust Fund. The primary source of revenue for the trust fund is an excise tax on coal produced and sold domestically. If excise tax revenue is not sufficient to finance Black Lung Program benefits, the trust fund may borrow from the general fund of the Treasury. For 2018, the tax rates on coal were $1.10 per ton of underground-mined coal or $0.55 per ton of surface-mined coal, limited to 4.4% of the sales price. These rates were established in 1986. Starting in 2019, under current law, these tax rates are $0.50 per ton of underground-mined coal or $0.25 per ton of surface-mined coal, limited to 2% of the sales price. These are the rates that were set when the trust fund was established in 1977. The decline in the excise tax rates will likely put additional financial strain on a trust fund that already borrows from the general fund to meet obligations. The decline in domestic coal production, recent increases in the rate of CWP, and bankruptcies in the coal sector also contribute to the financial strain on the trust fund. The Black Lung Disability Trust Fund and associated excise tax on coal were established so that the coal industry, as opposed to taxpayers in general, would bear the burden associated with providing black lung benefits. Throughout its history, the Black Lung Disability Trust Fund has not raised revenues sufficient to meet obligations. As a result, at various points in time, Congress and the President have acted to increase the excise tax on coal, forgive or refinance trust fund debt, and modify black lung benefits eligibility. With the rate of the excise tax on coal reduced in 2019, the 116th Congress may again evaluate options for improving the fiscal condition of the Black Lung Disability Trust Fund, or other issues related to providing federal benefits to miners with black lung disease.

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Introduction The Small Business Administration (SBA) currently administers several types of programs to support small businesses, including loan guaranty and venture capital programs to enhance small businesses' access to capital; contracting programs to increase small businesses' opportunities in federal contracting; direct loan programs for businesses, homeowners, and renters to aid in their recovery from natural disasters; and small business management and technical assistance training programs to assist in business formation and expansion. Congressional interest in these programs has increased in recent years, primarily because small businesses are viewed as a means to stimulate economic activity and create jobs. Many Members of Congress also regularly receive constituent inquiries about the SBA's programs. This report examines appropriations for the SBA (new budget authority, minus rescissions and sequestration) over time, focusing on developments and trends since FY2000. This report also provides total available funding (which includes carryover from the prior fiscal year, carryover into the next fiscal year, account transfers, rescissions, and sequestration) and, for comparative purposes, actual and anticipated expenditures for the SBA's entrepreneurial development noncredit programs. SBA appropriations, as a whole, have varied significantly from year to year since FY2000 and across all three major SBA spending categories: appropriations for disaster assistance, business loan credit subsidies, and "other programs," a spending category that includes appropriations for salaries and expenses, business loan administration, the Office of Inspector General, the Office of Advocacy, and entrepreneurial development noncredit programs. The variation in appropriations for disaster assistance since FY2000 is largely due to supplemental appropriations provided to address disaster needs arising from the impact of major hurricanes. Business loan credit subsidies represent the net present value of cash flows to and from the SBA over the life of the agency's loan portfolios. For guaranteed loans, the net present value of cash flows is affected by several factors, but it is primarily the difference between the cost of purchasing loans that have defaulted and the revenue generated from fees and collateral liquidation. For direct (Microloan) lending, it is primarily the cost of offering below-market interest rates to Microloan intermediaries. The variation in appropriations for SBA business loan credit subsidies since FY2000 is primarily due to the impact of changing economic conditions on the SBA's guaranteed loan portfolios. During good economic times, revenue from SBA fees and collateral liquidation is typically sufficient to cover the SBA's cost of purchasing guaranteed loans that have defaulted. During and immediately following economic slowdowns, however, revenue from SBA fees and collateral liquidation is typically insufficient to cover the SBA's cost of purchasing guaranteed loans that have defaulted. The shortfall occurs because the SBA's cost of purchasing guaranteed loans tends to increase when the economy slows (primarily because guaranteed loans are more likely to default during and immediately following recessions) and revenue from loan liquidation tends to be constrained during slow economic times (primarily because commercial real estate values typically fall during and immediately following recessions). As a result, additional appropriations are needed to cover these expenses, which are guaranteed by the "full faith and credit of the United States." Since FY2000, the variation in appropriations for the other programs spending category is attributable primarily to congressional response to changing economic conditions. As the report will discuss, appropriations for this spending category have generally increased at a pace that exceeds inflation. In addition, Congress approved significant, temporary increases in appropriations for SBA programs in the other programs spending category in FY2009 and FY2010. It approved these temporary increases primarily as a means to enhance small businesses' access to capital, which had become constrained during and immediately following the Great Recession (December 2007 to June 2009). The SBA's appropriations for FY1954 through FY1999 are provided in the Appendix . SBA Funding Trends: FY2000-FY2019 As shown in Table 1 , the SBA's appropriations have varied significantly since FY2000, ranging from a high of $2.359 billion in FY2018 to a low of $571.8 million in FY2007. Much of this volatility is due to significant variation in appropriations for disaster assistance, which ranged from a high of $1.7 billion in FY2006 to a low of $0 in FY2009. This variation is attributable primarily to supplemental appropriations provided to address disaster needs arising from the impact of major hurricanes, such as Hurricanes Katrina, Sandy, Harvey, Irma, and Maria. In addition, as shown in Table 1 , appropriations for business loan credit subsidies have varied significantly since FY2000, ranging from a high of $319.7 million in FY2013 ($337.3 million before sequestration and rescission) to a low of $1.3 million in FY2006 and FY2007. As mentioned previously, the variation in appropriations for business loan credit subsidies results primarily from the impact of changing economic conditions on the SBA's loan portfolios. During good economic times, revenue from fees and collateral liquidation is typically sufficient to cover the costs of purchasing defaulted loans. During and immediately following recessions, revenue from fees and collateral liquidation is typically not sufficient to cover those costs. As shown in Table 1 , appropriations for the all other programs category have also varied since FY2000, ranging from a high of $1.6253 billion in FY2010 to a low of $455.6 million in FY2007. Much of this variation resulted from significant, temporary increases in appropriations for the SBA's other programs in FY2009 ($724.0 million) and FY2010 ($962.5 million). These additional appropriations were approved primarily as a means to enhance small businesses' access to capital, which had become constrained during and immediately following the Great Recession. As mentioned previously, from FY2000 to FY2019, appropriations for the SBA's other programs spending category, as a whole, have exceeded the rate of inflation. For comparative purposes, Table 1 also presents the SBA's total available funds. As indicated in the table, the SBA's carryovers and account transfers tend to reduce variation in its budget from one fiscal year to the next. Much of this "evening out" process is due to disaster assistance appropriations, which are provided in one fiscal year and then typically spent over several fiscal years. SBA Funding Within the Other Programs Category The following section examines appropriations and total available funding for FY2000-FY2019 for the five main components of the SBA's other programs spending category: (1) salaries and expenses, (2) business loan administration, (3) the Office of Inspector General (OIG), (4) the Office of Advocacy (Advocacy), and (5) entrepreneurial development (ED) noncredit programs. Salaries and Expenses The SBA's salaries and expenses account currently provides funding for the following: office operating budgets, which are used by program and administrative offices for daily operations, such as travel, supplies, and contracted services; agency-wide costs, such as rent and telecommunications, which are managed centrally; employee compensation and benefits, which are also managed centrally; and reimbursable expenses for programs for which the SBA receives reimbursable budget authority from other federal government agencies. Several adjustments were made to the SBA's reported appropriations for its salaries and expenses account to enable meaningful comparisons over time. For example, prior to FY2014, appropriations for the SBA's ED programs were included in the salaries and expenses account. They now have their own, separate appropriations account. Therefore, to allow for meaningful comparisons with current appropriations, Table 2 lists and deducts the reported appropriations for ED programs prior to FY2014 from the reported appropriations for salaries and expenses. In addition, the SBA previously included appropriations for congressional initiatives (earmarks) under the salaries and expenses account. Therefore, to allow for meaningful comparisons with current appropriations and focus the comparison on administrative expenses, appropriations for earmarks are deducted from the reported appropriations for salaries and expenses. Prior to FY2012, Advocacy was funded through the salaries and expenses' executive direction subaccount. Advocacy now has its own, separate appropriations account. To allow for meaningful comparisons with current appropriations, Table 2 lists Advocacy's funding provided through the salaries and expenses' executive direction subaccount prior to FY2012 and deducts that amount from the reported appropriation s for salaries and expenses . As discussed in greater detail below (see "Office of Advocacy"), data concerning Advocacy's funding provided through the salaries and expenses' executive direction subaccount are not available for FY2006-FY2010. However, in FY2003, FY2004, and FY2005, Advocacy's funding provided through the salaries and expenses' executive direction subaccount was 79% of its reported total cost. The estimates provided in the table for FY2006-FY2010 were derived by multiplying Advocacy's total program cost reported for each of those fiscal years by 79%. As shown in Table 2 , the SBA's appropriations for salaries and expenses have varied from year to year, with increases in some years and decreases in others. Overall, appropriations for the SBA's salaries and expenses have increased from $176.490 million in FY2000 to $267.500 million in FY2019. This increase has exceeded the rate of inflation. The SBA has statutory authorization to transfer appropriations from the business loan administration account into the salaries and expenses account. As evidenced by the amounts listed in the total available funds column in the table, the SBA exercised that authority in every fiscal year from FY2000 to FY2018 (and is expected to do so again in FY2019), transferring the entire appropriation for business loan administration into the salaries and expenses account in each of those fiscal years. Business Loan Administration Appropriations for the SBA's business loan administration account have varied since FY2000, increasing in some years and decreasing in others (see Table 3 ). Overall, appropriations for SBA business loan administration increased from $129 million in FY2000 to $155.150 million in FY2019. The program's recommended appropriations have not kept pace with inflation. As evidenced by the $0.0 balance in the total funds available column for the business loan administration account, the SBA has routinely transferred all business loan administration appropriations to the salaries and expenses account. The combined appropriations for SBA salaries and expenses and business loan administration increased from $305.490 million in FY2000 to $422.650 million in FY2019. This increase has not kept pace with inflation. Office of Inspector General According to the SBA, the OIG's mission is to "provide independent, objective oversight to improve the integrity, accountability, and performance of the SBA and its programs for the benefit of the American people." The office was created within the SBA by the Inspector General Act of 1978 ( P.L. 95-452 , as amended). The inspector general, who is nominated by the President and confirmed by the Senate, directs the office. The Inspector General Act provides the OIG with the following responsibilities: promote economy, efficiency, and effectiveness in the management of SBA programs and supporting operations; conduct and supervise audits, investigations, and reviews relating to the SBA's programs and support operations; detect and prevent fraud, waste, and abuse; review existing and proposed legislation and regulations and make appropriate recommendations; maintain effective working relationships with other governmental agencies and nongovernmental entities regarding the inspector general's mandated duties; keep the SBA administrator and Congress informed of serious problems and recommend corrective actions and implementation measures; comply with the comptroller general's audit standards; avoid duplication of Government Accountability Office activities; and report violations of federal criminal law to the U.S. attorney general. As shown in Table 4 , the OIG's appropriations have increased from $11.405 million in FY2000 to $21.900 million in FY2019. This increase has exceeded the rate of inflation. The OIG typically receives a transfer of appropriations from the disaster assistance account for auditing expenses. It was also provided additional appropriations in FY2006, FY2013, and FY2018 for expenses related to the review of SBA disaster loans following major hurricanes (e.g., Hurricanes Katrina, Rita, and Wilma in 2005, Hurricane Sandy in 2012, and Hurricanes Harvey, Irma, and Maria in 2018) and in FY2009 to conduct reviews and audits of $730 million provided to the SBA by P.L. 111-5 , the American Recovery and Reinvestment Act of 2009. Office of Advocacy14 The SBA indicates that its Office of Advocacy is "an independent voice for small business within the federal government." The chief counsel for Advocacy, who is nominated by the President and confirmed by the Senate, directs the office. Advocacy's mission is to "encourage policies that support the development and growth of American small businesses" by intervening early in federal agencies' regulatory development processes on proposals that affect small businesses and providing Regulatory Flexibility Act compliance training to federal agency policymakers and regulatory development officials; producing research to inform policymakers and other stakeholders on the impact of federal regulatory burdens on small businesses, document the vital role of small businesses in the economy, and explore and explain the wide variety of issues of concern to the small business community; and fostering two-way communication between federal agencies and the small business community. As shown in Table 5 , Advocacy's funding has increased from $5.620 million in FY2000 to $9.120 million in FY2019. This increase has exceeded the rate of inflation. P.L. 111-240 , the Small Business Jobs Act of 2010, enhanced Advocacy's independence by ending the practice of funding Advocacy through the SBA's salaries and expenses' executive direction subaccount. Instead, P.L. 111-240 requires the President to provide a separate statement of the appropriations request for Advocacy, "which shall be designated in a separate account in the General Fund of the Treasury." The act also requires the SBA administrator to provide Advocacy with "appropriate and adequate office space at central and field office locations, together with such equipment, operating budget, and communications facilities and services as may be necessary, and ... necessary maintenance services for such offices and the equipment and facilities located in such offices." In addition, Congress has provided Advocacy its own, separate appropriations amount since FY2012. As mentioned previously, prior to FY2012, the SBA reported Advocacy's total program cost, which includes funding provided through the salaries and expenses' executive direction subaccount, agency-wide overhead costs (rent, telecommunications, etc.), and other support costs (e.g., management and administrative support, including human resources support). From FY2000 to FY2005, the SBA provided relatively detailed information concerning Advocacy's budget, including the amount of funding Advocacy received through the salaries and expenses' executive direction subaccount. Also, Advocacy's FY2013 congressional budget justification document included the amount of funding Advocacy received through the salaries and expenses' executive direction subaccount in FY2011. However, those data are not available for FY2006-FY2010, and it was therefore necessary to estimate Advocacy's funding from the salaries and expenses' executive direction subaccount for those years. The estimates provided in the table were derived by multiplying Advocacy's total program cost for each of those fiscal years by 79%, which was the proportion of Advocacy's total program costs provided from the salaries and expenses' executive direction subaccount in FY2003, FY2004, and FY2005. Entrepreneurial Development Noncredit Programs18 The SBA's entrepreneurial development (ED) noncredit programs provide a variety of management and training services to small businesses. Congress provides appropriations for eight management and technical assistance training programs: Small Business Development Centers, the Microloan Technical Assistance Program, Women Business Centers, SCORE, the Program for Investment in Microentrepreneurs (PRIME), Veterans Programs (including Veterans Business Outreach Centers, Boots to Business, Boots to Business: Reboot, Veteran Women Igniting the Spirit of Entrepreneurship [VWISE], and Entrepreneurship Bootcamp for Veterans with Disabilities), the 7(j) Technical Assistance Program, and the Native American Outreach Program; two relatively long-standing nontraining programs: the National Women's Business Council and HUBZone administration; three initiatives: the Entrepreneurial Development Initiative (Clusters), the Entrepreneurship Education Initiative, and Growth Accelerators; and the Step Trade and Export Promotion (STEP) Pilot Grant program. Initially, the SBA provided its own management and technical assistance training programs. Over time, however, the SBA has increasingly relied on third parties to provide that training. The SBA reports that more than 1 million aspiring entrepreneurs and small business owners receive training from an SBA-supported resource partner each year. Congress specifies appropriations in appropriations acts for the Small Business Development Center (SBDC) program, the Microloan Technical Assistance program, and the STEP program. Congress provides an overall appropriation for the SBA's ED programs and recommends appropriations for the SBA's other ED programs, typically in the conference agreement or "Explanatory Statement" accompanying the appropriations act. As a result, the following tables refer to appropriations for the SBDC and Microloan Technical Assistance programs and recommended appropriations for other ED programs. Although not legally binding, the SBA has traditionally adhered to these recommended funding amounts. Small Business Development Centers SBDCs provide free or low-cost assistance to small businesses using programs customized to local conditions. SBDCs support small business in marketing and business strategy, finance, technology transfer, government contracting, management, manufacturing, engineering, sales, accounting, exporting, and other topics. They are funded by grants from the SBA and matching funds. There are 63 lead SBDC service centers, at least one in each state (with four in Texas and six in California), the District of Columbia, Puerto Rico, the Virgin Islands, Guam, and American Samoa. These lead SBDC service centers manage more than 900 SBDC outreach locations. As shown in Table 6 , appropriations for SBDCs have increased from $84.179 million in FY2000 to $131.000 million in FY2019. This increase has exceeded the rate of inflation. In addition, as shown in the table, SBDCs received an additional $50 million in temporary funding in FY2010, which was spent over two fiscal years. The SBA reports actual and anticipated expenditures for its ED programs in its annual budget justification document. SBDC expenditures in FY2000-FY2018 and anticipated SBDC expenditures in FY2019 are presented in the table's last column for comparative purposes. Microloan Technical Assistance Program The SBA's Microloan lending program is designed to address the perceived disadvantages faced by women, low-income, veteran, and minority entrepreneurs and business owners in gaining access to capital for starting or expanding their business (see P.L. 102-140 , the Departments of Commerce, Justice, and State, the Judiciary, and Related Agencies Appropriations Act, 1992). Under the Microloan program, the SBA provides direct loans to qualified nonprofit intermediary Microloan lenders who, in turn, provide "microloans" of up to $50,000 to small business owners, entrepreneurs, and nonprofit child care centers. The SBA's Microloan Technical Assistance program is part of the SBA's Microloan program but receives a separate appropriation. It provides grants to Microloan intermediaries to offer management and technical training assistance to Microloan program borrowers and prospective borrowers. There are currently 147 active Microloan intermediaries, serving 49 states, the District of Columbia, and Puerto Rico. As shown in Table 7 , the Microloan Technical Assistance program's appropriations have varied over the years. Overall, Microloan Technical Assistance Program appropriations have increased from $23.112 million in FY2000 to $31.000 million in FY2019. This increase has been less than the rate of inflation. Microloan Technical Assistance expenditures in FY2000-FY2018 and anticipated Microloan Technical Assistance expenditures in FY2019 are presented in the table's last column for comparative purposes. Women Business Centers Women Business Centers (WBCs) provide financial, management, and marketing assistance to small businesses, including start-up businesses, owned and controlled by women. Since its inception, the program has targeted the needs of socially and economically disadvantaged women (see P.L. 100-533 , the Women's Business Ownership Act of 1988). Currently, there are 121 WBCs located throughout most of the United States and the territories. As shown in Table 8 , WBC's recommended appropriations have increased from $8.966 million in FY2000 to $18.500 million in FY2019. This increase has exceeded the rate of inflation. WBC expenditures in FY2000-FY2018 and anticipated WBC expenditures in FY2019 are presented in the table's last column for comparative purposes. SCORE The SBA provides financial assistance to SCORE (formerly the Service Corps of Retired Executives) to provide in-person mentoring and online training to small business owners and prospective owners. SCORE's 320 chapters and more than 800 branch offices are located throughout the United States and partner with more than 11,000 volunteer counselors, who are working or retired business owners, executives and corporate leaders, to provide management and training assistance to small businesses "at no charge or at very low cost." As shown in Table 9 , SCORE's recommended appropriations have increased from $3.487 million in FY2000 to $11.700 in FY2019. This increase has exceeded the rate of inflation. SCORE expenditures in FY2000-FY2018 and anticipated SCORE expenditures in FY2019 are presented in the table's last column for comparative purposes. Program for Investment in Microentrepreneurs The Program for Investment in Microentrepreneurs (PRIME) provides grants to nonprofit microenterprise development organizations or programs that have "a demonstrated record of delivering microenterprise services to disadvantaged entrepreneurs; an intermediary; a microenterprise development organization or program that is accountable to a local community, working in conjunction with a state or local government or Indian tribe; or an Indian tribe acting on its own, if the Indian tribe can certify that no private organization or program referred to in this paragraph exists within its jurisdiction." As shown in Table 10 , PRIME's recommended appropriations have varied, starting at $14.964 million in FY2001 (the program's first recommended appropriation) and falling to $2 million in FY2006 and FY2007. PRIME has received $5.0 million since FY2015. PRIME expenditures in FY2001-FY2018 and anticipated PRIME expenditures in FY2019 are presented in the table's last column for comparative purposes. The Obama Administration argued that PRIME overlaps and duplicates the SBA's Microloan Technical Assistance program and recommended in its FY2012-FY2017 budget requests that PRIME receive no appropriations. As shown in the table, in FY2013, the Obama Administration eliminated PRIME's appropriation as part of the SBA's sequestration process. The Trump Administration recommended in its FY2018 and FY2019 budget requests that the PRIME program receive no appropriations. Veterans Programs The SBA's Office of Veterans Business Development (OVBD) administers several management and training programs to assist veteran-owned businesses, including the Entrepreneurship Bootcamp for Veterans with Disabilities Consortium of Universities, which provides "experiential training in entrepreneurship and small business management to post-9/11 veterans with disabilities" at eight universities; the Veteran Women Igniting the Spirit of Entrepreneurship (V-WISE) program, which is administered through a cooperative agreement with Syracuse University, offers women veterans a 15-day, online course focused on entrepreneurship skills and the "language of business," followed by a 3-day conference (offered twice a year at varying locations) in which participants "are exposed to successful entrepreneurs and CEOs of Fortune 500 companies and leaders in government" and participate in courses on business planning, marketing, accounting and finance, operations and production, human resources, and work-life balance; the Operation Endure and Grow Program, which is administered through a cooperative agreement with Syracuse University, offers an eight-week online training program "focused on the fundamentals of launching and/or growing a small business" and is available to National Guard and reservists and their family members; the Boots to Business program (started in 2012), which is "an elective track within the Department of Defense's revised Training Assistance Program called Transition Goals, Plans, Success (Transition GPS) and has three parts: the Entrepreneurship Track Overview—a 10-minute introductory video shown during the mandatory five-day Transition GPS course which introduces entrepreneurship as a post-service career option; Introduction to Entrepreneurship—a two-day classroom course on entrepreneurship and business fundamentals offered as one of the three Transition GPS elective tracks; and Foundations of Entrepreneurship—an eight-week, instructor-led online course that offers in-depth instruction on the elements of a business plan and tips and techniques for starting a business"; the Boots to Business Reboot program (started in 2014), which assists veterans who have already transitioned to civilian life; and the Veterans Business Outreach Centers (VBOC) program, which provides veterans and their spouses management and technical assistance training at 15 locations, including assistance with the Boots to Business program, the development and maintenance of a five-year business plan, and referrals to other SBA resource partners when appropriate for additional training or mentoring services. Prior to FY2016, Congress recommended appropriations for VBOCs and, in FY2014 and FY2015, for the Boots to Business initiative ($7.0 million in FY2014 and $7.5 million in FY2015). Funding for the OVBD's other veterans assistance programs were provided through the SBA's salaries and expenses account. Starting in FY2016, Congress has recommended appropriations for OVBD's programs as a whole: $12.3 million in FY2016, FY2017, and FY2018, and $12.7 million in FY2019. This increase has not kept pace with inflation. OVBD expenditures in FY2015-FY2018 and anticipated OVBD expenditures in FY2019 are presented in the table's last column for comparative purposes. Recommended appropriations for VBOCs from FY2000-FY2015 are presented in Table 12 for historical comparisons. As the data indicate, recommended appropriations for VBOCs increased from $0.613 million in FY2000 to $3.000 million in FY2015. This increase has exceeded the rate of inflation. OVBD expenditures in FY2000-FY2015 are presented in the table's last column for comparative purposes. 7(j) Technical Assistance Program The SBA's 7(j) Technical Assistance Program provides "a wide variety of management and technical assistance to eligible individuals or concerns to meet their specific needs, including: (a) counseling and training in the areas of financing, management, accounting, bookkeeping, marketing, and operation of small business concerns; and (b) the identification and development of new business opportunities." Eligible individuals and businesses include "8(a) certified firms, small disadvantaged businesses, businesses operating in areas of high unemployment, or low income or firms owned by low income individuals." As shown in Table 13 , recommended appropriations for the 7(j) Technical Assistance Program have varied since FY2000, with increases in some years and decreases in others. Overall, the SBA's 7(j) Technical Assistance Program's recommended appropriations have decreased from $3.584 million in FY2000 to $2.800 million in FY2019. 7(j) Technical Assistance Program expenditures in FY2000-FY2018 and anticipated 7(j) Technical Assistance Program expenditures in FY2019 are presented in the table's last column for comparative purposes. Native American Outreach Program The SBA's Native American Outreach (NAO) program provides management and technical educational assistance to American Indians, Alaska natives, native Hawaiians, and "the indigenous people of Guam and American Samoa … to promote entity-owned and individual 8(a) certification, government contracting, entrepreneurial education, and capital access." The program's management and technical assistance services are available to members of these groups living in most areas of the nation. As shown in Table 14 , the NAO program's recommended appropriations have varied somewhat since FY2003 (the first year it received recommended appropriations), ranging from $1.0 million to $2.0 million. The program's recommended appropriations have not kept pace with inflation. NAO program expenditures in FY2003-FY2018 and anticipated NAO expenditures in FY2019 are presented in the table's last column for comparative purposes. National Women's Business Council The National Women's Business Council (NWBC) is a bipartisan federal advisory council created to serve as an independent source of advice and counsel to the President, Congress, and the SBA on economic issues of importance to women business owners. The council's mission "is to promote bold initiatives, policies, and programs designed to support women's business enterprises at all stages of development in the public and private sector marketplaces—from start-up to success to significance." As shown in Table 15 , the recommended appropriation for the NWBC has increased from $0.598 million in FY2000 to $1.500 million in FY2019. This increase has exceeded the rate of inflation. NWBC expenditures in FY2000-FY2018 and NWBC anticipated expenditures in FY2019 are presented in the table's last column for comparative purposes. HUBZone Administration The HUBZone program helps small businesses located in designated Historically Underutilized Business Zones (HUBZones) to compete for federal contracts. Federal agencies may award contracts directly to HUBZone-certified small businesses through a sole-source contract, limit contact competitions to HUBZone-certified firms through a contract set-aside, or provide HUBZone-certified firms a price evaluation preference in full and open competitions. The HUBZone program was initially funded through the SBA's salary and expenses account. As shown in Table 16 , Congress started recommending an appropriation for the program in FY2004. This recommended appropriation remained relatively stable until FY2015, when it increased to $3.0 million. With this increase, the HUBZone program's recommended appropriations have exceeded inflation. The HUBZone program's expenditures in FY2000-FY2018 and the HUBZone program's anticipated expenditures in FY2019 are presented in the table's last column for comparative purposes. The Entrepreneurial Development Initiative (Regional Innovation Clusters) The SBA reports that "regional innovation clusters are on-the-ground collaborations between business, research, education, financing and government institutions that work to develop and grow a particular industry or related set of industries in a particular geographic region." The SBA has supported regional innovative clusters since FY2009, and the initiative has received recommended appropriations from Congress since FY2010. As shown in Table 17 , funding for the Entrepreneurial Development Initiative (Regional Innovation Clusters) has been reduced from a recommended appropriation of $10.0 million in FY2010 to $5.0 million in FY2019. The table's last column indicates that the SBA's expenditures for the initiative have often been less than the amount appropriated. The Trump Administration recommended in its FY2018 and FY2019 budget requests that the Entrepreneurial Development Initiative receive no appropriations. Entrepreneurship Education Initiative The SBA's Entrepreneurship Education initiative offers high‐growth small businesses in underserved communities "a seven‐month executive leader education series" consisting of "more than 100 hours of specialized training, technical resources, a professional networking system, and other resources to strengthen their business model and promote economic development within urban communities." At the conclusion of the training, "participants produce a three‐year strategic growth action plan with benchmarks and performance targets that help them access the necessary support and resources to move forward for the next stage of business growth." As shown in Table 18 , the Entrepreneurship Education initiative received its first recommended appropriation from Congress in FY2014 ($5.0 million), $7.0 million in FY2015, $10.0 million in FY2016, FY2017, and FY2018, and $3.5 million in FY2019. Growth Accelerator Initiative The SBA describes growth accelerators as "organizations that help entrepreneurs start and scale their businesses." Growth accelerators are typically run by experienced entrepreneurs and help small businesses access seed capital and mentors. The SBA claims that growth accelerators "help accelerate a startup company's path towards success with targeted advice on revenue growth, employee growth, sourcing outside funding and avoiding pitfalls." As shown in Table 19 , the Growth Accelerator initiative received its first recommended appropriation from Congress in FY2014 ($2.5 million), $4.0 million in FY2015, $1.0 million in FY2016, FY2017, and FY2018, and $2 million in FY2019. It provides $50,000 matching grants each year to universities and private sector accelerators "to support the development of accelerators and their support of startups in parts of the country where there are fewer conventional sources of access to capital (i.e., venture capital and other investors)." The Trump Administration recommended in its FY2018 and FY2019 budget requests that the Growth Accelerator Initiative receive no appropriations. Appendix. SBA Appropriations, FY1954-FY1999

This report examines the Small Business Administration's (SBA's) appropriations (new budget authority, minus rescissions and sequestration) over time, focusing on developments and trends since FY2000. It also provides total available funding (which includes carryover from the prior fiscal year, carryover into the next fiscal year, account transfers, rescissions, and sequestration) and, for entrepreneurial development noncredit programs, actual and anticipated expenditures for comparative purposes. SBA appropriations, as a whole, have varied significantly from year to year since FY2000 and across all three of the agency's major spending categories: disaster assistance, business loan credit subsidies, and "other programs," a category that includes salaries and expenses, business loan administration, the Office of Inspector General, the Office of Advocacy, and entrepreneurial development programs. Overall, the SBA's appropriations have ranged from a high of $2.359 billion in FY2018 to a low of $571.8 million in FY2007. Much of this volatility is due to significant variation in appropriations for disaster assistance, which ranged from a high of $1.7 billion in FY2006 to a low of $0 in FY2009. This variation can be attributed primarily to supplemental appropriations provided to address disaster needs arising from the impact of major hurricanes, such as Hurricanes Katrina and Sandy, and more recently, Hurricanes Harvey, Irma, and Maria. The SBA's appropriations for business loan credit subsidies have also varied since FY2000, ranging from a high of $319.7 million in FY2013 ($337.3 million before sequestration and rescission) to a low of $1.3 million in FY2006 and FY2007. This variation is due to the impact of changing economic conditions on the SBA's guaranteed loan portfolios. During good economic times, revenue from SBA fees and collateral liquidation is typically sufficient to cover the costs of purchasing guaranteed loans that have defaulted. During and immediately following recessions, however, that revenue is typically insufficient to cover the costs of purchasing guaranteed loans that have defaulted. The SBA's appropriations for other programs, as a collective, have also varied since FY2000, ranging from a high of $1.6253 billion in FY2010 to a low of $455.6 million in FY2007. This variation is primarily due to congressional response to changing economic conditions. For example, Congress approved significant, temporary increases in appropriations for the SBA's other programs spending category in FY2009 and FY2010. Overall, since FY2000, appropriations for other programs have increased at a pace that exceeds inflation. This report provides appropriations for all five major components of the other programs spending category, including the SBA's entrepreneurial development programs. The SBA's appropriations for FY1954 through FY1999 are provided in the Appendix.

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Overview The majority of Latin American and Caribbean countries are functional democracies, but institutional weaknesses and widespread public corruption in many of these countries have undermined effective governance and sparked protest and demands for greater transparency. From a U.S. perspective, widespread corruption in Latin America is a potential threat to regional security, has a symbiotic relationship with violent crime, and can be a stimulus for migration. This report examines how anti-corruption strategies in U.S. policy and legislation initially evolved from a desire to level the playing field for corporations working in the developing world. At first, U.S. corporations were regulated so they could not bribe or extort to win contracts, and then the focus expanded to helping build more effective institutions and the rule of law in developing countries to ensure more fair, predictable, and transparent systems. The report examines how corruption contributes to wasting public monies, distorting electoral outcomes, and reinforcing criminal structures. Although the fight against corruption is a global effort, this report focuses more closely on U.S. interests in fighting corruption in the region, and how U.S. policy and assistance programs have developed to address that goal. Contemporary anti-corruption efforts in Brazil, Mexico, and Central America are examined as case studies. The report closes with considerations for Congress in conducting its oversight role over U.S. funded anti-corruption efforts in the region and pursuing the policy objective of broadening the rule of law and encouraging good government. Background In the wake of numerous scandals, particularly regarding the multi-country scandal involving the Odebrecht corporation, corruption has become a searing, top-level concern in many Latin American nations, with implications for U.S. policy. In past decades, public rejection of corruption has risen and then crested and fallen back, sometimes to a tacit toleration of bribery and other corruption as the way of politics. Some critics maintain that corruption is so entrenched that it is now endemic in the region and forms the primary path to political power. The number of grand-scale scandals exposed in recent years in the region, such as payoff schemes involving high court justices and top-level officials, has led some voters to conclude that all parties and politicians are corrupt, resulting in presidents and vice presidents being pushed from office and traditional political parties being viewed as corrupt and illegitimate. Some analysts maintain that chronic corruption diminishes support for democracy and stokes cynicism about the integrity of politics. However, 2018 saw prominent anti-corruption candidates and campaigns win elections across the region, with populist and anti-establishment fervor marking campaigns in Mexico, Brazil, and several other countries. In these contests, leading candidates abandoned traditional parties sullied by corruption allegations. For instance, in Mexico, the decades-long dominance of the Institutional Revolutionary Party (PRI) —displaced in 2000, but resurgent in 2012—was again swept out in Mexico's July 2018 national elections by the National Regeneration Party, or MORENA, founded four years earlier. Throughout the region, winning candidates of the left and the right—as in Mexico and Brazil—embraced anti-establishment platforms that appealed to voter disillusionment with corrupt elites. In its global perceptions survey, Transparency International (TI) has found that a majority of Latin Americans tend to believe pervasive public corruption exists and is expanding its reach. The sense of widespread corruption may be sparking a civil society rejection of the status quo and a deeper commitment to combat corrupt behavior and demand accountability (see textbox). Grand corruption involving top political leaders has touched every nearly every partof Latin America, generating a wave of anti-corruption activism. In the past, such demonstrations have proven ephemeral, quickly fading as the systemic nature of the problem has left citizens resigned to the status quo. These anti-corruption campaigns may prove more enduring, however, as civil society organizations are attempting to build on their preliminary successes by pushing for institutional reforms to enhance transparency and accountability throughout the public sector. Regarding the relationship of perceptions of corruption as an accurate indicator of actual acts of corruption or prevalence of those acts, TI has in the past married the two. In the 20 Latin American nations polled in the Corruption Perceptions Index (CPI) for 2016, TI said that respondents identified politicians, political parties, and police as the most corrupt sectors of their societies. The most frequently cited offenses were graft, influence peddling, extortion, bribe solicitation, money laundering, and political finance violations (for 2016 and 2017 CPI results for Latin America and the Caribbean, see Figure 1 ). One of the 2016 surveys used to establish TI's country rankings asked whether respondents had paid a bribe for a public service over the past 12 months. Nearly one-third confirmed they had paid a bribe to receive a basic public service, such as health care or education. Another index, called the World Justice Project's Rule of Law Index (WJP Rule of Law Index), reports that corruption levels vary significantly across the region, although corruption appears to be both widespread and endemic. The Rule of Law Index identifies several indicators for a regional ranking related to governance. At the region's apex and exhibiting the strongest rule of law sit Chile, Costa Rica, and, at the top, Uruguay. The region's least successful on the 2019 Rule of Law Index are Nicaragua, Honduras, Bolivia, and, at the bottom, Venezuela. However, on the indicator of "absence of corruption" alone, the region's worst with regard to the metrics of bribery, improper influence by public or private interests, and misappropriation of public funds, were: Peru, Venezuela, Mexico, and at the bottom, Bolivia. The World Justice Project asserts that full, functioning democracies evolve slowly and anti-corruption programs able to influence and transform the status quo may take years to show results. Corruption patterns vary considerably from country to country. Transparency International and other regional surveys, such as the Latinobarómeter, have found the divergence between countries is more pronounced in Latin America and the Caribbean than in other regions. Some commentators argue that lower-level corruption is simpler to identify and root out. More widespread and higher levels of corruption are more difficult to contain and have powerful forces protecting them. For instance, compromised justice systems, apparent in recent scandals in Mexico, Colombia, and Peru, result in impunity for powerful defendants and inhibit the number of successfully completed prosecutions. This may result in diminished belief in democratic legitimacy and the rule of law. The confidence or expectation of fairness is replaced with mistrust when bribes are routinely demanded by the police; there is ample evidence of political kickback schemes; and evidence such as recordings shows the suborning of court officials and judges. In the Western Hemisphere, populist leaders including Nicaragua's Daniel Ortega and Venezuela's Nicolás Maduro have resorted to tactics that undermine democratic institutions like the free press and an independent judiciary, which, when functioning, can help prevent corruption. In Peru, President Pedro Pablo Kuczynski stepped down in March 2018 to avoid impeachment for allegedly taking Odebrecht bribes right before he was to host a Summit of the Americas focused on eradicating corruption. In Mexico and Brazil in 2018, and in El Salvador early in 2019, presidential candidates campaigned successfully against traditional political parties deemed corrupt. In 2018, Mexico's long-dominant Institutional Revolutionary Party (PRI), was dogged by corruption allegations and performed poorly in congressional and presidential elections. Political parties are crucial to a competitive democracy, but when they are no longer accountable they lose their primary function of placing a check on the consolidation and abuse of power. Disillusioned and cynical voters who have regularly experienced breaches by their governments, leaders or political parties, can lose trust that is not easily restored. The effort needed to rebuild a country's democratic institutions, such as a functioning justice system, takes patience and political will that is hard to sustain over time. Anti-corruption efforts can face towering political opposition and significant undercurrents that undercut prosecution and future transparency. The economic costs related to systemic corruption are well researched. In 2018, the costs to Mexico of corruption were estimated to be as high as 5% of the country's GDP and in Peru and Colombia as much as 10%. Many analysts contend corruption also exacerbates inequality (a persistent feature of several Latin American and Caribbean societies) which increases instability. Many observers have noted the unusual level of activism on anti-corruption reaching nearly every corner of the region in recent years and wondered whether it will endure and produce lasting reform. They question whether this current resistance to an existing culture of impunity can be prevented from falling into anti-democratic reaction, or, once again, slipping into resignation. In the realm of foreign assistance and especially investment, U.S. competitors, including China and to a lesser extent Russia, are using investment in the region, such as infrastructure or energy development projects, not to strengthen recipient governments, but to further their own economic interests. These projects can be beset by hidden costs and have unknown beneficiaries, while they lack public oversight. Greater transparency on bidding and public finance will help give the general public greater capacity to assess them. U.S. programs to strengthen the rule of law and increase governmental transparency may directly benefit recipient nations in Latin America and the Caribbean by extending the institutional foundation for sustained economic development. Early Anti-corruption Approaches U.S. foreign assistance programs to bolster rule of law, encourage good governance, and eliminate bribery, extortion, and graft have been common in Latin America for about three decades. Anti-corruption programming sponsored by the United States and major international financial institutions grew out of ferment in the 1970s, when the long-time practice of businesses and foreign corporations paying bribes to gain contracts in developing countries was exposed (see textbox on Select International Efforts to Combat Corruption). Controlling bribery and payments to foreign governments by businesses became the focus, for the first time, of U.S. legislative reform, the Foreign Corrupt Practices Act (FCPA), in 1977. The law ( P.L. 95-213 , Title 1) prohibits U.S. corporate bribery of foreign officials. However, this change initially raised concern that the new policy could disadvantage U.S. corporations in comparison to firms from other countries. In 1996, the Organization of American States (OAS) adopted the Inter-American Convention Against Corruption (IACAC), the world's first anti-corruption treaty. The IACAC provides OAS member states with a set of legal tools and an institutional framework to prevent, detect, punish, and eradicate corruption. The convention covers criminalization of corruption, international cooperation, asset recovery, and considers preventive roles for business, civil society and nongovernmental organizations (NGOs) in curtailing corruption. All 34 active OAS member states are party to the IACAC, including the United States, which ratified the convention in 2000 (Treaty Doc. 105-39). The Convention requires signatory states to penalize active and passive corruption, transnational corruption, and improper use of confidential information. However, few high-level public office holders in the region have been brought to justice, especially those who are financially and politically powerful. Signatories' implementation of the IACAC treaty is largely voluntary and relies on sustained political will. (See Appendix B for background on the implementation of IACAC). In 1997, the Organization for Economic Cooperation and Development (OECD), with strong support from the United States, adopted the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions. Entering into force in 1999 and binding only upon OECD member nations, the Convention on Bribery has actually had a large impact in Latin America, even though only Mexico and Chile at the time were OECD members. Subsequently, Argentina, Brazil, Colombia, and Costa Rica adopted the measures and other countries changed their laws to begin to conform to the requirements of the 1996 OAS and 1997 OECD conventions. Some of the innovations from the anti-corruption conventions allowed legislatures in Latin America to sidestep the philosophical question of the capacity of a legal entity (e.g., a corporation) to have a will or intent to commit a crime. With corporations legally capable of committing a crime (such as bribery of local or national officials) then culpability could be assessed. Another method to encourage prevention of corruption was adoption of a "safe harbor" defense for companies, providing them a motive to reform their practices through greater internal corruption safeguards and monitoring. If a business implemented staunch policies to prevent bribery—such as designating an officer to monitor operations for potential corruption who reports twice a year to the top officer or CEO—then the business could avoid criminal liability, even if individuals inside the corporation were caught in bribery or graft. This policy rewards self-monitoring by offering a buffer from liability as an inducement for self-policing and prevention. Since the early 1990s, the OAS has convened the Summit of the Americas to address common agenda items in the Western Hemisphere. Both President Barack Obama and President George W. Bush supported initiatives and programs aimed at increasing transparency and accountability in governance to help achieve the overarching U.S. international policy goal of fostering good governance in the region. The Summit convened in April 2018, in Lima, Peru, attended by Vice President Pence rather than President Trump, had the theme of "Democratic Governance against Corruption," echoing a long-term concern with public corruption eroding support for democracy. In the past five years, as U.S. enforcement of the FCPA has increased, it has been used to expand the reach of U.S. extraterritorial jurisdiction, as evidenced in support to the Odebrecht case. Several countries are considering a similar statute, or FCPA-like laws to prohibit corporate bribery, including nations as diverse as India, Thailand, and France. In addition, the U.S. Federal Bureau of Investigation opened a unit on international corruption in Miami, Florida, in February 2019, with a focus on violations of the Foreign Corrupt Practices Act. The Fight Against Corruption Goes Global16 Anti-corruption has emerged gradually on the international agenda over recent decades. Factors contributing to its growing prominence as an international policy concern include domestic pressure in many countries to curb political corruption, business risks associated with corruption exposure in a globalized economy, and the undermining impact of official corruption on economic development and foreign aid. U.S. advocacy also appears to have played a significant role internationally, although approaches to combating corruption vary widely by country. International standards can provide guidelines and a framework for domestic reform and, critically, mobilize international pressure to enact and implement anti-corruption policies. Due to widespread links between corruption and natural resource exploitation, one prominent area for broadening accountability is in the use of natural resources. Many countries endowed with minerals and resources in demand by more developed economies have sought to put in place voluntary transparency measures and public monitoring of natural resource revenue and expenditure flows to ensure the assets gained will go for public purposes. Transparency measures to prevent resource diversion through corruption and mismanagement have included enactment of broader accountability-focused legal reforms, such as mandatory state budget transparency and accountability measures, freedom of information laws, and the formalization of citizens' participatory rights in state decisionmaking and regulation of extractive industries. For many countries in Latin America and the Caribbean, extractive resources provide a critical source of government revenue. The textbox below identifies some of the important global anti-corruption efforts, such as the Extractive Industries Transparency Initiative, which some Latin American countries have adopted. Corruption Scandals and Popular Response in 2018 Although protests decrying corruption in public office have occurred since 2015 in Brazil, Mexico, and in many countries of Central America, the events of 2018 suggest that corruption prosecutions and revelations during the year significantly increased. As a result, numerous anti-corruption candidates and campaigns played central roles during the 2018 elections, and protests against corrupt leaders erupted in countries throughout the region. (For more details, see the timeline in Appendix C ). Brazil . In Brazil, a sprawling corruption investigation underway since 2014 known as Lavo Jato (Car Wash, in English) implicated much of the political class. Brazil's multinational construction firm Odebrecht was one of the firms involved, and, in a landmark plea agreement, admitted to paying millions in bribes to politicians and office holders throughout Latin America. Odebrecht executives, in an agreement with authorities in the United States, Brazil, and Switzerland, admitted to paying some $788 million in bribes to secure public contracts worth more than $3.3 billion. The fallout extended beyond Brazil to countries such as Colombia, the Dominican Republic, Ecuador, Panama, and Peru. Both inside Brazil and in other countries, successful prosecution of cases connected to the Odebrecht plea deal received support from the U.S. Department of Justice (see Brazil case study below). In January 2019, Transparency International endorsed a comprehensive package of 70 reforms developed in conjunction with numerous public and private partners inside Brazil to set the country on a path to restore legitimacy to its political institutions. According to Transparency: The anti-corruption package includes proposals for institutional reforms, draft bills, constitutional amendments, draft resolutions and other rules to control corruption and tackle its systemic roots. Some of those proposals were incorporated into draft laws that Minister of Justice and Public Security Sérgio Moro presented to the Brazilian Congress in February 2019. Moro presided over the Car Wash investigation as a federal judge prior to being offered the Ministry of Justice and Public Security by President-elect Bolsonaro. In Brazil, former President Michel Temer (2016-2018), who was protected from investigation while in office, was arrested on charges of bribery and money laundering in March 2019. According to the Brazilian police, during his vice presidency in 2014 Temer took more than $2 million from Odebrecht to benefit himself and his Brazilian Democratic Movement Party. In addition, an array of former high-level government officials in Brazil, such as Aécio Neves, a former senator, governor, and 2014 presidential candidate for the Brazilian Social Democracy Party, face investigations for taking Odebrecht bribes for favorable consideration of legislation preferred by Odebrecht. Former President Luiz Inácio Lula da Silva (2003-2010) has been sentenced to two 12-year prison terms for steering contracts to Odebrecht and another Brazilian construction firm, OAS, in exchange for renovated properties. Venezuela . In 2018, an exodus of desperate Venezuelans continued to leave their country, which was under the sway of an authoritarian government that had asserted its power through human rights abuses and significant corruption from drug trafficking and other crimes. A May 2018 report by Insight Crime identified more than 120 high-level Venezuelan officials who had engaged in criminal activity. In Venezuela, Odebrecht reportedly provided bribes of more than $98 million to President Nicolás Maduro and his government to gain priority treatment. When President Maduro ousted his Attorney General Luisa Ortega, she reported the President solicited a $50 million bribe directly from the Brazilian construction firm. An Odebrecht executive based in Venezuela maintains that the company only paid Maduro $35 million, and other reports state that Odebrecht also sent contributions to Maduro's political opposition. The Andean Region Ecuador . In late 2017, Ecuador's vice president, Jorge Glás, was convicted of taking bribes exceeding $13 million from the Odebrecht firm when he served under former President Rafael Correa (2007-2017). He was removed from office, convicted, and given a seven-year prison sentence, which he is currently serving. Former President Correa, who currently resides in Europe with his Belgian wife, is also wanted by the current government of President Lenín Moreno for arranging the kidnapping of an Ecuadorian official who was a political opponent in 2012. Other charges against Correa include economic mismanagement during his 10-year tenure that involves his ties to Odebrecht. Colombia . High-level corruption networks have been exposed since March 2018, when Colombia's Supreme Court sentenced the country's top anti-corruption official, Luis Gustavo Moreno, to four years in prison for corruption. An investigation by Colombia's Attorney General's office found a corruption network pervading the national justice system involving high court justices receiving bribes from influential defendants. In late 2018, Colombia's current Attorney General, Néstor Humberto Martínez, was linked to Odebrecht bribes when he served as legal counsel to the Aval Group, a New York Stock Exchange-listed conglomerate run by the Colombia's wealthiest individual. In May 2019, Martínez announced his resignation but for an unrelated matter. Odebrecht executives admitted in their guilty plea that they had provided $32.5 million in bribes to facilitate the building of Colombia's Ruta del Sol highway and other infrastructure projects. A Colombian senator, who had accepted some bribes, cooperated in the prosecution to further expose the scheme. It ensnared a number of important Colombian officials in the previous administrations of President Juan Manuel Santos (2010-2018) and President Álvaro Uribe (2002-2010). A former governor, Sergio Fajardo, and a left-centrist presidential candidate, dedicated his 2018 presidential campaign to combating corruption, which became the impetus for a popular referendum promoting anti-corruption, promoted by the candidate who ran as Fajardo's vice president. Peru . The Odebrecht campaign-finance and bribery scandals upset political relations nowhere more than in Peru. Several high-profile political figures continue to be under investigation. Four former presidents of Peru are linked to the Odebrecht scandal and other corruption charges. President Pedro Pablo Kuczynski (2016-2018) stepped down in March 2018 to avoid impeachment, but may continue to be held in preventive detention for up to three years. The Public Ministry opened an investigation into Kuczynski's alleged involvement in buying votes to avoid impeachment as well as his ties to bribery by the Brazilian construction firm. Former president Ollanta Humala (2011-2016) and first lady Nadine Heredia, while released from pretrial detention, are under investigation for money laundering and corruption charges. Peru's government has sought to extradite former president Alejandro Toledo (2001-2006) from the United States for allegedly accepting bribes during his administration. In April 2019, former Peruvian president Alan Garcia (who served from 1985 to 1990 and 2006 to 2011) shot himself during his arrest on Odebrecht-related charges, and died shortly afterwards. His private secretary and other officials in his administrations are being closely investigated for allegedly taking bribes from Odebrecht. In October 2018, a judge ordered former presidential candidate and congressional leader Keiko Fujimori to pretrial detention for allegedly laundering illegal campaign contributions from Odebrecht. In his government's fiscal year 2019 budget, Peruvian President Vizcarra expanded funding to the judiciary by 11% to develop additional mechanisms to combat corruption. Referenda in the Andes. Voters in three Andean nations considered anti-corruption measures in public referenda held in 2018: in Ecuador in February, Colombia in August, and Peru in December. The Ecuador referendum approved all seven measures on the ballot, some of which tackled public corruption. The Colombian referendum, in which more than 11 million voted, was disqualified for not reaching its high voter threshold requirements (it was also the fourth national vote held in 2018). Although requirements for the referendum were not met, the seven measures on Colombia's ballot received high approval levels. New President Iván Duque supported most of the measures, and pledged to introduce some of them in legislation during his four-year term, although none of the measures that the Administration introduced in the first four months of 2019 passed the Colombian Congress. When Peru's President Martín Vizcarra came to office after president Kuczynski resigned in March 2018 he committed to fighting public corruption. The December 10, 2018, referendum in Peru that Vizcarra steered to a vote resulted in a ban on reelection of Members of Congress, a reform of the body that appoints members of the judiciary, and measures to regulate how political parties are financed. The only measure that failed was a controversial proposal to reestablish a bicameral Congress. Central America In 2018, anti-corruption institutions in Guatemala and Honduras faced inhospitable governments opposed to their mission once charges got too close to either themselves, family members, or close political colleagues. The U.N.'s International Commission against Impunity in Guatemala (CICIG), established in 2006, was embraced by President Jimmy Morales when he took office in 2016, but when CICIG began to scrutinize more closely allegations of financing irregularities in his electoral campaign, Morales's government became openly hostile to extending CICIG's mandate. In early January 2019, President Morales abruptly ended CICIG's mandate, prematurely disregarding the stated will of the nation's top court and instigating a constitutional standoff (see case study). In 2016, the Organization of American States worked with the Honduran government to establish a similar organization, the Mission to Support the Fight against Corruption and Impunity in Honduras (MACCIH). The Honduran government has also sought to undermine MACCIH over the past year. Dominican Republic. In May 2017, the attorney general issued indictments for 14 people, including a cabinet minister (who then resigned) and two senators, on charges of receiving $92 million in bribes from Odebrecht in exchange for construction contracts. The government maintains that the investigation is ongoing, but none of those accused were sentenced to prison, and in June 2018, the attorney general dropped charges against seven of the 14 defendants. Others linked with the Odebrecht scandal include a senator and former public works minister, both of whom belong to the dominant Dominican Liberation Party. Reportedly, resolution of their cases could tarnish the party's image in the run-up to the 2020 national elections. El Salvador . Former president of El Salvador Mauricio Funes (2009-2014) was found guilty of massive illicit enrichment during his time in office. After fleeing to Nicaragua, he was granted asylum by President Daniel Ortega in 2018. Former Salvadoran president Anthony Saca (2004-2009), Funes's predecessor from a rightwing party, pled guilty to similar charges and was convicted and sentenced to 10 years in prison in El Salvador in September 2018; former first lady Ana Ligia de Saca, announced in April 2019 she has reached a plea deal to avoid prison for her role in laundering $25 million in public money. Panama. In Panama, several high-profile politicians have faced charges of illicit financial gains. For example, U.S. court documents contend that Odebrecht reportedly paid more than $59 million in bribe payments in Panama to secure public works contracts between 2010 and 2014. In August 2017, Odebrecht agreed to pay the Panamanian government $220 million in fines. Former President Ricardo Martinelli (2009-2014) was extradited to Panama from the United States for charges of using public funds to spy on political opponents during his administration. In late 2018, two of Martinelli's sons were arrested in the United States for illegal actions, including accusations of taking Odebrecht bribes. Top members of the Martinelli government are also being investigated for receiving bribes from Odebrecht (e.g., former Minister of the Economy Frank de Lima). Mexico . In 2018, Mexican President Andrés Manuel López Obrador campaigned successfully for office by attacking corruption and promising to remove corrupt elites. However, how the President will implement his campaign pledges remains unclear. López Obrador was inaugurated in December 2018, and his new Attorney General announced in May 2019 that he planned to prioritize Odebrecht. The former president of the state oil company, Petróleos Mexicanos (Pemex), Emilio Lozoya Austin, has been accused of a scheme involving ghost companies and bribery by Odebrecht provided to Lozoya to help fund electoral campaigns of the historically dominant Institutional Revolutionary Party (PRI). In mid-February 2019, López Obrador maintained that the cases against Mexican officials begun under his predecessor, President Enrique Peña Nieto of the PRI party, would have to be re-launched. In Mexico, corruption investigations of 20 former state governors, most from the PRI, diminished the party's legacy. Following the end of the term of PRI President Enrique Peña Nieto in late 2018, the historic party reportedly is considering changing its name due to its poor showing in legislative and presidential elections. Among the PRI party governors under investigation or in jail in Mexico are former Veracruz Governor Javier Duarte (2010-2016) who was arrested in Guatemala and extradited to Mexico in August 2017. Following his trial in Mexico, he received a nine-year sentence in September 2018. Others are Governor Roberto Borge of Quintana Roo (2010-2016) who is wanted on charges of corruption and abuse of public office; Governor Tomás Yarrington of Tamaulipas state along the U.S.-Mexico border with Texas, who was arrested in Italy and extradited to the United States for U.S. charges of money laundering and other corruption; and former PRI governor Cesar Duarte of the border state of Chihuahua, who fled Mexico and is an international fugitive wanted on a Red Notice by the International Criminal Police Organization, Interpol. Santiago Narra, the former head of the Specialized Prosecutor's Office for Attention to Electoral Crimes (FEPADE), claims in a book published in January 2019 that the Peña Nieto administration was rife with corruption. According to Narra, governors made common practice of using intimidation and bribery to quash or co-opt dissent. Southern Cone Argentina . In Argentina during 2018 a large scandal surfaced called "the Notebooks." The name comes from notebooks belonging to a former government chauffeur, who allegedly recorded cash payments he ferried to the residence of Presidents Néstor Kirchner and Cristina Fernandez de Kirchner, who governed Argentina in succession from 2003 to 2015. The kickbacks to the Kirchners were allegedly in exchange for public works contracts approved between 2008 and 2015. The chauffeur's notebooks revealed an alleged bribery scheme totaling $160 million. In August 2018, federal authorities in Argentina arrested 12 former government officials and business executives on corruption-related charges. Fernandez de Kirchner has immunity from arrest as a sitting senator, but she can be prosecuted on the charges.  Other investigations into public works bribes directly tied to Odebrecht include investigations of Julio de Vido and Daniel Cameron, respectively the minister of planning under both Néstor Kirchner and Fernandez de Kirchner, and the energy secretary in the Fernandez Administration. De Vido allegedly received bribes for road construction tenders in the President's home state of Santa Cruz and other projects. Energy Minister Cameron was allegedly involved in a gas pipeline expansion project that involved taking bribes in cooperation with the Brazilian construction mega-firm. In September 2018, Cristina Fernández de Kirchner, who may be positioning herself to run again for president, was indicted on bribery charges alleging her involvement in taking some $69 million in bribes. Paraguay. Historically Paraguay has been plagued by corruption emerging from a chaotic political history. In the 20 th century, the landlocked country experienced a 35-year military dictatorship under General Alfredo Stroessner. Paraguay's legacy of dictatorship included one-party rule that endured until 2008. President Mario Benito Abdo Benítez, elected in April 2018, was a grandson of a general in the Stroessner cabinet, although he pledged to work toward greater transparency and not return to the days of nepotism and centralized rule. A grassroots protest movement known as " escraches , " started by a disenchanted criminal lawyer in August 2018, has led to some prominent politicians, reportedly from parties across the political spectrum, choosing to resign rather than be humiliated. Youthful supporters say that the focus of these protests is to reduce impunity from the historically weak and unresponsive judicial institutions of the country that require identifying and shaming the accused to push the cases forward. Protest leaders maintain long-unaddressed cases have been taken up and prosecuted with unprecedented speed. However, critics question the ethics of using visible protests at homes of officials (whose homes are picketed and pelted with raw eggs), when these officials are only alleged to be corrupt or to have committed crimes, and some protests have turned violent. On April 24, 2019, Paraguay's Comptroller General resigned as it became evident that the Paraguayan senate planned to vote in favor of his impeachment on charges of corruption. The vote to impeach him was reportedly supported by President Abdo Benítez. The Economics of Corruption and the Role of the Private Sector The World Economic Forum (WEF) has identified the inability of weak national institutions to cope with insecurity and prevent and punish corruption as a barrier to investment. According to the WEF's 2017-2018 Global Competitiveness Index , the largest economies in Latin America (Argentina, Brazil, Colombia, and Mexico) ranked below 100 out of 137 countries in the performance of their institutions. WEF recognizes Brazil for its efforts to use its judiciary to clean up government and punish bribery. On the other hand, El Salvador has received the lowest levels of foreign direct investment (FDI) in Central America over the past decade, with extensive insecurity and corruption cited as the primary reasons. Corruption constricts funds that should be available for legitimate socio-economic challenges, such as controlling violence and crime. On the other hand, criminal influence allowed to run rampant engenders instability that negatively affects economic growth. The worst-off victims of corruption tend to be the most marginal and therefore the most vulnerable. Some analysts maintain that private sector responses to corruption are often reactive rather than proactive and that in some countries businesses are part of the problem. Other analysts maintain that business leaders can be catalysts for demanding clean, non-corrupt governance and can serve as strong advocates for laws to prohibit bribery and extortion to end the distorted impact of corruption on competition. Private sector leaders have supported anti-bribery legislation in several of the more established Latin American democracies. In Mexico, the major business association for small and medium-sized businesses, COPARMEX, is advocating for full implementation of the National Anti-Corruption System, which began under the Peña Nieto government in 2017 (described in the Mexico case study). The business association supports establishing an independent prosecutor's office, one of the key features of the system. On the other hand, business leaders from Guatemala and Honduras have in many cases sought to weaken anti-corruption efforts and controls. The Inter-American Development Bank (IDB) report on anti-corruption, transparency and integrity in Latin America and the Caribbean called for an integrated approach for systemic change to reduce corruption. The report, published in 2018, describes earlier interventions encouraged by multilateral and regional institutions as "uneven and partial." The report points out that the use of corruption indicators by the main rating agencies (Standard & Poor's, Moody's, and Fitch) are critically important for investment and loans available to a recipient country. Typically, politicians receive payoffs in exchange for favors to aid their parties or campaigns that ultimately may distort public-works bidding (some for multi-billion dollar infrastructure projects). Levels of outside direct investment are also influenced by perceptions of public corruption. For instance, Chile has had one of the lowest levels of perceived corruption in Latin America, and was quick to correct a perception of increasing corruption when its record was tarnished by scandals between 2015 and 2017. Chile's reputation has helped it achieve both high growth and significant foreign direct investment. A Push Factor for Migration? Many scholars report that corruption affects productivity and lowers competitiveness; when it is systemic, corruption can reduce GDP. Public-sector corruption, widespread in many Latin American societies, may handicap Latin American growth, skew incentives, and erode public services. The active involvement of corrupt elites, whether from the private or public sector, may allow criminal networks to remain deeply embedded. Public-sector corruption can be a contributor to migration, since corruption that fosters criminality and corrodes the rule of law may be a factor in Central Americans leaving their countries of origin to migrate to the United States. In addition to economic factors, the growing reach of violent crime into their communities has been cited as an impetus to emigrate. Corruption hinders government efforts to address the factors that cause people to migrate, and undermines public confidence in state institutions. The Links between Corruption, Violent Crime, and Impunity61 Many governments in Latin America, particularly those in the Central America-Mexico drug transit zone through which 90% of U.S.-bound cocaine passes, suffer from weak and overwhelmed criminal justice systems. Weak criminal justice systems are unable to investigate and punish crimes and they are easily penetrated by bribery or intimidation. As a result, all manner of criminal behavior may increase, in a self-reinforcing cycle, due to lack of trust in the justice system, failure to invest in fixing the system to bring about improvements, and greater criminal impunity or non-prosecution of crimes. This continues to erode confidence in judicial authorities who are perceived to be "captured" by criminal networks. Lack of confidence in the justice system can affect the morale of criminal-justice personnel and further increase their susceptibility to corruption. This negative-feedback loop has contributed to Latin America having the highest homicide rate of any region in the world outside a war zone. The linkage between violence and corruption has led Latin Americans to protest the dire situation that they face in their communities, and has been an impetus for their support of anti-corruption campaigns and anti-crime candidates in recent elections. Venezuela, Guatemala, and Honduras, ranked in TI's 2018 Corruption Perceptions Index as highly corrupt by respondents, also registered some of the region's highest homicide rates. Correspondingly, these countries have some of the most-elevated emigration rates in the region, as families facing criminal threats leave rather than rely on security forces that they perceive as corrupt for protection. In February 2019, the drug trafficking kingpin Joaquín "El Chapo" Guzmán who led Mexico's notorious Sinaloa cartel for decades, was convicted in New York on multiple counts of operating a continuing criminal enterprise. The charges included trafficking more than 440,000 pounds of cocaine into the United States, murder, acts of torture, kidnapping, and money laundering. According to the U.S. Drug Enforcement Administration (DEA), the Sinaloa Cartel has the most extensive reach of any transnational crime group into U.S. cities. In some of the trial's most incendiary testimony, U.S. government witnesses testified that former senior officials in the Mexican government took bribes from Guzmán; one witness alleged that former president Peña Nieto (2012-2016) received a $100 million bribe from Guzmán. The conclusion of the Guzmán trial may do little to diminish the role of corruption generated by drug trafficking, which is entrenched and secured by the enormous profits of the drug trade. U.S.-supported Mexican efforts to train judicial personnel and judges, establish rule of law programming, and professionalize police and military have had limited sustainable impact, (see Mexico case study below). Most crimes still go unreported because the public believe there is ongoing police collaboration with the criminal networks and/or public officials acquiesce to criminal acts. Successful prosecutions are rare, with 8% of every 100 homicide cases resolved, due to poor investigations, corrupt policing, and other inefficiencies. The effort to build more independence and protect the judiciary from undue political influence in Mexico has focused on establishing a separate attorney general's office. As noted in the textbox, in early 2019 Mexico's Senate appointed Alejandro Gertz Manero to serve a nine-year term in a newly defined attorney general position. The appointment has raised concerns that the desired independence may be compromised, as the appointee has a long political association with Mexican President López Obrador. How the President will direct and respond to the newly independent office remains to be seen. Conditions that Can Cause Damage and Casualties Extortion by criminal networks—or by public officials—on an ongoing basis can be significant and corrosive. State resources or public funds to counter violence are diminished if funds are drained by officials stealing public monies. Extortion by criminal networks or officials can reduce funding for essential services like education and healthcare or public works, while artificially raising the cost to citizens for such services. When contracts for major public infrastructure, such as dams, large transportation, or water-supply projects are awarded to the highest briber instead of the lowest priced, qualified bidder, consequences can be deadly. In Peru, in 2017, one criminal group, dubbed by authorities the Imposters of Reconstruction, set up a fake government agency to assist in letting contracts designed to recover from floods and landslides caused by El Niño. The fake agency bilked some 50 to 100 contractors to pay bribes to expedite their bids in the bogus El Niño recovery. Oversight of public procurement and transparency requirements may be insufficient to prevent office holders and politicians from using extortion and nepotism to their benefit. Furthermore, government regulatory systems are often thwarted through bribery. The mine-waste dam collapse in January 2019 in Minais Gerais, Brazil, resulted in some 300 deaths. Prosecutors are considering charges of murder and violation of mine safety requirements for the Vale SA employees involved and the German company that signed off on dam inspections for filing false reports. The regulatory body for mines in Brazil had recently approved the dam as low risk, and the inspectors are alleged to have known that the dam was unsafe and at risk of collapse. Corruption as a U.S. Foreign Policy Concern and Anti-corruption Assistance The 2017 U.S. National Security Strategy maintains that corruption of weak governments, especially those cowed by criminals and terrorists, poses a serious national security challenge. It asserts that reducing violence should be a priority in countries that are U.S. trade and security partners because extreme violence is economically and socially disruptive and creates instability. The range of corrupt practices is broad and solutions to control public corruption are quite diverse as the case studies in this report indicate. Police and justice systems are open to corruption when morale and integrity are low and external pressures high, which may allow abusive prosecutorial practices to prevail, such as the use of torture or efforts to destroy or fabricate evidence. Weak rule of law subverts justice systems, and diminishes political systems and participatory democracy. For several years, U.S. foreign assistance has been provided to fight corruption and enhance the rule of law in Latin America (including judicial training), to improve law-enforcement techniques to conduct investigations, make arrests and properly handle evidence, and enhance oversight of civil society for better accountability. U.S. assistance has supported whistleblower protections and other measures to allow private citizens to be more effective watchdogs of public officials, disrupt abuses, and prevent corruption from taking hold again. Identifying U.S. partners as tainted by corruption can increase tensions in bilateral relations. As a result, U.S. assistance programs are often identified as efforts to increase the efficiency or integrity of "good government," increase "transparency," and inculcate the rule of law, rather than to combat egregious violations or known violators. Furthermore, anti-establishment and populist governing styles of leaders in Latin America may define their policy ends as anti-corruption, but this may mask other political goals that are more anti-institutional rather than committed to strengthening the nation's institutions. One example of the U.S. approach is the new proposed trade agreement signed by the United States, Canada, and Mexico in late 2018. U.S. trade talks with Mexico and Canada to replace the North Trade Agreement (NAFTA) resulted in the United States-Mexico-Canada Agreement, (USMCA), which includes a chapter on anti-corruption. The main purpose of the chapter is to "prevent and combat bribery and corruption in international trade and investment." The accomplishment of dedicating a full chapter to reinforce the trilateral commitment to combat corruption is significant, but success would be achieved as the provisions are translated into action. This is especially true in Mexico, where significant gaps remain in implementing anti-corruption regulation. Some scholars have identified the various anti-corruption requirements in the chapter as some of the most comprehensive in any trade treaty, though largely drawn from the proposed Trans-Pacific Partnership agreement from which the Trump Administration withdrew in 2017. The USCMA chapter includes measures to combat corruption, which are legislative, administrative, and promotional. Relevant assistance provided by the U.S. government to combat corruption includes assistance and efforts by U.S. State Department, the United States Agency for International Development (USAID), the Department of Justice, the Department of the Treasury, and the Millennium Challenge Corporation (MCC), outlined below. U.S. Agency for International Development (USAID), State Department and the Department of Justice72 The U.S. government's primary manager of foreign assistance is USAID and the closely linked U.S. State Department. The two organizations are the main funders of programming for increasing transparency, rule of law, and good government, and often use NGOs to implement their programs. State and USAID program implementers range from associations to local, U.S. embassy, and national civil society groups. Anti-corruption activities are integrated in the strategy of each USAID country mission and embassy, and therefore may influence programs beyond democracy and good governance to include such areas as health, education, economic growth, and promotion of environmental and natural resources management. In 1994, USAID opened a new Office of Transition Initiatives (OTI) to provide rapid response programming to help support peace and democracy. OTI has assisted NGOs to combat antidemocratic forces and fight corruption or bolster weak institutions by providing more agile U.S. government responses on the ground. Nevertheless, the OTI concentrates on conflict settings rather than governance reform, which often require long-term interventions. The State Department's International Narcotics and Law Enforcement bureau advances the rule of law and human rights by supporting criminal justice institutions in a country, promoting accountability, and helping to strengthen and reinforce the rule of law. In the last 30 years, USAID and State Department have funded programs to reinforce institutions that tackle corruption and cultivate a "culture of transparency" and integrity. Rule of Law (ROL) programming and judicial and prosecutorial training were part of USAID's 2005 strategy focused on overcoming challenges posed by corruption and targeting agency resources to meet greatest need with more precision. In 2012, with the intention to integrate anti-corruption goals throughout the agency's development portfolio, USAID established the Center of Excellence on Democracy, Human Rights, and Governance. According to one analysis, worldwide programming on combating corruption has totaled roughly 330 projects over seven years (2007 to 2013). About 30 were short-term projects including evaluations, while 289 were long-term country projects. Some funds for anti-corruption and justice programs abroad involve transfers from the State Department to the U.S. Department of Justice (DOJ), such as the International Criminal Investigative Training Assistance Program (ICITAP), which is a law enforcement development agency. It works with foreign governments to develop professional and transparent law enforcement institutions that can fend off corruption, lower the threat of transnational crime, counter terrorism, and protect human rights. The 17 ICITAP field offices include three based in Mexico, Panama, and Colombia. The Office of Overseas Prosecutorial Assistance and Training (OPDAT) carries out capacity building in the justice sector, largely by assigning experienced U.S. prosecutors to U.S. Embassies, who provide peer advice and training to host country prosecutors, judges, and other justice sector personnel. They also provide advice on legislation and criminal enforcement policy. Strategies under the MCC to Combat Corruption Another avenue of anticorruption assistance to the region is the U.S. Millennium Challenge Corporation, which provides positive incentives for good governance and transparency in its inventory system. The MCC requires countries to pass a "control of corruption" threshold in order to unlock funding such as assistance known as a compact, which on average provides a recipient country with $300 million of U.S. foreign assistance. Created by Congress in 2004, the MCC was established as an independent assistance agency to award funds to developing nations based on a competitive selection process. A country's performance record is the primary (but not the only) basis for awarding funds; and these criteria include a record of clean and transparent governance when judged in comparison with other nations with similar socio-economic characteristics. Since revising its approach in its 2016 strategy NEXT: A Strategy for MCC's Future , MCC's awards and threshold programs seek to address and promote reforms that support sustainable anti-corruption practices. In the past decade, the region has received several threshold programs (Honduras, Paraguay, and Peru) and two large compacts for El Salvador. The program for Honduras, which the MCC launched in 2005, ended prematurely because of a 2009 coup. Over the past ten years, MCC has awarded roughly $800 million of assistance to countries in the Western Hemisphere in compacts and threshold programs. Sanctions and the U.S. Treasury Department U.S. Treasury Department programs, including sanctions, listings, and asset seizures in cooperation with police also address corruption. The Office of Foreign Assets Control (OFAC) in Treasury administers and enforces economic sanctions that target foreign entities and persons for their activities related to terrorism, narcotics trafficking, and other threats to the national security, foreign policy, or the economy of the United States. Two of OFAC's sanctions programs address drug trafficking while other programs target terrorist funding. Additionally, 22 individuals and 27 companies from Venezuela are designated as "specially designated narcotics traffickers" under the Kingpin Act. In 2015, President Obama issued E.O. 13692 to target those who have undermined democratic processes or institutions, including acts of public corruption, violence or human rights abuses by senior Venezuelan officials. The Trump Administration has imposed sanctions on 74 Venezuelan officials pursuant to E.O. 13692 (in addition to 7 officials sanctioned by President Obama). These officials include President Maduro and his wife, Vice President Delcy Rodriguez, United Socialist Party of Venezuela (PSUV) First Vice President Diosdado Cabello, Supreme Court members, and other high level military officials, state governors, and other officials. In early 2019, the United States applied strong sanctions on Venezuelan oil and the Trump Administration has issued executive orders restricting the government and the ability of Venezuela's state oil company, Petróleos de Venezuela, S.A. (PdVSA), to access the U.S. financial system ( E.O. 13808 ), barring U.S. purchases of Venezuela's new digital currency ( E.O. 13827 ), and barring U.S. purchases of Venezuelan debt ( E.O. 13835 ). On November 1, 2018, President Trump signed E.O. 13850 , creating a framework to sanction those who operate in Venezuela's gold sector or are deemed complicit in corrupt transactions involving the government. On January 28, pursuant to E.O. 13850 , the Administration imposed sanctions on PdVSA to prevent Maduro and his government from benefitting from Venezuela's oil revenue. The 116th Congress has paid close attention to the turmoil in Venezuela and is likely to continue to consider the steps to influence the Venezuelan government and a return to democratic rule. The humanitarian crisis in the country has caused an exodus of Venezuelans—reportedly the largest outflow of refugees and migrants ever in the Western Hemisphere—which has tested the capacity of receiving countries to respond. For the United States, Europe, and others, the conduit of narcotics through Venezuela has had immediate ill effects. The Maduro government, that is widely considered to be the region's most corrupt, has caused suffering within and beyond Venezuela's borders. The effectiveness of sanctions on members of the Maduro government and on the vital oil sector, along with consequences for a destitute and undernourished population, are still to be seen. Should a transition to democracy occur in Venezuela, some observers speculate that what may be revealed would be multi-jurisdictional and massive corruption. It would far exceed the scope of what the State Department identified in a mid-April 2019 fact sheet. Case Studies The following examples highlight the various ways in which the U.S. government has supported recent anti-corruption efforts in Latin America. The selected cases—Brazil, Mexico, Guatemala, and Honduras—examine the extent to which U.S. support has contributed to driving anti-corruption efforts in widely divergent legal and historical contexts. The United States in these illustrative cases has sought to work closely with established authorities and civil society actors to combat impunity, increase transparency, and dislodge corruption. In Brazil, the U.S. Justice Department cooperated with Brazilian prosecutors on a complex international bribery and corruption case. In Mexico, the United States has supported rule of law reforms to increase judicial independence, reduce impunity, and protect journalists in the context of a strong central government. In Central America, with its historically weak governments, the multilateral institutions and outside experts worked alongside the justice systems in Guatemala and Honduras to expose corruption and criminal control. Brazil: Mutual Legal Cooperation77 Over the past five years, Brazilian authorities have carried out a series of overlapping investigations that have uncovered systemic corruption. As noted above, operation Lava Jato ("Car Wash"), launched in March 2014, has implicated high-level politicians from across the political spectrum, as well as many of the country's most prominent business executives. The initial investigation revealed that political appointees at the state-controlled oil company, Petróleo Braileiro S.A. (Petrobras), colluded with construction firms to fix contract bidding processes. The firms then provided kickbacks equivalent to 1-2% of the value of their inflated contracts to Petrobras officials and their politician sponsors in the ruling coalition. Subsequent 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. To date, Brazilian prosecutors have charged more than 900 individuals and secured more than 200 convictions for crimes including corruption, money laundering, and abuse of the international financial system. Most of the politicians implicated by the scandals have yet to be convicted, however, since the Supreme Court, which is charged with trying high-ranking public officials, faces a significant case backlog. Brazilian officials and outside analysts have identified several legal and institutional reforms that have facilitated these anti-corruption efforts. The country's 1988 constitution grants autonomy to the office of the attorney general ( Ministério Público Federal , MPF), and, due to institutional norms that have since developed, the practice has become entrenched of the president selecting the attorney general from a list of candidates created by federal prosecutors. This operational independence has enabled the MPF to pursue politically sensitive cases against high-ranking officials. Investigations also have improved as the MPF and the federal police have begun to work together more closely, using new investigative tools. A 2013 law to combat organized crime, for example, enhanced prosecutors' discretion to reduce or drop criminal charges for cooperative defendants. Brazilian prosecutors have approved at least 218 such plea bargain agreements to advance the various investigations stemming from the Car Wash probe. Brazil's anticorruption efforts also have benefitted from extensive cooperation with the United States and other international partners. Prosecutors affiliated with Operation Car Wash have issued 269 formal requests for legal assistance to 45 countries, and have received 279 requests for legal assistance from 36 countries. Formal cooperation between the United States and Brazil is governed by a bilateral treaty on mutual legal assistance ( Treaty Doc. 105-42 )—ratified with the advice and consent of the U.S. Senate in 1998—as well as several multilateral agreements. The bilateral treaty empowers both countries to request assistance from one another, including taking the testimony or statements of persons; providing documents, records, and items; locating or identifying persons or items; serving documents; transferring persons in custody for testimony or other purposes; executing requests for searches or seizures; assisting in proceedings related to immobilization and forfeiture of assets, restitution, and collection of fines; and any other form of assistance not prohibited by law. U.S. and Brazilian authorities also engage in extensive informal cooperation. This allows them to share information more quickly, but evidence obtained this way may not be admissible in court. The U.S. Department of Justice and the MPF have cooperated formally and informally to investigate and prosecute several major corruption cases related to the Car Wash probe. To date, those efforts have resulted in coordinated resolutions with seven multinational corporations for violations of the U.S. Foreign Corrupt Practices Act (15 U.S.C. §78dd–1) and various Brazilian laws. Collectively, the companies (Braskem, Embraer, Keppel Offshore and Marine, Odebrecht, Petrobras, Rolls Royce, and SBM Offshore) have agreed to pay more than $1.9 billion in penalties to the United States and nearly $4.4 billion to Brazil. The future of Operation Car Wash and the country's broader anti-corruption efforts will depend on the actions of Brazil's new government. President Jair Bolsonaro, who began a four-year term in January 2019, relentlessly attacked the corruption of the country's political class during his campaign. Upon taking office, he appointed Sérgio Moro, the federal judge who had presided over the Car Wash investigation, as his minister of justice and public security. Moro reportedly intends to use his position to push for concrete political and judicial reforms that could help consolidate the country's recent anti-corruption progress. However, Moro's decision to join the right-wing Bolsonaro Administration could jeopardize popular support for the Car Wash investigation by lending credence to those who argue that he politicized the probe to damage the electoral prospects of the left-leaning Workers Party. The Bolsonaro Administration's initial anti-corruption proposals already have run into resistance in the Brazilian Congress where a third of federal legislators, including the leaders of both houses, are under investigation for corruption or other crimes. Mexico: Confronting Endemic Corruption and Weak Institutions89 Official corruption is a serious problem at all levels of government in Mexico; 84% of Mexicans identify corruption as among the most pressing challenge facing the country. In Mexico, the costs of corruption reportedly reach as much as 5% of gross domestic product each year. The United States has supported programs to address corruption and impunity in Mexico since at least 2000, but lack of political will in Mexico to address these problems has arguably limited their impact. U.S. efforts have included programs aimed at supporting the country's transition to an accusatorial justice system, establishing a National Anti-corruption System (NAS), bolstering transparency and oversight of government programs, and supporting investigative journalism. U.S. Support for Anti-Corruption Efforts in Mexico Transition to Accusatorial Justice System By the mid-2000s, most Mexican legal experts had concluded that reforming Mexico's corrupt and inefficient criminal justice system was crucial for combating criminality and strengthening the rule of law. In 2008, Mexico implemented constitutional reforms mandating that by 2016, trial procedures at the federal and state level had to move from a closed-door process based on written arguments presented to a judge to an adversarial public trial system with oral arguments and the presumption of innocence. These changes aimed to create a new criminal justice system that would be less prone to corruption, more transparent, and more impartial. Federal changes followed advances made by early adopters of the new system, which included states such as Chihuahua. The United States has been supporting judicial reform efforts in Mexican states since the late 1990s, with assistance accelerating since the implementation of the Mérida Initiative in FY2008. U.S. assistance (1) has helped the federal and state governments adopt legislative frameworks to underpin the reform process, (2) provided in-depth training for justice sector operators on their roles in the system, and (3) built support for the reforms in Mexican civil society. Mexico technically met the June 2016 deadline for adopting the new system, with states that have received assistance from USAID showing, on average, better results than others do. Nevertheless, serious problems in implementation have occurred at a time when public opinion is turning against the system and government funding for ongoing training and technical support for the system has diminished. National Anticorruption System and Related Efforts to Improve Transparency In 2015, the Mexican congress approved and President Peña Nieto signed constitutional reforms creating a system to prevent and punish corruption following intense and sustained lobbying by civil society and the private sector. In July 2016, Mexico's congress approved secondary legislation to implement what became known as the National Anti-corruption System (NAS). The legislation reflected several of the proposals that were pushed by Mexican civil society groups and supported by USAID. The reforms gave the anticorruption system investigative and prosecutorial powers and a civilian board of directors, increased administrative and criminal penalties for corruption. and required three declarations (taxes, assets, and conflicts of interest) from public officials and contractors. The system took effect in July 2017. USAID has provided support to Mexican government (federal and state) anti-corruption and public administration entities, as well as efforts organized by private sector and civil society groups. Support to the Mexican government aims to help it comply with the NAS, conduct and publicize audits of government agencies and programs, develop and implement codes of conduct for public officials, and conduct transparent procurement processes. Through partnerships with private sector entities, USAID funds are helping to support research, push for public policy and legislative reforms, and foster investigative journalism. U.S. funds channeled through the World Bank and the U.N. Development Program support civic participation in federal and state-level transparency secretariats. Despite U.S. support and civil society pressure, Mexico's implementation of its NAS has lagged. In December 2017, members of the system's civilian board of directors maintained that the government had been "thwarting" its efforts by denying requests for information. It was not until February 2019 that a special prosecutor for corruption cases was appointed, and the 18 judges to hear corruption cases are still to be named. In addition to a lack of personnel at the federal level, many states have not fulfilled all the constitutional requirements for establishing a local anti-corruption system. In the past, President López Obrador has been critical of the NAS or largely ignored it. Yet, López Obrador made fighting corruption a central campaign promise. Since taking office, he has not prioritized NAS implementation, but the new Prosecutor General, Alejandro Gertz Manero, named a special anti-corruption prosecutor in February 2019. López Obrador has also launched a massive effort to combat fuel theft from the state petroleum company, Petróleos Mexicanos (PEMEX) and its pipelines. As part of this effort, he has called for the prosecution of high-level PEMEX officials, whose involvement in oil theft was revealed by investigative journalists. Searching for Safeguards for Investigative Journalism 100 A free and active press is widely viewed as critical to holding governments accountable for their actions, with investigative journalism playing a particularly important role in fostering government transparency and accountability. Over the past decade, at least 74 journalists have been killed in Mexico and many more have been threatened or attacked. According to the U.S.-based Freedom House NGO, officials at all levels of government in Mexico have punished critical journalists by publicly denouncing their work, pushing media owners (who rely on government advertising for revenue) to dismiss them, suing them for libel, or using other tactics to intimidate or threaten them. Criminal groups have also targeted Mexican journalists, particularly those investigating crime and corruption issues. U.S. foreign assistance has sought to help the Mexican government and civil society better protect journalists and reduce impunity in cases of crimes committed against them. USAID helped Mexico draft the 2012 legislation that established a federal protection mechanism. The State Department also initiated a high-level human rights dialogue with Mexico that includes a focus on the issue of protecting journalists. USAID has provided at least $6.6 million to support freedom of expression and protection for journalists in Mexico, and it plans to invest at least another $4.2 million through September 2019. Perhaps partially because of international pressure, the Mexican government has reported progress in resolving some of the 12 cases of journalists killed in 2017. Although some observers are skeptical of this reported progress, others remain hopeful that Mexico will take decisive action to investigate and prosecute unsolved murders and to prevent future crimes against journalists. In 2018, totals for the number of journalists and broadcasters slain vary depending on the source and criteria, according to the Justice in Mexico program at the University of San Diego. In the Justice in Mexico database, which counts Mexican journalists and media workers murdered during the year (regardless of investigated connections to their work as reporters), the total number for 2018 was 16, demonstrating that the problem continues. Regional Bodies in Central America: CICIG and MACCIH As part of its broader support for anti-corruption efforts in Central America, the U.S. government has provided extensive diplomatic and financial support to two innovative international institutions. The International Commission Against Impunity in Guatemala (CICIG), backed by the U.N., has recommended legal reforms and worked alongside Guatemalan institutions to dismantle a series of corruption networks. As a result of CICIG's success, civil society groups pushed for a similar institution in Honduras, leading to the establishment of the OAS-backed Mission to Support the Fight Against Corruption and Impunity in Honduras. International Commission against Impunity in Guatemala104 The Guatemalan government invited the U.N. to establish CICIG to help it combat a "parallel state" of criminal gangs, business elites, politicians, and security services which was undermining the elected government. An independent, international entity, CICIG's mandate is to support, strengthen and assist Guatemalan state institutions in investigating, prosecuting, and dismantling illegal groups and clandestine structures responsible for organized crime, human rights violations and other crimes, and to propose effective legal reforms. The United States and other external donors provide CICIG's funding. CICIG works directly with the Guatemalan Public Ministry to strengthen rule of law in Guatemala. The Ministry, headed by the Attorney General, is responsible for public prosecution and law enforcement. CICIG's Accomplishments A January 2019 CICIG statement reports that the commission has supported the Public Ministry in more than 100 cases, including against former President Otto Pérez Molina and Vice President Roxana Baldetti, both of whom subsequently resigned. It also has promoted more than 34 legal reforms to strengthen transparency and judicial independence, helped identify over 60 criminal networks, and secured more than 300 convictions. CICIG also builds the capacity of prosecutors, judges, and investigators working on high-profile and corruption-related cases. In its annual report on drug policy, the U.S. State Department highlighted these accomplishments and concerns in March 2019: Guatemala's Attorney General and the UN-backed International Commission Against Impunity in Guatemala (CICIG) have investigated hundreds of government officials suspected of corruption. ...Accomplishments in the broader fight against corruption in 2018 included several high profile corruption cases…Unfortunately, the government's expulsion of CICIG from Guatemala calls into question its commitment to fight entrenched corruption. As anti-corruption efforts have proven successful and investigations have broadened, attacks against CICIG and the judicial system have grown more intense. Tactics of intimidation have included death threats against the attorney general and judges in high-profile anti-corruption cases, and public and anonymous attempts to discredit the head of CICIG, as well as other officials, activists, and their organizations. President Jimmy Morales (2016 to present) established zero tolerance for corruption as a primary pillar of his government's policy approach. President Morales requested the extension of CICIG until 2019, and said that before he left office, he would extend CICIG's term again, until 2021. Since that time, however, President Morales, his brother and son, and members of his inner circle have become targets of investigation. Morales has tried to weaken and now oust CICIG. The President replaced some of his more reformist Cabinet ministers and officials who worked closely with CICIG and the attorney general's office with closer political allies. In August 2018, the newly appointed Attorney General, María Consuelo Porras, along with CICIG, called for President Morales to be stripped of his immunity so that corruption charges against him could be investigated. Although Guatemala's Supreme Court approved the request, it was blocked in the Guatemalan Congress, where almost half of the deputies are under investigation or have legal processes pending against them alleging corruption or other crimes. Morales subsequently said he would not renew CICIG's mandate and barred CICIG Commissioner Ivan Velásquez from reentering the country, in defiance of two Constitutional Court rulings that the President lacked the authority to prevent Velasquez's return. The battle to eradicate criminal networks that have coopted the Guatemalan state has drawn nearly to a standstill since January 24, 2019, when the current Attorney General cancelled the police protection for CICIG commissioners or staff in the country. When the Morales administration announced Guatemala was withdrawing from the CICIG agreement, it gave its staff 24 hours to leave the country. Guatemala's Constitutional Court overruled Morales's decision. The United Nations, European Union, and NGO advocates for government transparency and human rights, criticized Morales's decision to terminate CICIG, and citizens have protested the government's decision and called on Morales to resign. The U.N. maintained that CICIG should continue its work, in compliance with the judicial findings, but removed foreign staff because the government would not guarantee their safety. The Morales Administration subsequently tried to impeach members of Guatemala's Constitutional Court. U.S. Support for CICIG The United States has supported the International Commission against Impunity in Guatemala (CICIG) since its inception in 2007 as a key element in its Central American strategy. U.S. assistance to CICIG is provided through the State Department's Bureau of International Narcotics and Law Enforcement Affairs (INL). There has been broad support for CICIG over the years on a bipartisan basis in Congress and across U.S. Administrations. In March 2018, however, several Members expressed concern about a Russian businessman and his family who had been found guilty of purchasing false passports, but who claimed they were unfairly targeted by CICIG; as a result, a hold on the $6 million in U.S. aid allocated for CICIG was put in place. In July 2018, however, the State Department announced that its examination found no evidence to support the allegation regarding the Russians. Funds have since been released. After President Morales announced in early January 2019 that he was expelling CICIG, the U.S. Embassy in Guatemala issued a statement expressing concern about the future of anti-corruption efforts in the country, but did not mention the President's actions against CICIG. CICIG continued its work in compliance with the judicial finding from abroad, and in February 2019 most staff returned to Guatemala under contingency safety plans. However, Velásquez and 11 investigators whose visas were revoked have not returned. Many observers are concerned that Morales's moves against CICIG are part of a wider effort to protect himself and others from prosecution and that his actions threaten Guatemala's fragile democracy . Guatemalan Human Rights Ombudsman Jordan Rodas said if the government did not comply with the court ruling concerning CICIG being allowed to operate, it would represent a failure to obey the rule of law. Although some Guatemalan institutions have built greater capacity since working with CICIG, many institutions remain vulnerable, and some fear a return to impunity for organized crime and government corruption. Some observers have also raised concern that reducing the activity of CICIG before the June 2019 national elections could facilitate continued financing of politicians by drug cartels and other criminal organizations in Guatemala. Mission to Support the Fight Against Corruption and Impunity in Honduras115 U.S. policy in Honduras is guided by the U.S. Strategy for Engagement in Central America, which is intended to promote economic prosperity, strengthen governance, and improve security in the region, and thereby mitigate migration and security threats to the United States. Recognizing that high-level corruption undermines those objectives, the U.S. government has supported a variety of efforts to increase transparency and improve accountability in Honduras. It has provided assistance to improve public financial management systems, strengthen justice-sector institutions, and encourage civil society engagement and oversight. It also has imposed targeted sanctions, such as visa restrictions, on corrupt Honduran officials. Perhaps most importantly, the United States has offered crucial diplomatic and financial support for the Organization of American States (OAS)-backed Mission to Support the Fight Against Corruption and Impunity in Honduras (MACCIH). In 2015, 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 more than $300 million was embezzled from the Honduran Social Security Institute ( Instituto Hondureño de Seguridad Social ) during the administration of President Porfirio Lobo (2010-2014) and some of the stolen funds were used to fund the election campaign of President Juan Orlando Hernández (2014-present). Hernández was reluctant to create a U.N.-backed organization with far-reaching authorities like the CICIG but, facing significant pressure, 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 anticorruption legal framework. It secured congressional approval for new laws to create anticorruption courts with nationwide jurisdiction and to regulate the financing of political campaigns. Since then, however, the Honduran Congress repeatedly delayed and weakened the MACCIH's proposed reforms, hindering the mission's anti-corruption efforts. For example, prior to enactment of the law to establish anticorruption 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—including the embezzlement of public funds—from the jurisdiction of the new courts. Similarly, between the approval of the political financing law and its official publication, the law was changed to delay its entry into force and to remove a prohibition on campaign contributions from companies awarded public contracts. 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 yet to be enacted. 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 also are working alongside a recently established anti-corruption unit within the public prosecutor's office ( Unidad Fiscal Especial Contra la Impunidad de la Corrupción , UFECIC) to jointly investigate and prosecute high-level corruption cases. To date, their integrated criminal investigative teams have brought charges in eight cases that have implicated a former first lady as well as dozens of legislators and other government officials. In nearly all of the cases, Honduran officials allegedly diverted funds that were intended for social welfare programs to political campaigns or their own pockets. According to press reports, the MACCIH is also supporting investigations into alleged high-level government collusion with the Cachiros drug trafficking organization, and possible corruption involving public contracts awarded for the controversial Agua Zarca hydroelectric project, which Berta Cáceres—a prominent indigenous and environmental activist—was protesting at the time of her murder. This tentative progress has generated fierce backlash. In January 2018, for example, the Honduran Congress effectively blocked a MACCIH-backed investigation into legislators' mismanagement of public funds by enacting a law that prevents the public prosecutor's office from pursuing such cases for up to three years while another government body ( Tribunal Superior de Cuentas ) conducts an audit of public accounts. This "impunity pact," combined with other obstruction from the Honduran government and a perceived lack of support from the OAS, led the head of the MACCIH, Juan Jiménez, to resign in February 2018. OAS Secretary General Luis Almagro nominated Luiz Antonio Marrey, a Brazilian prosecutor, to succeed Jiménez, but Marrey was not sworn in until July 2018 due to resistance from the Hernández Administration. In March 2018, lawyers representing legislators accused of embezzling public funds challenged the constitutionality of the MACCIH's mandate. Although the Honduran Supreme Court agreed to hear the case, it ultimately ruled against the challenge in May 2018. Despite these challenges, the MACCIH and the public prosecutor's office have continued to push forward. Their anti-corruption efforts are likely to face sustained resistance from all three branches of the Honduran government, however, and further progress will likely require continued financial and diplomatic support from the United States and other international donors. The MACCIH's mandate will expire in January 2020, unless the Honduran government agrees to renew the agreement. Observations Regarding the Case Studies The case studies reflect recent efforts by the United States to provide support to countries that have not finished their efforts to tackle corruption. In Brazil, the Justice Department was able to complement the work of Brazilian prosecutors. In Mexico, the United States has worked for years to strengthen the Mexican justice system and help to reform it, and also to support an integrated anti-corruption system, although both new systems have only partially been put into practice. Central America's struggle with public corruption has direct effects on the United States related to crime and immigration. The outside bodies of CICIG and MACCIH, with independent outside experts assisting national judicial and investigative bodies, has been challenging official corruption, such that the local citizenry have in many instances become these institutions' strongest supporters. Issues for Congress A March 2019 congressional hearing titled, "Understanding Odebrecht: Lessons for Combating Corruption in the Americas," shows the current interest of Congress in anti-corruption and rule of law programs to reinforce the Latin American response to public corruption, which has ousted former and sitting Latin American presidents. U.S. assistance to increase justice-system proficiency has yielded some significant progress, according to some analysts. These programs may be provided through NGOs, or in exchanges and training organized by the U.S. Justice Department or USAID. Judicial system support and investigative assistance can also be provided by international bodies. Attitudinal coaching or education can help build a culture of integrity and respect for law enforcement. Those attitudes are supported by awarding the judiciary and law enforcement with salaries adequate to resist bribery; thus building respect for presumption of innocence, rejection of torture, and a commitment to equality before the law. Technical assistance may also be needed to open government to citizen scrutiny. Digital public accounting systems can be employed to increase transparency for government auditors, journalists, and the interested public to help identify how public funds are spent and pinpoint corruption if it occurs. The improvement of government practices through training is the strategy behind threshold grants from the MCC, as in Paraguay in 2009 and 2010. The threshold assistance to enact anti-corruption improvements is to enable the country to become eligible for a large MCC compact award. Recent U.S. Anti-Corruption and Rule of Law programs The ability to apply sanctions is another significant policy approach beyond the U.S. programs discussed in the preceding case studies. In 2017 and 2018, the United States targeted sanctions against individuals involved in significant acts of corruption. In recent years, the annual foreign operations appropriation has required that the Secretary of State ban entry by individuals (officials of a foreign government and immediate family members) if the Secretary has direct knowledge of their involvement in significant acts of corruption, such as gross violations of human rights or illicit practices tied to natural resource extraction. The process of "naming and shaming" individuals extends to visa denials by the State Department and targeted economic sanctions by the U.S. Department of the Treasury's Office of Foreign Assets Control. The U.S. government applied sanctions against officials in Venezuela, the Dominican Republic, and Nicaragua known to have committed acts of corruption, pursuant to Executive Order 13692 and to Executive Order 13818. Analysts critique individually focused sanctions used to force top-level corrupt officials out of power, because they may not result in an end to corrupt behavior. Likewise, broader economic sanctions directed at a nation may be applied to mobilize the government to remove the corrupt individuals from power. Some analysts maintain such sanctions may fail to achieve their intended results, and they can be drawn out in ways that have unintended consequences. These critics point to U.S. economic sanctions against Venezuela's state-run oil company put in place in early 2019 which they maintain could reduce the hard currency needed for food and essential medicines and thus exacerbate the ongoing humanitarian crisis. In May 2017, the House passed H.Res. 145 , reaffirming that combatting corruption is an important U.S. policy interest in the northern triangle countries of Central America, acknowledging the important work of CICIG and MACCIH, and encouraging anti-corruption efforts in the northern triangle countries. In September 2017, the Senate Foreign Relations Committee reported S. 1631 , a foreign relations authorization bill with a title focused on combating public corruption worldwide. In August 2018, Congress enacted the FY2019 defense authorization measure, P.L. 115-232 ( H.R. 5515 ), with several Latin America provisions, which include required reports on narcotics trafficking, corruption, and illicit campaign financing in El Salvador, Guatemala, and Honduras, including identifying government officials involved in such activities. In December 2018, Congress enacted the Nicaragua Human Rights and Anticorruption Act of 2018 ( P.L. 115-335 , H.R. 1918 ). The measure requires the United States to vote against loans from the international financial institutions to Nicaragua, except for the purpose of addressing basic human needs or promote democracy, and authorizes the President to impose sanctions on persons responsible for human rights violations or acts of corruption. Appropriations for FY2018 and FY2019 Congress also appropriated anti-corruption funding in the Consolidated Appropriations Act, 2018 ( P.L. 115-141 ) with $6 million for CICIG and $31 million for MACCIH and the northern triangle's attorneys general. The House and Senate Appropriations Committees both recommended continued funding for CICIG, MACCIH, and the attorneys general in their FY2019 foreign aid appropriations measures. In the Consolidated Appropriations Act, 2019, the omnibus legislation passed in February 2019, funding for CICIG was again $6 million, $5 million for MACCIH, and $20 million for the attorney generals of the northern triangle. Trade-related Anti-corruption Measures The 116 th Congress may consider policy changes to NAFTA proposed in 2018 as part of the United States-Mexico-Canada Agreement (USMCA). The Trump Administration's objectives in the trade negotiations included anti-corruption measures that were included in Chapter 27, which sets forth integrated anti-corruption commitments in trade and investment for both the public and private sectors. However, in the U.S. House of Representatives, some Members have raised concerns about the USMCA enforcement measures as well as provisions on pharmaceutical drugs and labor rights, while some U.S. Senators have indicated that tariffs on Canada and Mexico must be lifted as a precondition for further consideration of USCMA. As of late May 2019, it has not been taken up. Congressional Considerations The following presents some issues Congress may consider in determining the priorities for U.S. policies and assistance related to anti-corruption. Some Members of Congress remain concerned with weak rule of law in Latin America and corrupt practices in the public sector. Congress may wish to consider heightening its support for anti-corruption programs and supporting conditional assistance to bolster good governance and rule of law as a congressional policy priority. Oversight and Conditioned Assistance In its legislative and oversight roles, the U.S. Congress has appropriated foreign assistance with conditions on reaching or maintaining anti-corruption standards if future funding is to be released. This "carrot for good government" strategy is embodied in the Millennium Challenge Corporation's approach to reward those countries that reach anti-corruption standards and other qualifying criteria with large aid compacts. Since FY2016, U.S. assistance to the governments of El Salvador, Guatemala, and Honduras has been conditioned on 16 legislative concerns, ranging from those governments' efforts to improve border security to their protection of human rights. Sanctions, on the other hand, can be a tool to punish corrupt officials. However, if the desired change in behavior extends beyond the targeted individual(s) and their behavior, the desired end result may be less easy to achieve. Such sanctions are an example of coercive diplomacy to modify behavior of a nation's leadership; and the effectiveness of a sanction is only achieved if the desired behavior (i.e., removal of the corrupt officials) can be accomplished. Some analysts contend that sanctions to effect regime change may set the price of compliance too high (i.e., loss of office), so the desired behavior will not occur, and top leaders may refuse to leave office. Civil society activism seen across the region in recent years, due to a spate of corruption exposés and high-level scandals, may provide an opportunity to forge a new commitment to higher integrity standards that reject corruption. When the Financial Times editor for Latin America recently retired after a decade in his post, he observed that over the decade he had seen extraordinary changes for the better, "especially certain habits and expectations about justice and transparency, corruption and impunity." Some analysts portray the new activism as a region-wide "anti-corruption movement," while others maintain it is a critical moment in the region's democratic progression, when an awareness of public officials behaving corruptly may progress beyond temporary fixes. Eliminating and arresting malign leaders is seen as an interim step that needs to be followed with the difficult—and, at times, laborious—task of crafting legislation that adapts or reforms institutions, in such areas as more transparent public procurement or campaign finance. This would be be followed by building and applying the societal pressure to ensure implementation of those reforms. Setting Expectations for U.S. Relations with New Leaders Recently elected presidents in the region's most populous countries, Mexico and Brazil, who campaigned on promises to reduce corruption might be encouraged to fulfill their anti-corruption campaign pledges. For instance, Mexico's new Prosecutor General, appointed by the Mexican congress in early 2019, is envisioned as autonomous from the Mexican executive branch, and could seek to establish a reputation for resolving some key cases to reverse the widespread view of the prior Attorney General's office, which was widely seen as lacking independence, disregarding victims, and producing high levels of impunity. The U.S. government could encourage Mexico's government to operationalize its National Anti-corruption System, which was developed in cooperation with Mexican civil society with USAID support. Anti-corruption programs can build on country-based initiatives, and seek to put into practice existing credible laws that deserve full implementation. Programs to help foster a more vibrant civil society, capable of building the political will to help achieve higher accountability standards may also inspire courageous leaders who are willing to take on corruption. Congressional expressions of support for anti-corruption efforts in the region can be important for such efforts. Also, support for OECD and OAS anti-corruption conventions and mechanisms, and the importance of improving their implementation, can be another valuable measure because of the broad legitimacy such multilateral organizations and international standards may enjoy. Anti-Corruption Metrics Evaluating the success of anti-corruption programs is challenging due to the near impossibility of establishing causality in the development of democratic governance. The "sustainability" of anti-corruption efforts may depend on political and economic variables external to the provision of assistance. Many analysts note that there is no single anti-corruption solution, but that approaches should be tailored to country-specific circumstances. The timeframe for change is also difficult to define and measure, and evaluating long-term sustainability may also be complex. A key constraint on firms being barred from public works contracts because of corruption is the threat of bankruptcy. Bankruptcy of a major firm, such as the Odebrecht corporation, can lead to large numbers of unpaid employees and subcontractors thrown out of work. It can have destabilizing economic consequences, and result in loss of the crucial public infrastructure which the contractor was to provide. The cynicism about democratic governance derived from long exposure to widespread corruption, when all parties may come to be viewed as corrupt and most political leaders are seen as "on the take," can also create instability. In 2019, some Latin American governments are beginning to discuss how to recover from the serious consequences of the Odebrecht scandal, and move into a post-Odebrecht situation that is more stable. Constraints for U.S. Anti-corruption Programming and Funding In recent years, reductions in U.S. foreign assistance budgets have generally reduced anti-corruption funding and more broadly programs by USAID and others under the "governance" rubric. The Trump Administration has sought to reduce discretionary federal spending. Congress may consider that in confronting the challenges of trade and security presented by Russia and China in Latin America, as well as competition from European and Asian businesses, the reduction of corruption and the enhancement of the rule of law most benefits U.S. investors and businesses operating in the region. The cost for foreign assistance programs for good governance may also be more affordable than security assistance requiring costly equipment or other technology-based components. Sustainable program funding is another concern. One feature of successful U.S. foreign assistance efforts is that they have been consistently funded. Perhaps this constancy of effort is best demonstrated by Plan Colombia, often cited as a success in the Western Hemisphere and even globally, and which endured for nearly two decades. U.S. assistance to Plan Colombia helped a beleaguered country reach a peace agreement, reduce acts of terrorism, and homicides (to a 40-year low in 2017), and achieve a return to growth and broader stability. Although not an anti-corruption program, the Plan Colombia example suggests that bipartisan congressional support for a foreign assistance goal, through diverse U.S. administrations (and party majorities in Congress) may be a hallmark of an enduring foreign policy success. Good Governance as a U.S. Policy Priority Policies that champion human rights and prioritize governance and rule of law do not appear to be a central Trump Administration priority. The Administration's budgets have consistently sought to reduce foreign assistance overall and weigh improvement of democratic practices and good governance goals against other U.S. core interests. Instead of focusing on governance issues, the Trump Administration has prioritized security-related assistance, including for counternarcotics efforts. In contrast to prior administrations, it appears less eager to pressure governments on rule of law and transparency goals unless corruption is linked to other security interests, such as migration from Central America. At the same time, some analysts maintain that U.S. influence is decreasing in the Western Hemisphere due to the declining regard for U.S leadership (registered in opinion polling) over the past couple years, although positive views of bilateral relations between a single nation and the United States are often rated more favorably. In addition, some observers warn that attacks on the motives and accuracy of the news media by senior U.S. leaders can reduce acceptance of U.S. assistance programs designed to protect freedom of the press and investigative journalism. In essence it undermines the position of free-press advocate that the U.S. government once held. The Trump Administration has rarely applauded civil society activism in Latin America and Caribbean countries in response to high-level scandals and public corruption. Some of the regional and multilateral institutions, such as the Inter-American Development Bank and the IMF, have taken up advocacy of anti-corruption programming because it is no longer perceived as a top U.S. government concern. Appendix A. Select Reports and Recommendations Several foreign policy think tanks and the multilateral development banks have published analyses over the past three years examining broad corruption scandals in Latin American and Caribbean countries and the outpouring of civil society response. Some of these studies contend that donor assistance aimed at anti-corruption in recent times did not go far enough, or produce a measurable and enduring change in practices. For example, in November 2018, the Inter-American Development Bank (IDB) published a report by an Expert Advisory Group on anti-corruption, transparency and integrity in the countries of Latin America and the Caribbean. The IDB authors proposed a more aggressive and integrated approach to combating corruption. The report describes earlier interventions encouraged by the IDB as well as the United States and several multilateral donors as "uneven and partial," and focused more on enacting reforms and making pronouncements, rather than on implementation and enforcement. It maintains that only an integrated and across-the-board framework for fighting corruption can actually transform the culture and practice of public corruption that pervades too much of the region. Calling for a transformative approach, the IBD authors maintain that it is essential that both supply and demand sides of corruption be understood and addressed. They call for public and private sector participation at the national, regional, and international level to replace weak or dysfunctional institutions and practices. The Americas program at the Center for Strategic and International Studies (CSIS), recommends key targets for reform in the region, which are: (1) political party and campaign financing; (2) public financial sector management; (3) government contracting and procurement, especially for critical infrastructure; (4) civil service reform and effective vetting of public officials; and (5) internal strengthening and oversight of public security and justice institutions. CSIS advocates peer exchanges to tap the knowledge and skills of veterans of reining in public corruption from countries such as Uruguay, Chile, and Colombia. Their transferable experiences can assist struggling nations in the Northern Triangle countries of Central America and elsewhere. The emergence and persistence of civil society activism to fight corruption may be attributed to several conditions. One is the region's expanded middle class, which grew to nearly 35% in 2015 from about 21% of Latin America's population in 2001. The middle class is a bulwark against corruption according to the theory that the costs and inefficiencies of corruption take on greater salience when basic needs have been fulfilled. An analysis of the 2016/2017 Americas barometer study found that those individuals most apt to rank corruption as their nation's top problem were better educated, male, and more affluent. However, when the link between corruption and economic problems and insecurity is made clear, citizens of any background may become energized to combat it. Some analysts identify illicit campaign finance as the root of corruption. Guatemala's current President Jimmy Morales, a former TV evangelical and comedian, campaigned in 2015 on a pledge he was neither a thief nor corrupt. Morales financed his presidential campaign secretively, and was investigated by the U.N. supported anti-corruption body CICIG for undeclared campaign donations. The Odebrecht construction company reported it paid bribes across the region to public office holders for financing their political campaigns in exchange for large infrastructure contracts. In addition, the amount of off-the-record political donations in many countries greatly outpace the reported donations. In Argentina President Mauricio Marci's successful 2016 presidential race, Macri reportedly expended about 11 times more than he publicly declared, while his opponent reportedly spent some 20 times as much as he declared. Bilateral U.S. assistance programs to bolster rule of law, encourage good governance, and eliminate bribery, extortion, and graft, have been common in Latin America. Several analysts assert that further progress in combating corruption and improving governance in the region may require a cultural shift, building on the numerous citizen-led anti-corruption social movements unleashed in 2015. These movements, some of which were nurtured by years of foreign assistance, may begin to look beyond prosecutions related to specific scandals and seek structural and institutional reforms. Some practitioners who promote an inter-related set of program elements, what has been described as an "ecosystem" of integrity-enhancing efforts, also contend that the features of successful anti-corruption programs have features common to good development programming more broadly. These could include efforts to: Abolish or seek to revise rules and regulations that obscure the workings of government . Many government rules and processes can obscure budgets and reduce transparency, thus discouraging citizen oversight. One example that built more transparency and encouraged citizen participation is a technological solution in Mexico. LAB Justicia, an online collaborative tool funded by USAID, provides comprehensive information on the status of criminal justice in each state of Mexico. It draws data from open source government records and research by national and international NGOs. Recruit NGOs and corporations as c ritical partners in fighting corruption . Businesses and their associations and nongovernmental groups can be important targets for assistance to build demand for honest government. These entities can encourage and benefit from information sharing via social media, strong independent journalism, and broader citizen electoral participation. The business community and the private sector may play a critical role to press for the expansion of information, education and support to sharpen government transparency as commercial relations in a free market economy can only thrive with predictable economic rules. Adapt success ful models to local conditions . Successful multilateral and regional efforts can become exemplars for other countries if the models are adapted to local conditions and dynamics. The CICIG was cited by presidential candidates in El Salvador in the early 2019 elections as an effort they would like to replicate. During the Mexican elections in 2018, candidates also considered the CICIG framework for possible replication in Mexico, and in May 2019 Ecuador announced it had launched an anti-graft commission with five outside the country experts. The CICIG model also exemplifies that due to the complexity of grand corruption cases that international cooperation and support may be critical to success to supplement local resources in their battle with powerful corrupt networks. Build anti-corruption momentum with strong independent j ournalism, social media, and whistleblower p rotectio ns. Investigative and independent journalists have always played a crucial role to uncover public and private corruption and criminality, inform the citizenry of the true costs of corruption, and mobilize the public to fight corruption. In Mexico, journalists have helped to mobilize rejection of criminal domination and the violence that crime groups perpetrate. They also have raised awareness of criminal impunity for both criminal leaders and government officials on the take. Journalists are needed to amplify the efforts of whistleblowers; and to build political will and support for anti-corruption investigations, prosecutions, and legislation. Appendix B. Implementation of the Inter-American Convention against Corruption (MESICIC) In 2002, to support member states in implementing the IACAC, the OAS created the Mechanism for Follow-up on the implementation of the Inter-American Convention Against Corruption (MESICIC). The MESICIC serves primarily to measure how member states adhere to the convention and helps members achieve better implementation. The MESICIC provides activities that include: technical cooperation, sharing of best practices, and tools for the harmonization of anticorruption legislation throughout the Americas. Including the United States, 33 OAS member states are party to the MESICIC. (Barbados is not a MESICIC signatory.) The MESICIC's two main bodies are: The Conference of State Parties and the Committee of Experts. The Conference of State Parties exercises political and operational authority over the mechanism, and is comprised of representatives from all states which are party to the mechanism. The Committee of Experts manages and supervises the technical review process that steers the IACAC's implementation. It is composed of experts appointed by each state party. The OAS General Secretariat, which serves as the technical secretariat through the Department of Legal Cooperation of the Secretariat for Legal Affairs, supports the Committee of Experts. During the country-specific evaluation process, the MESICIC drafts and adopts reports to recommend ways to better implement regulatory and institutional measures. The reports aim to align the commitments of each state signatory with the goals of the IACAC. They also provide indicators for the states to identify challenges and ways to overcome shortcomings. Civil society and NGOs participate in the IACAC review process by submitting information to the Committee of Experts for consideration. These groups may present specific proposals, methodologies, and questions for gathering information. The Committee of Experts adopts a hemispheric report at the end of each technical review. The report summarizes the progress of implementing countries in meeting the recommendations formulated by the Committee in previous technical rounds, and makes recommendations of a collective nature. The Committee has adopted hemispheric reports in 2006, 2008, 2011, and 2015. Some analysts note that the battle against corruption in the public sector appears to be more resilient than in the past. However, the elusive nature of corruption makes it difficult to draw a causal relationship between rejection of corruption in the Americas and the IACAC and MESICIC. These critics maintain that the instruments need updating to make the IACAC relevant for combating new corruption modalities, and to make the MESICIC more independent, transparent, empowered to penalize noncompliance, and technically competent. Appendix C. Latin America Corruption Timeline from March 2014 through December 2018

Corruption of public officials in Latin America continues to be a prominent political concern. In the past few years, 11 presidents and former presidents in Latin America have been forced from office, jailed, or are under investigation for corruption. As in previous years, Transparency International's Corruption Perceptions Index covering 2018 found that the majority of respondents in several Latin American nations believed that corruption was increasing. Several analysts have suggested that heightened awareness of corruption in Latin America may be due to several possible factors: the growing use of social media to reveal violations and mobilize citizens, greater media and investor scrutiny, or, in some cases, judicial and legislative investigations. Moreover, as expectations for good government tend to rise with greater affluence, the expanding middle class in Latin America has sought more integrity from its politicians. U.S. congressional interest in addressing corruption comes at a time of this heightened rejection of corruption in public office across several Latin American and Caribbean countries. Whether or not the perception that corruption is increasing is accurate, it is nevertheless fueling civil society efforts to combat corrupt behavior and demand greater accountability. Voter discontent and outright indignation has focused on bribery and the economic consequences of official corruption, diminished public services, and the link of public corruption to organized crime and criminal impunity. In some countries, rejection of tainted political parties and leaders from across the spectrum has challenged public confidence in governmental legitimacy. In some cases, condemnation of corruption has helped to usher in populist presidents. For example, a populist of the left won Mexico's election and of the right Brazil's in 2018, as winning candidates appealed to end corruption and overcome political paralysis. The 2017 U.S. National Security Strategy characterizes corruption as a threat to the United States because criminals and terrorists may thrive under governments with rampant corruption. Studies indicate that corruption lowers productivity and mars competitiveness in developing economies. When it is systemic, it can spur migration and reduce GDP measurably. The U.S. government has used several policy tools to combat corruption. Among them are sanctions (asset blocking and visa restrictions) against leaders and other public officials to punish and deter corrupt practices, and programming and incentives to adopt anti-corruption best practices. The United States has also provided foreign assistance to some countries to promote clean or "good" government goals. U.S. efforts include assistance to strengthen the rule of law and judicial independence, law enforcement training, programs to institutionalize open and transparent public sector procurement and other clean government practices, and efforts to tap private-sector knowledge to combat corruption. This report examines U.S. strategies to help allies achieve anti-corruption goals, which were once again affirmed at the Summit of the Americas held in Peru in April 2018, with the theme of "Democratic Governance against Corruption." The case studies in the report explore: Brazil's collaboration with the U.S. Department of Justice and other international partners to expand investigations and use tools such as plea bargaining to secure convictions; Mexico's efforts to strengthen protections for journalists and to protect investigative journalism generally, and mixed efforts to implement comprehensive reforms approved by Mexico's legislature; and the experiences of Honduras and Guatemala with multilateral anti-corruption bodies to bolster weak domestic institutions, although leaders investigated by these bodies have tried to shutter them. Some analysts maintain that U.S. funding for "anti-corruption" programming has been too limited, noting that by some definitions, worldwide spending in recent years has not exceeded $115 million annually. Recent congressional support for anti-corruption efforts includes: training of police and justice personnel, backing for the Trump Administration's use of targeted sanctions, and other efforts to condition assistance. Policy debates have also highlighted the importance of combating corruption related to trade and investment. The 116th Congress may consider the United States-Mexico-Canada Agreement (USMCA), which would revise the NAFTA trade agreement, and contains a new chapter on anti-corruption measures.

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Introduction USAspending.gov, available to the public at http://www.usaspending.gov , is a government source for data on federal grants, contracts, loans, and other financial assistance. The website enables searching of federal awards from FY2008 to the present by state, congressional district (CD), county, and zip code. Grant awards include money the federal government commits for projects in states, local jurisdictions, regions, territories, and tribal reservations, as well as payments for eligible needs to help individuals and families. Contract awards refer to bids and agreements the federal government makes for specific goods and services. USAspending.gov also provides tools for examining the broader picture of federal spending obligations by categories, such as budget function, agency, and object class. Budget function refers to the major purpose that the spending serves, such as Social Security, Medicare, and national defense. Object class refers to the type of item or service purchased by the federal government, such as grants, contracts, and personnel compensation and benefits. For Congress, the ability to more accurately track these federal awards is necessary to better inform oversight of federal spending. In recent years, Congress has passed laws to create and improve systems used by government departments and agencies to report and input data on federal awards for contracts, grants, and other financial assistance: P.L. 109-282 , the Federal Funding Accountability and Transparency Act of 2006 (FFATA), called for the creation of a database that became USAspending.gov. The publicly available database replaced data collection and annual reports issued for more than 30 years in the Census Bureau's Federal Aid to States (FAS) report and Consolidated Federal Funds Report (CFFR). P.L. 111-5 , the American Recovery and Reinvestment Act of 2009 (ARRA), required federal agencies awarding stimulus funding and state and local recipients of such funding to report spending back to the ARRA Recovery Board; this reporting also became a part of USAspending.gov. P.L. 113-101 , the Digital Accountability and Transparency Act of 2014 (DATA Act), transferred responsibility for USAspending.gov from the Office of Management and Budget (OMB) to the Department of the Treasury and required that expenditures data be added to the federal agency obligations data already included in the USAspending.gov database. The DATA Act also required Treasury and OMB to develop government-wide data standardization to facilitate consolidating, automating, and simplifying reports on grant awards and contracts and to improve USAspending.gov underreporting and inconsistencies. However, finding accurate and complete data on federal funds received by states and congressional districts continues to be challenging due to ongoing data quality problems identified by the Government Accountability Office (GAO) in June 2014. A GAO report released in November 2017 assessed the quality of data reported by agencies in May 2017 under new DATA Act standards. GAO identified issues and challenges with the completeness and accuracy of the data submitted, use of data elements, and disclosure of data limitations on what was, at the time, a beta version of the new USAspending.gov website. The beta version has since become the official site as of March 2018 and the previous version is no longer available. According to a note on the site, data quality and display improvements will be continually made on a rolling basis. Users of USAspending.gov should be aware that although search results may be useful for informing consideration of certain questions, these results may also be incomplete or contain inaccuracies. USAspending.gov Background Origins FFATA required OMB to create a public database of all federal funds awarded to the final recipient level. The DATA Act followed eight years later and required the Department of the Treasury and OMB to develop government-wide data standardization to consolidate, automate, and simplify reports on grant awards and contracts to improve underreporting and inconsistencies as identified by GAO. These requirements in the DATA Act were intended to expand on the transparency efforts originally mandated by FFATA, specifically by disclosing direct agency expenditures and linking federal contract, loan, and grant spending information to federal agency programs; establishing government-wide data standards for financial data and providing consistent, reliable, and searchable data that are displayed accurately; simplifying reporting, streamlining reporting requirements, and reducing compliance costs, while improving transparency; and improving the quality of data submitted to USAspending.gov by holding agencies accountable. In addition, no later than four years after enactment (by spring 2018), Treasury and OMB must ensure that all information published on USAspending.gov conforms to government-wide data standards. OMB is also required to issue guidance so that all agencies can follow government-wide data standards when reporting on grantee and contractor awards. Types and Timing of Data The data in USAspending.gov are submitted by federal agencies and represent awards, including grants, contracts, loans, and other financial assistance (e.g., Medicare benefits, food stamps, unemployment benefits). USAspending.gov does not include data on actual spending by recipients. Federal agencies are required to submit reports on awards transactions within 30 days after transactions are implemented. There may be a longer lag-time with data from the Department of Defense, generally 90 days. Site Features USAspending.gov enables congressional staff and the public to search back to FY2008 for prime and subaward data by state, congressional district, and other jurisdictions. The site includes the following features: Advanced Award Search of prime and subaward data back to FY2008 allows filtering by award type, awarding agency, recipient, country, state, zip, county, CD, and other criteria. To identify where money is being spent, search on Place of Performance versus Recipient Location . Search results include awards that are active during the selected fiscal year, regardless of when the award initially started. Details on an individual award, including transaction history and subawards, may be viewed by clicking on the Award ID . The results list displayed can be downloaded at either the award or transaction level, along with additional details about each award, into a spreadsheet. The advanced search is currently being developed and improved on a rolling basis, so new features may have become available since the publication of this report. Spending Explorer enables "big picture" browsing of federal spending obligations and offers interactive data visualization by budget function, agency, and object class. With this tool, users can see the budget function breakdown by categories, such as Social Security, Medicare, and national defense; obligated amounts by agency; and obligations by object class categories, such as grants, contracts, and personnel compensation and benefits. Profile s Tab includes the following subtabs: Agencies features data on each agency's total budgetary resources, a dollar amount that has been obligated (or committed to be spent) against those budgetary resources, the breakdown of these obligations by object class, and the federal accounts through which the obligations are administered. Federal Accounts features a list of nearly 2,000 federal accounts through which users can track spending obligations. Data in this section are presented visually through graphs and other infographics. States provides tables, interactive maps, and graphs showing a breakdown of a total awarded amount to each state back to FY2008. Breakdowns include totals by award type, county, and CD. Profiles also include top five rankings in various categories, such as awarding agencies and recipients. Recipients contains profiles of entities that have received federal awards in the form of contracts, grants, loans, or other financial assistance back to FY2008. Profiles include data on award trends over time and top five rankings in various categories. Download Center allows bulk exporting of large, pregenerated award data sets by agency, award type, and fiscal year through the Award Data Archive . The custom download pages— Custom Award Data and Custom Account Data (which covers all spending data, including nonaward spending)—also allow downloading of large data sets but provide additional filtering options. Issues with Tracking Awards In addition to the data quality problems in USAspending.gov mentioned earlier, the following issues should be taken into consideration. Recipient Location Versus Place of Performance As recipients of federal grant funding, state and local governments may provide services directly to beneficiaries. Alternatively, a state may act as a pass-through, redisbursing federal grant funding to localities using a formula or a competitive process through subgrants or subcontracts. Both federal grant and procurement awards thus may have a where awarded vs. where spent component that is not fully identified in grant or procurement records. For example, most federal grant funding is awarded to states, which then subaward or subcontract to eligible recipients elsewhere in the state (see Figure 1 ) . So, a project's place of performance (where the award is spent) may therefore differ from the initial recipient location (where the funding is awarded). In addition, a funding award may pass through multiple different jurisdictions (in different CDs) before reaching the final place of performance. For example Federal grants may go first to the state (the state capital, in one CD), then be distributed to a city or county government (in one or more additional CDs), which then may pass the funds to an organization that spends the money in other CDs. A CD in which a state capital is located may appear to receive more federal funds than other CDs in the state, but searching USAspending.gov data by place of performance rather than recipient location would identify data by the project location. Procurement awards may be given to a corporation headquartered in one state (and one CD), but the company may spend the money manufacturing the purchased product at one or more of its manufacturing facilities in one or more additional states (and CDs). Congressional District Data The USAspending.gov advanced award search enables filtering by state and congressional district. When searching for CD data, note the following: For CD data, search USAspending.gov by place of performance rather than recipient location to identify awards by project location (see " Recipient Location Versus Place of Performance ," above). Use caution when comparing CD data over time. During decennial redistricting, CD borders and numbers may change, but past data are not revised to account for redistricting. For example, comparing data from the 115 th or 114 th Congress with earlier data must take into account new district borders created by the 2010 decennial redistricting. Other geographic search options, such as by zip code or county, could be used to track funds within a CD, although borders may not exactly align. CDs that include state capitals will appear to receive more federal funds because states are prime recipients of federal block and formula grants. State Administering Agencies (SAAs) then pass through or subaward federal funding for projects throughout the state. Other Data Sources Federal Procurement Data System The General Services Administration (GSA) maintains the Federal Procurement Data System–Next Generation (FPDS–NG) at https://www.fpds.gov/fpdsng_cms/index.php/en/ , which contains statistical information on federal contracts. The FPDS–NG serves as the source of USAspending.gov contracts data; makes available Federal Procurement Reports from FY2000 forward on its website; includes data on contracts of more than $25,000 and summary data of procurements less than $25,000; and provides selected search capabilities by state (including aggregate county statistics), contractor name, and product or service category. For more refined searching, such as by CD, the FPDS Help Desk can guide congressional staff and the public through filtering for data needed (called ad hoc reports ). Federal Audit Clearinghouse States, local governments, and nonprofits (including universities) spending $750,000 or more in federal grants during a fiscal year are required to submit an audit detailing expenditures. Data from the audits are posted on the Census Bureau's Federal Audit Clearinghouse site, at https://harvester.census.gov/facweb/Default.aspx . No printed documents are produced. Because the audit data are for the fiscal year of the filing agency or organization (which may differ from the federal fiscal year), they are not comparable with data from any other federal source. Searches may be conducted by organization or institution, Catalog of Federal Domestic Assistance (CFDA) program number, and geographic location (by city or state but not by congressional district). See search options at https://harvester.census.gov/facweb/ . U.S. Budget: Aid to State and Local Governments The Analytical Perspectives volume of the President's budget covers various topics, including "Aid to State and Local Governments" (Chapter 17 in the FY2020 report). Federal grants-in-aid to state and local governments, U.S. territories, and American Indian tribal governments are intended to support government operations or the provision of services to the public. Grants are most often awarded as direct cash assistance, but federal grants-in-aid also can include payments for grants-in-kind—nonmonetary aid such as commodities purchased for the National School Lunch Program. Federal revenues shared with state and local governments also are considered grants-in-aid. The FY2020 budget proposes $751 billion in outlays for aid to state and local governments, an increase of less than one percent from FY2019. Individual program tables with state-by-state obligation data for grants-in-aid programs to state and local governments may be found on the OMB website. Tables 17-3 through 17-39 show state-by-state obligations for 35 federal grants-in-aid programs. Federal grants generally fall into one of two broad categories—categorical grants or block grants, depending on the requirements of the grant program. In addition, grants may be characterized by how the funding is awarded, such as by formula, by project, or by matching state and local funds. As recipients of federal grant funding, state and local governments may provide services directly to beneficiaries or states may act as a pass-through, disbursing grant funding to localities using a formula or a competitive process. As discussed above, this pass-through, or subawarding, at the state level makes tracking federally originated funds to the final recipient a challenge. Federal Aid to States and the Consolidated Federal Funds Report These Census Bureau reports, published from FY1983 to FY2010 and available at https://www.census.gov/govs/pubs/title.html , were the federal government's primary documents summarizing the geographic distribution of federal monies to states and counties, whether grants, contracts, or appropriations. The FY2010 Federal Aid to States (FAS) and Consolidated Federal Funds Report (CFFR) were the last reports issued due to the termination of the Census Bureau's Federal Financial Statistics program. Federal obligations data continue to be posted on USAspending.gov, now the official source collecting federal awards data. FAS covered federal government expenditures to state and local governments and presented figures to the state level by program area and agency. CFFR included payments to state and local governments as well as to nongovernmental recipients. Dollar amounts reported represented either actual expenditures or obligations (see CFFR introduction and source notes for each table or graph). CFFR provided data to the state and county level for grants, salaries and wages, procurement contracts, direct payments for individuals, other direct payments, direct loans, guaranteed or insured loans, and insurance. Although CFFR indicated congressional districts (one or more) for each county, it did not give separate data by CD. Selected Agency Grant Awards Databases and Information USAspending.gov collects brief data on all federal grants and contracts awarded. However, some agencies, in particular those awarding research grants, also continue to post information on their own websites. Department of Agriculture (USDA) Current Research Information System https://cris.nifa.usda.gov/ Ongoing agricultural, food science, human nutrition, and forestry research, education and extension activities, with a focus on the National Institute of Food and Agriculture (NIFA) grant programs. Projects are conducted or sponsored by USDA research agencies, state agricultural experiment stations, land-grant universities, other cooperating state institutions, and participants in NIFA-administered grant programs, including Small Business Innovation Research and the Agriculture and Food Research Initiative. Department of Education (ED) Institute of Education Sciences, Funded Research Grants and Contracts http://ies.ed.gov/funding/grantsearch/index.asp Department of Health and Human Services (HHS) Tracking Accountability in Government Grants System (TAGGS) http://taggs.hhs.gov/AdvancedSearch.cfm Database of awards from HHS and its subsidiaries. National Institutes of Health (NIH) Research Portfolio Online Reporting Tools RePORTER http://projectreporter.nih.gov/reporter.cfm Includes projects funded by the NIH, Administration for Children and Families, Agency for Health Care Research and Quality, Centers for Disease Control and Prevention, Food and Drug Administration, and the U.S. Department of Veterans Affairs. National Library of Medicine (NLM) https://hsrproject.nlm.nih.gov/ Database of ongoing health services research and public health projects, whether government, corporate, or private. Department of Homeland Security (DHS) Federal Emergency Management Agency (FEMA), Public Assistance Grant Awards Activity 2013-2016: https://www.fema.gov/media-library/assets/documents/30731 2017-2019: https://www.fema.gov/media-library/assets/documents/128200 Daily activity of Public Assistance Grant Awards, including FEMA region, state, disaster declaration number, event description, mission assigned agency, assistance requested, obligated federal dollars, and date of obligation. Department of Justice (DOJ) Office of Justice Programs (OJP), OJP Grant Award Data http://ojp.gov/funding/Explore/OJPAwardData.htm Department of Labor (DOL) Employment and Training Administration (ETA), Grants Awarded http://www.doleta.gov/grants/grants_awarded.cfm Environmental Protection Agency (EPA) Grant Awards Database https://yosemite.epa.gov/oarm/igms_egf.nsf/HomePage?ReadForm Contains a summary record for all nonconstruction EPA grants awarded in the last 10 years plus grants that were awarded before that time that are still open. EPA Active Contracts Listing https://www.epa.gov/contracts/epa-active-contracts-listing Lists of all currently active EPA Contracts. The listing is available by Contract Number and by Vendor Name. Institute of Museum and Library Services (IMLS) IMLS Awarded Grants http://www.imls.gov/recipients/grantsearch.aspx National Endowment for the Arts (NEA) Grant Search https://apps.nea.gov/grantsearch/ NEA grants awarded since 1998. National Endowment for the Humanities (NEH) Funded Projects https://securegrants.neh.gov/publicquery/main.aspx National Science Foundation (NSF) NSF Awards http://www.nsf.gov/awardsearch/ Includes data from 1989 to the present. Research.gov is a partnership of federal research-oriented grant-making agencies led by the NSF http://www.research.gov/research-portal/appmanager/base/desktop?_nfpb=true&_eventName=viewQuickSearchFormEvent_so_rsr&wtlink=RSR_Search_homepage . Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) SBIR and STTR Awards https://www.sbir.gov/sbirsearch/award/all The SBIR/STTR program's mission is to stimulate technology innovation by strengthening the role of innovative small business in federal research and development. Currently, 11 federal agencies participate in the program: the Departments of Agriculture, Commerce (National Institute of Standards and Technology and the National Oceanic and Atmospheric Administration), Defense, Education, Energy, Health and Human Services, Homeland Security, and Transportation, and the Environmental Protection Agency, National Aeronautics and Space Administration, and National Science Foundation. Transportation Research Board (TRB) Research in Progress http://rip.trb.org/ View projects by subject, individuals, or organizations. Further Reading Data Foundation and Deloitte, "DATA Act 2022: Changing Technology, Changing Culture," report, May 2017, at http://www.datafoundation.org/data-act-2022/ . U.S. Senate, Permanent Subcommittee on Investigations, Committee on Homeland Security and Governmental Affairs, "Federal Agency Compliance with the DATA Act," report, July 2018, at https://www.hsgac.senate.gov/subcommittees/investigations/media/new-psi-report-details-failure-of-federal-agencies-to-submit-accurate-data-on-how-they-spend-taxpayer-dollars . Urban Institute, "Follow the Money: How to Track Federal Funding to Local Governments," research report, February 26, 2018, at https://www.urban.org/research/publication/follow-money-how-track-federal-funding-local-governments .

USAspending.gov, available at http://www.USAspending.gov, is a government source for data on federal awards by state, congressional district (CD), county, and zip code. The awards data in USAspending.gov are provided by federal agencies and represent contracts, grants, loans, and other forms of financial assistance. USAspending.gov also provides tools for examining the broader picture of federal spending obligations by categories, such as budget function, agency, and object class. Using USAspending.gov to locate and compile accurate data on federal awards can be challenging due, in part, to continuing data quality issues that have been identified by the U.S. Government Accountability Office (GAO). Users of USAspending.gov need to be aware that while search results may be useful for informing consideration of certain questions, these results may be incomplete or contain inaccuracies. USAspending.gov was created under P.L. 109-282, the Federal Funding Accountability and Transparency Act of 2006 (FFATA), and is being enhanced under requirements in P.L. 113-101, the Digital Accountability and Transparency Act of 2014 (DATA Act). Other federal awards data sources reviewed in this report include the following: Federal Procurement Data System (FPDS); Census Federal Audit Clearinghouse; U.S. Budget: Aid to State and Local Governments; Census Federal Aid to States (FAS) and Consolidated Federal Funds Report (CFFR); and Additional federal grant awards databases, including sources tracking medical, scientific, and technical research.

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SBA Assistance for Veterans The Small Business Administration (SBA) administers several programs to support small business owners and prospective entrepreneurs. For example, it provides education programs to assist with business formation and expansion; loan guaranty programs to enhance small business owners' access to capital; and programs to increase small business opportunities in federal contracting, including oversight of the service-disabled veteran-owned small business federal procurement goaling program. The SBA also provides direct loans for owners of businesses of all sizes, homeowners, and renters to assist their recovery from natural disasters. The Military Reservist Economic Injury Disaster Loan (MREIDL) program is also of interest to veterans. It provides direct loans of up to $2 million to small business owners who are not able to obtain credit elsewhere meet ordinary and necessary operating expenses that they could have met but are not able to because an essential employee has been called up to active duty in his or her role as a military reservist or member of the National Guard due to a period of military conflict. The SBA provides management and technical assistance to more than 100,000 veterans each year through its various training partners (e.g., Small Business Development Centers, Women's Business Centers, SCORE [formerly the Service Corps of Retired Executives], and Veterans Business Outreach Centers [VBOCs]). In addition, the SBA's Office of Veterans Business Development (OVBD) administers several programs to assist veteran-owned small businesses. The SBA's OVBD received an appropriation of $12.7 million for FY2018. The SBA has always assisted veteran small business owners and aspiring veteran entrepreneurs. In recent years, they have focused increased attention on assisting veterans transition from the military to the civilian labor force. For example, the SBA's OVBD, in partnership with Syracuse University, launched the Operation Boots to Business: From Service to Startup initiative for transitioning servicemembers in July 2012. The program consists of a two-day introductory course on entrepreneurship followed by an eight-week, online course to prepare servicemenmbers and military spouses "for post-service career success as business owners." Congress provided the SBA's OVBD an additional $7 million in FY2014 to expand the Boots to Business initiative "nationwide to the 250,000 yearly transitioning servicemembers in all branches of the military." The initiative's two-day Introduction to Entrepreneurship course is currently offered at 213 military institutions worldwide and is "a standard portion of the curricula offered at the revised Transition Assistance Program (TAP) to servicemembers." TAP is administered by the Department of Defense (DOD) in cooperation with the Department of Labor (DOL), Department of Veterans Affairs (VA), Department of Education (DOE), Department of Homeland Security (DHS), Office of Personnel Management (OPM), and the SBA. Congress has approved additional appropriations to continue the initiative, and it was expanded in 2014 to include veterans of all eras, active duty servicemembers (including National Guard and Reserves), and their partner or spouse via the Boots to Business: Reboot initiative. In FY2017, 17,320 servicemembers participated in the Boots to Business program. During the 114 th Congress, legislation was introduced and reported favorably by the Senate Committee on Small Business and Entrepreneurship to provide the Boots to Business initiative statutory authorization ( S. 1866 , the Veterans Small Business Ownership Improvements Act of 2015). Similar legislation was introduced during the 115 th Congress ( S. 121 , the Veterans Small Business Ownership Improvements Act, and H.R. 5193 , the Veteran Entrepreneurship Training Act of 2018). To date, nearly 70,000 servicemembers have participated in the initiative. The expansion of federal employment training programs targeted at specific populations, such as women and veterans, has led some Members and organizations to ask if these programs should be consolidated. In their view, eliminating program duplication among federal business assistance programs across federal agencies, and within the SBA, would lower costs and improve services. Others argue that keeping these business assistance programs separate enables them to offer services that match the unique needs of underserved populations, such as veterans. Instead of consolidating these programs, their focus is on improving communication and cooperation among the federal agencies providing assistance to entrepreneurs. This report examines the economic circumstances of veteran-owned businesses drawn from the Bureau of the Census's 2012 Survey of Business Owners (SBO). It also provides a brief overview of veterans' employment experiences, comparing unemployment and labor force participation rates for veterans, veterans who have left the military since September 2001, and nonveterans. The report also describes employment assistance programs offered by several federal agencies to assist veterans transitioning from the military to the civilian labor force and examines, in greater detail, the SBA's veteran business development programs, the SBA's efforts to enhance veterans' access to capital, and the SBA's veteran contracting programs. It also discusses the SBA's Military Reservist Economic Injury Disaster Loan program and P.L. 114-38 , the Veterans Entrepreneurship Act of 2015, which authorized and made permanent the SBA's recent practice of waiving the SBAExpress loan program's one time, up-front loan guarantee fee for veterans (and their spouse). An Economic Profile of Veteran-Owned Businesses From 1972 to 2012, the U.S. Bureau of the Census's SBO was sent every five years, for years ending in "2" and "7," to a stratified random sample of nonfarm businesses in the United States that file Internal Revenue Service tax forms as individual proprietorships, partnerships, or any type of corporation, and with receipts of $1,000 or more. It asked for information about the cha racteristics of the businesses and their owners. About 66% of the 1.75 million businesses that received the 2012 SBO responded. The SBO provided "the only comprehensive, regularly collected source of information on selected economic and demographic characteristics for businesses and business owners by gender, ethnicity, race, and veteran status." The SBO provided estimates of the number of employer and nonemployer firms and their sales and receipts, annual payroll, and employment. Data aggregates were provided by gender, ethnicity, race, and veteran status for the United States by North American Industry Classification System (NAICS) classification; the kind of business; and state, metropolitan and micropolitan statistical area, and county. This information was combined with data collected through the Census Bureau's main economic census and administrative records to provide a variety of searchable data products on Census's website, https://www.census.gov/programs-surveys/sbo.html , including the most detailed economic information available on veterans and veteran-owned firms. The Census Bureau has discontinued the SBO and is currently collecting data on business receipts, payroll, and employment by demographic characteristics, such as gender, ethnicity, race, and veteran status through its new, annual American Business Survey (ABS). The first set of data from the ABS is scheduled to be released in December 2019. Although now somewhat dated, the 2012 SBO provides the most detailed economic information available on veterans and veteran-owned firms. Demographics The Bureau of the Census estimates that in 2012 about 9.2% of nonfarm firms in the United States (2.54 million of 27.62 million) were owned by veterans. Four states had more than 100,000 veteran-owned firms: California (254,873), Texas (215,217), Florida (187,074), and New York (138,670). Of the 2.54 million veteran-owned, nonfarm firms in 2012, 82.3% (2.09 million) had no paid employees and 17.7% (450,807) had paid employees. This ratio is similar to comparable national figures of 80.4% (22.20 million) with no paid employees and 19.6% (5.42 million) with paid employees. 84.3% (2.14 million) were owned by a male, 15.1% were owned by a female (384,549), and 0.6% (14,035) were owned equally by a male and a female. Veteran-owned firms were more likely than other firms in 2012 to be owned by a male. The comparable national figures are 54.3% (14.99 million) were owned by a male, 36.0% (9.93 million) were owned by a female, and 9.0% (2.50 million) were owned equally by a male and a female. 85.1% (2.16 million) were owned by a Caucasian, 10.7% (270,702) were owned by an African American, 2.1% (52,933) were owned by an Asian, 1.3% (34,174) were owned by an American Indian or Alaska Indian, 0.3% (7,011) were owned by a native Hawaiian or other Pacific Islander, and 2.2% (56,091) were owned by "some other race." Veteran-owned firms were somewhat more likely than other firms in 2012 to be owned by a Caucasian and somewhat less likely to be owned by an Asian. The comparable national figures for 2012 are 78.7% (21.74 million) were owned by a Caucasian, 9.4% (2.59 million) were owned by an African American, 7.0% (1.94 million) were owned by an Asian, 1.0% (274,238) were owned by an American Indian or Alaska Indian, 0.2% (55,077) were owned by a native Hawaiian or other Pacific Islander, and 4.3% (1.18 million) were owned by "some other race." 3.3% (76,250 of the 2,299,501 reporting) were owned by an individual under the age of 35, 22.6% (520,472) were owned by an individual aged 35 to 54, and 74.5% (1,712,779) were owned by an individual aged 55 or older. Veteran-owned firms were more likely than other firms in 2012 to be owned by an individual aged 55 or older. The comparable national figures (minus veterans) for 2012 are 14.7% (2,943,446 of the 19,990,309 reporting) of nonfarm firms were owned by an individual under the age of 35; 48.1% (9,613,854) were owned by an individual aged 35 to 54; and 37.2% (7,433,009) were owned by an individual aged 55 or older. 7.3% (167,052 of the 2,292,035 reporting) were owned by an individual who reported that he or she had a service-connected disability. In addition, 99.8% of veteran-owned employer firms (441,799) had fewer than 500 employees and 0.2% (686) had at least 500 employees. This ratio is similar to comparable national figures for 2012, according to which 99.7% (5.41 million) had fewer than 500 employees and 0.3% (17,724) had at least 500 employees. Employment, Payroll, and Sales/Receipts In 2012, veteran-owned firms employed more than 5.5 million persons, reported a total payroll of $220.8 billion, and generated more than $1.47 trillion in total sales/receipts. Veteran-owned employer firms employed 5.5 million persons (about 4.8% of total U.S. employment); reported a total payroll of $220.8 billion (about 4.2% of total U.S. payroll); generated $1.375 trillion in total sales/receipts (about 4.2% of total U.S. receipts); and had average sales/receipts of $3.1 million. Veteran-owned nonemployer firms generated 6.4% ($94.5 billion) of the total sales/receipts generated by veteran-owned firms; and had average sales/receipts of $45,198. The comparable national figures for sales/receipts in 2012 were $6.0 million for employer firms and $47,679 for nonemployer firms. Access to Capital As shown in Table 1 , in 2012, veterans most frequently used personal or family savings to start or acquire a business (886,471 veterans, or 59.4% of respondents), followed by a personal or business credit card (148,856 veterans, or 10.0% of respondents), a business loan from a bank or financial institution (116,045 veterans, or 7.8% of respondents), and personal or family assets other than the owner's savings (92,748 veterans, or 6.2% of respondents). As shown in Table 2 , the source of capital most frequently used by veterans to expand or make capital improvements to an existing business in 2012 was personal or family savings (313,296 veterans, or 20.8% of respondents). The next most frequently used source of capital to expand or make capital improvements to an existing business was a personal or business credit card (114,815 veterans, or 7.6% of respondents), followed by business profits or assets (82,182 veterans, or 5.5% of respondents), and a government-guaranteed business loan from a bank or financial institution (64,499 veterans, or 4.3% of respondents). Veterans' Employment Data The Department of Labor's Bureau of Labor Statistics (BLS) provides monthly updates of the employment status of the nation's veterans. The BLS reports that as of January 2019, there were about 19.0 million veterans. There were 9.4 million veterans in the civilian labor force (i.e., they were either employed or unemployed and available for work, except for temporary illness, and had made specific efforts to find employment sometime during the four-week period ending with the reference week). Of those veterans in the civilian labor force, about 9.0 million were employed and about 344,000 were unemployed. In recent years, the unemployment rate among veterans as a whole has generally been lower than the unemployment rate for nonveterans 18 years and older. However, veterans who have left the military since September 2001 have experienced higher unemployment than other veterans and, in some years, higher than nonveterans as well. In January 2019, the unemployment rate for nonveterans 18 years and older was 4.3%, which was higher than for veterans as a whole (3.7%), for veterans who left the military prior to September 2001 (3.3%), and for veterans who left the military since September 2001 (4.2%). Veterans who have left the military since September 2001 also have a higher labor force participation rate (78.0%) than other veterans (40.0%) and nonveterans aged 18 and older (62.7%). The higher labor force participation rate for veterans who left the military since September 2001 was not wholly unexpected. They entered the civilian workforce more recently and have had less time to develop a reason (e.g., health issue, family responsibility, discouragement, retirement) to withdraw from the civilian workforce than other veterans and nonveterans aged 18 and older. The lower labor force participation rate for other veterans was also not wholly unexpected. They entered the civilian workforce earlier and have had more time to develop a reason to withdraw from the civilian workforce than veterans who left the military since September 2001 and nonveterans aged 18 and older. Veterans' Employment and Business Development Programs Several federal agencies, including the SBA, sponsor employment and business development programs to assist veterans in their transition from the military into the civilian labor force. As discussed, the expansion of federal employment and business development training programs targeted at specific populations, such as women and veterans, has led some Members and organizations to ask if these programs should be consolidated. Others question if the level of communication and coordination among federal agencies administering these programs has been sufficient to ensure the programs are being administered in the most efficient and effective manner. The SBA's Veterans Business Development Programs In an effort to assist veteran entrepreneurs, the SBA has either provided or supported management and technical assistance training for veteran-owned small businesses since its formation as an agency. The SBA provides management and technical assistance to more than 100,000 veterans each year through its various training partners (e.g., Small Business Development Centers, Women's Business Centers, SCORE [formerly the Service Corps of Retired Executives], and Veterans Business Outreach Centers [VBOCs]). In addition, the SBA's OVBD administers several programs to assist veteran-owned businesses, including the Entrepreneurship Bootcamp for Veterans with Disabilities Consortium of Universities, which provides "experiential training in entrepreneurship and small business management to post-9/11 veterans with disabilities" at eight universities; the Veteran Women Igniting the Spirit of Entrepreneurship (V-WISE) program, administered through a cooperative agreement with Syracuse University, which offers women veterans a 15-day, online course focused on entrepreneurship skills and the "language of business," followed by a 3-day conference (offered twice a year at varying locations) in which participants "are exposed to successful entrepreneurs and CEOs of Fortune 500 companies and leaders in government" and participate in courses on business planning, marketing, accounting and finance, operations and production, human resources, and work-life balance; the Operation Endure and Grow Program, administered through a cooperative agreement with Syracuse University, which offers an eight-week online training program "focused on the fundamentals of launching and/or growing a small business" and is available to National Guard members and reservists and their family members; the Boots to Business initiative, which is "an elective track within the Department of Defense's revised Training Assistance Program called Transition Goals, Plans, Success (Transition GPS) and has three parts: the Entrepreneurship Track Overview —a 10-minute introductory video shown during the mandatory five-day Transition GPS course which introduces entrepreneurship as a post-service career option; Introduction to Entrepreneurship —a two-day classroom course on entrepreneurship and business fundamentals offered as one of the three Transition GPS elective tracks; and Foundations of Entrepreneurship —an eight-week, instructor-led online course that offers in-depth instruction on the elements of a business plan and tips and techniques for starting a business"; the Boots to Business: Reboot initiative, which expanded the Boots to Business initiative in 2014 to include veterans of all eras, active duty servicemembers (including National Guard and Reserves), and their partner/spouse; the Veterans Institute for Procurement (VIP) program, which is designed to increase the ability of veteran-owned businesses to win government contracts by providing "an accelerator-like, in-residence educational training program for owners, principals, and executives of veteran-owned businesses, consisting of a three-day comprehensive certification program instructed by professional service experts, government officials, and agency representatives"; and the VBOC program, which provides veterans and their spouse management and technical assistance training at 22 locations, including assistance with the Boots to Business initiatives, the development and maintenance of a five-year business plan, and referrals to other SBA resource partners when appropriate for additional training or mentoring services. The SBA also continues to work closely with the Interagency Task Force for Veterans Small Business Development, which was established by executive order on April 26, 2010, held its first public meeting on October 15, 2010, and issued its first report on November 1, 2011, to identify "gaps in ensuring that transitioning military members who are interested in owning a small business get needed assistance and training." The task force's second report, issued on November 29, 2012, focused on progress made since the initial report. The task force continues to meet on a quarterly basis to foster communication and monitor agency progress in assisting transitioning servicemembers. Congressional Issues: Duplication of Services The SBA's OVBD, which serves as the SBA's focal point for its veteran assistance programs, was created by P.L. 106-50 , the Veterans Entrepreneurship and Small Business Development Act of 1999. The act addressed congressional concerns that the United States generally, and the SBA in particular, was not, at that time, doing enough to meet the needs of veteran entrepreneurs, especially service-disabled veteran entrepreneurs. At that time, several Members of Congress argued that "the needs of veterans have been diminished systematically at the SBA" as evidenced by the agency's elimination of direct loans, including direct loans to veterans, in 1995; and a decline in the SBA's "training and counseling for veterans … from 38,775 total counseling sessions for veterans in 1993 to 29,821 sessions in 1998." To address these concerns, the act authorized the establishment of the federally chartered National Veterans Business Development Corporation (known as the Veterans Corporation and reconstituted, without a federal charter, in 2012 as Veteranscorp.org). Its mission is to (1) expand the provision of and improve access to technical assistance regarding entrepreneurship for the Nation's veterans; and (2) to assist veterans, including service-disabled veterans, with the formation and expansion of small business concerns by working with and organizing public and private resources, including those of the Small Business Administration, the Department of Veterans Affairs, the Department of Labor, the Department of Commerce, the Department of Defense, the Service Corps of Retired Executives…, the Small Business Development Centers…, and the business development staffs of each department and agency of the United States. P.L. 106-50 reemphasized the SBA's responsibility "to reach out to and include veterans in its programs providing financial and technical assistance." It included veterans as a target group for the SBA's 7(a), 504 Certified Development Company (504/CDC), and Microloan lending programs. It also required the SBA to enter into a memorandum of understanding with SCORE to, among other things, establish "a program to coordinate counseling and training regarding entrepreneurship to veterans through the chapters of SCORE throughout the United States." In addition, it directed the SBA to enter into a memorandum of understanding with small business development centers, the VA, and the National Veterans Business Development Corporation "with respect to entrepreneurial assistance to veterans, including service-disabled veterans." The act specified that the following services were to be provided: (1) Conducting of studies and research, and the distribution of information generated by such studies and research, on the formation, management, financing, marketing, and operation of small business concerns by veterans. (2) Provision of training and counseling to veterans concerning the formation, management, financing, marketing, and operation of small business concerns. (3) Provision of management and technical assistance to the owners and operators of small business concerns regarding international markets, the promotion of exports, and the transfer of technology. (4) Provision of assistance and information to veterans regarding procurement opportunities with Federal, State, and local agencies, especially such agencies funded in whole or in part with Federal funds. (5) Establishment of an information clearinghouse to collect and distribute information, including by electronic means, on the assistance programs of Federal, State, and local governments, and of the private sector, including information on office locations, key personnel, telephone numbers, mail and electronic addresses, and contracting and subcontracting opportunities. (6) Provision of Internet or other distance learning academic instruction for veterans in business subjects, including accounting, marketing, and business fundamentals. (7) Compilation of a list of small business concerns owned and controlled by service-disabled veterans that provide products or services that could be procured by the United States and delivery of such list to each department and agency of the United States. Such list shall be delivered in hard copy and electronic form and shall include the name and address of each such small business concern and the products or services that it provides. The SBA's OVBD was established to address these statutory requirements by promoting "veterans' small business ownership by conducting comprehensive outreach, through program and policy development and implementation, ombudsman support, coordinated agency initiatives, and direct assistance to veterans, service-disabled veterans, reserve and National Guard members, and discharging active duty service members and their families." As mentioned previously, the OVBD provides, or supports third parties to provide, management and technical assistance training services to more than 100,000 veterans each year. These services are provided through funded SBA district office outreach; OVBD-developed and distributed materials; websites; partnering with DOD [Department of Defense], DOL [Department of Labor] and universities; agreements with regional veterans business outreach centers; direct guidance, training and assistance to Agency veteran customers; and through enhancements to intra-agency programs used by the military and veteran communities. The expansion of the SBA's veteran outreach efforts has led some Members and organizations to ask if the nation's veterans might be better served if some of the veteran employment and business development programs offered by federal agencies were consolidated. For example, as mentioned previously, DOD, in cooperation with several federal agencies, operates the recently revised Transition Assistance Program, Transition GPS, which provides employment information and training to exiting servicemembers to assist them in transitioning from the military into the civilian labor force. In addition, DOL's Jobs for Veterans State Grants program provides states funding for Disabled Veterans' Outreach Program specialists and Local Veterans' Employment Representatives to provide outreach and assistance to veterans, and their spouses, seeking employment. DOL also administers the Veterans Workforce Investment Program, which provides grants to fund programs operated by eligible state and local government workforce investment boards, state and local government agencies, and private nonprofit organizations to provide various services designed to assist veterans' transitions into the civilian labor force. The DOL-administered Homeless Veterans Reintegration Program provides grants to fund programs operated by eligible state and local government workforce investment boards, state and local government agencies, and private nonprofit organizations that provide various services designed to assist homeless veterans achieve meaningful employment and to aid in the development of a service delivery system to address problems facing homeless veterans. Advocates of consolidating veteran employment and business development programs argue that eliminating program duplication among federal agencies would result in lower costs and improved services. For example, H.R. 4072 , the Consolidating Veteran Employment Services for Improved Performance Act of 2012, which was introduced during the 112 th Congress and ordered to be reported by the House Committee on Veterans' Affairs on April 27, 2012, would have transferred several veteran employment training programs from the DOL to the VA. In addition, in 2011, 2012, 2013, 2014, and 2015, the House Committee on Small Business, in its "Views and Estimates" letter to the House Committee on the Budget, recommended that funding for the SBA's VBOCs be either eliminated or transferred to the Department of Veterans Affairs because, as it stated in 2012, "the SBA already provides significant assistance to veterans who are seeking to start or already operate small businesses. The VBOCs duplicate services already available from the SBA, other entrepreneurial development partners and programs available from the Department of Veterans Affairs." In 2014, the House Committee on Small Business also recommended that if additional funds were to be provided to VBOCs, those funds should come from the SBA's Boots to Business initiative. Advocates of consolidating federal veteran employment and business development programs cite U.S. Government Accountability Office (GAO) reports that have characterized the broader category of federal support for entrepreneurs, including veteran entrepreneurs, as fragmented and having overlapping missions. For example, in 2012, GAO identified 53 programs within the SBA and the Departments of Commerce, Housing and Urban Development, and Agriculture designed to support entrepreneurs, including 36 programs that provide entrepreneurs technical assistance, such as business training, counseling, and research and development support. GAO found that "the overlap among these programs raise[s] questions about whether a fragmented system is the most effective way to support entrepreneurs" and suggested agencies should "determine whether there are more efficient ways to continue to serve the unique needs of entrepreneurs, including consolidating programs." Instead of consolidating programs, some argue that improved communication and cooperation among the federal agencies providing entrepreneur support programs, and among the SBA's management and technical assistance training resource partners, would enhance program efficiencies while preserving the ability of these programs to offer services that match the unique needs of various underserved populations, such as veterans. For example, during the 111 th Congress, the House passed H.R. 2352 , the Job Creation Through Entrepreneurship Act of 2009, on May 20, 2009, by a vote of 406-15. The Senate did not take action on the bill. In its committee report accompanying the bill, the House Committee on Small Business concluded at that time that each ED [Entrepreneurial Development] program has a unique mandate and service delivery approach that is customized to its particular clients. However, as a network, the programs have established local connections and resources that benefit entrepreneurs within a region. Enhanced coordination among this network is critical to make the most of scarce resources available for small firms. It can also ensure that best practices are shared amongst providers that have similar goals but work within different contexts. The bill was designed to enhance oversight and coordination of the SBA's management and technical assistance training programs by requiring the SBA to coordinate these programs "with State and local economic development agencies and other federal agencies as appropriate" and to "report annually to Congress, in consultation with other federal departments and agencies as appropriate, on opportunities to foster coordination, limit duplication, and improve program delivery for federal entrepreneurial development activities." In a related development, as mentioned previously, the Obama Administration formed the Interagency Task Force for Veterans Small Business Development by executive order on April 26, 2010. The SBA's representative chairs the task force, which is composed of senior representatives from seven federal agencies and four representatives from veterans' organizations. One of the task force's goals is to improve "collaboration, integration and focus across federal agencies, key programs (e.g., the Transition Assistance Program), veterans' service organizations, states, and academia." On November 1, 2011, the task force issued 18 recommendations, including recommendations designed to increase and augment federal entrepreneurial training and technical assistance programs offered to veterans. For example, it recommended the development of a "standardized, national entrepreneurship training program specifically for veterans" that "could utilize expert local instructors, including academics and successful small business owners, to provide training in skills used to create and grow entrepreneurial ventures and small business. The national program could provide engaging training modules and workshops dedicated to the basics of launching a business." The task force also recommended the development of a web portal "that allows veterans to access entrepreneurship resources from across the government." Since then, the task force has met quarterly and its annual reports document its efforts to address the 18 recommendations. Veterans' Access to Capital The SBA administers several loan guaranty programs, including the 7(a) and the 504/CDC programs, to encourage lenders to provide loans to small businesses "that might not otherwise obtain financing on reasonable terms and conditions." SBA's 7(a) Loan Guaranty Program The SBA's 7(a) loan guaranty program is considered the agency's flagship loan guaranty program. Its name is derived from Section 7(a) of the Small Business Act of 1953 (P.L. 83-163, as amended), which authorizes the SBA to provide business loans to American small businesses. The 7(a) program provides SBA-approved lenders a guaranty of up to 85% of loans of $150,000 or less and up to 75% of loans exceeding $150,000, up to the program's maximum gross loan amount of $5 million (up to $3.75 million maximum guaranty). In FY2018, the average approved 7(a) loan amount was $420,401. Proceeds from 7(a) loans may be used to establish a new business or to assist in the operation, acquisition, or expansion of an existing business. Specific uses include to acquire land (by purchase or lease); improve a site (e.g., grading, streets, parking lots, and landscaping); purchase, convert, expand, or renovate one or more existing buildings; construct one or more new buildings; acquire (by purchase or lease) and install fixed assets; purchase inventory, supplies, and raw materials; finance working capital; and refinance certain outstanding debts. The 7(a) program's loan maturity for working capital, machinery, and equipment (not to exceed the life of the equipment) is typically 5 years to 10 years, and the loan maturity for real estate is up to 25 years. Interest rates are negotiated between the borrower and lender but are subject to maximum rates. As shown in Table 3 , the number and amount of veteran 7(a) loan approvals have generally increased since FY2012. In FY2018, the SBA approved 60,353 7(a) loans totaling nearly $25.4 billion, including 3,084 loans to veterans (5.3%) totaling $969 million (3.8%). In FY2018, the average approved veteran 7(a) loan amount was $314,360. SBA's 504/CDC Loan Guaranty Program The SBA's 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. The 504/CDC program's 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 sale of 504/CDC debentures. In FY2018, the average approved 504/CDC loan amount was $806,324. As shown in Table 4 , in recent years, the amount of veteran 504/CDC loan approvals peaked in FY2012, declined in FY2013 and FY2014, increased in FY2015, FY2016, and FY2017, and declined somewhat in FY2018. In FY2018, the SBA approved 5,874 504/CDC loans totaling $4.75 billion, including 158 loans to veterans (2.7%) totaling $95 million (2.0%). In FY2018, the average approved veteran 504/CDC loan amount was $601,202. SBA's 7(a) Loan Guaranty Subprograms and Fee Waivers The SBA administers several 7(a) loan guaranty subprograms that offer streamlined and expedited loan procedures to encourage lenders to provide loans to specific groups of borrowers identified by the SBA as having difficulty accessing capital. In the past, the Patriot Express program (2007-2013) encouraged lenders to provide loans to veterans and their spouses. It provided loans of up to $500,000 (with a guaranty of up to 85% of loans of $150,000 or less and up to 75% of loans exceeding $150,000). The SBA considered the Patriot Express program a success, but some veterans' organizations expressed concern that many veterans, especially during and immediately following the Great Recession (December 2007 to June 2009), experienced difficulty finding lenders willing to provide them Patriot Express loans. In addition, GAO reported in September 2013 that with the exception of loans approved in 2007, Patriot Express loans defaulted at a higher rate than regular 7(a) loans and loans made under the SBAExpress program (a 7(a) loan guaranty subprogram offering streamlined borrower application and lender approval procedures). Over its history, the Patriot Express program disbursed 9,414 loans totaling more than $791 million. On January 1, 2014, the SBA implemented a new, streamlined application process for 7(a) loans of $350,000 or less. As part of an overall effort to streamline and simplify its loan application process, the SBA also eliminated several 7(a) subprograms, including the Patriot Express program. In anticipation of ending the Patriot Express program, the SBA announced on November 8, 2013, that it would waive the up-front, one-time loan guaranty fee for loans to a veteran or veteran's spouse under the SBAExpress program from January 1, 2014, through the end of FY2014 (called the Veterans Advantage Program). The SBA announced that this fee waiver was part "of SBA's broader efforts to make sure that veterans have the tools they need to start and grow a business." The Obama Administration continued this fee waiver for veterans through the end of FY2015. During the 113 th Congress, S. 2143 , the Veterans Entrepreneurship Act, would have authorized and made the Veterans Advantage Program's fee waiver permanent. P.L. 113-235 , the Consolidated and Further Continuing Appropriations Act, 2015, provided statutory authorization for the fee waiver for FY2015. During the 114 th Congress, P.L. 114-38 , the Veterans Entrepreneurship Act of 2015, authorized and made the SBA's practice of waiving the SBAExpress loan program's one time, up-front guaranty fee for veterans (and their spouse) permanent beginning on or after October 1, 2015, 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 has waived this fee every year since then. The SBAExpress program is designed to increase the availability of credit to small businesses by permitting lenders to use their existing documentation and procedures in return for receiving a reduced SBA guaranty on loans. It provides a 50% loan guaranty on loan amounts up to $350,000. In FY2018, the SBA approved 27,794 SBAExpress loans (46.1% of total 7(a) program loan approvals) totaling $1.98 billion (7.8% of total 7(a) program amount approvals). The SBA also waived the up-front, one-time loan guaranty fee for smaller 7(a) loans (including those to veterans) in FY2014, FY2015, FY2016, FY2017, and FY2018; and is waiving 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 reduce the up-front one-time guaranty fee for these loans from 2.0% to 0.6667% of the guaranteed portion of the loan in FY2019. In FY2015 and FY2016, the SBA also waived 50% of the up-front, one-time loan guaranty fee on all non-SBAExpress 7(a) loans to veterans exceeding $150,000. In FY2017, the SBA waived 50% of the up-front, one-time loan guaranty fee on all non-SBAExpress 7(a) loans to veterans of $150,001 to $500,000. In FY2018, the SBA waived 50% of the up-front, one-time loan guaranty fee on all non-SBAExpress 7(a) loans to veterans of $150,001 to $350,000. Congressional Issues: Access As mentioned previously, the SBA has indicated in both testimony at congressional hearings and in press releases that it viewed the Patriot Express program and its own overall effort to enhance veterans' access to capital as a success. For example, when the SBA announced its veterans' fee waiver for the SBAExpress program, it also announced that its lending to veteran-owned small businesses had nearly doubled since 2009 and that "in FY2013, SBA supported $1.86 billion in loans for 3,094 veteran-owned small businesses." Congressional testimony provided by various veteran service organizations provides a somewhat different perspective. The SBA's self-evaluation of its success in assisting veterans access capital has focused primarily on the agency's efforts to streamline the loan application approval process (e.g., minimizing paperwork requirements and reducing the time necessary for the SBA to review and approve applications submitted by local lenders) and aggregate lending amounts (e.g., the number and amount of loans approved). In contrast, veteran service organizations focus primarily on program outcomes, especially the likelihood of a veteran being approved for a SBA loan by a local lender. For example, a representative of the American Legion testified at a congressional hearing in 2010 that, at that time, being turned down for a SBA Patriot Express loan by a private lender "is probably the largest, most frequent complaint that we receive from our business owners." At that same congressional hearing, a representative of the Vietnam Veterans of America testified in response to that statement that "I would have to concur … in talking with some of the veterans with regard to the Patriot Express Loan, they are having difficulties also to acquire that capital. The rationale seems to be … the banks in general seem to be tightening the credit, their lending practices, so that is … what we are hearing." More recently, GAO reported in 2013 that "selected loan recipients, lenders, and veteran service organizations said that a low awareness of the Patriot Express program among the military community was among the most frequently cited challenges." No empirical assessments of veterans' experiences with either the SBA's Patriot Express or SBAExpress loan programs exist that would be useful for determining the relative ease or difficulty for veteran-owned small business owners of accessing capital through the SBA's loan programs. Since 2010, many lenders report that they have eased their credit standards, at least somewhat, for small business loans, suggesting the experiences of veterans seeking a SBA loan guaranty today may be improved compared with their experiences in 2010. However, GAO found in 2013 that many veterans were not fully aware of the SBA's Patriot Express program and that "over half of the Patriot Express loan recipients, six of the eight lenders, and two veteran service organizations … said that [the] SBA could do more to increase outreach to veteran entrepreneurs and better market the program to the military community." GAO reported that low awareness of the SBA's Patriot Express program and the SBA's participating lenders were a continuing challenge for the SBA. One option to provide additional information concerning veterans' experiences with the SBA's lenders would be to survey veterans who have received a SBA guaranteed loan. The survey could include questions concerning these veterans' views of the programs, including the application process. However, obtaining a comprehensive list of veterans to survey who have been turned down for a SBA guaranteed loan by a private lender would be difficult given privacy concerns. In a related development concerning veterans' access to capital, legislation was introduced during the 114 th Congress ( S. 1870 , the Veterans Entrepreneurial Transition Act of 2015, and its House companion bill, H.R. 3248 ) to authorize a three-year pilot program, administered by the SBA, to provide grants to no more than 250 GI-Bill benefit-eligible veterans to start or acquire a qualifying business. The grant amount would have been calculated according to a formula related to the unused portion of the recipient's GI-Bill benefits. Recipients would have been required to complete specified training and meet other program requirements, such as having an approved business plan. S. 1870 was ordered to be reported with an amendment in the nature of a substitute by the Senate Committee on Small Business and Entrepreneurship on July 29, 2015. In addition, H.R. 5698 , the Strengthening Technical Assistance, Resources, and Training to Unleash the Potential of Veterans Act of 2016 (STARTUP Vets Act of 2016), and its companion bill in the Senate, S. 2273 , would have authorized the SBA to provide up to $1.5 million in grants annually "from amounts made available to the Office of Veterans Business Development" to organizations to create and operate business incubators and accelerators that provide technical assistance and training to veterans (including their spouse and dependents) to enable them "to effectively transfer relevant skills to launch and accelerate small business concerns owned and controlled by covered individuals; and to create an avenue for high-performing covered individuals to meet and collaborate on business ideas." During the 115 th Congress, S. 1056 , the Veteran Small Business Export Promotion Act, and H.R. 2835 , To amend the Small Business Act, would have permanently waived "the guarantee fee for loans of not more than $150,000 provided to veterans and spouses of veterans under the [SBA's] Export Working Capital, International Trade, and Export Express programs." Federal Contracting Goals for Service-Disabled Veteran-Owned Small Businesses Since 1978, federal agency heads have been required to establish federal procurement contracting goals, in consultation with the SBA, "that realistically reflect the potential of small business concerns" to participate in federal procurement. Each agency is required, at the conclusion of each fiscal year, to report its progress in meeting the goals to the SBA. The SBA negotiates the goals with each federal agency and establishes a small business eligible baseline for evaluating the agency's performance. 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, such as contracts awarded to mandatory and directed sources, awarded and performed overseas, funded predominately from agency-generated sources, not covered by Federal Acquisition Regulations, and not reported in the Federal Procurement Data System (e.g., contracts or government procurement card purchases valued less than $3,000). These exclusions typically account for 18% to 20% of all federal prime contracts each year. The SBA then evaluates the agencies' performance against their negotiated goals annually, using data from the Federal Procurement Data System–Next Generation, managed by the U.S. General Services Administration, to generate the small business eligible baseline. This information is compiled into the official Small Business Goaling Report, which the SBA releases annually. Over the years, federal government-wide procurement contracting goals have been established for small businesses generally ( P.L. 100-656 , the Business Opportunity Development Reform Act of 1988, and P.L. 105-135 , the HUBZone Act of 1997—Title VI of the Small Business Reauthorization Act of 1997); small businesses owned and controlled by socially and economically disadvantaged individuals ( P.L. 100-656 ); women ( P.L. 103-355 , the Federal Acquisition Streamlining Act of 1994); small businesses located within a Historically Underutilized Business Zone, or HUBZone ( P.L. 105-135 ); and small businesses owned and controlled by a service-disabled veteran ( P.L. 106-50 , the Veterans Entrepreneurship and Small Business Development Act of 1999). The current federal small business contracting goals are at least 23% of the total value of all small business eligible prime contract awards to small businesses for each fiscal year; 5% of the total value of all small business eligible prime contract awards and subcontract awards to small disadvantaged businesses for each fiscal year; 5% of the total value of all small business eligible prime contract awards and subcontract awards to women-owned small businesses; 3% of the total value of all small business eligible prime contract awards and subcontract awards to HUBZone small businesses; and 3% of the total value of all small business eligible prime contract awards and subcontract awards to service-disabled veteran-owned small businesses. There are no punitive consequences for not meeting the small business procurement goals. However, the SBA's Small Business Goaling Report is distributed widely, receives media attention, and heightens public awareness of the issue of small business contracting. For example, agency performance as reported in the SBA's report is often cited by Members during their questioning of federal agency witnesses in congressional hearings. As shown in Table 5 , the FY2017 Small Business Goaling Report , using data in the Federal Procurement Data System, indicates that federal agencies met the federal contracting goal for small businesses generally, small disadvantaged businesses, and service-disabled veteran-owned small businesses in FY2017. Federal agencies awarded 23.88% of the value of their small business eligible contracts ($442.5 billion) to small businesses ($105.7 billion), 9.10% to small disadvantaged businesses ($40.2 billion), 4.71% to women-owned small businesses ($20.8 billion), 1.65% to HUBZone small businesses ($7.3 billion), and 4.05% to service-disabled veteran-owned small businesses ($17.9 billion). The percentage of total reported federal contracts (without exclusions) awarded to those small businesses in FY2017 is also provided in the table for comparative purposes. In a related development, on November 17, 2015, the House passed H.R. 1694 , the Fairness to Veterans for Infrastructure Investment Act of 2015. The bill would have revised the requirement that 10% of the award of contracts for federal-aid highway, federal public transportation, and highway safety research and development programs be set-aside for small businesses owned and controlled by socially and economically disadvantaged individuals. The bill would have required the set-aside to include veteran-owned small businesses. In another related development, the U.S. Supreme Court's decision in Kingdomware Technologies, Inc. v. United States (decided on June 16, 2016) requiring the VA to grant VOSBs certain preferences when awarding procurement contracts could result in the VA awarding additional contracts to VOSBs. In addition, the prevention of fraud in federal small business contracting programs, and in the SBA's loan programs as well, has been a priority for both Congress and the SBA for many years, primarily because reports of fraud in these programs emerge with some regularity. Of particular interest to veterans, GAO has found that "the lack of an effective government-wide fraud-prevention program" has left the service-disabled veteran-owned small business program "vulnerable to fraud and abuse." Under the Small Business Act, a small business owned and controlled by a service-disabled veteran can qualify for a federal government procurement set-aside (a procurement in which only certain businesses may compete) or a sole-source award (awards proposed or made after soliciting and negotiating with only one source) if the small business is at least 51% unconditionally and directly owned and controlled by one or more service-disabled veteran. A veteran is defined as a person who has served "in the active military, naval, or air service, and who was discharged or released under conditions other than dishonorable." A disability is service related when it "was incurred or aggravated ... in [the] line of duty in the active military, naval, or air service." Federal agencies may set aside procurements for service-disabled veteran-owned small businesses only if the contracting officer reasonably expects that offers will be received from at least two responsible small businesses and the award will be made at a fair market price (commonly known as the "rule of two" because of the focus on there being at least two small businesses involved). Federal agencies may award sole contracts to service-disabled veteran-owned small businesses when (1) the contracting officer does not reasonably expect that two or more service-disabled veteran-owned small businesses will submit offers; (2) the anticipated award will not exceed $4.0 million ($6.5 million for manufacturing contracts); and (3) the award can be made at a fair and reasonable price. Otherwise, sole-source awards may only be made to service-disabled veteran-owned small businesses under other authority, such as the Competition in Contracting Act. Service-disabled veteran-owned small businesses are not eligible for price evaluation preferences in unrestricted competitions. The VA is statutorily required to establish annual goals for the awarding of VA contracts to both service-disabled veteran-owned small businesses and small businesses owned by other veterans. The VA is authorized to use "other than competitive procedures" in meeting these goals. For example, it may award any contract whose value is below the simplified acquisition threshold (generally $250,000 ) to a veteran-owned business on a sole-source basis, and it may also make sole-source awards of contracts whose value (including options) is between $250,000 and $5 million, provided that certain conditions are met. When these conditions are not met, the VA is generally required to set aside the contract for service-disabled or other veteran-owned small businesses. Service-disabled veteran-owned small businesses can generally self-certify as to their eligibility for contracting preferences available under the Small Business Act. However, in an effort to address fraud in VA contracting, veteran-owned and service-disabled veteran-owned small businesses must be listed in the VA's VetBiz database and have their eligibility verified by the VA to be eligible for preferences in certain VA contracts. Firms that fraudulently misrepresent their size or status have long been subject to civil and criminal penalties under Section 16 of the Small Business Act; SBA regulations implementing Section 16; and other provisions of law, such as the False Claims Act, Fraud and False Statements Act, Program Fraud Civil Remedies Act, and Contract Disputes Act. Several bills were introduced during the 112 th Congress to address fraud in small business contracting programs in various ways. Of particular interest to veterans, S. 3572 , the Restoring Tax and Regulatory Certainty to Small Businesses Act of 2012, and S. 633 , the Small Business Contracting Fraud Prevention Act of 2011, would have, among other changes, amended Section 16 of the Small Business Act to expressly include service-disabled veteran-owned small businesses among the types of small businesses subject to penalties for fraud under that section . The bills would also have required service-disabled veteran-owned small businesses to register in the VA's VetBiz database, or any successor database, and have their status verified by the VA to be eligible for contracting preferences for service-disabled veteran-owned small businesses under the Small Business Act. In addition, during the 113 th Congress, S. 2334 , the Improving Opportunities for Service-Disabled Veteran-Owned Small Businesses Act of 2013, and its companion bill in the House, H.R. 2882 , and H.R. 4435 , the Howard P. "Buck" McKeon National Defense Authorization Act for Fiscal Year 2015, which was passed by the House on May 22, 2014, included a provision that would have authorized the transfer of the VetBiz database's administration and the verification of service-disabled veteran owned small businesses from the VA to the SBA. Advocates of requiring service-disabled veteran-owned small businesses to register in the VetBiz database and have their status verified by the VA (or the SBA) to be eligible for contracting preferences under the Small Business Act argue that doing so would reduce fraud. As then-Senator Snowe stated on the Senate floor when she introduced S. 633 , "Our legislation attempts to remedy the spate of illegitimate firms siphoning away contracts from the rightful businesses trying to compete within the SBA's contracting programs." Others worry that requiring service-disabled veteran-owned small businesses to register in the VetBiz database and have their status verified by the VA (or the SBA) to be eligible for contracting preferences under the Small Business Act may add to the paperwork burdens of small businesses. They seek alternative ways to address the need to reduce fraud in federal small business procurement programs that do not increase the paperwork requirements of small businesses. Still others note that the effectiveness of any change to prevent fraud in veteran-owned and service-disabled veteran-owned small business procurement programs largely depends upon how the change is implemented. For example, in July 2011, the VA's Office of Inspector General concluded that the VA's implementation of its veteran-owned and service-disabled veteran-owned small business procurement fraud prevention programs needed improvement: We project that VA awarded ineligible businesses at least 1,400 VOSB [Veteran Owned Small Business] and SDVOSB [Service-Disabled Veteran Owned Small Business] contracts valued at $500 million annually and that it will award about $2.5 billion in VOSB and SDVOSB contracts to ineligible businesses over the next 5 years if it does not strengthen oversight and verification procedures. VA and the Office of Small and Disadvantaged Business Utilization (OSDBU) need to improve contracting officer oversight, document reviews, completion of site visits for "high-risk" businesses, and the accuracy of VetBiz Vendor Information Pages information. The Military Reservist Economic Injury Disaster Loan Program P.L. 106-50 , the Veterans Entrepreneurship and Small Business Development Act of 1999, signed into law on August 17, 1999, authorized the SBA's Military Reservist Economic Injury Disaster Loan (MREIDL) program. The SBA published the final rule establishing the program in the Federal Register on July 25, 2001, with an effective date of August 24, 2001. The Senate Committee on Small Business provided, in its committee report on the Veterans Entrepreneurship and Small Business Development Act of 1999, the following reasons for supporting the authorization of the MREIDL Program: During and after the Persian Gulf War in the early 1990's, the Committee heard from reservists whose businesses were harmed, severely crippled, or even lost, by their absence. Problems faced by reservists called to active duty and their small businesses were of a varied nature and included cash-flow problems, difficulties with training an appropriate alternate manager on very short notice to run the business during the period of service, lost clientele upon return, and on occasion, bankruptcy. These hardships can occur during a period of national emergency or during a period of contingency operation when troops are deployed overseas. To help such reservists and their small businesses, the Committee seeks to provide credit and management assistance to small businesses when an essential employee (i.e., an owner, manager or vital member of the business' staff) is a reservist called to active duty. The Committee believes that financial assistance in the form of loans, loan deferrals and managerial guidance are effective ways to minimize the adverse financial demands of the call to active duty. They not only ameliorate financial difficulties but also strengthen small businesses. The House Committee on Small Business also supported the program's authorization, indicating in its committee report that the program will also fulfill a long unmet need to assist our military reservists who are small business owners. Often these individuals, called to service at short notice, come back from fighting to protect our freedoms only to find their businesses in shambles. H.R. 1568 will establish loan deferrals, technical and managerial assistance, and loan programs for these citizen soldiers so that while they risk their lives they need not risk their livelihoods. As mentioned previously, the SBA provides direct loans for owners of businesses of all sizes, homeowners, and renters to assist their recovery from natural disasters. The SBA's MREIDL program provides disaster assistance in the form of direct loans of up to $2 million to help small business owners who are not able to obtain credit elsewhere to (1) meet ordinary and necessary operating expenses that they could have met but are not able to meet; or (2) enable them to market, produce, or provide products or services ordinarily marketed, produced, or provided by the business that cannot be done because an essential employee has been called up to active duty in his or her role as a military reservist or member of the National Guard due to a period of military conflict. Under specified circumstances, the SBA may waive the $2 million limit (e.g., the small business is in immediate danger of going out of business, is a major source of employment, employs 10% or more of the workforce within the commuting area in which the business is located). P.L. 106-50 defines an essential employee as "an individual who is employed by a small business concern and whose managerial or technical expertise is critical to the successful day-to-day operations of that small business concern." The act defines a military conflict as (1) a period of war declared by Congress; or (2) a period of national emergency declared by Congress or the President; or (3) a period of contingency operation. A contingency operation is designated by the Secretary of Defense as an operation in which our military may become involved in military actions, operations, or hostilities (peacekeeping operations). The SBA is authorized to make such disaster loans either directly or in cooperation with banks or other lending institutions through agreements to participate on an immediate or deferred basis. The loan term may be up to a maximum of 30 years and is determined by the SBA in accordance with the borrower's ability to repay the loan. The loan's interest rate is the SBA's published interest rate for an Economic Injury Disaster Loan at the time the application for assistance is approved by the SBA. Economic Injury Disaster Loan interest rates may not exceed 4%. The SBA is not required by law to require collateral on disaster loans. However, the SBA has established collateral requirements for disaster loans based on "a balance between protection of the Agency's interest as a creditor and as a provider of disaster assistance." The SBA generally does not require collateral to secure a MREIDL loan of $50,000 or less. Larger loan amounts require collateral, but the SBA will not decline a request for a MREIDL loan for a lack of collateral if the SBA is reasonably certain the borrower can repay the loan. The SBA disbursed one MREIDL loan in FY2014, none in FY2015, three in FY2016, and three in FY2017. Since the MREIDL's inception through December 31, 2017, the SBA has disbursed 352 MREIDL loans amounting to $32.97 million. Of these 352 loans, 85 loans (24.2% of the total number of MREIDL loans disbursed), amounting to $7.8 million (23.8% of the total amount of MREIDL loans disbursed), have been charged off (a declaration that the debt is unlikely to be collected) by the SBA. Because the MREIDL program is relatively small and noncontroversial, this report does not present a discussion of the congressional issues affecting the program. Concluding Observations Congress has demonstrated a continuing interest in federal programs designed to assist veterans transition from military to civilian life. For example, the SBA's veteran business development programs, loan guaranty programs, and federal procurement programs for small businesses generally, including service-disabled veteran-owned small businesses, have all been subject to congressional hearings during the past several Congresses. Also, as has been discussed, several bills have been introduced in recent Congresses to address the SBA's management of these programs and fraud. Given the many factors that influence business success, measuring the effectiveness of the SBA's veteran assistance programs, especially the programs' effect on veteran job retention and creation, is both complicated and challenging. For example, it is difficult to determine with any degree of precision or certainty the extent to which any changes in the success of a small business result primarily from that business's participation in the SBA's programs or from changes in the broader economy. That task is made even more challenging by the absence of performance outcome measures that could serve as a guide. In most instances, the SBA uses program performance measures that focus on indicators that are primarily output related, such as the number and amount of loans approved for veteran-owned small businesses and the number and amount of federal contracts awarded to service-disabled veteran-owned small businesses. Both GAO and the SBA's Office of Inspector General have recommended that the SBA adopt more outcome-related performance measures for the SBA's loan guaranty programs, such as tracking the number of borrowers that remain in business after receiving a SBA guaranteed loan to measure the extent to which the SBA contributed to their ability to stay in business. Other performance-oriented measures that Congress might also consider include requiring the SBA to survey veterans who participate in its business development programs or who have received a SBA guaranteed loan. This survey could provide information related to the difficulty the veterans experienced in obtaining a loan from the private sector, their experiences with the SBA's loan application process, and the role the SBA loan had in creating or retaining jobs. The SBA could also survey service-disabled veteran-owned small businesses that were awarded a federal contract to determine the extent to which the SBA was instrumental in their receiving the award and the extent to which the award contributed to their ability to create jobs or expand their scope of operations.

Several federal agencies, including the Small Business Administration (SBA), provide training and other assistance to veterans seeking civilian employment. For example, the Department of Defense (DOD), in cooperation with the SBA, Department of Labor, Department of Veterans Affairs, and several other federal agencies, operates the Transition Goals Plans Success program (Transition GPS), which provides employment information and entrepreneurship training to exiting military servicemembers to assist them in transitioning from the military to the civilian labor force. In recent years, the unemployment rate among veterans as a whole has generally been similar to or lower than the unemployment rate for nonveterans 18 years and older. However, veterans who have left the military since September 2001 have experienced higher unemployment than other veterans and, in some years, higher unemployment than nonveterans. As a result, Congress has focused much of its attention on finding ways to assist veterans who have left the military since September 2001. The SBA provides management and technical assistance services to more than 100,000 veterans each year through its various management and technical assistance training partners (e.g., Small Business Development Centers, Women's Business Centers [WBCs], Service Corps of Retired Executives [SCORE], and Veterans Business Outreach Centers [VBOCs]). The SBA's Office of Veterans Business Development (OVBD) also administers several programs to assist veterans, including the Operation Boots to Business: From Service to Startup initiative, which is part of DOD's Transition GPS program. The expansion of federal employment training programs targeted at specific populations, such as women and veterans, has led some Members and organizations to ask if these programs should be consolidated. In their view, eliminating program duplication among federal business assistance programs across federal agencies, and within the SBA, would result in lower costs and improved services. Others argue that keeping these business assistance programs separate enables them to offer services that match the unique needs of various underserved populations, such as veterans. In their view, instead of considering program consolidation as a policy option, the focus should be on improving communication and cooperation among the federal agencies providing assistance to entrepreneurs. This report opens with an examination of the economic circumstances of veteran-owned businesses drawn from the Bureau of the Census's 2012 Survey of Business Owners (SBO). It then provides a brief overview of veterans' employment experiences, comparing unemployment and labor force participation rates for veterans, veterans who have left the military since September 2001, and nonveterans. The report also describes employment assistance programs offered by several federal agencies to assist veterans in their transition from the military to the civilian labor force and examines, in greater detail, the SBA's veteran business development programs, the SBA's efforts to assist veterans' access to capital, and the SBA's veteran contracting programs. It also discusses the SBA's Military Reservist Economic Injury Disaster Loan program and P.L. 114-38, the Veterans Entrepreneurship Act of 2015, which authorized and made permanent the SBA's recent practice of waiving the SBAExpress loan program's one time, up-front loan guarantee fee for veterans (and their spouse).

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Small Business Access to Capital The Small Business Administration (SBA) administers several programs to support small businesses, including venture capital programs to provide "long-term loans and equity capital to small businesses, especially those with potential for substantial job growth and economic impact" and loan guaranty programs to encourage lenders to provide loans to small businesses "that might not otherwise obtain financing on reasonable terms and conditions." Historically, one of the justifications presented for funding the SBA's access to capital programs has been that small businesses can be at a disadvantage, compared with other businesses, when trying to obtain sufficient capital and credit. As an economist explained Growing firms need resources, but many small firms may have a hard time obtaining loans because they are young and have little credit history. Lenders may also be reluctant to lend to small firms with innovative products because it might be difficult to collect enough reliable information to correctly estimate the risk for such products. If it's true that the lending process leaves worthy projects unfunded, some suggest that it would be good to fix this "market failure" with government programs aimed at improving small businesses' access to credit. Congressional interest in the SBA's access to capital programs has increased in recent years, primarily because assisting small business in accessing capital is viewed as a means to enhance job creation and economic growth. Some have argued that the SBA should be provided additional resources to assist small businesses in acquiring capital necessary to start, continue, or expand operations and create jobs. Others worry about the long-term adverse economic effects of spending programs that increase the federal deficit. They advocate 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. Economists generally do not view job creation as a justification for providing federal assistance to small businesses. They argue that in the long term such assistance will likely reallocate jobs within the economy, not increase them. In their view, jobs arise primarily from the size of the labor force, which depends largely on population, demographics, and factors that affect the choice of home versus market production (e.g., the entry of women in the workforce). However, economic theory does suggest that increased federal spending may result in additional jobs in the short term. For example, the SBA reported in September 2010 that the $730 million in additional funding provided to the agency by P.L. 111-5 , the American Recovery and Reinvestment Act of 2009 (ARRA), created or retained 785,955 jobs. As will be discussed, the tightening of private-sector lending standards and the disruption of credit markets in 2008 and 2009 led to increased concern in Congress that small businesses might be prevented from accessing sufficient capital to start, continue, or expand their operations—actions that were expected to lead to higher levels of employment. As the SBA indicated in its FY2010 congressional budget justification report Over the last decade, small businesses across this country have been responsible for the majority of new private sector jobs, leaving little doubt that they are a vital engine for the nation's economic growth. However, with the United States facing the most severe economic crisis in more than 70 years, small businesses are confronted with a frozen lending market and limited access to the capital they need to survive and grow at this critical time. Since then credit markets have improved and lending standards have moderated, but congressional concern about the economy and disagreements concerning the best means to enhance job creation and economic growth remain. During the 111 th Congress, several laws were enacted to enhance small business access to capital. For example P.L. 111-5 , provided the SBA an additional $730 million, including $375 million to temporarily subsidize SBA fees and increase the 7(a) loan guaranty program's maximum loan guaranty percentage from 85% on loans of $150,000 or less and 75% on loans exceeding $150,000 to 90% for all regular 7(a) loans. P.L. 111-240 , the Small Business Jobs Act of 2010, authorized the Secretary of the Treasury to establish a $30 billion Small Business Lending Fund (SBLF) ($4.0 billion was issued) to encourage community banks with less than $10 billion in assets to increase their lending to small businesses; $1.5 billion State Small Business Credit Initiative to provide funding to participating states with small business capital access programs; numerous changes to the SBA's loan guaranty and contracting programs; funding to continue the fee subsidies and the 7(a) program's 90% maximum loan guaranty percentage through December 31, 2010; and about $12 billion in tax relief for small businesses (see Table A-1 in the Appendix for a list of its key provisions). P.L. 111-322 , the Continuing Appropriations and Surface Transportation Extensions Act, 2011, authorized the SBA to continue its fee subsidies and the 7(a) program's 90% maximum loan guaranty percentage through March 4, 2011, or until available funding was exhausted, which occurred on January 3, 2011. According to the SBA, the temporary fee subsidies and 90% maximum loan guaranty for the 7(a) program "engineered a significant turnaround in SBA lending.... The end result is that the agency helped put more than $42 billion in the hands of small businesses through the Recovery Act and Jobs Act combined." During the 112 th Congress, several bills were introduced to enhance small business access to capital through the SBA, including bills to extend the SBA's temporary fee subsidies and increase the 7(a) program's loan guaranty percentage to 90%. Congress did not adopt these legislative efforts. Instead, Congress passed legislation designed to enhance small business contracting opportunities, expand access to the SBA's surety bond guarantee program, amend the SBA's size standard practices, require a review and reassessment of the federal procurement small business goaling program, and expand small business mentor-protégé programs. Congress also adopted the Jumpstart Our Business Startups Act ( P.L. 112-106 ) that established a regulatory structure for startups and small businesses to raise capital through securities offerings using the Internet through crowdfunding (discussed later). During the 113 th Congress, P.L. 113-76 , the Consolidated Appropriations Act, 2014, increased the SBA's Small Business Investment Company (SBIC) venture capital program's authorization amount to $4 billion from $3 billion as a means to provide small businesses additional access to venture capital. During the 114 th Congress P.L. 114-38 , the Veterans Entrepreneurship Act of 2015, authorized and made permanent the SBA's waiving of the SBAExpress loan program's one-time, up-front loan guaranty fee for veterans (and their spouse). The act also increased the 7(a) loan program's FY2015 authorization limit from $18.75 billion to $23.5 billion; and P.L. 114-113 , the Consolidated Appropriations Act, 2016, expanded the 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; generally limited refinancing under this provision to no more than 50% of the dollars loaned under the 504/CDC program during the previous fiscal year; and increased the SBIC program's family of funds limit (the amount of outstanding leverage allowed for two or more SBIC licenses under common control) to $350 million from $225 million. The act also increased the 7(a) loan program's authorization limit to $26.5 billion for FY2016. During the 115 th Congress P.L. 115-31 , the Consolidated Appropriations Act, 2017, increased the 7(a) program's authorization limit to $27.5 billion for FY2017 and P.L. 115-141 , the Consolidated Appropriations Act, 2018, increased the 7(a) program's authorization limit to $29.0 billion for FY2018. This report addresses a core issue facing the 116 th Congress: What, if any, additional action should the federal government take to enhance small business access to capital? It discusses the role of small business in job creation and retention, provides an assessment of the supply and demand for small business loans, and discusses recently enacted laws designed to enhance small business access to capital by increasing the supply of small business loans, the demand for small business loans, or both. It also examines recent actions concerning the SBA's budget and concludes with a brief overview of three legislative options available to address small business access to capital issues during the 116 th Congress: wait-and-see, enact additional programs, or reduce and consolidate existing programs. Two Indicators of the Supply and Demand for Private-Sector Small Business Loans Federal Reserve Board: Surveys of Senior Loan Officers Each quarter, the Federal Reserve Board surveys senior loan officers concerning their bank's lending practices. The survey includes a question concerning their bank's credit standards for small business loans: "Over the past three months, how have your bank's credit standards for approving applications for C&I [commercial and industrial] loans or credit lines—other than those to be used to finance mergers and acquisitions—for small firms (annual sales of less than $50 million) changed?" The senior loan officers are asked to indicate if their bank's credit standards have "Tightened considerably," "Tightened somewhat," "Remained basically unchanged," "Eased somewhat," or "Eased considerably." Subtracting the percentage of respondents reporting "Eased somewhat" and "Eased considerably" from the percentage of respondents reporting "Tightened considerably" and "Tightened somewhat" provides an indication of the market's supply of small business loans. As shown in Figure 1 , senior loan officers reported that they generally tightened small business loan credit standards from 2007 through late 2009. Since 2009, small business credit markets have generally improved, with some tightening in 2016. The survey also includes a question concerning the demand for small business loans: "Apart from normal seasonal variation, how has demand for C&I loans changed over the past three months for small firms (annual sales of less than $50 million)?" Senior loan officers are asked to indicate if demand was "Substantially stronger," "Moderately stronger," "About the same," "Moderately weaker," or "Substantially weaker." Subtracting the percentage of respondents reporting "Moderately weaker" and "Substantially weaker" from the percentage of respondents reporting "Substantially stronger" and "Moderately stronger" provides an indication of the market's demand for small business loans. As shown in Figure 1 , senior loan officers reported that the demand for small business loans declined somewhat in 2007 and 2008 and declined significantly in 2009. Demand then leveled off (at a relatively reduced level) during 2010, increased somewhat during the first half of 2011, declined somewhat during the latter half of 2011, generally increased in 2012 through 2015, and has varied somewhat—increasing in some quarters and declining in others—since then. FDIC Call Reports: Outstanding Small Business Loans The Federal Deposit Insurance Corporation (FDIC) reports bank lending statistics on a quarterly basis drawn from the banks' Consolidated Reports of Condition and Income (Call Report). The FDIC has maintained comparable small business lending data for the second quarter (June 30) of each year since 2002. Figure 2 shows the amount of outstanding small business loans (defined by the FDIC as commercial and industrial loans of $1 million or less) for non-agricultural purposes as of June 30 of each year since 2006. As shown in Figure 2 , the amount of outstanding small business loans for non-agricultural purposes increased at a relatively steady pace from June 30, 2006, to June 30, 2008, declined over the next several years, and has increased since June 30, 2013. Although changes in small business outstanding debt are not necessarily a result of changes in the supply of small business loans, many, including the SBA, view a decline in small business outstanding debt as a signal that small businesses might be experiencing difficulty accessing sufficient capital to enable them to lead job growth. SBA Lending Table 1 shows selected financial statistics for the SBA from FY2005 to FY2018. It provides an overview of the extent of the SBA's various programs to enhance small business access to capital. The first column reports the total face value of non-disaster business loans that were disbursed by the SBA from FY2005 to FY2018. The second column indicates the number of non-disaster business loans approved by the SBA (after full cancellations) from FY2005 to FY2018. Each year, 7% to 10% of the loans approved by the SBA are subsequently canceled for a variety of reasons, typically by the borrower. The third column reports the contract value of bonds guaranteed under the SBA's surety bond guarantee program. A surety bond is a three-party instrument between a surety (someone 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. It is designed to reduce the risk of contracting with small businesses that may not have the credit history or prior experience of larger businesses. The SBA does not issue surety bonds. Instead, it provides and manages surety bond guarantees for qualified small and emerging businesses through its Surety Bond Guarantee (SBG) Program. The SBA reimburses a participating surety (within specified limits) for losses incurred due to a contractor's default on a bond. The fourth column shows the outstanding principal balance for the SBA's 7(a) secondary market guarantee program, which is discussed later in this report. The final column reports the SBA's outstanding principal balance of loans that have not been charged off as of the end of the fiscal year. It provides a measure of the SBA's scope of lending. As shown in Table 1 , the amount of non-disaster small business loans disbursed by the SBA declined in FY2008 and FY2009; increased, but remained below pre-recession levels in FY2010; and has generally exceeded pre-recession levels since FY2011. The decline in the amount of small business loans guaranteed by the SBA during FY2008 and FY2009 was, at least in part, due to the following three interrelated factors: many lending institutions become increasingly reluctant to lend to small businesses, even with an SBA loan guarantee, as loan defaults increased due to the recession, earnings fell, and an increasing number of lending institutions failed; the secondary market for small business loans, as with other secondary markets, began to contract in October 2008, reached its nadir in January 2009, and then began a relatively prolonged recovery. The SBA estimates that about half of the lenders that make SBA guaranteed loans resell them to obtain additional capital to make additional loans; and the demand for small business loans declined as many small business owners (and entrepreneurs considering starting a new small business) became more risk adverse during the recession. In 2009, the number and amount of small business loans guaranteed by the SBA declined sharply early in the year, followed by modest increases during the second and third quarters, and briefly surpassed pre-recession levels in the fourth quarter as small business owners took advantage of ARRA funded fee subsidies for the SBA's 7(a) and 504/CDC loan guaranty programs and an increase in the 7(a) program's maximum loan guaranty percentage to 90%, which were expected to end by the end of the year. The SBA argued that the increase in the number and amount of small business loans it guaranteed during FY2010 was primarily due to fee subsidies and loan enhancements first put in place under ARRA and later extended by law to cover most of the fiscal year. The SBA noted that its average weekly loan volume for FY2010 ($333 million) was 29% higher than its average weekly loan volume for FY2009 ($258 million). Another likely factor contributing to the higher loan volume was a general improvement in the economy as the recession ended (officially in June 2009) and the economic recovery began, albeit slowly in many parts of the nation. The demand for SBA loans increased significantly during the first quarter of FY2011 (October-December 2010), as borrowers took advantage of SBA fee subsidies that were expected to expire at the end of the calendar year. The SBA announced, on January 3, 2011, that it "approved nearly 22,000 small business loans for $10.47 billion, supporting a total of $12.16 billion in lending" during the first quarter of FY2011, which "was the highest volume in a fiscal year's first quarter than at any time in the agency's history." After the fee subsidies ended, SBA lending declined during the second quarter of FY2011, and then increased somewhat during the final two quarters of FY2011. As mentioned previously, the amount of non-disaster small business loans disbursed by the SBA has continued at or above pre-recession levels since FY2011. Recent Laws Designed to Enhance the Supply of Small Business Loans As mentioned previously, several laws were enacted during the 110 th and 111 th Congresses to enhance small business access to capital. The following laws were enacted largely in response to the contraction of financial credit markets which started in 2008, and reached its nadir in early 2009. P.L. 110-343 , the Emergency Economic Stabilization Act of 2008, was designed to enhance the supply of loans to businesses of all sizes. The act authorized the Troubled Asset Relief Program (TARP) to "restore liquidity and stability to the financial system of the United States" by purchasing or insuring up to $700 billion in troubled assets from banks and other financial institutions. TARP's purchase authority was later reduced from $700 billion to $475 billion by P.L. 111-203 , the Dodd-Frank Wall Street Reform and Consumer Protection Act. The Department of the Treasury has disbursed $389 billion in TARP funds, including $337 million to purchase SBA 7(a) loan guaranty program securities. The authority to make new TARP commitments expired on October 3, 2010. P.L. 111-5 (ARRA) included several provisions to enhance the supply of loans to small businesses. It authorized the SBA to establish a temporary secondary market guarantee authority to provide a federal guarantee for pools of first lien 504/CDC program loans that are to be sold to third-party investors. The SBA was granted emergency rulemaking authority to issue regulations for the program within 15 days after enactment (by March 4, 2009). After experiencing unanticipated delays in implementing the program due to "limited staff resources" and determining how to meet ARRA reporting requirements, the SBA issued regulations for its 504/CDC First Mortgage Loan Pooling program on October 30, 2009, and it became operational in June 2010. The program was scheduled to end on February 16, 2011, or until $3 billion in new pools are created, whichever occurred first. As will be discussed, the Small Business Jobs Act of 2010 extended the program. authorized the SBA to use emergency rulemaking authority to issue regulations within 30 days after enactment (by March 19, 2009), to make below market interest rate direct loans to SBA-designated "Systemically Important Secondary Market (SISM) Broker-Dealers." These broker-dealers would use the loan funds to purchase SBA-guaranteed loans from commercial lenders, assemble them into pools, and sell them to investors in the secondary loan market. The SBA experienced unanticipated delays in implementing the program primarily due to the need to determine "the extent to which broker-dealers, and perhaps small business lenders, would be required to share in the potential losses associated with extending the guarantee in the 504 loan program." The SBA issued regulations to establish the Direct Loan Program for Systemically Important Secondary Market Broker-Dealers on November 19, 2009. provided $255 million for a temporary, two-year small business stabilization program to guarantee loans of $35,000 or less to small businesses for qualified debt consolidation, later named the America's Recovery Capital (ARC) Loan program (the program ceased issuing new loan guarantees on September 30, 2010); $15 million for the SBA's surety bond program, and temporarily increased the maximum bond amount from $2 million to $5 million, and up to $10 million under certain conditions (the higher maximum bond amounts ended on September 30, 2010); $6 million for the SBA's Microloan program's lending program and $24 million for the Microloan program's technical assistance program; and increased the funds ("leverage") available to SBA-licensed Small Business Investment Companies (SBICs) to no more than 300% of the company's private capital or $150,000,000, whichever is less. authorized the SBA to guarantee 504/CDC loans used to refinance business expansion projects as long as the existing indebtedness did not exceed 50% of the project cost of the expansion and the borrower met specified requirements. P.L. 111-240 was enacted after the financial credit markets had stabilized. It included several provisions designed to enhance the supply of loans to small businesses. For example, the act authorized the Secretary of the Treasury to establish a $30 billion Small Business Lending Fund (SBLF) to encourage community banks to provide small business loans ($4 billion was issued) and a $1.5 billion State Small Business Credit Initiative (SSBCI) to provide funding to participating states with small business capital access programs. extended the SBA's secondary market guarantee authority from two years after the date of ARRA's enactment to two years after the date of the program's first sale of a pool of first lien position 504/CDC loans to a third-party investor (which took place on September 24, 2010). authorized $22.5 million for a temporary, three-year Small Business Intermediary Lending Pilot Program to provide direct loans to intermediaries which provide loans to small business startups, newly established small businesses, and growing small businesses. On August 4, 2011, the SBA announced the first 20 community lenders which were selected to participate in the program. authorized $15 million in additional funding for the SBA's 7(a) loan guaranty program. increased the loan guarantee limits for the SBA's 7(a) program from $2 million to $5 million, and for the 504/CDC program 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. increased the SBA's Microloan program's loan limit for borrowers from $35,000 to $50,000 and for microlender intermediaries after their first year in the program from $3.5 million to $5 million. temporarily increased for one year the SBA 7(a) Express Program's loan limit from $350,000 to $1 million (the temporary increase expired on September 26, 2011). required the SBA to establish an on-line lending platform listing all SBA lenders and information concerning their loan rates. authorized the SBA to temporarily guarantee for two years, under specified circumstances, 504/CDC loans that refinance existing business debt even if the project does not involve the expansion of the business. For additional details concerning provisions in the Small Business Jobs Act of 2010, see Table A-1 in the Appendix . During the 112 th Congress, P.L. 112-106 , the Jumpstart Our Business Startups Act (JOBS Act), established "a regulatory structure for startups and small businesses to raise capital through securities offerings using the Internet through crowdfunding." The JOBS Act's crowdfunding provisions "were intended to help provide startups and small businesses with capital by making relatively low dollar offerings of securities, featuring relatively low dollar investments by the 'crowd,' less costly." On November 16, 2015, the Securities and Exchange Commission (SEC) published a final rule, effective May 16, 2016, to implement the JOBS Act's crowdfunding provisions (e.g., the SEC established limits on the amount of money an issuer can raise and individual investors can invest over a 12-month period under the crowdfunding exemption to the securities laws, imposed disclosure requirements on the issuer's business and securities offering, and created a regulatory framework for the broker-dealers and funding portals that facilitate the crowdfunding transactions). During the 113 th Congress, P.L. 113-76 , the Consolidated Appropriations Act, 2014, included a provision increasing the annual authorization amount for the SBA's Small Business Investment Company (SBIC) program to $4 billion from $3 billion. The SBIC program provides privately owned and managed SBA-licensed SBICs loans at favorable rates (called leverage), and, in exchange, the SBICs provide equity capital to small businesses in various ways, including by purchasing small business equity securities (e.g., stock, stock options, warrants), making loans to small businesses, purchasing debt securities from small businesses, and providing small businesses, subject to limitations, a guarantee of their monetary obligations to creditors not associated with the SBIC. The SBIC program is designed to stimulate and supplement "the flow of private equity capital and long term loan funds which small business concerns need for the sound financing of their business operations and for their growth, expansion, and modernization, and which are not available in adequate supply." In FY2013, the SBA committed to guarantee $2.15 billion in SBIC small business investments, and SBICs invested another $1.34 billion from private capital, for almost $3.5 billion in financing for 1,068 small businesses. Although the SBA's commitment of $2.15 billion in SBIC leverage in FY2013 was well below the new $4 billion threshold amount, advocates of the higher threshold argued that the increase would enable the program to grow, providing more capital to a larger number of small businesses in the future. Subsequently, the SBA committed to guarantee $2.55 billion in SBIC small business investments in FY2014, $2.55 billion in FY2015, $2.51 billion in FY2016, $1.96 billion in FY2017, and $2.52 billion in FY2018. During the 114 th Congress, P.L. 114-38 , the Veterans Entrepreneurship Act of 2015, increased the supply of 7(a) loans by increasing the program's FY2015 authorization limit of $18.75 billion (on disbursements) to $23.5 billion. The increased authorization amount was necessary to accommodate an unexpected increase in the demand for SBA loans. In addition, P.L. 114-113 , the Consolidated Appropriations Act, 2016, further increased the 7(a) program's authorization limit to $26.5 billion for FY2016. The act also increased the supply of 504/CDC loans by expanding the projects eligible for refinancing under the 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 generally limited the expanded refinancing to no more than 50% of the dollars loaned under the 504/CDC program during the previous fiscal year. The act also increased the supply of SBIC financings by increasing the SBIC program's family of funds limit (the amount of outstanding leverage allowed for two or more SBIC licenses under common control) to $350 million from $225 million. During the 115 th Congress, P.L. 115-31 , the Consolidated Appropriations Act, 2017, increased the 7(a) program's authorization limit to $27.5 billion for FY2017 from $26.5 billion in FY2016 and P.L. 115-141 , the Consolidated Appropriations Act, 2018, increased the 7(a) program's authorization limit to $29.0 billion for FY2018. Recent Laws Designed to Enhance the Demand for Small Business Loans ARRA provided the SBA $375 million to subsidize fees for the SBA's 7(a) and 504/CDC loan guaranty programs and to 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 regular 7(a) loans through September 30, 2010, or when appropriated funding for the subsidies and loan modification was exhausted. The fee subsidies were designed to increase the demand for SBA loans by reducing loan costs. 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 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 subsides 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 subsides 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 subsides 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 subsides 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 subsides 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, authorizes the SBA to use funds provided under the Small Business Jobs Act of 2010 to continue the SBA's fee subsides and 90% maximum loan guaranty percentage through March 4, 2011, or until available funding is exhausted. On January 3, 2011, the SBA announced that funding for the fee subsidies and 90% maximum loan guaranty percentage had been exhausted. ARRA also included 11 tax relief provisions that have the potential to benefit small businesses in a broad range of industries. By reducing costs, it could be argued that providing tax relief for small businesses may lead to increased demand for small business loans because small business owners have additional resources available to invest in their business. The following five ARRA tax provisions provided about $5.7 billion in tax relief and were targeted at small businesses, whereas the other ARRA tax provisions were available to businesses of all sizes: allowed businesses with $15 million or less in average annual gross receipts in the past three years to carry back net operating losses from 2008 for up to five years instead of two years. extended through 2009 the enhanced expensing allowance, which allows businesses to deduct up to $250,000 of the cost of eligible assets placed in service in 2009, within certain limits. increased the exclusion of the gain on the sale of small business stock to 75% (instead of 50%) of any gain realized on the sale of eligible small business stock acquired between February 18, 2009, and December 31, 2010. reduced the recognition period from 10 years to seven years for corporate tax on sale of appreciated assets in 2009 or 2010 by S corporations that once were organized as C corporations. allowed individuals who had an adjusted gross income in 2008 of less than $500,000 and can prove that over half their income came from a small business to base their estimated tax payments for 2009 on 90% of their tax liability for 2008. P.L. 111-240 was designed to increase the demand for SBA loans by providing $505 million (plus an additional $5 million for related administrative expenses) to temporarily subsidize SBA's fees and increase the 7(a) program's maximum loan guaranty percentage to 90%. The act also required the SBA to establish an alternative size standard for the SBA's 7(a) and 504/CDC loan guaranty programs that uses maximum net worth and average net income as an alternative to the use of industry standards. It also established the following interim alternative size standard for both the 7(a) and 504/CDC programs: the business qualifies as small if it does not have a tangible net worth in excess of $15 million and does not have an average net income after federal taxes (excluding any carry-over losses) in excess of $5 million for two full fiscal years before the date of application. These changes were designed to increase the demand for small business loans by increasing the number of small businesses that are eligible for SBA assistance. P.L. 111-240 also provided small businesses with about $12 billion in tax relief. The act raised the exclusion of gains on the sale or exchange of qualified small business stock from the federal income tax to 100%, with the full exclusion applying only to stock acquired the day after the date of enactment through the end of 2010; increased the deduction for qualified start-up expenditures from $5,000 to $10,000 in 2010, and raised the phaseout threshold from $50,000 to $60,000 for 2010; placed limitations on the penalty for failure to disclose reportable transactions based on resulting tax benefits; allowed general business credits of eligible small businesses for 2010 to be carried back five years; exempted general business credits of eligible small businesses in 2010 from the alternative minimum tax; allowed a temporary reduction in the recognition period for built-in gains tax; increased expensing limitations for 2010 and 2011 and allowed certain real property to be treated as Section 179 property; allowed additional first-year depreciation for 50% of the basis of certain qualified property; and removed cellular telephones and similar telecommunications equipment from listed property so their cost can be deducted or depreciated like other business property. As mentioned earlier, P.L. 114-38 authorized and made permanent the Obama Administration's waiver of the up-front, one-time loan guaranty fee for veteran loans under the SBAExpress loan guaranty program beginning on or after October 1, 2015, except during any upcoming fiscal year for which the President's budget, submitted to Congress, includes a credit subsidy cost for the 7(a) program, in its entirety, that is above zero. The fee waiver is designed to encourage veterans to apply for a small business loan. Discussion As mentioned previously, congressional interest in the SBA's access to capital programs has increased in recent years, primarily because assisting small business in accessing capital is viewed as a means to enhance job creation and economic growth. Some have argued that the SBA should be provided additional resources to assist small businesses in acquiring capital necessary to start, continue, or expand operations and create jobs. Others worry about the long-term adverse economic effects of spending programs that increase the federal deficit. They also point to surveys of small business firms conducted by the National Federation of Independent Business (NFIB) which suggest that small business owners consistently place financing issues near the bottom of their most pressing concerns. Instead of increasing federal funding for the SBA, they advocate small business tax reduction, reform of financial credit market regulation, and federal fiscal restraint as the best means to assist small business and foster increased levels of economic growth and job creation. Some advocates of providing additional resources to the SBA have argued that the federal government should enhance small business access to capital by creating a SBA direct lending program for 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. Also, 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. Also, 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. During the 113 th Congress, H.R. 2451 , the Strengthening Entrepreneurs' Economic Development Act of 2013, introduced on June 20, 2013, and referred to the House Committee on Small Business, would have authorized the SBA to establish a direct lending program for small businesses that have fewer than 20 employees. Under the bill, each loan would be limited to $150,000 and have a term of six years or less. Before issuing a direct loan, the SBA would be required to make the loan available to eligible lenders within 50 miles of the applicant's principal office. If no local lenders agree to originate, underwrite, close, and service the loan within five business days, the SBA would make the loan available to lenders in the Preferred Lender program. If still no lenders agree to originate, underwrite, close, and service the loan, the SBA shall, within 10 business days, consider the application for a direct loan. The SBA has authority to make direct loans, both for disaster relief and for business purposes. The SBA limited the eligibility for direct business loans in 1984, 1994, and 1996 as a means to reduce costs. Until October 1, 1985, the SBA provided direct business loans to qualified small businesses. From October 1, 1985, to September 30, 1994, SBA direct business loan eligibility was limited to qualified small businesses owned by individuals with low income or located in an area of high unemployment, owned by Vietnam-era or disabled veterans, owned by the handicapped or certain organizations employing them, or certified under the minority small business capital ownership development program. Microloan program intermediaries were also eligible. On October 1, 1994, SBA direct loan eligibility was limited to Microloan program intermediaries and to small businesses owned by the handicapped. Funding to support direct loans to the handicapped through the Handicapped Assistance (renamed the Disabled Assistance) Loan program ended in 1996. The last loan issued under the Disabled Assistance Loan program took place in FY1998. The SBA currently offers direct business loans only to Microloan program intermediaries. Advocates for a small business direct lending program have argued that such a program would provide "rapid access to much-needed capital without having to face the administrative delays posed by the current Small Business Administration lending process." Advocates of a temporary SBA direct lending program argued that such a program was necessary during periods of economic difficulty because In prosperous times, small businesses are able to shop around to different lenders to find the best available terms and conditions for a loan. But in times of economic downturns, those same lenders aren't as willing to lend to small businesses. More than ever during these times, it's the government's responsibility to step in to help small businesses access the loans they need to keep their businesses running and workers employed. Opponents of a small business direct lending program argue that the SBA's mission is to augment the private sector by guaranteeing loans, not compete with it by providing direct loans to small businesses. They also argue that these loans hold greater risk than most; otherwise the private sector would accept them. They worry that SBA defaults may increase, resulting in added expense, either to taxpayers in the form of additional appropriations or to other small business borrowers in the form of higher fees, to cover the defaults. They argue that the SBA stopped offering direct loans in 1995, primarily because the subsidy rate was "10 to 15 times higher than that of our guaranty programs." They also assert that providing direct loans to small businesses might invite corruption. They note that the Reconstruction Finance Corporation (RFC), the SBA's predecessor, made direct loans to business and was accused of awarding loans based on the applicant's political connections or personal ties with RFC loan officers. Opponents also argue that the SBA does not have the human, physical, and technical resources to make direct loans. Still others argue that providing additional funding for SBA programs is largely a symbolic gesture because the SBA's guaranteed loan programs account for a relatively small fraction of small business lending. They argue that, in a typical year, no more than 1% of small businesses receive an SBA-guaranteed loan, and those loans account for less than 3% or 4% of the total amount loaned to small businesses. They assert that "these numbers show that the private banking system finances most loans and that the SBA is therefore largely irrelevant in the capital market." SBA Funding As mentioned previously, some have argued that the SBA should be provided additional funding to assist small businesses in acquiring capital necessary to start, continue, or expand operations and create jobs. Others worry about the long-term adverse economic effects of spending programs that increase the federal deficit. They advocate fiscal restraint as the best means to assist small business and foster increased levels of economic growth and job creation. Both of these views have been reflected in recent SBA budget discussions as Congress has focused on ways to reduce the SBA's budget while not compromising the SBA's ability to assist small businesses access capital and assist individuals and businesses of all sizes cope with damages caused by natural disasters. As shown in Table 2 , the SBA's appropriations have varied significantly since FY2005, ranging from a high of $2.360 billion in FY2018 to a low of $571.8 million in FY2007. Much of this volatility has resulted from significant increases in appropriations for disaster assistance in response to major hurricanes; increases in appropriations for business loan credit subsidies following recessions; and significant, temporary increases in appropriations for the SBA's other programs in FY2009 ($724.0 million) and FY2010 ($962.5 million) that were designed to enhance small businesses' access to capital following the Great Recession. The SBA's appropriations are separated into four categories in Table 2 (disaster assistance, disaster assistance supplemental, business loan credit subsidies, and other programs) because the need for disaster assistance is largely beyond congressional control and expenditures for business loan credit subsidies tend to vary with changes in the national economy. As a result, it could be argued that comparisons of SBA appropriations over time can be made more meaningful if those comparisons include appropriations for all four categories of spending. For example, the SBA's appropriation of $2.360 billion in FY2018 was nearly double its appropriation of $1.337 billion in FY2017 and nearly three times its appropriation of $871.0 million in FY2016. However, most of this increase was due to increased supplemental funding for disaster assistance. As shown in Table 2 , the SBA's FY2018 appropriation of $2.360 billion includes $1.659 billion in supplemental funding for disaster assistance, $3.4 million for business loan credit subsidies (for the Microloan program), and $697.4 million for all other SBA programs ($268.5 million for salaries and expenses; $247.1 million for entrepreneurial development programs, such as SCORE, Small Business Development Centers, and Women Business Centers; $152.8 million for administrative expenses related to the SBA's business loan programs; $19.9 million of the Office of Inspector General; and $9.1 million for the Office of Advocacy). Concluding Observations Congress approved many changes during the 111 th Congress to enhance small business access to capital. For example, P.L. 111-240 authorized the Secretary of the Treasury to establish a $30 billion Small Business Lending Fund (SBLF) to make capital investments in eligible community banks ($4 billion was issued). It authorized a $1.5 billion State Small Business Credit Initiative Program to be administered by the Department of the Treasury. It made numerous changes to SBA programs in an attempt to make them more accessible to small businesses, such as increasing maximum loan amounts, creating an alternative size standard so more businesses can qualify for assistance, waiving some matching requirements, and temporarily expanding refinancing options under the 504/CDC program. It provided funding to extend SBA fee subsidies and the 7(a) program's 90% maximum loan guaranty percentage, passed legislation to increase small business contracting opportunities, and provided about $12 billion in tax relief for small businesses. In addition, Congress approved legislation to temporarily reduce, for calendar years 2011 and 2012, payroll taxes by two percentage points for workers (including self-employed small business owners) who pay into Social Security. The NFIB has long advocated a reduction of federal payroll taxes as a means to reduce small business expenses. During the 112 th Congress, Congress passed legislation to expand access to the SBA's surety bond guarantee program, amend the SBA's size standard practices, require a review of the federal procurement small business goaling program, expand small business mentor-protégé programs, and establish a regulatory structure for startups and small businesses to raise capital through securities offerings using the Internet through crowdfunding. During the 113 th and 114 th Congresses, Congress approved legislation that increased the annual authorization amount for the SBA's SBIC program to $4 billion from $3 billion, authorized and made permanent the Obama Administration's waiver of the up-front, one-time loan guaranty fee for veteran loans under the SBAExpress loan guaranty program, expanded the projects eligible for refinancing under the 504/CDC loan guarantee program, and increased the SBIC program's family of funds limit (the amount of outstanding leverage allowed for two or more SBIC licenses under common control) to $350 million from $225 million. The question for the 116 th Congress is what, if any, additional action should the federal government take to enhance small business access to capital? Should Congress decide to take further action, three not necessarily mutually exclusive options are readily apparent. First, Congress could adopt a wait-and-see strategy that focuses on congressional oversight of the programmatic changes to the SBA's programs that were enacted during recent Congresses. Advocates of this approach could argue that small business credit markets have generally improved over the past several years, the SBA's lending now exceeds pre-recession levels, and the demand for small business loans is increasing. Therefore, it could be argued that evaluating the impact of the programmatic changes to the SBA's programs that have been enacted over the past several years, especially given that economic conditions appear to be improving, should take place before taking further congressional action to improve small business access to capital. Second, Congress could consider additional changes to the SBA's programs in an effort to enhance small business access to capital, such as considering a direct lending program, providing additional funding for SBA fee subsidies and loan modifications, modifying the Microloan program, or increasing funding for SBA programs. Advocates of this approach could argue that although small business credit markets have generally improved over the past several years, job growth is still a concern. In their view, assisting small businesses access capital would help to create and retain jobs. Third, Congress could consider the repeal of portions of the Small Business Jobs Act of 2010, or other SBA programs. For example, on March 15, 2011, the House Committee on Small Business approved its views and estimates for the concurrent resolution on the budget for FY2012. The committee recommended that the SBA's budget be "cut nearly $100 million." The committee recommended that 14 programs, including several management and technical assistance training programs, be defunded "because they duplicate existing programs at the SBA or at other agencies" or "where there is an absence of any evidence that they will help small businesses create new jobs." In its views and estimates letter for the FY2013 budget, the House Committee on Small Business recommended, on March 7, 2012, that funding be reduced for several SBA programs, including funding for 7(j) technical assistance, microloan technical assistance, and the National Women's Business Council. It also recommended that funding be eliminated for Women's Business Centers, Veterans Business Centers, Prime Technical Assistance, HUBZone outreach, the Office of Native American Affairs, and the Office of International Trade. It also recommended that funding be eliminated for several SBA initiatives, including the Drug-Free Workplace, Clusters, and National Veterans Entrepreneurial Training Program. Advocates of this option argue that instead of increasing federal funding for the SBA, the federal government should focus on small business tax reduction and federal fiscal restraint as the best means to assist small business and foster increased levels of economic growth and job creation. Appendix. Selected Provisions in the Small Business Jobs Act of 2010

The U.S. Small Business Administration (SBA) administers several programs to support small businesses, including loan guaranty and venture capital programs to enhance small business access to capital; contracting programs to increase small business opportunities in federal contracting; direct loan programs for businesses, homeowners, and renters to assist their recovery from natural disasters; and small business management and technical assistance training programs to assist business formation and expansion. Congressional interest in these programs has increased in recent years, primarily because assisting small business is viewed as a means to enhance economic growth. Some have argued that the SBA should be provided additional resources to assist small businesses in acquiring capital necessary to start, continue, or expand operations and create jobs. Others worry about the long-term adverse economic effects of spending programs that increase the federal deficit. They advocate 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. Over the past several Congresses, several laws were enacted to assist small businesses, including 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 SBA fees and increase the 7(a) loan guaranty program's maximum loan guaranty percentage to 90%. P.L. 111-240, the Small Business Jobs Act of 2010, authorized numerous changes to the SBA's loan guaranty and contracting programs; provided $510 million to continue the SBA's fee subsidies and 90% maximum loan guaranty percentage through December 31, 2010; and provided about $12 billion in tax relief for small businesses. P.L. 111-322, the Continuing Appropriations and Surface Transportation Extensions Act, 2011, continued the SBA's fee subsidies and the 7(a) program's 90% maximum loan guaranty percentage through March 4, 2011, or until available funding was exhausted, which occurred on January 3, 2011. P.L. 112-106, the Jumpstart Our Business Startups Act, established a regulatory structure for startups and small businesses to raise capital through securities offerings using the Internet through crowdfunding. P.L. 113-76, the Consolidated Appropriations Act, 2014, increased the annual authorization amount for the SBA's Small Business Investment Company (SBIC) venture capital program to $4 billion from $3 billion. P.L. 114-38, the Veterans Entrepreneurship Act of 2015, authorized and made permanent the SBA's practice of waiving the SBAExpress loan program's one-time, up-front loan guaranty fee for veterans and increased the 7(a) loan program's FY2015 authorization limit from $18.75 billion to $23.5 billion. P.L. 114-113, the Consolidated Appropriations Act, 2016, expanded the 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, increased the SBIC program's family of funds limit (the amount of outstanding leverage allowed for two or more SBIC licenses under common control) to $350 million from $225 million, and increased the 7(a) loan program's authorization limit to $26.5 billion for FY2016. P.L. 115-31, the Consolidated Appropriations Act, 2017, increased the 7(a) program's authorization limit to $27.5 billion for FY2017. P.L. 115-141, the Consolidated Appropriations Act, 2018, increased the 7(a) program's authorization limit to $29.0 billion for FY2018. This report addresses a core issue facing the 116th Congress: What, if any, additional action should the federal government take to enhance small business access to capital? It discusses the role of small business in job creation and retention, then provides an assessment of the supply and demand for small business loans and recently enacted laws designed to enhance small business access to capital by increasing either the supply of small business loans or the demand for small business loans, or both. It also examines recent actions concerning the SBA's budget and concludes with a brief overview of three legislative options available to address small business access to capital issues during the 116th Congress: wait-and-see, enact additional programs, or reduce and consolidate existing programs.

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T he Agriculture appropriations bill—formally called the Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Act—funds all of the U.S. Department of Agriculture (USDA), excluding the U.S. Forest Service. Congress passed the FY2018 Consolidated Appropriations Act on March 23, 2018 ( P.L. 115-141 ). FY2019 began with seven appropriations bills, including USDA, unfinished. The House and Senate Appropriations Committees reported Agriculture appropriations bills for FY2019 ( H.R. 5961 , S. 2976 ), with the Senate having amended and passed its version as Division C of a four-bill minibus ( H.R. 6147 ). Congress and the President approved continuing resolutions to fund the affected federal agencies through December 21, 2018, at the FY2018 level ( P.L. 115-245 and P.L. 115-298 ). After December 21, 2018, a partial shutdown of the government, including many agencies within USDA, occurred. One of the few exceptions was the Natural Resources Conservation Service (NRCS), which was able to operate on mandatory and carryover funds during the majority of the shutdown. On January 25, 2019, an agreement was reached to continue funding for USDA and other appropriations that had lapsed through February 15, at the FY2018 level ( P.L. 116-5 ). The FY2019 Consolidated Appropriations Act was signed into law on February 15, 2019, funding USDA through the end of the fiscal year (Division B, P.L. 116-6 ). This report provides a brief overview of the conservation-related provisions in the FY2018 and FY2019 Agriculture appropriations acts. For a general analysis of the FY2018 appropriations for agriculture, see CRS Report R45128, Agriculture and Related Agencies: FY2018 Appropriations , and for FY2019, see CRS Report R45230, Agriculture and Related Agencies: FY2019 Appropriations . Conservation Appropriations USDA administers a number of agricultural conservation programs that assist private landowners with natural resource concerns. These include working land programs, land retirement and easement programs, watershed programs, technical assistance, and other programs. The two lead agricultural conservation agencies within USDA are the Natural Resources Conservation Service (NRCS), which provides technical assistance and administers most 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 $5.3 billion of CCC funds for conservation in FY2018). Other conservation programs—mostly technical assistance—are discretionary spending and are funded through annual appropriations (about $1 billion annually). For the first time since FY2002, the FY2018 Agriculture appropriations act did not include reductions to mandatory conservation programs. It did, however, include legislative changes that affect farm bill programs and watershed programs. Similarly, the FY2019 appropriations act did not include reductions to mandatory conservation programs; however, the enacted 2018 farm bill (Agriculture Improvement Act, P.L. 115-334 ) reauthorized and amended funding for many of the mandatory conservation programs. The FY2018 appropriations act included a slight increase from FY2017 levels for discretionary conservation programs. The FY2019 appropriations act included a decrease from FY2018 levels for discretionary conservation programs and redirected funding to the new Farm Production and Conservation Business Center (see Table 1 and Figure 1 ). Discretionary Conservation Programs Conservation Operations 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 through field staff placed in almost all counties within the United States and territories. Other components of CO include the Soil Surveys, Snow Survey and Water Supply Forecasting, and Plant Materials Centers. The enacted FY2018 appropriation provided $874 million—more than the FY2017 enacted amount ($864 million). The enacted FY2019 appropriation decreases funding for CO below FY2018 levels to $819 million and redirects funding to the new Farm Production and Conservation Business Center. The Trump Administration's FY2019 budget request ($699 million) was less than the amount later enacted for FY2019 due to a proposed consolidation of mandatory and discretionary accounts to pay for conservation technical assistance. The proposal to consolidate funding has been made by USDA through multiple Administrations but never adopted by Congress (see text box below). The FY2018 and FY2019 Agriculture appropriations acts direct CO funding for a number of conservation programs ( Table 1 ). Report language further directs funding to selected activities ( Table 3 ). Watershed and Flood Prevention Operations The enacted FY2018 and FY2019 appropriations also contain funding for watershed activities, including $150 million annually for Watershed and Flood Prevention Operations (WFPO)—a program that assists state and local organizations with planning and installing measures to prevent erosion, sedimentation, and flood damage. This is the same level as appropriated in FY2017, which was the first appropriated funding for the WFPO program since FY2010. Beginning in FY2006, Administrations began requesting no funding for WFPO, citing program inflexibility and a backlog of congressionally earmarked projects. The Trump Administration's FY2018 and FY2019 requests proposed no funding for the program. Since FY2014, Congress has directed a portion of CO funds to select WFPO activities. Similar directive language ($5.6 million; see Table 1 ) is in the FY2018 and FY2019 appropriations, in addition to the $150 million made available each fiscal year for the program as a whole. The enacted FY2018 and FY2019 appropriations include $10 million annually for the Watershed Rehabilitation program––a reduction from the FY2017 level of $12 million. The Watershed Rehabilitation program repairs aging dams previously built by USDA under WFPO. The Administration proposed no funding in FY2018 and FY2019. The 2018 farm bill made minor amendments to WFPO, the most substantial being the authorization of permanent mandatory funding of $50 million annually. The new mandatory funding will be in addition to discretionary funding provided through annual appropriations and could be used for either WFPO or Watershed Rehabilitation activities. Mandatory Conservation Programs Mandatory conservation programs are generally authorized in omnibus farm bills and receive funding from the CCC and thus do not require an annual appropriation. In the past, Congress has used annual agriculture appropriations acts to reduce mandatory conservation programs through changes in mandatory program spending (CHIMPS) every year from FY2003 to FY2017. The FY2018 Consolidated Appropriations Act marked the first appropriation since FY2002 that did not include CHIMPS to conservation programs. This allowed all mandatory conservation programs to utilize their full authorized level of funding in FY2018, minus sequestration. Additionally, prior-year CHIMPS concerning programs that are authorized to remain available until expended (e.g., Watershed Rehabilitation) became available for obligation in FY2018. Nearly all mandatory conservation programs authorized in the 2014 farm bill (Agricultural Act of 2014; P.L. 113-79 ) expired on September 30, 2018. One exception is the Environmental Quality Incentives Program (EQIP), whose authority was extended to FY2019 in the Bipartisan Budget Act of 2018 (BBA; P.L. 115-123 ). The 2018 farm bill reauthorized mandatory funding for all conservation programs, including for FY2019. Similar to FY2018, the FY2019 appropriations bill, which was enacted after enactment of the 2018 farm bill, does not include reductions to mandatory conservation programs. Farm Production and Conservation Business Center On May 11, 2017, USDA announced the creation of the Farm Production and Conservation (FPAC) mission area as part of a larger Departmental reorganization. FPAC includes NRCS, FSA, 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 the three domestic agriculture agencies (NRCS, FSA, and RMA). The FY2018 Administration budget request was released two weeks following the announcement for FPAC (May 23, 2017), but did not include funding for the FPAC Business Center. The FY2019 Administration budget request did include funding for the Business Center ($196.4 million), as well as a request to transfer funding from other accounts ($76.3 million) to the Business Center. Final enactment of the FY2018 appropriation occurred on March 23, 2018, after the release of the Administration's FY2019 budget request, which occurred on February 12, 2018. The FY2018 appropriation included about $1 million for the Business Center. The FY2018 explanatory statement required USDA to submit an implementation and spending plan to Congress for the new FPAC mission area that would detail requested transfers. USDA submitted the FPAC spending plan on August 28, 2018. The FY2019 appropriation had already been marked up in the House and Senate, and did not include the full level of requested funding for the Business Center. The enacted FY2019 appropriations (February 15, 2019), however, did increase funding for the Business Center. The enacted level is more than the Administration's request and directs a transfer of funds from other accounts into the Business Center, including mandatory conservation programs and farm loan accounts. Funding for NRCS and FSA is reduced accordingly and FPAC Business Center funding shifts are dictated in the FY2019 explanatory statement (see Table 2 ). It is unclear what level of savings is projected from the centralization of agency functions and what this savings will ultimately be redirected toward. Overall, the total changes in funding for the new Business Center do not necessarily reflect a decline in NRCS resources. Total CO (discretionary spending) was reduced between FY2018 and FY2019 by $54.6 million, whereas NRCS' contribution to the FPAC Business Center appropriation for FY2019 is $70.8 million, thus indicating an effective increase of $16.2 million to NRCS in FY2019. This could result in NRCS effectively receiving less in total funding depending whether the amount shifted would have been used for administrative or technical assistance purposes had the Business Center not been in existence. The mandatory conservation program funding ($60.2 million) that is authorized to be transferred to the FPAC Business Center comes from programs authorized to receive CCC funding under 16 U.S.C. 3841(a). Three programs within the conservation title of the 2018 farm bill are included in this transfer—EQIP, CSP, and the Agricultural Conservation Easement Program (ACEP). Other mandatory conservation programs funded through the cited CCC authority (16 U.S.C. 3841(a)) are not included in the transfer, including CRP, which is administered by FSA. The transfer in the FY2019 appropriations act redirects mandatory funding that was authorized in the farm bill. It is unclear what, if any, effect the transfer could have on the implementation of EQIP, CSP, and ACEP, and the financial assistance offered by those programs. FY2019 Partial Government Shutdown In FY2019, a 34-day funding gap lasted from December 22, 2018, through January 25, 2019. It affected agencies funded by 7 of the 12 appropriations bills, including Agriculture appropriations. In general, a shutdown results in the furlough of many personnel and curtailment of affected agency activities and services. Exceptions may allow certain activities to continue, such as for law enforcement, protection of human life or property, and activities funded by other means such as carryover funds or user fees. Agencies make their own determinations about activities and personnel that are "excepted" from furlough and publish their intentions in "contingency plans" that are supervised by the Office of Management and Budget (OMB). USDA published contingency plans for each agency, including NRCS. USDA initially estimated on December 23, 2018, that 61% of its employees were excepted from furlough in the agencies that are funded by Agriculture appropriations (all of USDA except the Forest Service), which amounts to 37,860 staff being excepted out of 62,288. The number of excepted and furloughed personnel varied by agency. As previously discussed, NRCS funds technical assistance and related agency staff through both mandatory and discretionary accounts. As such, NRCS was initially able to claim as excepted 100% of its 9,342 staff using mandatory conservation program funding authorized through the farm bill (and therefore not affected by the lapse in discretionary appropriations), and discretionary carryover funding from prior fiscal years. As the shutdown continued, however, NRCS announced its intention to furlough some employees beginning on February 3, 2019, to conserve carryover balances and focus excepted staff on mandatory farm bill conservation program implementation. This plan was not implemented because the shutdown ended on January 25, 2019. Amendments to Conservation Programs Generally, Congress employs two separate types of legislative measures—authorizations and appropriations. Authorization acts establish, continue, or modify agencies or programs. Appropriations acts generally provide discretionary funding for authorized agencies and programs. While this practice is infrequent and subject to various procedural rules and limitations, the Agriculture appropriations bill may serve as a vehicle for amendments to authorized programs that permanently alter or create programs. These amendments generally have the force of law by amending the U.S. Code or by creating a permanent authorization. This is different from policy-related provisions (discussed in the " Policy-Related Provisions " section), which generally direct how the executive branch should carry out the appropriations and whose effect is typically limited to the current fiscal year. In some cases, the 2018 farm bill further amended the conservation programs that were amended in the FY2018 appropriations act. Where relevant, these amendments are noted; however, the focus is on amendments made in appropriations acts. Watershed and Flood Prevention Operations The FY2018 agriculture appropriations act included statutory amendments to the WFPO program. Section 761 of P.L. 115-141 amended the Watershed Protection and Flood Prevention Act of 1954 (16 U.S.C. 1001 et seq. ) by increasing the size thresholds required for congressional approval under the program. Under the amended language, approval by the Senate and House Agriculture Committees is required for individual projects that need an estimated federal contribution of more than $25 million for construction, an increase from the previous $5 million threshold. This amendment originated in the FY2018 Senate-reported bill ( S. 1603 , §754). Conservation Program Requirements The FY2018 appropriation also amended Title XII of the Food Security Act of 1985 ( P.L. 99-198 ; often referred to as the "1985 farm bill") by adding a new section that exempts farm bill conservation programs from certain reporting requirements. Federal grant recipients must comply with government-wide financial management policies and reporting requirements when receiving federal grants and agreements. Many of these reporting requirements are not new for USDA programs and have been in place for a number of years. Interested stakeholders raised concerns when a number of the farm bill conservation programs were designated as grants (rather than direct payments) under a 2010 regulation. This designation triggered the use of a Data Universal Numbering System (DUNS) number and System for Award Management (SAM) registration. The DUNS number requirement and SAM registration did not affect individuals or entities that apply for conservation programs using a Social Security number. Rather, it applied only to those applying as an entity with a Taxpayer Identification Number or Employee Identification Number. The amendment exempts producers and landowners who participate in farm bill conservation programs from the DUNS number and SAM registration requirement. The amendment originated in the FY2018 Senate-reported bill ( S. 1603 , §740). The 2018 farm bill moved and expanded this exemption to include conservation, indemnity or disease control, or commodity programs administered by NRCS, FSA, and the Animal and Plant Health Inspection Service. Policy-Related Provisions 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 ). Unlike the aforementioned authorization amendments that may be included in appropriations acts, 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 more than 12,500 acre-feet of floodwater detention capacity or 25,000 acre-feet of total capacity. The FY2018 and FY2019 enacted appropriations also include 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 appropriation year. Table 3 compares some of the policy provisions that have been identified in the Farm Production and Conservation Programs (Title II) and General Provisions (Title VII) titles of the FY2018 and FY2019 Agriculture appropriations bills related to conservation. Many of these provisions were also included in past years' appropriations laws. The explanatory statement that accompanies the final appropriation—and the House and Senate report language that accompanies the committee-reported bills—may also provide policy instructions. These documents do not have the force of law but often explain congressional intent, which the agencies are expected 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. Table 4 compares some of the policy provisions that have been identified in the FY2018 and FY2019 Agriculture appropriations reported language related to conservation. The FY2018 enacted report language column includes references to the House (H) and Senate (S) report language, as well as the enacted (E) explanatory statement. The FY2019 enacted report language column includes references to the House (H) and Senate (S) report language, and the enacted (E) conference report. The inclusion of all three reports better captures congressional intent for each fiscal year. Many of these provisions have been included in past years' appropriations laws. Some provisions in report language and bill text address conservation programs not authorized or funded within the annual appropriation (i.e., mandatory spending for farm-bill-authorized programs).

The Agriculture appropriations bill funds the U.S. Department of Agriculture (USDA) except for the Forest Service. The FY2018 Consolidated Appropriations Act (P.L. 115-141, Division A), and the FY2019 Consolidated Appropriations Act (P.L. 116-6, Division B) include funding for conservation programs and activities at USDA. Congress passed the FY2018 Consolidated Appropriations Act on March 23, 2018. FY2019 began with seven appropriations bills, including USDA, unfinished. The House and Senate Appropriations Committees reported Agriculture appropriations bills for FY2019 (H.R. 5961, S. 2976), with the Senate having amended and passed its version as Division C of a four-bill minibus (H.R. 6147). Congress and the President approved continuing resolutions to fund the affected federal agencies through December 21, 2018, at the FY2018 level (P.L. 115-245). After December 21, 2018, a partial shutdown of the government, including many agencies within USDA, occurred. One of the few exceptions was the Natural Resources Conservation Service (NRCS), which was able to operate on mandatory and carryover funds during the majority of the shutdown. On January 25, 2019, an agreement was reached to continue funding for USDA and other appropriations that had lapsed through February 15, at the FY2018 level (P.L. 116-5). The FY2019 Consolidated Appropriations Act was signed into law on February 15, 2019, funding USDA through the end of the fiscal year (Division B, P.L. 116-6). 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—mostly technical assistance—are discretionary and are funded through annual appropriations. The largest discretionary program is the Conservation Operations (CO) account, which funds conservation planning and implementation assistance on private agricultural lands across the country. The enacted FY2018 appropriation provided $874 million for CO, an increase from the FY2017 enacted amount ($864 million). The enacted FY2019 appropriation decreases funding for CO below FY2018 levels to $819 million and redirects funding to the new Farm Production and Conservation Business Center. Other discretionary spending is primarily for watershed programs. The largest—Watershed and Flood Prevention Operations (WFPO)—was funded at $150 million annually in FY2018 and FY2019. Most mandatory conservation programs are authorized in omnibus farm bills and do not require an annual appropriation. However, Congress has reduced mandatory conservation programs through changes in mandatory program spending (CHIMPS) in the annual agricultural appropriations law every year since FY2003. The enacted FY2018 omnibus marks the first appropriation since FY2002 that did not include CHIMPS to mandatory conservation programs. The enacted FY2019 appropriation also does not include reductions to mandatory conservation programs, as most programs' authorizations expired on September 30, 2018, making these programs ineligible for reduction. The 2018 farm bill (Agricultural Improvement Act of 2018, P.L. 115-334) reauthorized and amended funding for many of the mandatory conservation programs. While this is infrequent, the Agriculture appropriations bill may also serve as a vehicle for amendments to authorized programs that permanently alter or create programs. The FY2018 Agriculture appropriations act included two such amendments—one to WFPO and one to farm bill conservation program reporting requirements. The WFPO amendment increased the size threshold required for congressional approval. Under the amended language, the Senate and House Agriculture Committees must approve WFPO projects that include an estimated federal contribution of more than $25 million for construction, an increase from the previous $5 million threshold. Additionally, the FY2018 appropriations act exempted farm bill conservation programs from select federal reporting requirements, including obtaining a Data Universal Numbering System (DUNS) number and System for Award Management (SAM) registration. Agriculture appropriations bills may also include policy-related provisions that direct how the executive branch should carry out the appropriation. The FY2018 and FY2019 appropriations acts both include policy provisions for conservation programs that range from reports to Congress to suggested natural resource priorities.

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Introduction This report provides an overview of the FY2019 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. When comparing the Administration's FY2019 request with FY2018 funding, one may want to consider that the Administration formulated its FY2019 budget request before full-year appropriations for FY2018 were enacted. In this report, FY2018 funding levels reflect the amounts appropriated in the Consolidated Appropriations Act, 2018 ( P.L. 115-141 ), enacted on March 23, 2018. The Consolidated Appropriations Act, 2018, provided $482.0 million in direct funding for ITA, $93.7 million for USTIC, and a total of $72.6 million for USTR for FY2018. The FY2018 appropriation for the three CJS trade-related agencies totaled $648.3 million. The Consolidated Appropriations Act, 2019, provided $484.0 million in direct appropriations for ITA, $95.0 million in funding for USITC, and a total of $68.0 million for USTR. The FY2019 appropriations for three CJS trade-related agencies totaled $647.0 million, a 0.2% decrease from FY2018 appropriations. See the Appendix for enacted budget authority for the trade-related agencies for FY2009-FY2019. The Administration's FY2019 Budget Request The President submitted his FY2019 budget request to Congress on February 12, 2018. In it, the Administration requested a total of $590.8 million for the three CJS trade-related agencies (see Table 1 ). This request represented an 8.9% decrease in funding from the FY2018 appropriated amount. The request included reduced funding for all three trade agencies: $440.1 million in direct funding for ITA (an 8.7% decrease from the FY2018 appropriation), $87.6 million for USITC (a 6.5% decrease), and $63.0 million for USTR (a 13.2% decrease). Despite the proposed overall decrease in funding for CJS trade-related agencies, the Administration proposed increasing some trade enforcement activities within ITA and USTR. For ITA, the Administration proposed increasing trade enforcement activities while reducing funding for certain export promotion activities. For USTR, the Administration requested funds to increase staffing; however, the request did not include a request for funding to be drawn from the Trade Enforcement Trust Fund. (For a description of the " Trade Enforcement Trust Fund ," see section below.) The President's budget did not provide a rationale for requesting a decrease in funding for USITC. A more detailed overview of these agencies' FY2019 budget requests is provided below. Congressional Actions The House and Senate Appropriations Committees reported their CJS appropriation bills in the spring of 2018. Both committees largely declined the budget cuts requested by the Administration for these three trade agencies. (See Table 1 .) The House Committee on Appropriations reported H.R. 5952 on May 17, 2018. The House committee bill included a total of $647.6 million for the three trade-related agencies, which was $56.8 million more (9.6%) than the Administration's request and $0.7 million less (-0.1%) than the FY2018-enacted amount. The House committee recommended $480.0 million in direct funding for ITA, $95.0 million for USTIC, and a total of $72.6 million for USTR. The Senate Committee on Appropriations reported S. 3072 on June 14, 2018. The Senate bill included a total of $655.6 million for the three agencies, which was $64.8 million (11.0%) more than the Administration's request and $7.3 million (1.1%) more than the FY2018-enacted appropriation. The Senate committee recommended $488.0 million in direct funding for ITA, $95.0 million for USITC, and a total of $72.6 million for USTR. Through February 15, 2019, the CJS trade-related agencies operated under continuing resolutions (CR)—with the exception of a three-week lapse in funding when agencies halted most operations. Congress passed final FY2019 appropriations in the Consolidated Appropriations Act, 2019 ( P.L. 116-6 ), which was signed into law on February 15, 2019. The act included a total of $647.0 million in funding for the three trade-related agencies—a 0.2% decrease from FY2018 appropriations. For FY2019, the Consolidated Appropriations Act, 2019, included $484.0 million in direct appropriations for ITA (a 0.4% increase from the FY2018 appropriation), $95.0 million in funding for USITC (a 1.4% increase), and a total of $68.0 million for USTR (a 0.2% decrease). International Trade Administration (ITA) 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) Industry and Analysis; and (3) Enforcement and Compliance. 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 A-1 shows budget amounts for ITA by unit between FY2009 and FY2019.) For FY2019, the Administration requested $440.1 million for ITA in direct funding, with an additional $11.0 million to be collected in user fees, for a total of $451.1 million in authorized spending. The request for direct funding represents a $41.9 million decrease (-8.7%) from the FY2018-enacted amount ($482.0 million). According to ITA's budget justification, the Administration proposed increasing ITA's enforcement and compliance efforts in FY2019, while deemphasizing other initiatives, such as export promotion. The Administration specifically proposed closing some domestic and international offices of the United States and Foreign Commercial Service (US&FCS). The House committee-reported H.R. 5952 proposed $480.0 million for ITA in direct funding, with an additional $11.0 million to be collected from user fees, for a total of $491.0 million in authorized spending. The amount in direct funding proposed by the House Committee on Appropriations was $39.9 million (9.1%) more than the Administration's request and $2.0 million less (-0.4%) than the FY2018-enacted amount. The Senate committee-reported S. 3072 included $488.0 million in direct funding for ITA, with an additional $11.0 million in user fees, for a total of $499.0 million in authorized spending. The amount in direct funding proposed by the Senate Committee on Appropriations was $47.9 million (10.9%) more than the Administration's request and $6.0 million (1.2%) more than the FY2018-enacted amount. The Consolidated Appropriations Act, 2019 ( P.L. 116-6 ) provided $484.0 million in direct appropriations for ITA, with an additional $11.0 million to be collected in user fees, for a total of $495.0 in authorized spending. The act provided $2 million more (0.4%) in direct appropriations for ITA than the FY2018-enacted amount and $43.9 million more (10.0%) than the Administration's request. Global Markets Unit ITA's Global Markets (GM) unit is a combination of the United States and Foreign Commercial Service (US&FCS) unit, a program that provides export promotion services to U.S. businesses, and SelectUSA, a program that works to attract foreign investment into the United States. Through US&FCS, GM promotes U.S. exports by helping U.S. exporters research foreign markets and identify opportunities abroad. GM's country and regional experts―in domestic and overseas offices—help to advise 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 also promotes the United States as a destination for foreign investment. (For more on SelectUSA, see section below, " SelectUSA Program .") For FY2019, the Administration proposed reducing funding for the Global Markets unit. The Administration requested $276.5 million for Global Markets in direct funding, a 13.4% decrease from the FY2018-enacted appropriation. In its FY2019 budget submission, ITA proposed "rescaling export promotion" activities in the GM unit by reducing staff and its domestic and overseas offices, with a total reduction of 133 positions. The budget submission did not indicate how many or which domestic and overseas offices it was proposing to close. The House and Senate Appropriation Committees did not adopt the proposed cuts. The House Appropriations Committee recommended $319.0 million for the Global Markets unit for FY2019. This was $42.5 million (15.4%) more than the Administration's request. According to the committee report, "the recommendation does not adopt the proposal to reduce U.S. and Foreign Commercial Service staff or close overseas offices or U.S. Export Assistance Centers." The Senate Appropriations Committee report did not provide an exact funding amount, but recommended that ITA "fund US&FCS, and its core mission of export promotion, at the highest possible level in fiscal year 2019, and at no less than the amount provided in fiscal year 2018." Like the House committee, the Senate committee did not adopt the Administration's proposal to close offices. The Senate committee report specifically noted, "No offices shall be closed in fiscal year 2019 unless the Committee approves a reprogramming request to close such office or offices. Additionally, the Committee will not approve requests to close any domestic offices, called U.S. Export Assistance Centers, if such Center is the only one located in a given State." According to the conference report accompanying the Consolidated Appropriations Act, 2019 ( P.L. 116-6 ), the final agreement for FY2019 appropriations included "no less than $320 million" in funding for Global Markets and required ITA to report quarterly to the Committees on staffing levels within the US&FCS. Industry and Analysis 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 FY2019, the Administration requested $52.3 million for Industry and Analysis. The request is $3.4 million less than the FY2018 funding level. The Administration proposed refocusing some of the unit's priorities away from export promotion and toward trade enforcement. Specifically, the Administration proposed reducing activities related to trade missions, the International Buyer Program, and certified trade fairs, and eliminating Market Development Cooperator Program grants. The House committee proposed $52.0 million for Industry and Analysis. This represented $0.3 million less (-0.5%) than the Administration's request. The Senate committee-reported bill did not include a specific recommendation for Industry and Analysis. The Consolidated Appropriations Act, 2019 ( P.L. 116-6 ), did not provide an exact funding guidance for Industry and Analysis. Enforcement and Compliance The mission of ITA's Enforcement and Compliance unit is to enforce U.S. trade laws and ensure compliance with negotiated international trade agreements. It 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 FY2019, the Administration requested $90.6 million for the Enforcement and Compliance unit, an increase of $3.1 million (3.6%) from the FY2018-enacted amount. For the requested increase in funding, ITA cited the unit's increasing number of AD/CVD investigations, its new focus on self-initiating AD/CVD cases, and the increased workload due to the tariffs and investigations initiated through Section 232 of the Trade Expansion Act of 1962. The House Appropriations Committee proposed $85.5 million for Enforcement and Compliance. The House committee proposal represented $2.1 million less (-2.3%) than the Administration's request, and $1.0 million (1.1%) more than the FY2018-enacted amount . The Senate Committee on Appropriations recommended $91.5 million for Enforcement and Compliance. The Senate recommendation represented $0.9 million more than the Administration's request and $4.0 million more than the 2018-enacted amount. The Senate committee report noted that the committee was supportive of the Administration's request to self-initiate AD/CVD cases. For FY2019 appropriations, the conference report accompanying the Consolidated Appropriations Act, 2019 ( P.L. 116-6 ), included $88.5 million for Enforcement and Compliance. This amount was $1.0 million more (1.1%) than the FY2018 funding, and $2.1 million less (-2.1%) than the Administration's request. U.S. International Trade Commission (USITC) USITC is an independent, quasi-judicial agency responsible for conducting trade-related investigations and providing independent technical advice related to U.S. international trade policy to Congress, the President, and the 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 and Congress; 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. In addition to the President's budget request for the commission, USITC also has bypass authority to submit its budget directly to Congress without revision by the President, pursuant to Section 175 of the Trade Act of 1975. For FY2019, the President requested $87.6 million for USITC, which represented a $6.1 million decrease (-6.5%) from the FY2018-enacted amount ($93.7 million). While the President requested a decrease in funding for USITC, the commission's independent budget submission—sent directly to Congress without revision by the President—requested $97.5 million for FY2019, an increase of $3.8 million (4.0%) from the FY2018-enacted amount. USITC cited the increasing number of import injury cases in the previous five years and projected that the caseload would increase further in FY2019. Both the House and Senate committee-reported bills recommended $95.0 million for USITC. This amount was $7.4 million (8.4%) more than the President's request and $1.3 million (1.4%) more than the FY2018-enacted amount. The Consolidated Appropriations Act, 2019 ( P.L. 116-6 ), provided $95.0 million for USITC, which was $7.4 million (8.4%) more than the President's request and $1.3 million (1.4%) more than the FY2018-enacted amount. Office of the U.S. Trade Representative (USTR) USTR, located in the Executive Office of the President, is responsible for developing and coordinating U.S. international trade and direct investment policies. USTR is the President's chief negotiator for international trade agreements, including commodity and direct investment negotiations. It negotiates directly with foreign governments to create trade agreements, resolve disputes, and participate 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 2018, USTR led the negotiations for the modernization of the North American Free Trade Agreement (NAFTA) and the investigations into Chinese intellectual property practices. 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 ," below. For FY2019, the Administration requested $63.0 million for USTR's salaries and expenses, and no additional funding from the Trade Enforcement Trust Fund. The request represents a $9.6 million decrease (-13.2%) from the FY2018-enacted amounts ($72.6 million). In the Administration's budget request, USTR outlined the Trump Administration's "aggressive trade agenda," and its goals of "(1) defending U.S. national sovereignty over trade policy; (2) strictly enforcing U.S. trade laws; (3) using all possible sources of leverage to encourage other countries to open their markets to U.S. exports of goods and services, and protecting U.S. intellectual property rights; and (4) negotiating better trade deals with countries in key markets around the world." Both the House and Senate committee-reported bills recommended a total of $72.6 million for USTR for FY2019. These proposals included $57.6 million for USTR's salaries and expenses and $15.0 million from the Trade Enforcement Trust Fund for enforcement activities authorized in Section 611 of the Trade Facilitation and Trade Enforcement Act of 2015 ( P.L. 114-125 ). The total proposals were $9.6 million (15.2%) more than the Administration's request, and were equal to the FY2018-enacted amount. The Consolidated Appropriations Act, 2019 ( P.L. 116-6 ), provided a total of $63.0 million for USTR, which included $53.0 million in salaries and expenses for USTR and an additional $15.0 million to be derived from the Trade Enforcement Trust Fund. The total funding was $4.6 million less (-6.3%) than the FY2018 appropriated amount. Selected Trade-Related Programs and Activities Over the past decade, Congress has provided funding for specific trade-related programs, including (1) China trade enforcement and compliance activities; (2) trade promotion and attracting foreign direct investment to the United States through ITA's SelectUSA program; and (3) trade enforcement activities through the Trade Enforcement Trust Fund and the Interagency Center on Trade Implementation, Monitoring, and Enforcement (ICTIME, formerly the Interagency Trade Enforcement Center (ITEC)). China Trade Enforcement and Compliance Activities 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 in FY2009 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 FY2019 budget justification did not provide a breakdown of funding for its China AD/CVD activities. Both the House and Senate committee-reported bills included $16.4 million from ITA's funding for China AD/CVD enforcement and compliance activities for FY2019. The Consolidated Appropriations Act, 2019 ( P.L. 116-6 ), provided $16.4 million from ITA's funding for China AD/CVD enforcement and compliance activities for FY2019. This amount was equal to the FY2018-enacted amount. SelectUSA Program SelectUSA was created in 2011 and is now part of ITA's Global Markets unit. It coordinates investment-related resources across more than 20 federal agencies to (1) promote the United States as an investment market and (2) address investor climate concerns that may impede investment in the United States. The program serves as an information resource for international investors and advocates for U.S. cities, states, and regions as investment destinations. ITA's budget justification did not provide a breakdown for requested funding for SelectUSA. The House committee-reported bill did not propose a specific funding amount for SelectUSA. The Senate committee report recommended $10.0 million in funding for SelectUSA, an amount equal to the FY2018-enacted amount. The Senate Committee on Appropriation proposed making funding contingent on (1) SelectUSA updating its protocol to ensure that its programs did not encourage foreign investments by state-owned entities into the United States and (2) SelectUSA reporting its updated protocol to the committee within 30 days of enactment of the bill. According to the conference report accompanying the Consolidated Appropriations Act, 2019 ( P.L. 116-6 ), the final agreement adopted the Senate committee report language regarding SelectUSA. Survey of International Air Travelers (SIAT) ITA's Survey of International Air Travelers (SIAT) gathers statistics about air passenger travelers in the United States. These statistics are used across federal agencies, 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. The Administration requested $5.0 million for FY2019 for SIAT to expand the survey and data collection. The Administration proposed that "$5 million in fee revenues collected from the surcharge on international travelers utilizing the Electronic System for Travel Authorization (ESTA) be redirected to fully fund the SIAT." The House committee-reported bill did not include a specific recommendation for SIAT. According to the Senate committee report, the Senate Committee on Appropriations did not adopt the Administration's proposal to seek alternative funding sources for SIAT and "direct[ed] ITA to continue funding SIAT out of its base budget. Within funds provided, ITA [was] encouraged to increase the sample size for SIAT." The Consolidated Appropriations Act, 2019 ( P.L. 116-6 ), and the accompanying conference report did not provide specific language regarding SIAT. Trade Enforcement Trust Fund (TETF) 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 monitor and enforce trade agreements and WTO commitments and to support trade capacity-building assistance to help partner countries meet their free-trade agreement obligations and commitments. 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 FY2019, the Administration requested no funding to be derived from the TETF; the FY2018-enacted amount was $15.0 million. Both the House and Senate committee bills proposed $15.0 million from the TETF for enforcement activities authorized in Section 611 of the Trade Facilitation and Trade Enforcement Act of 2015. These proposals were equal to the FY2018-enacted amount. The Consolidated Appropriations Act, 2019 ( P.L. 116-6 ), provided $15.0 million to be derived from the TETF for USTR, for enforcement activities authorized in Section 611 of the Trade Facilitation and Trade Enforcement Act of 2015. This amount is equal to the FY2018-enacted amount. Implementation, Monitoring, and Enforcement (ICTIME, formerly the Interagency Trade Enforcement Center [ITEC]) ITEC was established by executive order in 2012 to take a "whole-of-government" approach to monitoring and enforcing U.S. trade rights by using expertise from across the federal government. In 2016, the ITEC was succeeded by ICTIME, which Congress established through the Trade Facilitation and Trade Enforcement Act of 2015 ( P.L. 114-125 ). The executive-established ITEC received its funding through ITA; funding for ICTIME is now appropriated through USTR. ICTIME's purpose is to advance U.S. trade policy through strengthened and coordinated enforcement of U.S. trade rights. ICTIME investigates potential disputes under the auspices of the World Trade Organization; inspects potential disputes pursuant to bilateral and regional trade agreements to which the United States is a party; and carries out the functions of USTR with respect to the monitoring and enforcement of trade agreements to which the United States is a party. USTR and ITA work closely within the ICTIME to identify issues and develop information in areas of economic importance to U.S. industries. The USTR's budget justification did not provide a breakdown for requested funding for ICTIME. The House and Senate committee-reported bills did not include a specific funding amount for ICTIME. The Senate committee report did note that the Senate committee supports ICTIME within the funds provided for USTR. The Consolidated Appropriations Act, 2019 ( P.L. 116-6 ) and the accompanying conference report also did not provide specific language regarding ICTIME. Appendix. Budget Authority Tables

The Consolidated Appropriations Act, 2019 (P.L. 116-6), was signed into law on February 15, 2019. The act included a total of $647.0 million in funding for three trade-related agencies under the Commerce, Justice, Science and Related Agencies (CJS) account—the International Trade Administration (ITA), the U.S. International Trade Commission (USITC), and the office of the United States Trade Representative (USTR). This represents a 0.2% decrease from FY2018 appropriations. For FY2019, the Consolidated Appropriations Act, 2019, included $484.0 million in direct appropriations for ITA (a 0.4% increase from the FY2018 appropriation), $95.0 million in funding for USITC (a 1.4% increase), and a total of $68.0 million for USTR (a 0.2% decrease). The Administration's Request On February 12, 2018, the Trump Administration submitted its FY2019 budget request to Congress. The FY2019 proposal included a total of $590.8 million for the three CJS trade-related agencies, an 8.9% decrease from FY2018 total appropriated amounts for these agencies. The Administration requested reducing funding for all three trade-related agencies. For FY2019, the request included $440.1 million in direct funding for ITA (an 8.7% decrease from the FY2018 appropriation), $87.6 million for USITC (a 6.5% decrease), and $63.0 million for USTR (a 13.2% decrease). Congressional Actions In the spring of 2018, the House and Senate reported FY2019 CJS appropriations bills, which included proposed funding for ITA, USITC, and USTR. The reported bills did not adopt many of the Administration's budget reductions, and instead proposed funding levels that were more similar to the FY2018-enacted amounts. The House Committee on Appropriations reported H.R. 5952 on May 17, 2018. The House proposal recommended a total of $647.6 million for the three CJS trade-related agencies. This proposal was $56.8 million more (9.6%) than the Administration's request, and $0.7 million less (-0.1%) than the FY2018-enacted legislation. The House committee proposed $480.0 million in direct funding for ITA, $95.0 million for USTIC, and a total of $72.6 million for USTR, comprised of $57.6 million for salaries and expenses and an additional $15.0 million from the Trade Enforcement Trust Fund for trade enforcement activities as authorized by the Trade Facilitation and Trade Enforcement Act of 2015 (P.L. 114-125). The Senate Committee on Appropriations reported S. 3072 on June 14, 2018. The Senate committee-reported proposal recommended a total of $655.6 million for the three CJS trade-related agencies. This is $64.8 million (11.0%) more than the Administration's request and $7.3 million (1.1%) more than the FY2018-enacted appropriations. The Senate committee proposed $488.0 million in direct funding for ITA, $95 million for USITC, and a total of $72.6 million for USTR, comprised of $57.6 million for salaries and expenses and an additional $15.0 million from the Trade Enforcement Trust Fund for trade enforcement activities. After three continuing resolutions and a three-week lapse in funding, Congress passed the Consolidated Appropriations Act. 2019 (P.L. 116-6), which was signed into law on February 15, 2019. The act included a total of $647.0 million in funding for the three trade-related agencies, which represented a 0.2% decrease from FY2018 funding levels.

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Introduction This report provides an introduction to select issues related to sub-Saharan Africa (henceforth, "Africa," unless oth erwise noted) and U.S. policy toward the region. It includes general information concerning Africa's economic and development challenges, governance and human rights trends on the continent, and key issues related to peace and security. It also provides an overview of U.S. engagement in Africa and current U.S. policy approaches toward the region. This report is intended to serve as a primer to help inform deliberations on key enduring issues for Congress, which include the authorization and appropriation of funding for U.S. foreign aid programs and U.S. military activities in the region and oversight of U.S. programs and policies. Other CRS products address in greater depth many of the topics considered in this report; several are cited in footnotes. Africa's Economic and Development Challenges What are the recent trends in Africa's economic development? Starting in the early 2000s, many countries in Africa exhibited high rates of economic growth. Buoyed by high commodity prices and strong domestic demand, some countries experienced middle class expansion, rapid growth in access to digital communications, and progress toward some of the U.N. Millennium Development Goals (MDGs), albeit starting from a low base by global standards. Outcomes varied widely across the region, however. Resource-rich states broadly recorded higher growth but achieved smaller declines in poverty and poorer progress toward human development than their resource-poor counterparts, although poverty alleviation was generally limited across the region. Many African countries have confronted economic headwinds since 2014, as weak global commodity prices and poor agricultural conditions have hampered economic activity. Regional average gross domestic product (GDP) growth dropped from 5% in 2013 to 2.7% in 2016, before recovering slightly to 3.3% in 2017, according to the International Monetary Fund (IMF). Africa's economic outlook has since improved moderately, owing to accelerating global growth, which spurred rising demand for commodities and a resulting rise in some commodity prices. The IMF predicted in October 2018 that regional growth would gradually rise to 4.5% by 2023, while noting considerable variance between countries. Seven countries—Ethiopia, Côte d'Ivoire, Rwanda, Senegal, Djibouti, Ghana, and Benin—were projected to exceed 6% growth in 2018. Meanwhile, Nigeria, Africa's largest economy, is recovering from a 2016 recession, while South Africa entered recession in 2018. Some countries likely recorded declines in per capita income in 2018, including Equatorial Guinea, South Sudan, Angola, Burundi, South Africa, and Nigeria. Many African economies remain undiversified and rely on raw or minimally processed commodity exports, especially in the energy, mining, and agricultural sectors. Meanwhile, public debt-to-GDP levels, which fell sharply in the 2000s due to concerted debt relief efforts by international lenders, are rising in multiple countries. In early 2018, the World Bank classified 18 African countries as being "at high risk of debt distress," up from eight in 2013. The World Bank attributed the trend to rising fiscal deficits and weak exchange rates, notably in commodity exporting states. Tax collection remains weak across the region, limiting fiscal policy options. What major human development challenges does Africa face? On a per-capita basis and by other measures, Africa remains among the poorest global regions. Despite modest reductions in extreme poverty between 1990 and 2010, 41% of Africans lived under the international poverty line of $1.90 per day as of 2015 (latest data), and 21% were undernourished as of 2016. Only one sub-Saharan African country (the Seychelles) qualifies as "high income" as defined by the World Bank. Six more (Botswana, Equatorial Guinea, Gabon, Mauritius, Namibia, and South Africa) qualify as "upper-middle-income" economies, although wealth is unequally distributed and human development indicators remain poor in several of these countries. All other countries in the region are either "lower-middle-income" or "low-income." Since 2013, economic turbulence, poor agricultural conditions, and violent conflict have hindered human development progress in much of the region. Many countries lack the institutional capacity to facilitate sustained growth and human development. Corruption and insecurity further hinder progress toward socioeconomic improvements in many countries. By several measures, Africa has lagged behind other developing regions in its pursuit of human development. Its maternal mortality rates remain the highest of any region; in 2015 (latest data), Africa accounted for almost two-thirds of all global deaths due to maternal causes. As a region, Africa's child mortality and stunted growth prevalence rates are also the highest in the world, as are rates of HIV/AIDS, tuberculosis, and malaria. Lack of access to safe drinking water—which was available to only 24% of Africans in 2015—and unsafe sanitation facilities also impair health in the region: the World Health Organization (WHO) reports that as of 2016, Africa's mortality rate due to exposure to unsafe drinking water and sanitation was four times the global average. Africa also lags behind other regions with regard to primary education. Nearly one-third of African children aged six to seventeen do not attend school. African girls are disproportionately excluded, despite progress toward inclusion. Africa's labor market has struggled to absorb a growing working age population. Roughly 79% of Africans are unemployed or in vulnerable employment (such as self-employment), which are often associated with low earnings and insecurity. In 2017, 61% of African workers were in poverty (24%) or extreme poverty (37%). Africa has a disproportionately youthful population. Sixty-two percent of sub-Saharan Africans were aged 24 or younger in 2018, although youth population shares vary across the region. Population growth projections reflect these rates; by one estimate, roughly 5.3 billion people will live in Africa (including North Africa) by 2050—roughly a quarter of the world's population. While youthful populaces hold notable economic promise, realizing their potential presents governments with profound challenges related to the delivery of social services, political enfranchisement, and jobs. The risk associated with not meeting such demands is high. In many countries, youth are a key source of dissent. Governance, Democracy, and Human Rights What is the state of democracy and governance in Africa? Since the early 1990s, nearly all African countries have transitioned from military or single-party rule to at least nominally multiparty political systems in which elections are held regularly. Some (such as Senegal, Cabo Verde, Benin, and Ghana) have experienced multiple peaceful electoral transfers of power, while others (such as Rwanda, Eritrea, Equatorial Guinea, South Sudan, and Sudan) exhibit autocratic regimes that limit civil society and opposition activity. In parts of Africa, leaders have abolished, altered, or circumvented constitutional term limits to remain in power. The departures of long-serving leaders in The Gambia and Angola in 2017 may present opportunities for greater openness, as may Ethiopia's inauguration of a reformist prime minister in 2018—though entrenched elites could threaten attempts at reform in each country. Meanwhile, a military crackdown after disputed 2018 elections in Zimbabwe diminished hopes of a democratic transition after the historic 2017 ouster of longtime president Robert Mugabe. According to Freedom House's annual Freedom in the World index, which charts global trends related to political rights and civil liberties, Africa has seen subregional divergence since the mid-1990s. Broadly, while states in Southern and coastal West Africa have seen substantial improvements in democratic governance, East and Central Africa "have suffered major setbacks." Civil liberties trends generally follow this pattern. Progress in West and Southern Africa, however, remains fragile. Several Southern African states with relatively strong institutions (e.g., South Africa, Botswana, and Namibia) remain dominated by single parties born during liberation struggles against colonial or white-minority rule. In much of Africa, the development of accountable, functional democratic institutions remains limited. Even some countries that regularly hold democratic elections exhibit few effective internal checks and balances. Accountability for high-level crimes, such as the resignation of President Jacob Zuma of South Africa in early 2018 due to multiple corruption scandals, remains the exception rather than the rule in Africa. In many conflict-affected countries, state weakness and violence impede the development of institutions and the provision of even basic services. State institutions in Africa often fail to respond adequately to citizens' needs because they lack human and financial capacity or are beset by corruption and mismanagement. Countries such as Somalia, South Sudan, Sudan, Guinea-Bissau, and Equatorial Guinea rank near the bottom of Transparency International's Corruption Perceptions Index . Endemic corruption also corrodes state effectiveness in regional economic powerhouses such as Nigeria, Kenya, and Angola. Justice systems in many African countries are often weak and subject to political influence; this can weaken public trust in justice and law enforcement systems and has spurred incidents of vigilante justice in some states. Frustrations over a perceived lack of access to justice and protection also may drive Islamist extremist recruitment in some areas, such as central Mali. What are the region's major human rights challenges?18 Like governance trends, human rights conditions vary widely across Africa. Several countries have maintained generally positive human rights records in recent years but continue to face challenges such as security abuses, poor prison conditions, violence against women and children, discrimination against vulnerable groups, and human trafficking. Multiple states (such as Togo, Cameroon, the Democratic Republic of Congo [DRC], and Zimbabwe) actively restrict citizens' right to dissent through protest bans and/or violent repression. Media and civil society in Africa's most authoritarian countries (such as Sudan, Rwanda, Eritrea, and Equatorial Guinea) face state intimidation and barriers to operation. Violence against civilians, including by state security forces, is a major concern in a number of countries. Police in Ghana, Liberia, Kenya, Nigeria, Sierra Leone, Uganda, and Zambia, among others, have been accused of using excessive force and mistreating detainees, often with impunity. In Burkina Faso, Cameroon, Mali, and Nigeria, local populations have faced attacks by Islamist extremist groups as well as abuses by national militaries. Internal conflicts and/or state repression in Burundi, DRC, and South Sudan have featured high levels of violence and widespread abuses that may amount to war crimes or crimes against humanity. Peace and Security Issues What are Africa's major peace and security challenges? Armed conflict and instability continue to threaten regional security, impede development, and contribute to human suffering in parts of Africa. Beyond internal conflicts, the region faces diverse transnational threats, including from terrorist groups, illicit trafficking, wildlife crime, and maritime piracy. Key threats to African peace and security are outlined below. Internal Conflicts. Violent political crises, civil wars, and/or intercommunal violence have broken out in several African states in the past decade, reversing a previous trend toward greater stability. These crises have triggered mass population displacement and created widespread humanitarian need; multiple African countries rank among the most fragile states globally, according to the Fragile States Index (see Figure 2 ). Islamist Armed Groups . Violent Islamist extremist groups in Northwest and East Africa have spurred humanitarian crises and threaten stability in their areas of operation. Since 2013, mass casualty attacks on targets such as hotels, malls, peacekeeping facilities, government buildings, and restaurants popular with Westerners in such countries as Kenya, Mali, Burkina Faso, and Côte d'Ivoire have underscored the capacity of some groups to mount complex operations. In a 2017 study of extremist recruitment in Africa, the United Nations Development Program (UNDP) identifies several factors that may encourage radicalization, including family circumstances, religious ideology, economic pressures, and perceptions of government. Seventy-one percent of respondents named state actions, such as the killing or arrest of a relative or friend, as a key factor in their decision to join violent extremist organizations. Maritime Security. Africa's coastal waters, particularly along the Gulf of Guinea, the Gulf of Aden, and the western Indian Ocean, have been highly susceptible to illegal fishing, trafficking, and piracy. Criminal elements smuggle people, drugs, and weapons, and dump hazardous waste. Maritime commerce and offshore oil production facilities in some zones have faced high rates of piracy, theft, kidnapping for ransom, and sabotage. The Gulf of Guinea has among the highest global rates of piracy and armed robbery, which surged in the first half of 2018 as compared to past years. International antipiracy efforts have sharply reduced pirate attacks in waters off the Somali coast since 2013, but analysts warn of a continued threat of piracy in the region. Other Transnational Threats. In parts of the continent, porous borders, corruption, and weak justice and law enforcement mechanisms have allowed transnational crime networks to operate with relative impunity. U.S. policymakers have expressed concern over potential links between transnational drug traffickers and Africa-based armed groups. Illegal poaching and wildlife trafficking are also concerns for U.S. policymakers. Some African countries have made significant progress toward curbing such activities, while others have had limited success due to inadequate capacity and/or political will. International Peacekeeping. Six U.N. peacekeeping operations are underway in sub-Saharan Africa. Under the U.N. system of assessed contributions, the United States is the top source of funding for U.N. peacekeeping. The United States also provides training and equipment to peacekeeping personnel contributors through bilateral programs, funded largely via the State Department's Peacekeeping Operations (PKO) and International Narcotics Control and Law Enforcement (INCLE) accounts. The United States has also provided extensive support to the African Union Mission in Somalia (AMISOM), which was authorized by the U.N. Security Council but is not U.N.-conducted. AMISOM carries out peacekeeping activities and stabilization and counterterrorist operations, primarily against Al Shabaab, an Al Qaeda-linked group. African states play a growing role in stability operations: Ethiopia was the world's top troop contributor to U.N. peacekeeping missions in 2018, and Rwanda, Ghana, and Tanzania ranked in the top 10. What are the major armed conflicts in Africa today? West Africa In the Lake Chad Basin region, attacks by Boko Haram and its splinter faction, an Islamic State affiliate known as IS-West Africa (IS-WA, aka ISIS-WA) have caused a spiraling humanitarian crisis. Civilians in Nigeria's impoverished, predominately Muslim northeast have borne the brunt of the violence, with border areas of neighboring Cameroon, Chad, and Niger also hard-hit. By some estimates the violence has killed more than 15,500 people since 2011. As of mid-2018, 2.4 million people were internally displaced across the region, and 220,000 more were refugees. A U.S.-backed regional force, led by Nigeria, has curtailed Boko Haram's territorial control but struggled to subdue the groups. Separately, violence between herders and farmers in Nigeria has escalated in recent years, with some 2,500 killed in such clashes in 2016 alone. In Mali, Islamist armed groups have expanded their reach, leveraging the shortfalls of a 2015 peace accord between the government and northern separatists. International interventions, including a U.N. peacekeeping mission and French military operations, have failed to contain extremist violence, which has spread south and east into neighboring countries. In 2017, regional states launched a "joint force" to counter terrorism and other threats. The force has drawn pledges of significant donor support, including from the United States, but it is not yet fully operational. East Africa The war in South Sudan, which erupted in late 2013, has also been of significant concern for U.S. policymakers. Successive attempts to negotiate an end to the crisis have failed to bring sustainable peace, amid reports of widespread atrocities during the conflict. A regionally backed peace deal signed in September 2018 has quieted some areas, but violence continues in others. According to one estimate, nearly 400,000 South Sudanese (including combatants) have died as a result of the war. The conflict has displaced over 4 million people, including nearly 2.5 million refugees. Acute food insecurity threatened more than 6 million South Sudanese in late 2018—including an estimated 47,000 facing famine-like conditions. The United States is South Sudan's largest humanitarian aid donor. Conflict and insecurity persist in parts of Sudan, notably the western Darfur region and Southern Kordofan and Blue Nile states, despite an official cessation of hostilities by the government and some armed groups. Over a decade since the United States declared a genocide in Darfur, the conflict eludes resolution: the peace process remains stalled and insecurity and access restrictions continue to aggravate dire humanitarian needs. Beyond Darfur, rising political unrest, spurred by a severe economic crisis, could ignite a broader conflict. As of mid-2018, 7.1 million Sudanese were in need of humanitarian assistance. In Somalia, Al Shabaab continues to wage an asymmetric campaign against the Somali state, AMISOM, and international targets. It has killed thousands of Somali civilians since the mid-2000s and has demonstrated the capacity to conduct attacks against targets in the broader East Africa region—most notably Kenya, which has faced violence in part for its role in AMISOM. A small Islamic State faction based in northern Somalia also poses a threat. More than a decade of violence has generated a protracted humanitarian emergency: as of late 2018, 2.6 million Somalis were displaced internally, while 1.1 million were refugees. Some 4.6 million are food insecure, including 1.5 million in crisis- or emergency-level food insecurity. Central Africa Instability has endured in DRC since the mid-1990s despite extensive international stabilization efforts, contributing to a protracted humanitarian crisis and posing a threat to the broader Great Lakes region. There were 4.5 million internally displaced people (IDPs) in DRC as of early 2018, according to U.N. agencies, twice as many as in 2015. Another 800,000 Congolese are refugees; 13.1 million Congolese are estimated to need humanitarian assistance. CAR has struggled to emerge from conflict and state collapse since 2013, when rebels overthrew the government. The ensuing instability has featured widespread violence against civilians, much of it along ethnic and religious lines, and the disintegration of state institutions. Prospects for stabilization and socioeconomic development appear dim, as 2.5 million Central Africans—including nearly 1.2 million IDPs and refugees—require humanitarian aid as of late 2018. In Cameroon, protests over the perceived marginalization of English speakers in the majority Francophone country have, since 2017, escalated into a separatist insurgency amid a harsh state crackdown. Government forces and a fractious array of rebel groups have reportedly committed widespread abuses against civilians, resulting in a budding displacement crisis. In Burundi, President Pierre Nkurunziza's reelection to a third term in 2015, which many viewed as unconstitutional, sparked an ongoing violent political crisis. As of mid-2018, nearly 400,000 Burundians were refugees, while 160,000 were displaced internally. Civil society and perceived regime opponents face violence from security forces and the ruling party's youth wing. U.S. Engagement U.S.-Africa Policy under the Trump Administration In a December 2018 public address, National Security Advisor John Bolton unveiled the Trump Administration's policy approach toward Africa. He identified three core U.S. interests in Africa: expanding U.S. trade and commercial ties with African countries, "countering the threat from Radical Islamic Terrorism and violent conflict," and imposing more stringent conditions on U.S. aid and U.N. peacekeeping missions in the region. Bolton indicated that the Administration would prioritize efforts to counter "Great power competitors, namely China and Russia, [which] are rapidly expanding their financial and political influence across Africa." The new policy framework appears to respond to criticism from some observers suggesting that the United States seems less engaged on the continent than in previous years, at a time when other foreign actors, including China and Russia, are seeking to expand their roles. In his remarks, Bolton emphasized the Administration's intention to pursue such goals largely through bilateral engagement with African countries as opposed to via multilateral mechanisms. He further stressed the Administration's aim to pursue "fair and reciprocal" U.S.-African trade, including through comprehensive bilateral trade agreements, and the promotion of private sector-centered economic deregulation. He also announced that the Administration would seek to "streamline, reconfigure, or terminate" U.N. peacekeeping missions that it deems ineffective. An accompanying White House fact sheet echoed such aims while emphasizing, among other ends, the Administration's intention to promote the use of nonreciprocal U.S. trade preferences provided under the African Growth and Opportunity Act (AGOA, discussed below), respond to deadly infectious diseases, advance democracy in the region, "strengthen states where failure to do so would threaten our homeland," and take unilateral action when doing so is in the interest of U.S. national security. Goals identified in other Administration statements and policy documents include the continued normalization of U.S. relations with Sudan, conflict resolution in South Sudan, a peaceful electoral transition in DRC, and reforms in Ethiopia. Officials also have pressed African states to sever ties with North Korea, in line with multilateral sanctions regimes. The Trump Administration has proposed one new Africa-focused trade and investment initiative, "Prosper Africa," and has otherwise maintained most existing Africa-focused initiatives launched by its predecessors—while in some cases seeking to fund them at far lower levels. Among the most notable are the global President's Emergency Plan for AIDS Relief (PEPFAR) and Feed the Future (FTF) initiatives, and the Africa-specific Young African Leaders Initiative (YALI) and Power Africa. PEPFAR, a global effort to counter HIV/AIDS, was first authorized by Congress during the George W. Bush Administration. FTF, launched by the Obama Administration and broadly backed by Congress under the Global Food Security Act ( P.L. 114-195 ), seeks to improve food access and agricultural development in developing countries. The Obama Administration also launched Power Africa, which seeks to expand electricity access in Africa, and YALI, which aims to foster the professional development of emergent African business and civic leaders. While maintaining such initiatives, the Trump Administration has proposed changes to foreign assistance, including aid cuts, that could significantly affect U.S.-Africa relations. In addition to the Administration's proposals to reduce overall aid to Africa (discussed below), National Security Advisor Bolton suggested in his December 2018 remarks that the Administration would curtail aid to countries whose governments are "corrupt," or "repeatedly vote against the United States in international forums, or take action counter to U.S. interests." He also noted that the Administration would direct U.S. assistance to governments that pursue democratic, accountable, and transparent governance, as well as fiscal transparency, the rule of law, and growth-centered economic reforms. How this policy might affect aid programs implemented, for example, by nongovernmental organizations in conflict-affected or authoritarian countries remains to be seen. The Administration's immigration policies have affected U.S.-Africa policy. It has used executive orders to prohibit nationals from several African countries (Sudan, Chad, and Somalia) from entry to the United States, subject to certain exceptions, citing terrorism concerns—although as of late 2018, only Somalia remained subject to such prohibitions. Implementing a decision made by the Obama Administration, it ended "temporary protected status" (TPS) for nationals of three West African countries (Sierra Leone, Guinea, and Liberia) affected by the 2014-2016 Ebola outbreak. A subsequent decision to end TPS for nationals of Sudan was stayed by a court injunction. The Administration has restricted visas, or threatened to do so, for nationals of some African countries whose governments do not cooperate with U.S. court-ordered immigration removals. Some African leaders reacted negatively to a derogatory remark about African countries that was attributed to President Trump in early 2018. Since taking office in July 2018, Assistant Secretary of State for African Affairs Tibor Nagy has sought to challenge perceptions of U.S. indifference or disdain—as did Bolton during his December remarks. How has the Administration approached foreign power involvement in Africa? National Security Advisor Bolton has placed a high priority on countering Chinese and Russian influence in Africa. In his December remarks, Bolton accused both countries of "targeting their investments in the region to gain a competitive advantage over the United States" and of engaging in "predatory practices" on the continent, including corrupt and opaque deal-making, exploitative lending, and self-interested extractive industry activity. Such comments align with the Administration's National Security Strategy, which portrays Chinese influence as undermining African development "by corrupting elites, dominating extractive industries, and locking countries into unsustainable and opaque debts and commitments." Executive branch policy documents and statements also cite rising "great power competition" globally, including in Africa. Limited interest by many U.S. firms in African markets has restricted the scope for direct competition with Chinese or Russian actors to date, but the region's long-term potential as a growth market could make concerns over competition more significant in the future. China replaced the United States as Africa's largest trading partner in 2009. Chinese firms have constructed infrastructure projects across Africa, often using Chinese state financing tied to the substantial use of Chinese goods or services and, in some cases, Chinese access to African natural resources. These activities, which may expand under China's global "One Belt, One Road" initiative, help to fill infrastructure gaps, but their linkage to broader Chinese commercial and strategic interests raises challenging questions for the United States. In 2017, China established its first overseas military base, in Djibouti, at a maritime chokepoint on the Red Sea, a key global trade route. In a 2018 report to Congress, DOD stated that the base extends "the reach of China's armed forces, reflecting China's growing influence." The proximity of the Chinese and U.S. bases in Djibouti adds to U.S. concerns: in 2018, the Pentagon reported several instances in which Chinese lasers from the base were directed at U.S. aircraft; two U.S. pilots suffered eye injuries. Russia also has shown increasing interest in expanding its presence in Africa; by one estimate, Russia has signed at least 19 military cooperation deals with African states since 2014. Russian engagement is generally centered on arms sales, military training, intelligence exchanges, and access to minerals, notably uranium. One country that has drawn particular attention is the Central African Republic, where more than 200 Russian military and private security personnel have deployed since 2017. Russia and Sudan also have reportedly expanded cooperation. The Horn of Africa appears to be of increasing strategic importance to international actors. Several of the Arab Gulf countries, namely the United Arab Emirates (UAE), Saudi Arabia, and Qatar, as well as Turkey, Russia, and China, have increased their involvement, and some have established military bases in the region. As noted above, China maintains a military base in Djibouti; Russia, for its part, has announced plans to build a logistics center in Eritrea. Gulf actors appear to have helped facilitate reconciliation between Ethiopia and Eritrea. Whether growing foreign interests in that subregion prove to be a more stabilizing or destabilizing force remains to be seen. U.S.-Africa Trade, Investment, and Economic Cooperation What is the scope of U.S.-Africa trade and economic relations? Africa accounts for a small share of overall U.S. trade and investment activity, making up less than 1% of such U.S. global transactions in 2017. As it has over the past several years, the United States ran a goods trade deficit with the region in 2017 (totaling $10.8 billion), importing $24.9 billion and exporting $14.1 billion. U.S. exports are diverse while imports are mostly in primary products (oil alone accounts for over 40% but has declined significantly in recent years). Motor vehicles (exclusively from South Africa) and apparel are the region's only significant manufactured exports to the United States. Over half of U.S. trade with the region is with the two largest economies, Nigeria and South Africa. U.S. foreign direct investment (FDI) in the region is also concentrated in a few countries, including Mauritius ($10.4 billion in 2017), South Africa ($7.3 billion), Nigeria ($5.8 billion), Ghana ($1.7 billion), and Tanzania ($1.4). The small stock of sub-Saharan African FDI in the United States comes almost exclusively from South Africa ($4.1 billion in 2017). See Figure 3 for a snapshot of U.S.-Africa trade and investment. U.S. trade and investment policy toward Africa is focused on encouraging economic growth and development through trade within the region, with the United States, and internationally. The U.S. government also seeks to facilitate U.S. firms' access to opportunities for trade with and investment in Africa. A growing number of Members of Congress have supported expanded efforts to pursue such goals, and multiple committees have held hearings on these topics in recent years. A major increase in African trade and investment ties with other countries, particularly China, has been a growing concern of U.S. policymakers due to questions about both lost U.S. export opportunities and potential foreign policy influence associated with such ties. Total China-Africa trade surpassed U.S.-Africa trade in 2009, and in 2017, at $137 billion, was 3.5 times as large as U.S.-Africa trade. Improving economic and political climates in some African countries have led to increasing interest in the region as a destination for U.S. goods, services, and investment. Despite these trends, many U.S. businesses remain skeptical of the region's investment and trade potential and focus their investments in other regions thought to offer more opportunity and less risk. Many avoid engaging in business in Africa due to economic governance challenges in many countries, the relative difficulty of doing business, and, in some instances, political instability. What programs and legislation support expanded U.S.-Africa trade and economic relations? Given development challenges in the region, U.S. efforts to boost trade and investment ties with Africa have historically focused largely on improving local economic conditions. U.S. trade preferences, or nonreciprocal duty-free treatment designed to encourage exports to the United States, are a central component of that policy, particularly as embodied in the African Growth and Opportunity Act (AGOA) passed by Congress in 2000 (see below). The United States also provides aid for trade capacity building (TCB, see text box) in order to help countries better engage in international trade and take advantage of the benefits of U.S. trade preferences, as well as to encourage trade-led growth. TCB funds to the region totaled $826.5 million in FY2016. Three African trade hubs, established under the George W. Bush Administration, are a pillar of U.S. TCB in the region and work to increase regional export competitiveness, intraregional trade, and AGOA use. The Trump Administration has continued the Obama Administration's effort to expand these mandates by turning the hubs into two-way U.S.-Africa trade and investment centers aimed at boosting U.S. business activity in the region. U.S. efforts have increasingly focused on advancing U.S. business opportunities in the region. The Trump Administration has continued several initiatives established by the Obama Administration, including the Trade Africa Initiative and the President's Advisory Council on Africa. The private-sector-led Advisory Council provides recommendations to the Administration to help facilitate U.S. commercial engagement in the region. To bolster U.S. commercial engagement and general economic development in the region, the Overseas Private Investment Corporation (OPIC) provides loans, guarantees, and political risk insurance for U.S. private investment in developing and emerging economies in order to advance U.S. development and foreign policy goals. As of September 2018, 25% of OPIC's portfolio exposure was in Africa, the second largest share of any region. The Better Utilization of Investments Leading to Development Act (BUILD Act, P.L. 115-254 ), signed by the President on October 5, 2018, creates a new U.S. International Development Finance Corporation (IDFC) that will combine OPIC together with certain components of USAID, including its Development Credit Authority (DCA). The reorganization received strong bipartisan support in Congress and is viewed by many as a tool for countering China's "One Belt, One Road" initiative and growing economic influence in developing countries, including in Africa. The new IDFC, by statute, has expanded authority and capacity compared to current U.S. development finance activities; its $60 billion exposure cap, however, is arguably dwarfed by finance from China, which in September 2018 offered $50 billion in finance to Africa alone. Other agencies that promote U.S. exports to the region include the Export-Import Bank (Ex-Im Bank) and the U.S. Trade and Development Agency (USTDA). Ex-Im Bank provides direct loans, loan guarantees, and export credit insurance to help finance U.S. exports to support U.S. jobs and includes a statutory requirement to target African export opportunities. USTDA seeks to advance economic growth in Africa by promoting export opportunities for U.S. businesses. It facilitates access to finance through such activities as funding project preparation and feasibility studies, and by supporting other trade-expanding efforts. As a region, Africa typically accounts for the largest share of USTDA funding. Other U.S. trade and investment policy tools in place with African countries include Trade and Investment Framework Agreements (TIFAs)—intergovernmental forums for dialogue on trade and investment issues—and bilateral investment treaties, which advance reciprocal commitments to facilitate and protect foreign investment. The United States has a Free Trade Agreement (FTA) with Morocco, but there are no existing U.S. FTAs with sub-Saharan African countries. The United States also encourages and provides TCB support aimed at fostering African participation in broader multilateral efforts to reduce trade barriers. This includes support to facilitate African accession to, and implementation of, WTO and other multilateral trade agreements, particularly the WTO Trade Facilitation Agreement. What is AGOA and how does it affect U.S.-Africa trade?83 AGOA (Title I, P.L. 106-200 , as amended) is a nonreciprocal U.S. trade preference program that provides duty-free tariff treatment on certain imports from eligible sub-Saharan African countries. Congress first passed AGOA in 2000 as part of a U.S. effort to promote African development, deepen economic integration within the region, and strengthen U.S.-African trade and investment ties. The program builds on the Generalized System of Preferences (GSP), which provides similar duty-free treatment on U.S. imports from developing countries worldwide. AGOA covers a wider range of products and has typically been authorized over longer periods than GSP. The Trade Preferences Extension Act of 2015 ( P.L. 114-27 ) extended AGOA's authorization for an unprecedented 10 years, to September 2025, and amended some aspects of the program. Thirty-nine countries in sub-Saharan Africa were eligible for AGOA benefits in 2018. AGOA also requires the President, in consultation with Congress and AGOA beneficiary governments, to hold an annual U.S.-Africa Trade and Economic Cooperation Forum (typically referred to as the "AGOA Forum"). The 18 th AGOA Forum, themed "Forging New Strategies for U.S.-Africa Trade and Investment," was held in July 2018 in Washington, DC, where U.S. Trade Representative (USTR) Robert Lighthizer focused his remarks on U.S. interest in reciprocal trade agreements in the region. When it established AGOA in 2000, Congress directed the executive branch to pursue reciprocal trade agreements, where feasible, with interested countries in sub-Saharan Africa. Negotiations on a potential U.S.-Southern African Customs Union (SACU) FTA were initiated in 2003 but suspended in 2006 due to divergent views on the scope. During the 2015 AGOA reauthorization debate this issue resurfaced, in part due to concerns that AGOA countries' reciprocal trade agreements with other advanced economies, such as South Africa's agreement with the European Union (EU), place U.S. exporters at a disadvantage in certain African markets. Congress ultimately reauthorized AGOA for 10 years for all countries but again directed the executive branch to seek reciprocal agreements in Africa. It also mandated reporting requirements on a strategy and progress to that end, as well as on the status of countries' AGOA eligibility and other developments in U.S.-Africa trade relations. Total U.S. imports under AGOA were $13.5 billion in 2017, and despite the decline in recent years, energy products, mostly crude oil, remain the top import under the program (see Figure 4 ). Most analysts, however, focus on AGOA and its relation to nonenergy trade as a potential catalyst for African development. U.S. imports of such products from beneficiary countries have grown three-fold between 2001 and 2017, signaling success in achieving some of the program's goals, but a handful of countries and products continue to account for the bulk of these imports. In 2017, more than half of the $4.3 billion in nonenergy imports under AGOA were from South Africa alone, which exports the broadest range of products, including motor vehicles. Kenya, Lesotho, Mauritius, and Madagascar are the other major beneficiaries of the program and primarily export apparel products under AGOA. How does the Administration's trade policy affect U.S. trade with the region? U.S. trade policy has been a key focus of the Trump Administration, particularly with regard to the U.S. trade deficit, foreign trade barriers, and the effects of import competition on U.S. manufacturing. While U.S. trade with Africa may be of less concern to the Administration, as such trade is minimal and U.S. imports mostly consist of primary products, U.S. trade policy changes could significantly affect U.S. trade with some African countries, notably South Africa. Tariff a ctions. Increased tariffs on steel (25%) and aluminum (10%) imposed under Section 232 of the Trade Expansion Act of 1962 are of particular concern for South Africa. In 2017, South Africa was the 14 th ($279 million) and 9 th ($340 million) largest supplier of affected U.S. steel and aluminum imports, respectively. The Administration has granted product exclusions for a limited number of steel and aluminum imports from South Africa. A Section 232 investigation on U.S. motor vehicle imports remains pending, however, and could result in increased tariffs on such products, South Africa's second-largest category of exports to the United States. U.S. imports of motor vehicles from South Africa totaled $1.1 billion in 2017. Eligibility for U.S. p reference p rograms. The statutes authorizing U.S. preference programs, including AGOA, give the Administration considerable discretion in determining country eligibility. The Administration's focus on the U.S. trade deficit suggests it may look skeptically at nonreciprocal preference programs such as AGOA, which have a direct and immediate effect on U.S. imports and an indirect and longer-term effect on U.S. exports. To date, the Administration has ended AGOA eligibility for two African countries, Rwanda and Mauritania, citing (respectively) protectionism and human rights concerns. Previous Administrations similarly revoked AGOA eligibility for a variety of issues, including related to governance and labor rights. Congress may seek to consult with the Administration over its enforcement of eligibility criteria to ensure adherence to congressional objectives. Focus on reciprocal trade agreements. The Administration has made reciprocal trade negotiations a top priority of its trade policy with Africa. It is likely, however, to confront the same challenges that have dogged previous U.S. pursuit of an FTA in the region, including concern among African countries over the extensive nature of U.S. FTA commitments and concern over how an agreement with select countries may negatively affect African efforts toward regional integration. On the first issue, the Trump Administration may be more flexible in its approach than previous Administrations, as evidenced by announcements for limited-scope bilateral U.S. negotiations with the EU and Japan. The Administration's stated preference for bilateral agreements rather than agreements with larger regional blocs, however, appears at odds with the push among many African states for more regionally integrated trade policy, including via the African Continental Free Trade Area, signed by 44 African states in March. Congress is also expected to play a role in determining the scope of any new U.S. agreements in the region and would have to approve such agreements through implementing legislation. U.S. Support for Governance, Democracy, and Human Rights U.S. policymakers use several tools to promote democracy and human rights in Africa, including: Diplomacy and r eporting. U.S. diplomats often publicly criticize or condemn undemocratic actions and human rights violations in Africa, and raise concerns in private meetings with African leaders. Some Members of Congress likewise raise concerns directly with African leaders, with U.S. executive branch officials, or through legislation. The State Department publishes annual congressionally mandated reports on human rights conditions globally, and on other issues of concern, such as religious freedom and trafficking in persons. Such reports document violations and, in some cases, provide the basis for U.S. policy actions, such as restrictions on assistance. Congress also has imposed certain human rights-related legal restrictions on aid, as discussed below. The State Department and USAID also finance international and domestic election observer missions in Africa that produce reports on the relative credibility of electoral contests. Foreign a id. Multiple U.S. aid programs support African electoral institutions; train African political parties, civil society organizations, parliaments, and journalists; and assist local government officials in improving service delivery. They also provide capacity-building support and technical assistance focused on issues such as legal changes and governance reforms. Some U.S. security assistance programs are designed to improve the human rights records of African security forces and/or advance the rule of law by building the capacity of judicial and law enforcement bodies. U.S. programs also provide legal and medical aid to foreign human rights defenders, and fund ad hoc programs to address particular human rights challenges. Foreign a id r estrictions. Congress has imposed human rights-related restrictions or conditions on aid to specific African countries (e.g., Ethiopia, South Sudan, Sudan, and Zimbabwe), often through the enactment of foreign aid appropriations measures. Aid to multiple African governments may also be restricted by legislation curtailing or denying certain types of aid to countries that fail to observe human rights norms. These norms include: religious freedom, under the International Religious Freedom Act of 1998 ( P.L. 105-292 ), with Sudan and Eritrea listed in 2018 as countries of particular concern subject to potential restrictions or other sanctions; the recruitment and use of child soldiers, under the Child Soldiers Prevention Act ( P.L. 110-457 ) and related legislation, with DRC, Mali, Niger, Nigeria, Somalia, and South Sudan listed in 2018 for potential security assistance restrictions; and trafficking in persons (TIP), under the Trafficking Victims Protection Act ( P.L. 106-386 , as amended) and related legislation, with Burundi, Comoros, DRC, Equatorial Guinea, Eritrea, Gabon, Mauritania, the Republic of Congo, and South Sudan listed in 2018 for potential foreign aid restrictions. Sanctions. Executive orders issued under previous Administrations permit U.S. sanctions on designated persons implicated in human rights violations and/or undermining democratic transitions or peace processes in several countries, including Burundi, CAR, DRC, Somalia, Sudan, South Sudan, and Zimbabwe. In 2017, citing progress by the Sudanese government toward key U.S. priorities, the Trump Administration permanently lifted economic sanctions on Sudan that the Obama Administration had eased, though some restrictions remain in place. Also in 2017, the Trump Administration issued a new Executive Order pertaining to global human rights abuses and corruption, which it has invoked to impose targeted financial sanctions on a key financier of DRC president Joseph Kabila, as well as on former Gambian leader Yahya Jammeh, and associated businesses. Prosecutions. The United States has helped fund special tribunals that investigated and prosecuted human rights violations in Sierra Leone, Rwanda, and Chad. The United States is not a state party to the International Criminal Court (ICC), which in practice has prioritized human rights cases in Africa; the American Servicemembers' Protection Act of 2002 (ASPA, Title II of P.L. 107-206 ) prohibits various forms of U.S. material cooperation with the Court. The Trump Administration has pledged to end a previous policy of providing legally permissible diplomatic, informational, and logistical support to ICC prosecutions on a case-by-case basis. U.S. federal prosecutors have sought charges against some alleged perpetrators of human rights abuses in African countries, notably Rwanda and Liberia, often on the basis of violations of U.S. immigration laws. The United States has been a proponent of the establishment by the African Union of a hybrid court to investigate abuses in South Sudan. U.S. Aid to Africa What are the objectives of U.S. assistance programs in the region? The vast majority of U.S. bilateral aid for Africa aims to address health challenges, notably relating to HIV/AIDS, malaria, maternal and child health, and nutrition. U.S. aid programs also seek to encourage economic growth and development, meet urgent humanitarian needs, promote good governance, and improve security. The U.S. Agency for International Development (USAID) administers much of this aid, typically under country strategies that target specific development needs, as well as under multiple global and Africa-specific presidential development initiatives. The State Department administers various programs aimed at bolstering health, fostering the rule of law, countering trafficking, and improving military and police professionalism, often in coordination with other executive branch agencies. The Millennium Challenge Corporation (MCC) separately supports large-scale, multiyear development projects targeting impediments to economic growth (e.g., building roads or other infrastructure) in countries that meet various governance and development benchmarks. The Department of Defense (DOD) implements some State Department-funded security assistance programs and has been authorized by Congress to provide its own assistance to foreign militaries and internal security forces. DOD also carries out military-to-military cooperation in many African countries. How much foreign aid does the United States provide to Africa?101 In recent years, sub-Saharan Africa has generally received between 20% and 25% of total U.S. bilateral aid administered by the State Department and USAID. In FY2017, $7.03 billion in total bilateral State Department- and USAID-administered funds were allocated specifically to African countries, not including Food for Peace (FFP) assistance under P.L. 480 Title II. Top recipients (in descending order) were Kenya, Nigeria, South Africa, Tanzania, Mozambique, Zambia, Uganda, Ethiopia, Somalia, and DRC. Many countries receive additional globally or functionally allocated funding (such as humanitarian or counterterrorism aid), MCC assistance, and/or other ad hoc executive branch agency aid, which is not included in these totals. The United States also channels substantial aid to Africa through multilateral bodies, such as the World Bank. The Administration proposed $5.28 billion specifically for Africa in FY2019, a 25% decrease compared to FY2017 (not counting FFP), but a slight increase compared to the FY2018 request of $5.24 billion. The Administration also proposed in both years to eliminate FFP funding under P.L. 480 Title II, most of which has gone to African countries in recent years. (USAID administers the program, for which Congress provides funding via agriculture appropriations measures. ) FFP funding for Africa reached $1.32 billion in FY2017, of which $1.02 billion was for emergency humanitarian purposes and the remainder for development programs. Administration officials asserted that International Disaster Assistance (IDA) funding would provide greater flexibility and efficiency than FFP, leaving the precise impact of the proposals uncertain. Congress appropriated FY2018 foreign aid under the Consolidated Appropriations Act, 2018 ( P.L. 115-141 ), in which it largely did not adopt the Administration's 2018 proposals; final country-level FY2018 allocations are not yet available. FY2019 foreign aid appropriations measures reported during the 115 th Congress in the House ( H.R. 6385 ) and Senate ( S. 3108 ) would have largely not adopted the Administration's global proposals. What changes to U.S. aid to Africa has the Trump Administration pursued? The Trump Administration contends that its proposals to reduce and reallocate U.S. aid funding for Africa are intended to reduce spending, enhance efficiency, and prioritize U.S. national security interests. In March 2018, USAID Administrator Mark Green testified that USAID's FY2019 budget request reflected efforts to "balance fiscal needs here at home with our leadership role on the world stage." As noted above, the Trump Administration has requested annual bilateral State Department- and USAID-administered assistance funding at levels far below those requested by the Obama Administration or appropriated by Congress in recent years. Additionally, the Trump Administration's FY2018 and FY2019 budget proposals would have ended Food for Peace (FFP) aid under P.L. 480 Title II, most of which has gone to African countries in recent years. The Administration also has proposed merging the Development Assistance (DA) and Economic Support Fund (ESF) accounts—through which African countries received roughly $1.33 billion in FY2017—with several smaller accounts under a new Economic Support and Development Fund (ESDF), and requested funding far below FY2018 levels for the accounts it would replace. Congress did not adopt these proposals in enacting the FY2018 omnibus appropriations act ( P.L. 115-141 ). FY2019 Department of State, Foreign Operations, and Related Programs appropriations bills pending during the 115 th Congress in the House and the Senate ( H.R. 6385 and S. 3108 , respectively), as well as agriculture appropriations measures ( H.R. 5961 and S. 2976 ) would have likewise retained the traditional account structure and maintained global DA, ESF, and FFP funding roughly at FY2018 levels. What types of security assistance does the United States provide to Africa?108 U.S. security assistance in Africa comprises a range of activities, including programs to train and provide equipment to foreign security forces, professionalization and education initiatives, and law enforcement assistance. A large portion of such assistance seeks to help counter terrorism; the largest cumulative share in the past decade (over $2 billion) has supported African forces fighting Al Shabaab and pursuing stabilization in Somalia. The State Department and DOD each administer some types of security assistance, as authorized and appropriated by Congress. In addition to peacekeeper support, the Peacekeeping Operations (PKO) account is the primary funding vehicle for State Department-administered military aid in Africa, including for counterterrorism, maritime security, and security sector reform. It is the primary vehicle for, inter alia, U.S. support to AMISOM, bilateral military aid to DRC, and two multiyear 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). H.R. 6018 , which the House passed during the 115 th Congress, would have formally established TSCTP in law while imposing new notification and reporting requirements under the program. The State Department also administers programs to improve African law enforcement entities, enhance military professionalization through training and technical instruction, bolster security forces' capacity to conduct internal, border, and maritime security operations, and support antitrafficking and counternarcotics activities. While some of these programs are funded through the PKO account, those involving internal security forces are generally funded through the International Narcotics Control and Law Enforcement (INCLE) or Nonproliferation, Anti-terrorism, Demining, and Related Programs (NADR) accounts. DOD implements some State Department-administered programs, such as the International Military Education and Training (IMET) program. DOD also funds and administers certain congressionally authorized security cooperation programs to help build the capacity of foreign partner states. These include DOD's "global train and equip" program, which Congress codified under 10 U.S.C. 333 ("Section 333") in the FY2017 National Defense Authorization Act. Section 333 consolidated and superseded various "partner capacity-building" authorities that Congress had granted to DOD on a temporary or otherwise limited basis, related to counterterrorism, counterproliferation, maritime security, counternarcotics, and countering transnational organized crime. Top African recipients of DOD global train-and-equip assistance over the past decade include Kenya, Uganda, Niger, Chad, Somalia, Mauritania, and Cameroon. DOD is also authorized to carry out certain assistance related to activities such as countering wildlife crime and cooperative threat reduction. U.S. Military Engagement in Africa How large is the U.S. military presence in Africa? An October 2017 attack that killed four U.S. Special Operations Forces (SOF) soldiers in Niger, followed by a June 2018 attack on SOF personnel in Somalia that killed one U.S. soldier and injured four others, have drawn attention to the expanding U.S. military presence in Africa. Public statements by DOD officials suggest that there are up to 7,200 DOD personnel in Africa at any one time, presumably including personnel charged with guarding U.S. diplomatic facilities. The majority are stationed in Djibouti, which hosts Camp Lemonnier—the only enduring U.S. military base in Africa. The second-largest number, as of mid-2018, were deployed in Niger, with about 730 troops engaged in a range of activities, including construction of a new airfield in the northern town of Agadez. News reports, citing DOD sources, indicate that DOD's presence in Africa includes an estimated 1,200 SOF members, including those involved in train, equip, advise, and/or accompany missions. In November 2018, DOD announced plans to reduce and "realign" the U.S. military presence in Africa in the coming years (see below). What roles does the U.S. military play in Africa? U.S. Africa Command (AFRICOM)'s 2018 Posture Statement noted five lines of effort: 1. Develop security and stability in East Africa, 2. Degrade violent extremist organizations in the Sahel and Maghreb regions and contain instability in Libya, 3. Contain Boko Haram and degrade Boko Haram and ISIS-West Africa, 4. Interdict illicit activity in the Gulf of Guinea and Central Africa, and 5. Build African peacekeeping, humanitarian assistance, and disaster response capacities. The 2018 Posture Statement also identified three enduring tasks of the U.S. military in Africa: protecting U.S. personnel and facilities, maintaining U.S. access, and building partner capacity. The last is conducted under AFRICOM's "By, With, and Through" framework, which "emphasizes U.S. military capabilities employed in a supporting role, not as principal participants in an armed conflict." This approach aligns with DOD's 2018 National Defense Strategy , which sets out the U.S. military's goals in Africa of "working by, with, and through local partners and the European Union to degrade terrorists" and helping to "build the capability required to counter violent extremism, human trafficking, trans-national criminal activity, and illegal arms trade with limited outside assistance; and limit the malign influence of non-African powers." Under this framework, the U.S. military provides training, equipment, intelligence, logistical support, and, in some cases, advisory support to various African partner forces, as well as logistical and intelligence support to French forces operating in the Sahel, as authorized by Congress. Other major DOD activities in Africa include the deployment, since 2013, of hundreds of U.S. military personnel to sites in Niger and Cameroon to conduct intelligence, surveillance, and reconnaissance (ISR) activities in the Sahel and Lake Chad Basin. Separately, in Somalia, the number of U.S. military personnel increased significantly in 2017—from roughly 200 to more than 500—as the United States deployed more special operations advisers across the country to "advise, assist, and accompany" Somali and AU counterterrorism missions. The U.S. military also has taken direct action (such as air strikes) against terrorist threats in Africa, notably in Somalia. U.S. strikes in Somalia were initiated under the George W. Bush Administration and have since expanded and accelerated. In 2015, President Obama notified Congress that military operations in Somalia were carried out not only "to counter Al Qaeda and associated elements of Al Shabaab" but also "in support of Somali forces, AMISOM forces, and U.S. forces in Somalia." In 2016, the Obama Administration publicly referred to Al Shabaab as an "associated force" of Al Qaeda, in the context of the 2001 Authorization for Use of Military Force (AUMF). President Trump has further broadened the scope of U.S. military involvement in Somalia, authorizing DOD to conduct lethal action against Al Shabaab within a geographically defined "area of active hostilities" in support of partner forces in Somalia (such as AMISOM and elements of the Somali security forces). U.S. officials have described some airstrikes in Somalia as conducted in "self-defense" of U.S., Somali, or AMISOM forces. In 2017, AFRICOM announced that it would end Operation Observant Compass (OOC), a U.S. military advisory mission deployed in 2011 to support African-led efforts to counter the Lord's Resistance Army (LRA) rebel group then active in CAR, South Sudan, and DRC. Citing progress made in degrading the LRA, AFRICOM stated that some U.S. military personnel would transition to "broader scope security and stability activities" in Central Africa. The U.S. military also conducts exercises with African militaries and shares skills related to goals such as disaster and humanitarian response and maritime security. In the Sahel, these include a large multinational annual exercise known as Flintlock. A small number of U.S. military personnel (49 as of September 2018) are deployed as staff officers in U.N. peacekeeping operations in the region. Nearly every U.S. Embassy in Africa also hosts some U.S. military personnel, for example as part of the Defense Attaché Office, Office of Security Cooperation, and/or Marine Security Detachment. What changes to U.S. military engagement has the Administration pursued? As noted above, the Administration has broadened the scope of U.S. military involvement in Somalia—to comprise lethal action against Al Shabaab within a geographically defined "area of active hostilities" in support of partner forces—and has overseen a continued increase in the tempo of U.S. air strikes there. Reportedly, the Trump Administration also initially expanded the use of U.S. military advisors in several countries in Africa, including missions in which U.S. personnel were embedded with local security forces in the context of counterterrorism operations. Military commanders, however, have more recently signaled that they are reexamining or curtailing some such missions in the aftermath of the October 2017 deadly ambush in Niger. More broadly, the Trump Administration has signaled that "inter-state strategic competition, not terrorism, is now the primary concern in U.S. national security" In this regard, DOD has announced "force optimization" plans, to be implemented over several years, entailing "a reduction of about 10 percent of the 7,200 military forces serving in Africa Command" and a reorientation of missions to emphasize great power competition. Precisely how the downsizing will be implemented, and its implications for specific missions, remain unclear. DOD's announcement suggested that counterterrorism activities would be de-emphasized overall, although operations in Somalia, Djibouti, and Libya would "largely remain the same." In January 2019, however, conflicting reports citing DOD sources suggested a drawdown of U.S. military personnel in Somalia was under consideration. The 115th Congress The 115 th Congress shaped U.S. engagement with Africa through its appropriations, authorization, and oversight roles. It enacted several pieces of legislation that have influenced U.S.-Africa policy and programs, including the African Growth and Opportunity Act and Millennium Challenge Act Modernization Act ( P.L. 115-167 ), the Zimbabwe Democracy and Economic Recovery Amendment Act of 2018 ( P.L. 115-231 ); the BUILD Act ( P.L. 115-254 ); the Global Food Security Reauthorization Act ( P.L. 115-266 ), annual National Defense Authorization Acts (most recently, P.L. 115-232 ), and foreign aid and defense appropriations measures (most recently, P.L. 115-141 ). The House and Senate also considered bills and resolutions responding to emerging developments in specific countries. As in past Congresses, legislative engagement by the 115 th Congress on Africa-related issues often centered on responding to humanitarian crises (e.g., S.Res. 114 , expressing the sense of the Senate regarding humanitarian crises in Nigeria, Somalia, South Sudan, and Yemen, and H.Res. 187 , on famine response efforts in South Sudan) and condemning human rights violations and undemocratic governance (e.g., H.Res. 128 , supporting respect for human rights and inclusive governance in Ethiopia, S.Res. 386 , urging the government of DRC to proceed with planned elections, and H.R. 6207 , which would have codified into law certain sanctions relating to DRC and require that the President submit to Congress a list of senior DRC political figures suitable for sanction). In addition, as noted above, H.R. 6018 would have established in law a long-running regional counterterrorism program in North-West Africa. Hearings in the House Foreign Affairs Committee and Senate Foreign Relations Committee attended to developments in Ethiopia, Cameroon, DRC, Zimbabwe, and South Sudan; humanitarian crises in Africa; human and civil rights issues on the continent; China's role in Africa; and U.S. military engagement in the region. Outlook Significant challenges and opportunities on the African continent, as well as shifts in U.S.-Africa policy under the Trump Administration, may continue to shape Congress' consideration of U.S. policy and programs in Africa. As it debates budgetary, policy, and oversight priorities, the Congress may consider issues such as Rapidly shifting politics and international engagement in the Horn of Africa, where a new government in Ethiopia has initiated sweeping changes at home and pursued peace with erstwhile rival Eritrea. Ongoing conflicts and humanitarian crises in South Sudan, Somalia, DRC, the Lake Chad Basin, CAR, and Mali, among others. The evolution of armed Islamist extremist threats in Africa, along with other transnational security issues, such as maritime piracy and narcotics smuggling in parts of the region. The prospects for expanding democracy in Africa, amid rising repression in Tanzania, leadership changes in Southern Africa, and enduring authoritarianism in countries such as Sudan, Rwanda, Eritrea, and Equatorial Guinea. Forthcoming presidential elections in several countries, including Nigeria (February 2019), Senegal (February 2019), Mauritania, Malawi, and South Africa (all in May 2019), and Mozambique (October 2019). U.S.-Africa trade and investment issues, including the effects of the Administration's tariff actions, possible reciprocal trade agreement negotiations, and the implementation of the BUILD Act as it affects the region. The scope, status, and operational goals of U.S. military deployments in Africa, following DOD's announcement of a proposed realignment that would reduce U.S. troop levels in the region. The scale and programmatic focus of U.S. foreign assistance to African countries in the context of the Trump Administration's forthcoming FY2020 aid budget proposal and FY2019 country allocations decisions. The involvement in Africa of foreign powers such as China, Russia, and Gulf states, and the implications for U.S. interests and policy. Congress may draw on a number of tools to shape U.S.-Africa policy, including foreign aid and defense authorization and appropriation legislation, other legislation, direct engagement with the Administration and African leaders, and oversight activities. While the 115 th Congress did not adopt many of the Administration's proposals regarding aid to Africa, it maintained a focus on areas of enduring congressional interest, including U.S. trade and investment, humanitarian crisis and response, human rights and democracy, and U.S. military activities. Congress may continue to consider similar issues as it weighs the appropriate balance between U.S. diplomacy, development and economic engagement, and defense priorities in Africa and responds to emerging developments in the region.

Congress may review existing U.S. policies and programs in sub-Saharan Africa (henceforth, "Africa") as it establishes its budgetary and policy priorities and responds to developments in the region. Key enduring issues for Congress include the authorization and appropriation of funding for U.S. foreign aid programs and U.S. military activities in the region, and oversight of U.S. programs and policies. Economic and Development Issues. Much of Africa experienced rapid economic growth starting in the early 2000s, reducing poverty and expanding the middle class in some countries. Since 2014, however, growth has slowed in many countries—and almost all continue to face high poverty rates and long-standing development challenges such as food insecurity and malnutrition, ineffective health and education institutions, and infrastructure deficiencies. Other factors hindering socioeconomic development in Africa include low domestic buying power, a shortage of skilled labor, limited access to capital and other inputs, poor governance, and political instability and insecurity. Governance, Democracy, and Human Rights. Since the early 1990s, nearly all African countries have transitioned from military or single-party rule to at least nominally multiparty political systems in which elections are held regularly. Nonetheless, the development of accountable, functional democratic institutions remains limited in many countries. Corruption and mismanagement are pervasive across much of the region, and state services are limited. Authoritarian governments and armed belligerents in Africa commit serious human rights violations. Peace and Security. Civil wars and crises have broken out in multiple African countries since 2010, reversing the previous decade's trend of stabilization. Newer crises have unfolded in the Lake Chad Basin, the Central African Republic (CAR), Mali, Burkina Faso, Cameroon, Burundi, and South Sudan, while long-running conflicts continue to affect the Democratic Republic of Congo (DRC), Sudan, and Somalia. Porous borders, weak institutions, and corruption have created permissive environments for transnational threats such as terrorism, trafficking, and maritime piracy. Two conflict-affected African countries, South Sudan and Nigeria, face a credible risk of famine in early 2019; in both, insecurity has hindered aid access to affected zones. U.S.-Africa Policy under the Trump Administration. The Trump Administration has maintained several Africa-focused initiatives launched by its predecessors, but it also has proposed changes to U.S. trade policy and foreign assistance, including aid cuts, that could significantly affect U.S. engagement with Africa if implemented. The Administration's policy approach toward Africa, unveiled in late 2018, identifies three broad U.S. interests in the region: expanding U.S. trade and commercial ties with African countries, countering Islamist extremism and other forms of violent conflict, and imposing more stringent conditions on U.S. aid and U.N. peacekeeping missions in the region. Administration officials also have placed a high priority on countering Chinese and Russian influence in Africa, with the Department of Defense announcing in late 2018 that it would reorient its personnel and footprint in parts of Africa to align with that objective in the coming years. Country-specific goals identified in other Trump Administration statements and policy documents include the continued normalization of U.S. relations with Sudan, conflict resolution in South Sudan, an electoral transition in DRC, and democratic reforms in Ethiopia. The Administration also has signaled greater focus on reciprocity in trade relations, imposed tariffs affecting trade with some African countries, pressed African states to join efforts to put pressure on North Korea, and enacted immigration policies that have affected U.S.-Africa policy, among other initiatives.

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Introduction The Fair Labor Standards Act (FLSA), enacted in 1938, is the federal legislation that establishes the general minimum wage that must be paid to all covered workers. The FLSA mandates broad minimum wage coverage. It also specifies certain categories of workers who are not covered by general FLSA wage standards, such as workers with disabilities or certain youth workers. In 1938, the FLSA established a minimum wage of $0.25 per hour. The minimum wage provisions of the FLSA have been amended numerous times since then, typically to expand coverage or raise the wage rate. Since its establishment, the minimum wage rate has been raised 22 separate times. The most recent change was enacted through P.L. 110-28 in 2007, which increased the minimum wage from $5.15 per hour to its current rate of $7.25 per hour in three steps (the final step occurring in 2009). States generally have three options in setting their minimum wage policies: (1) they can set their own minimum wage provisions that differ from those in the FLSA, (2) they can explicitly tie their minimum wage provisions to the FLSA, or (3) they can include no specific minimum wage provisions in state law. This report begins with a brief discussion of FLSA minimum wage coverage. It then provides a summary of state minimum wage laws, followed by an examination of rates and mechanisms of adjustments in states with minimum wage levels above the FLSA rate ( Table 1 provides summary data). Next, the report discusses the interaction of federal and state minimum wages over time, and finally, the Appendix provides detailed information on the major components of minimum wage policies in all 50 states and the District of Columbia. The state policies covered in this report include currently effective policies and policies enacted with an effective date at some point in 2019. While most states' scheduled state minimum wage rate changes (due to inflation adjustments or statutorily scheduled changes) occurred on January 1 of each year, a few states have rate increases scheduled for later in the year. Effective dates of rate increases are noted in Table 1 and in the Appendix . The FLSA Minimum Wage The FLSA extends two types of minimum wage coverage to individuals: "enterprise coverage" and "individual coverage." An individual is covered if they meet the criteria for either category. Enterprise Coverage To be covered by the FLSA at the enterprise or business level, an enterprise must have at least two employees and annual sales or "business done" of at least $500,000. Annual sales or business done includes all business activities that can be measured in dollars. Thus, for example, retailers are covered by the FLSA if their annual sales are at least $500,000. In non-sales cases, a measure other than sales must be used to determine business done. For example, for enterprises engaged in leasing property, gross amounts paid by tenants for property rental will be considered business done for purposes of determining enterprise coverage. In addition, regardless of the dollar volume of business, the FLSA applies to hospitals or other institutions primarily providing medical or nursing care for residents; schools (preschool through institutions of higher education); and federal, state, and local governments. Thus, regardless of how enterprise coverage is determined (by business done or by specified institutional type), all employees of a covered enterprise are considered to be covered by the FLSA. Individual Coverage Although an enterprise may not be subject to minimum wage requirements if it has less than $500,000 in annual sales or business done, employees of the enterprise may be covered if they are individually engaged in interstate commerce or in the production of goods for interstate commerce. To be engaged in interstate commerce—the definition of which is fairly broad—employees must produce goods (or have indirect input to the production of those goods) that will be shipped out of the state of production, travel to other states for work, make phone calls or send emails to persons in other states, handle records that are involved in interstate transactions, or provide services to buildings (e.g., janitorial work) in which goods are produced for shipment outside of the state. While individual coverage is broad under the FLSA, there are also specific exemptions from the federal rate, including individuals with disabilities; youth workers; tipped workers; and executive, administrative, and professional workers, among others. FLSA Minimum Wage Rates In 1938, the FLSA established a minimum wage of $0.25 per hour. The minimum wage provisions of the FLSA have been amended numerous times since then, typically for the purpose of expanding coverage or raising the wage rate. Since its establishment, the minimum wage rate has been raised 22 separate times. The most recent change was enacted in 2007 ( P.L. 110-28 ), which increased the minimum wage from $5.15 per hour to its current rate of $7.25 per hour in three steps. Figure 1 shows the nominal and real (inflation-adjusted) value of the federal minimum wage from its enactment in 1938 through 2018. The real value of the minimum wage generally rose from 1938 to 1968, after which it has generally fallen in real terms, with some brief increases in value following periodic statutory rate changes. From an initial rate of $0.25 per hour in 1938 ($4.43 in inflation-adjusted terms), the minimum wage increased to $1.60 per hour in 1968 ($11.50 in inflation-adjusted terms, a peak value to date). The real value of the minimum wage has fallen by $1.20 since it was increased to $7.25 in 2009. Minimum Wage Policies in the States State policymakers may also choose to set labor standards that are different from federal statutes. The FLSA establishes that if a state enacts minimum wage, overtime, or child labor laws more protective of employees than those provided in the FLSA, then state law applies. In the case of minimum wages, this means FLSA-covered workers are entitled to the higher state minimum wage in those states with rates above the federal minimum. On the other hand, FLSA-covered workers would receive the FLSA minimum wage in states that have set minimum wages lower than the federal rate. Given the generally broad minimum wage coverage of the FLSA, it is likely that most workers in states with minimum wages below the federal rate are covered by the FLSA rate. In 2019, the range of state minimum wage rates is as follows: 29 states and the District of Columbia have enacted minimum wage rates above the federal rate of $7.25 per hour; 2 states have minimum wage rates below the federal rate; 5 states have no state minimum wage requirement; and the remaining 14 states have minimum wage rates equal to the federal rate. In the states with no minimum wage requirements or wages lower than the federal minimum wage, only individuals who are not covered by the FLSA are subject to those lower rates. The Appendix provides detailed information on state minimum wage policy in all 50 states and the District of Columbia, including the legislation authorizing the state minimum wage and the relevant legislative language regarding the rate and mechanism of adjustment. The remainder of this report focuses on states with minimum wages above the federal rate. Rates and Mechanisms of Adjustment In states with minimum wage rates above the federal rate, variation occurs mainly across two dimensions: the rate and the mechanism of adjustment to the rate. This section (including data in Table 1 ) summarizes these two dimensions for the states with rates currently above the federal minimum. State rates range from $0.25 to $6.75 above the federal rate, with a majority of these states using some sort of inflation measure to index the state minimum wage. Rates In the 29 states and the District of Columbia with minimum wage rates above the federal rate in 2019, minimum hourly rates range from $7.50 per hour in New Mexico to $12.00 per hour in Massachusetts and Washington and $14.00 in the District of Columbia. Of the states with minimum wage rates above $7.25: 3 states have minimum wages within $1 of the federal rate of $7.25 per hour; 10 states have rates between $1.00 and $2.00 per hour above the federal rate; and 16 states and the District of Columbia have rates greater than $2.00 per hour above the federal rate (i.e., $9.26 or higher). Figure 2 shows the geographic and rate dispersion of state minimum wages. In terms of coverage, a majority of the civilian labor force is in states with a minimum wage rate above the federal rate of $7.25. Specifically, the 29 states and the District of Columbia with minimum wage rates above $7.25 represent about 61% of the total civilian labor force, which means the federal rate is the wage floor in states representing 39% of the labor force. Mechanisms for Future Adjustments In any given year, the exact number of states with a minimum wage rate above the federal rate may vary, depending on what mechanism is in place to adjust the state minimum wage. Some states specifically set rates above the federal rate. Other states have rates above the federal minimum wage because the state minimum wage rate is indexed to a measure of inflation or is increased in legislatively scheduled increments, and thus the state rate changes even if the federal minimum wage stays unchanged. Below are the two main approaches to regulating the adjustment of state minimum wage rates in states with rates above the federal minimum: legislatively scheduled increases and indexing to inflation. In this section, states are counted by the primary method of adjustment. While most states use only one of these methods, some states combine a series of scheduled increases followed by indexing the state rate to a measure of inflation. In these cases, states are counted as "indexing to inflation," as that is the long-term mechanism of adjustment in place. Legislatively Scheduled Increases If a state adopts a minimum wage higher than the federal rate, the state legislature may specify a single rate in the enacting legislation and then choose not to address future rates. In these cases, the only mechanism for future rate changes is future legislative action. Alternatively, a state may specify future rates in legislation through a given date. Rhode Island in 2017, for example, set a rate of $10.10 per hour beginning January 1, 2018, and $10.50 beginning January 1, 2019. After the final increase, the rate will remain at $10.50 per hour until further legislative action. This is the same approach taken in the most recent federal minimum wage increase ( P.L. 110-28 ), which increased the minimum wage from $5.15 an hour in 2007 to $7.25 per hour in 2009 in three phases. Of the 29 states and the District of Columbia with minimum wage rates above the federal rate, 9 currently have no scheduled increases beyond 2019, while Arkansas, Massachusetts, and Michigan have legislatively scheduled rate increases after 2019. Indexing to Inflation If a minimum wage rate is established as a fixed amount and not increased, its value will erode over time due to inflation. For this reason, several states have attempted to maintain the value of the minimum wage over time by indexing the rate to some measure of inflation. This mechanism provides for automatic changes in the minimum wage over time and does not require legislative action to make annual adjustments. Currently, nine states index state minimum wages to a measure of inflation. In addition, another eight states and the District of Columbia are scheduled in a future year to index state minimum wage rates to a measure of inflation. Thus, of the total of 17 states and the District of Columbia that currently or are scheduled to index minimum wage rates, seven states—Arizona, Montana, Nevada, New York, Oregon, South Dakota, and Vermont—index the state minimum wage to the national Consumer Price Index for All Urban Consumers (CPI-U); five states—California, Missouri, New Jersey, Ohio, and Washington—index the state minimum wage to the national Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W); two states—Alaska and Colorado—and the District of Columbia use a subnational version of the CPI-U to index the state minimum wage; two states—Florida and Maine—use a regional version of the CPI-W to index the minimum wage; and one state (Minnesota) uses the implicit price deflator for personal consumption expenditures (PCE) to index the minimum wage. Reference to the Federal Rate While scheduled increases and indexation are the two main ways that states adjust their minimum wage rates, a few states also add a reference to the federal minimum wage rate as a possible mechanism of adjustment. Thus any time the federal rate changes, the state rate may change. Currently, Alaska, Connecticut, the District of Columbia, and Massachusetts use this federal reference to supplement their primary mechanisms of adjusting state minimum wage rates. In Alaska, the state minimum wage rate is indexed to the CPI-U for Anchorage Metropolitan Statistical Area. However, Alaska state law requires that the state minimum wage must be at least $1.00 per hour higher than the federal rate. So it is possible that a federal wage increase could trigger an increase in the Alaska minimum wage, but the main mechanism is indexation to inflation. Although Connecticut does not currently include scheduled rate increases in the minimum wage, Connecticut state law requires that the state rate must exceed the federal minimum wage rate by 0.5% if the federal rate becomes greater than or equal to the state rate. The District of Columbia's minimum wage rate is the higher of the level required by the District of Columbia statute or the federal rate plus $1.00. Starting in 2021, the District of Columbia minimum wage will be indexed to inflation and the reference to the federal rate will no longer be in effect. While Massachusetts law includes scheduled rate increases in the minimum wage through 2023, the law also requires that the state rate must be at least $0.50 above federal minimum wage rate. Trends in State Minimum Wages Because federal and state minimum wages do not change in regular intervals or by regular increments, the number of states and the share of the labor force covered by higher minimum wages changes annually. In general, during periods in which the federal minimum wage remains constant, more states enact higher minimum wages and the share of the workforce for which the federal rate serves as the floor likewise decreases. When the federal rate increases, some state rates become equal to or less than the federal rate. Table 1 presents a snapshot of minimum wage rates in the 29 states and the District of Columbia with minimum wages above the federal rate from 2018 through 2024, while Figure 3 shows the changes in the coverage of the federal minimum wage. Specifically, Figure 3 plots the percentage of the civilian labor force residing in states in which the federal wage serves as the floor. If no state had a minimum wage above the federal rate, then the federal minimum wage would be the floor for states in which 100% of the labor force resides. Similarly, if every state had a minimum wage above the current rate of $7.25, then the federal rate would not be binding for the labor force. Instead the interaction of federal and state rates has led to the federal minimum wage playing a fluctuating, but generally decreasing, role in establishing a wage floor for the civilian labor force, particularly during periods in which the federal rate is not increased. Examining the specific time periods around changes in the federal minimum wage (see Figure 1 for the history of federal minimum wage rate changes), data in Figure 3 show a general trend toward a lower share of the labor force being covered by the federal minimum wage only. Federal rate increases in 2007 through 2009 mitigated this reduction, as did earlier changes in the federal rate. In the period from 1983 through 1989, the federal minimum wage remained constant at $3.35 per hour. Prior to the federal increases in 1990 and 1991, the number of states with higher minimum wages rose from 3 in 1984 to 16 in 1989 and the share of the U.S. civilian labor force in states for which the federal rate was the floor fell from 98% to 70%. Following a two-step federal increase in 1990 and 1991 from $3.35 to $4.25 per hour, the number of states with higher minimum wages fell to 8 in 1992, which meant that the federal rate was the floor for states comprising 92% of the civilian labor force. The next federal minimum wage increase occurred in two steps in 1996 and 1997, increasing from $4.25 to $5.15 per hour. Prior to that increase, in 1995, there were 10 states, representing 10% of the civilian labor force, with minimum wages above the federal rate. After the second increase in 1997, the number of states with higher minimum wages dropped to 8, but the share of the labor force in states for which the federal rate served as a floor decreased to 82%. The federal minimum wage did not increase after 1997 until 2007. During much of that period the number of states with higher minimum wages stayed somewhat steady, increasing from 8 (comprising 18% of the civilian labor force) in 1998 to 12 (comprising 21% of the civilian labor force) in 2003. However, by 2006, 22 states representing 50% of the civilian labor force had minimum wage rates above the federal rate. This increase was due in part to a few populous states, such as Florida, Michigan, and New York, adopting minimum wage rates above the federal rate in this period. Following the three-step increase in the federal minimum wage from $5.15 to the current $7.25 (2007-2009), 15 states, comprising 33% of the civilian labor force, had rates above the federal minimum wage in 2010. By 2019, this rose to 29 states and the District of Columbia, which means that the federal rate is the wage floor in states representing 39% of the civilian labor force. Appendix. Selected Characteristics of State Minimum Wage Policies For the 29 states and the District of Columbia with state minimum wage rates above the federal rate as of 2019, Table 1 and much of the text above summarizes information on those states' minimum wage policies, highlighting minimum wage rates and mechanisms used to establish and adjust wage rates. As discussed previously, for those states with current or scheduled minimum wages above the federal rate, three main mechanisms are in place to adjust future rates: (1) scheduled increases, (2) indexation to inflation, or (3) reference to the federal rate plus an add-on (i.e., a state minimum wage is a percentage or dollar amount above the federal rate). For the 21 states with minimum wage rates equal to or below the federal rate, however, there are no mechanisms in place to move rates above the federal rate. Thus, the main difference within this group of states is the relationship of the state rate, if any, to the federal rate. For those 21 states with minimum wages equal to or below the federal rate, the state rate may be set in four ways: No state minimum wage provisions: In five states—Alabama, Louisiana, Mississippi, South Carolina, and Tennessee—there are no provisions for state minimum wage rates. In practice, this means that most workers in these states are covered by the FLSA minimum wage provisions since coverage is generally broad. State minimum wage provisions with no reference to the FLSA: Five states have state minimum wage rates but do not reference the FLSA. Two of these states—Georgia and Wyoming—have state rates below $7.25, while three of these states—Kansas, North Dakota, and Wisconsin—have rates equal to $7.25. However, because there is no reference to the FLSA rate or other provision for adjustment in any of these states, the state rate does not change unless the state policy is changed. State minimum wage equals the FLSA rate: Six states—Idaho, Indiana, New Hampshire, Oklahoma, Texas, and Virginia—set the state rate equal to the FLSA rate. Thus, when the FLSA rate changes, the state rates in these six states change to equal the FLSA rate. State minimum wage equals FLSA rate if FLSA is greater: In four states—Iowa, Kentucky, North Carolina, and Pennsylvania—the state rate is specified separately but includes a provision to equal the FLSA rate if the latter is above the state specified rate. Table A-1 provides detailed information about minimum wage policies in the 50 states and the District of Columbia, including those summarized in a more concise manner in Table 1 .

The Fair Labor Standards Act (FLSA), enacted in 1938, is the federal legislation that establishes the general minimum wage that must be paid to all covered workers. While the FLSA mandates broad minimum wage coverage, states have the option of establishing minimum wage rates that are different from those set in it. Under the provisions of the FLSA, an individual is generally covered by the higher of the state or federal minimum wage. As of 2019, minimum wage rates are above the federal rate of $7.25 per hour in 29 states and the District of Columbia, ranging from $0.25 to $6.75 above the federal rate. Another 14 states have minimum wage rates equal to the federal rate. The remaining 7 states have minimum wage rates below the federal rate or do not have a state minimum wage requirement. In the states with no minimum wage requirements or wages lower than the federal minimum wage, only individuals who are not covered by the FLSA are subject to those lower rates. In any given year, the exact number of states with a minimum wage rate above the federal rate may vary, depending on the interaction between the federal rate and the mechanisms in place to adjust the state minimum wage. Adjusting minimum wage rates is typically done in one of two ways: (1) legislatively scheduled rate increases that may include one or several increments; (2) a measure of inflation to index the value of the minimum wage to the general change in prices. Of the 29 states and the District of Columbia with minimum wage rates above the federal rate, 9 currently have no scheduled increases beyond 2019, 3 states have legislatively scheduled rate increases after 2019, and 17 states and the District of Columbia have scheduled increases through a combination of planned increases and current- or future-year indexation of state minimum wage rates to a measure of inflation. Because the federal and state minimum wage rates change at various times and in various increments, the share of the labor force for which the federal rate is the binding wage floor has changed over time. Since 1981, there have been three series of increases in the federal minimum wage rate—1990-1991, 1996-1997, and 2007-2009. During that same period, there have been numerous changes in state minimum wage policies. As a result of those interactions, the share of the U.S. civilian labor force living in states in which the federal minimum wage is the floor has fluctuated but generally declined, and is about 39% as of 2018.

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Introduction Running away from home is not a recent phenomenon. Folkloric heroes Huckleberry Finn and Davy Crockett fled their abusive fathers to find adventure and employment. Although some youth today also leave home due to abuse and neglect, they often endure far more negative outcomes than their romanticized counterparts from an earlier era. Without adequate and safe shelter, runaway and homeless youth are vulnerable to engaging in high-risk behaviors and further victimization. Youth who live away from home for extended periods may become removed from school and systems of support. Runaway and homeless youth are vulnerable to multiple problems while they are away from a permanent home, including untreated mental health disorders, drug use, and sexual exploitation. They also report other challenges including poor health and the lack of basic provisions. Congress began to hear concerns about the vulnerabilities of the runaway population in the 1970s due to increased awareness about these youth and the establishment of runaway shelters to assist them in returning home. Congress and the President went on to enact the Runaway Youth Act of 1974 as Title III of the Juvenile Justice and Delinquency Prevention Act ( P.L. 93-415 ) to assist runaways through services specifically for this population. Since that time, the law has been updated to authorize services to provide support for runaway and homeless youth outside of the juvenile justice, mental health, and child welfare systems. The Runaway Youth Act—now known as the Runaway and Homeless Youth Act—authorized federal funding to be provided through annual appropriations for three programs that assist runaway and homeless youth: the Basic Center Program (BCP), Transitional Living Program (TLP), and Street Outreach Program (SOP). Together, the programs make up the Runaway and Homeless Youth Program (RHYP), administered by the Family and Youth Services Bureau (FYSB) in the U.S. Department of Health and Human Services' (HHS) Administration for Children and Families (ACF). Basic Center Program: Provides funding to community-based organizations for crisis intervention, temporary shelter, counseling, family unification, and after care services to runaway and homeless youth under age 18 and their families. In some cases, BCP-funded programs may serve older youth. Over 31,000 youth participated in FY2016, the most recent year for which data are available. Transitional Living Program: Supports community-based organizations that provide homeless youth ages 16 through 22 with stable, safe, longer-term residential services up to 18 months (or longer under certain circumstances), including counseling in basic life skills, building interpersonal skills, educational advancement, job attainment skills, and physical and mental health care. Over 6,000 youth participated in FY2016. Street Outreach Program: Provides funding to community-based organizations for street-based outreach and education, including treatment, counseling, provision of information, and referrals for runaway, homeless, and street youth who have been subjected to, or are at risk of being subjected to, sexual abuse, sexual exploitation, prostitution, and trafficking. SOP grantees made contact with more than 36,000 youth in FY2016. This report begins with an overview of the runaway and homeless youth population. It then describes the challenges in defining and counting this population, as well as the factors that influence homelessness and leaving home. The report also provides background on federal efforts to support runaway and homeless youth, including the evolution of federal policies to respond to these youth, with a focus on the period from the Runaway Youth Act of 1974 to the present time. The report then describes the administration and funding of the Basic Center, Transitional Living, and Street Outreach programs that were created from authorizations in the act. The appendixes include funding information for the BCP program and discuss other federal programs that may be used to assist runaway and homeless youth. Who Are Homeless and Runaway Youth? Defining the Population There is no single federal definition of the terms "homeless youth" or "runaway youth." However, HHS relies on definitions from the Runaway and Homeless Youth Act in administering the Runaway and Homeless Youth program: The act includes the following definitions: "Homeless youth," for purposes of the BCP, includes individuals under age 18 (or some older age if permitted by state or local law) for whom it is not possible to live in a safe environment with a relative and who lack safe alternative living arrangements. "Homeless youth," for purposes of the TLP, includes individuals ages 16 through 22 for whom it is not possible to live in a safe environment with a relative and who lack safe alternative living arrangements. Youth older than age 22 may participate if they entered the program before age 22 and meet other requirements. "Runaway youth" includes individuals under age 18 who absent themselves from their home or legal residence at least overnight without the permission of their parents or legal guardians. Separately, the McKinney-Vento Act authorizes several federal programs for homeless individuals that are administered by the U.S. Department of Housing and Urban Development (HUD). The definition of "homeless individual" in McKinney-Vento refers to "unaccompanied youth," which applies to selected homelessness programs. HUD's related regulation defines an "unaccompanied youth" as someone under age 25 who meets the definition of "homeless" in the Runaway and Homeless Youth Act or other specified federal laws. The regulation also provides additional criteria, including that they have lived independently without permanent housing for at least 60 days. The research literature discusses definitions of runaway and homeless youth. While studies have often categorized young people based on their status as runaways , homeless, or street youth , a 2011 report suggests that overlap exists between these categories. The authors of the study note that these "typologies," or classifications, are too narrowly defined by the youth's housing status and reasons for homelessness, among other factors. The authors explain that typologies based on mental health status or age cohort are promising, but they suggest further research in this area to ensure that the typologies are accurate. Demographics The precise number of homeless and runaway youth is unknown due to their residential mobility. These youth often eschew the shelter system for locations or areas that are not easily accessible to shelter workers and others who count the homeless and runaways. Youth who come into contact with census takers may also be reluctant to report that they have left home or are homeless. Determining the number of homeless and runaway youth is further complicated by the lack of a standardized methodology for counting the population and inconsistent definitions of what it means to be homeless or a runaway. Differences in methodology for collecting data on homeless populations may also influence how the characteristics of the runaway and homeless youth population are reported. Some studies have relied on point prevalence estimates that report whether youth have experienced homelessness at a given point in time, such as on a particular day. According to researchers that study the characteristics of runaway and homeless youth, these studies appear to be biased toward describing individuals who experience longer periods of homelessness. Annual Point-in-Time (PIT) Counts HUD requires communities receiving certain HUD funding to conduct annual point-in-time (PIT) counts of people experiencing homelessness, including homeless youth. The PIT counts include people living in emergency shelter, transitional housing, and on the street or other places not meant for human habitation. It does not include people who are temporarily living with family or friends. In the 2018 PIT count, communities identified 36,361 unaccompanied youth under age 25 (versus 40,799 in 2017) and another 8,724 under age 25 who were homeless parents (versus 9,434 in 2017). While PIT counts do not provide a confident estimate of youth experiencing homelessness across the country, they provide some information to communities about the potential scope of youth homelessness. Voices of Youth Count The Reconnecting Homeless Youth Act ( P.L. 110-378 ), which renewed authorization of appropriations for the Runaway and Homeless Youth Program through FY2013, also authorized funding for HHS to conduct periodic studies of the incidence and prevalence of youth who have run away or are homeless. Separately, the accompanying conference report to the FY2016 appropriations law ( P.L. 114-113 ) directed HUD to use $2 million to conduct a national incidence and prevalence study of homeless youth as authorized under the Runaway and Homeless Youth program. HUD provided these funds to Chapin Hall at the University of Chicago to carry out the study. The study, known as Voices of Youth Count , used a nationally representative phone survey to derive national estimates and conducted brief surveys of youth and in-depth interviews of youth who had experiences of homelessness. The phone survey involved interviews with adults whose households had youth and young adults ages 13 to 25 and with adults ages 18 to 25. Voices of Youth Count estimated that approximately 700,000 youth ages 13 to 17 and 3.5 million young adults ages 18 to 25 had experienced homelessness within a one-year period, meaning they were sleeping in places not meant for human habitation, staying in shelters, or temporarily staying with others while lacking a safe and stable alternative living arrangement. This differs from the PIT counts because it includes individuals who are staying with others. The study also found that youth homelessness affected youth in rural and urban areas at similar levels. Other Research A 2010 study on the lifetime prevalence of running away used longitudinal survey data of young people who were 12 to 18 years old when they were first interviewed about whether they had run away—defined as staying away at least one night without their parents' prior knowledge or permission—along with other behaviors. In subsequent years, youth who were under age 17 at their previous interview were asked if they had run away since their last interview. Youth who had ever run away were asked how many times they had done so and the age at which they first did. The study found that 19% of those who ran away did so before turning 18; females were more likely than males to run away; and among white, black, and Hispanic youth, black youth have the highest rate of ever running away. Youth who ran away reported that they did so about three times on average; however, about half of runaways had only run away once. Approximately half of the youth had run away before age 14. A subset of runaway youth is those in foster care. In FY2017, over 500 children in the United States had run away from their foster care home or other placement. While this represents less than 1% of all children in foster care, running away is more prevalent among older youth in care. A study of over 50,000 youth ages 13 through 17 in 21 states indicated that 17% ran away at least once during their first time in foster care. The study found that female, black, and Hispanic youth were more likely to run away than male and white youth in care. The study further found that youth were more likely to run away from congregate care (i.e., group care) settings compared to other settings, such as living with a relative or in a foster family home. Youth were also more likely to run away from care if they lived in the most socioeconomically disadvantaged counties or lived in a state that lacked a process to screen youth on the risk of running away. States report on the characteristics and experiences of certain current and former foster youth through the National Youth in Transition Database (NYTD). Among other information, states must report data on cohorts of foster youth beginning when they are age 17, and later at ages 19 and 21. Among youth surveyed in FY2015 at age 21, about 43% reported having experienced homelessness. Factors Influencing Homelessness and Leaving Home Youth most often cite family conflict as the major reason for their homelessness or episodes of running away. According to the research literature, a youth's poor family dynamics, sexual activity, sexual orientation, pregnancy, school problems, and alcohol and drug use are strong predictors of family discord. One-third of callers who used the National Runaway Safeline in 2017—a crisis call center funded under the Runaway and Homeless Youth Program for youth and their relatives involved in runaway incidents—gave family dynamics (not defined) as the reason for their call. Further, a longitudinal survey of middle school and high school youth examined the effects of family instability (e.g., child maltreatment, lack of parental warmth, and parent rejection) and other factors on the likelihood of running away from home approximately two to six years after youth were initially surveyed. Researchers found that youth with family instability were more likely to run away. Family instability also influenced problem behaviors, such as illicit drug use, which, in turn, were associated with running away. Researchers further determined that certain other effects (e.g., school engagement, neighborhood cohesiveness, physical victimization, and friends' support) were not strong predicators of whether youth in the sample ran away. In a study of youth who ran away from foster care between 1993 and 2003, the youth cited three primary reasons why they ran from foster care: to connect with their biological families, express their autonomy and find normalcy, and maintain relationships with nonfamily members. The Voices of Youth Count study found that certain youth ages 18 to 25 were at heightened risk of experiencing homelessness. This included youth with less than a high school diploma or GED; who were Hispanic or black; who were parenting and unmarried; or identified as lesbian, gay, bisexual, transgender, or questioning (LGBTQ). Gay and lesbian youth appear to be at greater risk for homelessness and are overrepresented in the homeless population, due often to experiencing negative reactions from their parents when they come out about their sexuality. The Voices of Youth Count study found that LGBTQ young adults ages 18 to 25 had more than twice the risk of being homeless than their heterosexual peers. LGBTQ youth made up about 20% of young adults who reported homelessness. In addition, a study involving LGBTQ young adults in seven cities found that the most common reason youth became homeless was due to being kicked out or asked to leave the home of a parent, relative, foster home, or group home. Under an HHS grant, Youth with Child Welfare Involvement at Risk of Homelessness , the 18 grantees (state, local, and tribal child welfare agencies or community-based organizations) evaluated multiple risk factors for homelessness among child welfare-involved populations: which include those who have had numerous foster care placements, run away from foster care, been placed in a group home, had a history of mental health or behavioral health diagnoses, had juvenile justice involvement, had a history of substance abuse, been emancipated from foster care, and been parenting or fathered a child. Challenges Associated with Running Away and Homelessness Runaway and homeless youth are vulnerable to multiple problems while they are away from a permanent home, including untreated mental health disorders, drug use, and sexual exploitation. Studies of homeless youth indicate that they are more likely to experience mental health and substance abuse disorders than their counterparts in the general population. A literature review of studies on psychiatric disorders among homeless youth found high prevalence of conduct disorders, major depression, psychosis, and other disorders. A study of participants in the Street Outreach Program found that about 6 out of 10 reported symptoms associated with depression and almost three-fourths reported that they had experienced major trauma, such as physical or sexual abuse or witnessing or being a victim of violence. Substance abuse is more prevalent among youth who live on the street, compared to homeless youth who are in shelters. Still, both groups of youth use alcohol or drugs at higher rates than their peers who live in family households, even after researchers control for demographic differences. While away from a permanent home, runaway and homeless youth are also vulnerable to sexual exploitation; sex and labor trafficking; and other victimization such as being beaten up, robbed, or otherwise assaulted. Some youth resort to illegal activity including stealing, exchanging sex for food or a place to stay, and selling drugs for survival. Runaway and homeless youth report other challenges including poor health and a lack of basic provisions. Evolution of Federal Policy Prior to the enactment of the Runaway Youth Act of 1974 (Title III, Juvenile Justice and Delinquency Prevention Act of 1974, P.L. 93-415 ), federal policy provided limited services to runaway and homeless youth. If they received any services, most of these youth were served through the local child welfare agency, juvenile justice court system, or both. The 1970s marked a shift to a more rehabilitative model for assisting youth who had run afoul of the law, including those who committed status offenses such as running away. During this period, Congress focused increasing attention on runaways and other vulnerable youth due, in part, to emerging sociological models to explain why youth engaged in deviant behavior. The first runaway shelters were created in the late 1960s and 1970s to assist them in returning home. The landmark Runaway Youth Act of 1974 decriminalized runaway youth and authorized funding for programs to provide shelter, counseling, and other services. Since the law's enactment, Congress and the President have expanded the services available to both runaway youth and homeless youth under what is now referred to as the Runaway and Homeless Youth Program. In more recent years, other federal entities have been involved in responding to the challenges facing runaway and homeless youth. These efforts are coordinated through the U.S. Interagency Council on Homelessness (USICH). Figure 1 traces the evolution of federal policy in this area. U.S. Interagency Council on Homelessness: Opening Doors The Runaway and Homeless Youth Program is a major part of recent federal efforts to end youth homelessness through the U.S. Interagency Council on Homelessness. The USICH, established under the 1987 Stewart B. McKinney Homeless Assistance Act, is made up of several federal agencies, including HHS and HUD. The HEARTH Act, enacted in 2009 as part of the Helping Families Save Their Homes Act ( P.L. 111-22 ), charged USICH with developing a National Strategic Plan to End Homelessness. In June 2010, USICH released this plan, entitled Opening Doors . The plan set out goals for ending homelessness, including (1) ending chronic homelessness by 2015; (2) preventing and ending homelessness among veterans by 2015; (3) preventing and ending homelessness for families, youth, and children by 2020; and (4) setting a path to ending all types of homelessness. Focus on Youth Homelessness In 2012, USICH amended Opening Doors to specifically address strategies for improving the educational outcomes for children and youth and assisting unaccompanied homeless youth. USICH outlined its intention to improve outcomes for youth in four areas: stable housing, permanent connections, education or employment options, and socio-emotional well-being. In 2013, a USICH working group developed a guiding document for ending youth homelessness by 2020. Known as the Framework to End Youth Homelessness , the document outlines a data strategy to collect better data on the number and characteristics of youth experiencing homelessness. This data strategy includes coordinating the former data collection system for the Runaway and Homeless Youth program—referred to as RHYMIS—with HUD's Homeless Management Information Systems (HMIS). RHYMIS was a data system administered by HHS for previous RHYP grantees to upload demographic and other data for the youth they served. HMIS is a locally administered data system used to record and analyze client, service, and housing data for individuals and families who are homeless or at risk of homelessness in a given community. As of FY2015, RHYP grantees stopped reporting to RHYMIS and instead report to HMIS. Grantees reported to RHYMIS on the basic demographics of the youth, the services they received, and the status of the youth upon exiting the programs. RHY grantees are now required to report this same (and new information) to HMIS. According to HHS, some grantees have had have encountered inaccurate software programming for their data standards or have had issues with successfully extracting their data to submit to HHS. The data strategy outlined in the framework also involves, if funding is available, designing and implementing a national study to estimate the number, needs, and characteristics of youth experiencing homelessness. This is consistent with the Runaway and Homeless Youth Act's directive for HHS to conduct a study of youth homelessness. As noted, this study— Voices of Youth Count —received funding from FY2016 HUD appropriations. In addition, HHS has supported other research on homeless youth, including factors associated with prolonged homelessness and risk factors for homelessness among children and youth with involvement in child welfare. In 2018, the USICH issued a brief that outlines continued gaps in data on the homeless youth population, citing the need for greater understanding about the causes of youth homelessness and how youth enter and exit homelessness. Separately, the framework also outlined a strategy to strengthen and coordinate the capacity of federal, state, and local systems to work toward ending youth homelessness. USICH has provided guidance to communities, including by establishing community-level criteria for ending homelessness and accompanying benchmarks to assess whether they have achieved an end to youth homelessness. Still, the 2018 USICH brief called for greater evidence regarding the impact of housing and service interventions in helping youth exit homelessness. Runaway and Homeless Youth Program As mentioned, the Runaway and Homeless Youth Program is administered by the Family and Youth Services Bureau (FYSB) within HHS's Administration for Children and Families (ACF). The Runaway and Homeless Youth Act includes three authorizations of appropriations. The authorization of appropriations for the Basic Center Program and Transitional Living program is $127.4 million for each of FY2019 and FY2020. Under the law, 90% of the federal funds appropriated under the two programs must be used for the BCP and TLP (together, the programs and their related activities are known as the Consolidated Runaway and Homeless Youth program). Of this amount, 45% is reserved for the BCP and no more than 55% is reserved for the TLP. The remaining share of consolidated funding is allocated for (1) a national communication system to facilitate communication between service providers, runaway youth, and their families (National Safeline); (2) training and technical support for grantees; (3) evaluations of the programs; (4) federal coordination efforts on matters relating to the health, education, employment, and housing of these youth; and (5) studies of runaway and homeless youth. The authorization of appropriations for the Street Outreach program is $25 million for each of FY2019 and FY2020. Although the SOP is a separately funded component, SOP services are coordinated with those provided under the BCP and TLP. The authorization of appropriations for the periodic estimate of incidence and prevalence of youth homelessness is such sums as may be necessary for FY2019 and FY2020. Funding has not been provided by HHS under this authority, and as noted, funds appropriated to HUD for this purpose have been used to support Voices of Youth Count. Table 1 shows funding levels for the Runaway and Homeless Youth Program from FY2006 through FY2019. Over this period, funding has increased notably for the program three times, most recently from FY2017 to FY2018. Congress has provided some guidance on how the additional funds are to be spent. In the conference report to accompany the FY2019 consolidated appropriations act, Congress stated that the increase should be provided to current TLP grantees whose awards end on March 31, 2019. The funding is to be used to continue services until new awards are made to those grantees, or for those grantees that did not receive a new grant, to provide services until the end of FY2019. Funding may then be used for additional new awards. Basic Center Program Overview The Basic Center Program is intended to provide short-term shelter and services for youth and their families at centers operated by BCP grantees, which are public and private community-based organizations. Youth eligible to receive BCP services include those youth who are at risk of running away or becoming homeless (and may live at home with their parents), or have already left home, either voluntarily or involuntarily. To stay at the shelter, youth must be under age 18, or an older age if the BCP center is located in a state or locality that permits this higher age. Some centers may serve homeless youth through street-based services, home-based services, and drug abuse education and prevention services. Grantees seek to connect youth with their families, whenever possible, or to locate appropriate alternative placements. They also provide individual or group and family counseling, health care, education, and employment assistance. As specified in the law, BCP grantees or centers are intended to provide services as an alternative to involving runaway and homeless youth in the law enforcement, juvenile justice, child welfare, and mental health systems. Youth may stay in a center continuously up to 21 days. In FY2017, the program served 23,288 youth, and in FY2018 it funded 280 BCP shelters (most recent figures available). These centers, which can shelter as many as 20 youth, are generally supposed to be located in areas that are frequented or easily reached by runaway and homeless youth. BCP grantees must make efforts to contact the parents and relatives of runaway and homeless youth. Grantees are also required to establish relationships with law enforcement, health and mental health care, social service, welfare, and school district systems to coordinate services. Grantees maintain confidential statistical records of youth, including youth who are not referred to out-of-home shelter services. Further, grantees are required to submit an annual report to HHS detailing the program activities and the number of youth participating in such activities, as well as information about the operation of the centers. Funding Allocation BCP grants are allocated directly to grantees for a three-year period. Funding is generally distributed to entities based on the proportion of the nation's youth under age 18 in the jurisdiction where the entities are located. The 50 states, the District of Columbia, and Puerto Rico each receive a minimum allotment of $200,000. Separately, the territories (currently, this includes American Samoa and Guam) each receive a minimum of $70,000. The amount of funding for each state or territory can further depend on whether grant applicants in that jurisdiction applied for funding, and if so, whether the applicant fulfilled the requirements in the authorizing law and grant application. For example, the authorizing law directs HHS to give priority to applicants who have demonstrated experience in providing services to runaway and homeless youth. HHS is to re-allot any funds designated for grantees in one state to grantees in other states that will not be obligated before the end of a fiscal year. See Table A-1 for the amount of funding allocated for each state in FY2017 and FY2018. The costs of the BCP are shared by the federal government (90%) and grantees (10%). Rural Homeless Youth Demonstration In FY2008, HHS began funding a three-year Rural Host Homes Demonstration Project , which was initiated to expand BCP shelter and support services to runaway and homeless youth who live in rural areas not served by shelter facilities. The project supported grantees that provided youth with shelter (via host home families who were recruited, screened, and trained) and preventive services, including transportation, counseling, educational assistance, and aftercare planning, among others. Over the course of the three years, the project served 781 youth, 411 of whom received shelter and 370 of whom received preventive services without shelter. Transitional Living Program Overview Recognizing the difficulty that youth face in becoming self-sufficient adults, the Transitional Living Program provides longer-term shelter and assistance for youth ages 16 through 22 (or older if the youth entered the TLP prior to reaching age 22) who may leave their biological homes due to family conflict, or have left and are not expected to return home. Pregnant and/or parenting youth are eligible for TLP services. In FY2017, the TLP provided services to 3,517 youth. In FY2018, the program funded 229 organizations. Each TLP grantee may shelter up to 20 youth at various sites, such as host family homes, supervised apartments owned by a social service agency, scattered-site apartments, or single-occupancy apartments rented directly with the assistance of the grantee. Youth may remain at TLP sites for up to 540 days (18 months), or longer for youth under age 18. Youth ages 16 through 22 may remain in the program for a continuous period of 635 days (approximately 21 months) under "exceptional circumstances." This term means circumstances in which a youth would benefit to an unusual extent from additional time in the program. A youth in a TLP who has not reached age 18 on the last day of the 635-day period may, in exceptional circumstances and if otherwise qualified for the program, remain in the program until his or her 18 th birthday. Youth receive several types of services at TLP-funded programs: basic life-skills training, including consumer education and instruction in budgeting and the use of credit; parenting support and child care (as appropriate); building interpersonal skills; educational opportunities, such as GED courses and postsecondary training; assistance in job preparation and attainment; and mental and physical health care services. TLP grantees are required to develop a written plan designed to help youth transition to living independently or another appropriate living arrangement, and they are to refer youth to other systems that can help to meet their educational, health care, and social service needs. The grantees must also submit an annual report to HHS that includes information regarding the activities carried out with funds and the number and characteristics of the homeless youth. Maternity Group Homes As part of the FY2002 budget request, the George W. Bush Administration proposed a $33 million initiative to fund maternity group homes—or centers that provide shelter to pregnant and parenting teens who are vulnerable to abuse and neglect—as a component of the TLP. Although the TLP authorized services for pregnant and parenting teens prior to FY2002, the Bush Administration sought funds specifically to serve this population. Increased funds were ultimately provided to enable these youth to access TLP services. The 2003 amendments to the Runaway and Homeless Youth Act ( P.L. 108-96 ) provided explicit authority to use TLP funds for this purpose. Since FY2004, funding for adult-supervised transitional living arrangements that serve pregnant or parenting women ages 16 to 21 and their children has been awarded to organizations that receive TLP grants. These organizations provide youth with parenting skills, including child development education, family budgeting, health and nutrition, and other skills to promote family well-being. Funding Allocation TLP grants are distributed competitively by HHS to community-based public and private organizations throughout the country for a five-year period. Grantees must provide at least 10% of the total cost of the program. Outcomes of Youth in the TLP HHS is carrying out a study to learn more about the long-term outcomes of 1,250 youth who have used TLP services. The study seeks to describe the outcomes and to isolate and describe promising practices and other factors that may contribute to their successes or challenges. Of particular interest for the study is how services are delivered, the demographics of youth, and their socio-emotional wellness and life experiences. It involves both a process evaluation and impact evaluation, with youth randomly assigned to the treatment (i.e., participation in the TLP) and control groups. The study seeks to address the following questions: (1) How do TLP programs operate, what types of program models are used to deliver services, and what services are delivered to homeless youth? (2) What are the long-term housing outcomes and protective factors for youth who participate in the TLP program immediately, six months, 12 months, and 18 months after exiting the program? (3) What interventions can be attributed to any positive outcomes experienced by youth who participate in the TLP? According to HHS, the pilot study revealed challenges "in collecting data from a large enough sample size of youth to detect any effects so that conclusions could be drawn about the impact of homeless youth served by TLPs." HHS is not certain how it will move forward with the study. Special Populations and Rural Homeless Youth Demonstration In FY2016, HHS began the Transitional Living Program Special Population Demonstration project. The project funded nine grantees over a two-year period that tested approaches for serving populations that need additional support: LGBTQ runaway and homeless youth ages 16 to 21; and young adults who have left foster care because of emancipation. Grantees were expected to provide strategies that help youth build protective factors, such as connections with schools, employment, and appropriate family members and other caring adults. According to HHS, a process evaluation will assess how grantees are implementing the demonstration project. HHS separately funded a project from FY2012 through FY2014 to build the capacity of TLPs in serving LGBTQ youth. Known as the 3/40 Blueprint: Creating the Blueprint to Reduce LGBTQ Youth Homelessness , the purpose of the grant was develop information about serving the LGBTQ youth population experiencing homelessness, such as through efforts to identify innovative intervention strategies, determine culturally appropriate screening and assessment tools, and better understand the needs of LGBTQ youth served by RHY providers. The website developed by the grantee, the University of Illinois at Chicago, identifies promising practices that serve LGBTQ youth who are experiencing homelessness and publishes information about their challenges. In FY2009, HHS began the Support Systems for Rural Homeless Youth Demonstration Project . Six states received grants to support TLPs in rural communities in serving young adults who have few or no connections to a supportive family structure or community resources. The five-year project sought to provide services across three main areas: survival support, which includes housing, health care (including mental health), and substance abuse treatment and prevention; community, which includes community service, youth and adult partnerships, mentoring, and peer support groups; and education and employment, which includes high school or GED completion, postsecondary education, and job training and employment. The six states—Colorado, Iowa, Minnesota, Nebraska, Oklahoma, and Vermont—each received annual grants of $200,000. According to HHS, all of the sites engaged youth in positive youth development activities that included safe places for youth to go. In addition, they raised awareness about homelessness in rural areas and addressed some of the unique needs around employment, housing, and transportation. However, the sites also confirmed that there is a general lack of available housing for homeless youth and that transportation was the most critical impediment to serving these youth. Street Outreach Program Overview The Street Outreach Program provides runaway and homeless youth living on the streets or in areas that increase their risk of using drugs or being subjected to sexual abuse, prostitution, sexual exploitation, and trafficking are eligible to receive services. The program's goal is to assist youth in transitioning to safe and appropriate living arrangements. SOP services include the following: treatment and counseling; crisis intervention; drug abuse and exploitation prevention and education activities; survival aid; street-based education and outreach; information and referrals; and follow-up support. Funding Allocation Grants are awarded for a three-year period, and grantees must provide 10% of the funds to cover the cost of the program. In FY2018, 96 grantees were funded. In FY2017 grantees made contact with 24,366 youth. Data Collection Project The Family and Youth Services Bureau initiated the Street Outreach Program Data Collection Project in 2012 to learn more about the lives and needs of homeless and runaway youth served by SOP grantees. The purpose of the project was to design services to better meet the needs of these youth. FYSB collected information through focus groups and computer-assisted personal interviews with 656 youth (ages 14 to 21 years) served by grantees in 11 cities. The project found that participants were homeless on average for nearly two years and had challenges with substance abuse, mental health, and exposure to trauma. Youth most identified that they were in need of job training or help finding a job, transportation assistance, and clothing. The top barriers to obtaining shelter were shelters being full, not knowing where to go for shelter, and lacking transportation to get to a shelter. The study researchers concluded that more emergency shelters could help prevent youth from sleeping on the street. Further, they noted that youth on the streets need more intensive case management (e.g., careful assessment and treatment planning, linkages to community resources, etc.) and more intensive interventions. Training and Technical Assistance: RHYTTAC HHS funds the Runaway and Homeless Youth Training and Technical Assistance Center (RHYTTAC) to provide technical assistance to RHYP grantees. HHS awarded a five-year cooperative agreement, from September 30, 2017, through September 29, 2020, to National Safe Place to operate RHYTTAC. National Safe Place is a national youth outreach program that aims to educate young people about the dangers of running away or trying to resolve difficult, threatening situations on their own. RHYTTAC is designed to provide training and conference services to RHYP grantees that enhance and promote continuous quality improvement to services provided by RHYP grantees. Further, RHYTTAC offers resources and information through its website, tip sheets, a quarterly newsletter, toolkits, sample policies and procedures, and other resources. RHYTTAC also provides assistance to individual grantees in response to their questions or concerns, as well as concerns raised by HHS as part of the Runaway and Homeless Youth Program Monitoring System (see subsequent section). National Communication System: National Runaway Safeline A portion of the funds for the BCP, TLP, and related activities are allocated for a national communications system known as the National Runaway Safeline ("Safeline"). The Safeline is intended to help homeless and runaway youth (or youth who are contemplating running away) through counseling, referrals, and communicating with their families. Beginning with FY1974 and every year after, the Safeline, which until 2013 was called the National Runaway Switchboard, has been funded through the Basic Center Program grant or the Consolidated Runaway and Homeless Youth Program grant. The Safeline is located in Chicago and operates each day to provide services to youth and their families across the country. Services include (1) a channel through which runaway and homeless youth or their parents may leave messages; (2) 24-hour referrals to community resources, including shelter, community food banks, legal assistance, and social services agencies; and (3) crisis intervention counseling to youth. In calendar year 2017, the Safeline handled nearly 30,000 contacts with youth (via phone, computer, emails, and postings), of which nearly three-quarters were from youth and 9% were from parents; the other callers were relatives, friends, and others. Other services are also provided through the Safeline. Since 1995, the "Home Free" family reunification program has provided bus tickets for youth ages 12 to 21 to return home or to an alternative placement near their home through Home Free. Oversight HHS evaluates each RHYP grantee through the Runaway and Homeless Youth Monitoring System. Staff from regional ACF offices and other grant recipients (known as peer reviewers) inspect the program site, conduct interviews, review case files and other agency documents, and conduct entry and exit conferences. The monitoring team then prepares a written report that identifies the strengths of the program and areas that require corrective action. The Reconnecting Homeless Youth Act of 2008 required that within one year of its enactment (October 8, 2009), HHS was to issue rules that specified performance standards for public and nonprofit entities that receive BCP, TLP, and SOP grants. On April 14, 2014, HHS issued a notice of proposed rulemaking (NPRM) for the new performance standards and other requirements for the Runaway and Homeless youth program grantees. On December 20, 2016, HHS implemented a final rule that was similar to the provisions in the NPRM. These standards are used to monitor individual grantee performance. The Senate Committee on Health, Education, Labor, and Pensions (HELP) and the House Committee on Education and Labor have exercised jurisdiction over the Runaway and Homeless Youth Program. HHS must submit reports biennially to the committees on the status, activities, and accomplishments of program grant recipients and evaluations of the programs performed by HHS. The most recent report was submitted in January 2018, and covered FY2014 and FY2015. The 2003 reauthorization law ( P.L. 108-96 ) of the Runaway and Homeless Youth Act required that HHS, in consultation with the U.S. Interagency Council on Homelessness, submit a report to Congress on the promising strategies to end youth homelessness within two years of the reauthorization, in October 2005. The report was submitted to Congress in June 2007. As mentioned above, the 2008 reauthorization law ( P.L. 110-378 ) required HHS, as of FY2010, to periodically submit to Congress an incidence and prevalence study of runaway and homeless youth ages 13 to 26, as well as the characteristics of a representative sample of these youth. As discussed, Congress appropriated funding to HUD for this purpose and the study, known as Voices of Youth Count , includes multiple publications about its findings. The 2008 law also directed the Government Accountability Office (GAO) to evaluate the process by which organizations apply for BCP, TLP, and SOP, including HHS's response to these applicants. GAO submitted a report to Congress in May 2010 on its findings. GAO found weaknesses in several of the procedures for reviewing grants, such as that peer reviewers for the grant did not always have expertise in runaway and homeless youth issues and feedback on grants was not provided in a permanent record. In addition, GAO found that HHS delayed telling successful grantees that the grant had been awarded to them. HHS has implemented the recommendations made in the report. Appendix A. Basic Center Program (BCP) Funding Appendix B. Additional Federal Support for Runaway and Homeless Youth Since the creation of the Runaway and Homeless Youth Program, other federal initiatives have also established services for such youth. Youth Homelessness Demonstration Program (YHDP): The omnibus appropriations laws for FY2016 through FY2018 enabled HUD to set aside up to $33 million (FY2016), $43 million (FY2017), and $80 million (FY2018) from the Homeless Assistance Grants account to implement projects that demonstrate how a "comprehensive approach" can "dramatically reduce" homelessness for youth through age 24. The appropriations laws each fiscal year direct this funding to up to 10 communities with the FY2016 funding; up to 11 communities with the FY2017 funding, including at least five rural communities; and up to 25 communities with the FY2018 funding, including at least eight rural communities. HUD has allocated $33 million to 10 communities for FY2016 and $43 million for FY2017. In addition, HUD is taking steps to evaluate the YHDP grantee communities in developing and carrying out a coordinated community approach to preventing and ending youth homelessness. 100-Day Challenges to End Youth Homelessness : Since 2016, cities have partnered with public and private entities to accelerate efforts to prevent and end youth homelessness. A Way Home America and Rapid Results Institute, organizations that focus on pressing social problems, have provided support to the organizations. HHS provided training and technical assistance through RHYTTAC to the first three cities involved in the challenge: Los Angeles, CA; Cleveland, OH; and Austin, TX. In general, participating communities have housed homeless youth and have identified new housing options for this population. Youth with Child Welfare Involvement At-Risk of Homelessness (YAHR): HHS has funded grants to build evidence on what works to prevent homelessness among youth and young adults who have child welfare involvement. HHS awarded funds to 18 grantees for a two-year planning period (2013-2015). Six of the grantees received additional funding to refine and test their service models during a second phase (2015-2018). A subset of those grantees will then be selected to conduct a rigorous evaluation of their impact on homelessness. Educational Assistance Elementary and Secondary Education In school year 2016-2017, more than 1.3 million children and youth were homeless. Of these students, over 118,000 were homeless youth unaccompanied by their families. The Department of Education administers the Education for Homeless Children and Youth program, which was established under the McKinney-Vento Homeless Assistance Act of 1987 ( P.L. 100-77 ), as amended. This program assists state education agencies (SEAs) to ensure that all homeless children and youth have equal access to the same, appropriate education, including public preschool education, that is provided to other children and youth. Grants made by SEAs to local education agencies (LEAs) under this program must be used to facilitate the enrollment, attendance, and success in school of homeless children and youth. Program funds may be appropriated for activities such as tutoring, supplemental instruction, and referral services for homeless children and youth, as well as providing them with medical, dental, mental, and other health services. McKinney-Vento liaisons for homeless children and youth in each LEA is responsible for coordinating activities for these youth with other entities and agencies, including local Basic Center and Transitional Living Program grantees. States that receive McKinney-Vento funds are prohibited from segregating homeless students from non-homeless students, except for short periods of time for health and safety emergencies or to provide temporary, special, supplemental services. FY2019 funding for the program is $93.5 million. Higher Education According to a 2017 survey of 43,000 college students at selected colleges and universities, 9% of those attending four-year universities and 12% of those attending community college had been homeless in the last year. In addition, 37% of university students and 46% of community college students were housing insecure in the past year, meaning that they had difficulty paying rent or lived with others beyond the expected capacity of the housing, among other scenarios. The Higher Education Act (HEA) authorizes financial aid and support programs that target homeless students and other vulnerable populations. 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 (and not their parents or guardians) are counted. Individuals under age 24 who have been verified during the school year as either (1) unaccompanied and homeless or (2) unaccompanied, self-supporting, and risk of homelessness. This verification can come from a McKinney-Vento liaison for homeless children and youth in the local education agency; the director (or designee) of a program funded under the Runaway and Homeless Youth program; the director (or designee) of an emergency shelter or transitional housing program funded by HUD; or a financial aid administrator. Separately, HEA provides that homeless children and youth are eligible for what are collectively called the federal TRIO programs. This includes the following TRIO programs: Talent Search, Upward Bound, Student Support Services, and Educational Opportunity Centers. 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 homeless youth through TRIO Student Support Services—a program intended to improve the retention and graduation rates of disadvantaged college students—that include temporary housing during breaks in the academic year. In FY2019, TRIO appropriations are $1.1 billion. 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 are or were 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. FY2019 appropriations for FIPSE are $5 million. Chafee Foster Care Independence Program88 Recently emancipated foster youth are vulnerable to becoming homeless. In FY2017, nearly 20,000 youth "aged out" of foster care. The Chafee Foster Care Independence Program (CFCIP), created under the Chafee Foster Care Independence Act of 1999 ( P.L. 106-169 ), provides states with funding to support children and youth ages 14 to 21 who are in foster care and former foster youth ages 18 to 21 (and up to age 23 in states that extend foster care to age 21). States are authorized to receive funds based on their share of the total number of children in foster care nationwide. However, the law's "hold harmless" clause precludes any state from receiving less than the amount of funds it received in FY1998 or $500,000, whichever is greater. The program specifies funding for transitional living services, and as much as 30% of the funds may be dedicated to room and board. The program is funded through mandatory spending, and as such $140 million ($143 million as of FY2020) is provided for the program each year through the annual appropriations process. Discretionary Grants for Family Violence Prevention The Family Violence Prevention and Services Act (FVPSA), Title III of the Child Abuse Amendments of 1984 ( P.L. 98-457 ), authorized funds for Family Violence Prevention and Service grants that work to prevent family violence, improve service delivery to address family violence, and increase knowledge and understanding of family violence. From FY2007 to FY2009, one of these projects focused on runaway and homeless youth in dating violence situations through HHS's Domestic Violence/Runaway and Homeless Youth Collaboration on the Prevention of Adolescent Dating Violence initiative. The initiative was created because many runaway and homeless youth come from homes where domestic violence occurs and may be at risk of abusing their partners or becoming victims of abuse. The initiative funded eight states and community-based organizations to address the issue of teen dating violence among runaway and homeless youth. The grants funded activities such as curriculum on dating violence, small groups for teens, and a sexual assault/dating violence reduction program. The initiative resulted in an online toolkit for advocates in the runaway and homeless youth and domestic and sexual assault fields to help programs better address relationship violence with runaway and homeless youth.

This report discusses runaway and homeless youth, and the federal response to support this population. There is no single definition of the terms "runaway youth" or "homeless youth." However, both groups of youth share the risk of not having adequate shelter and other provisions, and may engage in harmful behaviors while away from a permanent home. Youth most often cite family conflict as the major reason for their homelessness or episodes of running away. A youth's sexual orientation, sexual activity, school problems, and substance abuse are associated with family discord. The precise number of homeless and runaway youth is unknown due to their residential mobility and overlap among the populations. The U.S. Department of Housing and Urban Development (HUD) is supporting data collection efforts, known as Voices of Youth Count, to better determine the number of homeless youth. The 2017 study found that approximately 700,000 youth ages 13 to 17 and 3.5 million young adults ages 18 to 25 experienced homelessness within a 12-month period because they were sleeping in places not meant for habitation, in shelters, or with others while lacking alternative living arrangements. From the early 20th century through the 1960s, the needs of runaway and homeless youth were handled locally through the child welfare agency, juvenile justice courts, or both. The 1970s marked a shift toward federal oversight of programs that help youth who had run afoul of the law, including those who committed status offenses (i.e., a noncriminal act that is considered a violation of the law because of the youth's age). The Runaway Youth Act of 1974 was enacted as Title III of the Juvenile Justice and Delinquency Prevention Act (P.L. 93-415) to assist runaways through services specifically for this population. The act was amended over time to include homeless youth. It authorizes funding for services carried out under the Runaway and Homeless Youth Program (RHYP), which is administered by the U.S. Department of Health and Human Services (HHS). The program was most recently authorized through FY2020 by the Juvenile Justice Reform Act of 2018 (P.L. 115-385). This law did not make other changes to the RHYP statute. Funding is discretionary, meaning provided through the appropriations process. FY2019 appropriations are $127.4 million. The RHYP program is made up of three components: the Basic Center Program (BCP), Transitional Living Program (TLP), and Street Outreach Program (SOP). The BCP provides temporary shelter, counseling, and after care services to runaway and homeless youth under age 18 and their families. In FY2017, the program served 23,288 youth, and in FY2018 it funded 280 BCP shelters (most recent figures available). The TLP is targeted to older youth ages 16 through 22 (and sometimes an older age). In FY2017, the TLP program served 3,517 youth, and in FY2018 it funded 299 grantees (most recent figures available). Youth who use the TLP receive longer-term housing with supportive services. The SOP provides education, treatment, counseling, and referrals for runaway, homeless, and street youth who have been subjected to, or are at risk of being subjected to, sexual abuse, sex exploitation, and trafficking. In FY2017, the SOP grantees made contact with 24,366 youth. The RHYP is a part of larger federal efforts to end youth homelessness through the U.S. Interagency Council on Homelessness (USICH). The USICH is a coordinating body made up of multiple federal agencies committed to addressing homelessness. The USICH's Opening Doors plan to end homelessness includes strategies for ending youth homelessness by 2020, including through collecting better data and supporting evidence-based practices to improve youth outcomes. Voices of Youth Count is continuing to report on characteristics of homeless youth. In addition to the RHYP, there are other federal supports to address youth homelessness. HUD's Youth Homelessness Demonstration Program is funding a range of housing options for youth, in selected urban and rural communities. Other federal programs have enabled homeless youth to access services, including those related to education and family violence.

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Introduction The U.S. Department of Agriculture (USDA), under the authority of Congress as enunciated in periodic farm legislation, provides support to the U.S. farm economy through a variety of federal farm programs. Direct support can often involve the transfer of billions of dollars each year. For example, USDA's Commodity Credit Corporation (CCC) outlays on farm support programs have averaged $13.7 billion per year from 1996 through 2017. Program payments vary across commodities and regions as well as by size of farm operations. This variation has generated considerable interest—by both the general public and Congress—in who is eligible to participate in farm programs and, thus, may receive payments. The concern over program eligibility also derives, in part, from instances where farm payments have accrued to individuals who have never engaged in farming. Program eligibility requirements and payment limits are central to how many U.S. farm programs operate and how support dollars are distributed across the nation. In particular, eligibility requirements and payment limits determine who receives federal farm program payments and how much they receive. A number of statutory and regulatory requirements govern federal farm program eligibility for benefits under various programs. A key aspect of eligibility for major farm revenue support programs is the requirement that a person be "actively engaged in farming" (AEF)—that is, that a person contribute either labor or management time (or both) to the farm's operation. Not all farm programs are subject to the same AEF criteria, and the criteria often apply differently based on the type of legal entity owning the farm operation. Report Overview This is the first of two reports on the subject of program eligibility and payment limits. This report focuses on current requirements to successfully be determined as AEF and thus eligible for certain farm program payments. Another report (CRS Report R44739, U.S. Farm Program Eligibility and Payment Limits ) focuses on farm program payment limits, conservation compliance, and adjusted gross income (AGI) restrictions. This report begins by briefly discussing the historical development of congressional efforts to define and tighten eligibility criteria for farm program payments. This is followed by a description of all of the key terms and concepts involved in defining a farm business and farm program payment recipient, including the three major types of farm business organizations (sole proprietorship, partnership, and corporation). Then the report discusses current requirements used to define a person or entity as being "actively engaged in farming" (AEF) by type of legal entity. This is followed by a description of a 2015 USDA rule—released subsequent to the 2014 farm bill ( P.L. 113-79 )—that clarifies what constitutes AEF for nonfamily members of a farming operation, how more than one nonfamily person may qualify as an active farm manager (subject to a limit of three farm managers), and the recordkeeping requirements necessary to meet this new criteria. Finally, the report discusses several issues that may be of potential interest to Congress concerning regulations governing the implementation and monitoring of AEF criteria. A 2014 discussion of farm program payment limit and eligibility issues by farmdoc daily states: Payment limits are a technical and legal issue. Any decision on the number of entities receiving payments should be made with due diligence, including careful consideration of the business and legal implications, and should be discussed with both the Farm Service Agency (FSA) and a lawyer who is an expert on payment limits. This report is not a legal brief, nor does it represent a CRS legal analysis. Nor does this report intend to discuss the merits, or lack thereof, of federal farm program payments. Given its complexities, a review of U.S. farm program eligibility and annual payment limit policy can facilitate a conceptual understanding of issues of potential interest to Congress. Congressional Efforts to Tighten Eligibility Criteria The initial attempt to restrict payments to actual farmers was in 1987, when Congress enacted what is commonly known as the Farm Program Payments Integrity Act (Omnibus Budget Reconciliation Act of 1987, P.L. 100-203 , §§1301-1307). According to the Government Accountability Office (GAO), Congress was motivated to pass the Farm Program Payments Integrity Act after hearing several concerns about farm payments going to individuals not involved in farming. This law required that an individual or entity meet AEF criteria to receive farm commodity payments. Since their establishment, AEF criteria have been a requirement for payment eligibility for most farm revenue support programs. Since 1996, an average of about $9 billion per year in farm support program payments have been subject to the AEF criteria. Thus, significant taxpayer resources are at stake. However, designing a transparent and comprehensive definition of what it means to be AEF has proven difficult. In 2004, GAO contended that USDA regulations failed to specify a measurable standard for what constituted "a significant contribution of active personal management." Furthermore, GAO argued that, by not specifying such a measurable standard, USDA allowed individuals with little or no involvement in a farming operation to qualify for payments. As a consequence of such criticism, the definition of AEF has evolved over the years as Congress and USDA—via its regulatory powers—have attempted to tighten payment eligibility criteria. For example, the 2008 farm bill ( P.L. 110-246 ) added more specificity to the definition of person and legal entity . It limited qualifying payments via direct attribution to persons or legal entities with ownership interests in joint ventures that pooled the resources of multiple payment recipients. It also expanded a separate payment limit to the spouses of qualifying farm payment recipients. Yet GAO continued to argue that further specificity was needed for AEF criteria. The 2014 farm bill ( P.L. 113-79 , §1604) required USDA, in new regulations, to add more specificity to the role that a nonfamily producer who is a member of a legal entity—primarily a partnership or joint venture—must have to qualify for farm program benefits. In general, family farms receive special treatment in which every adult family member 18 years or older who receives income based on the farm's operating results is deemed to meet the AEF requirements. Prior to the 2018 farm bill, family membership was based on lineal ascendants or descendants but was also extended to siblings and spouses. The 2018 farm bill (§1703) further extended the definition of family member to include first cousins, nieces, and nephews. As a result, the current set of laws and rules governing farm program eligibility—particularly for family members of a farm operation—remain subject to considerable scrutiny and criticism from both rural and farm advocacy groups as well as certain Members of Congress. Critics contend that current USDA eligibility criteria—especially for providing active personal management—remain broad and subjective and may represent a low threshold to qualify for payments, thus facilitating the creation of partnership members to increase the farm business's payment limit and expand its farm payment receipts. Three Principal Farm Business Categories Many types of farm business entities own and operate some sort of agricultural production activity. 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—the linkage being common family lineage—where 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 who participates in the farming operation. Family farm or sole proprietorships comprised nearly 87% of U.S. farm operations in 2012. 2. Joint operation . Each member is 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 exemptions 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. Most incorporated farm operations are family held. These three categories represent over 98% of U.S. farm operations ( Table 1 ). Special rules exist for evaluating both the eligibility of and relevant payment limits for institutional and other exceptional types of potential legal entities. However, because of their small number (less than 2% of U.S. farm operations) and unique nature, they are not discussed further in this report. Identification Generally, program eligibility begins with identification of participants. Identifying who or what is participating and therefore how payments may be attributed is the cornerstone to most farm program eligibility. To be eligible to receive any farm program payment, every person or legal entity—including both U.S. and non-U.S. citizens—must 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 an 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—that is, capital, land, equipment, active personal labor, or active personal management—in the operation. These forms need 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 adding a new family member, changing the land rental status from cash basis 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. AEF Requirement AEF criteria are a required component of eligibility for payments under the principal revenue support programs of the 2018 farm bill, including the Agriculture Risk Coverage (ARC) and Price Loss Coverage (PLC) programs and benefits under the Marketing Assistance Loan (MAL) program. In addition, two direct payment programs established by the Secretary of Agriculture under the authority of the Commodity Credit Corporation Charter Act require that payment recipients meet all AEF criteria—the Cotton Ginning Cost-Share program and the Market Facilitation Program. Finally, benefits under the Trade Adjustment Assistance for Farmers also require that participants meet AEF requirements. To be eligible for payments under any of these programs, participants—individuals as well as other types of legal entities—must meet specific requirements concerning their "active participation" in the farming operation. In contrast, AEF criteria are not applicable for other farm programs including crop insurance and conservation programs ( Table 4 ). The AEF requirements apply equally to U.S. citizens, resident aliens, and foreign entities. This section briefly reviews the specific requirements for each type of legal entity to qualify as AEF. AEF Criteria: Person To understand what it means to be AEF, consider first the case of a single producer. The 2014 farm bill (§1111) defined a producer as an owner, operator, landlord, tenant, or sharecropper that shares in the risk of producing a crop and is entitled to a share of the crop that is produced on the farm. The 2018 farm bill retained this definition of a producer. A person, as an individual producer, must meet the following three AEF criteria: P1. The person, independently and separately from other individuals with an interest in the farm business, makes a significant contribution to the operation of: a. capital, equipment, or land; and b. active personal labor, active personal management, or a combination of personal labor and active personal management; P2. The person's share of profits or losses is commensurate with his/her contribution to the farming operation; and P3. The person shares in the risk of loss from the farming operation. However, with respect to the latter two criteria (P2 and P3), USDA has generally interpreted them as having been met if a person or entity participating in a farm program receives income based on the farm's operating results and, thus shares in the profits and losses from the crop. The criteria for meeting ownership or rental control of farm assets (P1.a.) are straightforward. The active personal labor and/or management requirement (P1.b.) are described in more detail below. Active Personal Labor "Active personal labor" means personally providing physical activities necessary in a farming operation, including activities involved in land preparation, planting, cultivating, harvesting, and marketing of agricultural commodities in the farming operation. Other physical activities include those required to establish and maintain conserving cover crops on Conservation Reserve Program acreages and those physical activities necessary in livestock operations. The personal labor contribution by an individual must be at least the smaller of 1,000 hours annually or 50% of the total hours needed to conduct a farming operation comparable in size to the individual's ownership interest in the operation. Active Personal Management The requirement for active personal management is less specific. For an individual it means personally providing and participating in management activities "critical to the profitability of the farming operation." Such management activities may be performed under one or more of the following categories: Capital (which includes arranging financing and managing capital), acquiring equipment, acquiring land and negotiating leases, managing insurance, and managing participation in USDA programs; Labor (which includes hiring and managing of hired labor); and Agronomics and marketing (which includes selecting crops and making planting decisions), acquiring and purchasing crop inputs, managing crops and making harvest decisions, and pricing and marketing of crop production. The GAO, in a 2013 report to Congress, pointed out that this broad definition of active personal management made it very difficult for USDA to determine whether individual contributions are significant. Furthermore, GAO suggested that, under this broad definition, management responsibilities could be distributed among farm operation members so as to increase the number of individuals who can claim eligibility for payments based on management contributions. In terms of evaluating an individual's eligibility for program payments, the "active" personal labor requirement clearly implies that a person must be routinely "on site" to undertake physical activities in support of the farming operation. The "active" personal management requirement is less clear on physical location and potentially allows a person to make significant contributions of active personal management without physically visiting the farming operation. Exceptions for Spouses Current law 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. Thus, a married farmer and spouse qualify for a doubling of the individual payment limit. Exceptions for Adult Family Members Family membership in a farm business is defined by being a sibling, spouse, lineal ancestor (e.g., great-grandparent, grandparent, or parent), lineal descendant (e.g., son, daughter, grandchild, or great-grandchild), niece, nephew, or cousin of the principal operator. Every adult family member 18 years or older who receives income based on the farm's operating results is deemed to meet the AEF requirements. Exceptions for Landowners An exception is also made for landowners who may forgo the AEF labor and management requirement and still be deemed in compliance with all AEF requirements if the landowner receives income based on the farm's operating results and, thus, shares in the risk of profits (P2) and losses (P3) from the crop. Failure to Meet AEF Criteria for a Person Any person or legal entity that does not satisfy the AEF requirements will not be eligible for farm program benefits under relevant programs. For example, a landowner who rents farmland to another farming operation for a fixed rental rate (i.e., under a fixed cash-rental arrangement) would bear no risk nor be subject to any potential loss from the farming operation. In other words, the landowner would fail to meet AEF criteria P2 and P3 described earlier. In such cases, the landowner would not be eligible for the relevant farm program benefits. Similarly, a landlord who rents land to a farming operation for a share of the crop that is guaranteed in volume or value independent of the actual harvest results would also not bear any risk and, thus, not be eligible for farm program benefits. AEF Criteria: Joint Operation In the case of a joint operation, the amount of farm payments that can be earned in a year depends on the number of qualifying members and their ownership share. Each partner or member must separately meet all of the AEF criteria required for a person. In particular, each partner or member with an ownership interest must contribute active personal labor and/or active personal management to the farming operation (but subject to certain exemptions, such as the spousal and landlord exceptions listed above). The contribution must be identifiable and documentable, separate and distinct from the contributions made by any other partner or member, and critical to the profitability of the farming operation. Since a partnership's potential payment limit is equal to the number of qualifying members (plus qualifying exemptions) times the individual payment limit, the partnership's total limit could be expanded by the addition of each new qualifying member. Similarly, the partnership's total limit could be reduced by one individual payment limit for each member that fails to meet the AEF requirements and any other eligibility criteria. There is an exception to the AEF criteria for certain partnerships. When a partnership owns all of the land it uses for farming (i.e., no land is rented), then its members are automatically deemed to be actively engaged in farming, provided that the partners receive income based on the farm's operating results and, thus, share in the risk of profits and losses from the crop. Nonfamily Members in a Joint Operation In the case of a nonfamily member of a joint venture seeking to satisfy AEF criteria, his or her individual labor and management contributions must be recorded in a special log to verify that a "significant contribution" has been achieved. This is described later in this report in the section entitled " Recordkeeping Requirement of Personal Hours Worked ." AEF Criteria: Corporation In the case of a corporation or similar entity with multiple owners (or shareholders), the entity is essentially treated as a single individual. It is considered as "actively engaged in farming" with respect to a farming operation if: C1.The corporation makes a significant contribution of capital, equipment, or land (or a combination thereof); C2.Each member with an ownership interest in the corporate entity makes a significant contribution of personal labor or active personal management—whether compensated or not—to the operation that are: a. performed on a regular basis; b. identifiable and documentable; and c. separate and distinct from such contributions of other members; C3.The collective contribution of corporate members is significant and commensurate with contributions to the farming operation; and C4.The corporation also meets the AEF criteria cited above for a person of (P2) sharing commensurate profits or losses, and (P3) bearing commensurate risk. If any member of the corporation fails to meet the labor and management requirements of C2 above, then any program payment or benefit to the corporation will be reduced by an amount commensurate with the ownership share held by that member. An exception to this requirement 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 is less than one payment limitation. There is an additional exception to the AEF criteria for certain corporate entities. When a corporation owns all of the land it uses for farming (i.e., no land is rented), then the corporation is automatically deemed to meet the AEF criteria provided the corporation receives income based on the farm's operating results and, thus, shares in the risk of profits and losses from the crop. AEF-Related Farm Payments by Farm Type When considering institutional recipients of farm payments subject to AEF criteria (i.e., ignoring family and individual payment recipients and recipients of farm payments not subject to AEF criteria), USDA data for 2015 suggests that there were 95,417 qualifying institutional arrangements ( Table 2 ). New AEF Rule: Nonfamily Member Compliance A nonfamily member of a farming operation is, by default, anyone who fails to meet the criteria of family membership. The 2014 farm bill (§1604) required USDA to add more specificity to the role that a nonfamily producer who is a member of a legal entity—primarily a partnership or joint venture—must play to qualify for farm program benefits. In the rule, USDA was directed to explicitly 1. Define what constitutes a " significant contribution of active personal management " for the purpose of payment eligibility. 2. Consider limits on the number of persons per farming operation who may be considered actively engaged in farming based on a significant contribution of active personal management . Such consideration should take into account: the size, nature, and management requirements of a farming operation; the changing nature of active personal management due to advancements of farming operations; and the degree to which these new regulations will adversely impact the long-term viability of the farming operation. 3. Exclude operations comprised solely of family members from these provisions. 4. Include a plan for monitoring the status of compliance reviews. The resulting USDA rule, published on December 16, 2015, specifies how legal entities comprised, either entirely or in part, of nonfamily members may be determined eligible for payments, based on a contribution of active personal management. The provisions of this rule do not apply to persons or entities comprised entirely of family members. It is noteworthy that, based on 2012 evidence in Table 1 , nonfamily farm operations comprise a relatively small share (less than 9%) of total farm operations. USDA estimated that the rule's limit on the number of farm managers could affect around 1,400 general partnerships and joint ventures, reducing USDA outlays (and benefits to producers) by about $50 million total for crop years 2016 through 2018, with an annual impact of $4 million to $38 million. As a result of the rule, several additional requirements now apply to nonfamily farming operations seeking to qualify more than one farm manager. Specifically, in addition to the existing AEF requirements, a limit is placed on the number of nonfamily members of a farming operation that can be qualified as a farm manager. Also, an additional recordkeeping requirement now applies for each member of such farming operations contributing any active personal management. Limit on Number of Nonfamily Farm Managers This rule restricts the number of nonfamily farm managers per farming operation to o ne f arm m anager , with the following exceptions: Two f arm m anagers permissible . If one person of the farming operation meets the AEF requirements by making a contribution of active personal management, and that farming operation seeks to qualify a second farm manager, the farming operation must also meet the requirement that it is either a large operation or a complex operation. T hree f arm m anagers permissible . To qualify a total of three farm managers, the operation is required to meet the requirements for both size and complexity. No m ore t han t hree f arm m anagers . Under no circumstances is a nonfamily farming operation allowed to qualify more than three persons as farm managers. Recordkeeping Requirement of Personal Hours Worked If a farming operation (comprised, in part, of nonfamily members) seeks to qualify one or more nonfamily farm managers as actively engaged in farming, then all persons that provide any management to the farming operation are required to maintain contemporaneous records or activity logs of their management activities, including the management activities that may not qualify as active personal management under this rule. Specifically, activity logs must include information about the location of where the management activity was performed (either on-site or remote) and the time expended or duration of the management and/or labor (see below) performed for the farming operation. In addition, a person's contributions must be identifiable and documentable, separate and distinct from the contributions of other members of the farm operation, and critical to the profitability of the farming operation. Active Personal Management: Significant Contribution Redefined The new definition for a significant contribution of active personal management (for nonfamily members only) requires an annual contribution of 500 hours of management or at least 25% of the total management required for that operation. Eligible management activities must be performed under one or more of the management categories listed earlier in the report section entitled " Active Personal Management ." The final rule also takes into consideration all of the actions of the farming operation associated with the financing. Passive management activities such as attendance at board meetings or on conference calls, or watching commodity markets or input markets (without making trades), are not considered as making a significant contribution of active personal management. Significant Combinations of Labor and Management The final rule, in response to public comment on the difficulty in discriminating between management and labor for farming operations, expanded the measurable standard of what constitutes a significant contribution to include a potential combination of both active personal labor and active personal management. A minimum hourly requirement for a significant contribution of active personal labor of 1,000 hours was established and joined with the hourly standard of 500 hours adopted for defining a significant contribution of active personal management. USDA published a table showing the qualifying minimum combinations of hours contributed to management and labor activities. The table includes five minimum thresholds of combined hours, ranging from 550 hours with predominantly management-identified hours to 950 hours with predominantly labor-identified hours. Issues for Congress Since 1987, when Congress first introduced the term "actively engaged in farming" and required that an individual or entity meet AEF criteria to receive farm program payments, U.S. legislators have continued their efforts to limit payments to those who are actual farmers. However, long-standing concerns remain that some farm operations are organized to overcome program payment limits and maximize the amount of their farm program payments. In particular, some advocacy groups suggest that USDA's new rule did not go far enough in tightening AEF criteria and that it continues to allow for a high number of farm managers and associated payment limits for both family and nonfamily farm operations. These concerns include the lack of specificity in eligibility criteria that continues to allow for as many as three nonfamily farm managers (each, plus their spouses, qualifying for a full payment limit) and no limit on the number of potential farm managers from family-held farm operations. This is noteworthy because family-operated farm businesses represent over 91% of all farm operations. As an example of the lack of specificity, critics point out that the 2014 farm bill provision (§1604) permits exceptions under the rationale of "concern for the long-term viability" of the farming operation. Furthermore, critics contend that, under the current monitoring system, it can be difficult for USDA to verify the management claims of farm operation partners. Several of these concerns are briefly described here. GAO Studies: Program Eligibility, Monitoring, and Enforcement GAO has undertaken several studies of program eligibility and of USDA efforts to monitor and enforce program payment limits. GAO has cited three principal hindrances to USDA oversight and enforcement of AEF regulations for members—both family and nonfamily alike—of a farming operation that claim AEF compliance by providing active personal management: (1) the definition of active personal management is broad and can be interpreted to include many potential activities, (2) requirements of what constitutes significant contributions of management are subjective, and (3) it is difficult to verify individuals' evidence of claimed contributions of active personal management and personal labor—often depending on interviews with individual payment recipients. GAO has said that the three concerns cited above prevent USDA from rigorously enforcing payment eligibility criteria. As a result, large farm operations can distribute various management activities among a partnership's members so as to increase the number of individuals who can claim eligibility for payments based on different types of management contributions. Furthermore, broad regulations allow members to claim that they are making a significant management contribution without physically visiting the farming operation. Thus, the federal government risks distributing payments to individuals who may have little actual involvement in farming operations. In a 2010 regulation, USDA recognized that it has the regulatory authority to tighten eligibility criteria but that it is unlikely to use that authority unless explicitly directed to do so by Congress: The definition of what constitutes a significant contribution is provided by regulation, not by statute and could be changed. We recognize the difficulty in determining the significance of a management contribution under the current definition and the desirability of a measurable, quantifiable standard. However, unlike labor, the significance of a management contribution is not appropriately measured by the amount of time a person spends doing the claimed contribution. The current regulatory definition of a significant contribution of active personal management has been in effect for over 20 years; Congress has not mandated a more restrictive definition during that time, including in the 2008 Farm Bill. As a result, GAO stated that "it appears unlikely that FSA will change its regulatory definition of active personal management in view of its 2010 statements in the Federal Register ." USDA data from 2015 ( Table 3 ) demonstrated that partnerships and joint ventures with larger numbers of members relied more heavily on active personal management criteria to meet AEF qualifications. Congress—in the 2014 farm bill (§1604)—explicitly directed USDA to design new regulations for AEF criteria but only for nonfamily members of farming operations. Furthermore, Congress directed that the new AEF criteria avoid any new regulatory obligations that would add to any paperwork or management burden of family farm operations. USDA released the rule in 2015. Limit on Number of Allowable Farm Managers Under the 2014 farm bill and 2015 USDA rule, a farm operation—operated primarily by nonfamily members—that meets both the size and complexity criteria discussed above could qualify three farm managers (and potentially their spouses) in addition to those persons qualifying under the personal labor criteria. Thus, a large nonfamily farming operation could have a payment limit that is over $1 million per year. Family-managed farm operations have no limit on the number of potential qualifying members and, thus, on the overall payment limit. Members of Congress may be interested in reviewing the number of farm managers allowed, possibly by establishing an explicit limit on the number a farming operation could claim. For example, everyone on a farm operation who qualifies as a working farmer (i.e., provides land, capital, or equipment and meets the personal labor requirement) could remain eligible to participate in farm programs and receive program payments. However, a restriction could be developed whereby only a single farm manager would be eligible to qualify without providing any farm labor. The spouses of the qualifying persons—both workers and manager—could continue to qualify for payments. Potential Long-Term Viability Exclusion The 2014 farm bill (§1604(b)(3)) instructed USDA to consider the extent to which new regulations would "adversely impact" the long-term viability of the farming operation. The basis for determining whether a "significant contribution" of managerial activity has occurred is a subjective assessment. Some wonder whether it might negate any farm manager limit—even on nonfamily farm operations—since one could argue that all farm managers are critical for a farm's long-term viability. Qualifying Family Members The farm manager restrictions related to the 2015 USDA regulation are relevant only for nonfamily members of a farming operation. The 2014 farm bill (§1604(c)) explicitly directs USDA to not apply any new restrictions to farm operations comprised solely of family members. An adult family member is considered actively engaged in farming if he or she receives income based on the farm's operating results. It is assumed that such a family member meets any input or labor requirements, and no recordkeeping is required to verify that sufficient labor hours have been worked on the farm operation or that sufficient managerial time has been made. Congressional Monitoring Various Members of Congress will likely be interested in monitoring the success of USDA's efforts to impose new payment disciplines on nonfamily participants while preventing new management burdens on family farms. Furthermore, they will likely be interested in the extent, if any, to which large farm operations are able to avoid eligibility and payment requirements.

In 1987, Congress enacted what is commonly known as the Farm Program Payments Integrity Act (Omnibus Budget Reconciliation Act of 1987, P.L. 100-203, §§1301-1307), which requires that an individual or legal entity be "actively engaged in farming" (AEF) to be eligible for federal commodity revenue support programs. AEF requirements apply equally to U.S. citizens, resident aliens, and foreign entities. Designing a transparent and comprehensive AEF definition has proven difficult and has evolved over the years. The current set of laws and rules governing farm program eligibility—for both family and nonfamily members on farm operations—remain subject to considerable scrutiny and criticism from both rural and farm advocacy groups as well as certain Members of Congress. In particular, critics contend that current U.S. Department of Agriculture (USDA) eligibility criteria—especially for providing active personal management—remain broad and subjective and may represent a low threshold to qualify for payments, thus facilitating the creation of new farm operation members simply to expand an operation's farm payment receipts. Three major categories of legal entities are subject to AEF requirement for program payment eligibility: an individual, a partnership, and a corporation. An individual must meet three specific AEF criteria. First, independently and separately from other individuals with an interest in the farm business, the person makes a significant contribution to the operation of: (a) capital, equipment, or land; and (b) active personal labor and/or active personal management. Second, the person's share of profits or losses is commensurate with his/her contribution to the farming operation. Third, the person shares in the risk of loss from the farming operation. An individual that meets the AEF criteria is eligible for farm program payments but subject to annual payment limits. If a married person meets the AEF requirements, any spouse will also be considered to have met the AEF requirements, thus effectively doubling the individual payment limit. Also, every family member 18 years or older who receives income based on the farm's operating results is deemed to meet the AEF requirements and is eligible for a separate payment limit. Another exception to AEF requirements is made for landowners provided they receive income based on the farm's operating results. A general partnership is an association of multiple persons whereby each member is treated separately and individually for purposes of determining eligibility and payment limits. 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 operation's ownership and meet the AEF requirements. Thus, adding a new member can potentially provide an additional payment limit. A corporation is an association of joint owners that is treated as a single person for purposes of determining eligibility and payment limits, provided that the entity meets the AEF and other eligibility criteria. Adding a new member generally does not affect a corporation's payment limit but only increases the number of members that can share a single payment limit. In accordance with a provision in the 2014 farm bill (P.L. 113-79; §1604), USDA added more specificity to the role that a nonfamily member of a partnership or joint venture must play to qualify for farm program benefits. However, considerable issues remain that may be of interest to Congress. Long-standing concerns remain that some farm operations are organized to overcome program payment limits and maximize the amount of their farm program payments. In particular, some advocacy groups suggest that USDA's new rule did not go far enough in tightening AEF criteria and that it continues to allow for a high number of farm managers and associated payment limits for both family and nonfamily farm operations.

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What Was the Joint Select Committee and Why Was It Created? On February 9, 2018, President Trump signed the Bipartisan Budget Act of 2018 into law ( P.L. 115-123 ). Subtitle B of Title IV provided for the creation of a Joint Select Committee on Budget and Appropriations Process Reform. The creation of this committee echoed a number of special panels created by Congress in the past in order to study and make recommendations on various issues unconstrained by existing committee jurisdictions. Prior examples include committees tasked with studying a wide spectrum of issues, including both budget process—such as the Joint Committee to Study Budget Control (created by P.L. 92-599)—and other topics, such as the Senate Select Committee to Study Governmental Operations with Respect to Intelligence Activities (also known as the Church Committee after its chairman, Senator Frank Church, created by S.Res. 2 , 94 th Congress). What Was the Authority and Jurisdiction of the Joint Select Committee? The act directed the joint select committee to "provide recommendations and legislative language that will significantly reform the budget and appropriations process." What Was the Membership of the Committee? The act required that the committee be composed of 16 members, with 4 members appointed by each of the Speaker of the House, the minority leader of the House, the majority leader of the Senate, and the minority leader of the Senate. Members were appointed to serve for the life of the committee, with any vacancy to be filled within 14 calendar days. The act further stated that the committee would be led by cochairs. One cochair was to be appointed jointly by the Speaker of the House and the majority leader of the Senate, with the other cochair to be appointed jointly by the House and Senate minority leaders. The four members of the joint select committee appointed by then-Speaker Paul Ryan were House Budget Committee Chairman Steve Womack (who served as committee cochair), House Rules Committee Chairman Pete Sessions, and Representatives Rob Woodall and Jodey Arrington. The four members appointed by then-House Minority Leader Nancy Pelosi were House Appropriations Committee ranking member Nita M. Lowey (who served as committee cochair), House Budget Committee ranking member John Yarmuth, and Representatives Lucille Roybal-Allard and Derek Kilmer. The four members appointed by Senate Majority Leader Mitch McConnell were Senators Roy Blunt, David Perdue, James Lankford, and Joni Ernst. The four members appointed by Senate Minority Leader Charles Schumer were Senators Sheldon Whitehouse, Michael Bennet, Brian Schatz, and Mazie Hirono. Under the act, the joint select committee terminated on December 31, 2018. How Was the Committee Staffed and Funded? Federal agencies (including legislative branch agencies) were tasked with providing technical assistance to the committee if requested in writing by the cochairs, and employees of the legislative branch could be detailed to the committee on a nonreimbursable basis consistent with the rules and regulations of the Senate. The act provided an authorization for use of not more than $500,000 from the appropriations account for ''Expenses of Inquiries and Investigations'' of the Senate with such sums to be disbursed by the Secretary of the Senate, in accordance with Senate rules and procedures, upon vouchers signed by the joint panel's cochairs. What Were the Responsibilities of the Committee? Meetings and Hearings The committee was required to hold its first meeting not later than 30 calendar days after the date of enactment, with the cochairs of the committee required to provide an agenda to committee members at least 48 hours in advance of any meeting. The initial organizing meeting was held on March 7, 2018, with additional working group meetings held on August 22, September 13, and September 26, 2018, and a markup held on November 15, 27, and 29, 2018. The committee was also authorized and expected to hold hearings and take testimony from witnesses. Each cochair was entitled to select an equal number of witnesses for each hearing. Witnesses appearing before the committee were required to file a written statement of proposed testimony at least two calendar days before his or her appearance. The law specified that nine members of the committee would constitute a quorum for purposes of voting and meeting, and five members of the committee would constitute a quorum for holding hearings. Report and Recommendations The act stated that the committee provide recommendations and legislative language to significantly reform the budget and appropriations process. The committee was required to vote by November 30, 2018, on (1) a report containing a detailed statement of the findings, conclusions, and recommendations of the committee and (2) proposed legislative language to carry out those recommendations. The text of any report and proposed legislative language were required to be made publicly available in electronic form at least 24 hours prior to its consideration by the joint select committee. The act required the report and the proposed legislative language to be approved by a majority of each of (1) the committee members appointed by the Speaker of the House and the majority leader of the Senate and (2) the committee members appointed by the House and Senate minority leaders. The law specified that nine members of the committee would constitute a quorum for purposes of voting, with no proxy voting permitted. If the committee voted to report recommendations and legislative language, members were to be allowed the opportunity to file supplemental, minority, or additional views to be included in a committee report. What Was to Happen Once the Committee Reported? Under the act, if the committee had approved a report and legislative language, it would have been required to make them available to the public "promptly" and submit them to the President, the Vice President, the Speaker of the House, and the majority and minority leaders of each chamber within 15 calendar days of approval. Upon receipt of proposed legislative language, the Senate majority leader (or his designee) was required to introduce it in the Senate (by request) on the next day on which the Senate was in session. There were no provisions in the law concerning the introduction of the recommendations of the joint select committee in the House. Were There Procedures Established for Congressional Consideration of the Committee's Recommendations? The Bipartisan Budget Act established certain unique procedures for Senate consideration of any legislative language reported by the joint select committee. These procedures were intended to allow the Senate to reach a timely vote on the question of whether or not to consider legislation embodying the recommendations of the joint select committee, but the act did not specify any procedures governing consideration of the bill once the Senate agreed to take it up. There were no provisions in the act concerning the consideration of the recommendations of the joint select committee in the House. There were also no provisions concerning resolving any differences between the House and Senate or the consideration of a veto message from the President. Such actions would have occurred under the regular procedures of each chamber. Committee Consideration in the Senate Once any recommendations of the joint select committee were introduced in the Senate, the bill would be referred to the Senate Committee on the Budget, which was required to report the bill favorably, unfavorably, or without recommendation within seven session days—but without any revisions. If the Budget Committee failed to report the bill within that period, it would be automatically discharged from consideration of the bill, and the bill would be placed on the Senate Calendar of Business. The Motion to Proceed in the Senate Not later than two days of Senate session after a joint committee bill was reported or discharged from the Budget Committee, the majority leader (or his designee) could move to proceed to consider it. Should the majority leader (or his designee) not make such a motion within two session days, any Senator could do so. The motion to consider a joint committee bill—and all debatable motions and appeals in connection with the motion—would be considered for a maximum of 10 hours, evenly divided between the majority leader and the minority leader (or their designees). A nondebatable motion to further limit debate would be in order and would require a vote of three-fifths of all Senators—60 votes if there is not more than one vacancy—to pass. In order for the recommendations of the joint select committee to be considered by the full Senate, the act required that the motion to proceed be agreed to by a vote of three-fifths of all Senators—60 votes if there is not more than one vacancy. The act further specified that all points of order against the motion to proceed are waived and that a motion to postpone the motion to proceed or a motion to reconsider a vote on it are not in order. Finally, the act directed that not later than the last day of the 115 th Congress (2017-2018), the Senate must vote on a motion to proceed to a bill containing recommendations of the joint select committee. Floor Consideration in the Senate If the Senate approved the motion to proceed, the joint committee bill could then be considered under the regular rules of the Senate, meaning that it would be fully debatable and fully amendable (possibly including by nongermane amendments) and that cloture might need to be invoked on one or more questions (requiring the support of three-fifths of all Senators) in order to reach a final vote. What Did the Committee Do? Committee Hearings24 The joint select committee held five days of public hearings. April 17: current challenges facing the budget and appropriations process in Congress and possibilities for improvement; May 9: challenges of the current procedural framework, particularly as it relates to the ability of Members to work effectively and in a bipartisan manner regardless of political dynamics; May 24: the role of the budget resolution and possible options to bolster its impact and influence on subsequent budgetary actions; June 27: testimony heard from 27 Members of the House and Senate (and written statements received from 5 others), including Speaker of the House Paul Ryan and Hou se Minority Leader, Nancy Pelosi; July 17: former Members' historical perspective on enacting budgetary legislation in the context of the challenges presented by both the politics and the framework of the budget and appropriations process. Committee Markup The committee held multiple meetings, both formal and informal, to provide its members a forum to discuss reforms to the budget and appropriations process. These meetings—including working sessions on August 22, September 13, and September 26, 2018—provided the basis for the recommendations that were subsequently incorporated into draft legislation to be considered by the committee as the cochair's mark. The cochair's mark included a recommendation that the budget resolution be adopted for a two-year cycle rather than the current annual cycle. The draft also addressed a number of related concerns, such as allowing reconciliation instructions for both years of a biennium, providing for a revision of the budget resolution in the second session of a Congress to update it for scoring purposes, and revising the requirements concerning the submission and content of the President's budget in the second year of a biennium. The recommendations also provided for a change in the membership of the Senate Budget Committee to be comprised of eight members from the majority and seven members from the minority, including the chairs and ranking members from the Appropriations and Finance Committees, and for the House and Senate Budget Committees to hold a joint hearing on the fiscal state of the nation. On November 15, 2018, the committee began marking up the draft legislation. In that markup, the committee agreed by unanimous consent to apply a voting rule for the adoption of amendments consistent with the rule required by the act for final adoption of any recommendations. This agreement required separate majorities of the appointees from each party. The markup continued on November 27 and 29. The final vote on reporting the draft bill, as amended, was not agreed to by a roll-call vote of one aye and seven noes of the Members appointed by the Speaker of the House and the Senate majority leader and seven ayes and zero noes of the Members appointed by the House minority leader and the Senate minority leader.

The Bipartisan Budget Act of 2018 (P.L. 115-123), signed into law on February 9, 2018, created a joint select committee of the House and Senate. The Joint Select Committee on Budget and Appropriations Process Reform was to be made up of 16 Members from the House and Senate—4 chosen by each of the chambers' party leaders. The act charged the joint select committee with formulating recommendations and legislative language to "significantly reform the budget and appropriations process." The law directed the committee to make a report no later than November 30, 2018, to be submitted, along with legislative language, to the President, the Speaker of the House, and the majority and minority leaders of the House and Senate. The act included procedures intended to allow the Senate to reach a timely vote on the question of whether or not to consider any legislation embodying the recommendations of the joint select committee. Under the terms of the act, the Senate would be able to vote on a motion to proceed to consider any reported joint committee bill before the conclusion of the 115th Congress (2017-2018). Consideration of the motion to proceed (and all debatable motions and appeals in connection therewith) was to be limited to 10 hours, equally divided and controlled by the majority and minority leaders (or their designees) with support of at least three-fifths of the Senate (60 votes if there is no more than one vacancy) necessary to approve the motion. The act did not specify any procedures governing consideration of the bill once the Senate had agreed to take it up. There were also no provisions in the act concerning the consideration of the recommendations of the joint select committee in the House nor any provisions concerning resolving any differences between the House and Senate. Such actions would have occurred under the regular procedures of each chamber. During its lifespan, the joint select committee held five days of hearings, taking testimony from 12 outside witnesses and 27 Members, including then-Speaker of the House Paul Ryan and then-House Minority Leader Nancy Pelosi. Formal and informal discussions among committee members resulted in draft legislation to be considered in a markup that concluded on November 29, 2018. The chief recommendation in the draft provided for the budget resolution to be adopted for a two-year cycle rather than the current annual cycle. By unanimous consent, the committee members applied a voting rule for the adoption of amendments consistent with the rule required by the act for final adoption of any recommendations requiring separate majorities of the appointees from each party. The final vote on reporting the bill as amended was not agreed to by a roll-call vote of one aye and seven noes of the Members appointed by the Speaker of the House and the Senate majority leader and seven ayes and zero noes of the Members appointed by the House minority leader and the Senate minority leader.

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Introduction "Too big to fail" (TBTF) is the concept that a financial firm's disorderly failure would cause widespread disruptions in financial markets and result in devastating economic and societal outcomes that the government would feel compelled to prevent, perhaps by providing direct support to the firm . Such firms are a source of systemic risk —the potential for widespread disruption to the financial system, as occurred in 2008 when the securities firm Lehman Brothers failed. Although TBTF has been a perennial policy issue, it was highlighted by the near-collapse of several large financial firms in 2008. Some of the large firms were nonbank financial firms, but a few were depository institutions. To avert the imminent failures of Wachovia and Washington Mutual, the Federal Deposit Insurance Corporation (FDIC) arranged for them to be acquired by other banks without government financial assistance. Citigroup and Bank of America were offered additional preferred shares through the Troubled Asset Relief Program (TARP) and government guarantees on selected assets they owned. In many of these cases, policymakers justified government intervention on the grounds that the firms were "systemically important" (popularly understood to be synonymous with too big to fail). Some firms were rescued on those grounds once the crisis struck, although the government had no explicit policy to rescue TBTF firms beforehand. In response to the crisis, the Dodd-Frank Wall Street Reform and Consumer Protection Act (hereinafter, the Dodd-Frank Act; P.L. 111-203 ), a comprehensive financial regulatory reform, was enacted in 2010. Among its stated purposes are "to promote the financial stability of the United States…, [and] to end 'too big to fail,' to protect the American taxpayer by ending bailouts." The Dodd-Frank Act took a multifaceted approach to addressing the TBTF problem. This report focuses on one pillar of that approach—the Federal Reserve's (Fed's) enhanced (heightened) prudential regulation for large banks and nonbank financial firms designated as systemically important by the Financial Stability Oversight Council (FSOC). For an overview of the TBTF issue and other policy approaches to mitigating it, see CRS Report R42150, Systemically Important or "Too Big to Fail" Financial Institutions , by Marc Labonte. The Dodd-Frank Act automatically subjected all bank holding companies and foreign banks with more than $50 billion in assets to enhanced prudential regulation (EPR). In addition, Basel III (a nonbinding international agreement that U.S. banking regulators implemented through rulemaking after the financial crisis) included several capital requirements that only apply to large banks. In 2018, the Economic Growth, Regulatory Relief, and Consumer Protection Act (referred to herein as P.L. 115-174 ) eliminated most EPR requirements for banks with assets between $50 billion and $100 billion. Banks that have been designated as Global-Systemically Important Banks (G-SIBs) by the Financial Stability Board (an international, intergovernmental forum) or have more than $250 billion in assets automatically remain subject to all EPR requirements, as modified. P.L. 115-174 gives the Fed discretion to apply most individual EPR provisions to banks with between $100 billion and $250 billion in assets on a case-by-case basis only if it would promote financial stability or the institution's safety and soundness. This report begins with a description of who is subject to enhanced prudential regulation and what requirements make up EPR. It then discusses several rules proposed by the Fed that would reduce EPR requirements for some large banks; some in response to P.L. 115-174 and some before it was enacted. Who Is Subject to Enhanced Prudential Regulation? Under P.L. 115-174 , the application of EPR remains mainly based on asset size and charter type. Broadly speaking, only three types of financial charters allow financial institutions to accept insured deposits—banks, thrifts, and credit unions. Banks operating in the United States can be U.S. or foreign based. Depository institutions are regulated much differently than other types of financial institutions. This section discusses whether or not EPR is applied to each of those types of institutions, as well as other types of financial firms. A detailed discussion of which provisions apply at which size threshold is discussed in the " Higher, Tiered Thresholds " section below. U.S. Banks Banks and Bank Holding Companies By statute, enhanced regulation applies to large U.S. bank holding companies (BHCs). A BHC is used any time a company owns multiple banks, but the BHC structure also allows for a large, complex financial firm with depository banks to operate multiple subsidiaries in different financial sectors. In general, the regime's requirements are applied to all parts of the BHC, not just its banking subsidiaries. Five large investment "banks" that operated in securities markets and did not have depository subsidiaries (and therefore were not BHCs) were among the largest, most interconnected U.S. financial firms and were at the center of events during the financial crisis. Two of the large investment banks, Goldman Sachs and Morgan Stanley, were granted BHC charters in 2008, whereas others failed (Lehman Brothers) or were acquired by BHCs (Merrill Lynch and Bear Stearns). As a result, all of the largest U.S. investment banks are now BHCs, subject to the enhanced prudential regime. If a bank does not have a BHC structure, it is not subject to enhanced regulation. The Congressional Research Service (CRS) found two banks that are currently over the previous $50 billion threshold and do not have a BHC structure. One of the two, Zions, converted its corporate structure from a BHC to a standalone bank in 2018, reportedly in order to no longer be subject to EPR. Under Title I of the Dodd-Frank Act's "Hotel California" provision, which was unchanged by P.L. 115-174 , BHCs with more than $50 billion in assets that participated in TARP cannot escape enhanced regulation by debanking (i.e., divesting of their depository business) unless permitted to by FSOC. FSOC found that "there is not a significant risk that Zions could pose a threat to U.S. financial stability," and permitted it to withdraw from EPR. Thrifts Similar to BHCs, thrift holding companies (THCs), also called savings and loan holding companies, have subsidiaries that accept deposits, make loans, and can also have nonbank subsidiaries. Although THCs are also regulated by the Fed, the EPR statute does not mention THCs. To date, enhanced prudential regulatory requirements have not been applied to large thrift (savings and loan) holding companies, with the exception of company-run stress tests. The Fed's 2018 proposed rule implementing P.L. 115-174 changes would subject THCs to EPR for the first time if they are not substantially engaged in insurance. Official regulatory data report four THCs with more than $100 billion in assets; three are substantially engaged in insurance, so only the one that is not (Charles Schwab) is subject to EPR. Two THCs have between $50 billion to $100 billion in assets, and are therefore not subject to EPR. U.S. Institutions Subject to EPR Under P.L. 115-174 The proposed rule that would implement P.L. 115-174 's changes to the $50 billion asset threshold creates four categories of banks based on their asset size and systemic importance, with increasingly stringent EPR requirements applied to each category as these characteristics increase. Table 1 shows which BHCs and THCs would currently be assigned to each category, as well as banks no longer subject to EPR because they hold between $50 billion and $100 billion in assets. A discussion of which requirements apply to each category is found in the " Higher, Tiered Thresholds " section below. Banks are assigned to categories based on size or other measures of complexity and interconnectedness, reflecting the relationship between those factors and systemic importance. The most stringent tier of regulation applies only to G-SIBs (Category I). Since 2011, the Financial Stability Board (FSB), an international forum that coordinates the work of national financial authorities and international standard-setting bodies, has annually designated G-SIBs based on the banks' cross-jurisdictional activity, size, interconnectedness, substitutability, and complexity. Currently, 30 banks are designated as G-SIBs worldwide, 8 of which are headquartered in the United States. Category II includes other banks with more than $700 billion in assets or more than $75 billion in cross-jurisdictional activity (and at least $100 billion in total assets). Currently, no bank meets the former test but one bank meets the latter test. Category III includes all other banks with $250 billion or more in assets or more than $75 billion in nonbank assets, weighted short-term funding, or off-balance sheet exposure (and at least $100 billion in total assets). Currently, all Category III banks meet the $250 billion asset test. Category IV includes banks with between $100 and $250 billion in assets who do not meet the criteria in one of the other categories. Foreign Banks Operating in the United States The enhanced prudential regime also applies to foreign banking organizations operating in the United States that meet the EPR asset threshold based on global assets. However, the implementing regulations, before P.L. 115-174 was enacted, have imposed most EPR requirements only on foreign banks with more than $50 billion in U.S. nonbranch, nonagency assets. Foreign banks with more than $50 billion in U.S. nonbranch, nonagency assets must form intermediate holding companies (IHCs) for their U.S. operations; those intermediate holding companies are essentially treated as equivalent to U.S. banks for purposes of applicability of the enhanced regime and bank regulation more generally. P.L. 115-174 raised the EPR threshold for global assets, but did not introduce a threshold for U.S. assets of foreign banks. It clarified that the act did not affect the Fed's rule on IHCs for foreign banks with more than $100 billion in global assets or limit the Fed's authority to subject those banks to EPR. Because the threshold for domestic banks has been raised, there is now a question of whether to raise the threshold for U.S. assets of foreign banks to maintain regulatory parity with U.S. banks. The Dodd-Frank Act states that enhanced regulation of foreign banks should "give due regard to the principle of national treatment and equality of competitive opportunity; and take into account the extent to which the foreign financial company is subject on a consolidated basis to home country standards that are comparable" to U.S. standards. The parity issue can be viewed from the perspective of U.S. assets or foreign assets. For example, should a foreign G-SIB with between $50 billion and $100 billion in U.S. assets have its U.S. operations regulated similarly to a U.S. bank with less than $100 billion in assets (i.e., not subject to EPR requirements) or to a U.S. G-SIB (i.e., subject to the most stringent EPR requirements)? Under proposed rules, the 23 foreign banks listed in Table 2 would currently be subject to some EPR requirements. Most foreign banks have less than $250 billion in U.S. assets, but the banks in Table 2 have more than $250 billion in global assets, and several are foreign G-SIBs. The proposed rules use $50 billion in U.S. assets as a minimum threshold for EPR, but are tiered so that most requirements only apply at higher thresholds. To determine which foreign banks are subject to which EPR requirements, the proposals would use total U.S. assets—in contrast to existing EPR rules, which exempt assets in U.S. branches or agencies. As a result, more foreign banks would become subject to some EPR requirements under the proposal. In addition, over 80 foreign banks (including those in Table 2 ) would be required to submit resolution plans (or living wills) under a proposed rule, because they had more than $250 billion in worldwide assets and operate in the United States, regardless of the extent of their U.S. assets. Hereinafter, the report will refer to BHCs, THCs, and foreign banking operations meeting the criteria described above as banks subject to EPR , unless otherwise noted. Other Financial Firms Numerous other large financial firms operating in the United States are not BHCs and are not automatically subject to enhanced regulation, such as credit unions, insurance companies, government-sponsored enterprises (GSEs), securities holding companies, and nonbank lenders. However, the FSOC may designate any nonbank financial firm as a systemically important financial institution (SIFI) if its failure or activities could pose a risk to financial stability. Designated SIFIs are then subject to the Fed's EPR regime, which can be tailored to consider their business models. Since inception, FSOC has designated three insurers (AIG, MetLife, and Prudential Financial) and one other financial firm (GE Capital) as SIFIs. MetLife's designation was subsequently invalidated by a court decision, which the Trump Administration declined to appeal, and the other three designations were later rescinded by FSOC. In some cases, these former SIFIs had substantially altered or shrank their operations between designation and de-designation. In addition to the former SIFIs, a CRS search of the proprietary database S&P Capital IQ identified multiple insurance companies and GSEs with more than $250 billion in assets. A Credit Union Times database includes only one credit union with more than $50 billion in assets (Navy Federal Credit Union) and zero credit unions with more than $100 billion in assets. Many investment companies have more than $250 billion in assets under management; these are not assets they own, but rather assets that they invest at their customers' behest. What Requirements Must Large Banks Comply With Under Enhanced Regulation? All BHCs are subject to long-standing prudential (safety and soundness) regulation conducted by the Fed. The novelty in the Dodd-Frank Act was to create a group of specific prudential requirements that apply only to large banks. Some of these requirements related to capital and liquidity overlap with parts of the Basel III international agreement. Under Title I of the Dodd-Frank Act, the Fed is responsible for administering EPR. It promulgates regulations implementing the regime (based on recommendations, if any, made by FSOC) and supervises firms subject to the regime. The Dodd-Frank regime is referred to as enhanced or heightened because it applies higher or more stringent standards to large banks than it applies to smaller banks. It is a prudential regime because the regulations are intended to contribute toward the safety and soundness of the banks subject to the regime. The cost to the Fed of administering the regime is financed through assessments on firms subject to the regime. Some EPR provisions are intended to reduce the likelihood that a bank will experience financial difficulties, while others are intended to help regulators cope with a failing bank. Several of these provisions directly address problems or regulatory shortcomings that arose during the financial crisis. As of the date of this report, no bank has experienced financial difficulties since EPR came into effect, but the economy has not experienced a downturn in which financial difficulties at banks become more likely. Thus, the risk mitigation provisions that have shown robustness in an expansion have not yet proven to be robust in a downturn, while the provisions intended to cope with a failing bank remain untested. Finally, some parts of enhanced regulation cannot be evaluated because, as noted below, they still have not been implemented through final rules. The following sections provide more detail on the requirements that Title I of the Dodd-Frank Act (which will be referred to hereinafter as Title 1) and Basel III place on banks subject to EPR. Subsequent to initial implementation, numerous regulatory changes over the years have tailored the individual provisions discussed in this section to reduce their regulatory burden; this report does not provide a comprehensive catalog of those subsequent changes. Stress Tests and Capital Planning Stress tests and capital planning are two enhanced requirements that have been implemented together. Title I requires company-run stress tests for any (bank or nonbank) financial firm with more than $10 billion in assets, which P.L. 115-174 raised to more than $250 billion in assets (with Fed discretion to apply to financial firms with between $100 billion and $250 billion in assets), and Fed-run (or "supervisory") stress tests (called DFAST) for any BHC or nonbank SIFI with more than $50 billion in assets, which P.L. 115-174 raised to more than $100 billion in assets. P.L. 115-174 also reduced the number of stress test scenarios and the frequency of company-run stress tests from semi-annually to periodically. Stress test and capital planning requirements were implemented through final rules in 2012, effective beginning in 2013. Stress tests attempt to project the losses that banks would suffer under a hypothetical deterioration in economic and financial conditions to determine whether banks would remain solvent in a future crisis. Unlike general capital requirements that are based on current asset values, stress tests incorporate an adverse scenario that focuses on projected asset values based on specific areas of concern each year. For example in 2017, the adverse scenario is "characterized by a severe global recession that is accompanied by a period of heightened stress in corporate loan markets and commercial real estate markets." In 2019, the Fed made changes to the stress test process to increase its transparency. Capital requirements are intended to ensure that a bank has enough capital backing its assets to absorb any unexpected losses on those assets without failing. Title I required enhanced capital requirements for banks with more than $50 billion in assets, which P.L. 115-174 raised to more than $250 billion in assets (with Fed discretion to apply to banks with between $100 billion and $250 billion in assets). Overall capital requirements were revamped through Basel III after the financial crisis (described below in the " Basel III Capital Requirements " section). Outside of Basel III, enhanced capital requirements were primarily implemented through capital planning requirements that are tied to stress test results. The final rule for capital planning was implemented in 2011. Under the Comprehensive Capital Analysis and Review (CCAR), banks must submit a capital plan to the Fed annually. The capital plan must include a projection of the expected uses and sources of capital, including planned debt or equity issuance and dividend payments. The plan must demonstrate that the bank will remain in compliance with capital requirements under the stress tests. The Fed evaluates the plan on quantitative (whether the bank would have insufficient capital under the stress tests) and qualitative grounds (the adequacy of bank's risk management policies and processes). If the Fed rejects the bank's capital plan, the bank will not be allowed to make any capital distributions, including dividend payments, until a revised capital plan is resubmitted and approved by the Fed. In 2017, the Fed removed qualitative requirements from the capital planning process for banks with less than $250 billion in assets that are not complex. Each year, the Fed has required some banks to revise their capital plans or objected to them on qualitative or quantitative grounds, or due to other weaknesses in their processes. Resolution Plans ("Living Wills") Policymakers claimed that one reason they intervened to prevent large financial firms from failing during the financial crisis was because the opacity and complexity of these firms made it too difficult to wind them down quickly and safely through bankruptcy. Title I requires banks with more than $50 billion in assets, which P.L. 115-174 raised to more than $250 billion in assets (with Fed discretion to apply to banks with between $100 billion and $250 billion in assets), to periodically submit resolution plans (popularly known as "living wills") to the Fed, FSOC, and FDIC that explain how they can safely enter bankruptcy in the event of their failures. The living wills requirement was implemented through a final rule in 2011, and it became fully effective at the end of 2013. The final rule required resolution plans to include details of the firm's ownership, structure, assets, and obligations; information on how the firm's depository subsidiaries are protected from risks posed by its nonbank subsidiaries; and information on the firm's cross-guarantees, counterparties, and processes for determining to whom collateral has been pledged. Proposed rules would reduce the frequency of living will submissions from annually to biennially for G-SIBs and triennially for other large banks. In the 2011 final rule, the regulators highlighted that the resolution plans would help them understand the firms' structure and complexity, as well as their resolution processes and strategies, including cross-border issues for banks operating internationally. The resolution plan is required to explain how the firm could be resolved under the bankruptcy code —as opposed to being liquidated by the FDIC under the Orderly Liquidation Authority created by Title II of the Dodd-Frank Act. The plan is required to explain how the firm can be wound down in a stressed environment in a "rapidly and orderly" fashion without receiving "extraordinary support" from the government (as some firms received during the crisis) or without disrupting financial stability. To do so, the plan must include information on core business lines, funding and capital, critical operations, legal entities, information systems, and operating jurisdictions. Resolution plans are divided into a public part that is disclosed and a private part that contains confidential information. Some banks have submitted resolution plans containing tens of thousands of pages. If regulators find that a plan is incomplete, deficient, or not credible, they may require the firm to revise and resubmit. If the firm cannot resubmit an adequate plan, regulators have the authority to take remedial steps against it—increasing its capital and liquidity requirements; restricting its growth or activities; or ultimately taking it into resolution. Since the process began in 2013, multiple firms' plans have been found insufficient, including all eleven that were submitted and subsequently resubmitted in the first wave. In 2016, Wells Fargo became the first bank to be sanctioned for failing to submit an adequate living will. Liquidity Requirements Bank liquidity refers to a bank's ability to meet cash flow needs and readily convert assets into cash. Banks are vulnerable to liquidity crises because of the liquidity mismatch between illiquid loans and deposits that can be withdrawn on demand. Although all banks are regulated for liquidity adequacy, Title I requires more stringent liquidity requirements for banks with more than $50 billion in assets, which P.L. 115-174 raised to more than $250 billion in assets (with Fed discretion to apply to banks with between $100 billion and $250 billion in assets). These liquidity requirements are being implemented through three rules: (1) a 2014 final rule implementing firm-run liquidity stress tests, (2) a 2014 final rule implementing the Fed-run liquidity coverage ratio (LCR), and (3) a 2016 proposed rule that would implement the Fed-run net stable funding ratio (NSFR). The firm-run liquidity stress tests apply to domestic banks with more than $100 billion in assets under the Fed's proposed rule. More stringent versions of the LCR and NSFR apply to G-SIBs and Category II banks. A less stringent version applies to Category III banks, except those with significant insurance or commercial operations. Proposed rules would extend the LCR and NSFR to large foreign banks operating in the United States. The final rule implementing firm-run liquidity stress tests was issued in 2014, effective January 2015 for U.S. banks and July 2016 for foreign banks. The rule requires banks subject to EPR to establish a liquidity risk management framework involving a bank's management and board, conduct monthly internal liquidity stress tests, and maintain a buffer of high-quality liquid assets (HQLA). The final rule implementing the liquidity coverage ratio was issued in 2014. The LCR came into effect at the beginning of 2015 and was fully phased in at the beginning of 2017. The LCR requires banks subject to EPR to hold enough HQLA to match net cash outflows over a 30-day period in a hypothetical scenario of market stress where creditors are withdrawing funds. An asset can qualify as a HQLA if it has lower risk, has a high likelihood of remaining liquid during a crisis, is actively traded in secondary markets, is not subject to excessive price volatility, can be easily valued, and is accepted by the Fed as collateral for loans. Different types of assets are relatively more or less liquid, and there is disagreement on what the cutoff point should be to qualify as a HQLA under the LCR. In the LCR, eligible assets are assigned to one of three categories, ranging from most to least liquid. Assets assigned to the most liquid category are given more credit toward meeting the requirement, and assets in the least liquid category are given less credit. Section 403 of P.L. 115-174 required regulators to place municipal bonds in a more liquid category, so that banks could get more credit under the LCR for holding them. The proposed rule to implement the net stable funding ratio was issued in 2016, and to date has not been finalized. The NSFR would require banks subject to EPR to have a minimum amount of stable funding backing their assets over a one-year horizon. Different types of funding and assets would receive different weights based on their stability and liquidity, respectively, under a stressed scenario. The rule would define funding as stable based on how likely it is to be available in a panic, classifies it by type, counterparty, and time to maturity. Assets that do not qualify as HQLA under the LCR would require the most backing by stable funding under the NSFR. Long-term equity would get the most credit toward fulfilling the NSFR, insured retail deposits get medium credit, and other types of deposits and long-term borrowing would get less credit. Borrowing from other financial institutions, derivatives, and certain brokered deposits would not qualify under the rule. Counterparty Exposure Limits One source of systemic risk associated with TBTF comes from "spillover effects." When a large firm fails, it imposes losses on its counterparties. If large enough, the losses could be debilitating to the counterparty, thus causing stress to spread to other institutions and further threaten financial stability. Title I requires banks with more than $50 billion in assets, which P.L. 115-174 raised to more than $250 billion in assets (with Fed discretion to apply to banks with between $100 billion and $250 billion in assets), to limit their exposure to unaffiliated counterparties on an individual counterparty basis and to periodically report on their credit exposures to counterparties. Counterparty exposure limits remain mandatory, but P.L. 115-174 placed credit exposure reports at the Fed's discretion. In 2011, the Fed proposed rules implementing these provisions, but they were not included in subsequent final rules. In 2018, the Fed finalized a reproposed rule to implement a single counterparty credit limit (SCCL), effective in 2020; to date, the counterparty exposure reporting requirement has not been reproposed. Counterparty exposure for all banks was subject to regulation before the crisis, but did not cover certain off balance sheet exposures or holding company level exposures. The SCCL is tailored to have increasingly stringent requirements as asset size increases. For banks with more than $250 billion in total assets that are not G-SIBs, net counterparty credit exposure is limited to 25% of the bank's capital. For G-SIBs, counterparty exposure to another G-SIB or a nonbank SIFI is limited to 15% of the G-SIB's capital and exposure to any other counterparty is limited to 25% of its capital. The 2011 credit exposure reporting proposal would have required banks to regularly report on the nature and extent of their credit exposures to significant counterparties. These reports would help regulators understand spillover effects if firms experienced financial distress. There has been no subsequent rulemaking on credit exposure reporting since the 2011 proposal. Risk Management Requirements The board of directors of publicly traded companies oversees the company's management on behalf of shareholders. The Dodd-Frank Act required publicly traded banks with at least $10 billion in assets, which P.L. 115-174 raised to at least $50 billion in assets, to form risk committees on their boards of directors that include a risk management expert responsible for oversight of the bank's risk management. Title I also requires the Fed to develop overall risk management requirements for banks with more than $50 billion in assets. The Fed issued the final rule implementing this provision in 2014, effective in January 2015 for domestic banks and July 2016 for foreign banks. The rule requires the risk committee be led by an independent director. The rule requires banks with more than $50 billion in assets to employ a chief risk officer responsible for risk management, which the proposed rule implementing P.L. 115-174 leaves unchanged. Provisions Triggered in Response to Financial Stability Concerns Title I of the Dodd-Frank Act provides several powers for—depending on the provision—FSOC, the Fed, or the FDIC to use when the respective entity believes that a bank with more than $50 billion in assets or designated nonbank SIFI poses a threat to financial stability. Unless otherwise noted, P.L. 115-174 raises the threshold at which the powers can be applied to banks with $250 billion in assets, with no discretion to apply them to banks between $100 billion and $250 billion in assets. Unlike the enhanced regulation requirements described earlier in this section, financial stability provisions generally do not require any ongoing compliance and would be triggered only when a perceived threat to financial stability has arisen—and none of these provisions have been triggered to date. Some of the following powers are similar to powers that bank regulators already have over all banks, but they are new powers over nonbank SIFIs. These powers are listed here because they, to varying degrees, expand regulatory authority over banks (or extend authority from bank subsidiaries to bank holding companies) with more than $250 billion in assets vis-a-vis smaller banks. FSOC Reporting Requirements. To determine whether a bank with more than $250 billion in assets poses a threat to financial stability, FSOC may require the bank to submit certified reports. However, FSOC may make information requests only if publicly available information is not available. Mitigation of Grave Threats to Financial Stability. When at least two-thirds of the FSOC find that a bank with more than $250 billion in assets poses a grave threat to financial stability, the Fed may limit the firm's mergers and acquisitions, restrict specific products it offers, and terminate or limit specific activities. If none of those steps eliminates the threat, the Fed may require the firm to divest assets. The firm may request a Fed hearing to contest the Fed's actions. To date, this provision has not been triggered, and the FSOC has never identified any bank as posing a grave threat. Acquisitions . Title I broadens the requirement for banks with more than $250 billion in assets to provide the Fed with prior notice of U.S. nonbank acquisitions that exceed $10 billion in assets and 5% of the acquisition's voting shares, subject to various statutory exemptions. The Fed is required to consider whether the acquisition would pose risks to financial stability or the economy. E mergency 15-to-1 Debt-to-Equity Ratio . For banks with more than $250 billion in assets, with Fed discretion to apply to banks with between $100 billion and $250 billion in assets, Title I creates an emergency limit of 15-to-1 on the bank's ratio of liabilities to equity capital (sometimes referred to as a leverage ratio ). The Fed issued a final rule implementing this provision in 2014, effective June 2014 for domestic banks and July 2016 for foreign banks. The ratio is applied only if a bank receives written warning from FSOC that it poses a "grave threat to U.S. financial stability," and ceases to apply when the bank no longer poses a grave threat. To date, this provision has not been triggered. Early Remediation Requirements. Early remediation is the principle that financial problems at banks should be addressed early before they become more serious. Title I requires the Fed to "establish a series of specific remedial actions" to reduce the probability that a bank with more than $250 billion in assets experiencing financial distress will fail. This establishes a requirement for BHCs similar in spirit to the prompt corrective action requirements that apply to insured depository subsidiaries. Unlike prompt corrective action, early remediation requirements are not based solely on capital adequacy. As the financial condition of a firm deteriorates, statute requires the steps taken under early remediation to become more stringent, increasing in four steps from heightened supervision to resolution. The Fed issued a proposed rule in 2011 to implement this provision that to date has not been finalized. Expanded FDIC Examination and E nforcement P owers . Title I expands the FDIC's examination and enforcement powers over certain large banks. To determine whether an orderly liquidation under Title II of the Dodd-Frank Act is necessary, the FDIC is granted authority to examine the condition of banks with more than $250 billion in assets. Title I also grants the FDIC enforcement powers over BHCs or THCs that pose a risk to the Deposit Insurance Fund. Basel III Capital Requirements Parallel to the Dodd-Frank Act, Basel III reformed bank regulation after the financial crisis. U.S. bank regulators implemented this nonbinding international agreement through rulemaking. Basel III determined many of the current capital requirements applied to all U.S. banks. Capital requirements are intended to ensure that a bank has enough capital backing its assets to absorb any unexpected losses on those assets without resulting in the bank's insolvency. Basel III did not include enhanced capital requirements at the original $50 billion threshold, but it did include more stringent capital requirements for the largest banks. The following Basel III capital requirements apply only to large banks: S upplementary L everage R atio (SLR) . Leverage ratios determine how much capital banks must hold relative to their assets without adjusting for the riskiness of their assets. Banks with more than $250 billion in assets or more than $10 billion in foreign exposure must meet a 3% SLR, which differs from the leverage ratio that applies to all banks by including the bank's off-balance-sheet exposures. Unanticipated losses related to opaque off-balance-sheet exposures exacerbated uncertainty about banks' solvency during the financial crisis. In April 2014, U.S. bank regulators adopted a joint rule that would require the G-SIBs to meet an enhanced SLR of 5% at the holding company level to pay all discretionary bonuses and capital distributions and 6% at the depository subsidiary level to be considered well capitalized as of 2018. The amount of capital required by the SLR and to whom it applies would be modified by proposed rules discussed below. G-SIB Capital Surcharge. Basel III also required G-SIBs to hold relatively more capital than other banks in the form of a common equity surcharge of at least 1% to "reflect the greater risks that they pose to the financial system." In July 2015, the Fed issued a final rule that began phasing in this capital surcharge in 2016. Currently, the surcharge applies to the eight G-SIBs, but under its rule, it could designate additional firms as G-SIBs, and it could increase the capital surcharge to as high as 4.5%. The Fed stated that under its rule, most G-SIBs would face a higher capital surcharge than required by Basel III. Countercyclical Capital Buffer. The banking regulators also issued a final rule implementing a Basel III countercyclical capital buffer applied to banks with more than $250 billion in assets or more $10 billion in foreign exposure. The countercyclical buffer requires these banks to hold more capital than other banks when regulators believe that financial conditions make the risk of losses abnormally high. It has been set at zero since inception. Because the countercyclical buffer has not yet been in place for a full business cycle, it is unclear how likely it is that regulators would raise it above zero, and under what circumstances an increase would be triggered. Total Loss-Absorbing Capacity (TLAC) . The Fed issued a 2017 final rule implementing a TLAC requirement for U.S. G-SIBs and U.S. operations of foreign G-SIBs effective at the beginning of 2019. The rule requires G-SIBs to hold a minimum amount of capital and long-term debt at the holding company level so that these equity and debt holders can absorb losses and be "bailed in" in the event of the firm's insolvency. This furthers the policy goal of avoiding taxpayer bailouts of large financial firms. TLAC would be affected by a proposed rule discussed below. These capital requirements determine how the largest banks must fund all of their activities on a day-to-day basis. In that sense, these requirements arguably have a larger ongoing impact on banks' marginal costs of providing credit and other services than most of the Title I provisions discussed in the last section that impose only fixed compliance costs on banks. Assessments The Dodd-Frank Act imposes various assessments on banks with more than $50 billion in assets. P.L. 115-174 raised the threshold for some of these assessments. As amended, fees are assessed on BHCs with more than $250 billion in assets (beginning in November 2019) and designated SIFIs to fund the Office of Financial Research; BHCs and THCs with assets over $100 billion and designated SIFIs to fund the cost of administering EPR. Assessments on BHCs and THCs with $100 billion to $250 billion in assets must reflect the tailoring of EPR; and BHCs with assets over $50 billion and designated SIFIs to repay any uncompensated costs borne by the government in the event of a liquidation under the Orderly Liquidation Authority. This assessment is imposed only after a liquidation occurs. Proposed Changes to Large Bank Regulation As of the date of this report, the Fed and the other bank regulators have proposed several rules that would modify EPR One set of rules, implementing Section 401 of P.L. 115-174 , would raise the asset thresholds for EPR. This rule would exempt banks with less than $100 billion in assets from EPR and reduce EPR requirements mostly for banks with between $100 billion and $250 billion in assets. A second proposed rule, implementing Section 402 of P.L. 115-174 , would reduce capital requirements under the SLR for three custody banks, two of which are G-SIBs. Two other rules were proposed independently of any legislative action One would combine elements of stress tests requirements and Basel III to create a stress capital buffer requirement for large banks, effectively reducing capital requirements mainly for large banks that are not G-SIBs. The other would reduce capital requirements under the SLR for G-SIBs by changing how the SLR is calculated. This section summarizes these proposed rules and their projected effects. Higher, Tiered Thresholds Prior to the enactment of P.L. 115-174 , U.S. regulators described the prudential regulatory regime applying to all banks as tiered regulation , meaning that increasingly stringent regulatory requirements are applied as metrics, such as a bank's size, increase. These different tiers have been applied on an ad hoc basis—in some cases, statute requires a given regulation to be applied at a certain size; in some cases, regulators have discretion to apply a regulation at a certain size; and in other cases, regulators must apply a regulation to all banks. In addition to $100 billion and $250 billion, notable thresholds found in bank regulation are $1 billion, $3 billion, $5 billion, and $10 billion. P.L. 115-174 expanded tiered regulation for EPR and other types of bank regulation (see text box). Even before enactment of P.L. 115-174, EPR was itself an example of tiered regulation, as it imposed requirements only on banks with more than $50 billion in assets, banks with $250 billion in assets, or G-SIBs, depending on the requirement. Before P.L. 115-174 , the Fed's rules had also tailored some of the EPR requirements for banks with more than $50 billion in assets, so that more stringent regulatory or compliance requirements were applied to banks with more than $250 billion in assets or G-SIBs, depending on the requirement. Under P.L. 115-174 , EPR would become much more tiered and tailored by bank size. The Fed has proposed rules that would implement changes to bank asset thresholds and specific EPR requirements found in P.L. 115-174 and would make additional changes to EPR requirements using the discretionary authority provided in P.L. 115-174 . Under these proposed rules, EPR would impose progressively more stringent requirements across four categories of banks, as summarized in Table 3 . As proposed, the Fed used the discretion granted by P.L. 115-174 to exempt banks with $100 billion to $250 billion from most, but not all, EPR requirements unless they had other characteristics that made them qualify as Category II or III banks. Consistent with P.L. 115-174 , banks with under $100 billion would be exempted from all EPR requirements except those related to risk management. Under proposed rules, foreign banks would be placed in the same categories, based on their U.S. assets, with requirements for each category similar to those applied to U.S. banks. In most cases, compared to the status quo for foreign banks, EPR requirements for foreign banks in Category II and III (see Table 2 ) would remain largely unchanged, whereas foreign banks with an IHC in Category IV would be exempted from or face less stringent versions of most EPR requirements, depending on the requirement. Most requirements would continue to be applied to the U.S. IHC, but a few would apply to all U.S. operations, including U.S. branches and agencies. Because assets of U.S. branches and agencies were not used to determine who was subject to EPR previously, the proposed rule would apply a few EPR requirements to foreign banks that were not previously subject to EPR. But overall the proposed rules would mostly continue to defer to home country regulation for foreign banks operating in the United States that do not qualify as Category II or III banks. Stress Capital Buffer Stress tests and capital planning requirements play a specific role in EPR—they provide the Fed with an assessment of whether large banks have enough capital to withstand another crisis, as simulated using a specific adverse scenario developed by the Fed. This is similar to the role of capital requirements more generally and creates some overlap and redundancy between the two. More generally, the Fed points out that banks with more than $100 billion in assets must simultaneously comply with 18 capital requirements and G-SIBs must simultaneously comply with 24 different capital requirements, each addressing a separate but related risk. To try to minimize what it perceives as redundancy between these various measures, the Fed has proposed a rule to combine elements of the stress tests and the Basel III requirements. Under the proposed rule, banks with more than $100 billion in assets would have to simultaneously comply with 8 capital requirements and G-SIBs would have to simultaneously comply with 14 capital requirements. The proposed rule would accomplish this by eliminating 5 requirements tied to the "adverse" scenario in the stress tests, which the Fed is allowed to do under P.L. 115-174 , and by combining 4 requirements tied to the "severely adverse" stress tests with 4 Basel III capital requirements. Under current Basel III risk-weighted capital requirements, all banks must hold a common equity capital conservation buffer (CCB) equal to 2.5% of their risk-weighted assets (on top of the minimum amount of common equity, Tier 1, and total capital required) to avoid limitations on capital distributions. They also must meet an unweighted leverage capital requirement. Under capital planning requirements, banks currently must hold enough capital to still meet the minimum amount required under the common equity, Tier 1, and total capital, and leverage requirements after their stress test losses, planned capital distributions (such as dividends and share buybacks), and projected balance sheet growth (because an increase in assets requires a proportional increase in capital). The proposed rule would replace these separate requirements with a combined stress capital buffer (SCB) requirement that banks hold enough capital to cover stress test losses and dividends or 2.5% of risk-weighted assets, whichever is larger (see Figure 1 ). The former is less restrictive than what banks face if their projected capital levels fall below the minimum under current stress test requirements. The Fed has provided three justifications for making these requirements less stringent than the current capital planning requirements. First, the Fed argues that because capital distributions would automatically face restrictions if the proposed stress capital buffer was not met, it would no longer be necessary for firms to hold enough capital to meet all planned capital distributions. However, distributions are not entirely forbidden unless the stress capital buffer falls below 0.625%. Second, the Fed argues for removing stock repurchases from capital planning on the grounds that only dividends are likely to be continued as planned in a period of financial stress. Finally, the Fed argues that its previous assumption that balance sheets continue to grow in a stressed environment was an unreasonable one. Because the Fed decided that banks would no longer have to hold capital to account for capital distributions other than dividends and balance sheet growth, they have reduced capital requirements relative to current stress tests for non G-SIBs. However, whether the stress capital buffer would be a lower capital requirement than the stress tests and the risk-weighted Basel III requirements it is replacing depends on whether losses under the stress tests were greater than 2.5%. If they were less than 2.5%, then a bank is required to hold the same amount of capital under the proposal as currently under the capital conservation buffer. If they were more than 2.5%, then a bank is required to hold less capital under the proposal than currently under the stress tests. Under the proposal, banks would also face a stress leverage buffer in lieu of the leverage ratio. The stress leverage buffer would require large banks to hold Tier 1 capital equal to stress tests losses and dividends, but the leverage buffer would not include any minimum (see Figure 2 ). Currently, the leverage ratio does not include a buffer requirement, although banks must hold an additional 1% of capital to be considered well capitalized under prompt-corrective action requirements. So in this case, whether the stress leverage buffer would be a lower capital requirement than the stress tests and Basel III leverage requirements it is replacing depends on whether losses, planned capital distributions, and projected balance sheet growth under the stress tests were greater than 1%—which the Fed reports is generally the case. These proposed buffers would work similarly to the CCB, in that capital restrictions would be automatically triggered if a bank's capital level falls below the buffers. It would not feature the annual quantitative "pass/fail" announcement that is a current feature of the stress tests. The Fed calculated what would have happened if this proposed rule had been in place in recent years. It found that the proposed rule would have reduced required capital for large banks that are not G-SIBs (because the stress test is currently the binding constraint) by between $10 billion and $45 billion and would have required G-SIBs to hold the same or more capital (because the G-SIB surcharge is being added to the stress capital buffer); overall, capital requirements for G-SIBs would have increased by between $10 billion and $50 billion. The Fed also found that all banks would have had enough actual capital in those years to meet the SCB requirement. Treatment of Custody Banks Under the Supplementary Leverage Ratio Custody banks provide a unique set of services not offered by many other banks, but are generally subject to the same regulatory requirements as other banks. Custody banks hold securities; receive interest or dividends on those securities; provide related administrative services; and transfer ownership of securities on behalf of financial market asset managers, including investment companies such as mutual funds. Asset managers access central counterparties and payment systems via custodian banks. Custodian banks play a passive role in their clients' decisions, carrying out instructions. As discussed in the " Basel III Capital Requirements " section above, under leverage ratios, including the SLR, the same amount of capital must be held against any asset, irrespective of risk to ensure that banks have a minimum amount of total capital. Banks must hold capital against their deposits at central banks under the leverage or supplemental leverage ratio, although there is no risk associated with those deposits. Custody banks argue that this disproportionately burdens them because of their business model. Other observers counter that the purpose of the leverage ratio is to measure the amount of bank capital against assets regardless of risk, and to exempt "safe" assets undermines the usefulness of that measure. Section 402 of P.L. 115-174 allows for custody banks—defined by the legislation as banks predominantly engaged in custody, safekeeping, and asset servicing activities—to no longer hold capital against funds deposited at certain central banks to meet the SLR, up to an amount equal to customer deposits linked to fiduciary, custodial, and safekeeping accounts. All other banks would continue to be required to hold capital against central bank deposits. In April 2019, the banking regulators proposed a rule to implement this provision. Custody banks are generally an industry concept, not a regulatory concept. P.L. 115-174 leaves it to bank regulators to define which banks meet the definition of "predominantly engaged in custody, safekeeping, and asset servicing activities." The proposed rule uses a ratio of at least 30 times more assets under custody than the banks' assets to determine "predominantly engaged." By this measure, three banks would qualify—Bank of New York Mellon, Northern Trust, and State Street. Depending on who qualifies in the final rule, other large banks that offer custody services but do not qualify for relief under the "predominantly engaged" definition may be at a relative disadvantage under this provision. Under the proposed rule, Northern Trust would be able to reduce its capital by $3 for every $100 it deposits at central banks, and Bank of New York Mellon and State Street (as G-SIBs) would be able to reduce their capital by $6 for every $100 of banking subsidiary deposits at central banks—although the latter two would face a lower leverage ratio under the enhanced SLR proposed rule discussed in the next section. The proposed rule implementing Section 402 estimates that the three eligible custody banks would be granted an exclusion equivalent to 21% to 30% of their assets and be able to reduce their capital requirements at the holding company level under the SLR by an aggregate $8 billion. However, the proposed rule states that the SLR was not the binding capital requirement for the custody banks at the holding company level, but it was the binding requirement at the depository level for two of the banks, as of the third quarter of 2018. As a result, capital requirements would have declined by a combined $7 billion or 23% for those two banks had the rule been in effect. Incorporating the G-SIB Surcharge into the Enhanced Supplementary Leverage Ratio and the Total Loss Absorbing Capacity As noted in the " Basel III Capital Requirements " section, G-SIBs must currently comply with a higher SLR than other banks with $250 billion in assets. For G-SIBs, the current enhanced SLR is set at 5% at the holding company level and 6% for the depository subsidiary to be considered well capitalized. In April 2018, the Fed and the Office of the Comptroller of the Currency (OCC) proposed a rule to modify the enhanced SLR for G-SIBs. Instead of 5% and 6%, respectively, the enhanced SLR would now be set for each G-SIB at 3% plus half of its G-SIB surcharge for both the holding company and the depository subsidiary. In this way, the amount of capital required to be held by G-SIBs would increase with their systemic importance. Because each G-SIB has a surcharge that is less than 4% or 6%, respectively, the proposed rule would reduce capital requirements under the enhanced SLR for each G-SIB to between 3.75% and 4.75%, depending on the bank. Figure 3 compares the current SLR requirement for G-SIBs to the anticipated SLR requirement for each G-SIB if the proposed rule were finalized. Whether this reduces how much capital the G-SIBs are required to hold depends on whether the SLR is the binding capital ratio. The Fed reported that in 2017, the SLR was the binding ratio for each G-SIB's bank subsidiary. Thus, the proposed rule would have reduced how much capital each G-SIB had to hold at the subsidiary level by $121 billion in total. The effect on the overall BHC would have been much smaller. At the holding company level, the proposed rule would have reduced required capital by $400 million in total. The Fed argues that it is undesirable for the SLR to be the binding capital requirement because it is intended to act as a backstop if risk-weighted requirements fail. If the SLR is the binding ratio, banks have more incentive to hold riskier assets. To avoid having the SLR be the binding ratio, banking regulators could raise risk-weighted capital requirements or reduce the SLR, as is proposed. The Fed estimates that under the proposal, the SLR would still be the binding ratio for three G-SIBs. The proposed rule would make similar changes to G-SIBs' TLAC requirement. Currently, G-SIBs must meet a 9.5% leverage buffer under TLAC. Under the proposed rule, G-SIBs would be required to meet a leverage buffer equal to 7.5% plus half of their G-SIB surcharge. Because all G-SIBs currently have a surcharge below 4%, this would reduce their TLAC requirement. The proposed rule would also make a similar change to the TLAC long-term debt requirement for G-SIBs. Evaluating Proposed Changes Collectively, recent proposed changes would, to varying degrees, reduce capital and other advanced EPR requirements for banks with more than $50 billion in assets. In the view of the banking regulators and the supporters of P.L. 115-174 , these changes better tailor EPR to match the risks that large banks pose. Opponents are concerned that the additional systemic and prudential risks these changes pose outweigh the benefits to society of reduced regulatory burden, believing that the benefits will mainly accrue to the affected banks. One way these changes can be evaluated is by comparing the benefits of EPR to its costs. According to Section 165 of the Dodd-Frank Act, the purpose of enhanced regulation is "to prevent or mitigate risks to the financial stability of the United States that could arise from the material financial distress or failure, or ongoing activities, of large, interconnected financial institutions." General prudential regulation applying to all banks is intended to be microprudential , focusing mainly on the individual institution's safety and soundness. Enhanced regulation is intended to be macroprudential , focusing mainly on the broader systemic risk that large institutions pose. In particular, it is meant to address concerns that large banks are TBTF. Enhanced regulation is not necessarily mutually exclusive with other policy approaches to eliminating TBTF, although combining approaches could dilute any single approach's effectiveness. Different parts of the Dodd-Frank Act pursue several different approaches to eliminating TBTF. In the case of proposed changes that would not apply to G-SIBs, the main question from a systemic risk perspective is whether firms that have more than $50 billion in assets but are not G-SIBs are a source of systemic risk. If a bank does not pose systemic risk or is not perceived as TBTF, the main benefit of enhanced regulation is not present, "and it is subjected to unnecessary costs without any offsetting benefits." Although there is widespread consensus that G-SIBs pose the most systemic risk, there is little agreement on how much, if any, systemic risk is posed by the next tier of institutions. Ultimately, the risk to financial stability posed by a large bank failing—and the efficacy of EPR in mitigating that risk—cannot be known for certain until a large bank fails, and no failure has occurred since the crisis. Quantifying the benefits of EPR is difficult because the benefits of preventing another financial crisis are large, but the probability of another crisis at any given time is small. Furthermore, the ability to isolate the effects of any particular provision on financial stability is hindered because maintaining financial stability likely depends on the joint effects of a number of policies. The effect of various proposals on systemic risk may jointly be greater than the sum of their individual parts. Although systemic risk mitigation is the main purpose of enhanced regulation, there are also other potential benefits that could be lost by reducing the number of banks subject to it. First, enhanced regulation could reduce the likelihood that a bank's failure would result in taxpayer exposure to FDIC insurance losses or due to "bailouts." For example, the government lost money on TARP investments following the financial crisis in some midsized institutions (such as Ally Financial and CIT Group, which had between $50 billion and $250 billion in assets) although they were not viewed as systemically important. An Inspector General report found that if Washington Mutual, which was taken into receivership in September 2008, had been liquidated, it would have depleted the entire FDIC deposit insurance fund. Second, EPR could reduce the likelihood of a bank failure that did not pose systemic risk but could still result in localized or sectoral disruptions to the availability of credit and the provision of financial services. Third, some have argued that some enhanced prudential requirements (e.g., risk committees, chief risk officers, company-run stress tests) represent good risk management practices that any large, well-managed firm should apply in the interest of shareholders. Comparing the magnitude of benefits to the costs EPR imposes involves additional difficulty. In general, enhanced prudential requirements impose costs on large banks. However, the extent to which those costs are passed on to customers potentially depends on a variety of economic factors, such as the degree of market competition and the price sensitivity of customers. Furthermore, from an economic net benefit perspective, the cost to large banks is less relevant than the overall effects on the cost and availability of credit throughout the financial system. If banks subject to EPR face higher costs, then more credit will be supplied by other financial firms, at least partially offsetting the reduction in credit from banks subject to EPR. Some of these firms will be small banks, but some financial intermediation could also migrate from large banks to firms that are not regulated for safety and soundness. Whether overall systemic risk is higher or lower if financial activity migrates from large banks subject to EPR to less regulated sectors is beyond the scope of this report. But in that sense, even if a heightened prudential regime worked as planned, net benefits (i.e., reduction of overall systemic risk) could be smaller than anticipated. The possibility that TBTF banks create market distortions creates additional considerations. Normally, higher costs imposed by regulation reduce economic efficiency, which must be balanced against the benefits they provide. However, if TBTF banks create moral hazard—the theory that if TBTF firms expect that failure will be prevented, they have an incentive to take greater risks than they otherwise would because they are shielded from at least some negative consequences of those risks (a market failure that reduces efficiency), then regulatory costs may increase efficiency (from a societal perspective) by reducing risk-taking. Put differently, if there is a TBTF "subsidy," then enhanced regulation may reduce that subsidy by partially offsetting the funding advantage that some believe is caused by moral hazard. On these grounds, the costs and benefits of tailoring EPR or removing some banks from EPR will depend crucially on which banks are TBTF—a question that cannot be answered definitively until a bank fails. Tailoring also addresses the concern that enhanced regulation poses disproportionately greater compliance costs on smaller banks than on the largest banks. Some EPR requirements are highly complex and more costly to comply with. Proponents of the recent proposals believe that EPR could be modified to reduce costs for banks that are not TBTF without a substantial decline in benefits, while opponents disagree.

The 2007-2009 financial crisis highlighted the problem of "too big to fail" financial institutions—the concept that the failure of large financial firms could trigger financial instability, which in several cases prompted extraordinary federal assistance to prevent their failure. One pillar of the 2010 Dodd-Frank Act's (P.L. 111-203) response to addressing financial stability and ending too big to fail is a new enhanced prudential regulatory (EPR) regime that applies to large banks and to nonbank financial institutions designated by the Financial Stability Oversight Council (FSOC) as systemically important financial institutions (SIFIs). Previously, FSOC had designated four nonbank SIFIs for enhanced prudential regulation, but all four have since been de-designated. Under this regime, the Federal Reserve (Fed) is required to apply a number of safety and soundness requirements to large banks that are more stringent than those applied to smaller banks. These requirements are intended to mitigate systemic risk posed by large banks Stress tests and capital planning ensure banks hold enough capital to survive a crisis. Living wills provide a plan to safely wind down a failing bank. Liquidity requirements ensure that banks are sufficiently liquid if they lose access to funding markets. Counterparty limits restrict the bank's exposure to counterparty default. Risk management requires publicly traded companies to have risk committees on their boards and banks to have chief risk officers. Financial stability requirements provide for regulatory interventions that can be taken only if a bank poses a threat to financial stability. Capital requirements under Basel III, an international agreement, require large banks hold more capital than other banks to potentially absorb unforeseen losses. The Dodd-Frank Act automatically subjected all bank holding companies and foreign banks with more than $50 billion in assets to enhanced prudential regulation. In 2017, the Economic Growth, Regulatory Relief, and Consumer Protection Act (P.L. 115-174) created a more "tiered" and "tailored" EPR regime for banks. It automatically exempted domestic banks with assets between $50 billion and $100 billion (five at present) from enhanced regulation. The Fed has discretion to apply most individual enhanced prudential provisions to the 11 domestic banks with between $100 billion and $250 billion in assets on a case-by-case basis if it would promote financial stability or the institutions' safety and soundness, and has proposed exempting them from several EPR requirements. The eight domestic banks that have been designated as Global-Systemically Important Banks (G-SIBs) and the five banks with more than $250 billion in assets or $75 billion in cross-jurisdictional activity remain subject to all Dodd-Frank EPR requirements. In addition, the Fed has proposed applying some EPR requirements on a progressively tiered basis to the 23 foreign banks with over $50 billion in U.S. assets and $250 billion in global assets. P.L. 115-174 also reduced the amount of capital that custody banks are required to hold against one of the EPR capital requirements, the supplementary leverage ratio (SLR). In addition, the Fed has issued a proposed rule that would reduce the amount of capital that G-SIBs are required to hold against the SLR. Finally, the Fed has proposed another rule that would combine capital planning under the stress tests with overall capital requirements for large banks. Collectively, these proposed changes would reduce, to varying degrees, capital and other advanced EPR requirements for banks with more than $50 billion in assets. In the view of the banking regulators and the supporters of P.L. 115-174, these changes better tailor EPR to match the risks posed by large banks. Opponents are concerned that the additional systemic and prudential risks posed by these changes outweigh the benefits to society of reduced regulatory burden, believing that the benefits will mainly accrue to the affected banks. The 2007-2009 financial crisis highlighted the problem of "too big to fail" financial institutions—the concept that the failure of large financial firms could trigger financial instability, which in several cases prompted extraordinary federal assistance to prevent their failure. One pillar of the 2010 Dodd-Frank Act's (P.L. 111-203) response to addressing financial stability and ending too big to fail is a new enhanced prudential regulatory (EPR) regime that applies to large banks and to nonbank financial institutions designated by the Financial Stability Oversight Council (FSOC) as systemically important financial institutions (SIFIs). Previously, FSOC had designated four nonbank SIFIs for enhanced prudential regulation, but all four have since been de-designated. Under this regime, the Federal Reserve (Fed) is required to apply a number of safety and soundness requirements to large banks that are more stringent than those applied to smaller banks. These requirements are intended to mitigate systemic risk posed by large banks Stress tests and capital planning ensure banks hold enough capital to survive a crisis. Living wills provide a plan to safely wind down a failing bank. Liquidity requirements ensure that banks are sufficiently liquid if they lose access to funding markets. Counterparty limits restrict the bank's exposure to counterparty default. Risk management requires publicly traded companies to have risk committees on their boards and banks to have chief risk officers. Financial stability requirements provide for regulatory interventions that can be taken only if a bank poses a threat to financial stability. Capital requirements under Basel III, an international agreement, require large banks hold more capital than other banks to potentially absorb unforeseen losses. The Dodd-Frank Act automatically subjected all bank holding companies and foreign banks with more than $50 billion in assets to enhanced prudential regulation. In 2017, the Economic Growth, Regulatory Relief, and Consumer Protection Act (P.L. 115-174) created a more "tiered" and "tailored" EPR regime for banks. It automatically exempted domestic banks with assets between $50 billion and $100 billion (five at present) from enhanced regulation. The Fed has discretion to apply most individual enhanced prudential provisions to the 11 domestic banks with between $100 billion and $250 billion in assets on a case-by-case basis if it would promote financial stability or the institutions' safety and soundness, and has proposed exempting them from several EPR requirements. The eight domestic banks that have been designated as Global-Systemically Important Banks (G-SIBs) and the five banks with more than $250 billion in assets or $75 billion in cross-jurisdictional activity remain subject to all Dodd-Frank EPR requirements. In addition, the Fed has proposed applying some EPR requirements on a progressively tiered basis to the 23 foreign banks with over $50 billion in U.S. assets and $250 billion in global assets. P.L. 115-174 also reduced the amount of capital that custody banks are required to hold against one of the EPR capital requirements, the supplementary leverage ratio (SLR). In addition, the Fed has issued a proposed rule that would reduce the amount of capital that G-SIBs are required to hold against the SLR. Finally, the Fed has proposed another rule that would combine capital planning under the stress tests with overall capital requirements for large banks. Collectively, these proposed changes would reduce, to varying degrees, capital and other advanced EPR requirements for banks with more than $50 billion in assets. In the view of the banking regulators and the supporters of P.L. 115-174, these changes better tailor EPR to match the risks posed by large banks. Opponents are concerned that the additional systemic and prudential risks posed by these changes outweigh the benefits to society of reduced regulatory burden, believing that the benefits will mainly accrue to the affected banks.

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T he federal government has two major tools for affecting the macroeconomy: fiscal policy and monetary policy. These policy interventions are generally used to either increase or decrease economic activity to counter the business cycle's impact on unemployment, income, and inflation. This report focuses on fiscal policy; for more information related to monetary policy, refer to CRS Report RL30354, Monetary Policy and the Federal Reserve: Current Policy and Conditions , by Marc Labonte. What is Fiscal Policy? Fiscal policy is the means by which the government adjusts its budget balance through spending and revenue changes to influence broader economic conditions. According to mainstream economics, the government can impact the level of economic activity, generally measured by gross domestic product (GDP), in the short term by changing its level of spending and tax revenue. Expansionary fiscal policy—an increase in government spending, a decrease in tax revenue, or a combination of the two—is expected to spur economic activity, whereas contractionary fiscal policy—a decrease in government spending, an increase in tax revenue, or a combination of the two—is expected to slow economic activity. When the government's budget is running a deficit, fiscal policy is said to be expansionary: when it is running a surplus, fiscal policy is said to be contractionary. From a policymaker's perspective, expansionary fiscal policy is generally used to boost GDP growth and the economic indicators that tend to move with GDP, such as employment and individual incomes. However, expansionary fiscal policy also tends to affect interest rates and investment, exchange rates and the trade balance, and the inflation rate in undesirable ways, limiting the long-term effectiveness of persistent fiscal stimulus. Contractionary fiscal policy can be used to slow economic activity if policymakers are concerned that the economy may be overheating, which can cause a recession. The magnitude of fiscal policy's effect on GDP will also differ based on where the economy is within the business cycle—whether it is in a recession or an expansion. Expansionary Fiscal Policy During a recession, aggregate demand (overall spending) in the economy falls, which generally results in slower wage growth, decreased employment, lower business revenue, and lower business investment. Recessions occur for a number of reasons, but as seen during the most recent recession from 2007 to 2009, they can result in serious negative consequences for both individuals and businesses. However, the government can replace some of the lost aggregate demand and limit the negative impacts of a recession on individuals and businesses with the use of fiscal stimulus by increasing government spending, decreasing tax revenue, or a combination of the two. Government spending takes the form of both purchases of goods and services by the government, which directly increase economic activity, and transfers to individuals, which indirectly increase economic activity as individuals spend those funds. Decreased tax revenue via tax cuts indirectly increases aggregate demand in the economy. For example, an individual income tax cut increases the amount of disposable income available to individuals, enabling them to purchase more goods and services. Standard economic theory suggests that in the short term, fiscal stimulus can lessen the negative impacts of a recession or hasten a recovery. However, the ability of fiscal stimulus to boost aggregate demand may be limited due to its interaction with other economic processes, including interest rates and investment, exchange rates and the trade balance, and the rate of inflation. Potential Offsetting Effects to Expansionary Fiscal Policy Investment and Interest Rates To engage in fiscal stimulus by either increasing spending or decreasing tax revenue, the government must increase the size of its deficit and borrow money to finance that stimulus. This can lead to an increase in interest rates and subsequent decreases in investment and some consumer spending. This rise in interest rates may therefore offset some portion of the increase in economic activity spurred by fiscal stimulus. At any given time, there is a limited supply of loanable funds available for the government and private parties to borrow from—a global pool of savings. If the government begins to borrow a larger portion of this pool of savings, it increases the demand for these funds. As demand for loanable funds increases, without any corresponding increase in the supply of these funds, the price to borrow these funds, also known as interest rates, increases. Rising interest rates generally depress economic activity, as they make it more expensive for businesses to borrow money and invest in their firms. Similarly, individuals tend to decrease so-called interest-sensitive spending—spending on goods and services that require a loan, such as cars, homes, and large appliances—when interest rates are relatively higher. The process through which rising interest rates diminish private-sector spending is often referred to as crowding out . However, the degree to which crowding out occurs is partially dependent on where the economy is within the business cycle, either in a recession or in a healthy expansion. During a recession, crowding out tends to be smaller than during a healthy economic expansion due to already depressed demand for investment and interest-sensitive spending. Because demand for loanable funds is already depressed during a recession, the additional demand created by government borrowing does not increase interest rates as much, and therefore does not crowd out as much private spending as it would during an economic expansion. In addition to fiscal policy, the government can influence the business cycle through the use of monetary policy, which is implemented by the Federal Reserve. The Federal Reserve is an independent government agency charged with maintaining stable prices and maximum employment through its monetary policy. The Federal Reserve can influence interest rates throughout the economy by adjusting the federal funds rate, a very short-term interest rate faced by banks. Decreasing interest rates reduces the cost to businesses and individuals of borrowing funds to make new investments and purchases. Conversely, increasing interest rates raises the cost to businesses and individuals of borrowing funds to make new investments and purchases. The Federal Reserve can conduct monetary policy in a complementary nature to fiscal policy, offsetting the rise in interest rates by decreasing the federal funds rate. Alternatively, the Federal Reserve can pursue a policy that offsets stimulus, pushing interest rates up by increasing the federal funds rate. Exchange Rates and the Trade Balance Another potential consequence of government fiscal stimulus is an increase in the value of the U.S. dollar and a subsequent increase in the trade deficit, which mitigates some portion of the rise in economic activity resulting from the fiscal stimulus. As discussed above, fiscal stimulus can cause interest rates to rise. In a global context where interest rates are rising in the United States relative to the rest of the world, demand for investment inside the United States is likely to increase among investors around the world as they seek out higher rates of return. The greater demand for investment in the United States is likely to temper the increase in interest rates resulting from fiscal stimulus. However, foreign investors must first exchange their own currency for U.S. dollars to invest in the United States. The increased demand for U.S. dollars increases the value of a U.S. dollar relative to other foreign currencies. As the U.S. dollar appreciates in value, domestic demand for imported goods increases because a U.S. dollar can now buy more goods and services abroad, but foreign demand for U.S. goods and services decreases because they are now relatively more expensive for foreigners. The end result is generally an increase in the U.S. trade deficit, as exports decrease and imports from abroad increase in the United States. An increasing trade deficit, all else equal, means that consumption and production of domestic goods and services are falling, partly offsetting the increase in aggregate demand caused by the stimulus. As discussed above, however, during a recession interest rates are less likely to rise, or are likely to increase to a lesser degree, due to an already depressed demand for investment and spending within the economy. Without rising interest rates, or if they increase to a lesser degree, the associated increase in the trade deficit is also likely to be smaller. In addition, if the Federal Reserve engages in similarly stimulative monetary policy, it may be able to mitigate some of the anticipated increase in the trade deficit by further preventing an increase in interest rates. Inflation As discussed above, the goal of fiscal stimulus is to increase aggregate demand within the economy. However, if fiscal stimulus is applied too aggressively, or is implemented when the economy is already operating near full capacity, it can result in an unsustainably large demand for goods and services that the economy is unable to supply. When the demand for goods and services is greater than the available supply, prices tend to rise, a scenario known as inflation. A rising inflation rate can introduce distortions into the economy and impose unnecessary costs on individuals and businesses, although economists generally view low and stable inflation as a sign of a well-managed economy. As such, rising inflation rates can hinder the effectiveness of fiscal stimulus on economic activity by imposing additional costs on individuals and interfering with the efficient allocation of resources in the economy. The Federal Reserve has some ability to limit inflation by implementing contractionary monetary policy. If the Federal Reserve observes accelerating inflation as a result of additional fiscal stimulus, it can counteract this by increasing interest rates. The rise in interest rates results in a slowing of economic activity, neutralizing the fiscal stimulus, and may help to slow inflation as well. Fiscal Expansion Multipliers Economists attempt to evaluate the overall impact of fiscal stimulus on the economy by estimating fiscal multipliers , which measure the ratio of a change in economic output to the change in government spending or revenue that causes the change in output. A fiscal multiplier greater than one suggests that for each dollar the government spends, the economy grows by more than one dollar. A multiplier may be larger than one if the initial government stimulus results in further spending by private actors. For example, if the government increases spending on infrastructure projects as part of its stimulus, directly increasing aggregate demand, numerous contractors and construction workers will likely receive additional income as a consequence. If those workers then spend a portion of their new income within the economy, it further increases aggregate demand. Alternatively, a fiscal multiplier of less than one suggests that for each dollar the government spends, the economy grows by less than one dollar, suggesting the expansionary power of the fiscal stimulus is being offset by the contractionary pressures discussed above. Estimates of fiscal multipliers vary depending on the form of the fiscal stimulus and on which economic model the economist uses to measure the multiplier. For example, a 2012 academic research article estimated fiscal multipliers for various forms of stimulus utilizing several different prominent economic models from the Federal Reserve Board, the European Central Bank, the International Monetary Fund (IMF), the European Commission, the Organisation for Economic Co-operation and Development (OECD), the Bank of Canada, and two models developed by academic economists. The authors found varying estimates (see Table 1 ) for different forms of fiscal stimulus ranging from 1.59 for cash transfers to low-income individuals to 0.23 for reduced labor income taxes. Based on these estimates, increasing government spending on consumption by 1% of GDP would result in a 1.55% increase in GDP, and decreasing labor income taxes by 1% of GDP would result in a 0.23% increase in GDP. The magnitude of fiscal multipliers likely depends on where the economy is in the business cycle. As discussed above, during a recession fiscal stimulus is less likely to result in offsetting contractionary effects—such as rising interest rates, trade deficits, and inflation—resulting in a larger increase in economic activity from fiscal stimulus. Accordingly, another academic research article attempted to estimate fiscal multipliers depending on whether the economy was in an expansion or a recession, and found that the multiplier for government spending was between 0 and 0.5 during expansions and between 1.0 and 1.5 during recessions. Long-Term Considerations Regarding Fiscal Stimulus Persistently applying fiscal stimulus can negatively affect the economy through three main avenues. First, persistent large budget deficits can result in a rising debt-to-GDP ratio and lead to an unsustainable level of debt. Second, persistent fiscal stimulus—particularly during economic expansions—can limit long-term economic growth by crowding out private investment. Third, rising public debt will require a growing portion of the federal budget to be directed toward interest payments on the debt, potentially crowding out other, more worthwhile sources of government spending. Some economic research has suggested that relatively high public debt negatively impacts economic growth. For example, one academic research paper suggested that for developed countries, a 10-percentage-point increase in the debt-to-GDP ratio is associated with a 0.15- to 0.20-percentage-point decrease in per capita real GDP growth. Unsustainable Public Debt As noted, persistent fiscal stimulus can result in a rising debt-to-GDP ratio and lead to an unsustainable level of public debt. A rising debt-to-GDP ratio can be problematic if the perceived or real risk of the government defaulting on that debt begins to rise. As the perceived risk of default begins to increase, investors will demand higher interest rates to compensate themselves. The tipping point at which public debt becomes unsustainable is difficult to predict. A continually rising debt-to-GDP ratio is likely to lead to an unsustainable level of debt over time. The threshold at which a nation's debt becomes unsustainable depends on a number of factors, such as the denomination of the debt, political circumstances, and, potentially most importantly, underlying economic conditions. A change in these circumstances may shift a nation's debt to unsustainable without the underlying amount of debt changing at all. To date, it does not appear that the United States has an immediate concern with respect to unsustainability; however, the U.S. debt-to-GDP ratio is projected to continually rise under current policy. Decreased Business Investment Persistent fiscal stimulus, and the associated budget deficits, can decrease the size of the economy in the long term as a result of decreased investment in physical capital. As discussed previously, the government's deficit spending can result in higher interest rates, which generally lead to lower levels of business investment. Business investment—spending on physical capital such as factories, computers, software, and machines—is an important determinant of the long-term size of the economy. Physical capital investment allows businesses to produce more goods and services with the same amount of labor and raw materials. As such, government deficits that lead to lower levels of business investment can result in lower quantities of physical capital, and therefore may reduce the productive capacity of the economy in the long term. As discussed earlier, some of the increase in interest rates and decline in domestic investment resulting from fiscal stimulus will likely be offset by additional investment in the United States from abroad. The inflow of capital from abroad is beneficial, as it allows for additional investment in the United States economy. However, in exchange for these investment flows, the United States is now sending a portion of its national income to foreigners in the form of interest payments. With a larger portion of investment flows coming from abroad, rather than from within the United States, a larger portion of the U.S. national income will be sent abroad. Crowding Out Government Spending Rising public debt may also be of concern due to its associated interest payments. All else equal, an increase in the level of public debt will result in an increase in interest payments that the government must make each year. Rising interest payments may displace government spending on more worthwhile programs. In 2019, interest payments on the debt are projected to be about 1.8% of GDP, or about $382 billion. By 2029 interest payments on the debt are expected to increase significantly, rising to about 3.0% of GDP or about $921 billion. Withdrawing Fiscal Stimulus As the economy shifts from a recession and into an expansion, broader economic conditions will generally improve, whereby unemployment falls and wages and private spending increase. With improving economic conditions, policymakers may choose to begin withdrawing fiscal stimulus by decreasing the size of the deficit or potentially by applying contractionary fiscal policy and running a budget surplus. As discussed in the previous section, policymakers may choose to withdraw fiscal stimulus for a number of reasons. First, persistent fiscal stimulus when the economy is near full capacity can exacerbate the negative consequences of fiscal stimulus, such as decreasing investment, rising trade deficits, and accelerating inflation. Second, decreasing the size of the budget deficit slows the accumulation of public debt. The government can withdraw fiscal stimulus by increasing taxes, decreasing spending, or a combination of the two. When the government raises individual income taxes, for example, individuals have less disposable income and decrease their spending on goods and services in response. The decrease in spending reduces aggregate demand for goods and services, slowing economic growth temporarily. Alternatively, when the government reduces spending, it reduces aggregate demand in the economy, which again temporarily slows economic growth. As such, when the government reduces the deficit, regardless of the mix of fiscal policy choices used to do so, aggregate demand is expected to decrease in the near term. However, withdrawing fiscal stimulus is expected to result in lower interest rates and more investment; a depreciation of the U.S. dollar and a shrinking trade deficit; and a slowing inflation rate. These effects tend to spur additional economic activity, partly offsetting the decline resulting from withdrawing fiscal stimulus. Whether the decrease in aggregate demand is problematic for overall economic performance depends on the state of the overall economy at that time. Potential Offsetting Effects to Withdrawing Fiscal Stimulus Investment and Interest Rates Withdrawing fiscal stimulus is likely to put downward pressure on domestic interest rates, which encourages additional spending and investment, increasing economic activity. When the government decreases its budget deficit, the demand for loanable funds decreases because the government reduces the amount of those funds it is borrowing. The decrease in demand for loanable funds decreases the price to borrow those funds (i.e., interest rates decline). Declining interest rates encourage increased business investment into new capital projects and consumer spending into durable goods by reducing the cost of borrowing. Exchange Rates and the Trade Balance Withdrawing fiscal stimulus is also expected to result in a depreciation of the U.S. dollar and an improved trade balance with the rest of the world. Assuming the shrinking deficit causes a decline in U.S. interest rates relative to interest rates abroad, individuals in the United States and abroad would rather make investments outside of the United States to benefit from those higher interest rates. Individuals shifting their investments outside the United States must first exchange their U.S. dollars for foreign currency, which decreases the value of the U.S. dollar relative to foreign currencies. As the U.S. dollar depreciates, foreign goods and services become relatively more expensive for U.S. residents and U.S. goods and services become relatively less expensive for foreign individuals. This generally results in an improved trade balance as foreign demand for U.S. goods and services (exports) increases and domestic demand for foreign goods and services (imports) decreases. Inflation When fiscal stimulus is withdrawn, aggregate demand for goods and services in the economy also tends to shrink, which is expected to slow inflation. Economists generally view relatively low and stable inflation as beneficial for economic growth, because businesses and consumers are relatively certain about the future price of goods and can make efficient decisions with respect to investment and consumption over time. Fiscal Contraction Multipliers The ultimate impact on the economy of withdrawing fiscal stimulus depends on the relative magnitude of its effects on aggregate demand, interest rates and investment, exchange rates and the trade deficit, and inflation. The same fiscal multipliers discussed earlier in the " Fiscal Expansion Multiplier " section can be used to estimate the impact of withdrawing fiscal stimulus by simply reversing the sign for each multiplier. As shown in Table 1 , decreasing government spending on consumption by 1% of GDP is expected to reduce real GDP by 1.55% after the first year, compared to no change in fiscal policy. Alternatively, increasing labor income taxes by 1% of GDP is expected to reduce real GDP by 0.23% after the first year. Again, monetary policy can be used alongside fiscal policy to affect the overall impact on the economy. For example, the Federal Reserve could lower interest rates to spur aggregate demand as the federal government withdraws fiscal stimulus in an effort to offset the decline in aggregate demand resulting from the shrinking deficit. This could allow the government to withdraw fiscal stimulus without decreasing aggregate demand or economic activity. Fiscal Policy Stance As shown in Figure 1 , the federal government has generally been running a budget deficit for much of the past 30 years—save for two short periods in the 1960s and 1990s. This suggests that the federal government has been applying some level of fiscal stimulus to the economy for much of the past three decades, although the level of stimulus has increased and decreased over time. However, simply examining the overall budget deficit to judge the level of fiscal stimulus can be misleading, as the levels of federal spending and revenue differ over time automatically due to changes in the state of the economy, rather than deliberate choices made each year by Congress. During economic expansions, tax revenue tends to increase and spending tends to decrease automatically, as rising incomes and employment result in higher average incomes and therefore greater individual and corporate income tax revenues. Federal spending on income support programs, such as food stamps and unemployment insurance, tends to fall as fewer people need financial assistance and unemployment claims fall during economic expansions. The combination of rising tax revenue and falling federal spending tends to improve the government's budget deficit. The opposite is true during recessions, when federal spending rises and revenue shrinks. These cyclical fluctuations in revenue and spending are often referred to as automatic stabilizers. Therefore, when examining fiscal policy, it is often beneficial to estimate the budget deficit excluding these automatic stabilizers, referred to as the structural deficit , to get a sense of the affirmative fiscal policy decisions made each year by Congress. As shown in Figure 1 , budget deficits tend to increase during and shortly after recessions (denoted by grey bars) as policymakers attempt to buoy the economy by applying fiscal stimulus. This can be seen explicitly by viewing the structural deficit/surplus, as this only shows affirmative changes in fiscal policy made by Congress. The budget deficit then tends to shrink as the economy enters into recovery and fiscal stimulus is less necessary to support economic growth. However, in recent years, the federal budget has bucked this trend. After the structural deficit peaked in 2009 at roughly 7.5% of GDP, it began to decline through 2014, falling to about 2.0% of GDP. Beginning in 2016, in spite of relatively strong economic conditions, the structural deficit has started to rise again, nearing 4.0% of GDP in 2018. Given that the economy is arguably at or exceeding full employment currently, the increase in fiscal stimulus since 2016 is notable. As discussed earlier, expanding fiscal stimulus when the economy is not depressed can result in rising interest rates, a growing trade deficit, and higher inflation. As of publication of this report, interest rates and inflation do not appear to have been affected by the additional fiscal stimulus; interest rates are at historic lows and inflation shows no signs of acceleration. The trade deficit has been growing in recent years; however, it is not clear that this growth in the trade deficit is a result of increased fiscal stimulus.

Fiscal policy is the means by which the government adjusts its spending and revenue to influence the broader economy. By adjusting its level of spending and tax revenue, the government can affect the economy by either increasing or decreasing economic activity in the short term. For example, when the government runs a budget deficit, it is said to be engaging in fiscal stimulus, spurring economic activity, and when the government runs a budget surplus, it is said to be engaging in a fiscal contraction, slowing economic activity. The government can use fiscal stimulus to spur economic activity by increasing government spending, decreasing tax revenue, or a combination of the two. Increasing government spending tends to encourage economic activity either directly through purchasing additional goods and services from the private sector or indirectly by transferring funds to individuals who may then spend that money. Decreasing tax revenue tends to encourage economic activity indirectly by increasing individuals' disposable income, which tends to lead to those individuals consuming more goods and services. This sort of expansionary fiscal policy can be beneficial when the economy is in recession, as it lessens the negative impacts of a recession, such as elevated unemployment and stagnant wages. However, expansionary fiscal policy can result in rising interest rates, growing trade deficits, and accelerating inflation, particularly if applied during healthy economic expansions. These side effects from expansionary fiscal policy tend to partly offset its stimulative effects. The government can use contractionary fiscal policy to slow economic activity by decreasing government spending, increasing tax revenue, or a combination of the two. Decreasing government spending tends to slow economic activity as the government purchases fewer goods and services from the private sector. Increasing tax revenue tends to slow economic activity by decreasing individuals' disposable income, likely causing them to decrease spending on goods and services. As the economy exits a recession and begins to grow at a healthy pace, policymakers may choose to reduce fiscal stimulus to avoid some of the negative consequences of expansionary fiscal policy, such as rising interest rates, growing trade deficits, and accelerating inflation, or to manage the level of public debt. In recent history, the federal government has generally followed a pattern of increasing fiscal stimulus during a recession, then decreasing fiscal stimulus during the economic recovery. Prior to the "Great Recession" of 2007-2009 the federal budget deficit was about 1% of gross domestic product (GDP) in 2007. During the recession, the budget deficit grew to nearly 10% of GDP in part due to additional fiscal stimulus applied to the economy. The budget deficit began shrinking in 2010, falling to about 2% of GDP by 2015. In contrast to the typical pattern of fiscal policy, the budget deficit began growing again in 2016, rising to nearly 4% of GDP in 2018 despite relatively strong economic conditions. This change in fiscal policy is notable, as expanding fiscal stimulus when the economy is not depressed can result in rising interest rates, a growing trade deficit, and accelerating inflation. As of publication of this report, interest rates have not risen discernibly and are still near historic lows, and inflation rates show no sign of acceleration. The trade deficit has been growing in recent years; however, it is not clear that this growth in the trade deficit is a result of increased fiscal stimulus.

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Introduction: Major Issues for U.S.-Israel Relations Strong relations between the United States and Israel have led to bilateral cooperation in many areas. Matters of particular significance include the following: Israel's own capabilities for addressing threats, and its cooperation with the United States. Shared U.S.-Israel concerns about Iran, within the context of the U.S. exit from the 2015 international nuclear agreement, and growing tension involving Iran and Hezbollah at Israel's northern border with Syria and Lebanon. Israeli-Palestinian issues, including those involving Jerusalem, Hamas and the Gaza Strip, funding for Palestinians, and a possible Trump Administration peace plan. Israeli domestic political issues, including probable corruption-related indictments against Prime Minister Binyamin Netanyahu and closely contested elections that are scheduled for April 9, 2019. For background information and analysis on these and other topics, including aid, arms sales, and missile defense cooperation, see CRS Report RL33476, Israel: Background and U.S. Relations , by Jim Zanotti; and CRS Report RL33222, U.S. Foreign Aid to Israel , by Jeremy M. Sharp. How Israel Addresses Threats Israel relies on a number of strengths to manage potential threats to its security and existence. These strengths include robust military and homeland security capabilities, as well as close cooperation with the United States. Military Superiority and Homeland Security Measures Israel maintains conventional military superiority relative to its neighbors and the Palestinians. Shifts in regional order and evolving asymmetric threats during this decade have led Israel to update its efforts to project military strength, deter attack, and defend its population and borders. Israel appears to have reduced some unconventional threats via missile defense systems, reported cyber defense and warfare capabilities, and other heightened security measures. Israel has a robust homeland security system featuring sophisticated early warning practices and thorough border and airport security controls; most of the country's buildings have reinforced rooms or shelters engineered to withstand explosions. Israel also has proposed and partially constructed a national border fence network of steel barricades (accompanied at various points by watch towers, patrol roads, intelligence centers, and military brigades) designed to minimize militant infiltration, illegal immigration, and smuggling from Egypt, Syria, Lebanon, Jordan, and the Gaza Strip. Additionally, Israeli authorities have built a separation barrier in and around parts of the West Bank. Undeclared Nuclear Weapons Capability Israel is not a party to the Nuclear Nonproliferation Treaty (NPT) and maintains a policy of "nuclear opacity" or amimut . A 2017 report estimated that Israel possesses a nuclear arsenal of around 80-85 warheads. The United States has countenanced Israel's nuclear ambiguity since 1969, when Israeli Prime Minister Golda Meir and U.S. President Richard Nixon reportedly reached an accord whereby both sides agreed never to acknowledge Israel's nuclear arsenal in public. Israel might have nuclear weapons deployable via aircraft, submarine, and ground-based missiles. No other Middle Eastern country is generally thought to possess nuclear weapons. U.S. Cooperation Israeli officials closely consult with U.S. counterparts in an effort to influence U.S. decisionmaking on key regional issues, and U.S. law requires the executive branch to take certain actions to preserve Israel's "qualitative military edge," or QME. Additionally, a 10-year bilateral military aid memorandum of understanding (MOU)—signed in 2016—commits the United States to provide Israel $3.3 billion in Foreign Military Financing and to spend $500 million annually on joint missile defense programs from FY2019 to FY2028, subject to congressional appropriations. Israel's leaders and supporters routinely make the case that Israel's security and the broader stability of the region remain critically important for U.S. interests. They also argue that Israel is a valuable U.S. ally. The United States and Israel do not have a mutual defense treaty or agreement that provides formal U.S. security guarantees. Iran and the Region Iran remains of primary concern to Israeli officials largely because of (1) Iran's antipathy toward Israel, (2) Iran's broad regional influence, and (3) the probability that some constraints on Iran's nuclear program could loosen in the future. In recent years, Israel and Arab Gulf states have discreetly cultivated closer relations with one another in efforts to counter Iran. Iranian Nuclear Agreement and the U.S. Withdrawal Prime Minister Netanyahu has sought to influence U.S. decisions on the international agreement on Iran's nuclear program (known as the Joint Comprehensive Plan of Action, or JCPOA). He argued against the JCPOA when it was negotiated in 2015—including in a speech to a joint session of Congress—and welcomed President Trump's May 2018 withdrawal of the United States from the JCPOA and accompanying reimposition of U.S. sanctions on Iran's core economic sectors. A few days before President Trump's May announcement, Netanyahu presented information that Israeli intelligence operatives apparently seized in early 2018 from an Iranian archive. He used the information to question Iran's credibility and highlight its potential to parlay existing know-how into nuclear-weapons breakthroughs after the JCPOA expires. In his September 2018 speech before the U.N. General Assembly, Netanyahu claimed that Iran maintains a secret "atomic warehouse for storing massive amounts of equipment and materiel." An unnamed U.S. intelligence official was quoted as saying in response, "so far as anyone knows, there is nothing in [the facility Netanyahu identified] that would allow Iran to break out of the JCPOA any faster than it otherwise could." After Netanyahu publicly exposed the Iranian nuclear archive, some former Israeli officials speculated about what action Israel might consider taking against Iranian nuclear facilities if Iran abrogates the JCPOA and expands nuclear activities currently restricted under the agreement. However, Netanyahu had said in an interview that he was not seeking a military confrontation with Iran. Syria22 Israel and Iran have engaged in hostile action over Iran's presence in Syria. In the early years of the Syria conflict, Israel primarily employed air strikes to prevent Iranian weapons shipments destined for the Iran-backed group Hezbollah in Lebanon. Later, as the Syrian government regained control of large portions of the country with Iranian backing, Israeli leaders began pledging to prevent Iran from constructing and operating bases or advanced weapons manufacturing facilities in Syria. Since 2018, Israeli and Iranian forces have repeatedly targeted one another in and over Syrian- and Israeli-controlled areas. In January 2019, Prime Minister Netanyahu said that Israel had targeted Iranian and Hezbollah targets in Syria "hundreds of times." Limited Israeli strikes to enforce "redlines" against Iran-backed forces could expand into wider conflict, particularly if there is a miscalculation by one or both sides. U.S. involvement in Syria could be one factor in Israeli calculations on this issue. The U.S. base at Al Tanf in southern Syria has reportedly "served as a bulwark against Iran's efforts to create a land route for weapons from Iran to Lebanon." Israeli officials favor continued U.S. involvement in Syria, while also preparing for the possibility that they may need to take greater direct responsibility for countering Iran there. Russia Russia's advanced air defense systems in Syria could make it more difficult for Israel to operate there. Since 2015, Russia has operated an S-400 system at Russia's Khmeimim air base in Lattakia, a city on Syria's Mediterranean coast. To date, however, Russia does not appear to have acted militarily to thwart Israeli air strikes against Iranian or Syrian targets, and Israel and Russia maintain communications aimed at deconflicting their operations. In addition to the S-400 that it owns and operates, Russia delivered an S-300 air defense system for Syria's military to Khmeimim airbase in October 2018. The delivery followed Syria's downing of a Russian military surveillance plane in September 2018 under disputed circumstances, shortly after an Israeli operation in the vicinity. According to an Israeli satellite imagery analysis company, three launchers appeared to be operational as of February 2019. It is unclear to what extent Russia has transferred the S-300 to Syrian military control, and how this might affect future Israeli military action in Syria. An Israeli journalist wrote that "Israel has the knowledge, experience and equipment to evade the S-300, but the fact that additional batteries, manned by Russian personnel, are on the ground, will necessitate greater care [when carrying out future operations against Iran-aligned targets in Syria]." Since the September 2018 incident, Israeli air strikes appear to have decreased somewhat. Golan Heights On March 25, 2019, President Trump signed a proclamation stating that the United States recognizes the Golan Heights (hereinafter, the Golan) to be part of the State of Israel. The proclamation stated that "any possible future peace agreement in the region must account for Israel's need to protect itself from Syria and other regional threats" —presumably including threats from Iran and the Iran-backed Lebanese group Hezbollah. Israel gained control of the Golan from Syria during the 1967 Arab-Israeli war, and effectively annexed it unilaterally by applying Israeli law to the region in 1981 (see Figure 2 ). President Trump's proclamation changed long-standing U.S. policy on the Golan. Since 1967, successive U.S. Administrations supported the general international stance that the Golan is Syrian territory occupied by Israel, with its final status subject to negotiation. In reaction to the U.S. proclamation, others in the international community have insisted that the Golan's status has not changed. In Congress, Senate and House bills introduced in February 2019 ( S. 567 and H.R. 1372 ) support Israeli sovereignty claims to the Golan, and would treat the Golan as part of Israel in any existing or future law "relating to appropriations or foreign commerce." For decades after 1967, various Israeli leaders, reportedly including Prime Minister Netanyahu as late as 2011, had entered into indirect talks with Syria aimed at returning some portion of the Golan as part of a lasting peace agreement. However, the effect of civil war on Syria and the surrounding region, including an increase in Iran's presence, may have influenced Netanyahu to shift focus from negotiating with Syria on a "land for peace" basis to obtaining international support for Israel's claims of sovereignty. As part of the periodic conflict in Syria between Israel and Iran , some Iranian missiles have targeted Israeli positions in the Golan. The Syrian government has denounced the U.S. policy change as an illegal violation of Syrian sovereignty and territorial integrity, and insisted that Syria is determined to recover the Golan. Additionally, observers have argued that the policy change could unintentionally bolster Syrian President Bashar al Asad within Syria by rallying Syrian nationalistic sentiment in opposition to Israel's claims to the Golan and deflecting attention from Iran's activities inside Syria. Since 1974, the U.N. Disengagement Observer Force (UNDOF) has patrolled an area of the Golan Heights between the regions controlled by Israel and Syria, with about 880 troops from five countries stationed there as of January 2019. During that time, Israel's forces in the Golan have not faced serious military resistance to their continued deployment, despite some security threats and diplomatic challenges. Periodic resolutions by the U.N. General Assembly have criticized Israel's occupation as hindering regional peace and Israel's settlement and de facto annexation of the Golan as illegal. Hezbollah in Lebanon Hezbollah's forces and Israel's military have sporadically clashed near the Lebanese border for decades—with the antagonism at times contained in the border area, and at times escalating into broader conflict. Speculation persists about the potential for wider conflict and its regional implications. Israeli officials have sought to draw attention to Hezbollah's buildup of mostly Iran-supplied weapons—including reported upgrades to the range, precision, and power of its projectiles—and its alleged use of Lebanese civilian areas as strongholds. Ongoing tension between Israel and Iran over Iran's presence in Syria raises questions about the potential for Hezbollah's forces in Lebanon to open another front against Israel. After the September 2018 incident leading to Russia's installation of an S-300 system in Syria (discussed above), Iran reportedly began directly transferring weapons to Hezbollah in Lebanon while reducing Syria's use as a transshipment hub. One Israeli media account warned that Hezbollah's threat to Israel is increasing because of initiatives to build precision-weapons factories in Lebanon and to set up a military infrastructure in southern Syria. In late 2018 and early 2019, Israel's military undertook an effort—dubbed "Operation Northern Shield"—to seal six Hezbollah attack tunnels to prevent them from crossing into Israel. Israeli officials claim that they do not want another war, while at the same time taking measures aimed at constraining and deterring Hezbollah, including through consultation with the U.N. Interim Force in Lebanon (UNIFIL). Israeli-Palestinian Issues Recent Complicating Factors President Trump has expressed interest in brokering a final-status Israeli-Palestinian agreement, and his Administration has supposedly prepared a proposal to facilitate negotiations, but the Administration has repeatedly postponed releasing the proposal. Many factors may account for the delays, including recent U.S. actions regarding Jerusalem, tension in and around the Gaza Strip, reduced funding for the Palestinians, Israeli settlements in the West Bank, and political jockeying and domestic constraints among Israelis and Palestinians. The U.S. decision—announced in December 2017—to recognize Jerusalem as Israel's capital and move the U.S. embassy there has fed U.S.-Palestinian tensions. Israeli leaders generally celebrated the change, but Palestine Liberation Organization (PLO) Chairman and Palestinian Authority (PA) President Mahmoud Abbas strongly objected. Many other countries opposed President Trump's actions on Jerusalem, as reflected in action at the United Nations. Claiming U.S. bias favoring Israel, Palestinian leaders broke off high-level political contacts with the United States shortly after the December 2017 announcement and have made efforts to advance Palestinian national claims in international fora. However, the PA continues security coordination with Israel in the West Bank. U.S.-Palestinian tensions appear to have influenced Administration decisions to cut off various types of U.S. funding to the Palestinians, and arguably have dimmed prospects for restarting Israeli-Palestinian talks. In a September 2018 address before the U.N. General Assembly, PLO Chairman/PA President Abbas denounced Administration actions that he characterized as taking disputed Israeli-Palestinian issues—such as Jerusalem's status and Palestinian refugee claims—off the negotiating table. Funding for economic and humanitarian needs in the West Bank and Gaza could become even scarcer. In February 2019, Israel announced that it would withhold a portion of the tax revenue it collects for the PA because—pursuant to a law passed by the Knesset in 2018—Israel had determined that amount represented PLO/PA payments made on behalf of individuals allegedly involved in terrorist acts. In response, Abbas announced that the PA would completely reject monthly revenue transfers from Israel if it withheld any amount, even though the transfers comprise approximately 65% of the PA budget. For February, Israel withheld approximately $11 million from the $193 million due to the PA, with the PA rejecting the entire amount as a result. The PA is reportedly seeking temporary financial support from the private sector and local banks, and also asking the Arab League to follow through on its 2010 decision to provide $100 million per month as a "financial safety net" for the PA. At the end of January 2019, U.S. bilateral aid to the Palestinians—including nonlethal security assistance that Israel generally supports—ended completely due to the Anti-Terrorism Clarification Act (ATCA, P.L. 115-253 ), which became law on October 3, 2018. Two months after the law's enactment, PA Prime Minister Rami Hamdallah informed Secretary of State Michael Pompeo that the PA would not accept aid that subjected it to federal court jurisdiction. Apparently, U.S. aid will not resume unless Congress amends or repeals the ATCA, or the Administration channels the aid differently. Diplomatic Prospects and Concerns Assistant to the President and Senior Advisor Jared Kushner has stated that the Administration will publicly release a peace plan sometime after Israeli national elections, which are set to occur on April 9, 2019. According to Kushner, the peace plan contains detailed proposals on the various issues that divide Israel and the PLO. Many observers express skepticism about the prospect that these proposals can serve as a basis for the serious resumption of bilateral talks, but Kushner has reportedly said that the Administration is focusing on formulating "realistic solutions," and that "privately, people are more flexible." U.S. officials hope to surmount potential obstacles to the peace plan in the Israeli and Palestinian domestic arenas by obtaining political and economic support for the U.S. initiative from key Arab states in the region, including Saudi Arabia, the United Arab Emirates, Jordan, and Egypt. A number of Arab states share common interests in working behind the scenes with Israel to counter Iranian regional influence. While some diplomatic developments have fed speculation about warming Arab-Israeli ties, reports suggest that key Arab Gulf states remain reluctant to embrace more formal relations with Israel without a resolution of the Palestinian issue. Saudi Arabia's press agency responded to the U.S. recognition of Israel's claims to sovereignty in the Golan Heights by saying that it "will have significant negative effects on the peace process in the Middle East and the security and stability of the region." In a statement with implications both for domestic and international audiences, Prime Minister Netanyahu reportedly said that the March 2019 change in U.S. policy on the Golan proves that countries can retain territory captured in a defensive war. His statement prompted speculation over the possibility that Israeli leaders might consider annexing part of the West Bank and whether the situation in the Golan is sufficiently similar to invite comparison. Days before the April elections, Netanyahu asserted that if he were to lead the next government, he would apply Israeli law to West Bank settlements. April 2019 Elections and Other Domestic Issues The closely contested Israeli national elections—scheduled for April 9, 2019—and the subsequent government formation process will have significant implications for the country's leadership and future policies. Prime Minister Netanyahu faces a challenge from the centrist Blue and White party under the combined leadership of former top general Benny Gantz and former Finance Minister Yair Lapid. Some setbacks for Netanyahu during the campaign have included the attorney general's announcement of probable corruption-related indictments against Netanyahu, new media allegations of possible misconduct relating to Israel's procurement of German submarines, and questions about some individuals or groups possibly spreading rumors against Netanyahu's opponents via social media. Yet, some observers calculate that Netanyahu's Likud could possibly get fewer Knesset seats than Blue and White and still form the next coalition. For more information on the actors involved in the elections, see CRS Insight IN11068, Israel: April 2019 Elections and Probable Indictments Against Prime Minister Netanyahu , by Jim Zanotti and this report's Appendix . In July 2018, the Knesset passed a Basic Law defining Israel as the national homeland of the Jewish people. Some observers have expressed concern that the law might further undermine the place of Arabs in Israeli society, while others view its effect as mainly symbolic. In March 2019, Netanyahu said that Israel is a Jewish, democratic state with equal rights for all its citizens, and "the nation-state not of all its citizens, but only of the Jewish people," reviving domestic debate about the 2018 law and perhaps seeking support during the election campaign from sympathetic voter groups. Appendix. Major Israeli Political Parties and Their Leaders

Strong relations between the United States and Israel have led to bilateral cooperation in many areas. Matters of particular significance to U.S.-Israel relations include Israel's ability to address the threats it faces in its region. Shared U.S.-Israel concerns about Iran and its allies on the nuclear issue and in Syria and Lebanon. Israeli-Palestinian issues. Israeli domestic political issues, including elections scheduled for 2019. Israel relies on a number of strengths to manage potential threats to its security and existence. It maintains conventional military superiority relative to neighboring states and the Palestinians. It also takes measures to deter attack and defend its population and borders from evolving asymmetric threats such as rockets and missiles, cross-border tunneling, drones, and cyberattacks. Additionally, Israel has an undeclared but presumed nuclear weapons capability. Against a backdrop of strong bilateral cooperation, Israel's leaders and supporters routinely make the case that Israel's security and the broader stability of the region remain critically important for U.S. interests. A 10-year bilateral military aid memorandum of understanding (MOU)—signed in 2016—commits the United States to provide Israel $3.3 billion in Foreign Military Financing annually from FY2019 to FY2028, along with additional amounts from Defense Department accounts for missile defense. All of these amounts remain subject to congressional appropriations. Israeli officials seek to counter Iranian regional influence and prevent Iran from acquiring nuclear weapons. Prime Minister Binyamin Netanyahu released new Israeli intelligence on Iran's nuclear program in April 2018, days before President Trump announced the U.S. withdrawal from the 2015 international agreement that constrains Iran's nuclear activities. It is unclear whether Israel might take future military action in Iran if Iranian nuclear activities resume. Since 2018, Israel has conducted a number of military operations in Syria against Iran and its allies, including Lebanese Hezbollah. Israel and Iran also appear to be competing for military advantage over each other at the Israel-Lebanon border. Amid uncertainty in the area, in March 2019 President Trump recognized Israel's claim to sovereignty over the Golan Heights, changing long-standing U.S. policy that held—in line with U.N. Security Council Resolution 497 from 1981—the Golan was occupied Syrian territory whose final status was subject to Israel-Syria negotiation. The prospects for an Israeli-Palestinian peace process are complicated by many factors. Palestinian leaders cut off high-level political contacts with the Trump Administration after it recognized Jerusalem as Israel's capital in December 2017. U.S.-Palestinian tensions have since worsened amid U.S. cutoffs of funding to the Palestinians and diplomatic moves—including the May 2018 opening of the U.S. embassy to Israel in Jerusalem. Palestinian leaders interpreted these actions as prejudicing their claims to a capital in Jerusalem and to a just resolution of Palestinian refugee claims. Israeli Prime Minister Netanyahu has welcomed these U.S. actions. The Trump Administration has suggested that it will release a proposed peace plan after Israeli elections, which are scheduled for April 9, 2019. Speculation continues about how warming ties between Israel and Arab Gulf states may affect Israeli-Palestinian diplomacy, though Saudi Arabia said that the U.S. policy change on the Golan Heights would negatively affect the peace process. Bouts of tension and violence between Israel and Hamas in Gaza have continued—reportedly accompanied by indirect talks between the two parties that are being brokered by Egypt and aim for a long-term cease-fire. Domestically, Israel is preparing for the April 9 elections, which are closely contested. Former top general Benny Gantz is combining with former Finance Minister Yair Lapid to challenge Netanyahu, whom the attorney general has recommended be indicted for corruption in three separate cases. The elections and subsequent government formation process will have significant implications for Israel's future leadership and policies.

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Why Is This Issue Important to Congress? Infantry Brigade Combat Teams (IBCTs) constitute the Army's "light" ground forces and are an important part of the nation's ability to rapidly project forces overseas. The wars in Iraq and Afghanistan, as well as current thinking as to where and how future conflicts would be fought, suggest IBCTs are limited operationally by their lack of assigned transport and reconnaissance vehicles as well as firepower against hardened targets and armored vehicles. To address these limitations, the Army is undertaking three programs: the Ground Mobility Vehicle (GMV)/Infantry Squad Vehicle (ISV), formerly known as the Ultra-Light Combat Vehicle (ULCV); the Light Reconnaissance Vehicle (LRV); and the Mobile Protected Firepower (MPF) programs. These programs would be based on vehicles that are commercially available. This is in order to reduce costs and the time it takes to field combat vehicles associated with traditional developmental efforts. Congress may be concerned with the effectiveness of ground forces over the full spectrum of military operations. A number of past unsuccessful Army acquisition programs have served to heighten congressional oversight of Army programs, including nondevelopmental programs such as those currently being proposed for IBCTs. In addition to these primary concerns, how these new programs affect deployability and sustainability of IBCTs as well as affordability could be potential oversight issues for Congress. Background Brigade Combat Teams (BCTs) are the basic combined-arms formations of the Army. They are permanent, stand-alone, self-sufficient, and standardized tactical forces consisting of between 3,900 to 4,100 soldiers. There are three types of BCTs: Armored Brigade Combat Teams (ABCTs); Stryker Brigade Combat Teams (SBCTs); and Infantry Brigade Combat Teams (IBCTs). BCTs are found both in the Active Component and the U.S. Army National Guard (USARNG). In February 2017 the Army announced it would establish six Security Force Assistance Brigades (SFABs)—five in the Active Component and one in the Army National Guard (ARNG). SFABs are to be capable of conducting security force assistance (SFA) operations at the tactical (brigade and below) level. While not combat brigades per se, the Army plans for SFABs to be expanded, if the need arises, into fully operational ABCTs or IBCTs capable of conducting major combat operations. Types of IBCTs Light IBCTs Light IBCTs are primarily foot-mobile forces. Light IBCTs can move by foot, vehicle, or air (either air landed or by helicopter). While IBCTs have light- and medium-wheeled vehicles for transport, there are not enough vehicles to transport all or even a significant portion of the IBCT's infantry assets in a single movement. Airborne IBCTs Airborne IBCTs are specially trained and equipped to conduct parachute assaults. They are equipped with limited vehicular assets, and once they have conducted a parachute assault, they move by foot, vehicle, or helicopter, just like Light IBCTs. Air Assault IBCTs Air Assault IBCTs are specially trained and equipped to conduct helicopter assaults. What sets them apart from Light and Airborne IBCTs (which can also conduct helicopter assaults) is that they receive additional specialized training; the division to which these BCTs are assigned—the 101 st Airborne Division—has the primary mission and organic helicopter assets to conduct large-scale helicopter assaults. How IBCTs Are Employed4 The Army's Field Manual on Brigade Combat Teams describes how IBCTs are employed as follows: The role of the IBCT is to close with the enemy using fire and movement to destroy or capture enemy forces, or to repel enemy attacks by fire, close combat, and counterattack. Fire and movement is the concept of applying fires from all sources to suppress, neutralize, or destroy the enemy, and the tactical movement of combat forces in relation to the enemy (as components of maneuver applicable at all echelons). At the squad level, fire and movement entails a team placing suppressive fire on the enemy as another team moves against or around the enemy. The IBCT performs complementary missions to SBCTs and ABCTs. IBCT complementary missions include control of land areas, populations, and resources. The IBCT optimizes for the offense against conventional, hybrid, and irregular threats in severely restrictive terrain. The IBCT performs missions such as reducing fortified areas, infiltrating and seizing objectives in the enemy's rear, eliminating enemy force remnants in restricted terrain, securing key facilities and activities, and conducting stability in the wake of maneuvering forces. IBCTs easily configure for area defense and as the fixing force component of a mobile defense. The IBCT's lack of heavy combat vehicles reduces its logistic requirements. Not having heavy combat vehicles gives higher commanders greater flexibility when adapting various transportation modes to move or maneuver the IBCT. Operational Environment Chief of Staff of the Army General Mark A. Milley characterizes the operational environment confronting the Army as follows: I believe we are on the cusp of a fundamental change in the character of war. Technology, geopolitics and demographics are rapidly changing societies, economies, and the tools of warfare. They are also producing changes in why, how and where wars are fought—and who will fight them. The significantly increased speed and global reach of information (and misinformation) likewise will have unprecedented effects on forces and how they fight. For example, the proliferation of effective long-range radars, air defense systems, long-range precision weapons, electronic warfare, and cyber capabilities enables adversary states to threaten our partners and allies. Even if we do not fight the producers of these sophisticated weapons, warfare will become more lethal as they export this advanced equipment to their surrogates or customers. Crises involving such adversaries will unfold rapidly, compressing decision cycles and heightening the risks of miscalculation or escalation. Conflict will place a premium on speed of recognition, decision, assembly and action. Ambiguous actors, intense information wars and cutting-edge technologies will further confuse situational understanding and blur the distinctions between war and peace, combatant and noncombatant, friend and foe—perhaps even humans and machines. Warfare in the future will involve transporting, fighting and sustaining geographically dispersed Army, joint and multinational forces over long and contested distances, likely into an opposed environment and possibly against a technologically sophisticated and numerically superior enemy. All domains will be viciously contested, and both air and maritime superiority—which have been unquestioned American advantages for at least 75 years—will no longer be a given. Forces in theater should expect to operate under increased public scrutiny, persistent enemy surveillance, and massed precision long-range fires with area effects. Close combat on sensor-rich battlefields of the future will be faster, more violent and intensely lethal, unlike anything any of us have witnessed. And the majority of our operations will likely occur in complex, densely populated urban terrain. In relation to this operational environment, IBCTs are presented with the following challenges: In the past, light infantry of the 82 nd Airborne, 101 st or 10 th Mountain Division would either air drop by parachute, helicopter air assault, or air land at a friendly or secured airfield or land near one to seize it. However, Anti-Access Area Denial (A2AD) technology and weapons, like air defense systems and anti-armor, mines and improvised explosive devices (IEDs), have become both more effective and prevalent. These open the question of whether traditional insertion drop or landing zone is feasible any longer. It is increasingly likely that an "off set insertion" will be necessary with the ground force then moving by land to the objective or operating area. The concept itself is largely an upscaling of what U.S. and other nations' special operations, reconnaissance, and even some airborne units have been doing for some time: using light vehicles, including light armored vehicles that are inserted by airdrop, helicopter, or tactical transport air landing. Using the vehicles they are able to insert discretely where they are unlikely to be detected and then conduct their missions. IBCT Capability Gaps The Army describes IBCT critical capability gaps as The IBCT lacks the ability to decisively close with and destroy the enemy under restricted terrains such as mountains, littorals, jungles, subterranean areas, and urban areas to minimize excessive physical burdens imposed by organic material systems. The IBCT lacks the ability to maneuver and survive in close combat against hardened enemy fortifications, light armored vehicles, and dismounted personnel. IBCTs lack the support of a mobile protected firepower capability to apply immediate, lethal, long-range direct fires in the engagement of hardened enemy bunkers, light armored vehicles, and dismounted personnel in machine gun and sniper positions; with all-terrain mobility and scalable armor protection; capable of conducting operations in all environments. How Programs Address Capability Gaps In its current configuration, Army officials note that IBCTs "can get there fast with low logistics demand, and they can work in severely restricted terrain, but they lack mobility and protected firepower" to "enter a foreign territory, immediately overcome armed opposition and hold an area that enables further troops to enter, like an airfield." The Army's concept of operation for these vehicles is to increase ground tactical mobility in the IBCT; allow infantry squads and rifle companies to quickly move extended distances over difficult terrain to seize assault objectives; allow rapid deployment into contested areas while providing high mobility and flexibility upon arrival; and limit the impact on strategic mobility of the IBCT. In this regard, the GMV/ISV is intended to provide mobility to the rifle squad and company; the LRV to provide protection to the moving force by means of scouts, sensors, and a variety of medium-caliber weapons; and the MPF to provide the overall IBCT the capability to more effectively engage and destroy fortifications, bunkers, buildings, and light to medium armored vehicles. The Systems11 The GMV/ISV, LRV, and MPF are briefly described in the following sections based on each individual vehicle's requirements. Ground Mobility Vehicle (GMV)/Infantry Squad Vehicle (ISV) Payload: Nine soldiers/3,200 pounds capacity. Transportability: UH-60 sling load/CH-47 internal load; Air drop from C-130. Mobility: Provide mobility 75% cross-country; 10% primary roads; 10% secondary roads; 5% urban rubble environment. Protection: Provided by high mobility avoiding enemy contact and soldier Personal Protection Equipment (PPE). Lethality: Provide capability to host crew-served weapons assigned to the infantry squad. Command, Control, Communications, Computers, Intelligence, Reconnaissance, and Surveillance (C4ISR): No requirement for added communication equipment or Size, Weight, Power, and Cooling (SWaP-C) organic equipment of the infantry squad. Light Reconnaissance Vehicle (LRV) Transportability: CH-47 internal load (in combat configuration). Air drop from C-130. Range: Greater than 300 miles on internal fuel. Mobility : Provide mobility 75% cross-country; 10% primary roads; 10% secondary roads; 5% urban rubble environment. Lethality: Medium-caliber weapon system to provide precision "stand-off" lethality against small arms and offense against light armored vehicles. Protection: Protection from small arms. Capacity: Six scouts with combat equipment. Command, Control, Communications, Computers, Intelligence, Reconnaissance, and Surveillance (C4ISR): Ensure sufficient Size, Weight, Power, and Cooling (SWaP-C) to facilitate the integration of current and future communications organic to an IBCT. Support scout sensor package. Mobile Protected Firepower (MPF) R ange: 300 kilometer range; 24-hour operations "off the ramp" or on "arrival at drop zone (DZ)." Mobility: Capable of traversing steep hills, valleys typical in cross-country and urban terrain, and ford depths equal to that of other organic IBCT vehicles. Lethality: Ability to defeat defensive fortifications (bunkers), urban targets (behind the wall), and armored combat vehicles. Protection: Scalable armor to include underbelly protection. Communications Network: SWaP-C sufficient to support current and future communications organic to an IBCT. Programmatic Overview The following sections provide brief programmatic overviews of the vehicles. Figure 4 depicts the Department of Defense (DOD) Systems Acquisition Framework, which illustrates the various phases of systems development and acquisitions and is applicable to the procurement of these three systems. The Army's Acquisition Strategy The Army plans to acquire the vehicles as modified Non-Developmental Item (NDI) platforms. Because the Army adopted the NDI acquisition approach for all three vehicles, the Army can enter the programs at Acquisition Milestone C: Production and Deployment, and forgo the Engineering and Manufacturing Development Phase associated with developmental items (systems developed "from scratch") if so desired. Variations of these vehicles already exist commercially, and in order to meet Army requirements, they would require minor modifications. The Army chose this acquisition strategy because a survey of potential candidates suggested a number of existing vehicles—with minor modifications—could meet the Army's requirements. In the case of the MPF, which was less well-developed than the GMV, the MPF underwent an Analysis of Alternatives (AoA) as part of the Material Solution Analysis phase, which was completed September 7, 2017. Theoretically, adopting a NDI approach for all three vehicles could lead to a shorter acquisition time line and a less expensive overall acquisition. The NDI approach is not without risk, however, as the Technology Maturation and Risk Reduction Phase permits a more detailed examination of candidate systems, which can help identify and address requirement shortfalls earlier in the acquisition process (a less expensive solution as opposed to identifying and correcting problems later in a system's development). In all cases, a full and open competition is expected for all three vehicles. Mobile Protected Firepower (MPF) Becomes Part of the Next Generation Combat Vehicle (NGCV) Program In June 2018, the Army established the Next Generation Combat Vehicle (NGCV) program to replace the M-2 Bradley Infantry Fighting Vehicle (IFV), which has been in service since the early 1980s. In October 2018, Army leadership reportedly decided to add additional vehicle programs to what would be called the NGCV Program. Under the new NGCV Program, the following systems are planned for development: The Optionally Manned Fighting Vehicle (OMFV): the M-2 Bradley IFV replacement. The Armored Multi-Purpose Vehicle (AMPV): the M-113 vehicle replacement. Mobile Protected Firepower (MPF). Robotic Combat Vehicles (RCVs): three versions—Light, Medium, and Heavy. The Decisive Lethality Platform (DLP): the M-1 Abrams tank replacement. Previously, the MPF program was overseen by the Program Executive Office (PEO) Ground Combat Systems, but the NGCV program is overseen by the recently established Army Futures Command (AFC) NGCV Cross Functional Team (CFT). MPF will continue to be overseen by PEO Ground Combat Systems, but the NGCV CFT will determine operational requirements and acquisition schedule. GMV/ISV In March 2015, the Army changed the name of its Ultra-Light Combat Vehicle (ULCV) to the Ground Mobility Vehicle (GMV). The overall GMV Army Acquisition Objective (AAO) was 2,065 vehicles for the Army and 317 vehicles for U.S. Army Special Operations Command (USASOC). The specific near-term requirement is 295 vehicles for the five Airborne IBCTs and 317 vehicles for USASOC. The Army's FY2018 budget request modified the Army's original acquisition strategy for the GMV, essentially splitting it into two phases. In the first phase, the Army planned to procure GMVs for the five Airborne IBCTs through a U.S. Special Operations Command (USSOCOM) contract already in place for a similar vehicle (GMV 1.1) for USSOCOM forces. In this case, the Army planned to purchase the Flyer 72 vehicle from General Dynamics Ordnance and Tactical Systems. The Army contended that the limited buy of 295 GMV 1.1 vehicles for the five Airborne IBCTs was the quickest way to field this interim capability that has gone through USSOCOM-sponsored testing and shares the same repair parts, thereby reducing costs. The second phase of the GMV program would be to acquire 1,700 GMVs through a full and open competition once the Army has refined its requirements, which was intended to reduce the overall cost. Army officials noted the GMV 1.1 procurement cost will be higher, however, than the cost of the GMVs procured through full and open competition. The Army planned to spend $194.8 million for 718 vehicles from FY2018 to FY2022, with an expectation that a contract award would be made in FY2020. Phase II of the GMV Program—The Infantry Squad Vehicle (ISV)24 To equip other types of IBCTs, the Army established the Infantry Squad Vehicle (ISV) program. The ISV is planned to be a larger competitive program than the GMV program and is to have similar operational requirements as the GMV. ISV is planned to be fielded to Active and Reserve Components. The estimated total requirement is for 2,065 vehicles, with projected target production quantities for the next five fiscal years as follows: FY2020: 17 vehicles. FY2021: 118 vehicles. FY2022: 177 vehicles. FY2023: 177 vehicles. FY2024: 162 vehicles. The targeted ISV program acquisition timeline is as follows: Draft Request for Proposal (RFP): March 29, 2019. Industry Day: April 11, 2019. Final RFP Release: April 18, 2019. Prototype Contract Awards (up to three vendors): August 20, 2019. Prototype Vehicle Delivery (two vehicles up to three vendors): November 1, 2019. Production Contract Award: March 31, 2020. LRV Army officials were planning to use the Joint Light Tactical Vehicle (JLTV) to serve as the LRV on an interim basis. From a programmatic perspective, the Army refered to its interim LRV solution as the Joint Light Tactical Vehicle-Reconnaissance Vehicle (JLTV-RV). The JLTV, which is currently in production, could be equipped with additional firepower and sensors to serve in this role while the Army continues to refine its requirements for the LRV. The standard JLTV—at around 18,000 pounds and carrying only four soldiers—does not meet the Army's weight and crew requirements for the LRV as currently envisioned. The Army planned for the LRV to be fielded in IBCT Cavalry Squadrons and Infantry Battalion Scout Platoons. The Army's decision to not request funds for JLTV - RV in its FY2020 budget request calls into question the future of this effort. MPF In October 2016 the Army began its Analysis of Alternatives for MPF candidates. MPF would also be a modified Non-Developmental Item (NDI) platform. The Engineering Manufacturing Development (EMD) phase is planned to begin in FY2019 and last through FY2022, with an anticipated Milestone C—beginning of Production and Deployment—by FY2022. Reports suggested the Army had a requirement for about 500 MPF vehicles with an average unit manufacturing cost of $6 million to $7 million per vehicle, which suggests a total program cost of approximately $3 billion to $3.5 billion. The Marine Corps is reportedly monitoring MPF development for possible use in its Marine tank battalions, which could raise the overall MPF procurement to around 600 vehicles. On November 17, 2017, the Army released a request for proposal (RFP) for MPF. The RFP reportedly noted the Army wished to procure 504 MPF vehicles at a unit manufacturing cost target of $6.4 million per vehicle. MPF Prototype Contracts Awarded34 In December 2018, the Army reportedly awarded contracts to BAE Systems and General Dynamics Land Systems (GDLS) to build MPF prototypes. Both companies were reportedly awarded contracts not to exceed $376 million to build 12 prototypes for testing before one company is selected to deliver up to 28 low-rate initial production (LRIP) vehicles. BAE was said to have proposed a modified version of the Army's old M-8 Armored Gun System, and GDLS integrated an M-1 Abrams turret onto the British Ajax Scout Vehicle hull into what is called the Griffin III. Budgetary Considerations FY2020 Budget Request GMV/ISV The FY2020 Army GMV budget request for $37 million in procurement funding supports the procurement of 69 GMVs for the U.S. Army Special Operations Command and 15 ISVs for the Army. The FY2020 GMV Research, Development, Test & Evaluation (RDT&E) request is for $3 million to support operational testing. LRV The Army did not submit a FY2020 budget request for the LRV program. From a programmatic perspective, the Army refers to its interim LRV solution as the Joint Light Tactical Vehicle-Reconnaissance Vehicle (JLTV-RV). MPF The FY2020 Army MPF budget request for $310.152 million in RDT&E funding supports the continuation of rapid prototyping efforts and the completion of 24 prototypes. Potential Issues for Congress Future of the Light Reconnaissance Vehicle (LRV) Effort As previously noted, the Army did not submit a FY2020 budget request for LRV funding. Absent any formal announcement, it is unknown if the Army has decided to cancel this effort, initiate a new effort, or if it is putting this effort on hold to free up funding for other priorities. Another potential issue is if this effort has been cancelled, how the Army will address the operational need for reconnaissance in the IBCTs that the LRV was intended to satisfy. Security Force Assistance Brigades (SFABs) and ISV, LRV, and MPF Requirements As previously noted, in February 2017 the Army announced it would establish six Security Force Assistance Brigades (SFABs)—five in the Active Component and one in the Army National Guard (ARNG). While not combat brigades per se, the Army plans for SFABs to be expanded, if the need arises, into fully operational ABCTs or IBCTs capable of conducting major combat operations. If the Army plans to expand some of its SFABs into IBCTs it could have an impact on the number of ISVs, LRVs, and MPF systems needed to fully equip these units. While these numbers would likely be modest, it might be of interest to Congress to know how many additional vehicles would be required. Since they would not be part of the SFAB's organic equipment and only needed in the event of Army expansion, how and when will these vehicles be procured and how will they be maintained so that they would be available when needed? GMV/ISV, LRV, and MPF Fielding Plans Apart from fielding GMVs to Airborne IBCTs, little is known about the Army's overall fielding plan for these vehicles. Would active IBCTs receive these vehicles first, followed by National Guard IBCTs, or would both components receive the vehicles concurrently? When would these vehicles begin arriving at units, and when is the overall fielding anticipated to conclude? Does the Army plan to field these vehicles to prepositioned stocks in addition to units? What are some of the challenges associated with fielding three different vehicles with different production and delivery dates?

Infantry Brigade Combat Teams (IBCTs) constitute the Army's "light" ground forces and are an important part of the nation's ability to project forces overseas. The wars in Iraq and Afghanistan, as well as current thinking by Army leadership as to where and how future conflicts would be fought, suggest IBCTs are limited operationally by their lack of assigned transport and reconnaissance vehicles as well as firepower against hardened targets and armored vehicles. There are three types of IBCTs: Light, Airborne, and Air Assault. Light IBCTs are primarily foot-mobile forces. Light IBCTs can move by foot, by vehicle, or by air (either air landed or by helicopter). Airborne IBCTs are specially trained and equipped to conduct parachute assaults. Air Assault IBCTs are specially trained and equipped to conduct helicopter assaults. Currently, the Army contends IBCTs face a number of limitations The IBCT lacks the ability to decisively close with and destroy the enemy under restricted terrains such as mountains, littorals, jungles, subterranean areas, and urban areas to minimize excessive physical burdens imposed by organic material systems. The IBCT lacks the ability to maneuver and survive in close combat against hardened enemy fortifications, light armored vehicles, and dismounted personnel. IBCTs lack the support of a mobile protected firepower capability to apply immediate, lethal, long-range direct fires in the engagement of hardened enemy bunkers, light armored vehicles, and dismounted personnel in machine gun and sniper positions; with all-terrain mobility and scalable armor protection; capable of conducting operations in all environments. To address these limitations, the Army is undertaking three programs: the Ground Mobility Vehicle (GMV)/Infantry Squad Vehicle (ISV), formerly known as the Ultra-Light Combat Vehicle (ULCV); the Light Reconnaissance Vehicle (LRV); and the Mobile Protected Firepower (MPF) programs. These programs would be based on vehicles that are commercially available. This approach serves to reduce costs and the time it takes to field combat vehicles. The GMV/ISV is intended to provide mobility to the rifle squad and company. The LRV would provide protection to the moving force by means of scouts, sensors, and a variety of medium-caliber weapons, and the MPF would offer the IBCT the capability to engage and destroy fortifications, bunkers, buildings, and light-to-medium armored vehicles more effectively. The FY2020 Army GMV budget request for $37 million in procurement funding supports the procurement of 69 GMVs for the U.S. Army Special Operations Command and 15 ISVs for the Army. The FY2020 GMV Research, Development, Test & Evaluation (RDT&E) request is for $3 million to support operational testing. The Army did not submit a FY2020 budget request for the LRV program. The FY2020 Army MPF budget request for $310.152 million in RDT&E funding supports the continuation of rapid prototyping efforts and the completion of 24 prototypes. Potential issues for Congress include the future of the LRV effort; Security Force Assistance Brigades (SFABs) and GMV/ISV, LRV, and MPF requirements; and GMV/ISV, LRV, and MPF fielding plans.

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Introduction U.S. insurers and Congress face new policy issues and questions related to the opportunities and risks presented by the growth in the international insurance market and trade in insurance products. Insurance is often seen as a localized product and U.S. insurance regulation has addressed this through a state-centric regulatory system. The McCarran-Ferguson Act, passed by Congress in 1945, gives primacy to the individual states, and every state has its own insurance regulator and state laws governing insurance. Although the risks of loss and the regulation may be local, the business of insurance, as with many financial services, has an increasingly substantial international component as companies look to grow and diversify. The international aspects of insurance have spurred the creation of a variety of entities and measures, both domestic and foreign, to facilitate the trade and regulation of insurance services. Financial services have been addressed in a number of U.S. trade agreements going back to the North American Free Trade Agreement (NAFTA) in 1994. The International Association of Insurance Supervisors (IAIS) was created more than 20 years ago, largely under the impetus of the U.S. National Association of Insurance Commissioners (NAIC), to promote cooperation and exchange of information among insurance supervisors, including development of regulatory standards. The 2007-2009 financial crisis sparked further international developments, with heads of state of the G-20 nations creating the Financial Stability Board (FSB). The postcrisis 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) altered the U.S. insurance regulatory system, particularly as it relates to international issues. With the states continuing as the primary insurance regulators, following Dodd-Frank, the Federal Reserve exercised holding company oversight over insurers who owned a bank subsidiary or who were designated for enhanced supervision (popularly known as systemically important financial institutions or SIFIs) by the new Financial Stability Oversight Council (FSOC). The FSOC includes a presidentially appointed, independent voting member with insurance expertise as well as a state regulator as a nonvoting member. The Federal Reserve, already a major actor in efforts at the FSB and the Basel Committee on Banking Supervision, thus became a significant insurance supervisor and joined the IAIS shortly thereafter. Dodd-Frank also created a new Federal Insurance Office (FIO). The FIO is not a federal insurance regulator, but is tasked with representing the United States in international fora and, along with the United States Trade Representative (USTR), can negotiate international covered agreements relating to insurance prudential measures. The FIO also became a member of the IAIS and is participating significantly in IAIS efforts to create insurance capital standards. The new federal involvement in insurance issues, both domestic and international, has created frictions both among the federal entities and between the states and the federal entities, and has been a subject of both congressional hearings and proposed legislation. This report discusses trade in insurance services and summarizes the various international entities and agreements affecting the regulation of and trade in insurance. It then addresses particular issues and controversies in greater depth, including the concluded U.S.-EU covered agreement, pending U.S.-UK covered agreement, and issues relating to international insurance standards. It includes an Appendix addressing legislation in the 115 th Congress. International Insurance Trade In 2017, total U.S. services accounted for $798 billion of U.S. exports and $542 billion of U.S. imports, creating a surplus of $255 billion. In financial services generally, the United States runs a substantial trade surplus, exporting $110 billion and importing $29 billion. In contrast, the United States imported nearly $51 billion in insurance services and exported $18 billion in 2017, mostly due to firms' reliance on foreign reinsurance. This deficit has dropped from its peak in 2009, but U.S. insurance services trade has been consistently in deficit for many years (see Figure 1 ). Global performance by insurance brokers and agencies is concentrated, with Europe, North America, and North Asia accounting for 88.6% of total written premiums. Overall, the North American and European domestic insurance markets are highly competitive and there are fewer suppliers and less competition in the Asia-Pacific region. A third of U.S. insurance services exports are with Asia-Pacific, with Japan accounting for 14% of total U.S. insurance exports in 2017 (see Figure 2 ). Bermuda and the United Kingdom each account for another 15% of U.S. international insurance exports. Industry analysts note that although the current level of trade is relatively low for industry segments such as property, casualty, and direct insurance, it is rising as companies seek new markets for growth and risk diversification. The property casualty market declined from 2013 to 2018, in part due to intensifying natural disasters; however, moving forward, that market is expected to grow due to demand in emerging markets. Insurance in U.S. Free Trade Agreements Services, including financial and insurance services, are traded internationally in accordance with trade agreements negotiated by the USTR on behalf of the United States, similar to trade in goods. As a member of the World Trade Organization (WTO), the United States helped lead the conclusion of negotiations on the General Agreement on Trade in Services (GATS) in 1994, thus creating the first and only multilateral framework of principles and rules for government policies and regulations affecting trade in services among the 164 WTO countries. The GATS provides the foundational floor on which rules in other agreements on services, including U.S. free trade agreements (FTAs), are based. Core GATS principles include most-favored nation (MFN), transparency, and national treatment. As part of the GATS negotiations, WTO members also agreed to binding market access commitments on a positive list basis in which each member specified the sectors covered by its commitments. For insurance services, the United States submitted its schedule of market access and national treatment commitments, as well as exceptions, under GATS to allow foreign companies to compete in the United States in accordance with the U.S. state-based system. The GATS Financial S ervices Annex applies to " all insurance and insurance-related services, and all banking and other financial services (excluding insurance) ." The Annex defines insurance services as follows: (i.) Direct insurance (including co-insurance): (A.) life (B.) non-life (ii.) Reinsurance and retrocession; (iii.) Insurance intermediation, such as brokerage and agency; (iv.) Services auxiliary to insurance, such as consultancy, actuarial, risk assessment and claim settlement services. The annex excludes "services supplied in the exe rcise of governmental authority," such as central banks, Social Security, or public pension plans. In the U.S. Schedule of Specific Commitments, the United States lists market access and national treatment limitations that constrain foreign companies' access in line with state laws. These include clarifying which states have no mechanism for licensing initial entry of non-U.S. insurance companies except under certain circumstances and which states require U.S. citizenship for boards of directors. Furthermore, the GATS and U.S. FTAs explicitly protect prudential financial regulation . The prudential exception within the GATS allows members to take " measures for prudential reasons, including for the protection of investors, depositors, policy holders or persons to whom a fiduciary duty is owed by a financial service supplier, or to ensure the integrity and stability of the financial system ," even if those measures do not comply with the agreement. Most U.S. FTAs contain a chapter on financial services that builds on the commitments under GATS ("WTO-plus"). Like GATS, these chapters exclude government-provided public services. In addition to market access, national treatment, and MFN obligations, FTAs include WTO-plus obligations, such as increased transparency by providing interested persons from one party the opportunity to comment on proposed regulations of another party; allowing foreign providers to supply new financial services if domestic companies are permitted to do so; and providing access to public payment and clearing systems. Each FTA chapter defines the specific financial and insurance services covered and incorporates relevant provisions in other FTA chapters, such as Investment and Cross-Border Services. The Proposed U.S.-Mexico-Canada Agreement On November 30, 2018, President Trump and the leaders of Canada and Mexico signed the United States-Mexico-Canada Trade Agreement (USMCA) to update and revise the North American Free Trade Agreement (NAFTA). Still subject to congressional approval, the proposed USMCA contains several differences from NAFTA and is seen as representing the Trump Administration's approach to trade agreements. The proposed agreement has some similarities and differences from the proposed Trans-Pacific Partnership (TPP), which was negotiated under the Obama Administration and from which the United States withdrew in 2017. Given that the TPP also included both Mexico and Canada, many observers saw it as a template for the NAFTA renegotiations on certain issues. Like the TPP, the financial services chapter in the proposed USMCA reflects the growing trade in insurance and is an example of extensive and enforceable "WTO-plus" commitments. Compared with NAFTA, the proposed agreement clarifies the coverage of insurance services and contains a specific new provision on expedited availability of insurance services and transparency requirements designed to ensure the use of good regulatory practices to better enable U.S. firms to do business in those markets. In contrast to NAFTA, the proposed USMCA would apply both national treatment and market access obligations to cross-border supply of insurance services. The USMCA provisions on cross-border data flows are stronger than similar provisions in recent U.S. FTAs. They would, for example, prohibit the use of data or computing localization requirements for financial services. Canada would have one year to comply with the ban, and it would need to remove existing localization requirements that have been a trade barrier for U.S. firms seeking to do business in Canada. Many provisions in the USMCA Digital Trade chapter are relevant to the insurance industry, such as permitting electronic signatures, protecting source code and algorithms, promoting cybersecurity, and allowing cross-border data flows. By contrast, some changes in the investor-state dispute settlement system (ISDS) provide a narrower scope than in TPP or NAFTA, and ISDS would apply only to certain U.S. or Mexican covered investments, excluding Canada completely. Changes in the state-to-state dispute settlement system also may limit its effectiveness for the insurance sector in certain situations. These changes have raised concerns among insurance companies. Similar to other trade agreements, the proposed USMCA would establish a Committee on Financial Services and provide for consultations between the parties on ongoing implementation and other issues of interest. Covered Agreements In comparison to trade agreements, a covered agreement is a relatively new form of an international agreement, established along with the FIO in Title V of the Dodd-Frank Act. The statute defines a covered agreement as a type of international insurance or reinsurance agreement for recognition of prudential measures that the FIO and the USTR negotiate on a bilateral or multilateral basis. FIO has no regulatory authority over the insurance industry, which is generally regulated by the individual states. This is a significant contrast to, for example, federal financial regulators, such as the Federal Reserve or the Securities and Exchange Commission (SEC), that might enter into international regulatory agreements at the Basel Committee on Banking Supervision or the International Organization of Securities Commissions, respectively. After such agreements are reached, the Federal Reserve or SEC would generally then implement the agreements under its regulatory authority using the federal rulemaking process. Although the FIO lacks regulatory authority, some state laws may be preempted if the FIO director determines that a state measure (1) is inconsistent with a covered agreement and (2) results in less favorable treatment for foreign insurers. The statute limits the preemption with the following provision: (j) Savings Provisions. — Nothing in this section shall— (1) preempt— (A) any State insurance measure that governs any insurer's rates, premiums, underwriting, or sales practices; (B) any State coverage requirements for insurance; (C) the application of the antitrust laws of any State to the business of insurance; or (D) any State insurance measure governing the capital or solvency of an insurer, except to the extent that such State insurance measure results in less favorable treatment of a non-United State insurer than a United States insurer. Further strictures are placed on the FIO determination, including notice to the states involved and to congressional committees; public notice and comment in the Federal Register ; and the specific application of the Administrative Procedure Act, including de novo determination by courts in a judicial review. Although there is no legal precedent interpreting the covered agreement statute, it appears that these provisions would narrow the breadth of any covered agreement, particularly compared with other international agreements reached by federal financial regulators. International agreements have been undertaken without direct congressional direction under agencies' existing regulatory authorities. These authorities are then implemented through the regulatory rulemaking process, which may, in some cases, preempt state laws and regulations. Although the FIO and the USTR must consult with Congress on covered agreement negotiations, the statute does not require specific authorization or approval from Congress for a covered agreement. It does, however, require a 90-day layover period. Covered Agreements and Trade Agreements: Key Differences Although the goals of a covered agreement and aspects of trade agreements may be similar—market access and regulatory compatibility—the role of Congress is different in each instance. Congress has direct constitutional authority over foreign commerce, while Congress has given itself a consultative role in insurance negotiations through the Dodd-Frank Act. The U.S. Constitution assigns express authority over foreign trade to Congress. Article I, Section 8, of the Constitution gives Congress the power to "regulate commerce with foreign nations" and to "lay and collect taxes, duties, imposts, and excises." U.S. trade agreements such as the North American Free Trade Agreement (NAFTA), WTO agreements, and bilateral FTAs have been approved by majority vote of each house rather than by two-thirds vote of the Senate—that is, they have been treated as congressional-executive agreements rather than as treaties. This practice contrasts with the covered agreements, defined by Dodd-Frank (see above), which require congressional notification and a 90-day layover. The layover time could give Congress time to act on the agreement if Congress chooses, but congressional action is not required for a covered agreement to take effect. In further contrast, as mentioned previously, international agreements entered into by federal financial regulators, such as the Basel Capital accords in banking, have no specific congressional notification requirements, but must be implemented through the rulemaking process. Trade Promotion Authority U.S. bilateral, regional, and free trade agreements are conducted under the auspices of Trade Promotion Authority (TPA). TPA is the time-limited authority that Congress uses to set U.S. trade negotiating objectives, establish notification and consultation requirements, and allow implementing bills for certain reciprocal trade agreements to be considered under expedited procedures, provided certain statutory requirements are met. As noted above, the Dodd-Frank Act requires that the FIO or the Treasury Secretary and the USTR notify and consult with Congress before and during negotiations on a covered agreement. In addition, it requires the submission of the agreement and a layover period of 90 days, but does not require congressional approval. By contrast, legislation implementing FTAs must be approved by Congress. Under TPA, the President must fulfill notification and consultative requirements in order to begin negotiations and during negotiations. Once the negotiations are concluded, the President must notify Congress 90 days prior to signing the agreement. After the agreement is signed, there are additional reporting requirements to disclose texts and release the U.S. International Trade Commission's economic assessment of the agreement. The introduction of implementing legislation sets off a 90-legislative-day maximum period of time for congressional consideration, and the legislation is accompanied by additional reports. If these notification and consultation procedures are not met to the satisfaction of Congress, procedures are available to remove expedited treatment from the implementing legislation. State Role As discussed above, the FIO and the USTR jointly negotiate covered agreements, with the states having a consultative role set in the statute. In international trade agreements the USTR is the lead U.S. negotiator, with representatives from executive branch agencies participating to provide expertise. In addition to consultations within the executive branch under an interagency process, USTR formally consults with state governments and regulators through the Intergovernmental Policy Advisory Committee on Trade (IGPAC) as part of the USTR advisory committee system for trade negotiations. USTR's Office of Intergovernmental Affairs and Public Engagement (IAPE) manages the advisory committees and provides outreach to official state points of contact, governors, legislatures, and associations on all trade issues of interest to states. The USTR cannot make commitments on behalf of U.S. states in trade negotiations. This can be a source of frustration for negotiating partners who seek market openings at the state level. As part of trade negotiations, USTR may try to persuade individual states to make regulatory changes, but USTR is limited to what state regulators voluntarily consent to do. In general, state laws and state insurance regulations are explicitly exempted from trade negotiations. For example, in the proposed USMCA agreement, the United States listed measures for which the FTA obligations would not apply, including "All existing non-conforming measures of all states of the United States, the District of Columbia, and Puerto Rico." In contrast, as explained above, in the context of a covered agreement, FIO and USTR may make limited commitments that result in preempting some state laws and regulations. Enforcing Trade Agreements and Covered Agreements In general, international trade agreements are binding agreements. If a party to a trade agreement believes another party has adopted a law, regulation, or practice that violates the commitments under the trade agreement, the party may initiate dispute settlement proceedings under the agreement's dispute settlement provisions, which may differ for each agreement. Each party to a trade agreement has an obligation to comply with dispute resolution rulings or potentially face withdrawal of certain benefits under the agreement. Dodd-Frank does not specify how disagreements might be resolved in covered agreements, thus each covered agreement would need to clarify the dispute resolution process. Regulatory Cooperation As discussed, U.S. FTAs include market access commitments and rules and disciplines governing financial services measures, such as nondiscrimination and transparency obligations. Although FTAs customarily establish a Financial Services Committee composed of each party's regulators to oversee implementation of the agreement and provide a forum for communication, U.S. FTAs to date exclude regulatory cooperation commitments for the financial services sector, though this is subject to change in future trade agreements. On October 16, 2018, the Trump Administration notified Congress, under Trade Promotion Authority (TPA), of its intent to enter trade agreement negotiations with the European Union (EU), its largest overall trade and investment partner. The negotiating objectives published by USTR include to "expand competitive market opportunities for U.S. financial service suppliers to obtain fairer and more open conditions of financial services trade" and "improve transparency and predictability in the EU's financial services regulatory procedures, and ensure that the EU's financial regulatory measures are administered in an equitable manner." The EU member states are currently discussing the scope of the EU negotiating mandate, and U.S.-EU preparatory talks have been ongoing. In prior trade agreement negotiations between the two sides, the EU sought to include regulatory cooperation issues that could have addressed some of the same matters as the recent U.S.-EU covered agreement (see below). Some Members of Congress supported this position, whereas U.S. financial regulators opposed the inclusion at that time. During the prior negotiations, the United States and the EU agreed to establish the Joint U.S.-EU Financial Regulatory Forum, which has met regularly. U.S. participants include representatives of the Treasury Department, Federal Reserve, Commodity Futures Trading Commission (CFTC), Federal Deposit Insurance Corporation (FDIC), SEC, and Office of the Comptroller of the Currency (OCC). The forum meetings include discussions of financial regulatory reforms, agency priorities, assessments of the cross-border impact of regulation, and cooperation efforts on specific financial issues. U.S.-EU Covered Agreement On September 22, 2017, the United States and European Union signed the first bilateral insurance covered agreement. The covered agreement had been submitted to the House Committees on Financial Services and Ways and Means and the Senate Committees on Banking, Housing, and Urban Affairs and Finance on January 13, 2017. As noted above, a 90-day layover period is mandated in statute to allow Congress to review the agreement. The House Financial Services Committee Subcommittee on Housing and Insurance and the Senate Committee on Banking, Housing, and Urban Affairs each held a hearing on the agreement, but no legislative action affecting the agreement occurred. To address concerns among U.S. insurance firms that their market access to the EU would become limited due to changes in EU regulatory policy, in November 2015, the Obama Administration notified Congress regarding plans to begin negotiations with the EU on a covered agreement. Expressed goals for the negotiations included (1) achieving recognition of the U.S. regulatory system by the EU, particularly through an "equivalency" determination by the EU that would allow U.S. insurers and reinsurers to operate throughout the EU without increased regulatory burdens, and (2) obtaining uniform treatment of EU-based reinsurers operating in the United States, particularly with respect to collateral requirements. The issue of equivalency for U.S. regulation is a relatively new one, as Solvency II only came into effect at the beginning of 2016 (see " The European Union, Solvency II, and Equivalency " below), whereas the question of reinsurance collateral has been a concern of the EU for many years (see " Reinsurance Collateral " below). The covered agreement negotiations also sought to facilitate the exchange of confidential information among supervisors across borders. According to the USTR and Treasury, the bilateral agreement allows U.S. and EU insurers to rely on their home country regulators for worldwide prudential insurance group supervision when operating in either market; eliminates collateral and local presence requirements for reinsurers meeting certain solvency and market conduct conditions; and encourages information sharing between insurance supervisors. The proposal sets time lines for each side to make the necessary changes and allows either side to not apply the agreement if the other side falls short on full implementation. Unlike the goals expressed to Congress when negotiations began, the agreement does not explicitly call for equivalency recognition of the U.S. insurance regulatory system by the EU. However, the agreement's provisions on group supervision would seem to meet the same goal of reducing the regulatory burden on U.S. insurers operating inside the EU. The proposal goes beyond a previous state-level proposal on reinsurance collateral requirements put forth by the NAIC and adopted by many states, and allows for the possibility of federal preemption if states are not in compliance. Several U.S. industry groups welcomed the agreement, including the American Insurance Association (AIA), the Reinsurance Association of America, and the American Council of Life Insurers (ACLI) . The AIA's senior vice president and general counsel noted that, "when negotiations began, U.S. insurance and reinsurance groups were facing growing obstacles to their ability to do business in Europe, but this agreement removes those barriers—affirming not only each other's regulatory systems, but also their commitments to non-discriminatory treatment and open, reciprocal, competitive insurance markets." State regulators and state lawmakers , respectively represented by the NAIC and National Council of Insurance Legislators (NCOIL), expressed concern with the agreement due to the limited state involvement in the negotiation process and the potential federal preemption of state laws and regulations. NCOIL expressed disappointment with the final signing, stating "this agreement is an intrusion by both the federal government and international regulatory authorities into the U.S. state based regulation of insurance regulation." Some insurers also question the utility of the agreement, with the president of the National Association of Mutual Insurance Companies (NAMIC) seeing ambiguity that "will result in confusion and potentially endless negotiations with Europe on insurance regulation." As mentioned, the agreement includes a review after an initial implementation period, at which time either the United States or EU may pull out of the agreement. Reinsurance Collateral The covered agreement aims to address EU concerns regarding U.S. state regulatory requirements that reinsurance issued by non-U.S. or alien reinsurers must be backed by collateral deposited in the United States. In the past, this requirement was generally for a 100% collateral deposit. Non-U.S. reinsurers long resisted this requirement, pointing out, among other arguments, that U.S. reinsurers do not have any collateral requirements in many foreign countries and that the current regulations do not recognize when an alien reinsurer cedes some of the risk back to a U.S. reinsurer. Formerly, the NAIC and the individual states declined to reduce collateral requirements, citing fears of unpaid claims from non-U.S. reinsurers and an inability to collect judgments in courts overseas. This stance, however, has changed in recent years. In 2010, an NAIC Task Force approved recommendations to reduce required collateral based on the financial strength of the reinsurer involved and recognition of the insurer's domiciliary regulator as a qualified jurisdiction. The NAIC, in November 2011, adopted this proposal as a model law and accompanying model regulation. To take effect, however, these changes must be made to state law and regulation by the individual state legislatures and insurance regulators. The reinsurance models are part of the NAIC accreditation standards, and all states are expected to adopt them by 2019. According to information provided to CRS by the NAIC, as of December 2018, 49 states have adopted the model law and 42 have adopted the accompanying regulation. To date, 29 reinsurers have been approved by the states as certified reinsurers for reduction in collateral requirements. To receive the reduced collateral requirements, the reinsurer's home jurisdiction must also be reviewed and listed on the NAIC List of Qualified Jurisdictions. As of January 2019, seven jurisdictions have been approved. The state actions addressing reinsurance collateral requirements, however, have not fully met concerns of foreign insurers regarding the issue. Non-U.S. reinsurers reportedly would like a single standard across the United States that would eliminate, not just reduce, collateral requirements. This desire was a significant part of the EU's expressed motivation to enter into covered agreement negotiations. A Council of the EU representative indicated that "an agreement with the U.S. will greatly facilitate trade in reinsurance and related activities" and would "enable us, for instance, to recognize each other's prudential rules and help supervisors exchange information." The European Union, Solvency II, and Equivalency The covered agreement also aims to assist U.S. insurers concerned with potential regulatory burdens in relation to EU market requirements that went into effect in 2016. The European Union's Solvency II is part of a project aimed at transforming the EU into a single market for financial services, including insurance. In some ways, Solvency II is purely an internal EU project designed to more closely harmonize laws among the EU countries. However, as part of the Solvency II project, new equivalency determinations of foreign jurisdictions are to be made by the EU. An equivalency determination would allow insurers from a foreign jurisdiction to operate throughout the EU as do EU insurers. If the U.S. system of state-centered supervision of insurers were not judged to be "equivalent" to the EU insurance supervision, U.S. insurers could face more difficulty in operating in EU markets. Past suggestions have been made that an EU regulatory change might serve as "a useful tool in international trade negotiations as it could help improve access for European reinsurers to foreign markets," such as the United States. A June 6, 2014, letter from the European Commission to FIO and the NAIC drew an explicit connection between an equivalency designation applying to the United States and the U.S. removal of reinsurance capital requirements that the states place on non-U.S. reinsurers. Solvency II came into effect in the EU at the beginning of 2016. The EU has granted provisional equivalence to the United States along with five other countries and equivalence to three countries. The grant of provisional U.S. equivalence, however, applies only to capital requirements of EU insurers with U.S. operations, and U.S. insurers had reported experiencing difficulties with their operation in EU countries prior to the signing of the covered agreement. The U.S.-UK Covered Agreement Following the 2016 referendum on the United Kingdom remaining in the European Union (popularly known as Brexit ), the UK is scheduled to leave the EU by March 29, 2019. The future status and terms of the UK withdrawal from the EU is highly uncertain. Withdrawal from the EU may leave the UK outside the scope of any existing EU international agreements, including the U.S.-EU covered agreement. Thus, insurance trade between the United States and the UK could be negatively affected. As noted, the UK is an important market for U.S. firms, accounting for more than half of U.S. insurance exports in 2017. The United States and UK negotiated a separate covered agreement to address the potential disruption to insurance trade under Brexit. Announced on December 11, 2018, the substantive provisions of the U.S.-UK agreement mirror those in the U.S.-EU covered agreement—reinsurance capital and local presence requirements are to be eliminated and home country regulation is to be recognized for worldwide group supervision. According to the USTR and Treasury Department, the bilateral agreement aims to provide "regulatory certainty and market continuity" for U.S. and UK firms operating in the two markets. The Administration submitted the final text to Congress on December 11, 2018, starting the 90-day layover period for Congress to review the agreement prior to signature. The agreement implicitly recognizes the uncertainty regarding Brexit and will not come into effect until both parties provide notification that their internal procedures have been completed with the UK specifically taking account "of its obligations arising in respect of any agreement between the EU and the UK pursuant to Article 50 of the Treaty on European Union." The U.S.-UK covered agreement has been welcomed by most insurance stakeholders for addressing the uncertainty surrounding Brexit. For example, although the NAIC continues to have "concerns with the covered agreement mechanism, [the NAIC does] not object to its use in this instance to replicate consistent treatment for the UK." In addition to the covered agreement, on October 16, 2018, the Administration formally notified Congress of its intent to enter into negotiations of a bilateral U.S.-UK free trade agreement. Whether an agreement would include financial services regulatory cooperation is unclear, and the United States and the UK would not be able to start formal trade negotiations until the UK officially leaves the EU. Future Covered Agreements The U.S.-EU and U.S.-UK covered agreements as negotiated apply only to the jurisdictions that are party to the respective agreements. The United States, however, engages in a significant amount of trade in insurance services with other countries. Depending on what changes might be made to state insurance laws, reinsurers from other countries such as Bermuda or Japan could continue to face collateral requirements when offering products in the United States while competing with EU reinsurers free from such requirements. Two primary policy approaches are being considered to address concerns regarding an uneven playing field between European and non-European reinsurers. It would be possible to negotiate additional covered agreements with non-European jurisdictions, as was done with the UK. In addition to the negotiation of new covered agreements, state laws enacted in response to the U.S.-EU covered agreement might themselves remove reinsurance collateral requirements for all or some non-EU jurisdictions. The NAIC is in the process of adopting an updated model law regarding reinsurance collateral, which would do this for a subset of "qualified jurisdictions" including Japan, Bermuda, and Switzerland. International Insurance Entities Outside of international trade negotiations and agreements, two separate but interrelated entities have the most significant impact on international insurance issues in the United States: the Financial Stability Board and the International Association of Insurance Supervisors. The Financial Stability Board The FSB was established in April 2009 by G-20 nations to help strengthen the global financial system following the 2008 financial crisis. The FSB's functions include assessing vulnerabilities to the global financial system; coordinating with financial authorities of member nations; and recommending measures to protect and strengthen the global financial system. The FSB's members comprise financial regulatory agencies of G-20 nations. U.S. FSB members are the Department of the Treasury, the Federal Reserve, and the SEC; no insurance-focused representative from the United States is included. The FSB's recommendations and decisions are not legally binding on any of its member nations. Rather, the FSB "operates by moral suasion and peer pressure, in order to set internationally agreed policies and minimum standards that its members commit to implementing at national level." The International Association of Insurance Supervisors The IAIS, created in 1994, is the international standard-setting body, establishing a variety of guidance documents and conducting educational efforts for the insurance sector. Its mission is "to promote effective and globally consistent supervision of the insurance industry." The IAIS is primarily made up of insurance regulators worldwide with most jurisdictions having membership. U.S. members include all the individual states, the NAIC, the Federal Reserve, and the Federal Insurance Office. FIO and the Federal Reserve became IAIS members only after the passage of the Dodd-Frank Act. These U.S. members serve on many IAIS committees and working groups and have held various committee positions, past and present. An NAIC representative serves as chair of the IAIS Policy Development Committee, which plays a central role in drafting IAIS-proposed standards; the FIO director previously served as chair of this committee's prior incarnation, the IAIS Financial Stability and Technical Committee. The NAIC coordinates individual state participation in IAIS committees and working groups. According to the NAIC, three NAIC members serve on the IAIS Executive Committee, including one as vice chair; three serve on the Policy Development Committee; and three serve on the Macroprudential Committee. The NAIC's 56 members have 15 votes in the IAIS general meetings, with the NAIC designating which of its members may exercise their votes. Figure 3 provides a graphical representation of the relationships between international entities and their U.S. members. International Insurance Standards and Designations As part of its monitoring of global financial stability, the FSB has designated a number of financial institutions as globally systemically important. An FSB designation is meant to indicate that the failure of an individual institution could have a negative impact on the global financial system. Initially, the designation focused on global systemically important banks (G-SIBs) , but it also encompasses global systemically important insurers (G-SIIs), and nonbank noninsurer global systemically important financial institutions (NBNI G-SIFIs) , such as large asset managers, broker-dealers, and hedge funds. Designated institutions are expected to meet higher qualitative and quantitative regulatory and capital standards to help ensure their stability during a crisis. Although the FSB designations may be similar in intent to the designations done under the FSOC in the United States, FSB designations are a separate process with somewhat different criteria. In 2016, the FSB designated nine G-SIIs, including three U.S. insurers (AIG, MetLife, and Prudential Financial). The FSB also had requested that the IAIS develop capital standards and other regulatory measures to apply to G-SIIs as well as Internationally Active Insurance Groups (IAIGs), a wider set of insurers that fall short of the G-SII designation. In 2017, the FSB did not publish a new G-SII list, allowing the 2016 list to continue to be in effect. In 2018, the FSB decided not to identify G-SIIs, and it may suspend or discontinue the identification of G-SIIs depending on a new IAIS "holistic framework" to address systemic risk based on specific activities rather than individual firm designations. In addition to the standards addressing systemic risk, the IAIS is developing a general Common Framework for the Supervision of Internationally Active Insurance Groups (ComFrame). ComFrame encompasses a range of supervisory standards, particularly capital standards for IAIGs. The ComFrame process dates to 2010; currently, a public comment period has ended for a draft of the overall framework and a "2.0" version of specific insurance capital standards, with additional consultations continuing and formal adoption scheduled at the end of 2019. Implementation of International Standards In general, actions undertaken by international bodies, such as the FSB's designations of G-SIIs or adoption of capital standards by the IAIS, have no immediate effect on the regulatory system within the United States. To be implemented, such standards must be adopted by regulators in the United States or enacted into law if regulators do not already have sufficient legal authority to adopt the standards. In many cases, it is expected that members of such international bodies will adopt the agreed-to standards. For example, the Basel Committee on Bank Supervision (BCBS) charter includes among the members' responsibilities that they commit to "implement and apply BCBS standards in their domestic jurisdictions within the pre-defined timeframe established by the Committee." In some situations, the translation from international standard to national implementation may be relatively straightforward because the agencies agreeing to the international standards are the same agencies that have the authority to implement the standards at home. The mix of federal and state authorities over insurance in the United States, however, has the potential to complicate the adoption of international standards, such as the IAIS's capital standards that are under development. In the case of insurance, the U.S. representation at the IAIS includes (1) the NAIC, which collectively represents the U.S. state regulators, but has no regulatory authority of its own; (2) the 56 different states and territories, which collectively regulate the entire U.S. insurance market, but individually oversee only individual states and territories; (3) the Federal Reserve, which has holding company oversight only over designated systemically significant insurers and insurers with depository subsidiaries; and (4) the FIO, which has authority to monitor and report but no specific regulatory authority. Thus, it is possible for a situation to develop where some part of the U.S. representation at the IAIS may agree to particular policies or standards without agreement by the entity having authority to actually implement the policies or standards that are being agreed to. Moral Suasion and Market Pressures Although international standards may not be self-executing, nations may still face pressures to implement these standards. For example, the International Monetary Fund performs a Financial Sector Assessment Program (FSAP) of many countries every five years. In the latest FSAPs from 2010 and 2015, the judgments and recommendations offered regarding the U.S. insurance regulatory system compared U.S. laws and regulations to core principles adopted by the IAIS. Although U.S. regulators generally accept the IAIS core principles, the FSAP does note that state regulators specifically "disagree with a few of the ratings ascribed to certain" core principles and the states "do not believe that each of the proposed regulatory reforms recommended in the Report is warranted, or would necessarily result in more effective supervision." Pressure may also derive from internationally active market participants, including both domestic and foreign firms. Companies operating in different jurisdictions incur costs adapting to different regulatory environments. To minimize these costs, companies may pressure jurisdictions to adopt similar rules. Even if one country's rules might be more favorable to the company seen in the abstract, it may still be more efficient for a company if all the countries adopt slightly less favorable, but substantially similar, rules. Thus, for example, a U.S. company operating in multiple countries might favor adoption of U.S. regulations similar to international standards to simplify business operations, even if it finds the U.S. regulations generally preferable. Specific Policy Concerns with International Standards Those concerned about potential international insurance standards often raise the possibility that these standards may be "bank-like" and thus inappropriate for application to insurers. A primary concern in this regard is the treatment of financial groups. In banking regulation, a group holding company is expected, if not legally required, to provide financial assistance to subsidiaries if necessary. In addition, safety and soundness regulations may be applied at a group-wide level. A somewhat similar focus on the group-wide level is also found in the EU's Solvency II and in possible future IAIS standards. Within U.S. insurance regulation, however, state regulators in the United States historically have focused on the individual legal entities and on ensuring that the specific subsidiaries have sufficient capital to fulfill the promises inherent in the contracts made with policyholders. Since the financial crisis, the U.S. regulators have increased oversight at the overall group level, but the possible movement of capital between subsidiaries remains an issue. The NAIC has indicated specifically that "it is critical that the free flow of capital (i.e., assets) across a group should not jeopardize the financial strength of any insurer in the group." A group-wide approach that facilitates capital movement among subsidiaries could potentially improve financial stability as a whole if it prevents a large financial firm from becoming insolvent in the short run. It also could provide protection for individual policyholders if it results in additional resources being made available to pay immediate claims. Potential movement of capital within groups, however, could also potentially reduce financial stability if it were to cause customers to doubt the payment of future claims and thus promote panic or contagion. Free movement of capital across subsidiaries could also harm policyholders in the future if it results in insufficient capital to pay such claims. Congressional Outlook The 116 th Congress faces an immediate issue regarding the U.S.-UK covered agreement. This agreement is currently in its statutory 90-day layover period (which began December 11, 2018) before it can take effect. Congress could enact legislation directly affecting the agreement, conduct hearings or other oversight mechanisms, or allow the covered agreement to take effect without direct action. The U.S.-UK covered agreement may not be the only international insurance issue before this Congress. With expected continued growth in the international insurance market and differences in regulatory approaches, the frictions between U.S. and foreign regulators as well as between state and federal regulators seem likely to continue. Congress may choose to address these issues in multiple ways including, for example, amending Dodd-Frank and the statutory role of FIO and the USTR in international insurance negotiations; legislating an increased role for states in U.S. representation to international insurance regulatory entities; endorsing international insurance standards and legislating their adoption by states; encouraging additional covered agreements to address the countries not covered by the current ones; or encouraging the inclusion of insurance services as part of negotiations of potential free trade agreements. Appendix. Legislation in the 115th Congress The following summarizes legislation addressing international insurance issues in the 115 th Congress. Legislation is ordered according to the stage to which it advanced in the legislative process. Economic Growth, Regulatory Relief, and Consumer Protection Act ( P.L. 115-174 / S. 2155 ) S. 2155 was introduced by Senator Michael Crapo and 19 cosponsors on November 16, 2017. The bill, covering a broad range of financial services provisions largely dealing with noninsurance issues, was marked up and reported on a vote of 16-7 by the Senate Committee on Banking, Housing, and Urban Affairs in December 2017. A new section was added during the Senate committee markup with language similar to S. 1360 (discussed below). S. 2155 passed the Senate by a vote of 67-31 on March 14, 2018. The House passed S. 2155 without amendment on May 22, 2018, and the President signed the bill into P.L. 115-174 on May 24, 2018. Section 211 of P.L. 115-174 finds that the Treasury, Federal Reserve, and FIO director shall support transparency in international insurance fora and shall "achieve consensus positions with State insurance regulators through the [NAIC]" when taking positions in international fora. It creates an "Insurance Policy Advisory Committee on International Capital Standards and Other Insurance Issues" at the Federal Reserve made up of 21 members with expertise on various aspects of insurance. The Federal Reserve and the Department of the Treasury are to complete an annual report and to provide testimony on the ongoing discussions at the IAIS through 2022, and the Federal Reserve and FIO are to complete a study and report, along with the opportunity for public comment and review by the Government Accountability Office (GAO), on the impact of international capital standards or other proposals prior to agreeing to such standards. Unlike S. 1360 , however, the enacted law does not have specific requirements on the final text of any international capital standard. After signing S. 2155 , the President released a statement indicating that the congressional directions in the findings contravene the President's "exclusive constitutional authority to determine the time, scope, and objectives of international negotiations" but that the President will "give careful and respectful consideration to the preferences expressed by the Congress in section 211(a) and will consult with State officials as appropriate." International Insurance Standards Act ( H.R. 4537 / S. 488 , Title XIV) Representative Sean Duffy, along with seven cosponsors, introduced H.R. 4537 on December 4, 2017. (A substantially similar bill, H.R. 3762 , was previously introduced and addressed in an October 24, 2017, hearing by the House Financial Services' Subcommittee on Housing and Insurance.) H.R. 4537 was marked up and ordered reported on a vote of 56-4 by the House Committee on Financial Services on December 12-13, 2017. It was reported ( H.Rept. 115-804 ) on July 3, 2018. The House considered a further amended version on July 10, 2018, and passed it under suspension of the rule by a voice vote. H.R. 4537 was not taken up by the Senate in the 115 th Congress. S. 488 originally was introduced by Senator Pat Toomey as the Encouraging Employee Ownership Act, increasing the threshold for disclosure relating to compensatory benefit plans. After Senate passage on September 11, 2017, it was taken up in the House and amended with a number of different provisions, mostly focusing on securities regulation. Title XIV of the amended version of S. 488 , however, was nearly identical to H.R. 4537 as it passed the House. The House-passed version of S. 488 was not taken up by the Senate in the 115 th Congress. H.R. 4537 as passed by the House and S. 488 as passed by the House would have instituted a number of requirements relating to international insurance standards and insurance covered agreements. U.S. federal representatives in international fora would have been directed not to agree to any proposal that does not recognize the U.S. system as satisfying that proposal. Such representatives would have been required to consult and coordinate with the state insurance regulators and with Congress prior to and during negotiations and to submit a report to Congress prior to entering into an agreement. With regard to future covered agreements, the bill would have required U.S. negotiators to provide congressional access to negotiating texts and to "closely consult and coordinate with State insurance commissioners." Future covered agreements were to be submitted to Congress for possible disapproval under "fast track" legislative provisions. The Congressional Budget Office's cost estimate on H.R. 4537 as reported from committee found that, Any budgetary effects of enacting H.R. 4537 would depend, in part, on how often the United States negotiates international insurance agreements and how frequently the negotiators must consult and coordinate with state insurance commissioners. CBO has no basis for predicting that frequency but expects that the cost of such consultations would be less than $500,000 per year. International Insurance Capital Standards Accountability Act of 2017 ( S. 1360 ) S. 1360 was introduced by Senator Dean Heller with cosponsor Senator Jon Tester on June 14, 2017, and referred to the Senate Committee on Banking, Housing, and Urban Affairs. Similar language to S. 1360 was added to P.L. 115-174 / S. 2155 as discussed above. S. 1360 would have created an "Insurance Policy Advisory Committee on International Capital Standards and Other Insurance Issues" at the Federal Reserve made up of 11 members with expertise on various aspects of insurance. It would have required both an annual report and testimony from the Federal Reserve and the Department of the Treasury on the ongoing discussions at the IAIS through 2020. The Federal Reserve and FIO would have been required to complete a study and report, along with the opportunity for public comment and review by GAO, on the impact of international capital standards or other proposals prior to agreeing to such standards. Any final text of an international capital standard would have been required to be published in the Federal Register for comment and could not have been inconsistent with either state or Federal Reserve capital standards for insurers. International Insurance Standards Act of 2017 ( H.R. 3762 ) H.R. 3762 was introduced by Representative Sean Duffy with cosponsor Representative Denny Heck on September 13, 2017. It was addressed in an October 24, 2017, hearing by the House Financial Services' Subcommittee on Housing and Insurance, but it was not the subject of further committee action. The sponsor introduced an identically titled and substantially similar bill, H.R. 4537 , which was ordered reported by the House Committee on Financial Services on December 13, 2017. See the above section on H.R. 4537 for more information on the bill. Federal Insurance Office Reform Act of 2017 ( H.R. 3861 ) H.R. 3861 was introduced by Representative Sean Duffy with cosponsor Representative Denny Heck on September 28, 2017. It was addressed in an October 24, 2017, hearing by the House Financial Services' Subcommittee on Housing and Insurance, but it was not the subject of further action. H.R. 3861 would have amended the Dodd-Frank Act provisions creating the Federal Insurance Office, generally limiting the focus and size of FIO. It would have placed FIO specifically within the Office of International Affairs and narrowed its function in international issues to representing the Treasury rather than all of the United States. It also would have required FIO to reach a consensus with the states on international matters. The bill would have removed FIO's authority to collect and analyze information from insurers, including its subpoena power, and to issue reports with this information. Under the bill, the authority to preempt state laws pursuant to covered agreements would have rested with the Secretary of the Treasury, and FIO would have been limited to five employees.

The growth of the international insurance market and trade in insurance products and services has created opportunities and new policy issues for U.S. insurers, Congress, and the U.S. financial system. Insurance regulation is centered on the states, with the federal government having a limited role. Although the risks of loss and the regulation may be local, the business of insurance, as with many financial services, has an increasingly substantial international component as companies and investors look to grow and diversify. The 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act The 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank; P.L. 111-203) enhanced the federal role in insurance markets through several provisions, including the Financial Stability Oversight Council's (FSOC's) ability to designate insurers as systemically important financial institutions (SIFIs); Federal Reserve oversight of SIFIs and insurers with depository affiliates; and the creation of a Federal Insurance Office (FIO) inside the Department of the Treasury. Alongside FIO, Dodd-Frank defined a new class of international insurance agreements called covered agreements for recognition of prudential measures which the FIO and the United States Trade Representative (USTR) may negotiate with foreign entities. Although not a regulator, FIO has the authority to monitor the insurance industry and limited power to preempt state laws in conjunction with covered agreements. Dodd-Frank requires congressional consultations and a 90-day layover period for covered agreements, but such agreements do not require congressional approval. International Insurance Stakeholders and Concerns The international response to the financial crisis included the creation of a Financial Stability Board (FSB), largely made up of various countries' financial regulators, and increasing the focus of the International Association of Insurance Supervisors (IAIS) on creating regulatory standards, especially relating to insurer capital levels. The Federal Reserve and the FIO have assumed roles in the IAIS, whereas previously the individual states and the U.S. National Association of Insurance Commissioners (NAIC) had been the only U.S. members. Any agreements reached under the FSB or IAIS would have no legal impact in the United States until adopted in regulation by federal or state regulators or enacted into federal or state statute. Congress has little direct role in international regulatory cooperation agreements such as those reached at the FSB or IAIS, but past hearings and proposed legislation has addressed these issues. The federal involvement in insurance issues has created frictions both among the federal entities and between the states and the federal entities, and it has been a subject of congressional hearings and legislation. The first covered agreement, between the United States and the European Union (EU), went into effect on September 22, 2017. The agreement was largely rejected by the states and the NAIC, with the insurance industry split in its support, or lack thereof, for the agreement. Treasury and USTR announced a second covered agreement, with the United Kingdom (UK), on December 11, 2018. Congressional Outlook The recently negotiated U.S.-UK covered agreement is currently in the 90-day layover period giving the 116th Congress the opportunity to conduct oversight or pass legislation affecting the agreement. Past Congresses have been interested in revisiting the Dodd-Frank authorities that created covered agreements and the current Congress may consider similar legislation. The potential impact of international organizations and standards on the U.S. insurance markets and the potential for new trade agreements may also be of congressional concern.

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Introduction The Social Security Act of 1935 established a federal old-age pension financed with employee-employer payroll taxes. Since then, Congress has amended the Social Security program for multiple purposes, including to expand coverage, change the minimum age for retirement benefits, provide an automatic cost-of-living adjustment to benefits, and address concerns about solvency of the Social Security Trust Funds. This report traces the major decisions affecting the Social Security program, from the earliest enacting legislation through the most recent congressional session. It provides a summary of the provisions and voting records for each bill, focusing on amendments to Old-Age, Survivors and Disability Insurance (OASDI). (OASDI is the formal name for Social Security.) For an overview of the Social Security program, see CRS Report R42035, Social Security Primer . Table 1 lists major Social Security legislation from 1935 to 2018. Chamber Votes P.L. 271—74th Congress, Enactment of the Social Security Act The Social Security Act became law on August 14, 1935, when President Franklin Roosevelt signed H.R. 7260. Title II of the act created a compulsory national old-age benefits program, covering nearly all workers in commerce and industry and providing monthly pensions for insured workers aged 65 or older. A benefit weighted toward lower-paid workers was to be based on cumulative wages and was to be payable beginning in 1942 to persons aged 65 or older who had paid Social Security taxes for at least five years. The benefit was to be withheld from otherwise qualified persons in any month in which they did any work. Under Title VIII of the act, a payroll tax of 1%, each, on employees and employers, payable on earnings up to $3,000 each year, was to be imposed on covered jobs as of January 1, 1937, and was scheduled to rise in steps to 3% each by 1949. Besides old-age benefits, the act provided for a system of federal-state unemployment compensation funded with employer payroll taxes, and for grants to states to help fund assistance payments to certain categories of needy persons (i.e., the aged, the blind, and children under 16 who had been deprived of parental support), child welfare services, and maternal and child health services. When the act was debated in Congress, prominent Republicans in the House and Senate made attempts to delete the provisions creating the old-age pension system. They said they preferred to rely solely on the assistance (i.e., charity/welfare) approach to help the aged. They argued that the payroll tax/insurance mechanism of the old-age benefits provisions might be unconstitutional and that it would impose a heavy tax burden on businesses that would retard economic development. Members of the minority stated, in the Ways and Means Committee's report to the House, that the old-age benefits program (Title II) and the method by which the money was to be raised to pay for the program (Title VIII) established a "bureaucracy in the field of insurance in competition with private business." They contended further that the program would "destroy old-age retirement systems set up by private industries, which in most instances provide more liberal benefits than are contemplated under Title II." Although some party members tried to remove the old-age benefits provisions, the majority of Republicans in both chambers nevertheless did vote for the final Social Security bill. During congressional debate, Democrats generally supported the proposed old-age benefits program, and the vast majority of Democrats voted for the final bill. House Action Debate on the Social Security bill started in the House on April 11 and lasted until April 19, 1935. Approximately 50 amendments were offered, but none passed. According to Edwin Witte, a key player in the development of the Social Security Act, House leaders passed the word that they wanted all amendments defeated. Four particularly significant votes were Representative Monaghan's amendment proposing a revised "Townsend plan" and Representative Connery's amendment proposing the Lundeen plan, both of which (described below) called for a more generous social insurance system; Representative Treadway's motion to recommit H.R. 7260 to delete the old-age benefits program and its related taxes; and the vote on final passage of the bill. On April 18, 1935, Representative Monaghan (D-MT) offered an amendment, introduced in its original form by Representative Groarty (D-CA) and referred to as the Townsend plan, which required the federal government to pay a $200-a-month pension to everyone 60 years of age or older, to be financed by a 2% tax on "all financial" transactions (essentially a sales tax). (For more details on the Townsend plan, see discussion of the 1939 amendments below.) Representative Monaghan's amendment, although less costly than the original Townsend plan, was rejected by a vote of 56 to 206. On April 18, 1935, Representative Connery (D-MA) offered an amendment that contained the provisions of a bill sponsored by Representative Lundeen (Farmer-Laborite-MN). The Lundeen bill, which was approved 7-6 by the House Labor Committee, called for the "establishment of a system of social insurance to compensate all workers and farmers, 18 years of age or older, in all industries, occupations, and professions, who are unemployed through no fault of their own.... " Representative Lundeen's plan offered higher benefits than the bill reported out of the Committee on Ways and Means, and it tied benefits to the cost of living. Under the Lundeen proposal, a more generous social insurance program was to be extended to all workers and farmers unable to work because of illness, old age, maternity, industrial injury, or any other disability. This system was to be financed by taxes falling most heavily on persons with higher incomes (by levying additional taxation on inheritances, gifts, and individual and corporation incomes of $5,000 or more per year). There was a division vote of 52 in favor and 204 opposed. Representative Connery asked for tellers. The Connery amendment was rejected by a 40-158 teller vote. On April 18, 1935, Representative Treadway (R-MA), the ranking minority Member of the Ways and Means Committee, offered an amendment to strike Title II, the old-age benefit provisions, from the bill. Representative Treadway was opposed to the old-age benefits provision and to the taxing provisions of Title VIII. He said that the financing arrangement was unconstitutional. He indicated that the tax would be particularly burdensome on industry, running up to 6% on payrolls. He said that "business and industry are already operating under very heavy burdens" and maintained that to add a payroll tax to their burden would probably cause more unemployment and more uncertainty. Representative Jenkins (R-OH), supporter of the Treadway amendment, stated that making each worker pay 3% of his money for old-age benefits, whether he wanted to or not, and requiring employers to do the same, was clearly unconstitutional. He said, "Why talk about wanting to relieve the Depression, why talk about charity, why talk about all these other things when you are placing a financial lash upon the backs of the people whose backs are breaking under a load of debts and taxes?" He described the old-age benefits system as "compulsion of the rankest kind." The Treadway amendment was defeated by a 49-125 teller vote. On April 19, 1935, Representative Treadway made a motion to recommit H.R. 7260, including instructions to the Ways and Means Committee to strike out the old-age and unemployment insurance provisions and to increase the federal contribution for the welfare program of old-age assistance, Title I of the bill. Representative Treadway stated that the old-age benefit and unemployment insurance provisions of the bill were not emergency measures and that they "would not become effective in time to help present economic conditions, but, on the contrary would be a definite drag on recovery." He was opposed to levying a tax against both the employer and the employee. During his remarks on April 12, 1935, he stated that he would "vote most strenuously in opposition to the bill at each and every opportunity." During his April 19, 1935, remarks, Representative Treadway said he was disgusted "at the attitude of business in that it has not shown the proper interest in protecting itself by stating its case before Congress." His motion to recommit was rejected by a vote of 149 (95-R, 45-D, 9-I) to 253 (1-R, 252-D). On April 19, 1935, the House passed the Social Security bill by a vote of 372 (77-R, 288-D, 7-I) to 33 (18-R, 13-D, 2-I). Senate Action There were also four major votes in the Senate: Senator Long's (D-LA) proposal to substitute taxes on wealth and property for the payroll tax; Senator Clark's amendment to exempt from coverage employees in firms with private pensions; Senator Hastings's motion to recommit; and the vote on final passage of the bill. On June 17, 1935, Senator Long offered an amendment to liberalize the proposed old-age assistance program (Title I of the bill) and delete the payroll tax provisions (Title VIII and IX). In place of the payroll tax, Senator Long recommended that states levy a tax on wealth or property. Senator Long's amendment was rejected by voice vote. On June 19, 1935, Senator Clark (D-MO) offered an amendment to exempt from coverage under the old-age benefits system employees in firms with private old-age pension systems. This idea came from an official of a Philadelphia insurance brokerage firm that specialized in group annuity contracts. Proponents of the amendment stated that employees would benefit from more liberal private annuities that would be in true proportion to earnings and service; joint annuities to protect spouses; earlier retirement for disability; and other factors. Supporters of the amendment also maintained that the government would benefit because the reserves of private annuity plans would increase investment and create more income to tax. The Administration (being opposed to the amendment) argued that the amendment did not provide true retirement income guarantees because private pension programs could be cancelled, or the firm sponsoring them could go out of business. Critics maintained that the amendment discouraged the employment of older men. The Ways and Means Committee rejected the proposal and so did the Finance Committee (by a narrow margin), but when Senator Clark offered it as an amendment on the Senate floor, it was passed by a vote of 51 (16-R, 35-D) to 35 (3-R, 30-D, 2-I). On June 19, 1935, Senator Hastings (R-DE) made a motion to strike out the old-age benefits provisions from the bill. Senator Hastings stated that those provisions were an effort to write into law a forced annuity system for a certain group of people. He maintained that the reserve account to take care of people in the future was not a contract and the American public could not depend upon it. He stated that the accumulation of huge sums of money for persons who had not yet reached retirement age would be subjected to many demands and most likely could not be preserved intact. He also said "let us not deceive that youth by making him believe that here is an annuity whereby he is contributing 50% and his employer is contributing 50%, and that it goes to his credit, when as a matter of fact, part of it is taken from him in order that we may take care of the older people of today." Senator Hastings's amendment was rejected by a vote of 15 (12-R, 3-D) to 63 (7-R, 54-D, 2-I). On June 19, 1935, Senator George (D-GA) offered an amendment to encourage formation of industrial pensions as a substitute for Titles II and VIII. Under the amendment, employers were to operate and manage their own plans. The amendment called for a uniform schedule of benefits nationwide and provided for disability and survivor benefits along with old-age and unemployment benefits. The amendment was defeated by voice vote. The Senate passed the bill on June 19, 1935, by a vote of 77 (15-R, 60-D, 2-I) to 6 (5-R, 1-D). Conference Action The conferees settled all differences except on the Clark amendments related to employees under private pension plans. The conference committee reported the bill without the Clark amendments, but with an understanding that the chairmen of the Ways and Means and Finance Committees would appoint a special joint committee to study whether to exempt industrial employers with private pension plans from coverage under Social Security and to report to the next Congress. On July 17, 1935, the House rejected Representative Treadway's motion to accept the Clark amendment by a vote of 78 to 268; then agreed by a vote of 269 to 65 to a motion by Representative Doughton (D-NC) that the House insist that the Senate drop the Clark amendment. On July 17, 1935, the Senate agreed, by voice vote, to Senator Harrison's motion to insist on keeping the Clark amendment and ask for a further conference. On August 8, 1935, the conference report cleared the House by a voice vote. On August 9, 1935, the Senate conferees agreed to delete the Clark amendment; the Senate then agreed to the conference report by a voice vote. P.L. 379—76th Congress, Social Security Amendments of 1939 H.R. 6635, the Social Security Amendments of 1939, was signed into law on August 10, 1939, by President Franklin Roosevelt. Congress expressly provided in the 1935 Act that the Social Security Board (a three-member panel appointed by the President with advice and consent of the Senate) study and make recommendations on the most effective methods of providing economic security through social insurance. An advisory council appointed by the Senate Special Committee on Social Security and the Social Security Board was created in May 1937 to work with the Social Security Board to study amending Titles II and VII of the Social Security Act. Some members of the advisory council represented employees, some represented employers, and others represented the general public. Both the Social Security Board and the advisory council made recommendations on how the old-age benefits program should be changed, and many of their recommendations were the same. President Roosevelt sent the Social Security Board's recommendations to Congress on January 16, 1939. The 1939 amendments incorporated most of the board's recommendations. The 1939 amendments extended benefits to dependents and survivors of workers covered by Social Security. Dependents included an aged wife, a child under 16 (under 18 if attending school), a widowed mother caring for an eligible child, an aged widow, and a dependent aged parent if there were no eligible widow or child. Widows would receive 75% of the primary insurance amount (PIA) of the worker, and all other dependents would receive 50% of the PIA. The starting date for monthly benefits was accelerated to January 1, 1940, instead of January 1, 1942. Benefits were based on average monthly wages rather than on cumulative wages. In addition, Congress repealed the tax rate increase to 1.5%, scheduled to go into effect in 1940, replacing it with an increase to 2% in 1943-1945. The amendments also modified qualifying provisions, including the definition of insured status, for consistency with other changes in the act. Further, people receiving OASI benefits were permitted to earn up to $14.99 monthly: no benefits were to be paid in any month in which the recipient earned $15 or more in covered employment. The system now was called Old-Age and Survivors Insurance (OASI). Congress also changed the old-age reserve account to a trust fund, managed by a board of trustees. House Action On June 2, 1939, following public hearings on the proposed amendments and six weeks of executive sessions, the Committee on Ways and Means reported to the House H.R. 6635, embodying its recommendations for amendments to the Social Security Act. The day before, the House had debated on and voted against the Townsend old-age pension bill. The Townsend plan, embodied in H.R. 6466 introduced by Representative McGroarty (D-CA) in January 1935, was offered as a substitute for H.R. 6635. The Townsend plan would have provided a monthly pension of $200 to every citizen aged 60 or older who had not been convicted of a felony. To receive the pension, a person could not earn wages and was required to spend the entire pension within 30 days. The plan would have been financed by a 2% tax on every commercial and financial transaction; the President would have been given discretionary power to raise the tax to 3% or to lower it to 1%. During a 1935 Ways and Means Committee hearing, Representative Townsend stated that his plan was only incidentally a pension plan. He said the principal objectives of the proposal were to solve the unemployment problem and to restore prosperity by giving people purchasing power. He cited Census Bureau data that 4 million people over the age of 60 held jobs in 1930. He reiterated that to be eligible for the proposed pension of $200 a month, those elderly people would have to give up their jobs, which he said meant that 4 million jobs would become available to middle-aged and younger people. In addition, he said that requiring 8 million elderly persons to buy $200 worth of goods and services each month would increase demand and result in more jobs. Representative Sabath (D-IL) said he thought it was "decidedly out of place to bring the Townsend bill to the floor." He said that the bill "had no chance of passing in the first place; neither was it feasible nor possible of operation." Others branded the bill as "crackpot," and in general objected because they thought that the Social Security program was a better means of caring for the aged, asserting that any liberalization of pensions should be done within the framework of the Social Security Act. Edwin Witte wrote, The members of the House of Representatives at all times took the Townsend movement much more seriously than did the senators. The thousands of letters that the members received in support of this plan worried them greatly. With the exception of probably not more than a half dozen members, all felt that the Townsend plan was utterly impossible; at the same time they hesitated to vote against it. The House rejected H.R. 6466, the Townsend plan bill, on June 1, 1939, by a vote of 97 (55-R, 40-D, 2-I) to 302 (107-R, 194-D, 1-I). A New York Times editorial reported that "the psychological effect of the presentation of the Townsend bill was to make these liberalized benefits, referring to the provisions in H.R. 6635, seem small. Most of those who voted against the Townsend plan will be eager to vote for these liberalized benefits to show that their hearts are in the right place. The result is that the real cost of the new Social Security scale of benefits is not likely to receive very serious attention." The House took up H.R. 6635 on June 6, 1939. The bill had the general support of the Ways and Means Committee. The minority stated in the committee's report to the House that "while the bill in no sense represents a complete or satisfactory solution of the problem of Social Security, it at least makes certain improvements in the present law (some of which we have ourselves heretofore suggested) which we believe justify us in supporting it despite its defects." On June 9, 1939, Representative Havenner (D-CA) offered an amendment, endorsed by the American Federation of Labor, to extend Social Security coverage to workers employed in college clubs or fraternities or sororities; employees in nonprofit religious, charitable, or educational institutions; student nurses; and some agricultural workers. The amendment was rejected by voice vote. On June 9, 1939, Representative Kean (R-NJ) offered an amendment that required that the money derived from the Social Security payroll tax be invested in one-year marketable U.S. government bonds rather than in special nonmarketable Treasury obligations. Representative Kean remarked that the adoption of the amendment would "prevent the present practice of using old-age taxes for current expenses." The amendment was rejected by voice vote. On June 9, 1939, Representative Carlson (R-KS) offered an amendment to exclude non-citizens from coverage under Social Security. He was opposed to putting foreigners under the U.S. old-age insurance provisions. Opponents of the amendment argued that exemption of such people would give employers of aliens a competitive advantage over vessels owned and manned by Americans. Representative Carlson's amendment was rejected 24 to 59 by a division vote. On June 10, 1939, Representative Carlson moved to recommit H.R. 6635 to the Committee on Ways and Means. The motion was rejected by voice vote. On June 10, 1939, the House passed H.R. 6635 by a vote of 364 (142-R, 222-D) to 2 (2-R). Senate Action On July 13, 1939, Senator Downey (D-CA), in the course of his statement on how "unworkable, unjust, and unfair" the Social Security Act was, moved that the bill be recommitted to the Finance Committee for more study of the whole pension and savings field. Senator Downey stated that under H.R. 6635 covered workers in 1942 would receive only one-half as much in old-age benefits as those receiving government subsidies (old-age assistance benefits/cash relief). Under H.R. 6635, the average monthly Social Security benefit was projected at between $19 and $20 for 80% of workers in 1942, whereas the maximum old-age assistance benefit was $40. The motion was rejected by a vote of 18 (12-R, 5-D, 1-I) to 47 (4-R, 41-D, 2-I). On July 13, 1939, Senator Reynolds (D-NC) offered an amendment to prohibit non-U.S. citizens from being eligible for Social Security coverage or benefits. Senator Harrison (D-MS) offered additional language to Senator Reynolds's amendment that allowed benefit payments to aliens if they lived within 50 miles of the United States. The amendment as modified was agreed to by voice vote. The Senate passed H.R. 6635 on July 13, 1939, by a vote of 57 (8-R, 45-D, 4-I) to 8 (6-R, 2-D). Conference Action The conference report was approved by the House on August 4, 1939, by voice vote, and by the Senate on August 5, 1939, by a vote of 59 (14-R, 42-D, 3-I) to 4 (4-D). Payroll Tax Freeze, 1942-1947 Between 1942 and 1947, the Social Security payroll tax rate increase was postponed seven times. It was not until 1950 that the 1% Social Security tax rate was allowed to rise to 1.5%. The Revenue Act of 1942, P.L. 753 (H.R. 7378, 77 th Congress) was signed by President Franklin Roosevelt on October 21, 1942. It provided that for calendar year 1943, the payroll tax rate for old-age and survivors benefits would be frozen at the existing rate of 1% for employees and employers, each, instead of being increased to 2% on each as otherwise would have been required. P.L. 211 (H.J.Res. 171, 78 th Congress), a joint resolution regarding the Tariff Act, signed by President Roosevelt on December 22, 1943, froze the payroll tax at the 1% rate until March 1, 1944. The purpose of the resolution was to give Congress time to consider the scheduled payroll tax increase before it went into effect. The Revenue Act of 1943, P.L. 235 (H.R. 3687, 78 th Congress), was vetoed by President Roosevelt on February 22, 1944; the veto was overridden by the House on February 24, 1944, and by the Senate on February 25, 1944. The bill deferred the scheduled payroll tax increase (from 1 to 2%) until 1945. P.L. 235 also contained an amendment by Senator Murray (D-MT) that authorized the use of general revenues if payroll taxes were insufficient to meet Social Security benefit obligations. Senator Murray stated that the amendment merely stated in law what had been implied in the Senate committee report. Senator Vandenberg (R-MI) replied that the amendment "has no immediate application, it has no immediate menace, it contemplates and anticipates no immediate appropriation; but as the statement of a principle, I agree with the amendment completely." The amendment passed by voice vote. The "Murray-Vandenberg" general revenue provision was repealed in 1950, when the tax rate was increased. The Federal Insurance Contributions Act (FICA) of 1945, P.L. 495 (H.R. 5564, 78 th Congress), signed by President Roosevelt on December 16, 1944, froze the payroll tax rate at 1% until 1946 and scheduled the payroll tax rate to rise to 2.5% for the years 1946 through 1948, and to 3% thereafter. The Revenue Act of 1945, P.L. 214 (H.R. 4309, 79 th Congress), signed by President Truman on November 8, 1945, deferred the tax rate increase until 1947. The Social Security Amendments of 1946, P.L. 719 (H.R. 7037, 79 th Congress), signed by President Truman on August 10, 1946, deferred the tax rate increase until 1948. The Social Security Amendments of 1947, P.L. 379 (H.R. 3818, 80 th Congress), signed by President Truman on August 6, 1947, continued the freeze on the tax rate increase until 1950 and provided that it would rise to 1.5% for 1950-1951 and to 2% thereafter. Members who favored these payroll tax freezes argued that the Social Security reserves were adequate and that benefit payments in the immediate future could be met with the current payroll tax rate. In a 1942 letter to the Senate Finance Committee, President Roosevelt said that "a failure to allow the scheduled increase in rates to take place under the present favorable circumstances would cause a real and justifiable fear that adequate funds will not be accumulated to meet the heavy obligations of the future and that the claims for benefits accruing under the present law may be jeopardized." He also stated that "expanded Social Security, together with other fiscal measures, would set up a bulwark of economic security for the people now and after the war and at the same time would provide anti-inflationary sources for financing the war." Members who were opposed to the freeze argued that the scheduled payroll tax increase was important for the long-term soundness of the OASI trust fund and that postponing the tax increase would mean higher payroll tax rates in the future and perhaps government subsidies to meet obligations. Some proponents of the freeze maintained that the Administration wanted the tax increase to retire the public debt accumulated by wartime expenditures. Although Senator Vandenberg (R-MI) was the main spokesman for postponing the payroll tax increases, the legislative effort to defer tax increases was bipartisan. "Without regard to party or ideology, elected representatives of the people were not willing to argue for increases in an earmarked tax if a current need for them could not be demonstrated," one scholar observed. P.L. 492—80th Congress, 1948 Provision for Exclusion of Certain Newspaper and Magazine Vendors from Social Security Coverage (H.R. 5052) and P.L. 642—80th Congress, 1948 Provision to Maintain Status Quo Concept of Employee Two pieces of 1948 legislation, H.R. 5052 and H.J.Res. 296, settled the argument of who was considered an employee for purposes of Social Security coverage. The term employee was not defined in the Social Security Act or in the Internal Revenue Code. However, in 1936, the Social Security Board and the Treasury Department issued regulations that to a certain extent explained the meaning of the terms employee and employer . In defining employer, both sets of regulations emphasized the concept of "control"—the right to give instructions—but other significant factors, such as the right to discharge, the furnishing of tools, and a place to work, were also mentioned in the regulations. During the next few years, the Social Security Board and the Treasury Department issued numerous rulings to clarify the boundaries of the employee-employer relationship and a number of court cases established generally applicable precedents. The common-law meaning of employee, however, was very unclear in cases of outside salesmen. On December 31, 1946, the U.S. District Court for the Northern District of California, in the case of Hearst Publications, Inc. v. The United States , ruled that newspaper vendors should be considered employees rather than independent contractors. H.R. 5052, introduced in 1948, proposed to treat newspaper and magazine vendors as independent contractors rather than employees and thereby to exclude them from Social Security coverage. In addition, in 1948, Congress addressed the broader issue of who was to be considered an employee by passing H.J.Res. 296, a resolution to maintain the status quo of treating newspaper vendors as independent contractors, by stating that Congress, not the courts or the Social Security Administration (SSA), should determine national policy regarding Social Security coverage. It was reported that H.J.Res. 296 was introduced primarily to prevent the release of new federal regulations defining the meaning of employee along the lines interpreted by the Supreme Court in three cases decided in June 1947. H.J.Res. 296 excluded from Social Security coverage (and unemployment insurance) any person who was not considered an employee under the common-law rules. In effect, H.J.Res. 296 said that independent contractors (e.g., door-to-door salesmen, insurance salesmen, and pieceworkers) were not to be considered employees. H.R. 5052 and H.J.Res. 296 were vetoed by President Truman. Congress overrode both vetoes. In his veto of H.R. 5052, President Truman asserted that the nation's security and welfare demanded that Social Security be expanded to cover the groups excluded from the program: "Any step in the opposite direction can only serve to undermine the program and destroy the confidence of our people in the permanence of its protection against the hazards of old age, premature death, and unemployment." The action taken on H.R. 5052 illustrated the controversial issues involved in determining who should be covered under Social Security. House Action On March 4, 1948, Representative Gearhart (R-CA) asked unanimous consent for immediate consideration of H.R. 5052. He stated that "until the rendition of the federal court decisions I have referred to were rendered the status of the newspaper and magazine vendors was considered by everyone, and as this Congress clearly intended, to be that of independent contractors since they bought their periodicals at a low price and sold them at a higher price, deriving their livelihood from the profit in the operation." Under the court decisions "these vendors were arbitrarily declared to be employees and therefore subject to the payroll taxes though the money they receive is not wages, as generally understood, but profits derived from an independent business operation of their own." Under the court decisions, newspaper and magazine vendors were in essence employees of all of the newspaper and magazine companies with which they had an arrangement. H.R. 5052 excluded newspaper and magazine vendors from coverage under the Social Security Act. Representative Gearhart stated in his remarks that "when newspaper vendors are covered into the Social Security system—and I believe they will be by act of Congress before this session ends—they will be brought in as the independent contractors which they are, as the self-employed.... " The House passed H.R. 5052 on March 4, 1948, by unanimous consent. On February 27, 1948, H.J.Res. 296 was passed by a vote of 275 to 52. Senate Action On March 23, 1948, the Senate passed by unanimous consent H.R. 5052 in form identical to that passed by the House. On June 4, 1948, H.J.Res. 296 was passed, after public assistance amendments increasing federal assistance to states were added, by a vote of 74 to 6. Although there was no conference on H.J.Res. 296, the House concurred with the Senate amendments on June 4, 1948, by voice vote. Veto On April 6, 1948, in the veto message on H.R. 5052, President Truman stated that some vendors work under arrangements, "which make them bona fide employees of the publishers, and, consequently, are entitled to the benefits of the Social Security Act." President Truman further stated that "It is said that news vendors affected by this bill could more appropriately be covered by the Social Security laws as independent contractors when and if coverage is extended to the self-employed. Whether that is true or not, surely they should continue to receive the benefits to which they are now entitled until the broader coverage is provided. It would be most inequitable to extinguish their present rights pending a determination as to whether it is more appropriate for them to be covered on some other basis." On June 14, 1948, President Truman vetoed H.J.Res. 296, saying that "If our Social Security program is to endure, it must be protected against these piecemeal attacks. Coverage must be permanently expanded and no employer or special group of employers should be permitted to reverse that trend by efforts to avoid the burden which millions of other employers have carried without serious inconvenience or complaint." Veto Override The House overrode President Truman's veto of H.R. 5052 and passed the bill on April 14, 1948, by a vote of 308 (207-R, 101-D) to 28 (2-R, 24-D, 2-I). On April 20, 1948, the Senate overrode the President's veto and passed H.R. 5052 by a vote of 77 (48-R, 29-D) to 7 (7-D). On June 14, 1948, President Truman's veto of H.J.Res. 296 was overridden in the House by a vote of 298 to 75 and in the Senate by a vote of 65 (37-R, 28-D) to 12 (2-R, 10-D). P.L. 734—81st Congress, Social Security Act Amendments of 1950 H.R. 6000, the Social Security Act Amendments of 1950, was signed by President Truman on August 28, 1950. H.R. 6000 broadened the Social Security Act to cover roughly 10 million additional persons, including regularly employed farm and domestic workers; self-employed people other than doctors, lawyers, engineers, and certain other professional groups; certain federal employees not covered by government pension plans; and workers in Puerto Rico and the Virgin Islands. On a voluntary group basis, coverage was offered to employees of state and local governments not under public employee retirement systems and to employees of nonprofit organizations. Dependent husbands, widowers, and, under certain circumstances children of insured women were also made eligible for benefits (before, such benefits were not generally available to children of female workers). In addition, Congress raised benefits by about 77%; raised the wage base from $3,000 to $3,600; raised employer and employee taxes gradually from 1.5% to an ultimate rate of 3.25% each in 1970 and years thereafter; set the OASI tax rate for the self-employed at 75% of the combined employer-employee rate; eased requirements for eligibility for benefits by making 1950 the starting date for most people in determining the quarters of coverage needed; permitted recipients to have higher earnings ($50 a month) without losing any OASI benefits (i.e., those aged 75 or older could now earn any amount without losing OASI benefits); and gave free wage credits of $160 for each month in which military service was performed between September 16, 1940, and July 24, 1947. House Action On August 22, 1949, the Committee on Ways and Means reported H.R. 6000. H.R. 6000 did not include President Truman's recommendations for health insurance or his request to lower the OASI eligibility age to 60 for women, but it did include disability protection for both Social Security and public assistance recipients. It also extended coverage to farm and domestic workers. All 10 Republicans on the committee (including 7 who voted to send H.R. 6000 to the floor) filed a minority report stating that OASI coverage and benefits should be limited so as to provide only a "basic floor" of economic protection. The minority report opposed the disability insurance provision, saying that aid to the disabled should be limited to charity aid provided under the proposed public assistance program for the permanently and totally disabled. The Committee on Rules at first refused to send H.R. 6000 to the floor, but, after much debate, a closed rule barring floor amendments was granted. A number of Members opposed the rule because they said it foreclosed their right to improve the bill through floor amendments. On October 4, 1949, Representative Sabath (D-IL) offered a resolution for four days of debate, with only the Committee on Ways and Means having the right to offer amendments, and with only a motion to recommit being in order. Those favoring the resolution stated that the Ways and Means Committee had devoted six months to considering the bill, had heard testimony from 250 witnesses and thus knew best how to improve the program. Those opposing the closed rule said the bill was very controversial and that the whole House should settle difficult questions of policy. They said the closed rule negated the importance of other House Members and usurped their rights. The House agreed to the resolution for a closed rule by a vote of 189 (12-R, 176-D, 1-I) to 135 (123-R, 12-D) on October 4, 1949. On October 5, 1949, Representative Mason (R-IL) moved to recommit H.R. 6000, and offered H.R. 6297 (a bill that carried out the minority view on H.R. 6000) as its substitute. H.R. 6297, introduced by Representative Kean (R-NJ) on October 3, 1949, held the wage base to $3,000; recommended greater coverage for domestic workers so that those who were less regularly employed would be included; exempted teachers, firemen, and policemen with their own pension systems from coverage; confined disability payments to the public assistance program; and recommended that Congress establish an independent Social Security system in Puerto Rico, the Virgin Islands, and other possessions rather than include them in the existing OASI program. The motion to recommit was defeated by a vote of 113 (112-R, 1-D) to 232 (29-R, 202-D, 1-I). Immediately following the rejection of the motion, H.R. 6000 was passed in the House by a vote of 333 (R-130, D-202, 1-I) to 14 (R-12, D-2). Senate Action Since Congress adjourned shortly after the House action, the Senate did not consider H.R. 6000 until 1950. The Senate Finance Committee held extensive hearings and adopted many amendments to H.R. 6000. The committee stated that the chief purpose of the bill was to strengthen the OASI system so that OASI would be the primary method of offering "basic security to retired persons and survivors," with public assistance (particularly old-age assistance) playing strictly a supplementary and secondary role. The Finance Committee version of the bill did not include the disability insurance provision passed by the House nor the provision providing federal grants to states for needy persons who were permanently and totally disabled, nor President Truman's health insurance proposal. The bill was reported to the Senate on May 17, 1950, and debate began on June 12, 1950. On June 14, 1950, following a Senate Republican Policy Committee meeting, Senator Millikin (R-CO) and Senator Taft (R-OH) indicated that Republicans would support H.R. 6000 but favored a study to determine whether the OASI and old-age assistance programs eventually should be united in a universal pay-as-you-go system. Under this proposal, all elderly persons in the United States would become eligible for subsistence-level pensions at the age of 65, with pension amounts the same for all (rather than varied to reflect earnings during the work career), and financed from current revenues rather than a trust fund. An amendment offered by Senator Myers (D-PA) to add a disability insurance program to OASI was rejected by a voice vote. On June 20, 1950, another amendment offered by Senator Myers to boost the OASI wage base from $3,000 to $4,200, closer to what President Truman had requested (instead of $3,600 specified in the George amendment—see below), was rejected 36 (9-R, 27-D) to 45 (27-R, 18-D). On June 20, 1950, Senator Long (D-LA) introduced an amendment to provide federal grants to States for needy disabled persons. The amendment was rejected by a vote of 41 (4-R, 37-D) to 42 (33-R, 9-D). On June 20, 1950, Senator George's (D-GA) amendment to increase the basic wage base from $3,000 to $3,600 was agreed to by voice vote. On June 20, 1950, by a voice vote, the Senate adopted S.Res. 300, authorizing a study of a universal pay-as-you-go old-age pension system. The Senate passed H.R. 6000 on June 20 by a vote of 81 (35-R, 47-D) to 2 (2-R). Conference Action Conferees dropped the disability insurance proposal, but retained the public assistance program for the permanently and totally disabled (i.e., the so-called charity approach). The conference report was submitted to the House on August 1, 1950. On August 16, 1950, Representative Byrnes (R-WI) moved to recommit the conference report on H.R. 6000. He stated that his main reason for doing so was to prevent any attempt to remove from the bill a Senate floor amendment by Representative Knowland (R-CA) to reduce federal control over state-administered unemployment insurance. Representative Doughton (D-NC) moved the previous question on the motion to recommit. The motion on the previous question was passed by a vote of 188 (120-R, 68-D) to 186 (20-R, 165-D, 1-I). The motion to recommit the conference report was rejected. The conference report passed the House on August 16, 1950, 374 (140-R, 234-D) to 1 (1-R); and the Senate on August 17, 1950, by voice vote. P.L. 590—82nd Congress, Social Security Act Amendments of 1952 H.R. 7800, the Social Security Amendments of 1952, was signed into law on July 18, 1952, by President Truman. The amendments increased OASI benefits for both present and future recipients (by an average of 15% for those on the rolls), permitted recipients to earn $75 a month (instead of $50) without losing OASI benefits, extended wage credits of $160 for each month in which active military or naval service was performed during the period from July 24, 1947, through December 1953, and provided for a disability "freeze," which in principle preserved the Social Security benefits of qualified workers who became permanently and totally disabled before retirement by averaging the person's wages only over his or her working years. (See following conference action section for more details.) House Action In the House, debate centered largely on a so-called disability freeze proposed by the Committee on Ways and Means. Under the provision, if a person became permanently and totally disabled, the period of disability was to be excluded in computing the number of quarters of coverage he or she needed to be eligible for benefits, and in computing the average earnings on which the benefits would be based. The provision, in effect, preserved benefit rights while a person was disabled. Medical examinations by doctors and public institutions would be designated and paid for by the Federal Security Agency (FSA). The American Medical Association (AMA) claimed that this arrangement would lead to socialized medicine. Representative Reed (R-NY), the minority leader of the Ways and Means Committee, was the primary spokesman for Members who endorsed the AMA position. On May 19, 1952, when H.R. 7800 was brought to the floor under suspension of the rules procedure—requiring a two-thirds vote for passage and barring amendments—the majority of Republicans voted against it because of the disability provision, and it was rejected by a vote of 151 (52-R, 98-D, 1-I) to 141 (99-R, 42-D), failing to win a two-thirds vote. On June 16, 1952, Democratic leaders brought H.R. 7800 to the floor under suspension of the rules. An amended version of the revised bill empowered the FSA to make disability determinations but omitted the language specifying how the FSA administrator should do so. Representative Reed said "... let no person on this floor be deceived. You have the same old H.R. 7800 here before you. While the socialized medicine advocates pretend to remove the specific instructions to the Administrator, they now give him more powers under general provisions of the law than he had before. You have socialized medicine here stronger in this bill than was H.R. 7800, heretofore defeated." Representative Reed later contended that because of the approaching election, many Members chose to go on record in favor of the other OASI provisions and so voted for the amended version of H.R. 7800. The bill was approved 361 (165-R, 195-D, 1-I) to 22 (20-R, 2-D) on June 17, 1952. Senate Action When the bill came to the Senate Finance Committee, it dropped the disability freeze provision. The Finance Committee said there was inadequate time to study the issue properly. The committee amendment, offered by Senator George (D-GA), to drop the disability freeze provision, was passed by voice vote on June 26, 1952. H.R. 7800 (without the disability freeze provision) was passed in the Senate by a voice vote on June 26, 1952. Conference Action The conferees retained the disability freeze provision, in principle. The compromise terminated the freeze provision on June 30, 1953; at the same time, it did not allow an application to be accepted before July 1, 1953. Thus, the disability freeze provision was made inoperative unless Congress, in subsequent legislation, were to take action to remove the bar. The stated intent in making the provision inoperative was to permit "the working out of tentative agreements with the States for possible administration of these provisions." In addition, the conferees gave responsibility for determining whether an applicant was disabled to appropriate state agencies (such as public assistance, vocational rehabilitation, or workmen's compensation), instead of the FSA. The Federal Security administrator would be able to overturn a ruling by the state agencies that a person was disabled, but would not be able to reverse a ruling by the state agencies that a person was not disabled. The conference report was agreed to July 5, 1952, by voice votes in both chambers. P.L. 761—83rd Congress, Social Security Amendments of 1954 H.R. 9366, the Social Security Amendments of 1954, was signed by President Eisenhower on September 1, 1954. In his 1953 State of the Union Message, the President recommended that "OASI should promptly be expanded to cover millions of citizens who have been left out of the Social Security system." The Social Security Amendments of 1954 extended mandatory coverage to, among others, some self-employed farmers, engineers, architects, accountants, and funeral directors, all federal employees not covered by government pension plans, and farm and domestic service workers not covered by the 1950 amendments, and it extended voluntary coverage to ministers and certain state and local government employees already covered by staff retirement systems. The bill also raised the wage base for the OASI tax to $4,200; raised the tax rate to 3.5%, each, for employers and employees beginning in 1970, and to 4.0%, each, beginning in 1975, with the tax rate for the self-employed continuing at 1.5 times the employee rate (or 75% of the combined employee-employer rate). OASI benefits for recipients were raised by roughly 15%, with the maximum individual benefit rising from $85 to $98.50 a month, and a revised benefit formula was provided for future retirees that increased benefits by roughly 27%, with the maximum benefit rising from $85 a month to $108.50. The bill also put the disability freeze into effect (see discussion of House action on the 1952 amendments below), with disability determinations to be made by the appropriate State agencies, permitted a recipient to earn up to $1,200 a year without deductions, eliminated the earnings test for people aged 72 or older, and dropped the five years of lowest earnings from average monthly wage determinations for benefit computation purposes. House Action On June 1, 1954, Representative Smith (D-VA) and other farm area Democrats objected to bringing H.R. 9366 to the floor under a closed rule because coverage of farmers was included in the bill. Representative Smith stated, "I object to the feature of this bill that prohibits you from offering any amendment. I think that requires a little discussion and a little understanding. We all agree that on an ordinary tax bill it is not feasible or practical to write it on the floor of the House, and therefore we have adopted the theory that we have closed rules on tax bills ... all we asked for in the Rules Committee was that the individual members of this House be given an opportunity to offer amendments to designate what classifications of persons should be included." On June 1, 1954, by a vote of 270 (171-R, 98-D, 1-I) to 76 (5-R, 71-D), debate of the closed rule was cut off, and the closed rule was then adopted by voice vote. The House bill also included provisions extending mandatory coverage to all self-employed professionals but doctors (dentists and other medical professionals would have been covered). The House passed H.R. 9366 on June 1, 1954, by a vote of 356 (181-R, 174-D, 1-I) to 8 (2-R, 6-D). Senate Action H.R. 9366 as reported by the Finance Committee included the coverage of farm and domestic service workers, ministers, state and local government employees covered by a retirement system, and a small number of professionals. It also increased the earnings test threshold to $1,200 a year; reduced the age at which the earnings test no longer applied to 72; and increased the lump-sum death benefit from $255 to $325.50. During the Senate debate on H.R. 9366, nine amendments were adopted, six were rejected, and six were presented and then withdrawn. Among the amendments adopted on the floor by the Senate was a provision by Senator Long (D-LA) to require the Department of Health, Education, and Welfare to study the feasibility and costs of providing increased minimum benefits of $55, $60, and $75 a month under the Social Security program. On August 13, 1954, Senator Long's amendment was agreed to by voice vote. Among the amendments defeated were the Johnston (D-SC) amendment to reduce the Social Security eligibility age to 60; the Stennis (D-MS) amendments that would have left the coverage of farm workers unchanged; and the Humphrey (D-MN) amendment to increase the widow's benefit to 100% of the primary insurance amount. On August 13, 1954, Senator Johnston's amendment was rejected by voice vote. On August 13, 1954, the Stennis amendments were rejected en bloc by voice vote. On August 13, 1954, Senator Humphrey's amendment was rejected on a division vote. Among the amendments that were presented and then withdrawn was an amendment by Senator Lehman (D-NY) to extend Social Security coverage, increase benefits, add permanent and total disability and temporary disability Social Security benefits, and to make other changes. On August 13, 1954, the Senate passed H.R. 9366, by voice vote. Conference Action The conferees, among other things, accepted a provision mandatorily covering self-employed farmers, accountants, architects, engineers, and funeral directors, but excluding lawyers, doctors, dentists, or other medical professionals, and extended coverage to federal employees not covered by staff retirement systems. Both chambers agreed to the conference report without amendments by voice vote on August 20, 1954, the last day of the session. P.L. 880—84th Congress, Social Security Amendments of 1956 H.R. 7225, the Social Security Amendments of 1956, was signed by President Eisenhower on August 1, 1956. The amendments provided benefits, after a six-month waiting period, for permanently and totally disabled workers aged 50 to 64 who were fully insured and had at least 5 years of coverage in the 10-year period before becoming disabled; to a dependent child 18 years or older of a deceased or retired insured worker if the child became disabled before age 18; to female workers and wives at the age of 62, instead of 65, with actuarially reduced benefits; reduced from 65 to 62 the age at which benefits were payable to widows or parents, with no reduction; extended coverage to lawyers, dentists, veterinarians, optometrists, and all other self-employed professionals except doctors; increased the tax rate by 0.25% on employer and employee each (0.375% for self-employed people) to finance disability benefits (thereby raising the aggregate tax rate ultimately to 4.25% each for employees and employers); and created a separate Disability Insurance (DI) trust fund. The Social Security program now consisted of Old-Age, Survivors, and Disability Insurance (OASDI). House Action Major House Ways and Means Committee provisions provided benefits to disabled persons aged 50 or older and reduced the age at which women could first receive OASI benefits to 62. Although some Members maintained that not enough time was spent in working out the details of these two controversial provisions, H.R. 7225 was brought to the floor under suspension of the rules, which barred floor amendments and required a two-thirds vote for passage. H.R. 7225 was passed by the House on July 18, 1955, by a vote of 372 (169-R, 203-D) to 31 (23-R, 8-D). Senate Action At Senate Finance Committee hearings on the House-passed bill, the Secretary of Health, Education, and Welfare, Marion Folsom stated that the Administration was opposed to reducing the retirement age to 62 for women and providing disability benefits. According to Congress and the Nation , Senator Folsom said that OASI had stayed actuarially sound without excessive taxes because it had been restricted to one purpose with "predictable costs": providing income for the aged. Spokesmen for the AFL-CIO and several other groups maintained that union experience with welfare plans and federal studies dating back to 1937 showed that disability insurance was both administratively and financially sound. On June 5, 1956, the Senate Finance Committee reported H.R. 7225 after eliminating the Disability Insurance program and the tax increase to pay for it and limiting retirement benefits at age 62 to widows only. On July 17, 1956, Senator George (D-GA) offered an amendment reinstating the Disability Insurance program and the tax increase to finance it. The amendment provided for a separate disability insurance trust fund (instead of operating the new program out of the OASI fund). The amendment was passed by a vote of 47 (6-R, 41-D) to 45 (38-R, 7-D). Also, on July 17, 1956, the Senate agreed to Senator Kerr's (D-OK) amendment to permit women to receive benefits at age 62 at actuarially reduced rates. The amendment passed by a vote of 86 (40-R, 46-D) to 7 (5-R, 2-D). On July 17, 1956, the Senate passed H.R. 7225 by a vote of 90 (45-R, 45-D) to 0. Conference Action The House on July 26, 1956, and the Senate on July 27, 1956, cleared the conference report on H.R. 7225 without amendments by voice votes. P.L. 85-840, Social Security Amendments of 1958 H.R. 13549, the Social Security Amendments of 1958, was signed by President Eisenhower on August 28, 1958. The amendments raised recipients' benefits an average of 7%, with benefits ranging from $33 to $127 per month for future recipients; increased maximum family benefits from $200 to $254; raised the wage base from $4,200 to $4,800 a year; increased the tax rate by 0.25% on employers and employees each and 0.375% for the self-employed; provided benefits to dependents of workers receiving disability benefits; and permitted the aged dependent parents of an insured deceased worker to receive survivors' benefits even if the worker's widow or dependent widower or child were alive and also eligible for benefits. House Action Most of the controversy over H.R. 13549 pertained to public assistance programs. There was relatively little controversy over the proposed OASDI provisions. During debate on H.R. 13549, Representative Reed (R-NY) stated that the bill would strengthen the actuarial soundness of the Social Security program. On July 31, 1958, the House passed H.R. 13549 by a vote of 374 to 2. Senate Action On August 15, 1958, Senator Yarborough (D-TX) offered an amendment to increase benefits by 10%, rather than 7% as proposed in H.R. 13549. Senator Yarborough stated that in many states old-age public assistance payments were higher than the "Social Security payments the people have earned by putting their money into the Social Security fund." Proponents of the amendment mentioned that a 10% increase would alleviate erosion of benefits due to inflation. Opponents of the amendment argued that many persons getting Social Security also received income from other sources. Some opponents of the amendment maintained that it would jeopardize the enactment of the bill. Senator Yarborough's amendment was rejected by a vote of 32 (6-R, 26-D) to 53 (33-R, 20-D). On August 16, 1958, Senator Kennedy (D-MA) offered an amendment to increase Social Security benefits by 8% (rather than 7%). The Kennedy-Case amendment was rejected by voice vote. On August 16, 1958, Senator Morse (D-OR) offered an amendment to increase Social Security benefits by 25%, provide health insurance, and make other changes. Senator Morse's amendment was rejected by voice vote. On August 16, 1958, Senator Humphrey (D-MN) offered an amendment to provide health insurance. (Senator Morse's amendment was based in part on this Humphrey amendment.) Senator Humphrey withdrew his amendment. On August 16, 1958, Senator Kennedy offered an amendment for himself and Senator Smathers (D-NJ) to eliminate the dollar ceiling of $255 on the lump-sum death benefit and restore the 3-to-1 ratio between the death benefit and the regular monthly benefit. The amendment was rejected by voice vote. On August 16, 1958, Senator Revercomb (R-WV) offered an amendment to provide full Social Security retirement benefits at age 62, for both men and women. Senator Revercomb's amendment was rejected by voice vote. The Senate passed H.R. 13549 on August 16, 1958, by a vote of 79 (37-R, 42-D) to 0. House Concurrence On August 19, 1958, the House by a voice vote agreed to the Senate amendments. P.L. 86-778, Social Security Amendments of 1960 H.R. 12580, the Social Security Amendments of 1960, was signed by President Eisenhower on September 13, 1960. Health care for the aged was the primary issue in 1960. At the crux of the debate was the question of whether the federal government should assume major responsibility for the health care of the nation's elderly people, and, if so, whether medical assistance should be provided through the Social Security system or through the public assistance programs (i.e., charity approach). The 1960 amendments provided more federal funds for old-age assistance (OAA) programs so that states could choose to improve or establish medical care services to OAA recipients. In addition, the legislation known as "Kerr-Mills" established a new voluntary program (under jurisdiction of the OAA program) of medical assistance for the aged, under which states received federal funds to help pay for medical care for persons aged 65 or older who were not recipients of OAA but whose income and resources were insufficient to meet their medical expenses. The 1960 amendments also contained a number of OASDI provisions. The amendments made disability benefits available to workers under the age of 50; established a new earnings test whereby each dollar of yearly earnings between $1,200 and $1,500 would cause only a 50-cent reduction in benefits with a dollar-for-dollar reduction in benefits for earnings above $1,500; liberalized requirements for fully insured status so that to be eligible for benefits a person needed only one quarter of covered work for every three calendar quarters (rather than one for every two quarters, as under the old law), elapsing after 1950 and before retirement, disability, or death; and raised the survivor benefit of each child to 75% of the parent's PIA. House Action H.R. 12580 as reported by the Ways and Means Committee contained two medical care provisions for elderly people. The first provision provided the states with additional funding to improve or to establish medical care programs for old-age assistance recipients. The second provision established a new federal-state program (under a new title of the Social Security Act) designed to assist aged persons who were not eligible for public assistance but who were unable to pay their medical bills. The Ways and Means Committee rejected H.R. 4700, introduced by Representative Forand (D-RI), which would have provided insurance against the cost of hospital, nursing home, and surgical services for OASDI recipients, by a vote of 17 to 8. Proponents of H.R. 12580 said that it provided medical assistance for every aged person in any state that implemented a medical assistance program. Representative Thompson (D-NJ), a supporter of the Forand bill stated that under H.R. 12580 people would be "denied the opportunity of contributing to their old-age health insurance coverage while employed and would be forced to rely upon charity after their working days were over." He contended further that "even this charity ... is contingent upon the action of the separate states." The House passed H.R. 12580 on June 23, 1960, by a vote of 381 (137-R, 244-D) to 23 (7-R, 16-D). Senate Action The Senate deleted the bill's new title, and instead adopted an amendment by Senator Kerr (D-OK) and Senator Frear (D-DE) that amended Title I of the Social Security Act to provide medical services for medically needy aged persons. On August 20, 1960, Senator Javits (R-NY) offered an amendment to provide federal matching grants to states to enable them to give health care to needy persons aged 65 or older. (This proposal was more generous than the provisions—also based on the public assistance, i.e., charity approach—already in the report by the Finance Committee.) On August 23, 1960, Senator Javits's amendment was rejected by a vote of 28 (28-R) to 67 (5-R, 62-D). Also on August 20, 1960, Senator Anderson (D-NM) offered an amendment to use Social Security as well as the public assistance program for the aged to provide health care to the elderly. On August 23, 1960, Senator Anderson's amendment was rejected by a vote of 44 (1-R, 43-D) to 51 (32-R, 19-D). On August 23, 1960, the Senate passed by voice vote Senator Byrd's (D-WV) amendment to permit men to retire at the age of 62 with actuarially reduced benefits. (The amendment was later dropped in conference.) The Senate passed H.R. 12580 on August 23, 1960, by a vote of 91 (31-R, 60-D) to 2 (1-R, 1-D). Conference Action The conferees agreed to the medical care provisions in the Senate-passed bill (i.e., no new title for a program for aged persons not eligible for OAA benefits). The medical provisions became known as the Kerr-Mills program, named for Senator Robert Kerr (D-OK) and House Ways and Means Committee Chairman Wilbur Mills (D-AR). The House agreed to the conference report on August 26, 1960, by a vote of 369 (132-R, 237-D) to 17 (8-R, 9-D). The Senate agreed to the conference report on August 29, 1960, by a vote of 74 (31-R, 43-D) to 11 (1-R, 10-D). P.L. 87-64, Social Security Amendments of 1961 H.R. 6027, the Social Security Amendments of 1961, was signed into law on June 30, 1961, by President Kennedy. In general, the amendments made many of the changes in the Social Security program recommended by President Kennedy in his February 2, 1961, message to Congress, in which he outlined a program to restore momentum to the national economy. The amendments raised the minimum benefit to $40 per month; permitted men to claim retired worker's benefits at the age of 62, instead of 65, with actuarially reduced benefits; liberalized the insured status requirement so that, subject to the 6-quarter minimum and the 40-quarter maximum, an individual was fully insured if he had one quarter of coverage for every calendar year that elapsed between January 1, 1951, or age 21, whichever was later, and the year before he died, became disabled, or reached retirement age; increased benefits to a surviving aged widow, widower, or dependent parent of an insured deceased worker from 75 to 82.5% of the benefit the worker would have been entitled to if alive; changed the earnings test so that an aged recipient had no benefits withheld if earnings were $1,200 a year or less, $1 withheld for each $2 earned between $1,200 and $1,700, and a $1 reduction in benefits for each additional dollar of earnings above $1,700; and raised the employer and employee tax rates by 0.125% and the self-employed tax rate by 0.1875%. House Action In the House, the principal point of dissension was the provision in H.R. 6027 that lowered the eligibility age for men from 65 to 62. Several Republicans opposed the provision on the basis that it would likely start a trend toward "compulsory retirement" at age 62. Speaking for himself and most of the minority committee members, Representative Curtis (R-MO) stated, "The reason [we are] against the age 62 [provision] is this: our older people are having a hard enough time now to stay in the labor market. This provides further incentive to drive them out." On April 20, 1961, Representative Curtis made a motion to recommit H.R. 6027 and substitute a measure that cut out the provisions for lowering the first eligibility age for men, increased benefits for widows, and raised the minimum benefit from $33 to $40. The motion was rejected by voice vote. Note that the provisions raising the minimum benefit and increasing benefits for widows were already in H.R. 6027 as reported out of committee. The House passed H.R. 6027 on April 20, 1961, by a vote of 400 (149-R, 251-D) to 14 (14-R). Senate Action In the Senate, debate focused on Senator Cotton's (R-NH) amendment made on June 26, 1961, to increase the earnings test limit to $1,800 a year. Senator Kerr (D-OK) said that Senator Cotton's amendment failed to provide increased OASDI taxes to pay for the additional $427 million to $615 million that would be paid out each year under the proposed amendment. Senator Kerr stated that "an amendment which would result in the impairment of the fiscal integrity of the fund should not be pressed." Senator Hartke (D-IN) offered a substitute amendment that provided a slightly less generous new earnings test limit ($1,700). The substitute amendment was passed June 26, 1961, by a vote of 59 (3-R, 56-D) to 30 (30-R). Provisions to finance this change were agreed to by unanimous consent. On June 26, 1961, Senator Hartke's amendment to broaden the definition of disability was rejected by voice vote. The Senate passed H.R. 6027 90 (33-R, 57-D) to 0 on June 26, 1961. Conference Action Both chambers cleared the conference report by voice votes June 29, 1961. Proposed Social Security Amendments of 1964 H.R. 11865, the proposed Social Security Amendments of 1964, was passed by both the House and the Senate but the conference committee could not reach agreement, adjourning on October 3, 1964, without making any recommendations. The proposed Social Security Amendments of 1964 as passed by the House contained a 5% across-the-board Social Security benefit increase; extended the child's benefit to age 22 if he or she were in school; allowed widows to retire at age 60, with actuarially reduced benefits; provided limited benefits to persons aged 72 or older who had some Social Security coverage but not enough to meet the minimum requirements of existing law; and extended Social Security coverage to groups of persons who previously had been excluded. The House-passed bill contained no provision relating to hospital insurance for the aged. The proposed Social Security Amendments of 1964 as passed by the Senate contained a hospital insurance program, the so-called King-Anderson bill; increased benefits: raised the earnings base; liberalized the earnings test; changed the eligibility requirements for the blind; and permitted religious groups to reject Social Security coverage if they had religious objections to social insurance. House Action H.R. 11865, the proposed Social Security Amendments of 1964, was reported out of the Ways and Means Committee on July 7, 1964. The bill was debated under a rule that permitted only committee amendments. No amendments were offered. On July 29, 1964, the House passed H.R. 11865 by a vote of 388 to 8. Senate Action The Finance Committee approved H.R. 11865 on August 21, 1964. The committee rejected several amendments that would have created a hospital insurance program for the aged through the Social Security program. On August 31, 1964, Senator Gore (D-TN) offered an amendment to Senator Long's (D-LA) amendment to increase the proposed across-the-board benefit increase to 7% (instead of the proposed 5% increase) and to liberalize the earnings test. Senator Gore's amendment included the 1963 King (D-CA)-Anderson (D-NM) bill (H.R. 3920/S. 880), which would have provided hospital insurance benefits for the aged under the Social Security program. On September 2, 1964, the Gore amendment passed by a vote of 49 to 44. On September 3, 1964, the Senate passed H.R. 11865 by a vote of 60 to 28. Conference Action The conference committee on H.R. 11865 could not reach agreement. The conferees from the Senate voted 4 to 3 to insist on including the hospital insurance provisions; the conferees from the House, by a 3 to 2 vote, refused to accept such provisions. The conference committee adjourned on October 2, 1964. P.L. 89-97, Social Security Amendments of 1965 H.R. 6675, the Social Security Amendments of 1965, was signed into law on July 30, 1965, by President Lyndon Johnson. Although a federally operated health insurance program covering the entire nation was considered by the Franklin Roosevelt Administration in 1935, it was not explicitly endorsed until January 1945, when President Roosevelt's budget message called for an "extended Social Security including medical care." Such a plan was submitted to Congress by President Truman in November 1945, but neither chamber acted on the proposal, in large part due to strong opposition by the AMA. The controversy surrounding the establishment of a federal health insurance program for the aged was finally ended by the 1965 amendments (H.R. 6675), which established a basic two-part health insurance program called Medicare (Title XVIII of the Social Security Act). The costs of hospitalization and related care would be met in part by a compulsory program of Hospital Insurance (HI, Part A), financed by a separate payroll tax. The program would serve recipients of the Social Security and railroad retirement programs, aged 65 or older. A voluntary Supplementary Medical Insurance (SMI) plan (Part B) would help pay doctor bills and related services, for all persons aged 65 or older, financed through monthly premiums paid by the recipient and a matching federal payment from general revenues. The amendments also provided a 7% across-the-board increase in OASDI benefits, extended compulsory self-employment coverage to doctors, made child's benefits available through age 21 if the child were a full-time student (under prior law, they were available only through age 17), permitted widows to receive actuarially reduced benefits at age 60 rather than age 62, provided benefits to divorced wives and widows under certain conditions, increased the earnings test amount to $1,500 with $1 withheld for every $2 earned up to $2,700, and provided that an insured worker would be eligible for disability benefits if his or her disability was expected to end in death or to last for 12 consecutive months, instead of indefinitely. The 1965 amendments also increased the payroll tax rate and the taxable wage base. In addition, P.L. 89-97 reduced the number of quarters of work necessary for persons aged 72 or older to have insured status (from 6 quarters to 3 quarters for a worker and from 6 quarters to 3 quarters for a wife who reached age 72 in or before 1966, to 4 quarters for a wife who turned 72 in 1967, and to 5 quarters for a wife who attained age 72 in 1968). Further, a new federal-state medical assistance program established under Title XIX of the Social Security Act replaced the Kerr-Mills law (medical assistance for the aged that was enacted in 1960). The program was to be administered by the states, with federal matching funds. The new Medicaid program was available to all people receiving assistance under the public assistance titles (Title I, Title IV, Title X, and Title XIV) and to people who were able to provide for their own maintenance but whose income and resources were insufficient to meet their medical costs. House Action A federal hospital insurance program, or "Medicare," had been passed only once by the Senate, in 1964, and then by a narrow margin. It had never been approved by the Ways and Means Committee and thus had not been put to a House vote. The 1964 congressional elections, however, brought 42 new Northern Democrats into the House, almost all of them Medicare supporters. The Ways and Means Committee began holding executive sessions on H.R. 1, a bill to establish a social insurance program for hospital and related care for the aged, on January 27, 1965. The committee reported H.R. 6675 March 29, 1965, with all 17 Democrats favoring the bill and all 8 Republicans opposing it. House floor debate centered on the Medicare proposal. Supporters said it was long overdue. Critics opposed its compulsory nature, argued that it would be financed by a "regressive" payroll tax, and said it would endanger the Social Security cash benefit program. Republican spokesmen instead wanted a voluntary health plan (as opposed to a mandatory social insurance approach) with a Medicaid-like program underpinning it to provide medical assistance for the needy aged. On April 8, 1965, the House rejected Representative Byrnes's (R-WI) motion to recommit H.R. 6675 to the Ways and Means Committee with instructions to substitute the text of H.R. 7057, a bill that Representative Byrnes had introduced a week earlier. H.R. 7057 was not offered as an amendment because the rule did not permit such action. H.R. 7057 provided for all hospitalization, nursing home, medical and surgical care to be financed through a voluntary system with payment split between the patient and general revenues, rather than from a tax on the payrolls of employers. The motion to recommit was rejected by a vote of 191 (128-R, 63-D) to 236 (10-R, 226-D). On April 8, 1965, the House passed H.R. 6675 by a vote of 313 (65-R, 248-D) to 115 (73-R, 42-D). Senate Action On June 30, 1965, the Finance Committee reported its version of H.R. 6675. The committee approved the bill by a vote of 12 (2-R, 10-D) to 5 (4-R, 1-D). On July 7 and 8, 1965, three moves to expand H.R. 6675 were rejected. Senator Ribicoff's (D-CT) amendment to remove all time limits on length of hospital stays under Medicare was rejected by a vote of 39 (13-R, 26-D) to 43 (12-R, 31-D). Senator Miller's (R-IA) amendment to provide for an automatic 3% increase in Social Security pensions whenever a 3% increase occurred in the "retail" price index was rejected by a vote of 21 (15-R, 6-D) to 64 (9-R, 55-D). Senator Prouty's (R-VT) amendment to provide benefit increases ranging from 75% in the low-income brackets to 7% in the upper-income brackets was rejected by a vote of 12 (10-R, 2-D) to 79 (18-R, 61-D). In addition, Senator Curtis's (R-NE) amendment to provide that the Medicare patient pay a deductible based on ability to pay was rejected by a vote of 41 (25-R, 16-D) to 51 (4-R, 47-D). On July 7, 1965, Senator Byrd's (D-WV) amendment to lower the age at which workers could receive Social Security benefits to 60 (rather than age 62, the existing minimum) was agreed to by voice vote. On July 8, 1965, Senator Kennedy's (D-NY) amendment to prohibit federal payments to any hospital not meeting the standards required by the state or local government was passed by voice vote. On July 9, 1965, Senator Hartke's (D-IN) amendment to liberalize the definition of blindness under the Social Security program, provide benefits to blind workers with at least 6 quarters of Social Security coverage, and permit blind workers to receive benefits regardless of other earnings was passed by a vote of 78 (28-R, 50-D) to 11 (11-D). On July 9, 1965, Senator Hartke's amendment to eliminate the time limit on hospital care under the proposed program was agreed to by voice vote. On July 9, 1965, Senator Smathers's (D-FL) amendment to raise payroll taxes to finance the benefits provided in floor amendments passed by a voice vote. On July 9, 1965, Senator Curtis (R-NE) offered an amendment to strike Medicare, Parts A and B, from the bill. The amendment was rejected by a vote of 26 (18-R, 8-D) to 64 (11-R, 53-D). Senator Curtis also reintroduced, in a slightly different form, his amendment to provide a deductible based on the Medicare patient's ability to pay. This amendment, too, was rejected by a vote of 40 to 52. In addition, Senator Curtis moved to recommit H.R. 6675 with instructions to strike out the portions related to Medicare and substitute a plan patterned after the health insurance program used by retired federal employees, but financed from current premiums. The motion to recommit H.R. 6675 was rejected by a vote of 26 (18-R, 8-D) to 63 (10-R, 53-D). H.R. 6675 was passed by the Senate on July 9, 1965, by a vote of 68 (13-R, 55-D) to 21 (14-R, 7-D). Conference Action On July 27, 1965, the House adopted the conference report by a vote of 307 (70-R, 237-D) to 116 (68-R, 48-D). On July 28, 1965, the Senate adopted the conference report by a vote of 70 (13-R, 57-D) to 24 (17-R, 7-D). P.L. 89-368, Tax Adjustment Act of 1966 H.R. 12752, signed by President Johnson on March 15, 1966, raised income taxes to help pay for the Vietnam War. It extended OASI benefits of $35 per month to persons over the age of 71 who were not covered, but with the benefit reduced by the amount of payments received under government pension plans, veteran's or civil service pensions, teacher's retirement pension plans, or welfare programs. House Action The House passed H.R. 12752, the Tax Adjustment Act of 1966, by a vote of 246 (46-R, 200-D) to 146 (88-R, 58-D). The bill did not contain any Social Security provisions. Senate Action During the floor debate on H.R. 12752, Senator Prouty (R-VT) offered an amendment to extend a minimum Social Security payment of $44 a month to all persons aged 70 or older who were not then eligible for benefits (an estimated 1.8 million persons at a cost of $760 million in FY1967). On March 8, 1966, Senator Long (D-LA) moved to table the Prouty amendment but his motion was rejected by a vote of 37 (1-R, 36-D) to 51 (30-R, 21-D). On March 8, 1966, the Senate passed the Prouty amendment by a vote of 45 (21-R, 24-D) to 40 (9-R, 31-D) and adopted by a vote of 44 (25-R, 19-D) to 43 (6-R, 37-D) a motion by Senator Prouty to table Senator Mansfield's (D-MT) motion to reconsider the vote on passage of the amendment. On March 9, 1966, the Senate passed the Tax Adjustment Act of 1966 by a vote of 79 (24-R, 55-D) to 9 (4-R, 5-D). Conference Action On March 10, 1966, the conferees included the Prouty amendment in the final version of H.R. 12752, but changed the monthly benefit to $35. On March 15, 1966, the House adopted the conference report on H.R. 12752 by a vote of 288 (68-R, 220-D) to 102 (59-R, 43-D). On March 15, 1966, the Senate adopted the conference report on H.R. 12752 by a vote of 72 (23-R, 49-D) to 5 (4-R, I-D). P.L. 90-248, Social Security Amendments of 1967 (H.R. 12080) H.R. 12080, the Social Security Amendments of 1967, was signed by President Johnson on January 2, 1968. The amendments provided a 13% across-the-board increase in benefits; raised the taxable wage base from $6,600 to $7,800; increased the payroll tax rate from 4.4% on employers and employees each to 4.8% in 1969; raised the minimum benefit from $44 to $55 per month; raised the earnings test limit to $1,680 a year instead of $1,500 (recipient lost $1 in benefits for every $2 earned between $1,680 and $2,880, and lost $1 for each additional dollar earned above $2,880); added benefits for disabled widows and widowers at age 50, with a stricter definition of disability; liberalized the definition of blindness for disability payments; and clarified the definition of disability. President Johnson had called for a 15% across-the-board increase in OASDI benefits and numerous other changes in the Social Security Act. The proposals were embodied in H.R. 5710, introduced in the House on February 20, 1967, by the Committee on Ways and Means chairman, Wilbur Mills (D-AR). House Action The Ways and Means Committee held hearings on the Administration's bill (H.R. 5710) in March and April 1967. On August 7, 1967, it reported a new bill, H.R. 12080, that included most of the Administration's Social Security proposals, notably a provision that raised the earnings test limit from $1,500 to $1,680. On August 17, 1967, Representative Utt (R-CA) moved to recommit H.R. 12080. The motion was rejected by voice vote. On August 17, 1967, the House passed H.R. 12080 by a roll call vote of 416 (182-R, 234-D) to 3 (1-R, 2-D). The bill was debated under a closed rule prohibiting floor amendments. Senate Action On November 14, 1967, the Senate Finance Committee reported a heavily amended bill that contained several OASDI provisions as recommended by the Administration rather than as modified by the House. The Senate bill provided a 15% across-the-board Social Security increase, in contrast to the 12.5% increase in the House bill. On November 17, 1967, Senator Prouty (R-VT) offered an amendment to finance the higher benefits out of general revenues rather than Social Security taxes. The amendment was rejected by a vote of 6 (3-R, 3-D) to 62 (23-R, 39-D). On November 17, 1967, Senator Metcalf (D-MT) offered an amendment to delete from H.R. 12080 a more stringent definition of disability. The Metcalf amendment was passed by a vote of 34 (6-R, 28-D) to 20 (16-R, 4-D). On November 21, 1967, Senator Williams (R-DE) offered an amendment to implement the Finance Committee's recommended payroll tax increase in January 1968 (before the general election) rather than in January 1969. The amendment was defeated by a vote of 27 (22-R, 5-D) to 49 (4-R, 45-D). On November 21, 1967, the Senate, by a vote of 22 (17-R, 5-D) to 58 (9-R, 49-D), rejected a Republican proposal offered by Senator Curtis (R-NE) and Senator Williams (R-DE) substituting the 12.5% OASDI benefit increase and financing plan contained in the House bill for the 15% benefit increase and financing plan recommended by the Finance Committee. On November 21, 1967, Senator Bayh (D-IN) offered an amendment to raise the earnings test limit from $1,680 to $2,400. The amendment passed by a vote of 50 (14-R, 36-D) to 23 (10-R, 13-D). The Senate passed H.R. 12080 on November 22, 1967, by a 78 (23 R, 55-D) to 6 (4-R, 2-D) roll call vote. Conference Action The conference report on H.R. 12080 was filed on December 11, 1967. All of the major Senate floor amendments were dropped from the bill. The conferees split the difference between many of the other provisions. The House adopted the conference report on December 13, 1967, by a vote of 390 (167-R, 223-D) to 3 (1-R, 2-D). The Senate adopted the conference report on December 15, 1967, by a vote of 62 (26-R, 36-D) to 14 (3-R, 11-D). P.L. 91-172, Tax Reform Act of 1969 H.R. 13270, the Tax Reform Act of 1969, was signed by President Nixon on December 30, 1969. The new law included a 15% increase in Social Security benefits beginning in January 1, 1970. House Action On August 7, 1969, the House passed H.R. 13270 by a vote of 395 (176-R, 219-D) to 30 (10-R, 20-D). The bill did not contain any Social Security provisions. Senate Action On December 5, 1969, Senator Long (D-LA) offered an amendment to raise basic Social Security benefits by 15% beginning in January 1970. Senator Long's amendment was passed by a vote of 73 (23-R, 50-D) to 14 (14-R). A Byrd (D-WV)-Mansfield (D-MT) amendment to increase the minimum benefit to $100 for single persons and to $150 for couples and to increase the taxable wage base from $7,800 to $12,000 beginning in 1973 was passed December 5, 1969, by a vote of 48 (8-R, 40-D) to 41 (28-R, 13-D). On December 5, 1969, Senator Williams (R-DE) offered a substitute amendment to provide a 10%, rather than a 15% benefit increase. The substitute amendment was rejected by a vote of 34 (33-R, 1-D) to 56 (5-R, 51-D). On December 11, 1969, the Senate passed H.R. 13270 by a vote of 69 (18-R, 51-D) to 22 (20-R, 2-D). Conference Action The conferees agreed to increase Social Security benefits by 15%, effective January 1, 1970. The House had not included the increase in H.R. 13270 but had approved an identical provision in another bill, H.R. 15095. The conferees dropped the other provisions that were added on the Senate floor. On December 22, 1969, the House adopted the conference report on the Tax Reform Act, H.R. 13270, by a vote of 381 (169-R, 212-D) to 2 (2-R). On December 22, 1969, the Senate adopted H.R. 13270 by a vote of 71 (25-R, 46-D) to 6 (6-R). P.L. 92-5, Public Debt Limit Increase; Social Security Amendments President Nixon signed H.R. 4690 on March 17, 1971. It provided a 10% across-the-board increase in OASDI benefits, retroactive to January 1, 1971; raised the minimum benefit from $64 to $70.40 per month; increased the taxable wage base from $7,800 to $9,000 effective January 1, 1972; increased the OASDI tax rates on employers and employees to 5.15% each beginning in 1976 (from 5% scheduled to take effect in 1973 under prior law); and provided a 5% increase in special benefits payable to individuals aged 72 or older who were not insured for regular benefits, retroactive to January 1, 1971. House Action In 1970, a comprehensive Social Security bill (H.R. 17550) was passed by the House by a vote of 344 (166-R, 178-D) to 32 (32-D). H.R. 17550 increased benefits by 5%, provided for automatic benefit increases with rises in the cost of living, and made other changes in the OASDI and Medicare programs. Senate Action In the Senate, H.R. 17550 became a conglomerate bill containing import quotas and welfare provisions as well. On December 29, 1970, the Senate separated Social Security changes from the rest of the bill. H.R. 17550, with provisions raising benefits by 10%, providing a $100 minimum monthly benefit, raising the taxable wage base from $7,800 to $9,000, and making changes in the Medicare and Medicaid programs, was passed by the Senate on December 29, 1970, by a vote of 81 (35-R, 46-D) to 0. However, the House never agreed to a conference. Senator Long (D-LA), chairman of the Finance Committee and floor manager of H.R. 4690, said that he had asked the House to take immediate action to raise Social Security benefits and as the House had not responded, he was offering a benefit increase as an amendment to H.R. 4690, a bill to increase the debt ceiling. On March 12, 1971, Senator Long's amendment to provide a 10% increase in Social Security payments, a $100 minimum monthly benefit, increases in earnings limitations, and other changes passed by a vote of 82 (38-R, 44-D) to 0. The Senate, on March 12, 1971, passed H.R. 4690, after approving several Social Security changes, including the benefit increase proposed by Senator Long, by a vote of 80 (37-R, 43-D) to 0. Conference Action Conferees accepted the Senate's 10% benefit increase but reduced the $100 minimum benefit to $70.40 and made several other modifications. On March 16, 1971, the House adopted the conference report by a vote of 360 (150-R, 210-D) to 3 (3-R). On March 16, 1971, the Senate adopted the report by a vote of 76 (37-R, 39-D) to 0. P.L. 92-336, Public Debt Limit; Disaster losses; Social Security Act Amendments President Nixon signed H.R. 15390, a bill to extend the limit on the public debt, on July 1, 1972. At the beginning of the year, the President included a number of Social Security proposals, along with a controversial welfare reform plan, in H.R. 1. Congress at midyear used a more promising vehicle to pass a separate 20% increase in Social Security benefits. The increase was added in the Senate to a House-passed bill that raised the debt limit (H.R. 15390). The bill also provided for future automatic increases in Social Security benefits when the consumer price index (CPI) rose by 3% or more. To finance the increase, the taxable wage base was raised from $9,000 to $10,800 in 1973 and to $12,000 in 1974, with automatic adjustment thereafter. The Congressional Quarterly Almanac reported that, Backers of the Social Security benefits package decided to attach it to the debt increase bill for two reasons: (1) President Nixon, who opposed a 20% increase as inflationary, would be unlikely to veto a bill that contained a debt limit increase, and (2) H.R. 1, the bill under which a benefit increase was then being considered, faced an uncertain future because of controversy over its welfare provisions. House Action On June 22, 1971, the House had passed H.R. 1 (see P.L. 92-603, below) which included provision for a general benefit increase of 5%. On February 23, 1972, Representative Mills (D-AR), chairman of the Ways and Means Committee, introduced H.R. 13320, which provided for an immediate benefit increase of 20%. On June 27, 1972, the House passed H.R. 15390, providing only for an increase in the debt ceiling, by a vote of 211 to 168. Senate Action On June 29, 1972, Senator Aiken (R-VT) offered an amendment to the Church amendment to increase Social Security benefits by 30%. Following Senator Long's (D-LA) motion, Senator Aiken's amendment was tabled by a vote of 71 (31-R, 40-D) to 18 (8-R, 10-D). On June 30, 1972, an amendment by Senator Bennett (R-UT) to increase Social Security benefits by 10% instead of 20% was rejected by the Senate by a vote of 20 (17-R, 3-D) to 66 (21-R, 45-D). On June 30, 1972, Senator Church's (D-ID) amendment calling for a 20% benefit increase and the automatic adjustment of benefits and the taxable wage base in the future was adopted by the Senate by a vote of 82 (34-R, 48-D) to 4 (4-R). The amendment made benefit increases automatic whenever the CPI rose by 3% or more in any calendar year. On June 30, 1972, the Senate passed H.R. 15390 by a vote of 78 (36-R, 42-D) to 3 (1-R, 2-D). H.R. 15390 was then sent back to the House. House Response to Senate Amendment The House sent the debt ceiling bill to the conference committee on June 30, 1972, without accepting the Senate-passed benefit increase. Immediate congressional action was necessary because the debt limit was to revert automatically to $400 billion (from the existing $450 billion) at midnight on June 30, 1972. Conference Action On June 30, 1972, the conferees informally accepted the Senate-passed version of H.R. 15390. Under House rules, however, House conferees could not agree to nongermane amendments added by the Senate. Thus, the conference report was reported back to the House in disagreement. On June 30, 1972, Representative Byrnes (R-WI) called the proposed 20% increase "irresponsible" and moved that the House concur with the Senate amendment but with the benefit increase limited to 10%. The motion was rejected by a vote of 83 (63-R, 20-D) to 253 (73-R, 180-D). On June 30, 1972, Representative Mills's (D-AR) motion that the House concur with the Senate-passed amendment granting a 20% Social Security benefit increase and annual automatic cost-of-living adjustments (COLAs) was accepted by a vote of 302 (108-R, 194-D) to 35 (28-R, 7-D). P.L. 92-603, Social Security Amendments of 1972 H.R. 1, the Social Security Amendments of 1972, was signed into law on October 30, 1972, by President Nixon. From1969 to 1972, Congress raised OASDI benefits three times. Benefits were raised by 15% in 1969, 10% in 1971, and 20% in 1972 (discussed above, the latter with the adoption of P.L. 92-336). P.L. 92-336 also provided for future automatic benefit increases, or COLAs, starting in January 1975, whenever the consumer price index rose more than 3% in a year. These benefit increases were amendments to bills dealing with other subjects. President Nixon had requested a number of other Social Security liberalizations in 1969, but those proposals were entangled with his controversial welfare reform plan. It was not until 1972, when H.R. 1 became P.L. 92-603, that the requested Social Security recommendations became law. The 1972 amendments (H.R. 1) increased benefits for widows and widowers; raised the earnings limit from $1,680 to $2,100 with automatic adjustment to average wages thereafter (benefits were reduced by $1 for every $2 in earnings in excess of $2,100); reduced the waiting period for disability benefits from six to five months; extended Medicare protection to disabled recipients who had received benefits for at least two years; and provided a special minimum benefit of up to $170 a month for those who had worked many years, but at low earnings. In addition, OASDHI tax rate-increases scheduled for the periods 1973-1977, 1978-1980, 1981-1985, 1986-1992, 1993-1997, 1998-2010, and 2011 and years thereafter, were further raised. H.R. 1 also contained the President's controversial Family Assistance Plan. The bill remained in the Senate for more than a year because of controversy over welfare reform. The Senate finally approved H.R. 1 with a provision for tests of rival welfare plans, but in conference all family welfare provisions were dropped. In addition, the final version of H.R. 1 contained provisions federalizing and consolidating adult public assistance programs for needy aged, blind, or disabled persons in a new Supplemental Security Income (SSI) program. House Action Most of the debate on H.R. 1 dealt with the family welfare provisions, with little debate on the OASDI and Medicare provisions. H.R. 1 was passed by the House on June 22, 1971, by a vote of 288 (112-R, 176-D) to 132 (64-R, 68-D). Senate Action On September 27, 1972, Senator Mansfield (D-MT) offered an amendment to increase the earnings test limit from $1,680 to $3,000. The amendment was agreed to by a vote of 76 (32-R, 44-D) to 5 (4-R, 1-D). On September 28, 1972, Senator Percy's (R-IL) amendment to require the Secretary of the Department of Health, Education, and Welfare to review the Social Security earnings test, and report to Congress on the feasibility of eliminating it, was accepted by voice vote. On September 29, 1972, Senator Long (D-LA) offered an amendment to provide a federal SSI program for needy aged, blind, or disabled persons (in place of the existing state adult assistance programs). The amendment was passed by a vote of 75 (32-R, 43-D) to 0. n September 29, 1972, the Finance Committee's amendment to guarantee every person who worked in employment covered under the Social Security program for at least 30 years a minimum monthly benefit of $200 ($300 for a couple) passed by a vote of 73 (30-R, 43-D) to 0. On September 30, 1972, Senator Byrd's (D-WV) amendment to lower to 60 the age at which reduced Social Security benefits could be received and to 55 the age at which a woman could receive reduced widow's benefits was agreed to by a vote of 29 (10-R, 19-D) to 25 (12-R, 13-D). On September 27, 1972, Senator Goldwater (R-AZ) offered an amendment to repeal the earnings limitation for all Social Security recipients aged 65 or older. The amendment was rejected by voice vote. H.R. 1 passed the Senate on October 5, 1972, by a vote of 68 (33-R, 35-D) to 5 (1-R, 4-D). Conference Action On October 17, 1972, the House adopted the conference report on H.R. 1 by a vote of 305 (129-R, 176-D) to 1 (1-D). On October 17, 1972, the Senate adopted the conference report on H.R. 1 by a vote of 61 (24-R, 37-D) to 0. P.L. 93-233, Social Security Benefits Increase A two-step 11% benefit increase became law when President Nixon signed H.R. 11333 on December, 31, 1973. This increase was in lieu of a 5.9% increase scheduled by P.L. 93-66 , which had been enacted in July 1973. In passing H.R. 11333 , congressional sentiment was that the earlier increase was inadequate to offset recent rapid increases in inflation. P.L. 93-233 increased benefits by 7% in March 1974 and by another 4% in June 1974. To finance the increases, the Social Security taxable wage base was raised from $12,600 to $13,200 in January 1974. In addition, the automatic COLA mechanism was revised. Under P.L. 93-233 , the COLA was to be based on the rise in the CPI from the first quarter of one year to the first quarter of the next year, rather than second quarter to second quarter, with benefit increases starting in June 1975 rather than in January. As a result, the increases would appear in checks received in July, creating only a three-month lag from the close of the measuring period (i.e., the first quarter) rather than the seven-month lag under the prior mechanism. House Action With a rule allowing only one floor amendment (pertaining to SSI), the House passed H.R. 11333 on November 15, 1973. The November 14-15 debate on H.R. 11333 was devoted to the need for a quick cost-of-living Social Security benefit increase and to questions about the fiscal soundness of the Social Security trust funds. H.R. 11333 as reported by the Ways and Means Committee recommended a two-step 11% Social Security benefit increase in 1974, accelerated SSI benefit increases, and payroll tax increases. On November 15, 1973, the House passed H.R. 11333 by a vote of 391 (168-R, 223-D) to 20 (15-R, 5-D). Senate Action The Senate Finance Committee approved a number of provisions affecting Social Security, including an initial 7% benefit increase effective upon enactment and a further 4% increase in June 1974. Rather than acting on H.R. 11333 , the Senate attached its Social Security amendments to H.R. 3153 , a Social Security bill passed by the House on April 2, 1973. ( H.R. 3153 made a number of technical and conforming amendments to the Social Security Act that had been omitted in drafting the conference agreement on H.R. 1, which became P.L. 92-603.) The Senate debated H.R. 3153 for three days and adopted 38 amendments. On November 29, 1973, Senator Byrd (D-WV) introduced an amendment that reduced to 55 the age at which a woman could claim a Social Security widow's benefit. Under existing law, a widow could elect to retire at 60 with reduced benefits. Senator Byrd said that his amendment would help widows between the ages of 55 and 60, who would be unlikely and perhaps unable to establish a new career or to reactivate an old one. Terming the Byrd amendment "inequitable," Senator Curtis (R-NE) objected that it would be unjust to reduce the eligibility age for widows "who have not worked under covered employment" while keeping the existing requirement at age 62 for "women who have had to work all their lives and will have to work until they are of retirement age." Senator Byrd's amendment was adopted by a vote of 74 (28-R, 46-D) to 13 (9-R, 4-D). Senator Byrd introduced a second amendment that increased the earnings test limit from $2,400 to $3,000 and lowered from 72 to 70, the age at which the earnings limit would no longer apply. The amendment was accepted November 29, 1973, by a vote of 83 (33-R, 50-D) to 1 (1-R). On November 29, 1973, Senator Hartke's (D-IN) amendment making blind persons eligible for disability benefits after working 18 months in covered employment was adopted by voice vote. (Ordinarily a disabled person had to have covered employment in 20 quarters out of the last 40 quarters to be eligible.) On November 30, 1973, the Senate passed H.R. 3153 by a vote of 66 (24-R, 42-D) to 8 (6-R, 2-D). Conference Action After the Senate passed H.R. 3153 , it asked the House for a conference, but the House appointed conferees only two days before the end of the session. The conferees did not act on H.R. 3153 . Instead, they agreed to work on revisions to H.R. 11333 , the House-passed Social Security bill, on which the Senate had never acted. As part of a compromise reached on December 20, the House conferees agreed to hold a further conference on H.R. 3153 in 1974 to consider additional Senate amendments, but the conference never took place. The conference report on H.R. 11333 included a two-step 11% increase in benefits, effective March 1974 and June 1974, raised the wage base to $13,200 in 1974, and increased the initial federal SSI benefit level. The Senate passed H.R. 11333 with the amendments agreed to in conference on December 21, 1973, by a vote of 64 to 0. The House, on December 21, 1973, concurred in passing the bill by a vote of 301 (123-R, 178-D) to 13 (10-R, 3-D). P.L. 95-216. The Social Security Amendments of 1977 H.R. 9346 , the Social Security Amendments of 1977, was signed by President Carter on December 20, 1977. H.R. 9346 was passed to meet major Social Security financing problems that emerged in the mid-1970s. The Congressional Quarterly Almanac says that the main cause of the immediate financial problems was the "combination of rapid inflation and a recession, which together raised Social Security benefit costs and reduced tax receipts." In addition to fixing short-run problems, the amendments sought to eliminate the medium-range deficit (over the next 25 years) and to reduce the projected long-range deficit (next 75 years) from more than 8% of taxable payroll to less than 1.5%. The basic approach was to (1) handle the short-term financing problem either through increased payroll taxes or infusions from the general fund; and (2) reduce and possibly eliminate the projected long-run deficit by modifying the benefit formula to stabilize replacement rates. Neither house of Congress gave much attention to an Administration proposal to authorize use of general revenues for Social Security during periods of high unemployment (i.e., the so-called counter cyclical use of general revenues). Instead, the new law met the short-run problem mostly by increasing Social Security tax rates and the taxable earnings base and also by somewhat reducing expenditures. The final bill contained "decoupling" procedures, which also had been supported by the Ford Administration, for correcting a basic flaw in the benefit computation formula, and thereby largely reduced the long-run problem. P.L. 95-216 also liberalized the earnings test by providing a five-step ad hoc increase in the earnings limits for recipients aged 65 or older (the limit for persons under age 65 continued to be adjusted only for increases in average wages after 1978); eliminated the earnings test for recipients aged 70 or older (reduced from age 72), beginning in 1982; reduced spousal benefits for government annuitants whose government jobs were not covered by Social Security; and liberalized the treatment of divorced and widowed recipients. House Action Legislation that incorporated the Administration's recommendations ( H.R. 8218 ) was introduced on July 12, 1977, by Representative Burke (D-MA), chairman of the House Ways and Means Committee's Social Security Subcommittee. After reworking the Administration's package, the subcommittee made recommendations to the full committee that were introduced by Chairman Ullman (D-OR) on September 27, 1977, as H.R. 9346 . On October 6, 1977, the full committee approved a financing plan combining payroll tax increases with basic changes in benefits and coverage. H.R. 9346 , was reported to the House on October 12, 1977. The House floor debate on H.R. 9346 began on October 26, 1977. On October 26, 1977, the House considered an amendment from the Committee on Post Office and Civil Service. The amendment would have deleted the provision in the Ways and Means Committee bill covering federal, state, local, and nonprofit employees under Social Security. Representative Fisher (D-VA) offered a substitute for the Post Office and Civil Service Committee amendment. The Fisher substitute provided that federal employees would continue to be exempt from the Social Security system and that state and local governments and nonprofit organizations would continue to have the option of electing to cover their employees. While the amendment deleted mandatory coverage of these employees, the bill retained a provision requiring a study of mandatory coverage to be conducted jointly by the Civil Service Commission, the Departments of Treasury and Health, Education, and Welfare, and the Office of Management and Budget. Many Members endorsed the concept of universal mandatory Social Security coverage, but supporters of the Fisher amendment asserted that a study of the universal coverage issue should be conducted first. Opponents, in contrast, argued that the committee bill, by postponing the extension of coverage until 1982, allowed sufficient time to work out details. To make up for the revenue loss due to deletion of the mandatory coverage provisions, the amendment also provided for greater increases in the Social Security tax rate and wage base than those included in the committee bill. The Administration, as well as representatives of many groups that would have been affected by the coverage extension, lobbied for the Fisher amendment. Representative Fisher's substitute amendment was agreed to by a vote of 386 (129-R, 257-D) to 38 (14-R, 24-D). The House then adopted the Post Office and Civil Service Committee amendment, as amended by the Fisher amendment, by a vote of 380 (124-R, 256-D) to 39 (14-R, 25-D). On October 26, 1977, Representative Pickle (D-TX) offered an amendment to strike another committee provision authorizing standby loans to the OASDI system from general revenues whenever trust fund reserves dipped below 25% of a year's outgo. Representative Pickle argued that any use of general treasury funds for Social Security undermined the contributory nature of the program. He remarked that he did not want to see the Social Security program turned into a "welfare or need program." The Pickle amendment was rejected by a vote of 196 (122-R, 74-D) to 221 (15-R, 206-D). On October 26, 1977, Representative Corman (D-CA) offered an amendment to eliminate the minimum Social Security benefit for new recipients. He said that the minimum benefit gave those who had paid very little in Social Security taxes a benefit "far in excess of his or her average monthly wage." He stated that his amendment restored "a measure of the social insurance principle of relating benefits to contributions." The amendment was rejected by a vote of 131 (68-R, 63-D) to 271 (64-R, 207-D). On October 27, 1977, Representative Ketchum (R-CA) offered an amendment to gradually raise the earnings limitation on recipients over age 65 and to phase it out completely in 1982. The amendment included a tax rate increase to meet the cost of the additional benefit payments. The amendment was adopted by a vote of 268 (139-R, 129-D) to 149 (1-R, 148-D). On October 27, 1977, Representative Conable (R-NY) moved to recommit H.R. 9346 to the Ways and Means Committee with instructions to report out the bill with an amendment that mandated coverage of federal workers, diverted half of the HI portion of the payroll tax to OASDI in 1980, and replaced the lost HI revenues with general revenues. Representative Conable argued that an amendment containing the above would enable both the wage base and the tax rate to remain as scheduled under existing law. The recommittal motion was rejected by a vote of 57 (44-R, 13-D) to 363 (97-R, 266-D). H.R. 9346 passed the House on October 27, 1977, by a vote of 275 (40-R, 235-D) to 146 (100-R, 46-D). Senate Action Preliminary hearings and markup sessions on financing and decoupling were held by the Senate Committee on Finance in the summer and fall of 1977, even though the House had not yet passed its Social Security bill. Before H.R. 9346 was passed by the House, the Finance Committee had tentatively agreed that its amendments would be attached to H.R. 5322 , an unrelated tariff bill that had originated in the House. H.R. 5322 was to be a convenient vehicle for putting the Senate Finance Committee proposals before the Senate promptly. When H.R. 9346 as passed by the House came up for debate on the Senate floor on November 2, 1977, Senator Long (D-LA) introduced an amendment to substitute the Finance Committee Social Security proposals in H.R. 5322 for the House bill. The Finance Committee proposals included decoupling measures similar to those in the House bill. They also included provisions that would require employers to pay Social Security taxes on a higher wage base than employees and would reduce spousal benefits by the amount of a government pension that was based on work not covered by Social Security. Senator Long's amendment was agreed to with no recorded vote. Thus, the text of H.R. 5322 became H.R. 9346 as amended by the Senate. On November 3, 1977, Senator Curtis (R-NE) offered an amendment that would have kept the taxable wage base the same for employers and employees (at the level specified for employees in the committee proposal) but would have raised the tax rate above the committee-recommended levels. Senator Curtis said his amendment would take care of the deficit in the Social Security fund. He stated that raising the wage base would put half of the financing burden exclusively on the people with higher incomes. Senator Nelson (D-WI) acknowledged that the Curtis amendment would supply the necessary funding to keep the retirement system solvent, but stressed that the average worker would pay a higher tax under the Curtis plan than under the committee proposal. Senator Nelson's motion to table the Curtis amendment lost by a vote of 44 (3-R, 41-D) to 45 (31-R, 14-D), but the Senate then rejected the Curtis amendment, 40 (27-R, 13-D) to 50 (7-R, 43-D). On November 4, 1977, Senator Goldwater (R-AZ) offered an amendment to lower the age at which the earnings test would no longer apply from 72 to 65. Senator Goldwater said that his amendment would end the discrimination that allowed full benefits to relatively wealthy retirees who had unearned income in excess of $3,000, but reduced benefits for retirees who relied entirely on additional earned income to supplement their Social Security benefits. Opponents of the amendment said that it would provide a windfall to professionals who continued to work at lucrative jobs past retirement age. Senator Church (D-ID offered a substitute amendment to lower from 72 to 70 the age at which the earnings test would no longer apply. Senator Goldwater's motion to table the Church amendment was rejected 33 (25-R, 8-D) to 53 (7-R, 46-D). The Senate adopted the Church substitute amendment 59 (12-R, 47-D) to 28 (20-R, 8-D) and then adopted the Goldwater amendment as amended by the Church substitute by a vote of 79 (30-R, 49-D) to 4 (4-D). An amendment offered by Senator Church on November 4, 1977, to provide for semiannual COLAs when the rate of inflation for a six-month period was 4% or greater was adopted by a vote of 50 (11-R, 39-D) to 21 (15-R, 6-D). On November 4, 1977, Senator Bayh (D-IN) offered an amendment to remove the earnings limit for blind persons collecting disability benefits and to set the number of quarters blind persons must work to qualify for disability benefit at six. The Bayh amendment was adopted by voice vote. The Senate passed H.R. 9346 , as amended, by a vote of 42 (9-R, 33-D) to 25 (15-R, 10-D) on November 4, 1977. Conference Action The conference agreement provided for higher payroll tax rates than those proposed by either the House or Senate. The House-approved authority for loans to the trust funds from general revenues was dropped, as was the Senate-passed proposal to raise the wage base for employers higher than that for employees. Rather than phase out the earnings test, as in the House-passed bill, the conferees agreed to raise, over five years, the earnings tests limit for the elderly (aged 65 or older). Despite numerous differences between the House and Senate versions of the bill, the Congressional Quarterly Almanac stated that the conferees resolved their differences "without trouble." The main controversy involved provisions dealing with welfare programs and college tuition tax credits. On December 15, 1977, the House agreed to the conference report by a vote of 189 (15-R, 174-D) to 163 (109-R, 54-D). There was unease in the House because of the large tax increases. Representative Conable (R-NY) claimed that more reasonable non-tax alternatives were available. On December 15, 1977, Representative Ullman (D-OR) stated that the conference report "responsibly faces up to the issues of Social Security, both short range and long range." He assured Members that he would "move as expeditiously as possible ... toward adopting a new revenue mechanism whereby we can back off from these major increases.... " On December 15, 1977, the Senate passed the conference report with little controversy by a vote of 56 (17-R, 39-D) to 21 (14-R, 7-D). P.L. 96-265, Social Security Disability Amendments of 1980 H.R. 3236 , the Social Security Disability Amendments of 1980, was signed by President Carter on June 9, 1980. H.R. 3236 changed the Social Security disability insurance program in four major ways: (1) it placed a new limit on family benefits to prevent Social Security benefits from exceeding the worker's previous average earnings; (2) it provided incentives for recipients to return to work; (3) it required a higher percentage of federal reviews of new disability awards and more frequent periodic state-level reexamination of existing recipients; and (4) it modified the administrative relationship between the federal government and states. The amendments also made similar changes in disability payments under the SSI program and established federal standards for "medigap" insurance policies sold by private insurance companies to supplement federal Medicare health insurance. House Action The House Ways and Means Committee's Subcommittee on Social Security held public hearings in February and March 1979. Following these hearings, the subcommittee held markup sessions on H.R. 2854 , the Administration's proposals, and incorporated its recommendations into H.R. 3236 , which was introduced on March 27, 1979. After considering the subcommittee's recommendations, the full Committee on Ways and Means reported the bill to the House on April 23, 1979. Action on the bill was delayed as several major groups raised questions about the legislation, and controversy arose as to the rules under which the bill would be considered on the House floor. Many of the interested parties wanted an opportunity to consider several of the provisions separately when H.R. 3236 was considered on the floor, rather than to vote for or against the bill as a whole. The Rules Committee held hearings on June 6 and 7, 1979, and reported out on June 7, 1979, H.Res. 310 , which provided for a modified rule and one hour of debate on H.R. 3236 . The rule provided that the only amendments that would be in order would be those recommended by the Ways and Means Committee (which were not amendable) and an amendment offered by Representattive Simon (D-IL) that would delay the implementation of a provision affecting vocational rehabilitation funding by one year. Despite the passage of the rule, "the opposition coalition was able to block floor consideration of the measure for 3 months." Floor debate on H.R. 3236 did not begin until September 6, 1979. On September 6, 1979, the House agreed to the Ways and Means Committee and Representative Simon's amendments and passed H.R. 3236 by a vote of 235 (108-R, 127-D) to 162 (36-R, 126-D). Senate Action In October 1979, the Senate Finance Committee held hearings on proposed disability legislation. The committee completed its markup on November 7, 1979, and reported H.R. 3236 to the Senate on November 8, 1979. On December 5, 1979, the Senate began floor debate. Final debate, which occurred in late January 1980, centered primarily on the provision to establish a lower limit on family benefits. On January 30, 1980, Senator Metzenbaum's (D-OH) amendment to increase the limit on disability benefits from 85% to 100% of the worker's previous average earnings was defeated by a vote of 47 (7-R, 40-D) to 47 (31-R, 16-D). On January 30, 1980, Senator Bayh (D-IN) offered an amendment to exempt terminally ill applicants from the waiting period. The amendment was limited to people who, in the opinion of two doctors, would probably die within a year. Senator Bayh said it was cruel to deny assistance to desperately ill people on the basis of an arbitrary waiting period that lasted longer than most of them were likely to live. Senator Long (D-LA) said elimination of the waiting period for one group would eventually lead to its elimination for all disabled persons, at a cost of $3 billion a year. Senator Long also argued that the amendment was not germane because there was nothing in the bill relating to the waiting period for benefits. The amendment was ruled out of order but the Senate voted 37 (19-R, 18D) to 55 (17-R, 38-D) against the ruling of the chair and then adopted the Bayh amendment by a vote of 70 (25-R, 45-D) to 23 (12-R, 11-D). On January 31, 1980, the Senate passed H.R. 3236 , with amendments, by a vote of 87 (35-R, 52-D) to 1 (1-D). Conference Action On May 13, 1980, the conference committee reported the bill. On the key issue of limiting future family benefits, the conferees combined the Senate limit of 85% of the worker's previous average work earnings and the House provision limiting benefits to no more than 150% of the worker's basic individual benefit. The conferees also made a modification to the medigap provision (added by the Senate) and dropped the Senate amendment regarding the waiting period for the terminally ill, calling for a study of the issue instead. On May 22, 1980, the House passed H.R. 3236 , as agreed to by the conferees, by a vote of 389 (147-R, 242-D) to 2 (2-D). On May 29, 1980, the Senate passed the conference report on H.R. 3236 by a voice vote. P.L. 96-403, Reallocation of OASI and Dl Taxes On October 9, 1980, H.R. 7670 , the Reallocation of Social Security Taxes Between OASl and Dl Trust Funds, was signed into law by President Carter. Although the Social Security Amendments of 1977 did, in part, remedy the program's financing problems, high inflation increased Social Security benefits and higher than expected unemployment reduced income to the trust funds. The outlook for the OASI program, in particular, was deteriorating fairly rapidly. H.R. 7670 shifted revenues from the Disability Insurance Trust Fund to the Old-Age and Survivors Trust Fund during 1980 and 1981 so that adequate reserves could be maintained in both trust funds at least through the end of calendar year 1981. House Action On July 21, 1980, Representative Pickle (D-TX) moved to suspend the rules and pass H.R. 7670 . In his remarks, Representative Pickle said that "the bill we bring today is a deliberate step both to insure the stability of the trust funds and to provide the Congress the time it will need to make any further changes necessary." He also stated that "Reallocation, the mechanism used in H.R. 7670 , has been the traditional way of redistributing the OASDI tax rates when there have been changes in the law and in the experience of programs and in order to keep all the programs on a more or less even reserve ratio.... Reallocation means that the formula for allocating the incoming payroll tax receipts is changed in the law so that funds will flow into the various funds in a different mix than currently projected." On July 21, 1980, the House suspended the rules and passed H.R. 7670 . There was no roll call vote. Senate Action On September 25, 1980, H.R. 7670 was passed by unanimous consent. P.L. 96-473, Retirement Test Amendments277 On October 19, 1980, H.R. 5295 was signed by President Carter. It made various changes in the earnings test provisions enacted in 1977 and limited the circumstances under which Social Security benefits could be paid to prisoners. Before enactment of P.L. 96-473 , two earnings tests applied to Social Security benefits. One was an annual test, the other a monthly test. If a recipient earned more than the annual limit, benefits were reduced $1 for every $2 of excess earnings until all Social Security benefits were withheld. Under the monthly earnings test, however, if a person's earnings were less than one-twelfth of the annual amount, he or she could get full benefits for that month, regardless of annual earnings. The 1977 provision eliminating the monthly earnings test was designed with retirees in mind. However, the language as enacted applied to all classes of recipients affected by the earnings limitation. Generally, these recipients are likely to get a job and have substantial earnings in the year their benefits end. If these earnings were over the annual earnings limitation, some of the benefits they already received in the year become overpayments and had to be repaid. P.L. 96-473 modified this by allowing individuals who received certain dependents' benefits (a child or student's benefit, mother's benefit, or father's benefit) to use the monthly earnings test in the year in which their entitlement to such benefits ended. P.L. 96-473 also allowed all recipients to qualify for at least one "grace year" in which the monthly earnings test applies and made other changes relating to the earnings test for the self-employed, particularly those whose incomes were often in "deferred" forms. In addition, P.L. 96-473 prohibited payment of Social Security disability insurance benefits or of student benefits (based on any kind of Social Security status) to prisoners convicted of a felony, except where the individual is participating in a court-approved rehabilitation program (but allowed benefits to be paid to their dependents); disallowed impairments that arise from or are aggravated by the commission of a crime to be considered in determining whether a person is disabled; and disallowed impairments developed while an individual is in prison to be considered in determining disability while the person remains in prison. House Action On July 23, 1979, the House Ways and Means Committee's Subcommittee on Social Security held a hearing on the Social Security earnings test. In the spring of 1980, Congress also was concerned with the issue of paying Social Security benefits to prisoners. The Subcommittee on Social Security held hearings on the subject, and numerous bills prohibiting payments to prisoners were introduced. On December 19, 1979, Senator Long (D-LA) in discussing the earnings test as amended by the 1977 amendments said, "The purpose of the change was to simplify the test and make more evenhanded the treatment of those who had similar amounts of annual earnings but differences in monthly work patterns. Several categories of recipients have been experiencing unforeseen problems with the new annual earnings test, however, and have been disadvantaged by it. H.R. 5295 is designed to correct those inequities." On December 19, 1979, H.R. 5295 , as amended, was passed unanimously by the House, 383 to 0. Senate Action On April 21, 1980, the Senate Finance Committee's Subcommittee on Social Security held a hearing on the Social Security earnings test. During the spring of 1980, the subcommittee also held hearings on the subject of denying Social Security benefits to prisoners. When S. 2885 , the 1981 Budget Reconciliation bill, was reported out of the Senate Finance, it included a provision that prohibited payment of Social Security disability benefits to prisoners convicted of crimes. The Finance Committee also included this measure in H.R. 5295 . On September 30, 1980, the Senate passed H.R. 5295 , with amendments, by unanimous consent. House Concurrence On October 1, 1980, Representative Conable (R-NY) remarked "The only amendment that we are asking to be attached here that goes to the Senate is an amendment that changes the word 'crime' to the words 'crime in the nature of a felony,' so that it would apply only to more serious crimes and not possibly to traffic infractions and things of that sort." On October 1, 1980, the House concurred in the Senate amendments with an amendment by unanimous consent. Senate Concurrence On October 1, 1980, Senator Byrd's motion that the Senate concur with the House amendment to the Senate amendment was agreed to by voice vote. P.L. 97-35, Omnibus Budget Reconciliation Act of 1981 H.R. 3982 , the Omnibus Budget Reconciliation Act of 1981, was signed into law ( P.L. 97-35 ) by President Reagan on August 13, 1981. It included most of the Social Security changes proposed as part of the President's 1982 budget, as well as some added by the House. The Social Security provisions were among many outlay reduction measures intended to constrain federal expenditures. The Administration argued that the benefits it targeted for elimination or reduction were not directed at the basic goals of the program, and it did not consider them to have been "earned." The budget proposals eliminated the minimum Social Security benefit for both current and future recipients, phased out benefits for students in postsecondary schools (aged 18 or older, except for those under aged 19 still in high school), made lump-sum death benefits available only to a spouse who was living with the worker or a spouse or child eligible for immediate monthly survivor benefits, and reduced benefits for those whose Social Security disability payments and certain other public pensions exceed 80% of pre-disability earnings. The amendments also eliminated reimbursement of the cost of state vocational rehabilitation services from the trust funds except where it could be shown that the services had resulted in the disabled person leaving the rolls; postponed the lowering of the earnings test exempt age (from 72 to 70) until 1983; ended parents' benefit when the youngest child reaches age 16; and provided that workers and their spouses would not receive benefits unless they meet the requirements for entitlement throughout the month. These last three provisions were initiatives added by the Ways and Means Committee. Senate Action287 Because the Social Security legislation was considered in the context of the budget and reconciliation processes, there was virtually simultaneous consideration of the proposals by the House and the Senate. After final adoption on May 21, 1981, of the First Concurrent Budget Resolution, both the House and the Senate were acting within similar reconciliation guidelines. On June 10, 1981, the Finance Committee reported its recommendations for spending reductions. These were included by the Senate Budget Committee in S. 1377 , the Omnibus Budget Reconciliation Act of 1981, which was reported by the Budget Committee to the Senate on June 17, 1981. The Social Security proposals included in S. 1377 were basically those proposed by the Administration with some minor modifications. On June 22-25, 1981, the Senate debated S. 1377 . The most controversial aspect of the bill relating to the Social Security program was the elimination of the minimum benefit for people already on the benefit rolls. On June 23, 1981, Senator Riegle (D-MI) offered an amendment that would have eliminated the minimum benefit only for future recipients. The amendment was defeated by a vote of 45 (4-R, 41-D) to 53 (48-R, 5-D). On June 25, 1981, the Senate passed S. 1377 , with the Finance Committee's Social Security proposals, by a vote of 80 (52-R, 28-D) to 15 (0-R, 15-D). House Action The Ways and Means Committee recommendations, while touching on some of the same benefit categories as the Administration's proposals, were notably different. These proposals were incorporated by the Budget Committee into its version of the Omnibus Budget Reconciliation Act of 1981, H.R. 3982 , which was reported to the House on June 19, 1981. The adoption of the rule for floor consideration of H.R. 3982 became, in itself, a highly controversial issue. The Democratic leadership argued for allowing six separate votes on the grounds that this would allow for greater accountability for individual Members and avoid criticisms of "rubber-stamping" the Administration's proposals. A bipartisan group of Members (generally supported by the Administration) argued instead for a rule that allowed only an up-or-down vote on a substitute for the Budget Committee bill sponsored by Representative Gramm (D-TX) and Representative Latta (R-OH). Those arguing for the substitute said it would facilitate future conference agreement by bringing H.R. 3982 more closely in line with the President's original proposals and with S. 1377 then pending in the Senate. On June 25, 1981, the original rule for floor consideration of the bill was defeated by a vote of 210 (1-R, 209-D) to 217 (188-R, 29-D). A package of amendments by Representative Latta, the so-called Gramm-Latta II alternative, called for (1) deleting the Ways and Means' proposal to move the COLA from July to October and (2) changing the effective date of the Senate-passed minimum benefit proposal, affecting both current and future recipients, and (3) modifying the Senate-passed student benefit phase-out proposal (which contained a faster phase-out than the Ways and Means Committee version). The Gramm-Latta II alternative package passed the House on June 26, 1981, by a vote of 217 (188-R, 29-D) to 211 (2-R, 209-D). On June 26, 1981, the House passed the Omnibus Budget Reconciliation Act of 1981 by a vote of 232 (185-R, 47-D) to 193 (5-R, 188-D). Conference Action The passage of the alternative budget package resulted in House-passed Social Security measures that were very similar to the Administration's original proposals and to those in the Senate-passed reconciliation bill. On July 13, 1981, the Senate voted to substitute the reconciliation proposals from S. 1377 for those passed by the House in H.R. 3982 and to go to conference to resolve the differences. On July 30, 1981, Representative Bolling (D-MO), chairman of the House Rules Committee, threatened to prevent the conference agreement from being brought to the House floor for final approval until something could be negotiated to modify the minimum benefit provision. An agreement was worked out permitting a bill that would modify the minimum benefit provision to be brought to the House floor before the vote on the reconciliation conference report. This bill was H.R. 4331 , the Social Security Amendments of 1981. (See following section for further details.) On July 31, 1981, both the House and the Senate approved the conference report on the 1981 Budget Reconciliation bill, the House by a voice vote and the Senate by a vote of 80 (49-R, 31-D) to 14 (1-R, 13-D). P.L. 97-123, Social Security Amendments of 1981 H.R. 4331 , the Social Security Amendments of 1981, was signed by President Reagan on December 29, 1981. The amendments restored the minimum benefit for current recipients but eliminated it for people becoming eligible for benefits after December 31, 1981 (see discussion of P.L. 97-35 above). In July 1981, as part of P.L. 97-35 , Congress had enacted the elimination of the minimum benefit effective in April 1982. However, the public outcry was so great that both houses and the Administration thought it prudent to reconsider the measure. H.R. 4331 also allowed the financially troubled OASI trust fund to borrow from the healthier disability insurance and hospital insurance trust funds until December 31, 1982. The law specified that the borrowing could not exceed amounts needed to pay full benefits for six months and provided for repayment of any amounts borrowed. OASI borrowed $17.5 billion from the two trust funds late in December 1982, an amount limited to that necessary to keep benefits flowing until June 1983. In addition, the bill (1) allowed members of religious orders who had taken a vow of poverty and were covered by Social Security before enactment of the bill to continue to become eligible for the minimum benefit during the next 10 years; (2) extended the payroll tax to the first six months of sick pay; (3) made it a felony to alter or counterfeit a Social Security card; and (4) allowed the Department of Health and Human Services (DHHS) access to recorded Social Security numbers to prevent ineligible prisoners from receiving disability benefits. House Action On July 21, 1981, the House, by a vote of 405 (176-R, 229-D) to 13 (10-R, 3-D), adopted a nonbinding resolution ( H.Res. 181 ) urging that steps be taken "to ensure that Social Security benefits are not reduced for those currently receiving them." After the conference report on the reconciliation bill was filed, the House Rules Committee Chairman Richard Bolling (D-MO) held up the reconciliation bill in his committee in an effort to restore the minimum benefit. An agreement was subsequently reached whereby the budget bill would be reported out of the Rules Committee intact, and a separate bill to restore the minimum benefit for all current and future recipients ( H.R. 4331 ) would be taken up by the House before the vote on the budget bill. The House passed H.R. 4331 on July 31, 1981. It repealed the section of P.L. 97-35 that eliminated the minimum benefit, thereby reinstating the minimum benefit for current and future recipients. On July 31, 1981, the House passed H.R. 4331 by a vote of 404 (172-R, 232-D) to 20 (17-R, 3-D). Senate Action When H.R. 4331 was sent to the Senate, Senators Riegle (D-MI), Moynihan (D-NY), and Kennedy (D-MA) moved to have the Senate immediately consider it. The Senate's presiding officer ruled the motion out of order, and the ruling was upheld by a vote of 57 to 30, thereby permitting consideration of the bill by the Finance Committee and delaying a Senate vote until October. The bill reported by the Finance Committee in September 1981 included provisions that restored the minimum benefit for current recipients, except for those with government pensions, whose so-called windfall Social Security benefits would be reduced dollar for dollar by the extent their government pension exceeded $300 a month. The bill provided that members of religious orders who became eligible for Social Security in 1972 could remain eligible for the minimum benefit for the next 10 years. To offset the cost of restoring the minimum benefit, the Senate agreed to apply the payroll tax to the first six months of all sick pay received and to lower the maximum family retirement and survivor benefit to 150% of the worker's primary insurance amount (PIA). The bill also allowed interfund borrowing. On October 14, 1981, the Senate by a voice vote agreed to (1) Senator Danforth's (R-MO) amendment to override provisions of the federal Privacy Act to allow access to prison records so that disability payments to ineligible inmates could be stopped; and (2) Senator Baucus's (D-MT) amendment to make it a felony to alter or counterfeit a Social Security card. On October 15, 1981, Senator Dole's (R-KS) amendment to apply the Social Security payroll tax to the first six months of all employer-financed sick pay, except that paid as insurance, was accepted by voice vote. On October 15, 1981, Senator Moynihan's (D-NY) amendment requiring counterfeit-proof Social Security cards was agreed to by voice vote. On October 15, 1981, Senator Eagleton (D-MO) offered an amendment to repeal a provision of the Economic Recovery Tax Act of 1981 ( P.L. 97-34 ) that had reduced windfall profit taxes on newly discovered oil, and then use these tax savings to build an emergency reserve for the Social Security trust funds. The amendment was tabled 65 (42-R, 23-D) to 30 (7-R, 23-D). On October 15, 1981, by a unanimous vote of 95 (48-R, 47-D) to 0, the Senate passed H.R. 4331 , as amended. Conference Action The Congressional Quarterly Almanac states that the major dispute of the conference was whether to pay for the cost of restoring the minimum benefit by tax increases or by benefit cuts. The conferees finally agreed to accept only the sick pay tax "on the condition that inter-fund borrowing be allowed for just one year." The conference agreement restored the minimum benefit to recipients eligible for benefits before 1982, and it rejected the Senate provisions (1) to reduce the minimum for those also receiving government pensions above $300 per month and (2) to limit further family benefits in OASI cases. The Senate agreed to the conference report on December 15, 1981, by a vote of 96 (50-R, 46-D) to 0. The House agreed to the conference report on December 16, 1981, by a vote of 412 (181-R, 231-D) to 10 (7-R, 3-D). P.L. 97-455, An Act Relating to Taxes on Virgin Island Source Income and Social Security Disability Benefits President Reagan signed H.R. 7093 on January 12, 1983. In March 1981, the Administration began implementing the continuing disability investigation process mandated (beginning in 1982) under the 1980 amendments ( P.L. 96-265 ), with the result that thousands of recipients lost their benefits, although many were restored upon appeal to an administrative law judge. P.L. 97-455 was a "stopgap" measure to remedy some of the perceived procedural inequities in the disability review process. It provided, temporarily, an opportunity for individuals dropped from the rolls before October 1, 1983, to elect to receive DI and Medicare benefits while they appealed the decision; June 1984 was to be the last month for which such payments could be made. The DI benefits would have to be repaid if the appeal were lost. The measure also required the DHHS to provide, as of January 1, 1984, face-to-face hearings during reconsideration of any decision to terminate disability benefits. Previously, recipients did not have such a meeting until they appeared before an administrative law judge. The bill also required the Secretary to report to Congress semiannually on the rate of continuing disability reviews and terminations and gave the Secretary authority to decrease the number of disability cases sent to state agencies for review. Senate Action314 On September 28, 1982, the Finance Committee marked up S. 2942 , which contained a number of continuing disability review provisions. The chairman, Senator Dole (R-KS), asked that S. 2942 be attached to a House-passed bill ( H.R. 7093 ) dealing with Virgin Islands taxation. Thus, H.R. 7093 , with provisions of S. 2942 , was reported to the Senate on October 1, 1982. On December 3, 1982, Senator Heinz (R-PA) said, "... this emergency legislation does not completely solve the problem of the unfair terminations of hundreds of thousands of disabled individuals ... nonetheless. It means that in the immediate future, at least, individuals who have been wrongly terminated will not be financially ruined because they have been deprived of their benefits during a lengthy appeals process." On December 3, 1982, the Senate passed H.R. 7093 by a vote of 70 (43-R, 27-D) to 4 (1-R, 3-D). House Action On September 20, 1982, the House passed H.R. 7093 by voice vote. This version of the bill contained no Social Security provisions. On December 14, 1982, the House amended the Senate-passed version of H.R. 7093 and passed it by unanimous consent. H.R. 7093 was then sent back to the Senate for consideration of the added amendments. These amendments required the Secretary to (1) provide face-to-face hearings during reconsideration of any decision to terminate disability benefits; (2) advise recipients of what evidence they should bring to and what procedures they should follow at the reconsideration hearing; and (3) provide that, for a five-year period beginning December 1, 1982, only one-third of a spouse's government pension would be taken into account when applying the government pension offset provision enacted in 1977. Conference Action The bill as agreed to by the conferees was identical to the House-passed bill, except for the modification in the government pension offset provision. The House passed the conference report on H.R. 7093 on December 21, 1982, by a vote of 259 (115-R, 144-D) to 0. The Senate passed the report by a voice vote on December 21, 1982. P.L. 98-21, The Social Security Amendments of 1983 H.R. 1900 , the Social Security Amendments of 1983, was signed by President Reagan on April 20, 1983. The latest projections showed that the OASDI program was projected to run out of funds by mid-1983 and to need about $150 billion to $200 billion to provide reasonable assurance that it would remain solvent for the rest of the decade. Once this short-run problem was addressed, the program was projected to be adequately financed for about 35 years. However, beginning about 2025, the effects of the retirement of the baby-boom were projected to plunge the system into deficit again. The National Commission on Social Security Reform, a bipartisan panel appointed by President Reagan and congressional leaders, was formed to seek a solution to the system's financing problems. On January 15, 1983, a majority of the commission members reached agreement on a package of changes. Conforming to most of the recommendations in the commission's package, the 1983 amendments put new federal employees and all nonprofit organization employees under the OASDI program as of January 1, 1984; prohibited state and local and nonprofit agencies from terminating Social Security coverage; moved the annual cost-of-living adjustments in benefits from July to January of each year (which caused a delay of six months in 1983); made up to one-half of the benefits received by higher income recipients subject to federal income taxation; gradually raised the full benefit retirement age from 65 to 67 early in the 21 st century; increased benefits for certain groups of widow(er)s; liberalized the earnings test; increased the delayed retirement credit; reduced benefits for workers also getting pensions based on noncovered employment; called for the earlier implementation of scheduled payroll tax increases; and substantially raised payroll tax rates on the self-employed. P.L. 98-21 also stipulated that beginning with the FY1993 budget, income and expenditures for OASDI and HI would no longer be included in federal budget totals. The 1983 amendments also stipulated that only two-thirds of a spouse's government pension would be taken into account when applying the government pension offset provision, eliminated remaining gender-based distinctions, and made numerous additional technical changes in the law. House Action On March 4, 1983, the Ways and Means Committee reported out H.R. 1900 . The bill included most of the recommendations of the National Commission, numerous additional relatively minor Social Security provisions, and other measures mostly related to long-run financing issues, along with provisions affecting the Medicare and Unemployment Insurance programs. On March 9, 1983, the House debated H.R. 1900 . Proponents of the bill maintained that, although there were many provisions that individuals or certain groups might find troublesome, there was an overriding need to deal quickly and effectively with the Social Security financing issues. Opponents questioned whether this was the best way to solve the system's projected financial difficulties. Many favored raising the retirement age instead of increasing payroll taxes. On March 9, 1983, Representative Pickle's (D-TX) amendment calling for increases in the age at which "full" retirement benefits (i.e., unreduced for early retirement) are payable to 66 by 2009 and to 67 by 2027 was approved by a vote of 228 (152-R, 76-D) to 202 (14-R, 188-D). Early retirement at age 62 would be maintained but at 70% of full benefits (instead of 80%) after the "full retirement age" reached 67. Representative Pepper (D-FL) then offered a substitute amendment to raise the OASDI tax rate from 6.20% to 6.73% beginning in 2010. The amendment was rejected by a vote of 132 (1-R, 131-D) to 296 (16-R, 131-D). Had the amendment passed, it would have superseded Representative Pickle's amendment. The House passed H.R. 1900 , as it had been amended, by a vote of 282 (97-R, 185-D) to 148 (69-R, 79-D) on March 9, 1983. Senate Action The Senate Finance Committee reported out S. 1 on March 11, 1983. As with the House bill, the committee adopted long-term financing measures along the lines of the recommendations of the National Commission and provisions affecting the Medicare and Unemployment Insurance programs. The full Senate began consideration of H.R. 1900 on March 16, 1983. Seventy-two amendments were offered to the bill on the floor; the Senate adopted 49 of them. The following were among the major amendments debated. On March 23, 1983, Senator Long (D-LA) offered an amendment to make coverage of newly hired federal employees contingent upon enactment of a supplemental civil service plan for them. It was passed by a voice vote. An amendment to the Long amendment by Senator Stevens (R-AL) and Senator Mathias (R-MD) to exclude federal workers from coverage altogether was rejected by a vote of 12 (8-R, 4-D) to 86 (46-R, 40-D) on March 23, 1983. Senator Stevens's amendment to the Long amendment to require the creation of a supplemental civil service retirement program by October 1985, while granting new employees wage credits toward such a plan in the meantime, was rejected 45 (41R, 4-D) to 50 (12-R, 38-D) on March 23, 1983. The Senate passed H.R. 1900 on March 23, 1983, by a vote of 88 (47-R, 41-D) to 9 (6-R, 3-D). Conference Action329 On March 24, 1983, conferees agreed to the final provisions of H.R. 1900 . The primary issue was how to solve the system's long-run financial problems. The House measure called for a two-year increase in the retirement age, whereas the Senate bill proposed to increase the retirement age to 66, eliminate the earnings test, and cut initial benefit payments 5%. Another major difference was a provision in the Senate bill delaying coverage of new federal employees until a supplemental civil service retirement plan could be developed. House conferees charged that if the change were made, no revenues from the proposed coverage could be counted on for the Social Security bailout plan because, if such a plan were not subsequently developed, federal workers might escape coverage altogether. The conferees agreed to the House retirement age change. Senate conferees then agreed to recede on the federal employee coverage issue. On March 24, 1983, the House passed the conference report by a vote of 243 (80-R, 163-D) to 102 (48-R, 54-D). On March 25, 1983, the Senate passed H.R. 1900 , as agreed to in the conference report, by a vote of 58 (32-R, 26-D) to 14 (8-R, 6-D). P.L. 98-460, Social Security Disability Benefits Reform Act of 1984 On October 9, 1984, President Reagan signed H.R. 3755 , the Social Security Disability Benefits Reform Act of 1984. P.L. 98-460 ended three years of controversy over the Administration's efforts to rid the DI program of ineligible recipients through an expanded periodic review process. The expanded reviews had been authorized by the 1980 disability amendments. Shortly after implementation of periodic review, the public and Congress began to criticize the process. The major complaints were the large number of persons dropped from the Dl rolls, of whom many had been receiving benefits for years and had not expected their cases to be reviewed; the great increase in the number of cases subjected to continuing disability reviews; and the number of cases in which recipients were erroneously dropped from the rolls. More than half of those removed from the rolls were reinstated upon appeal, fueling complaints that many terminations were unjustified. Advocacy groups for the disabled raised questions about the Social Security Administration's termination policies and procedures and petitioned Congress for legislative relief. In addition, concerns about the disability process were raised by the federal courts and the states. P.L. 98-460 provided that (1) with certain exceptions, benefit payments can be terminated only if the individual has medically improved and can engage in substantial gainful activity; (2) benefit payments can be continued until a decision by the administrative law judge in cases where a termination of benefits for medical reasons is being appealed; (3) reviews of all mental impairment disabilities be delayed until regulations stipulating new medical listings for mental impairments are published; (4) in cases of multiple impairments, the combined effect of all the impairments must be considered in making a disability determination; (5) the DHHS Secretary initiate demonstration projects providing personal appearance interviews between the recipient and state agency disability examiner in potential termination cases and potential initial denials; (6) the Secretary issue uniform standards, binding at all levels of adjudication, for disability determinations under Social Security and SSI disability; (7) the Secretary federalize disability determinations in a state within six months of finding that a state is not in substantial compliance with federal laws and standards; and (8) the qualifications of representative payees be more closely examined, and that the Secretary establish a system of annual accountability monitoring where benefit payments are made to someone other than a parent or spouse living in the same household with the recipient. It also established a temporary statutory standard for the evaluation of pain and directed that a study of the problem of evaluating pain be made by a commission to be appointed by the Secretary. House Action On March 14, 1984, the House Committee on Ways and Means reported H.R. 3755 with amendments. During debate on H.R. 3755 , Representative Conable (R-NY) remarked that the intent of the 1980 legislation, requiring continuing disability reviews, was meritorious, but the results were not what the drafters intended. He further stated, "Not only were ineligible recipients terminated, but some eligible recipients were taken from the rolls, as well. Many, especially those with mental impairments, suffered duress and the economic hardship of interrupted benefits." Representative Conable also said, "Both Congress and the administration have taken remedial steps ... we approved P.L. 97-455 , which, on an interim basis, provided for the continuation of benefits during an appeal of an adverse decision ... H.R. 3755 represents the next step." The sponsor of H.R. 3755 , Representative Pickle (D-TX), said, "In the past 3 years nearly half a million disabled recipients have been notified that their benefits will end. Far too often this notice has been sent in error, and corrected only at the recipient's expense ... we who serve on the Social Security Subcommittee have heard those pleas from the disabled, from Governors, and from those who must administer this program in the states ... for over a year now we have carefully drafted legislation to bring order to the growing chaos ... This bill does not attempt to liberalize the disability program. It does restore order and humanity to the disability review process." On March 27, 1984, the House passed H.R. 3755 by a vote of 410 (160-R, 250-D) to 1 (1-R). Administrative Action Six months before legislation was enacted, Secretary Heckler imposed a moratorium on periodic continuing disability reviews. The Secretary said, Although we have made important progress in reforming the review process with Social Security, the confusion of differing court orders and state actions persists. The disability program cannot serve those who need its help when its policies are splintered and divided. For that reason, we must suspend the process and work together with Congress to regain order and consensus in the disability program. Senate Action On May 16, 1984, the Finance Committee approved S. 476 . Major provisions of the bill allowed disabled persons to continue collecting Social Security benefits if their medical condition had not improved since they were determined disabled. The major difference between the medical improvement provision in S. 476 and H.R. 3755 was that the Senate bill stated that the recipient bore the burden of proof that his or her condition had not improved. On May 22, 1984, Senator Cohen (R-ME), one of the sponsors of S. 476 , said, "The need for fundamental change in the disability reviews has been evident for some time. Since the reviews began, more than 12,000 individuals have filed court actions challenging the SSA's termination of their benefits. An additional 40 class action suits had been filed as of last month. The legislation before the Senate today would end this chaos and insure an equitable review process." Senator Levin (D-MI), another sponsor, said, "It has taken us 3 years to come to grips with the problems in the disability review process as a legislative body. And while it was long in coming, I am pleased with the final outcome. The bill I, along with Senator Cohen and others introduced on February 15, 1983, S. 476 , as reported by the Finance Committee contains the essential ingredients to the development of a fair and responsible review process." On May 22, 1984, the Senate passed H.R. 3755 , after substituting the language of S. 476 for the House-passed version, 96 (52-R, 44-D) to 0. Conference Action On September 19, 1984, the conferees filed the conference report. The conference committee generally followed the House version of the medical improvement standard (with some modifications) and added the requirement that any continuing disability review be made on the basis of the weight of the evidence with regard to the person's condition. On September 19, 1984, the House and Senate passed H.R. 3755 unanimously; 402 to 0 in the House, and 99 to 0 in the Senate. P.L. 99-177, Public Debt Limit—Balanced Budget and Emergency Deficit Control Act of 1985 The Balanced Budget and Emergency Deficit Control Act, which was included as Title II of H.J.Res. 372 , increasing the national debt, was signed by President Reagan on December 12, 1985. The act stipulated that budget deficits must be decreased annually, and under certain circumstances required across-the-board cuts of nonexempt programs by a uniform percentage to achieve this result. Under the act, if annual deficit amounts were larger than the law established, a formula would be used to reduce the deficit annually until it reached zero in FY1991. This part of P.L. 99-177 is generally referred to by the names of its sponsors—Senators Gramm (R-TX), Rudman (R-NH), and Hollings (D-SC). The Gramm-Rudman-Hollings Act accelerated the "off-budget" treatment of OASDI, as prescribed by P.L. 98-21 , from FY1993 to FY1986. (However, Social Security income and outgo still would be counted toward meeting Gramm-Rudman-Hollings deficit reduction targets.) The HI trust fund was not affected (i.e., not to be separated from the budget until FY1993). In addition, the act exempted Social Security benefits (including COLAs) from automatic cuts and required the Secretary of the Treasury to restore to the trust funds any interest lost as a result of 1984 and 1985 debt ceiling constraints, and to issue to the trust funds obligations bearing interest rates and maturities identical to those of securities redeemed between August 31, 1985, and September 30, 1985. House Action On August, 1, 1985, the House approved the debt-limit increase, unamended, as part of the FY1986 budget resolution ( S.Con.Res. 32 ) by a vote of 309 (127-R, 182-D) to 119 (52-R, 67-D). Senate Action On October 9, 1985, the Senate adopted the Gramm-Rudman-Hollings amendment to H.J.Res. 372 (Balanced Budget and Emergency Control Act of 1985) by a vote of 75 (48-R, 27-D) to 24 (4-R, 20-D). On October 10, 1985, the Senate passed H.J.Res. 372 , with amendments, by a vote of 51 (38-R, 13-D) to 37 (8-R, 29-D). Conference Action On November 1, 1985, the conference report was filed in disagreement. The House asked for another conference on November 6, 1985, the Senate agreeing on November 7, 1985. The second conference report was filed on December 10, 1985. On December 11, 1985, both the House and the Senate agreed to the conference report, the House by a vote of 271 (153-R, 118-D) to 154 (24-R, 130-D) and the Senate by a vote of 61 (39-R, 22-D) to 31 (9-R, 22-D). S.Con.Res. 32, Proposed COLA Constraints in FY1986 Budget Resolution In 1985, the Senate voted to skip the 1986 COLA for various federal programs, including Social Security, when it passed S.Con.Res. 32 , the first concurrent budget resolution for FY1986. However, the House-passed version had no COLA freeze, and the proposal was dropped in conference. In his FY1986 Budget submitted in January 1985, President Reagan proposed that there be no COLA for several federal benefit programs, among them civil service and military retirement, in 1986. However, Social Security was exempted from the proposal. In considering S.Con.Res. 32 , the first concurrent budget resolution for FY1986 (which involves the goal-setting stage of the congressional budget process) on March 14, the Senate Budget Committee, by a vote of 11 (11-R, 0-D) to 10 (0-R, 10-D) added Social Security to the list of programs whose COLAs were to be skipped in 1986. The Social Security portion of the COLA "freezes," as they were called, was estimated to yield $22 billion in savings over the FY1986-FY1988 period and larger savings thereafter. An alternative COLA cutback proposal emerged shortly thereafter, as part of a substitute deficit-reduction package developed by the Administration and the Senate Republican leadership. Instead of freezing COLAs in the affected federal retirement programs for one year, it would have limited the COLAs for the next three years to 2% per year plus any amount by which inflation exceeded the Administration's assumptions (its assumptions at that time suggested that inflation would hover in the high 3% or low 4% range). It further included a guarantee provision under which the affected COLAs could not be less than 2%. It, too, would have resulted in about $22 billion in Social Security savings over the following three years (as well as higher savings in later years). Senate Action When the Senate took up the Budget Committee's first budget resolution, it rejected both the COLA freeze and the alternative COLA limitation by agreeing on May 1, 1985, by a vote of 65 (19-R, 46-D) to 34 (33-R, 1-D) to an amendment by Senator Dole (R-KS), for Senators Hawkins (R-FL) and D'Amato (R-NY), to provide for full funding of Social Security COLAs. However, on May 10, 1985, after considering many amendments, the Senate adopted by a vote of 50 (49-R, 1-D) to 49 (4-R, 45-D) an entirely revised budget package, introduced by Senator Dole, which incorporated the original COLA freeze recommended by the committee. Subsequently, the Senate considered an amendment by Senator Moynihan (D-NY) to provide a full Social Security COLA in January 1986, but it was tabled by a vote of 51 (49-R, 2-D) to 47 (3-R, 44-D). The final budget resolution, passed by a voice vote, assumed later enactment of the 1986 COLA freezes, including one affecting Social Security. House Action The House-passed version of the FY1986 first budget resolution, H.Con.Res. 152 , assumed that full COLAs would be paid in all federal benefit programs. On May 22, 1985, the House rejected an amendment by Representative Dannemeyer (R-CA) to limit Social Security COLAs to 2% per year for the three-year period FY1986-FY1988 by a vote of 382 (135-R, 247-D) to 39 (39-R, 0-D). On May 23, 1985, the House also rejected by a vote of 372 (165-R, 207-D) to 56 (15-R, 41-D) an amendment offered by Representative Leath (D-TX) to freeze 1986 COLAs for Social Security, federal retirement, and veterans' compensation while adding back 20% of the anticipated savings to programs that aid needy elderly and disabled people. Provisions of the House-passed resolution were inserted in S.Con.Res. 32 , in lieu of the Senate-passed measures, which was approved by a vote of 258 (24-R, 234-D) to 170 (155-R, 15-D) on May 23, 1985. Conference Action Conferees for the House and Senate met throughout June and July 1985 to work out an agreement on a deficit reduction package. Among the number of ideas that surfaced were proposals to delay the Senate-passed COLA freezes until 1987, means test the COLAs, make both the COLAs and adjustments to income tax brackets effective every other year (instead of annually), and increase the amount of Social Security benefits that would be subject to income taxes. Ultimately, however, agreement could not be reached on any form of Social Security constraint, and the conference agreement on the First Concurrent Resolution on the Budget for FY1986, passed on August 1, 1985, did not assume any such savings. P.L. 99-509, Omnibus Budget Reconciliation Act of 1986 President Reagan signed H.R. 5300 , the Omnibus Budget Reconciliation Act of 1986, on October 21, 1986. During 1986, inflation slowed to a rate that made it unlikely that it would reach the 3% threshold necessary to provide a COLA in that year. P.L. 99-509 permanently eliminated the 3% requirement, which enabled a 1.3% COLA to be authorized for December 1986. Senate Action The Senate Finance Committee, as part of its budget provisions incorporated in S. 2706 , the Omnibus Budget Reconciliation Act of 1986, included a measure that would have provided a Social Security COLA in January 1987 no matter how low inflation turned out to be, that is, it permanently eliminated the 3% requirement. The Senate approved S. 2706 on September 20, 1986, by a vote of 88 (50-R, 38-D) to 7 (0-R, 7-D). House Action The House Ways and Means Committee, as part of its budget reconciliation provisions incorporated in H.R. 5300 , its version of the Omnibus Budget Reconciliation Act of 1986, included a similar measure. The House passed H.R. 5300 with this measure on September 24, 1986, by a vote of 309 (99-R, 210-D) to 106 (71-R, 35-D). Conference Action The conference report on H.R. 5300 , including the COLA provision, was approved by both houses on October 17, 1986, by a vote of 305 (112-R, 193-D) to 70 (R-51, D-19) in the House and 61 (33-R, 28-D) to 25 (10-R, 15-D) in the Senate. P.L. 100-203, Omnibus Budget Reconciliation Act of 1987 H.R. 3545 , the Omnibus Budget Reconciliation Act of 1987, was signed into law on December 22, 1987, by President Reagan. Several of its provisions affected Social Security. P.L. 100-203 extended FICA coverage to military training of inactive reservists, the employer's share of all cash tips, and several other categories of earnings; lengthened from 15 months to 36 months the period during which a disability recipient who returns to work may become automatically re-entitled to benefits; and extended the period for appeal of adverse disability decisions through 1988. House Action H.R. 3545 was a bill to meet the deficit reduction targets set by the FY1988 budget resolution ( H.Con.Res. 93 ). Earlier, in July, the Ways and Means Committee also had approved changes in Social Security. Two of these provisions—extending coverage to military training of inactive reservists and group term life insurance—had been requested by President Reagan. In addition, the committee agreed to lengthen from 15 months to 36 months the period during which a disability recipient who returns to work may become automatically re-entitled to benefits, to extend the period for appeal of adverse disability decisions through 1988, and to cover certain agricultural workers, children and spouses in family businesses. The house passed H.R. 3545 on October 29, 1987, by a vote of 206 (1-R, 205-D) to 205 (164-R, 41-D). Senate Action When the Finance Committee approved H.R. 3545 on December 3, 1987, it included the House Social Security coverage provisions. On December 10, 1987, the Senate rejected an amendment by Senator Kassebaum (R-KS) that would have limited the 1988 Social Security COLA to 2%, by a vote of 71 (34-R, 37-D) to 25 (11-R, 14-D). On December 11, 1987, the Senate approved H.R. 3545 by a voice vote. Conference Action The conference committee generally accepted the House-passed version of H.R. 3545 . On December 21, 1987, the House passed the conference report by a vote of 237 (44-R, 193-D) to 181 (130-R, 51-D). On December 21, 1987, the Senate passed the conference report by a vote of 61 (18-R, 43-D) to 28 (23-R, 5-D). P.L. 100-647, The Technical and Miscellaneous Revenue Act of 1988 On November 10, 1988, President Reagan signed H.R. 4333 , the Technical and Miscellaneous Revenue Act of 1988. In addition to various tax measures the bill contained several provisions affecting Social Security. Among these, H.R. 4333 provided interim benefits to individuals who have received a favorable decision upon appeal to an Administrative Law Judge but whose case has been under review by the Appeals Council for more than 110 days; extended the existing provision for continued payment of benefits during appeal; denied benefits to Nazis who are deported; and lowered the number of years of substantial Social Security-covered earnings that are needed to begin phasing out the windfall benefit formula (which applies to someone receiving a pension from noncovered employment) from 25 years to 20 years. House Action On July 14, 1988, the Ways and Means Committee approved a "tax corrections" bill, H.R. 4333 , that also included some measures affecting Social Security. The House passed H.R. 4333 on August 4, 1988, by a vote of 380 (150-R, 230-D) to 25 (19-R, 6-D). Senate Action The Finance Committee adopted about half of the House Social Security provisions. The Senate approved H.R. 4333 on October 11, 1988, by a vote of 87 (38-R, 49-D) to 1 (0-R, 1-D). Conference Action The conference committee generally accepted the House-passed version of H.R. 4333 . On October 21, 1988, the House passed the conference report by a vote of 358 (150-R, 208-D) to 1 (0-R, 1-D). On October 21, 1988, the Senate passed the conference report by a voice vote. P.L. 101-239, Omnibus Budget Reconciliation Act of 1989 On December 19, 1989, President George H. W. Bush signed H.R. 3299 , the Omnibus Budget Reconciliation Act of 1989. Among other things, its Social Security provisions extended benefits to children adopted after the worker became entitled to benefits, regardless of whether the child was dependent on the worker before the worker's entitlement; further extended the existing provision for continued payment of benefits during appeal; increased the calculation of average wages, used for purposes of computing of benefits and the maximum amount of earnings subject to FICA tax, by including deferred compensation; and, beginning in 1990, required that SSA provide estimates of earnings and future benefits to all workers over the age of 24. House Action When the Ways and Means Committee considered H.R. 3299 on October 5, 1989, it proposed several Social Security-related measures. Among these was a provision making SSA an independent agency; raising the Special Minimum benefit by $35 a month; increasing the earnings test limits for recipients over the age of 64; extending benefits to children adopted after the worker became entitled to benefits, regardless of whether the child was dependent on the worker before the worker's entitlement; further extending the existing provision for continued payment of benefits during appeal; and including deferred compensation in the determination of average wages for purposes of determining benefits and the maximum amount of earnings subject to the FICA tax. On October 5, 1989, the House passed H.R. 3299 by a vote of 333 (R-146, D-187) to 91 (R-28, D-63). Senate Action The Finance Committee approved its version of H.R. 3299 on October 3, 1989. Like the House version, it included an increase in the maximum amount of earnings subject to the FICA tax, but it specifically earmarked the revenue therefrom to pay for proposed increases in the earnings test limits. It also approved making SSA an independent agency, but with a single administrator as opposed to the three-person board specified in the House version. However, because it was thought that a "clean bill" would improve chances of passage, the bill was stripped of its Social Security provisions before it reached the floor. The senate approved its version of H.R. 3299 on October 13, 1989, by a vote of 87 (R-40, D-47) to 7 (R-2, D-5). Conference Action In conference, most of the House provisions were accepted (but the major exclusion was making SSA an independent agency). Although neither version of H.R. 3299 included it, a provision was added that, beginning in 1990, required that SSA provide estimates of earnings and future benefits to all workers over the age of 24. On November 22, 1989 (legislative day November 21), the House approved the conference report by a vote of 272 (R-86, D-186) to 128 (R-81, D-47). The Senate approved it the same day by a voice vote. P.L. 101-508, The Omnibus Budget Reconciliation Act of 1990 On November 5, 1990, President George H. W. Bush signed H.R. 5835 , the Omnibus Budget Reconciliation Act of 1990. Among its Social Security provisions, it made permanent a temporary provision, first enacted in 1984 and subsequently extended, that provides the option for recipients to choose to continue to receive disability and Medicare benefits while their termination is being appealed; liberalized the definition of disability for disabled widow(er)s by making it consistent with that for disabled workers; extended benefits to spouses whose marriage to the worker is otherwise invalid, if the spouse was living with the worker before he or she died or filed for benefits; removed the operation of the trust funds from budget deficit calculations under the Gramm-Rudman-Hollings Act; established separate House and Senate procedural safeguards to protect trust fund balances; extended coverage to employees of state and local governments who are not covered by a retirement plan; and raised the maximum amount of earnings subject to HI taxes to $125,000, effective in 1991, with raises thereafter indexed to increases in average wages. House Action In 1990, the congressional agenda was dominated by the debate over how to reduce a large budget deficit, which, under the Gramm-Rudman-Hollings (GRH) sequestration rules, would have required billions of dollars of cuts in many federal programs. The Administration's FY1991 budget contained several Social Security measures, the most prominent of which was to extend Social Security coverage to state and local government workers not covered by a retirement plan. The Ways and Means Social Security Subcommittee included some of them in a package of Social Security provisions it forwarded to the full committee. For several months budget negotiations stalled, as the democratic majority in Congress disagreed with the Administration's position that the deficit should be reduced entirely with spending cuts. As a result of a budget "summit" between congressional and Administration leaders, an agreement was reached in which the President would put tax increases on the table and the Congress would consider spending cuts in entitlements, including Social Security and Medicare. The resulting bill reported from the Budget Committee on October 15, H.R. 5835 , extended Social Security coverage to state and local government workers not covered by a retirement plan and raised the maximum amount of earnings subject to HI taxes to $100,000, effective in 1991. However, the same day the Ways and Means Committee reported out H.R. 5828 , a bill making miscellaneous and technical amendments to the Social Security Act, which incorporated most of the provisions that had earlier been approved by the Social Security Subcommittee. On October 16, 1990, the House approved H.R. 5835 by a vote of 227 (10-R, 217-D) to 203 (163-R, 40-D). Senate Action During 1990, the debate about Social Security was largely dominated by a proposal by Senator Moynihan (D-NY) to cut the Social Security payroll tax and return the program to true pay-as-you-go financing. The driving force behind the proposal was the growing realization that the rapid rise in Social Security yearly surpluses, caused by payroll tax revenues that exceeded the program's expenditures, were significantly reducing the size of the overall federal budget deficit. This had led to charges that the Social Security trust funds were being "raided" to finance the rest of government and "masking" the true size of the deficit. In S. 3167 , Senator Moynihan proposed that the payroll tax rate be scheduled to fall and rise with changes in the program's costs. On October 10, 1990, Senator Moynihan asked that the Senate vote on S. 3167 . While the Senate leadership agreed to bring the bill to the floor, a point of order was raised against it on the basis that it violated the Budget Act. Although a majority of Senators voted to override the point of order, 54 (R-12, D-42) to 44 (31-R, 13-D), the measure fell short of the 60 votes required. When the Senate considered H.R. 5835 on October 18, 1990, it accepted by a vote of 98 (43-R, 55-D) to 2 (2-R, 0-D) an amendment by Senators Hollings (D-SC) and Heinz (R-PA) to remove Social Security from GRH budget deficit calculations. On October 19, 1990 (legislative day October 18), the Senate passed the budget reconciliation bill by a vote of 54 (23-R, 31-D) to 46 (22-R, 24-R). Conference Action On October 27, 1990 (legislative day October 26), the House passed the conference report on H.R. 5835 by a vote of 228 (47-R, 181-D) to 200 (126-R, 74-D). On October, 27, 1990, the Senate passed the conference report by a vote of 54 (19-R, 35-D) to 45 (25-R, 20-D) P.L. 103-66, The Omnibus Budget Reconciliation Act of 1993 On August 10, 1993, President Clinton signed H.R. 2264 , the Omnibus Budget Reconciliation Act of 1993. Effective in 1994, H.R. 2264 made up to 85% of Social Security benefits subject to the income tax for recipients whose income plus one-half of their benefits exceed $34,000 (single) and $44,000 (couple); and eliminated the maximum taxable earnings base for the HI payroll tax, (i.e., subjected all earnings to the HI tax), effective in 1994. As part of his plan to cut the federal fiscal deficit, President Clinton proposed in his first budget that the proportion of benefits subject to taxation should be increased from 50% to 85%, effective in 1994. His budget document said this would "move the treatment of Social Security and railroad retirement Tier I benefits toward that of private pensions" and would generate $32 billion in new tax revenues over five years. The proceeds from the change would not be credited to the Social Security trust funds, as under current law, but to the Medicare Hospital Insurance program, which had a less favorable financial outlook than did Social Security. Doing so also would have avoided procedural obstacles that could have been raised in the budget reconciliation process. The budget also proposed that the maximum taxable earnings base for HI be eliminated entirely beginning in 1994. Both proposals, especially the increase in the taxation of benefits, were opposed vigorously by the Republican minority. Critics maintained that the increase was unfair as it changed the rules in the middle of the game, penalizing recipients who relied on old law and who could not change past work and savings decisions. Regardless of abstract arguments about tax principles, many recipients regarded increased taxation as simply a reduction in the benefits they had been promised. They regarded taxation of benefits as an indirect means test, which would weaken the "earned right" nature of the program and make it more like welfare, where need determines the level of benefits. Finally, they maintained that it grossly distorts marginal tax rates and provides a strong disincentive for many recipients to work. House Action H.Con.Res. 64 , the FY1994 Concurrent Budget Resolution, included the additional revenue from the President's proposal. On March 18, 1993, the House passed H.Con.Res. 64 by a vote of 243 (0-R, 242-D, 1-I) to 183 (172-R, 11-D), which included the additional revenue from the President's proposal. Senate Action The Senate devoted six days of debate to H.Con.Res. 64 at the end of March. On March 24, 1993, the Senate rejected by a vote of 47 (43-R, 4-D) to 52 (0-R, 52-D) an amendment by Senator Lott (R-MS) that would have deleted from the resolution the revenue projected from the President's proposal. On March 24, 1993, the Senate approved, by a vote of 67 (12-R, 55-D) to 32 (31-R, 1-D), an amendment by Senators Lautenberg (D-NJ) and Exon (D-NE) expressing the sense of the Senate that the revenues set forth in the resolution assume that the Finance Committee would make every effort to find alternative sources of revenue before imposing additional taxes on the Social Security benefits of recipients with threshold incomes of less than $32,000 (single) and $40,000 (couples). The thresholds for taxing 50% of benefits were to remain at the current law levels of $25,000 and $32,000. On March 25, 1993, the Senate approved H.Con.Res. 64 by a vote of 54 (0-R, 54-D) to 45 (43-R, 1-D). Conference Action On March 31, 1993, the House approved the conference report on H.Con.Res. 64 by a vote of 240 (0-R, 239-D, 1-I) to 184 (172-R, 12-D). On April 1, 1993, the Senate approved the conference report by a vote of 55 (0-R, 55-D) to 45 (43-R, 2-D). It included the sense of the Senate resolution. House Action as Modified On May 13, 1993, by a party-line vote of 24-14, the House Committee on Ways and Means approved the President's proposal, but modified it so that the additional proceeds would be credited to the General Fund instead of to Medicare. This measure was included in H.R. 2264 , the 1993 Omnibus Budget Reconciliation Act. On May 27, 1993, the House passed H.R. 2264 by a vote of 219 (0-R, 218-D, 1-I) to 213 (175-R, 38-D). Senate Action as Modified On June 18, 1993, by a party-line vote of 11-9, the Finance Committee approved H.R. 2264 , but included the Lautenberg-Exon amendment to raise the taxation thresholds to $32,000 (single) and $42,000 (couple). On June 24, 1993, the Senate rejected, by a vote of 46 (41-R, 5-D) to 51 (1-R, 50-D), an amendment by Senator Lott to delete the taxation of benefits provision. It also rejected, by a vote of 46 (3-R, 43-D) to 51 (40-R, 11-D) an amendment by Senator DeConcini to increase the 85% thresholds to $37,000 (single) and $54,000 (couple), and, by a vote of 41 (40-R, 1-D) to 57 (3-R, 54-D) an amendment by Senator McCain to direct that the proceeds of increased taxation of benefits be credited to the Social Security trust funds. On June 24, 1993, the Senate approved, by a vote of 50 (0-R, 50-D) to 49 (43-R, 6-D), the Budget Reconciliation bill. It included the Lautenberg-Exon amendment creating second-tier thresholds of $32,000 and $40,000. Conference Action as Modified On July 14, 1993, the House adopted, by a vote of 415 to 0, an amendment by Representative Sabo (D-MN) to instruct its conferees on the bill to accept the Senate version of taxation of benefits. When the House and Senate versions of the budget package were negotiated in conference, the conferees modified the Senate taxation of Social Security benefits provision by setting the second tier thresholds at $34,000 (single) and $44,000 (couple). The measure was included in the final version of the reconciliation bill passed by the House on August 5, 1993, by a vote of 218 (0-R, 217-D, 1-I) to 216 (175-R, 41-D). On August 6, 1993, the Senate passed H.R. 2264 by a vote of 51 (0-R, 51-D) to 50 (44-R, 6-D). P.L. 103-296, Social Security Administrative Reform Act of 1994 President Clinton signed H.R. 4277 , the Social Security Administrative Reform Act of 1994, on August 15, 1994. P.L. 103-296 established the SSA as an independent agency, effective March 31, 1995. It restricted DI and SSI benefits payable to drug addicts and alcoholics by creating sanctions for failing to get treatment, limiting their enrollment to three years, and requiring that those receiving DI benefits have a representative payee (formerly required only of SSI recipients). Representatives of the Clinton Administration initially opposed making SSA an independent agency, but President Clinton supported H.R. 4277 's final passage. Interest in making SSA independent began in the early 1970s, when Social Security's impact on fiscal policy was made more visible by including it in the federal budget. During congressional budget discussions in the early 1980s, proponents of independence wanted to insulate Social Security from benefit cuts designed to meet short-term budget goals rather than policy concerns about Social Security. Many argued that making the agency independent would help insulate it from political and budgetary discussions, lead to better leadership, and reassure the public about Social Security's long-run survivability. Opponents argued that Social Security's huge revenue and outlays should not be isolated from policy choices affecting other HHS social programs and that its financial implications for the economy and millions of recipients should be evaluated in conjunction with other economic and social functions of the government. They further believed that making SSA independent would not necessarily resolve its administrative problems, which were heavily influenced by ongoing policy changes to its programs resulting from legislation and court decisions. Starting in 1986, a number of attempts were made in Congress to make SSA independent. Various Administrations generally opposed the idea, and a disagreement persisted between the House and Senate over how such an agency should be administered. The House preferred an approach under which an independent SSA would be run by a three-member bipartisan board; the Senate preferred an approach where it would be run by a single administrator. House Action On May 12, 1994, the Ways and Means Committee reported out H.R. 2264 (incorporating the three-member bipartisan board approach), introduced by Representative Jacobs (D-IN). The House passed H.R. 2264 on May 17, 1994, by a vote of 413-0. Senate Action On January 25, 1994, the Senate Finance Committee reported out S. 1560 (incorporating the single-administrator approach), introduced by Senator Moynihan (D-NY). The Senate passed S. 1560 by voice vote on March 2, 1994. On May 23, 1994, the Senate approved H.R. 4277 , after striking its language and substituting that of S. 1560 , by voice vote. Conference Action Conferees reached an agreement on July 20, 1994, under which SSA would be run by a single administrator appointed for a six-year term, supported by a seven-member bipartisan advisory board. The Senate passed the agreement by voice vote on August 5, 1994. The House passed the agreement on August 11, 1994, by a vote of 431-0. P.L. 103-387, Social Security Domestic Reform Act of 1994 President Clinton signed H.R. 4278 , Social Security Domestic Reform Act of 1994, on October 22, 1994. H.R. 4278 raised the threshold for Social Security coverage of household employees from $50 in wages a quarter to $1,000 a year, which would rise thereafter with the growth in average wages and reallocated taxes from the OASI fund to the DI fund. In early 1993, the issue of coverage of domestic workers burst into public awareness when several Cabinet nominees revealed that they had failed to report the wages they had paid to childcare providers. Subsequent media scrutiny made it apparent that under-reporting of household wages was common. It also highlighted that householders were supposed to be reporting even occasional work such as babysitting and lawn mowing. As the threshold had not been changed for 43 years, the question naturally arose of whether it should be raised. House Action Several measures were introduced in the 103 rd Congress that would have raised the threshold by varying amounts. On March 22, 1994, Representative Andrew Jacobs (D-IN) introduced H.R. 4105 , which would have raised the threshold to $1,250 a year in 1995, to be indexed thereafter to increases in average wages. This measure was included in H.R. 4278 , approved by the House on May 12, 1994, by a vote of 420-0. Senate Action When the Senate considered H.R. 4278 on May 25, 1994, it struck the House language and substituted the text of S. 1231 , a bill by Senator Moynihan (D-NY) that would have raised the annual threshold to the same level as that needed to earn a quarter of coverage ($620 in 1994) and exempted from Social Security taxes the wages paid to domestic workers under the age of 18. The Senate passed the revised version of H.R. 4278 on May 25, 1994, by unanimous consent. Conference Action On October 5, 1994, conferees agreed to a measure that raised the threshold for Social Security coverage of household workers to $1,000, effective in 1994. The measure also provided that the threshold would rise in the future, in $100 increments, in proportion to the growth in average wages in the economy. On October 6, 1994, the conference report was approved in the House by a vote of 423-0. The same day, the Senate approved the conference report by unanimous consent. P.L. 104-121, The Senior Citizens Right to Work Act of 1996 On March 29, 1996, President Clinton signed H.R. 3136 , the Senior Citizens Right to Work Act of 1996. H.R. 3136 : raised the annual earnings test exempt amount, for recipients who have attained the full retirement age (FRA), over a period of seven years, reaching $30,000 in 2002, and then indexed that amount to wages; prohibited DI and SSI eligibility to individuals whose disability is based on drug addiction or alcoholism; tightened eligibility requirements for entitlements to benefits as a stepchild; and, as a way to produce program savings that would help compensate for the increased costs to the Social Security system due to liberalizing the earnings test, provided funds for additional continuing disability reviews. On September 27, 1994, 300 Republican congressional candidates presented a "Contract with America" that listed 10 proposals that they would pursue if elected. One of the proposals, the "Senior Citizens Equity Act," included a measure to increase the earnings test limits, for those over age 64, over a period of five years, reaching $30,000 in 2000. After the Republican victory in the election, the Senior Citizens Equity Act was sponsored by 131 Members in H.R. 8 , introduced January 4, 1995. Although the House approved the measure as part of H.R. 1215 , it was not included in the Balanced Budget Reconciliation bill ( H.R. 2491 ) passed by the Congress on November 20, 1995. House Action On November 28, 1995, the Social Security Subcommittee of the Ways and Means Committee approved H.R. 2684 , the Senior Citizens Right to Work Act, introduced by Chairman Bunning (R-KY), that would gradually increase the earnings test limits for those aged 65-69 to $30,000 in 2002. The full committee approved H.R. 2684 by a vote of 31-0 on November 30, 1995. The House approved H.R. 2684 on December 5, 1995, by a vote of 411 (230-R, 180-D, 1-I) to 4 (0-R, 4-D). On March 21, 1996, reportedly with the agreement of the Administration, a modified version of H.R. 2684 was included in H.R. 3136 , the Contract with America Advancement Act of 1996, introduced by Representative Archer (D-TX). H.R. 3136 , also included an increase in the debt ceiling and other measures. The part of H.R. 3136 relating to the earnings test was similar to H.R. 2684 , but modified to slow the rise in the exempt amounts during the first five years of the phase-in. On March 28, 1996, H.R. 3136 was passed by the House by a vote of 328 (201-R, 127-D) to 91 (30-R, 60-D, 1-I). Senate Action On December 14, 1995, the Senate Committee on Finance approved S. 1470 , a bill similar to H.R. 2684 . On March 28, 1996, H.R. 3136 was passed by the Senate by unanimous consent. P.L. 106-170, The Ticket to Work and Work Incentives Improvement Act of 1999 President Clinton signed H.R. 1180 , the Ticket to Work and Work Incentive Act of 1999, on December 17, 1999. H.R. 1180 provided disabled recipients with vouchers they can use to purchase rehabilitative services from public or private providers and extended Medicare coverage for up to 4.5 additional years for disabled recipients who work. In the 1990s, there was a growing movement to mitigate what was seen as a fundamental dilemma faced by many disabled Social Security recipients. While the disabled were encouraged to try to leave the Social Security rolls by attempting to work, in doing so they faced a limited choice in seeking rehabilitation services and a potentially serious loss of Medicare and Medicaid benefits. Proponents of providing greater work opportunity argued that incentives for the disabled to attempt to work should be enhanced. House Action On October 19, 1999, the House approved H.R. 1180 , The Ticket to Work and Work Incentives Improvement Act of 1999, introduced by Representative Rick Lazio (R-NY), by a vote of 412 (206-R, 205-D, 1-I) to 9 (9-R, 0-D). Senate Action On June 16, 1999, the Senate passed a similar bill, S. 331 , the Work Incentives Improvement Act of 1999, introduced by Senator James S. Jeffords (R-VT), by a vote of 99-0. On October 21, 1999, the Senate passed H.R. 1180 , after striking its language and substituting that of S. 331 , by unanimous consent. Conference Action On November 18, 1999, the House adopted the conference report by a vote of 418 (212-R, 205-D, 1-I) to 2 (0-R, 2-D). On November 19, 1999, the Senate adopted the conference report by a vote of 95 (51-R, 44-D) to 1 (1-R, 0-D). P.L. 106-182, Senior Citizens Right to Work Act President Clinton signed H.R. 5 , the Senior Citizens Right to Work Act, on April 7, 2000. H.R. 5 eliminated the earnings test for recipients who have attained FRA, effective in 2000. The earnings test has always been one of the most unpopular features of the Social Security program. Critics said it was unfair and inappropriate to impose a form of means test for a retirement benefit that has been earned by a lifetime of contributions to the program, that it has a strong negative effect on work incentives, and that it can hurt elderly individuals who need to work to supplement their Social Security benefits. Defenders of the provision said that it is a reasonable means of executing the purpose of Social Security. Because the system is social insurance that protects workers from loss of income due to the retirement, death, or disability of the worker, they consider it appropriate to withhold benefits from workers who show by their substantial earnings that they have not in fact "retired." They also argued that eliminating or significantly liberalizing the benefit would primarily help those who do not need help (i.e., the better-off). However, over the years probably the main impediment to eliminating the earnings test was its negative effect on the program's financial status and on current federal budgets, which perennially were in deficit. By 2000, the federal budget was running large surpluses, so major alterations to the test were deemed affordable. In addition, it was projected that eliminating the test would have no negative impact on Social Security's long-range financing because of offsetting savings. The ground work for this offsetting effect had been laid in 1983, when Congress increased the Delayed Retirement Credit (DRC). The DRC increases benefits for retirees by a certain percentage for each month they do not receive benefits after they attained FRA. The 1983 legislation provided for a long phase-in of the increase in the DRC, so that its ultimate rate would not be achieved until 2008. At that point, it would be "actuarially fair," meaning that the additional benefits a person would receive over his or her lifetime due to the DRC would be approximately equal to the value of the benefits lost due to the earnings test. Thus, the long-range cost of eliminating the earnings test for those above FRA would be offset by the savings produced by fewer payments of DRCs. Because there was no threat to Social Security's long-range solvency and the short-range costs were judged to be affordable, the momentum to repeal the test for those at or over the retirement age was overwhelming. House Action On March 1, 2000, the House approved H.R. 5 , a bill that would eliminate the earnings test for recipients who have attained FRA, introduced by Representative Sam Johnson (R-TX), by a vote of 422-0. Senate Action On March 22, 2000, the Senate approved H.R. 5 , with a modification to the monthly exempt amounts in the year of attaining FRA, by a vote of 100-0. Conference Action On March 28, 2000, the House approved the Senate version of H.R. 5 by a vote of 419-0. P.L. 108-203, The Social Security Protection Act of 2004 President George W. Bush signed H.R. 743 , the Social Security Protection Act of 2004, on March 2, 2004. The measure included various provisions designed to reduce fraud and abuse in the Social Security and SSI programs. Among other changes, H.R. 743 imposed stricter standards on individuals and organizations that serve as representative payees for Social Security and SSI recipients; made nongovernmental representative payees liable for misused funds and subjected them to civil monetary penalties; tightened restrictions on attorneys who represent Social Security and SSI disability claimants; limited assessments on attorney fee payments; prohibited fugitive felons from receiving Social Security benefits; modified the last day rule under the Government Pension Offset provision; and required certain noncitizens to have authorization to work in the United States at the time a Social Security number is assigned, or at some later time, to gain insured status under the Social Security program. Several major provisions of the law are described below. SSA may designate a "representative payee" to accept monthly benefit payments on behalf of Social Security and SSI recipients who are physically or mentally incapable of managing their own funds, or on behalf of children under the age of 18. Before P.L. 108-203 , SSA was required to reissue benefits misused by an individual or organizational representative payee only in cases where the Social Security Commissioner found that SSA negligently failed to investigate or monitor the payee. The new law eliminated the requirement that the reissuance of benefits be subject to a finding of negligence on the part of SSA. As a result, SSA is required to reissue any benefits misused by an individual representative payee who represents 15 or more recipients, or by an organizational representative payee. In addition, the law made nongovernmental representative payees (i.e., those other than federal, state, and local government agencies) liable for the reimbursement of misused funds. Under the new law, SSA has the authority to impose a civil monetary penalty (up to $5,000 for each violation) and an assessment (up to twice the amount of misused benefits) on representative payees who misuse benefits. The new law included a number of other provisions aimed at strengthening the accountability of representative payees. Social Security and SSI disability claimants may choose to have an attorney or other qualified individual represent them in proceedings before SSA, and the claimant representative may charge a fee for his or her services. The fee, which is subject to limits, must be authorized by SSA. If a Social Security disability claimant is awarded past-due benefits and his or her representative is an attorney, SSA withholds the attorney's fee payment from the benefit award and sends the payment directly to the attorney. To cover the administrative costs associated with the fee withholding process for attorney representatives of Social Security disability claimants, SSA withholds an assessment of up to 6.3% from the attorney's fee. Before P.L. 108-203 , if the claimant representative was not an attorney, or the claim was for SSI benefits, SSA would send the full benefit award to the claimant and the claimant representative would be responsible for collecting his or her fee from the individual. The new law capped the assessment for processing attorney fee payments at the lesser of 6.3% of the attorney's fee and $75 (indexed to inflation); provided for a temporary (five-year) extension of the attorney fee withholding process to SSI claims; authorized a five-year demonstration project to extend the fee withholding process to non-attorney representatives in both Social Security and SSI claims; and required the Government Accountability Office to study the fee payment process for claimant representatives. Before P.L. 108-203 , SSA was prohibited from paying SSI benefits only (not Social Security benefits) to fugitive felons (i.e., persons fleeing prosecution, custody, or confinement after conviction, and persons violating probation or parole). In addition, upon written request, SSA was required to provide information about these individuals (current address, Social Security number, and photograph) to law enforcement officials. The new law prohibited SSA from paying Social Security benefits as well to fugitive felons and required SSA, upon written request, to provide information to law enforcement officials to assist in the apprehension of these individuals. The new law authorized the Social Security Commissioner to pay, with good cause, SSI and Social Security benefits previously denied because of an individual's status as a fugitive felon. If an individual receives a government pension from work that was not covered by Social Security, his or her Social Security spousal or widow(er) benefit is reduced by an amount equal to two-thirds of the noncovered government pension, under a provision known as the Government Pension Offset (GPO). Before P.L. 108-203 , a state or local government employee who was not covered by Social Security would be exempt from the GPO if he or she worked in a Social Security-covered government position on the last day of employment . That is, under the last day rule , a noncovered state or local government employee could avoid having his or her Social Security spousal or widow(er) benefit reduced under the GPO by switching to a Social Security-covered government position for one day (or longer). Under the new law, a state or local government employee must be covered by Social Security for at least the last 60 calendar months of employment to be exempt from the GPO. Before P.L. 108-203 , a noncitizen was not required to have authorization to work in the United States at any point to qualify for Social Security benefits. Under the new law, a noncitizen who is assigned a Social Security number (SSN) in 2004 or later is required to have work authorization at the time the SSN is assigned, or at some later time, to gain insured status under the Social Security program. Specifically, if the individual obtains work authorization at some point, all of his or her Social Security-covered earnings count toward qualifying for benefits (all authorized and unauthorized earnings). If the individual never obtains authorization to work in the United States, none of his or her Social Security-covered earnings count toward qualifying for benefits. A noncitizen who was assigned an SSN before 2004 is not subject to the work authorization requirement established under the new law (i.e., all of the individual's Social Security-covered earnings count toward qualifying for benefits, regardless of his or her work authorization status). House Action On April 2, 2003, the House approved H.R. 743 , the Social Security Protection Act of 2003, introduced by Representative E. Clay Shaw (R-FL), by a vote of 396 (219-R, 176-D, 1-I) to 28 (3-R, 25-D). Senate Action On September 17, 2003, the Senate Finance Committee approved an amendment in the nature of a substitute to H.R. 743 , as passed by the House, by a voice vote. On December 9, 2003, the Senate approved H.R. 743 , with an amendment that substituted for the version of the bill approved by the Senate Finance Committee, by unanimous consent. House Response to Senate Action On February 11, 2004, the House agreed to the Senate version and passed H.R. 743 (renamed the Social Security Protection Act of 2004), by a vote of 402 (221-R, 180-D, 1-I) to 19 (4-R, 15-D). P.L. 111-312, Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 President Obama signed H.R. 4853 , the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010, on December 17, 2010. Section 601 of the law reduced, in 2011 only, the Social Security portion of the payroll tax applied to both the wages and salaries of FICA-covered workers and to the net earnings of SECA-covered self-employed workers, each by two percentage points. The Social Security initiative was just one among other provisions included in the legislation intended to stimulate the economy by creating jobs, extending public payments to the unemployed, and providing workers with more disposable income. The act temporarily reduced the FICA tax rate from 6.2% of covered earnings to 4.2% for employees, and the SECA tax rate from 12.4% of covered net self-employed earnings to 10.4%. The law did not change the FICA rate for employers in 2011, which remained at 6.2%. Net revenue to the Social Security trust funds was not affected by P.L. 111-312 . Any decline in tax revenue in 2011 attributed to the act was covered by appropriate transfers from the General Fund of the U.S. Treasury. House Action On March 17, 2010, the House approved H.R. 4853 , under suspension of the rules by voice vote. The bill, introduced by Representative James Oberstar (D-MN), at the time was known as the ultimately unrelated Federal Aviation Administration Extension Act of 2010. Senate Action On September 23, 2010, the Senate passed the bill, with an amendment in the nature of a substitute to H.R. 4853 , as passed by the House, by unanimous consent. The Senate's amendment, still focused on the aviation industry, was titled the Airport and Airway Extension Act of 2010, Part III. House Action as Amended After a few days of debate on tax relief and the economy in early December, the House moved to strip out all aviation provisions in H.R. 4853 and subsequently used the bill as a vehicle for tax relief measures. On December 2, 2010, the House agreed to adopt an amendment to H.R. 4853 , as amended by the Senate, by a vote of 234 (231-D, 3-R) to 188 (168-R, 20-D). Senate Action as Amended The Senate immediately began deliberation of its version of tax relief in response to the House amendment to the Senate amendment of H.R. 4853 . On December 9, 2010, the Senate produced a new substitute to H.R. 4853 , in the form of yet another amendment. This version included a provision to grant a one year partial payroll tax "holiday" to workers and the self-employed in 2011. The holiday was packaged as a two percentage point reduction in the FICA and SECA payroll tax rates. On December 15, 2010, the Senate approved this new version of the bill, by a vote of 81 (43-D, 37-R, 1-I) to 19 (13-D, 5-R, 1-I). House Action Approved Amendment On December 17, 2010, the House approved the latest Senate version of H.R. 4853 (officially, the Senate amendment to the House amendment to the Senate amendment of H.R. 4853 ). The House approved the measure by a vote of 277 (139-D, 138-R) to 148 (112-D, 36-R). P.L. 112-78, Temporary Payroll Tax Cut Continuation Act of 2011 President Obama signed H.R. 3765 , the Temporary Payroll Tax Cut Continuation Act of 2011, on December 23, 2011. Section 101 of the law extended the expiring temporary Social Security payroll tax contribution rates that were provided in P.L. 111-312 , the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 ( P.L. 111-312 ), effective in calendar year 2011, into calendar year 2012. In addition to the Social Security payroll tax provisions, P.L. 112-78 also included extensions of unemployment insurance and health provisions, as well as provisions relating to mortgage fees and the construction of a transcontinental oil pipeline. Specifically, the Social Security portion of the payroll tax applied to the covered net earnings of SECA-covered self-employed workers remained reduced throughout 2012 at 10.4%, down from the SECA tax rate of 12.4%. The act also extended the 2011 temporary reduction of the FICA tax rate on employee covered earnings from 6.2% to 4.2% through February 2012 only. Throughout 2011, several proposals were introduced to extend the 2011 temporary payroll tax reductions through calendar year 2012. H.R. 3630 received attention as the vehicle for a year-long extension, which had bipartisan and bicameral support, but the bill stalled as respective versions advanced by the House and Senate differed on how to replace revenue lost as a result of the payroll tax rate reductions. Ultimately, H.R. 3765 emerged as a short-term compromise, and it extended the payroll tax reductions for two months. The year-long extension of payroll tax cuts through calendar year 2012 is addressed in the "P.L. 112-96, The Middle Class Tax Relief and Job Creation Act of 2012" section below, in which Congress revisited H.R. 3630 after the adoption of H.R. 3765 into P.L. 112-78 . House Action On December 23, 2011, the House approved H.R. 3765 , introduced by Representative Dave Camp (R-MI) without objection. Senate Action On December 23, 2011, the Senate approved H.R. 3765 by unanimous consent. P.L. 112-96, Middle Class Tax Relief and Job Creation Act of 2012 President Obama signed H.R. 3630 , the Middle Class Tax Relief and Job Creation Act of 2012, on February 22, 2012. Section 1001 of the law further extended, through 2012, expiring reduced Social Security payroll tax contribution rates first provided in the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 ( P.L. 111-312 ). The payroll tax rate reductions included in P.L. 113-312 addressed above in the "P.L. 111-312, The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010" section, were initially intended to be applied only in 2011. These rate reductions were extended for an additional two months, through February 2012, by the Temporary Payroll Tax Cut Continuation Act of 2011 ( P.L. 112-78 ). The Middle Class Tax Relief and Job Creation Act of 2012 further extended the rate reductions through the end of calendar year 2012. In addition to the Social Security payroll tax provisions, P.L. 112-96 also included extensions of unemployment insurance, health, and welfare provisions, as well as provisions relating to the retirement contributions for federal employees and to public safety programs. In the second session of the 112 th Congress, the House and Senate came to an agreement on how to pay for the provisions in H.R. 3630 , and the legislation advanced with the filing of a conference report on February 16, 2012. The temporary payroll tax rates extended under P.L. 112-96 expired at the end of 2012. The tax rates returned to 6.2% of covered earnings for employees and 12.4% of covered net earnings for the self-employed in 2013. House Action On December 13, 2011, the House approved H.R. 3630 , the Middle Class Tax Relief and Job Creation Act of 2011, introduced by Representative Dave Camp (R-MI), by a vote of 234 (224-R, 10-D) to 193 (14-R, 179-D). Senate Action On December 17, 2011, the Senate approved its version of H.R. 3630 , as an amendment in the nature of a substitute and renamed the Temporary Payroll Tax Cut Continuation Act of 2011 by Majority Leader Harry Reid (D-NV), by a vote of 89 (49-D, 39-R, 1-I) to 10 (2-D, 7-R, 1-I). House Action as Agreed On February 17, 2012, the House agreed to the conference report of the bill, now identified as the Middle Class Tax Relief and Job Creation Act of 2012, by a vote of 293 (147-D, 146-R) to 132 (91-R, 41-D). Senate Action as Agreed On February 17, 2012, the Senate agreed to the conference report by a vote of 60 (45-D, 14-R, 1-I) to 36 (30-R, 5-D, 1-I). P.L. 113-270, No Social Security for Nazis Act President Barack Obama signed into law H.R. 5739 , the No Social Security for Nazis Act, on December 18, 2014. Before P.L. 113-270 , Title II of the Social Security Act provided for the termination of Social Security benefits for individuals who were ordered removed due to participation in Nazi persecutions, genocide, torture, or extrajudicial killings under Section 237(a)(4)(D) of the Immigration and Nationality Act. SSA was required to terminate benefits for such individuals upon notification that final orders of removal were issued against the individuals. Physical removal of the individual from the United States was not a necessary condition for the termination of benefits in such cases as it is with all other individuals who have been ordered removed; rather, the issuance of a final order of removal was the basis for the termination of benefits. P.L. 113-270 expanded the conditions under which Social Security benefits would be terminated for those who participated in Nazi persecutions. In addition, under P.L. 113-270 , benefits would be reinstated for those who are ordered removed based on participation in genocide, torture, or extrajudicial killings until those persons are physically removed. The act broadened the existing provision of the Social Security Act described above for those who participated in Nazi persecutions in response to concerns that certain individuals believed to have participated in Nazi persecutions during World War II have been living outside the United States and receiving Social Security benefits. Specifically, concern focused on a small surviving group of individuals who had lived in the United States previously and, due to their participation in Nazi persecutions, had been under investigation by the Department of Justice and left the country before being ordered removed. Because these individuals left the United States before being issued an order of removal, their Social Security benefits were not subject to termination. (These individuals would also have met other requirements for the payment of Social Security benefits outside the United States.) P.L. 113-270 provided for the termination of Social Security benefits for these additional individuals determined to have participated in Nazi persecutions, and it prohibited them from receiving Social Security benefits based on another person's work record. It also clarified the timeframe in which the Department of Justice or the Department of Homeland Security must notify SSA of certain actions involving these individuals. The change in benefit eligibility for those who participated in genocide, torture, or extrajudicial killings as a result of P.L. 113-270 (i.e., making the physical removal of such individuals from the United States a necessary condition for the termination of benefits, rather than the issuance of a final order of removal ) is likely an unintended consequence of the legislative language. House Action On December 2, 2014, the House moved to suspend the rules and pass H.R. 5739 by a vote of 420 (228-R, 192-D) to 0. Senate Action On December 4, 2014, H.R. 5739 was passed by the Senate without amendment by unanimous consent. P.L. 114-74, Bipartisan Budget Act of 2015 President Barack Obama signed into law the Bipartisan Budget Act of 2015 ( H.R. 1314 ) on November 2, 2015. The broad budget legislation contained a number of Social Security-related provisions, including changes to rules that apply when a person files an application for Social Security benefits, and a temporary reallocation of Social Security payroll tax revenues from the Old-Age and Survivors Insurance (OASI) Trust Fund to the Disability Insurance (DI) Trust Fund. Changes to Social Security's Filing Rules Section 831 of P.L. 114-74 made changes to two types of filing rules: (1) deemed filing and (2) the voluntary suspension of benefits . The changes affect options available to claimants who are full retirement age (FRA) or older (the FRA ranges from 65 to 67, depending on the person's year of birth). Deemed Filing A worker who qualifies for both a retired-worker benefit and a spousal benefit generally cannot restrict his or her application to only one type of benefit. Rather, when the person files for one benefit, he or she is required (or deemed) to file for the other benefit at the same time. The person becomes simultaneously entitled to a retired-worker benefit and a spousal benefit, and the spousal benefit is reduced under the dual entitlement rule . Under the dual entitlement rule, a person receives his or her own retired-worker benefit first, plus a spousal benefit that has been reduced by the amount of the retired-worker benefit (the spousal benefit may be reduced to zero). In effect, the person receives the higher of the two benefit amounts (not both). Before P.L. 114-74 , deemed filing applied only to claimants who are below FRA . A claimant who was FRA or older could file a restricted application for benefits; that is, he or she could file for spousal benefits only, for example, and wait until a later time to file for retired-worker benefits. This would allow the person to receive a full spousal benefit now (the dual entitlement rule would not be applied at this time) and to file for a higher retired-worker benefit later. When the person filed for his or her own retired-worker benefit later on, the spousal benefit would then be reduced under the dual entitlement rule. Some beneficiaries used this "claiming strategy" as a way to maximize their Social Security retired-worker and spousal benefits. P.L. 114-74 eliminated the restricted application option for claimants who are FRA or older. Like claimants who are below FRA, they are deemed to file for both a retired-worker benefit and a spousal benefit, if eligible for both. The deemed filing change is effective for people born in 1954 or later (i.e., people who reach age 62—the age at which one first becomes eligible for retirement benefits—on or after January 2, 2016). People born before 1954 (i.e., people who reached age 62 before January 2, 2016) are "grandfathered" under the old rules. They can file a restricted application for spousal benefits only or retired-worker benefits only when they reach FRA . If they claim benefits before FRA, they are subject to deemed filing rules. Voluntary Suspension of Benefits Social Security benefits replace a portion of earnings lost due to the worker's retirement, disability, or death. Therefore, family members generally cannot claim benefits on a worker's record if the worker has not claimed benefits. Before P.L. 114-74 , a worker who was FRA or older could file an application for retired-worker benefits and then request that the benefit payments be suspended. This "file and suspend" approach (1) allowed the worker to accrue delayed retirement credits (DRCs) during the period of voluntary suspension (i.e., his or her retired-worker benefit would increase 8% per year from FRA up to age 70) and at the same time (2) allowed eligible family members (such as a spouse or dependent child) to claim benefits on the worker's record. In addition, a beneficiary who had voluntarily suspended his or her own retired-worker benefit could receive a spousal or widow(er)'s benefit based on another person's record. A spousal or widow(er)'s benefit would be reduced under the dual entitlement rule as if the beneficiary's own retired-worker benefit had not been suspended (i.e., the beneficiary could receive any excess spousal or widow(er)'s benefits). A worker could also "unsuspend" his or her benefits on a retroactive basis and receive a lump sum payment for the past-due period. Under P.L. 114-74 , a worker who is FRA or older can file for retired-worker benefits and voluntarily suspend benefits between FRA and age 70 to accrue DRCs (as before). This approach could be used by a beneficiary who claims retired-worker benefits and then returns to work, for example. Under the new rules, however, benefits are no longer payable to eligible family members based on the worker's record during the period of voluntary suspension, with the exception of divorced spouses . A divorced spouse may collect benefits on the worker's record during the period of suspension. Widow(er)'s benefits are also payable on the record of a deceased worker who had suspended his or her own retired-worker benefits. In addition, a worker can no longer receive benefits based on another person's record while his or her own retired-worker benefit is suspended; nor can a worker "unsuspend" his or her benefits retroactively and receive a lump sum payment. The period of voluntary suspension ends with the earlier of (1) the month before the person turns age 70, or (2) the month following the person's request to resume benefit payments. The changes apply to requests for the voluntary suspension of benefits made after April 29, 2016. The changes to Social Security's filing rules were intended to prevent the use of "claiming strategies" viewed as inconsistent with the concept behind Social Security spousal benefits, and that otherwise allowed workers and spouses to collect more in Social Security benefits than Congress intended. Before P.L. 114-74 , a person who was FRA or older could claim spousal benefits only, when he or she also qualified for retired-worker benefits. As a result, the person could receive full spousal benefits for several years, before claiming a higher retired-worker benefit and only then being subject to the dual entitlement rule. In addition, the "restricted application" and "file and suspend" options were being used in combination by some married couples, for example, to allow both members of the couple to maximize their own retired-worker benefit (through the accrual of DRCs) and to allow one member of the couple to receive full spousal benefits at the same time (by avoiding the dual entitlement rule). Social Security Payroll Tax Reallocation In July 2015, the Social Security Board of Trustees (the Trustees) released projections showing that the asset reserves held by the DI trust fund would be depleted by the end of calendar year 2016; had this occurred, Social Security would have been unable to pay disability benefits in full and on time from that point forward. Section 833 of P.L. 114-74 provided a temporary reallocation of the Social Security payroll tax rate between the OASI and DI trust funds, directing a larger share of total payroll tax revenues to the DI trust fund over a three-year period (2016 through 2018). Updated projections following enactment of P.L. 114-74 show that the reallocation extends DI trust fund solvency from the end of calendar year 2016 to c alendar year 202 3 . The reallocation did not change the year of projected reserve depletion for the OASI trust fund; it is projected to remain solvent until calendar year 2035. P.L. 114-74 also contained a number of other provisions designed to address fraud and other program integrity issues in SSA's disability programs. On March 4, 2015, Representative Patrick Meehan (PA) introduced H.R. 1314 , the Ensuring Tax Exempt Organizations the Right to Appeal Act. At the time, the bill contained no Social Security provisions. The bill was approved by the House on April 15, 2015, and was moved to the Senate. On May 22, 2015, the Senate passed H.R. 1314 , with an amendment in the nature of a substitute, and it was now known as the Trade Act of 2015. After attempts by the House to resolve differences with the Senate amendment (which still did not contain Social Security provisions), the Trade Act of 2015 was tabled on June 25, 2015. On October 28, 2015, the House reported an amendment to the Senate amendment of H.R. 1314 , now titled the Bipartisan Budget Act of 2015. The version of H.R. 1314 reported in the House amendment included the Social Security tax rate reallocation and the unrelated provisions mentioned above. Details of congressional action prior to the bill being renamed the Bipartisan Budget Act of 2015 are not reflected in this report. House Action On October 28, 2015, the House adopted their amendment to H.R. 1314 , as amended by the Senate, by a vote of 266 (187-D, 79-R) to 167 (167-R). Senate Action On October 30, 2015, the Senate agreed to the House amendment to the Senate amendment to H.R. 1314 by a vote of 64 (44-D, 18-R, 2-I) to 35 (35-R). P.L. 115-8, Providing for congressional disapproval under chapter 8 of title 5, United States Code, of the rule submitted by the Social Security Administration relating to Implementation of the NICS Improvement Amendments Act of 2007 President Donald Trump signed H.J.Res . 40 on February 28, 2017. Under the Congressional Review Act, the law nullified the "Implementation of the NICS Improvement Amendments Act of 2007" rule which was finalized by the SSA on December 19, 2016, and had been scheduled to be implemented as of January 18, 2017. The final rule would have required the SSA to send the names of individuals meeting certain criteria to the National Instant Criminal History Background Check System. The criteria included individuals who received benefit payments through a representative payee because they had been determined to be mentally incapable of managing benefit payments on their own. The proposed rule received over 90,000 comments. This law vacated the SSA final rule. It also barred the SSA from issuing any future rule that would be "substantially the same" as the vacated rule unless the agency received a new statutory authorization to do so. In the retraction of the rule, SSA notes that, "Although the final rule had an effective date of January 18, 2017, we delayed the compliance date of the rule until December 19, 2017 (81 FR at 91720). Therefore, we did not report any records to the National Instant Criminal Background Check System (NICS) pursuant to the final rule." House Action H.J.Res . 40 was i ntroduced by Representative Sam Johnson (R-TX) on January 30, 2017, and the House debated the joint resolution on February 2, 2017 . Members raised multiple issues, including the concern that the SSA rule stigmatized those with mental health issues or intellectual disabilities. They cited letters from several advocacy groups, as well as a letter from the National Council on Disability favoring the joint resolution. Representatives voicing opposition to the joint resolution cited several factors including that the SSA final rule only impacted a small subset of beneficiaries and that the joint resolution disregarded the decisionmaking processes of the agency. At the conclusion of debate, the resolution was passed by a voice vote. A recorded vote occurred later that afternoon, and H.J.Res . 40 was passed by a vote of 235 (R-229, D-6) to 180 (R-2, D-178). Senate Action On February 15, 2017, H.J.Res . 40 was passed by the Senate without amendment by a vote of 57 (R-52, D-4, I-1) to 43 (D-42, I-1). P.L. 115-59, Social Security Number Fraud Prevention Act of 2017 President Donald Trump signed H.R. 624 , the Social Security Number Fraud Prevention Act of 2017, on September 15, 2017. The law included several provisions to limit federal agencies from including an individual's SSN on documents sent by mail. It requires the head of each CFO (chief financial officer) Act agency to issue regulations no later than five years after enactment, which specify the circumstances under which a Social Security number would be necessary to include on a document sent by mail. In addition, it stipulates that each agency must issue several reports demonstrating the agency's progress in removing the SSN from agency documents. The final report would list any remaining documents produced by the CFO Act agency that continued to include an SSN. House Action H.R. 624 was introduced by Representative David G. Valadao (R-CA) on January 24, 2017. The Committee on Oversight and Government Reform adopted, by voice vote, a substitute amendment extending the deadline for issuing regulations from one year to five years on February 14, 2017. The House approved the bill, as amended, under suspension of the rules by a voice vote on May 24, 2017. Senate Action On September 6, 2017, H.R. 624 was passed by the Senate without amendment by unanimous consent. P.L. 115-165, Strengthening Protections for Social Security Beneficiaries Act of 2018 President Donald Trump signed H.R. 4547 on April 13, 2018. The law amended Titles II, VIII, and XVI of the Social Security Act. It was designed to increase oversight of representative payees and protect vulnerable beneficiaries. The law required the SSA to make annual grants to each state's protection and advocacy system for the purpose of conducting reviews of representative payees under the Supplemental Security Income (SSI) program and the Old-Age, Survivors, and Disability Insurance (OASDI) program. Impetus for this law came as details emerged of significant cases of abuse by representative payees. In one case, reported by the SSA's Office of Inspector General, a woman in Philadelphia imprisoned mentally ill adults and confiscated their Social Security benefits by identifying herself as their representative payee. This case, and similar ones, led to the publication of two reports by the Social Security Advisory Board: Representative Payees: A Call to Action (2016) and Improving Social Security's Representative Payee Program (2018). The GAO also published a report, SSA Representative Payee Program: Addressing Long-Term Challenges Requires a More Strategic Approach (2013). The Social Security Subcommittee of the House Committee on Ways and Means held hearings in 2017 on the representative payee program, including Examining the Social Security Administration's Representative Payee Program: Determining Who Needs Help on February 7, 2017, and Examining the Social Security Administration's Representative Payee Program: Who Provides Help on March 22, 2017. P.L. 115-165 included a provision designed to enhance personal control by allowing beneficiaries to designate their preferred payee in advance. It directed SSA to take a greater role in assessing the appropriateness of representative payees, and banned individuals with certain criminal convictions from serving as payees. In addition, it prohibited individuals who have a payee from serving as a payee for others. House Action H.R. 4547 was introduced on December 5, 2017, by Representative Sam Johnson (R-TX). It was referred to the House Committee on Ways and Means. On February 5, 2018, the House moved to suspend the rules and passed H.R. 4547 , as amended, by a vote of 396 (225-R, 171-D) to 0. Senate Action On March 23, 2018, the Senate passed the House bill without amendment by unanimous consent. P.L. 115-243, Tribal Social Security Fairness Act of 2018 President Donald Trump signed H.R. 6124 , the Tribal Social Security Fairness Act of 2018, on September 20, 2018. The law amended Title II of the Social Security Act and directed the SSA to extend Old-Age, Survivors and Disability Insurance benefits to tribal council leaders, if requested to do so by an Indian tribe. The law also allowed tribal council members to receive Social Security credit for taxes paid prior to the establishment of the agreement, if taxes were paid in good faith and not subsequently refunded. It reversed an SSA policy that prevented tribal leaders from being covered under the Social Security program. House Action H.R. 6124 was introduced by Representative Dave Reichert (R-WA) on June 15, 2018. An amendment in the nature of a substitute was presented in the Committee on Ways and Means by Representative Kevin Brady (R-TX). The substitute amendment was adopted by a voice vote in committee on June 21, 2018. H.R. 6124 , as amended, was considered by the House under suspension of the rules and passed by a voice vote on July 24, 2018. Senate Action On September 6, 2018, the House bill passed the Senate without amendment by unanimous consent. P.L. 115-174, Economic Growth, Regulatory Relief, and Consumer Protection Act President Donald Trump signed S. 2155 , the Economic Growth, Regulatory Relief, and Consumer Protection Act, on May 24, 2018. Section 215 required SSA to accept the electronic signature of an individual who consents to allow a financial institution to verify his or her name, date of birth, and Social Security number using SSA's Consent Based Social Security Number Verification (CBSV) Service. Some identity thieves use a technique called synthetic identity theft in which they apply for credit using a mixture of real, verifiable information of an existing person with fictitious information, thus creating a "synthetic" identity. Often the information includes real SSNs of people who are unlikely to have existing credit files, such as children or recent immigrants. The SSA Consent-Based Social Security Number Verification Service was created to fight identity fraud such as this, but prior to the enactment of P.L. 115-174 it required financial institutions to obtain a physical written signature to make a verification request. Some observers believed this requirement was outdated and time consuming, undermining the effectiveness of the program. Section 215 aimed to modernize SSA's verification system and make it more efficient by allowing the use of electronic signatures. Section 215 directed the SSA to allow certain financial institutions to receive customers' consent by electronic signature to verify their name, date of birth, and Social Security number with SSA. In addition, the section directed SSA to modify their databases and systems to allow financial institutions to electronically and quickly request and receive accurate verification of the consumer data. Senate Action Senator Mike Crapo introduced S. 2155 on November 16, 2017. As introduced, the bill did not include any Social Security provisions. S.Amdt. 2151 , an amendment in the nature of a substitute, which included the Social Security provisions in Section 215, was offered on the Senate floor on March 7, 2018. During floor debate, Senator Tim Scott identified himself as the author of the provisions in Section 215. Senator Scott explained that the purpose of Section 215 was to reduce synthetic identity theft by providing options for entities to crosscheck consumer information with the SSA. Senator Scott also expressed his expectation that the database that SSA would create to allow this cross check to occur would be operational within one year of enactment. S.Amdt. 2151 , as modified, passed the Senate by a roll call vote of 67 (R-50, D-16, I-1) to 31(D-30, I-1) on March 14, 2018. House Action On May 22, 2018, the House passed the Senate version of the bill in a roll call vote of 258 (R-225, D-33) to 159 (R-1, D-158).

The Social Security program, enacted in 1935, has been amended numerous times. Lists and summaries of individual major Social Security amendments may illuminate the tone and context of the debate of the program in the House and Senate. Major statutory decisions made by Congress on the Social Security program, vote information, summaries of major legislative actions, and descriptions of floor amendments and congressional debate may be informative to current discussions of the Social Security program. During the 115th Congress, lawmakers enacted several pieces of Social Security legislation that included the following: P.L. 115-59, the Social Security Number Fraud Prevention Act of 2017, which restricted federal agencies from including any individual's Social Security number (SSN) on documents sent by mail; P.L. 115-165, the Strengthening Protections for Social Security Beneficiaries Act of 2018, which made a variety of changes to the Social Security Administration's (SSA's) representative payee program; P.L. 115-243, the Tribal Social Security Fairness Act of 2018, which allowed federally recognized Indian tribes to enter into voluntary agreements with SSA to extend Social Security coverage to tribal council members; and P.L. 115-174, the Economic Growth, Regulatory Relief and Consumer Protection Act, which required SSA to accept electronic signatures of individuals who consent to allow a financial institution to verify their name, SSN, and date of birth with the information contained in SSA's records.

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Background First enacted in 1965, the Older Americans Act (OAA, P.L. 89-73, as amended) is the primary federal vehicle for the delivery of social and nutrition services for older persons. The majority of OAA grant funds are provided to states and other entities based on statutory formulas that exist in the following titles: Title III, Grants for State and Community Programs on Aging; Title V, Community Service Employment for Older Americans; Title VI, Grants for Older Native Americans; and Title VII, Vulnerable Elder Rights Protection Activities. These formula grants fund programs that assist older Americans with supportive services in their homes; congregate nutrition services (meals served at group sites such as senior centers, community centers, schools, churches, or senior housing complexes); home-delivered nutrition services; family caregiver support; community service employment; the long-term care ombudsman program; and services to prevent the abuse, neglect, and exploitation of older persons. The OAA also supports grants to older Native Americans for nutrition and supportive services. , Since enactment of OAA, Congress has reauthorized and amended the act numerous times. Most recently, the Older Americans Act Reauthorization Act of 2016 ( P.L. 114-144 ) authorized appropriations for OAA programs for FY2017 through FY2019, and made other changes to the act, including changes to four Title III programs that receive funding under statutory formulas. Prior to the 2016 OAA reauthorization, the OAA Amendments of 2006 ( P.L. 109-365 ) reauthorized all programs under the act through FY2011. Although the authorizations of appropriations under the OAA expired at the end of FY2011, Congress continued to appropriate funding for OAA-authorized activities through FY2016. For most OAA programs, entities such as states, U.S. territories, and tribal organizations are allotted funding based on a population-based formula factor (e.g., aged 55 and over, aged 60 and over, or aged 70 and over). Some statutory requirements for program funding allocations include a "hold harmless" provision, which guarantees that states' or other entities' allotments will remain at a certain fiscal year level or amount, provided sufficient funding in a given year (e.g., FY2000 levels or FY2018 levels less 1%). The following describes the OAA statutory provisions that allocate funds to states and other entities under the various titles of the act. Title III: Grants for State and Community Programs on Aging Title III authorizes grants to State Units on Aging (SUAs) and Area Agencies on Aging (AAAs) in all 50 states, the District of Columbia, Puerto Rico, and the U.S. territories to act as advocates on behalf of, and to coordinate programs for, older persons (defined in the law as those aged 60 and older). The Administration on Aging (AOA) within the Administration for Community Living (ACL) in the Department of Health and Human Services (HHS), allocates Title III funds to SUAs. The states, in turn, award funds to more than 600 AAAs, which are designated by states to operate within specified planning and service areas. States must develop an intrastate funding formula for distribution of Title III funding within the state that takes into account the geographical distribution of older individuals in the state as well as the distribution of older individuals with greatest economic and social need (with particular attention to low-income minority older individuals) among specified planning and service areas. The state formula for distribution of Title III funding must be developed in accordance with AOA guidelines and approved by the Assistant Secretary for Aging. As the OAA's largest component, discretionary spending under Title III accounts for 73% of the act's total FY2019 appropriations ($1.498 billion out of $2.055 billion). States receive separate allotments of funds for the following six programs authorized under Title III: (1) supportive services and senior centers, (2) congregate nutrition services, (3) home-delivered nutrition services, (4) the Nutrition Services Incentive Program (NSIP), (5) disease prevention and health promotion services, and (6) the National Family Caregiver Support Program (NFCSP). States are required to provide a matching share of 15% in order to receive funds for supportive services and congregate and home-delivered nutrition programs. A matching share of 25% is required for the NFCSP; no match is required for NSIP and disease prevention and health promotion services. To determine state allotments, a separate allocation is calculated for each of the six grant programs. The same formula is used to determine state allocations for supportive services and senior centers, congregate nutrition services, home-delivered nutrition services, and disease prevention and health promotion services. The formulas for the NSIP and NFCSP use different factors. The funding formula for four of these Title III programs—supportive services and senior centers, the congregate and home-delivered nutrition programs, and disease prevention and health promotion services—has been a major point of contention during the past three OAA reauthorizations of 2000, 2006, and 2016. Appendix A of the report provides a detailed legislative history of the Title III funding formula changes and describes the debate surrounding changes to the Title III funding formula during the OAA reauthorizations of 2000, 2006, and 2016. Appendix B provides an analysis of the state-based population data for the U.S. population age 60 and older for these Title III programs. Appendix C compares FY2016 allotment amounts for states and other entities with actual allotment amounts under the statutory funding formula changes in P.L. 114-144 for FY2017 to FY2019 for Title III Parts B, C1, C2 and D programs. Allocation for Supportive Services and Senior Centers, Congregate and Home-Delivered Nutrition Services, and Disease Prevention and Health Promotion Separate state allotments for (1) supportive services and senior centers, (2) congregate nutrition services, (3) home-delivered nutrition services, and (4) disease prevention and health promotion services are based on a population formula factor that is defined as each state's relative share of the total U.S. population aged 60 years and older. For the purposes of this calculation, the total U.S. population aged 60 and older includes all 50 states, the District of Columbia, Puerto Rico, and the U.S. territories. Population data are from annual population estimates published by the U.S. Census; the reference date for estimates is July 1. There is a two-year time lag between the reference year of the population estimates and the respective appropriation year. For example, FY2019 state allotments are calculated using 2017 estimates of the population aged 60 and older. For the purpose of determining state allotments, the law requires that allotments meet two criteria. The first criterion is the "small state minimum." This ensures that all states (including the District of Columbia and Puerto Rico) receive a minimum amount of funds, which is defined as 0.5% (one-half of 1%) of the total grant appropriation for the respective fiscal year. Guam and the U.S. Virgin Islands each are allotted no less than 0.25% (one-quarter of 1%) of the total grant amount, and American Samoa and the Commonwealth of the Northern Mariana Islands are each allotted no less than 0.0625% (one-sixteenth of 1%) of the total grant amount. The second criterion is the "hold harmless" provision. The OAA Reauthorization Act of 2016 Amendments ( P.L. 114-144 ) reduces state and U.S. territory hold harmless amounts (previously referenced to FY2006 funding levels) by 1% from the previous fiscal year as follows: For FY2017, no state receives less than 99% of the annual amount allotted to the state in FY2016. For FY2018, no state receives less than 99% of the annual amount allotted to the state in FY2017. For FY2019, no state receives less than 99% of the annual amount allotted to the state in FY2018. For FY2020 and each subsequent fiscal year, no state receives less than 100% of the annual amount allotted to the state in FY2019. Allocation for Nutrition Services Incentive Program The Nutrition Services Incentives Program (NSIP) provides funds to states, territories, and Indian tribal organizations to purchase food or to cover the costs of food commodities provided by the U.S. Department of Agriculture (USDA) for the congregate and home-delivered nutrition programs. NSIP funds are allotted to states and other entities based on a formula that takes into account each state's share of total meals served by the nutrition services program (both congregate and home-delivered meals) in all states and tribes during the prior year. Allocation for the National Family Caregiver Support Program The National Family Caregiver Support Program (NFCSP) provides direct services for caregivers in five core service areas: Information about health conditions, resources, and community-based services. Assistance with accessing available services. Individual counseling, support groups, and caregiver training. Respite care services to provide families temporary relief from caregiving responsibilities. Supplemental services on a limited basis that would complement care provided by family and other caregivers (e.g., adult day health care, home care, home modifications, and assistive devices). Funds for NFCSP are allotted to states based on each state's relative share of the population aged 70 years and older. States receive a minimum grant amount, which is defined as 0.5% (one-half of 1%) of the total grant appropriation for the respective fiscal year. Guam and the U.S. Virgin Islands are allotted no less than 0.25% (one-quarter of 1%) of the total grant appropriation, and American Samoa and the Commonwealth of the Northern Mariana Islands are allotted no less than 0.0625% (one-sixteenth of 1%) of the total grant appropriation. There is no hold harmless provision in the formula allocation for this grant program. Title V: Community Service Employment for Older Americans Title V authorizes the Community Service Employment for Older Americans Program (CSEOA). Administered by the Department of Labor (DOL), Title V is OAA's second-largest program and is the only federally subsidized employment program for low-income older persons (defined in the law as those aged 55 and older with incomes up to 125% of the federal poverty guidelines). Its FY2019 funding of $400 million represents 20% of the act's total discretionary funding. There is a 10% nonfederal match requirement for Title V grant activities. DOL allocates Title V funds for grants to state agencies in all 50 states, the District of Columbia, Puerto Rico, and the U.S. territories, and to national grantees who are typically nonprofit organizations that operate in more than one state. The total Title V state allotment is the sum of its respective state agency grantee allotment and national grantee allotment for activities in that state. To determine grant allotments for each state, a separate allocation is calculated for each grant type. The 2016 OAA reauthorization did not revise the Title V funding formula, but the formula had been an issue for Congress in the past. During the 2006 OAA reauthorization, the original House bill ( H.R. 5293 ) included a provision to update the "hold harmless" year in the Title V formula from FY2000 to FY2006; however, the Senate bill ( S. 3570 ) did not include this provision. The compromise bill ( H.R. 6197 ) enacted into law made no changes to the Title V formula. The following describes the Title V formula allocation. Before allocation of funds to states, DOL is required to reserve funds as follows: up to 1.5% of the total appropriation for Section 502(e) demonstration projects, pilot projects, and evaluation projects; 0.75% of the total appropriation for Guam, the U.S. Virgin Islands, American Samoa, and the Commonwealth of the Northern Mariana Islands; and "such amount as may be necessary" for national grants to public or private organizations serving eligible Indians and Pacific Island and Asian Americans. After these reservations, the remaining funds are divided into two amounts, one for all state agency grantees and the other for all national grantees. The allocation for these amounts is dependent on program funding. If funds for a given year are equal to their FY2000 level of $440.2 million, then amounts set aside for all state agencies and all national grantees are in proportion to their respective FY2000 levels. If funds for a given year are less than their FY2000 levels, then total amounts for the state and national grantees are reduced proportionately. If funds for a given year exceed the FY2000 level, up to $35 million of the excess is to be distributed as follows: 75% of the excess is to be provided for all state agency grantees and 25% of the excess is to be provided to all national grantees. Any funding amount over $35 million that remains is to be distributed 50/50 to all state agency and national grantees, respectively. Once the total funding levels for grants for state agency and national grantees have been determined, the same formula is used to determine the state agency allotment and the national grantee allotment for each state. Each allotment is distributed to states based on a formula that takes into account (1) a state's share of the total U.S. population aged 55 years and older (includes the District of Columbia and Puerto Rico), and (2) the state per capita income relative to other states. The formula favors states with a lower per capita income and a higher proportion of the population aged 55 and older relative to other states. Population data are from the annual population estimates published by the U.S. Census; the reference date for estimates is July 1. Per capita income data are from the Bureau of Economic Analysis (BEA) within the U.S. Department of Commerce (DOC). There is a two-year time lag between the data (reference year of the population estimates and per capita income) and the respective appropriation year. For the purpose of determining state allotments to state agency and national grantees, the law requires that allotments meet two criteria. The first criterion is that states (including the District of Columbia and Puerto Rico) are to receive at least a minimum grant allotment, which is defined as 0.5% (one-half of 1%) of the respective grant amount for the given fiscal year. The second criterion is the "hold harmless" provision. If grant amounts for a given year are equal to, or less than, their FY2000 level, states are to receive an allotment in proportion to their respective FY2000 levels. If grant amounts exceed their FY2000 levels, states are to receive no less than their FY2000 level plus a "guaranteed growth" of at least 30% of the percentage increase above the FY2000 level. Title VI: Grants for Older Native Americans Title VI authorizes funds for supportive and nutrition services to older Native Americans to promote the delivery of home and community-based supportive services, nutrition services, and family caregiver support. Funds are awarded directly to Indian tribal organizations, Alaskan Native organizations, and nonprofit groups representing Native Hawaiians. To be eligible for funding, a tribal organization must represent at least 50 Native American elders aged 60 or older. In FY2017, grants were awarded to 270 tribal organizations representing 400 Indian tribes, including one organization serving Native Hawaiian elders. FY2019 funding for supportive and nutrition services grants is $34.2 million, while FY2019 funding for the Native American caregiver program is $10.1 million. There is no requirement for tribal organizations to match these grant funds. Separate formula grant awards are made for (1) nutrition and supportive services and (2) family caregiver support services. Formula grants for services to older Native Americans are allocated to tribal and other representing organizations based on their share of the American Indian, Alaskan Native, and Native Hawaiian population aged 60 and over in their services area. Tribal organization allotments must meet a FY1991 "hold harmless" provision. If funds for a given year exceed the FY1991 amount, then the grant amount is either (1) increased to equal or approximate the amount the organization received in 1980 or (2) determined based on what the Assistant Secretary considers sufficient if the tribal organization did not receive a grant for either FY1980 or FY1991. For Native Hawaiian programs, formula allotments for services to representing organizations are only required to meet a FY1991 "hold harmless" provision. Title VII: Vulnerable Elder Rights Protection Activities Title VII authorizes the Long-Term Care (LTC) Ombudsman Program and elder abuse, neglect, and exploitation prevention programs. Most Title VII funding is directed at the LTC Ombudsman Program, the purpose of which is to investigate and resolve complaints of residents of nursing facilities and other long-term care facilities. For FY2019, funding for the LTC Ombudsman and Elder Abuse, Neglect, and Exploitation Prevention Programs totals $21.7 million. There is no requirement for states to match these grant funds. Funds for LTC ombudsman and elder abuse prevention activities are allotted to states based on each state's relative share of the population aged 60 years and older. For the purpose of determining state allotments, the law requires that states (including the District of Columbia and Puerto Rico) receive a minimum amount of funds, which is defined as 0.5% (one-half of 1%) of the total grant appropriation for the respective fiscal year. Guam and the U.S. Virgin Islands are allotted no less than 0.25% (one-quarter of 1%) of the total grant appropriation, and American Samoa and the Commonwealth of the Northern Mariana Islands are allotted no less than 0.0625% (one-sixteenth of 1%) of the total grant appropriation. State allotments must also meet a FY2000 "hold harmless" provision. SUAs may award funds for these activities to a variety of organizations for administration, including other state agencies, AAAs, county governments, nonprofit service providers, and volunteer organizations. Appendix A. Legislative History of OAA Title III Funding Formula When the OAA was enacted in 1965, Title III funds were allocated to states based on their relative share of the population aged 65 and over. The law also set certain minimum grant amounts for states and territories. For states, the minimum allotment was 1% of total funds appropriated, and for the U.S. Virgin Islands, Guam, and American Samoa, the minimum allotment was 0.5% (one-half of 1%) of funds appropriated. These provisions remained in effect until 1973. The first significant change to the OAA Title III funding formula occurred under the 1973 amendments to the act, which based the formula on the states' relative share of the population aged 60 and over, rather than, as under prior law, aged 65 and over. The 1973 amendments also changed the minimum allotments states and territories were to receive, as follows: states were to receive no less than 0.5% of the total appropriation; and Guam, American Samoa, the U.S. Virgin Islands, and the Trust Territories of the Pacific Islands were to receive no less than 0.25% (one-fourth of 1%) of total funds. In addition, the 1973 amendments specified that states were to receive no less than they received in FY1973 (the hold harmless amount). These provisions remained in effect until the 1978 amendments, which changed the minimum amounts for American Samoa to one-sixteenth of 1% of the appropriation, and added a minimum funding amount for the Northern Marianas (also one-sixteenth of 1%). The 1978 amendments also changed the year for the hold harmless amount. The law stipulated that for fiscal years after 1978, states were to receive no less than they received in FY1978, rather than, as in prior law, FY1973. Successive amendments subsequently changed the hold harmless year. Amendments in 1984 required that for fiscal years after FY1984, states be allotted no less than they received for services in FY1984. There were no changes to the formula provisions under the 1987 amendments. The 1992 amendments moved the hold harmless reference year to FY1987. No further changes were made to these funding formulas until the 2000 amendments. The OAA Amendments of 2000 and 2006 The Title III funding formula for supportive services and senior centers, the congregate and home-delivered nutrition programs, and disease prevention and health promotion services has been a point of controversy in recent congressional attempts to reauthorize the Older Americans Act. Initially, Congress was concerned that the method AOA used to distribute Title III funds was inconsistent with statutory requirements, thereby negatively affecting states experiencing faster growth in their older population. However, more recently, congressional debate has focused on whether or not the statutory formula itself accurately reflects trends in the aging of the U.S. population. The following provides a brief overview of the debate and legislative changes to the Title III funding formula in the OAA reauthorizations of 2000 and 2006. After unsuccessful attempts in the 104 th and 105 th Congresses to reauthorize the OAA, the 106 th Congress approved the Older Americans Act Amendments of 2000 ( P.L. 106-501 ). The Title III funding formula was a controversial issue during the six years of congressional debate on the 2000 OAA reauthorization. Prior to the reauthorization, a 1994 U.S. General Accounting Office (now the Government Accountability Office, or GAO) report found that the method AOA used did not distribute funds among states proportionately to their older population to the maximum extent possible. Instead, AOA allotted funds to states, first according to an amount equal to their FY1987 "hold harmless" allocation, with the remainder of the appropriations allotted to states based on their relative share of the population aged 60 and over. This methodology negatively affected states with faster-growing older populations, since the majority of funds were being distributed according to population estimates that did not reflect the most recent trends. The GAO report recommended that AOA revise its methodology for distributing funds to states. In response to these concerns, the 2000 OAA reauthorization resulted in the following changes to the law: (1) Congress clarified the law to ensure that, first, funds were allotted to states based on the most recent population data; (2) Congress created an FY2000 "hold harmless" requirement, thereby ensuring that no state would receive less than it received in FY2000; and (3) Congress created the "guaranteed growth" provision, ensuring that all states would receive a share of any appropriations increase over the FY2000 level. The Title III funding formula also became a major point of contention during the 2006 OAA reauthorization debate. Congress revisited the FY2000 "hold harmless" requirement and "guaranteed growth" provision. At the time, the "hold harmless" requirement ensured that, provided sufficient funds, every state and U.S. territory received at least its FY2000 amount. The "guaranteed growth" provision guaranteed that all states received a certain share of any increase above the FY2000 appropriation. These issues divided Members from states with relatively faster-growing older populations from lawmakers representing states with relatively slower growth in their older populations. High-growth states argued that the "hold harmless" provisions in current law provided protections to states whose populations were not increasing as quickly as others', resulting in an inequitable distribution of funds that disadvantaged high-growth states. The OAA 2006 Amendments ultimately resulted in changes to the law as follows: (1) Congress changed the formula to ensure that, provided sufficient funds, every state receives at least its FY2006 amount (creating a new fiscal year "hold harmless" amount); and (2) Congress phased out the "guaranteed growth" provision, reducing the share of any increase in appropriations from 20% to 0 by 5 percentage points annually beginning in FY2008. For FY2007 through FY2010, the guaranteed growth provisions were as follows: 20% of the percentage increase in appropriations from FY2006 to FY2007; 15% of the percentage increase in appropriations from FY2006 to FY2008; 10% of the percentage increase in appropriations from FY2006 to FY2009; and 5% of the percentage increase in appropriations from FY2006 to FY2010. Under current law, for FY2011 and any succeeding fiscal years, the formula does not include the guaranteed growth provision. The OAA Reauthorization of 2016 The Title III funding formula for supportive services and senior centers, the congregate and home-delivered nutrition programs, and disease prevention and health promotion services continued to be a major point of contention during the 2016 OAA reauthorization debate, which spanned multiple Congresses. Congress again revisited the issue of how much state population growth should influence state funding allocations versus retaining continuity in funding allocations for slower-growth states. In the 113 th Congress, comprehensive OAA reauthorization legislation was introduced in the Senate ( S. 1028 and S. 1562 ) which would have extended the authorizations of appropriations through FY2018 for most OAA programs and would have made various amendments to existing OAA authorities. The Senate HELP Committee ordered S. 1562 reported favorably with an amendment in the nature of a substitute. In the House of Representatives, two OAA reauthorization bills were introduced ( H.R. 3850 and H.R. 4122 ). These bills were referred to the Committee on Education and the Workforce, but saw no further legislative action. Prior to legislative consideration, the topic of OAA statutory funding formulas was again examined by GAO in an analysis of the OAA Title III and VII statutory funding formulas that focused on formula modifications that would capture state differences with respect to need by including factors that measure the needs of the elderly population, costs of services in addressing those needs, and the capacity of states to finance needed services. GAO found that the current formulas could better meet generally accepted equity standards in targeting OAA services to those with "greatest economic need" and "greatest social need." For example, GAO found that the need for OAA services can be estimated using data on older individuals' functional limitations. GAO also noted that while revisions to the OAA statutory formula may pose challenges, options to ease the transition such as phasing in implementation over several years and/or instituting funding floors or ceilings may be further provisions for policymakers to consider in any statutory revisions. In the 113 th Congress, S. 1562 did not contain provisions that would amend OAA statutory funding formulas. However, during the Senate HELP Committee consideration of the OAA reauthorization bill, Senator Richard Burr introduced an amendment that would have removed the Title III Part B (supportive services and senior centers), Part C (nutrition services), and Part D (disease prevention and health promotion services) FY2006 hold harmless provision, which was rejected. Senator Tom Harkin, then chairman, stated there would be additional examination of the OAA funding formula by a Senate bipartisan workgroup with a possible solution prior to Senate floor consideration. The bill was subsequently reported out of committee and placed on the Senate Legislative Calendar, but did not receive consideration by the Senate. The bill saw no further action in the Senate. In the 114th Congress, the Older Americans Act Reauthorization Act of 2015 ( S. 192 ) was introduced on January 20, 2015. The bill authorized appropriations for most OAA programs for a three-year period from FY2016 to FY2018. It also made various amendments to existing OAA authorities, including changes to the statutory funding formula for the supportive services and senior centers, congregate nutrition, home-delivered nutrition, and disease prevention and health promotion services under Title III of the act, which lessens the effect of the hold harmless provision over time. The Senate HELP Committee ordered S. 192 reported favorably, and it subsequently passed the Senate on July 16, 2015. The House took up S. 192 on March 21, 2016, and passed the bill with an amendment authorizing appropriations for the three-year period from FY2017 to FY2019. S. 192 , as amended by the House, did not substantively change the hold harmless provision under S. 192 , as passed by the Senate. Rather, it amended the effective dates for the hold harmless reduction, from FY2016 through FY2018 to FY2017 through FY2019. It froze this reduction in place for FY2020 and future fiscal years, unless or until such language is amended. The Senate passed S. 192 as amended by the House on April 7, 2016. President Barack Obama signed P.L. 114-144 , the Older Americans Act Reauthorization Act of 2016, on April 19, 2016. Specifically, P.L. 114-144 changed the statutory funding allocations for OAA Title III, Parts B, C, and D. This provision retained the same state and U.S. territory minimum amounts allotted under current law and the same population-based formula factor (aged 60 and over), but reduced state and U.S. territory hold harmless amounts (currently referenced to FY2006 funding levels) by 1% from the previous fiscal year. The law lessens the effect of the FY2006 hold harmless provision by reducing state and U.S. territory hold harmless amounts by 1% for each of three years, and then freezes this reduction in place for FY2020 and future fiscal years, unless or until such language is amended. Effectively, for those states that receive an annual program allotment based on their FY2006 hold harmless amount, the policy change minimizes any reduction in funding to no more than 1% from the previous fiscal year, assuming a program's total funding level in fiscal years 2017 to 2019 is at or above the previous fiscal year's level. Appendix B. Population Trends Table B-1 shows the population aged 60 and older by state or U.S. territory and the proportion of the entity's population aged 60 and older relative to the total U.S. population aged 60 and over for selected years. U.S. Census data shown are for the 2000 and 2010 Decennial Censuses, as well as the 2017 Intercensal state population estimates, which is the most recent year for which data are available. There is a two-year time lag between the reference year of the population estimates and the respective appropriation year. For example, FY2019 state allotments are calculated using 2017 estimates of the population aged 60 and older. The column labeled "% Age 60+" is the entities' relative share of the 60+ population, which functions as its population-based formula factor used to determine state allotments under OAA Title III, Parts B, C, and D and Title VII. The final column of Table B-1 calculates the percentage point change in the population formula factor for each state and U.S. territory from 2000 to 2017. Among all 56 states and U.S. territories (which includes the District of Columbia and Puerto Rico), 29 entities saw a proportionate increase in the population formula factor from 2000 to 2017, while 27 saw a decrease over this time period. The top five states that experienced the greatest proportionate increase were Texas (+0.93%), California (+0.56%), Georgia (+0.47%), North Carolina (+0.37%), and Arizona (+0.37%). The bottom five states that experienced the greatest decline were Pennsylvania (-0.85%), New York (-0.79%), Ohio (-0.44%), Illinois (-0.42%), and New Jersey (-0.35%). Appendix C. The Older Americans Act Reauthorization Act of 2016 ( P.L. 114-144 ): Analysis of Formula Change The following analysis compares FY2016 allotment amounts for states and other entities with actual allotment amounts under the statutory funding formula change in P.L. 114-144 for FY2017 to FY2019. The following tables provide results by program: Table C-1 : Title III, Part B, supportive services and senior centers; Table C-2 : Title III, Part C, subpart 1, congregate nutrition services; Table C-3 : Title III, Part C, subpart 2, home-delivered nutrition services; and Table C-4 : Title III, Part D, disease prevention and health promotion services programs. Each table compares FY2016 state and U.S. territory allotments prior to the statutory funding formula change under P.L. 114-144 to allotments with the change, for FY2017 through FY2019. The columns in each table provide two types of analyses for each year. The first is the percentage change between the entities' FY2016 allotment and the entities' annual allotment for each year, respectively. The second is the entities' allotment type for each year of the change, where "M" refers to an entity that receives a minimum allotment amount; "HH" refers to an entity that receives an allotment amount based on 99% of the previous fiscal year's hold harmless funding amount; and "P" refers to an entity that receives an allotment amount based on the entities' population formula factor. For programs where the current law hold harmless is in effect (i.e., some states and territories receive an allotment based on their hold harmless), the change to the statutory funding formula, often also combined with increases in appropriated funding amounts, reduces the effect of the hold harmless over time. For example, 16 states and territories received an allotment based on their FY2006 hold harmless level for the congregate nutrition services program. Under the statutory funding formula change, the number of states and territories that received an allotment based on the hold harmless (99% of the previous fiscal year) remained at 16 in FY2017 with a 0.2% increase in the total allotment amount from the prior year. That number fell to 4 in FY2018 when combined with a 10% increase in the total allotment amount compared to the prior year and remained at 4 in FY2018. As a state or territory's hold harmless amount is reduced gradually by 1% from the previous year's hold harmless over three fiscal years, additional states and territories received funding based on their hold harmless amount. Effectively, the change to the statutory funding formula, especially when combined with increases in appropriated funding amounts, allows funding freed up from the hold harmless reductions to be redistributed to states and territories based on the population formula factor. Thus, more states and territories received funding based on their population aged 60 and over. Under the supportive services and senior centers and disease prevention and health promotion services programs all states and territories received funding in FY2016 based on a proportionate reduction to their FY2006 hold harmless amount. Total FY2016 funding for these programs was below FY2006 funding levels. The statutory funding formula change combined with program funding increases reduced the number of entities receiving an allotment based on their hold harmless from FY2017 to FY2018 (for supportive services, 29 states in FY2017, to 10 in FY2018; and for disease prevention, 28 states in FY2017, to 0 in FY2018). From FY2018 to FY2019, appropriated amounts for these programs did not change and the number of entities receiving an allotment based on their hold harmless increased slightly—to 12 entities for the supportive services program and 9 entities for disease prevention. For programs where the previous FY2006 hold harmless was not in effect, such as home-delivered nutrition services, the funding formula change had a smaller effect compared to prior law. Two states and territories receive funding for FY2017 based on their hold harmless amount. For FY2018 and FY2019 all states receiving funding based on either their population age 60 and older or the minimum grant amount. In general, the statutory funding formula change did not affect entities receiving an allotment based on the minimum grant amount as P.L. 114-144 made no change to this provision.

The Older Americans Act (OAA) is the major vehicle for the delivery of social and nutrition services for older persons. The act's statutory funding formulas determine allotments to states and other entities under the following OAA Titles: Title III, Grants for State and Community Programs; Title V, the Community Service Senior Opportunities Act; Title VI, Grants for Older Native Americans; and Title VII, Vulnerable Elder Rights Protection Activities. This report describes the OAA statutory provisions that allocate funds to states and other entities under various titles of the act. Title III accounts for 73% of the act's total FY2019 discretionary appropriations ($1.498 billion out of $2.055 billion). States receive separate allotments of funds for the following six programs authorized under Title III: (1) supportive services and senior centers, (2) congregate nutrition services, (3) home-delivered nutrition services, (4) the Nutrition Services Incentive Program (NSIP), (5) disease prevention and health promotion services, and (6) the National Family Caregiver Support Program (NFCSP). Formula grants are allotted from the Administration on Aging (AOA), within the Administration for Community Living (ACL) in the Department of Health and Human Services (HHS), to State Units on Aging (SUAs) in all 50 states, the District of Columbia, Puerto Rico, and the U.S. territories. The states, in turn, award funds to approximately 629 Area Agencies on Aging (AAAs). Title V authorizes the Community Service Employment for Older Americans Program (CSEOA). Administered by the Department of Labor (DOL), Title V is OAA's second-largest program and is the only federally subsidized employment program for low-income older persons. Its FY2019 funding of $400 million represents 20% of the act's total discretionary funding. DOL allocates Title V funds for grants to state agencies in all 50 states, the District of Columbia, Puerto Rico, and the U.S. territories, and to national grantees who are typically nonprofit organizations that operate in more than one state. The total Title V state allotment is the sum of its respective state agency grantee allotment and national grantee allotment. Title VI authorizes funds for supportive and nutrition services to older Native Americans to promote the delivery of home and community-based supportive services, nutrition services, and family caregiver support. Funds are awarded directly to Indian tribal organizations, Alaskan Native organizations, and nonprofit groups representing Native Hawaiians. Title VII authorizes the Long-Term Care (LTC) Ombudsman Program and elder abuse, neglect, and exploitation prevention programs. Most Title VII funding is directed at the LTC Ombudsman Program, the purpose of which is to investigate and resolve complaints of residents of nursing facilities and other long-term care facilities. Funds for LTC ombudsman and elder abuse prevention activities are allotted to all 50 states, the District of Columbia, Puerto Rico, and the U.S. territories. The Older Americans Act Reauthorization Act of 2016 (P.L. 114-144) authorizes appropriations for most OAA programs through FY2019. P.L. 114-144 also made changes to the statutory funding formulas for several programs under Title III of the act. Appendix A of the report provides a detailed legislative history of the Title III funding formula changes, including changes under P.L. 114-144, as well as the OAA reauthorizations of 2000 and 2006. Appendix B provides an analysis of the state-based population data for the U.S. population age 60 and older. Appendix C compares FY2016 allotment amounts for states and other entities with actual allotment amounts under the statutory funding formula change in P.L. 114-144 for FY2017 to FY2019 for Title III Parts B, C, and D programs.

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What Are Cluster Munitions?1 Cluster munitions are weapons that open in mid-air and disperse smaller submunitions—anywhere from a few dozen to hundreds—into an area. They can be delivered by aircraft or from ground systems such as artillery, rockets, and missiles. Cluster munitions are valued militarily because one munition can kill or destroy many targets within its impact area, and fewer weapons systems are needed to deliver fewer munitions to attack multiple targets. Cluster munitions also permit a smaller force to engage a larger adversary and are considered by some an "economy of force" weapon. Many cluster munitions rely on simple mechanical fuzes that arm the submunition based on its rate of spin and explode on impact or after a time delay. A newer generation of sensor-fuzed submunitions is being introduced by a number of nations to improve the munitions' and submunitions' accuracy and to reduce the large number of residual unexploded submunitions. These sensor-fuzed submunitions are designed to sense and destroy vehicles without creating an extensive hazard area of unexploded submunitions. History2 Cluster bombs were first used in World War II, and inclusive of their debut, cluster munitions have been used in at least 21 states by at least 13 different countries. Cluster munitions were used extensively in Southeast Asia by the United States in the 1960s and 1970s, and the International Committee of the Red Cross (ICRC) estimates that in Laos alone, 9 million to 27 million unexploded submunitions remained after the conflict, resulting in over 10,000 civilian casualties to date. Cluster munitions were used by the Soviets in Afghanistan, by the British in the Falklands, by the Coalition in the Gulf War, and by the warring factions in Yugoslavia. In Kosovo and Yugoslavia in 1999, NATO forces dropped 1,765 cluster bombs containing approximately 295,000 submunitions. From 2001 through 2002, the United States dropped 1,228 cluster bombs containing 248,056 submunitions in Afghanistan, and U.S. and British forces used almost 13,000 cluster munitions containing an estimated 1.8 million to 2 million submunitions during the first three weeks of combat in Iraq in 2003. Senior U.S. government officials have stated that the United States has not used cluster munitions since 2003, during the intervention in Iraq. It is widely believed that confusion over U.S. cluster submunitions (BLU-97/B) that were the same color and size as air-dropped humanitarian food packets played a major role in the U.S. decision to suspend cluster munitions use in Afghanistan but not before using them in Iraq. In 2006, Israeli use of cluster munitions against Hezbollah forces in Lebanon resulted in widespread international criticism. Israel was said to have fired significant quantities of cluster munitions—primarily during the last 3 days of the 34-day war after a U.N. cease-fire deal had been agreed to —resulting in almost 1 million unexploded cluster bomblets to which the U.N. attributed 14 deaths during the conflict. Reports maintain that Hezbollah fired about 113 "cluster rockets" at northern Israel and, in turn, Israel's use of cluster munitions supposedly affected 26% of southern Lebanon's arable land and contaminated about 13 square miles with unexploded submunitions. One report states that there was a failure rate of upward of 70% of Israel's cluster weapons. Cluster Munitions Criticisms The fundamental criticisms of cluster munitions are that they disperse large numbers of submunitions imprecisely over an extended area, that they frequently fail to detonate and are difficult to detect, and that submunitions can remain explosive hazards for decades. Civilian casualties are primarily caused by munitions being fired into areas where soldiers and civilians are intermixed, inaccurate cluster munitions landing in populated areas, or civilians traversing areas where cluster munitions have been employed but failed to explode. Two technical characteristics of submunitions—failure rate and lack of a self-destruct capability—have received a great deal of attention. Failure Rate8 There appear to be significant discrepancies among failure rate estimates. Some manufacturers claim a submunition failure rate of 2% to 5%, whereas mine clearance specialists have frequently reported failure rates of 10% to 30%. A number of factors influence submunition reliability. These include delivery technique, age of the submunition, air temperature, landing in soft or muddy ground, getting caught in trees and vegetation, and submunitions being damaged after dispersal, or landing in such a manner that their impact fuzes fail to initiate. Lack of Self-Destruct Capability Submunitions lacking a self-destruct capability—referred to as "dumb" munitions—are of particular concern because they can remain a hazard for decades, thereby increasing the potential for civilian casualties. Some nations are developing "smart" or sensor-fuzed weapons with greater reliability and a variety of self-destruct mechanisms intended to address the residual hazard of submunitions. Experts maintain that self-destruct features reduce—but do not eliminate—the unexploded ordnance problem caused by cluster munitions and that the advantage gained by using "smart" cluster munitions is negated when high-failure rate and/or "dumb" cluster munitions are used in the same area. For some nations, replacing "dumb" and high-failure rate cluster munitions may not be an option—China, Russia, and the Republic of Korea maintain that they cannot afford to replace all current submunitions with "smart" submunitions. International Attempts to Regulate Use U.N. Convention on Prohibitions or Restrictions on the Use of Certain Conventional Weapons (CCW) In an effort to restrict or ban specific types of weapons used in armed conflicts, 51 states negotiated the CCW in 1980. When the treaty entered into force in December 1983, it applied only to incendiary weapons, mines and booby-traps, and weapons intended to cause casualties through very small fragments. Since then, some states-parties have added provisions through additional protocols to address other types of weapons. Acting in accordance with the recommendation of a group of experts established during the 2006 CCW review conference, states-parties to the convention decided in 2007 to "negotiate a proposal to address urgently the humanitarian impact of cluster munitions." Negotiations took place in 2008 and 2009, but the parties have not reached agreement on a new proposal. The experts group continued negotiations in 2011 "informed by" a Draft Protocol on Cluster Munitions. However, the CCW states-parties were unable to reach agreement on a protocol during their November 2011 review conference. Convention on Cluster Munitions (CCM)15 Described as "frustrated with the CCW process," a number of CCW members—led by Norway—initiated negotiations in 2007 outside of the CCW to ban cluster munitions. On May 30, 2008, they reached an agreement to ban cluster munitions. The United States, Russia, China, Israel, Egypt, India, and Pakistan did not participate in the talks or sign the agreement. During the Signing Conference in Oslo on December 3-4, 2008, 94 states signed the convention and 4 of the signatories ratified the convention at the same time. China, Russia, and the United States did not sign the convention, but France, Germany, and the United Kingdom were among the 18 NATO members to do so. The convention was to enter into force six months after the deposit of the 30 th ratification. The United Nations received the 30 th ratification on February 16, 2010, and the convention entered into force on August 1, 2010. As of January 2, 2019, 105 states were party to the convention. The Convention on Cluster Munitions (CCM), inter alia, bans the use of cluster munitions, as well as their development, production, acquisition, transfer, and stockpiling. The convention does not prohibit cluster munitions that can detect and engage a single target or explosive submunitions equipped with an electronic self-destruction or self-deactivating feature —an exemption that seemingly permits sensor-fuzed or "smart" cluster submunitions. U.S. officials were concerned that early versions of the CCM would prevent military forces from non-states-parties from providing humanitarian and peacekeeping support and significantly affect NATO military operations, but the version signed May 30, 2008, does permit states-parties to engage in military cooperation and operations with non-states-parties (Article 21, Paragraph 3). U.S. Policy on Cluster Munitions Then-Acting Assistant Secretary for Political-Military Affairs Stephen Mull stated in May 2008 that the United States relies on cluster munitions "as an important part of our own defense strategy," and that Washington's preferred alternative to a ban is "to pursue technological fixes that will make sure that these weapons are no longer viable once the conflict is over." U.S. officials note that Cluster munitions are available for use by every combat aircraft in the U.S. inventory, they are integral to every Army or Marine maneuver element and in some cases constitute up to 50 percent of tactical indirect fire support. U.S. forces simply can not fight by design or by doctrine without holding out at least the possibility of using cluster munitions. The United States also maintains that using cluster munitions reduces the number of aircraft and artillery systems needed to support military operations, and that if cluster munitions were eliminated, significantly more money would need to be spent on new weapons systems, ammunition, and logistical resources. Officials further suggest that if cluster munitions were eliminated, most militaries would increase their use of massed artillery and rocket barrages, which would likely increase destruction of key infrastructure. Then-Department of State Legal Adviser Harold Koh stated November 9, 2009, that the United States has determined that its "national security interests cannot be fully ensured consistent with the terms" of the CCM. 2008 Department of Defense (DOD) Policy on Cluster Munitions25 The Barack Obama Administration announced on November 25, 2011, that the United States would continue to implement the DOD policy on cluster munitions issued June 19, 2008, which recognized the need to minimize harm to civilians and infrastructure but also reaffirmed that "cluster munitions are legitimate weapons with clear military utility." The central directive in the Pentagon's policy was the unwaiverable requirement that cluster munitions used after 2018 must leave less than 1% of unexploded submunitions on the battlefield. Prior to that deadline, U.S. use of cluster munitions that did not meet this criterion required combatant commander approval. Revised 2017 DOD Policy on Cluster Munitions On November 30, 2017, then-Deputy Secretary of Defense Patrick Shanahan issued a revised policy on cluster munitions. The memorandum describing the policy noted that [c]luster munitions provide the Joint Force with an effective and necessary capability to engage area targets, including massed formations of enemy forces, individual targets dispersed over a defined area, targets whose precise location are not known, and time-sensitive or moving targets. Cluster munitions are legitimate weapons with clear military utility, as they provide distinct advantages against a range of threats in the operating environment. Additionally, the use of cluster munitions may result in less collateral damage than the collateral damage that results from use of unitary munitions alone. Since the inception of the 2008 policy, in the midst of extended combat operations in Iraq and Afghanistan, we have witnessed important changes in the global security environment and experienced several years of budgets that under-invested in replacement systems and the modernization of the Joint Force more broadly. Our adversaries and our potential adversaries have developed advanced capabilities and operational approaches specifically designed to limit our ability to project power. Both Shanahan and Admiral Harry Harris Jr. have also argued that sustaining the current U.S. cluster munitions arsenal is necessary to prepare for a potential conflict with North Korea. 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. 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 will 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." Specifically, DOD's revised policy stipulates the following: Continuing or beginning with their respective FY2019 budgets, the military departments will program for capabilities to replace cluster munitions currently in active inventories that do not meet the above-described standards for procuring new cluster munitions. The department's annual Program and Budget Review will be used to assess the sufficiency of the replacement efforts. The department's operational planners should plan for the availability of cluster munitions. The approval authority to employ cluster munitions that do not meet the standards prescribed by this policy for procuring new cluster munitions, however, rests with the combatant commanders. In accordance with their existing authorities, commanders may use cluster munitions that meet the standards prescribed by this policy for procuring new cluster munitions. The military departments and combatant commands, in keeping with U.S. legal obligations under CCW Protocol V on Explosive Remnants of War and consistent with past practices, will continue to record and retain information on the use of cluster munitions and provide relevant information to facilitate the removal or destruction of unexploded submunitions. The military departments and combatant commands will maintain sufficient inventories and a robust stockpile surveillance program to ensure operational quality and reliability of cluster munitions. In extremis, to meet immediate warfighting demand, combatant commanders may accept transfers of cluster munitions that do not meet the above-described cluster-munition procurement standards. Cluster munitions that do not meet the standards prescribed by this policy for procuring new cluster munitions will be removed from active inventories and demilitarized after their capabilities have been replaced by sufficient quantities of munitions that meet the standards in this policy. The department will not transfer cluster munitions except as provided for under U.S. law. The operational use of cluster munitions that include Anti-Personnel Landmines (APL) submunitions shall comply with presidential policy. Furthermore, the Deputy Secretary of Defense Expect(s) the Department to achieve the goals in this policy as rapidly as industry can support. Combatant Commanders will continue to ensure that the employment of cluster munitions is consistent with the law of war and applicable international agreements in order to minimize their harmful effects on civilian populations and infrastructure. In developing a new generation of cluster munitions less dangerous to civilians, DOD will need to determine whether such a high level of performance is achievable under both controlled laboratory conditions and real-world conditions. Factors such as delivery technique, landing in soft or muddy ground, getting caught in trees and vegetation, and submunitions being damaged after dispersal or landing could result in an appreciable number of dud submunitions, even if they have a self-deactivation feature. DOD Efforts to Reduce Unexploded Ordnance Rates for Its Cluster Munitions DOD and the services have been and are currently involved in efforts to reduce cluster munitions failure rates. The Army's Alternative Warhead Program (AWP) is intended to assess and recommend new technologies to reduce or eliminate cluster munitions failure rates. The AWP program is viewed as particularly relevant, as the Pentagon estimates that "upward of 80 percent of U.S. cluster munitions reside in the Army artillery stockpile." In December 2008, the Army decided to cease procurement of a Guided Multiple Launch Rocket System (GMLRS) warhead—the Dual-Purpose Improved Conventional Munition (DPICM) warhead—because its submunitions had a dud rate up to 5%. The Air Force has also acquired cluster munitions that comply with the less than 1% failure rate—the CBU-97 Sensor Fuzed Weapon (SFW) and the CBU-105 WCMD/SFW. While DOD's new 2017 cluster munitions policy calls for DOD to continue its efforts to meet the 1% or less unexploded submunitions standard "as rapidly as industry can support," it is not yet known how this policy will affect the aforementioned programs or how it could result in the establishment of new programs. Potential Issues for Congress Cluster Munitions in an Era of Precision Weapons It may be argued that even with advances in "sensor-fuzed" type submunitions that seek out and destroy certain targets, cluster munitions are still essentially an indiscriminate area weapon in an era where precision weapons are increasingly becoming the military norm. In Operation Desert Storm in 1991, only about 10% of ordnance used were precision-guided, but by the time of the Iraq invasion in 2003, "the ratio of 'smart' to dumb weapons was nearly reversed." Since then, this trend toward greater precision has continued, if not accelerated with the development of precision rocket, artillery, mortar munitions, and smaller precision aerial bombs designed to reduce collateral damage. Given current and predicted future precision weaponry trends, cluster munitions might be losing their military relevance—much as chemical weapons did between World War I and World War II. Other Weapons in Lieu of Cluster Munitions According to the State Department, the U.S. military suspended its use of cluster munitions in Iraq and Afghanistan in 2003. For subsequent military operations, where cluster munitions would otherwise have been the weapon of choice, Congress might review what types of weapons were substituted in place of cluster munitions and how effective they were in achieving the desired tactical results. Also worth considering are effects-based weapons systems and operations, which seek to achieve the same or similar effect against a potential target without applying a "kinetic solution" such as a cluster munition. Such insights could prove valuable in analyzing U.S. policy options on the future of cluster munitions. What Is the Impact of DOD's 2017 Revised Cluster Munitions Policy? DOD's November 2017 revised policy on cluster munitions potentially raises a number of issues for possible congressional consideration. With limits on cluster munition use after 2018 rescinded, how does this affect combatant commanders' operational plans in their respective theaters? Does this mean a lesser degree of military risk because combatant commanders can employ cluster munitions to meet warfighting demands, possibly translating into fewer forces needed to achieve the same result when the 2008 policy was in effect? Despite DOD emphasis on achieving a 1% or less unexploded submunitions standard "as rapidly as industry can support," will DOD funding restrictions slow or stall programs previously intended to replace those systems that exceeded 1% because there no longer is an urgent operational need to replace those systems? In a similar manner, will defense industry view this as a renewed opportunity to develop systems with a 1% or less unexploded submunitions standard or take a more sanguine view that since DOD is no longer time constrained to develop and field 1% or less weapons that funding these programs will be less of a priority and, therefore, an unprofitable venture? Another possible issue for consideration is how this U.S. policy reversal on the military use of cluster munitions will be perceived by the international community and how this might affect future U.S. and international military treaty initiatives. Selected Legislation Consolidated Appropriations Acts The Consolidated Appropriations Act, 2010 ( P.L. 111-117 ), which the President signed into law December 16, 2009, prohibits the provision of military assistance for cluster munitions, the issuing of defense export licenses for cluster munitions, or the sale or transfer of cluster munitions or cluster munitions technology unless "the submunitions of the cluster munitions, after arming, do not result in more than 1 percent unexploded ordnance across the range of intended operational environments." Moreover, any agreement "applicable to the assistance, transfer, or sale of such cluster munitions or cluster munitions technology" must specify that the munitions "will only be used against clearly defined military targets and will not be used where civilians are known to be present or in areas normally inhabited by civilians." Subsequent appropriations laws have included similar provisions; the most recent is the Consolidated Appropriations Act, 2019 ( P.L. 116-6 ), which the President signed into law on February 15, 2019.

Cluster munitions are air-dropped or ground-launched weapons that release a number of smaller submunitions intended to kill enemy personnel or destroy vehicles. Cluster munitions were developed in World War II and are part of many nations' weapons stockpiles. Cluster munitions have been used frequently in combat, including the early phases of the current conflicts in Iraq and Afghanistan. Cluster munitions have been highly criticized internationally for causing a significant number of civilian deaths, and efforts have been undertaken to ban and regulate their use. The Department of Defense (DOD) continues to view cluster munitions as a military necessity but in 2008 instituted a policy to reduce the failure rate of cluster munitions to 1% or less after 2018. In November 2017, a new DOD policy was issued that essentially reversed the 2008 policy. 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. In addition, the new policy does not establish a deadline to replace cluster munitions exceeding the 1% rate and states that DOD "will retain cluster munitions currently in active inventories until the capabilities they provide are replaced with enhanced and more reliable munitions." Potential issues for Congress include cluster munitions in an era of precision weapons, other weapons in lieu of cluster munitions, and the potential impact of DOD's 2017 revised cluster munitions policy.

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Introduction This report provides background information and issues for Congress regarding the U.S. role in the world, meaning the overall character, purpose, or direction of U.S. participation in international affairs and the country's overall relationship to the rest of the world. Some observers perceive that after remaining generally stable for a period of about 70 years, the U.S. role in the world is undergoing a potentially historic change. A change in the U.S. role in the world could have significant and even profound effects on U.S. security, freedom, and prosperity. It could significantly affect U.S. policy in areas such as relations with allies and other countries, defense plans and programs, trade and international finance, foreign assistance, and human rights. It could also have implications for future international order. The overall issue for Congress is how to respond to recent developments regarding the U.S. role in the world. Congress's decisions on this issue could have significant implications for numerous policies, plans, programs, and budgets, and for the role of Congress relative to that of the executive branch in U.S. foreign policymaking. A variety of other CRS reports address in greater depth specific policy areas mentioned in this report. Appendix A provides a glossary of some key terms used in this report, including role in the world , grand strategy , international order/world order , unipolar/bipolar/tripolar/multipolar , Eurasia , regional hegemon , spheres-of-influence world , geopolitics , hard power , and soft power . In this report, the term U.S. role in the world is often shortened for convenience to U.S. role . Footnotes in this report with citations taking up more than 10 lines of type have had their citations transferred to Appendix B . Background on U.S. Role Overview The U.S. role in the world since the end of World War II in 1945 (i.e., over the past 70 years or so) is generally described as one of global leadership and significant engagement in international affairs. Observers over the years have referred to the U.S. role in the world since World War II using various terms and phrases that sometimes reflect varying degrees of approval or disapproval of that role. It has been variously described as that of global leader, leader of the free world, superpower, hyperpower, indispensable power, system administrator, world policeman, or world hegemon. Similarly, the United States has also been described as pursuing an internationalist foreign policy, a foreign policy of global engagement or deep engagement, a foreign policy that provides global public goods, a foreign policy of liberal order building, liberal internationalism, or liberal hegemony, an interventionist foreign policy, or a foreign policy of seeking primacy or world hegemony. Key Elements Creation and Defense of Liberal International Order A key element of the U.S. role in the world since World War II has been to defend and promote the liberal international order that the United States, with the support of its allies, created in the years after World War II. Although definitions of the liberal international order vary, key elements are generally said to include the following: respect for the territorial integrity of countries, and the unacceptability of changing international borders by force or coercion; a preference for resolving disputes between countries peacefully, without the use or threat of use of force or coercion, and in a manner consistent with international law; respect for international law, global rules and norms, and universal values, including human rights; strong international institutions for supporting and implementing international law, global rules and norms, and universal values; the use of liberal (i.e., rules-based) international trading and investment systems to advance open, rules-based economic engagement, development, growth, and prosperity; and the treatment of international waters, international air space, outer space, and (more recently) cyberspace as international commons. The liberal international order was created by the United States with the support of its allies in the years immediately after World War II. At that time, the United States was the only country with both the capacity and willingness to establish a new international order. U.S. willingness to establish and play a leading role in maintaining the liberal international order is generally viewed as reflecting a desire by U.S. policymakers to avoid repeating the major wars and widespread economic disruption and deprivation of the first half of the 20 th century—a period that included World War I, the Great Depression, the rise of communism and fascism, the Ukrainian famine, the Holocaust, and World War II. U.S. willingness to establish and play a leading role in maintaining the liberal international order is also generally viewed as an act of national self-interest, reflecting a belief among U.S. policymakers that it would strongly serve U.S. security, political, and economic objectives. Supporters of the liberal international order generally argue that in return for bearing the costs of creating and sustaining the liberal international order, the United States receives significant security, political, and economic benefits, including the maintenance of a favorable balance of power on both a global and regional level, and a leading or dominant role in establishing and operating global institutions and rules for international finance and trade. Indeed, some critics of the liberal international order argue that it is primarily a construct for serving U.S. interests and promoting U.S. world primacy or hegemony. As discussed later in this report, however, the costs and benefits for the United States of the liberal international order are a matter of debate. Though often referred to as if it is a fully developed or universally established situation, the liberal international order, like other international orders that preceded it, is incomplete in geographic reach and in other ways; partly aspirational; not fixed in stone, but rather subject to evolution over time; sometimes violated by its supporters; resisted or rejected by certain states and nonstate actors; and subject to various stresses and challenges. Some observers, emphasizing points like those above, argue that the liberal international order is more of a myth than a reality. Other observers, particularly supporters of the order, while acknowledging the limitations of the order, reject characterizations of it as a myth and emphasize its differences from international orders that preceded it. Defense and Promotion of Freedom, Democracy, and Human Rights A second element of the 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 possible. This element of the U.S. role is viewed as consistent not only with core U.S. political values but also with a theory advanced by some observers (sometimes called the democratic peace theory) that democratic countries are more responsive to the desires of their populations and consequently are less likely to wage wars of aggression or go to war with one another. Prevention of Regional Hegemons in Eurasia A third element of the U.S. role in the world since World War II has been to oppose the emergence of regional hegemons in Eurasia or a spheres-of-influence world. This objective reflects a U.S. perspective on geopolitics and grand strategy developed during and in the years immediately after World War II, including in particular a judgment that—given the amount of people, resources, and economic activity in Eurasia—a regional hegemon in Eurasia would represent a concentration of power large enough to be able to threaten vital U.S. interests, and that Eurasia is not dependably self-regulating in terms of preventing the emergence of regional hegemons. Changes over Time Although the U.S. role in the world was generally stable over the past 70 years, the specifics of U.S. foreign policy for implementing that role have changed frequently for various reasons, including changes in administrations and changes in the international security environment. Definitions of the overall U.S. role have room within them to accommodate some flexibility in the specifics of U.S. foreign policy. Long-standing Debate over Its Merits The fact that the U.S. role in the world has been generally stable over the past 70 years does not necessarily mean that this role was the right one for the United States, or that it would be the right one in the future. Although the role the United States has played in the world since the end of World War II has many defenders, it also has critics, and the merits of that role have been a matter of long-standing debate among foreign policy specialists, strategists, policymakers, and the public, with critics offering potential alternative concepts for the U.S. role in the world. One major dimension of the debate is whether the United States should attempt to continue playing the active internationalist role that it has played for the past 70 years, or instead adopt a more-restrained role that reduces U.S. involvement in world affairs. A number of critics of the U.S. role in the world over the past 70 years have offered multiple variations on the idea of a more-restrained U.S. role. A second major dimension within the debate over the future U.S. role concerns how to balance or combine the pursuit of narrowly defined material U.S. interests with the goal of defending and promoting U.S. or universal values such as democracy, freedom, and human rights. A third major dimension concerns the balance in U.S. foreign policy between the use of hard power and soft power. Observers debating these two dimensions of the future U.S. role in the world stake out varying positions on these questions. The long-standing debate over the U.S. role in the world is discussed further below in the " Issues for Congress " section of this report, particularly the part entitled " Should the U.S. Role Change? " Issues for Congress Overview: Potential Key Questions The overall issue for Congress is how to respond to recent developments regarding the U.S. role in the world. Potential key issues for Congress include but are not necessarily limited to the following: Is the U.S. role changing, and if so, in what ways? Should the U.S. role change? Is a change of some kind in the U.S. role unavoidable? How are other countries responding to a possibly changed U.S. role? Is a changed U.S. role affecting world order? What implications might a changed U.S. role in the world have for Congress's role relative to that of the executive branch in U.S. foreign policymaking? How might the operation of democracy in the United States affect the U.S. role in the world? Would a change in the U.S. role be reversible, and if so, to what degree? Each of these issues is discussed briefly below. Is the U.S. Role Changing, and If So, in What Ways? Some Observers See a Potentially Historic Change Some observers argue that under the Trump Administration, the U.S. role in the world is undergoing a potentially historic change. Although views among these observers vary in their specifics, a number of these observers argue that under the Trump Administration, the United States is voluntarily retreating from or abdicating the United States' post-World War II position of global leadership in favor of an approach to U.S. foreign policy that is more restrained, less engaged (or disengaged), more unilateralist, less willing to work through international or multilateral institutions and agreements, and/or less willing to promote and defend certain universal values. Within that general assessment, these observers argue that the United States more specifically is doing one or more of the following: becoming more skeptical of the value to the United States of certain allies, particularly those in Europe, and more transactional in managing U.S. alliance relationships; becoming less supportive of regional or multilateral trade agreements and the World Trade Organization (WTO) in favor of an approach to trade policy that relies more on protectionist measures and on negotiations aimed at reaching new or revised bilateral trade agreements, and which links trade actions more directly to other policy objectives; reducing, becoming more selective in, or becoming indifferent to efforts for defending and promoting freedom, democracy, and human rights as universal values, and for criticizing and resisting authoritarian and illiberal forms of government; and relying less on soft power, and more heavily on hard power, particularly military power. In support of this assessment, these observers tend to cite various actions by the Trump Administration, including the following: the Administration's emphasis on its "America First" theme and the concept of national sovereignty applied to both the United States and other countries as primary guideposts for U.S. foreign policy; actions (particularly in 2017) that these observers view as intended to weaken or "hollow out" the State Department—including a relatively slow rate for forwarding nominations to fill senior positions in the department, and budget proposals to substantially reduce overall staffing and funding levels for the department—as well as proposed reductions in funding for U.S. foreign assistance programs; U.S. withdrawal from the Trans-Pacific Partnership (TPP) regional trade agreement; the Paris climate agreement; the Iran nuclear agreement; and the Global Compact on Migration (GCM); a U.S. decision to not cooperate with the International Criminal Court (ICC); and a U.S. decision to limit U.S. exposure to decisions by the International Court of Justice (ICJ) by withdrawing from the Optional Protocol Concerning the Compulsory Settlement of Disputes to the Vienna Convention on Diplomatic Relations; mixed signals, including skeptical or critical comments by President Trump, regarding the value to the United States of allies, and particularly the NATO alliance, and a reported focus by President Trump, in assessing allies, on their defense spending levels and their trade imbalances with the United States; an apparent reluctance by President Trump to criticize Russia or to impose certain sanctions on Russia, and an apparent determination by President Trump to seek improved relations with Russia, despite various Russian actions judged by U.S. intelligence agencies and other observers to have been directed against the United States and U.S. overseas interests, particularly in Europe; a reduced U.S. level of involvement in, or U.S. disengagement from, the conflict in Syria, and U.S. acceptance of a reestablished Russian position as a major power broker in the Syrian situation and the Middle East in general; the nonattendance by then-Secretary of State Rex Tillerson at the rollout of the 2017 edition of the State Department's annual country reports on human rights practices around the world; infrequent or inconsistent statements by President Trump or other Administration officials in support of democracy and human rights, or criticizing human rights practices of authoritarian and illiberal governments; U.S. withdrawal from the United Nations Human Rights Council; U.S. actions to reduce the number of international refugees entering the United States; President Trump's reaction to the killing of journalist Jamal Khashoggi; and what these observers view as President Trump's apparent affinity for, or admiration of, the leaders of authoritarian and illiberal governments. Some of the observers who argue that the U.S. role in the world is undergoing a potentially historic change under the Trump Administration oppose the change, while others support it, or at least certain aspects of it. Opponents tend to view the retreat from U.S. global leadership that they see as an unforced error of immense proportions—as a needless and self-defeating squandering or throwing away of something of great value to the United States that the United States had worked to build and maintain for 70 years. Opponents argue that actions contributing to the U.S. retreat are weakening the United States and the U.S. position in the world by rupturing long-standing and valuable U.S. alliance relationships; isolating the United States on certain issues; devaluing or reducing U.S. soft power; making the United States appear less reliable as an ally or negotiating partner; creating vacuums in global leadership and regional power balances that other countries (including China, Russia, the European Union, individual European countries, Canada, Japan, Saudi Arabia, and Iran) are acting to fill, sometimes at the expense of U.S. interests; and weakening and causing doubts about the future of the U.S.-led international order. Supporters tend to view the change they see in the U.S. role, or at least certain aspects of it, as needed and appropriate, if not overdue, for responding to changed U.S. and global circumstances and for defending U.S. interests. Supporters argue that actions being implemented by the Trump Administration reflect a principled realism about what the United States can accomplish in the world; are reasserting the importance of U.S. sovereignty (and the concept of sovereignty in general as an organizing principle for international relations); are proving effective in standing up for U.S. interests in relations with China, as well as U.S. trade interests in general (including new trade agreements with South Korea, Mexico, and Canada); encouraging U.S. allies to make greater military and other contributions to their own security; enhancing deterrence of potential regional aggression by making potential U.S. actions less predictable to potential adversaries; avoiding potentially costly and unproductive commitments of U.S. lives and resources in places like Syria and Yemen; and are achieving progress or potential breakthroughs in terms of denuclearization negotiations with North Korea. Others See Less Change, and More Continuity Other observers see less change in the U.S. role in the world under the Trump Administration. They argue that although statements from President Trump sometimes suggest or imply a large-scale change in the U.S. role, actions taken by the Administration actually reflect a smaller amount of change, and more continuity with the U.S. role of the past 70 years. In support of this assessment, these supporters cite various actions by the Trump Administration, including the following: the Administration's December 2017 national security strategy (NSS) document, large portions of which reflect—through multiple mentions of U.S. leadership, a general emphasis on great power competition with China and Russia, and strong support for U.S. alliances—a perspective on the U.S. role in the world generally consistent with the U.S. role of the past 70 years, as well as actions the Trump Administration has taken in support of that perspective; the Administration's January 2018 unclassified summary of its supporting national defense strategy (NDS) document, which similarly reflects a perspective on the U.S. role in the world generally consistent with the U.S. role of the past 70 years; the Administration's October 2018 counterterrorism strategy document, which observers view as largely consistent with the counterterrorism strategies of previous administrations; the continuation (as opposed to winding down) of U.S. military operations in Afghanistan and the Middle East; Secretary of State Mike Pompeo's statement that he wants the State Department to "get its swagger back"; statements from senior U.S. officials reaffirming U.S. support for NATO; Administration actions to improve U.S. military capabilities in Europe for deterring potential Russian aggression in Europe; and U.S. actions to encourage NATO allies to spend more on defense and to take similar actions; the Administration's implementation of additional sanctions on Russia in response to Russian actions; the Administration's recent, more-confrontational policy toward China, and the Administration's plan to increase funding for U.S. foreign assistance programs to compete against China for influence in Africa, Asia, and the Americas; the Administration's articulation of the concept of a free and open Indo-Pacific (FOIP) region as a framework for U.S. foreign policy directed toward that part of the world; U.S. trade actions that, in the view of these observers, are intended to make free trade more sustainable over the long run by ensuring that it is fair to all parties, including the United States; and statements regarding human rights from then-U.S. Ambassador to the United Nations Nikki Haley and other Administration officials, as well as the U.S. withdrawal from the United Nations Human Rights Council, which in the view of these observers reflect U.S. support (rather than lack of support) for human rights. Among those who see less change in the U.S. role in the world under the Trump Administration, arguments as to whether that is a good or bad thing are to some degree the obverse of those outlined earlier regarding the views of those who argue that the U.S. role in the world is undergoing a potentially historic change under the Trump Administration. In general, supporters of the U.S. role in the world of the past 70 years tend to support areas where they see less change under the Trump Administration, while those who advocate a more-restrained U.S. role have expressed disappointment at what they view as insufficient movement by the Trump Administration in that direction. Some Assess That Change Began Prior to Trump Administration Some observers argue that if the United States is shifting to a more-restrained role in the world, this change began not with the Trump Administration, but during the Obama Administration. In support of this view, these observers point to the Obama Administration's focus on reducing the U.S. military presence and ending U.S. combat operations in Iraq and Afghanistan in favor of focusing more on domestic U.S. rebuilding initiatives, the Obama Administration's restrained response to the conflict in Syria and to Russian actions in Crimea and eastern Ukraine, and the Obama Administration's policy toward Russia in general. Other observers argue that a shift to a more-restrained U.S. role in the world arguably began even sooner, under the George W. Bush Administration, when that Administration did not respond more strongly to Russia's 2008 invasion and occupation of part of Georgia, or under the Clinton Administration. For both groups of observers, a more-restrained U.S. role in the world under the Trump Administration may represent not so much a shift in the U.S. role as a continuation or deepening of a change that began in a prior U.S. administration. Others Say Degree of Change Is Currently Difficult to Assess Some observers argue that the question of whether the U.S. role is changing, and if so, in what ways, is difficult to assess, due to what these observers view as mixed, contradictory, or incoherent signals from the Trump Administration on issues such as policy toward Russia, the value of NATO, policy toward North Korea, and trade policy, among other matters. For some of these observers, these mixed signals appear to be rooted in what these observers see as basic differences between President Trump and certain senior Administration officials (or differences among those officials) on these matters, and in what these observers characterize as an unpredictable, impulsive, or volatile approach by President Trump to making and announcing foreign policy decisions. Regarding the final point above, supporters of the Trump Administration argue that U.S. foreign policy had become too predictable for its own good, and that adding an element of unpredictability to U.S. foreign policy is therefore advantageous. The Administration's January 2018 unclassified summary of its supporting national defense strategy document, for example, states that U.S. military operations in the future will be "strategically predictable, but operationally unpredictable," meaning predictable in terms of overall goals, but unpredictable in terms of specific tactics for achieving those goals. Critics, while not necessarily objecting to the value of a certain degree of operational unpredictability, argue that the Trump Administration, through its recurring mixed signals and President Trump's approach to decisionmaking, has taken the idea of unpredictability too far, raising potential doubts in other countries about U.S. policy goals, consistency, resolve, or reliability as an ally or negotiating partner. Some observers see both potential advantages and potential disadvantages in an approach that features a substantial element of unpredictability. Some observers, viewing the difficulty of judging whether and how the U.S. role may have changed under the Trump Administration, have attempted to identify key or unifying characteristics of the Trump Administration's foreign policy or a so-called "Trump Doctrine." These observers have reached varying conclusions as to what those key or unifying characteristics or a Trump Doctrine might be. Potential Assessments Combining These Perspectives The above four perspectives—that there is a potentially historic change in the U.S. role; that there is less change, and more continuity; that if there is a change, it began prior to the Trump Administration; and that the degree of change is difficult to assess—are not necessarily mutually exclusive. Assessments combining aspects of more than one of these four perspectives are possible. Should the U.S. Role Change? Overview In addition to the question of whether the U.S. role in the world is changing, another key issue for Congress is whether the U.S. role should change. As mentioned in the background section, the fact that the U.S. role in the world has been generally stable over the past 70 years does not necessarily mean that this role was the right one for the United States, or that it would be the right one in the future. Although the role the United States has played in the world since the end of World War II has many defenders, it also has critics, and the merits of that role have been a matter of long-standing debate among foreign policy specialists, strategists, policymakers, and the public, with critics offering potential alternative concepts for the U.S. role in the world. Debate over the merits of the U.S. role in the world since World War II has been fueled in recent years by factors such as changes in the international security environment, projections of U.S. federal budget deficits and the U.S. debt (which can lead to constraints on funding available for pursuing U.S. foreign policy, national security, and international economic policy goals), and U.S. public opinion on matters relating to U.S. foreign policy. Developments during the Trump Administration regarding possible changes in the U.S. role in the world have further contributed to the debate. Past Role vs. More-Restrained Role As mentioned earlier, a major dimension of the debate is whether the United States should attempt to continue playing the active internationalist role that it has played for the past 70 years, or instead adopt a more-restrained role that reduces U.S. involvement in world affairs. Among U.S. strategists and foreign policy specialists, advocates of a more-restrained U.S. role include (to cite a few examples) Andrew Bacevich, Doug Bandow, Ted Galen Carpenter, John Mearsheimer, Barry Posen, Christopher Preble, William Ruger, and Stephen Walt. These and other authors have offered multiple variations on the idea of a more-restrained U.S. role. Terms such as offshore balancing , offshore control , realism , strategy of restraint , or retrenchment have been used to describe some of these variations. These variations on the idea of a more-restrained U.S. role would not necessarily match in their details a changed U.S. role that might be pursued by the Trump Administration. Arguments in Favor of a More-Restrained U.S. Role Observers advocating a more-restrained U.S. role in the world make various arguments regarding the United States and other countries. Arguments that they make relating to the United States include the following: Costs and benefits. In terms of human casualties, financial and economic impacts, diplomatic impacts, and impacts on domestic U.S. values, politics, and society, the costs to the United States of defending and promoting the liberal international order have been underestimated and the benefits have been overestimated. U.S. interventions in the security affairs of Eurasia have frequently been more costly and/or less successful than anticipated, making a strategy of intervening less cost-effective in practice than in theory. U.S. interventions can also draw the United States into conflicts involving other countries over issues that are not vital or important U.S. interests. C apacity. Given projections regarding future U.S. budget deficits and debt, the United States in coming years will no longer be able to afford to play as expansive a role in the world as it has played for the past 70 years. Overextending U.S. participation in international affairs could lead to excessive amounts of federal debt and inadequately addressed domestic problems, leaving the United States poorly positioned for sustaining any future desired level of international engagement. P ast 70 years as a historical aberration. The U.S. role of the past 70 years is an aberration when viewed against the U.S. historical record dating back to 1776, which is a history characterized more by periods of restraint than by periods of high levels of international engagement. Returning to a more-restrained U.S. role would thus return U.S. policy to what is, historically, a more traditional policy for the United States. M oral standing. The United States has not always lived up to its own ideals, and consequently lacks sufficient moral standing to pursue a role that involves imposing its values and will on other countries. Attempting to do that through an interventionist policy can also lead to an erosion of those values at home. P ublic opinion. It is not clear that U.S. public opinion supports the idea of attempting to maintain a U.S. role in the world as expansive as that of the past 70 years, particularly if it means making trade-offs against devoting resources to domestic U.S. priorities. In public opinion polls, Americans often express support for a more-restrained U.S. role, particularly on issues such as whether the United States should act as the world's police force, funding levels for U.S. foreign assistance programs, U.S. participation in (and financial support for) international organizations, and U.S. defense expenditures for defending allies. Arguments that these observers make relating to other countries include the following: Growing wealth and power . Given the rapid growth in wealth and power in recent years of China and other countries, the United States is no longer as dominant globally as it once was, and is becoming less dominant over time, which will make it increasingly difficult or expensive and/or less appropriate for the United States to attempt to continue playing a role of global leadership. I deas about international order. Other world powers, such as China, have their own ideas about international order, and these ideas do not match all aspects of the current liberal international order. The United States should acknowledge the changing global distribution of power and work with China and other countries to define a new international order that incorporates ideas from these other countries. Eurasia as self-regulating. Given the growth in the economies of U.S. allies and partners in Europe and Asia since World War II, these allies and partners are now more capable of looking after their own security needs, and Eurasia can now be more self-regulating in terms of preventing the emergence of regional hegemons in Eurasia. Consequently, the level of U.S. intervention in the affairs of Eurasia can be reduced without incurring undue risk that regional hegemons will emerge there. The current substantial level of U.S. intervention in the affairs of Eurasia discourages countries in Eurasia from acting more fully on their own to prevent the emergence of regional hegemons. Hegemons and spheres of influence . Even if one or more regional hegemons were to emerge in Eurasia, this would not pose an unacceptable situation for the United States—vital U.S. interests could still be defended. Similarly, the emergence of a spheres-of-influence world need not be unacceptable for the United States, because such a world would again not necessarily be incompatible with vital U.S. interests. Arguments in Favor of Continuing the U.S. Role of the Past 70 Years Observers who support a continuation of the U.S. role in the world of the past 70 years generally reject the above arguments and argue the opposite. Arguments that these observers make relating to the United States include the following: Costs and benefits. Although the costs to the United States of its role in the world over the past 70 years have been substantial, the benefits have been greater. The benefits are so long-standing that they can easily be taken for granted or underestimated. U.S. interventions in the security affairs of Eurasia, though not without significant costs and errors, have been successful in preventing wars between major powers and defending and promoting vital U.S. interests and values. A more-restrained U.S. role in the world might be less expensive for the United States in the short run, but would create a risk of damaging U.S. security, liberty, and prosperity over the longer run by risking the emergence of regional hegemons or a spheres-of-influence world. C apacity. Projections regarding future U.S. budget deficits and debt need to be taken into account, but even in a context of limits on U.S. resources, the United States is a wealthy country that can choose to play an expansive role in international affairs, and the costs to the United States of playing a more-restrained role in world affairs may in the long run be much greater than the costs of playing a more expansive role. Projections regarding future U.S. budget deficits and debt are driven primarily by decisions on revenues and domestic mandatory expenditures rather than by decisions on defense and foreign-policy-related expenditures. Consequently, these projections are an argument for getting the country's fiscal house in order primarily in terms of revenues and domestic mandatory expenditures, rather than an argument for a more-restrained U.S. role in the world. P ast 70 years as a historical aberration. Although a restrained U.S. foreign policy may have been appropriate for the United States in the 18 th and 19 th centuries, the world of the 18 th and 19 th centuries was quite different. For example, given changes in communication, transportation, and military technologies since the 18 th and 19 th centuries, the Atlantic and Pacific oceans are much less effective as geographic buffers between the United States and Eurasia today than they were in the 18 th and 19 th centuries. Experiences in more recent decades (including World Wars I and II and the Cold War) show that a more-restrained U.S. foreign policy would now be riskier or more costly over the long run than an engaged U.S. foreign policy. Moral standing. The United States, though not perfect, retains ample moral authority—and responsibility—to act as a world leader, particularly in comparison to authoritarian countries such as China or Russia. P ublic opinion. Other public opinion poll results show that Americans support a U.S. global leadership role. Arguments that these observers make relating to other countries include the following: Growing wealth and power . Although the wealth and power of countries such as China have grown considerably in recent years, future rates of growth for those countries are open to question. China faces the prospect of declining rates of economic growth and the aging and eventual shrinkage of its population, while Russia has a relatively small economy and is experiencing demographic decline. The United States has one of the most favorable demographic situations of any major power, and retains numerous advantages in terms of economic and financial strength, military power, technology, and capacity for innovation. Although the United States is no longer as dominant globally as it once was, it remains the world's most powerful country, particularly when all dimensions of power are taken into consideration. I deas about international order. The liberal international order reflects U.S. interests and values; a renegotiated international order incorporating ideas from authoritarian countries such as China would produce a world less conducive to defending and promoting U.S. interests and values. Americans have long lived in a world reflecting U.S. interests and values and would not welcome a world incorporating Chinese values on issues such as the rule of law; the scope of civil society; political and human rights; freedom of speech, the press, and information; and privacy and surveillance. Eurasia as self-regulating. Eurasia historically has not been self-regulating in terms of preventing the emergence of regional hegemons, and the idea that it will become self-regulating in the future is a risky and untested proposition. Hegemons and spheres of influence . A regional hegemon in Eurasia would have enough economic and other power to be able to threaten vital U.S. interests. In addition to threatening U.S. access to the economies of Eurasia, a spheres-of-influence world would be prone to war because regional hegemons historically are never satisfied with the extent of their hegemonic domains and eventually seek to expand them, coming into conflict with other hegemons. Leaders of regional hegemons are also prone to misjudgment and miscalculation regarding where their spheres collide. Narrowly Defined Material U.S. Interests and U.S. and Universal Values As also noted earlier, a second major dimension within the debate over the future U.S. role concerns how to balance or combine the pursuit of narrowly defined material U.S. interests with the goal of defending and promoting U.S. or universal values such as democracy, freedom, and human rights. Supporters of focusing primarily on narrowly defined material U.S. interests argue, among other things, that deterring potential regional aggressors and resisting the emergence of regional hegemons in Eurasia can require working with allies and partner states that have objectionable records in terms of democracy, freedom, and human rights. Supporters of maintaining a stronger focus on U.S. and universal values in the conduct of U.S. foreign policy argue, among other things, that these values help attract friends and allies in other countries, adding to U.S. leverage, and are a source of U.S. strength in ideological competitions with authoritarian competitor states. Balance of Hard and Soft Power As noted earlier, a third major dimension within the debate over the future U.S. role concerns the balance in U.S. foreign policy between the use of hard power and soft power. Some observers argue that a reduced reliance on soft power would undervalue soft power as a relatively low-cost tool for defending and promoting U.S. interests while making the United States more reliant on hard power, particularly military power, which might be a more expensive and/or less effective means for accomplishing certain goals. Other observers argue that the value of soft power is overrated, and that a greater reliance on hard power would be an appropriate response to an era of renewed great power competition. Costs and Benefits of Allies Within the overall debate over whether the U.S. role should change, one specific question relates to the costs and benefits of allies. As noted earlier, some observers believe that under the Trump Administration, the United States is becoming more skeptical of the value of allies, particularly those in Europe, and more transactional in managing U.S. alliance relationships. The U.S. approach to allies and alliances of the past 70 years reflected a belief that allies and alliances are of value to the United States for defending and promoting U.S. interests and for preventing the emergence of regional hegemons in Eurasia. This approach led to a global network of U.S. alliance relationships involving countries in Europe and North America (through NATO), East Asia (through a series of mostly bilateral treaties), and Latin America (through the multilateral Inter-American Treaty of Reciprocal Assistance, known commonly as the Rio Treaty or Rio Pact). Skeptics of allies and alliances generally argue that their value to the United States is overrated; that allies are capable of defending themselves without U.S. help; that U.S. allies frequently act as free riders in their alliance relationships with the United States by shifting security costs to the United States; that in the absence of U.S. help, these allies would do more on their own to balance against potential regional hegemons; and that alliances create a risk of drawing the United States into conflicts involving allies over issues that are not vital to the United States. Supporters of the current U.S. approach to allies and alliances, while acknowledging the free-rider issue as something that needs to be managed, generally argue that alliances are needed and valuable for deterring potential regional aggressors and balancing against would-be potential hegemonic powers in Eurasia; that although allies might be capable of defending themselves without U.S. help, they might also choose, in the absence of U.S. help, to bandwagon with would-be regional hegemons (rather than contribute to efforts to balance against them); that alliances form a significant advantage for the United States in its dealings with other major powers, such as Russia and China (both of which largely lack similar alliance networks); that in addition to mutual defense benefits, alliances offer other benefits, particularly in peacetime, including sharing of intelligence, information, and technology and the cultivation of soft-power forms of cooperation; and that a transactional approach to alliances, which encourages the merits of each bilateral alliance relationship to be measured in isolation, overlooks the collective benefits of maintaining alliances with multiple countries in a region. U.S. Public Opinion U.S. public opinion can be an important factor in debates over the future U.S. role in the world. Among other things, public opinion can shape the political context (and provide the impulse) for negotiating the terms of, and for considering whether to become party to, international agreements; influence debates on whether and how to employ U.S. military force; and influence policymaker decisions on funding levels for defense, international affairs activities, and foreign assistance. Foreign policy specialists, strategists, and policymakers sometimes invoke U.S. public opinion poll results in debates on the U.S. role in the world. At least one has argued that the American people "always have been the greatest constraint on America's role in the world." One issue relating to U.S. public opinion that observers are discussing is the extent to which the U.S. public may now believe that U.S. leaders have broken a tacit social contract under which the U.S. public has supported the costs of U.S. global leadership in return for the promise of receiving certain benefits, particularly steady increases in real incomes and the standard of living. Appendix F provides additional background information on U.S. public opinion regarding the U.S. role in the world. Additional Writings The foregoing covers only some of the more prominent arguments and counterarguments in the debate over the future U.S. role in the world. In addition to writings cited in footnotes to the above section, see Appendix C for additional examples of recent writings by observers involved in the debate. Is a Change of Some Kind in the U.S. Role Unavoidable? Another issue for Congress—one that might be viewed as related to, or forming part of, the previous issue—is whether a change of some kind in the U.S. role, whether desirable or not, is unavoidable due to factors such as the growth in recent decades in the wealth and power of China and other countries, and the effect this has on reducing the U.S. position of dominance in world affairs; constraints on U.S. resources, particularly given projected U.S. budget deficits and debt and competing domestic priorities; the gradual fading over time of collective memory of the major wars and widespread economic disruption and deprivation of the first half of the 20th century, and of how the U.S. role in the world of the last 70 years has been motivated at bottom by a desire to prevent a repetition of the events of that earlier era; and other factors, such as technological developments, that can change power dynamics among nations, influence international financial and economic flows and globalization in general, affect social cohesion and relationships between governments and the governed, affect the development and spread of political beliefs and ideologies, and empower nonstate organizations and individuals in ways not previously possible. Some observers—particularly those who advocate a more-restrained U.S. role in the world—might argue that factors such as those above make a change of some kind in the U.S. role unavoidable, regardless of whether such a change is deemed desirable. Others—particularly those who advocate a continuation of the U.S. role in the world of the past 70 years—might argue that factors such as those above might call for adjustments in the U.S. role, but not necessarily for a larger-scale change, and might even underscore the need for continuing the U.S. role in the world of the past 70 years. In assessing the question of whether a change of some kind in the U.S. role is unavoidable, key factors that Congress may consider include projected rates of economic growth and demographic change in both the United States and other countries, and the potential impacts of technological developments such as those relating to the internet; social media; cyber operations; digital manipulation of videos, photos, and other information (including so-called "deep fake" videos); additive manufacturing (aka 3D printing); cryptocurrencies; artificial intelligence; quantum computing; robotics; energy production and use; nanotechnology; and gene editing, to name just a few examples. How Are Other Countries Responding to a Possibly Changed U.S. Role? Another question for Congress concerns how other countries are responding to a possible change in the U.S. role in the world. The sections below provide some brief discussions on this question. Authoritarian and Illiberal Countries Particularly given the shift in the international security environment to an era of renewed great power competition, principally with China and Russia, as well as renewed ideological competition against 21 st -century forms of authoritarianism and illiberal democracy in Russia, China, and other countries, the ways that China, Russia, and other authoritarian or illiberal governments respond to a possible change in the U.S. role in the world could have major implications for U.S. national security. China The question of how China may be responding to a possibly changed U.S. role is of particular potential significance because while certain countries, such as Russia, are viewed by some observers as wanting to erode or tear down the liberal international order, China is the only country (other than the United States) that is generally viewed as being potentially capable of acting on its own to build a successor world order. Some observers believe that China has concluded, correctly or not, that the United States is retreating from or abandoning its role as global leader, and that China is responding to this assessment by expanding or accelerating its efforts to increase its economic and political role on the world stage, in part through its ambitious Belt and Road Initiative (BRI); separate the United States from its allies and raise doubts about the reliability of the United States as an ally or partner; work more closely with Russia with the aim of reducing U.S. influence in Eurasia; revise the liberal international order in ways that are conducive to Chinese values and interests; and perhaps eventually supplant the United States in the role of world leader. Other observers perceive that some in China, viewing certain actions by the Trump Administration—including the Administration's "trade war" with China, the Administration's articulation of the concept of a free and open Indo-Pacific, and actions aimed at countering China's growing control over the South China Sea—have concluded that the United States is seeking to contain China in a manner broadly consistent with how the United States pursued a policy of containment against the Soviet Union during the Cold War. Still others argue that the Administration's trade actions are leading to closer relations between China and other countries (including U.S. allies in Europe) that do not support certain U.S. trade-related actions. Russia Some observers believe that Russia, like China, has concluded, correctly or not, that the United States is retreating from or abandoning its role as global leader, and that Russia is responding to this assessment by continuing efforts aimed at establishing greater Russian influence over or control of countries on its periphery, and more generally, reestablishing Russia as a major world power; separating the United States from transatlantic allies and weakening the NATO alliance; working more closely with China with the aim of reducing U.S. influence in Eurasia; and raising doubts about the merits of liberal democracy while promoting illiberal and authoritarian approaches to government in Europe and elsewhere. Although Russia, in the eyes of some of these observers, was originally hopeful about establishing better relations with the United States under the Trump Administration, these observers now perceive that Russia has largely given up on this possibility, and now sees a prospect of long-term confrontation with the United States. Some observers have expressed concern that recent U.S. actions, including U.S. sanctions against Russia and the Trump Administration's recent, more-confrontational policy toward China, are helping to push Russia and China closer to one another politically, toward an entente or some other form of strategic cooperation, to the potential or actual detriment of U.S. interests in Eurasia and elsewhere. They argue that U.S. policymakers should pay attention to how U.S. actions could have the effect of encouraging or strengthening such Sino-Russian strategic cooperation, given the combined economic resources, military capabilities, and informational capabilities of China and Russia, and their common goals of separating the United States from its allies, reducing U.S. influence in Eurasia, and raising doubts about the merits of liberal democracy while promoting illiberal and authoritarian approaches to government. Other observers argue that while Russia is working more closely with China to reduce U.S. influence in Eurasia, Russia is at the same time wary of China's continued growth in wealth and power, and of how that might eventually lead to China becoming the dominant power in Eurasia, with Russia being relegated to a secondary or subordinate status. How that might affect Russia's response to a changed U.S. role in the world, particularly over the longer run, is not clear. Authoritarian and Illiberal Countries in General Some observers argue that what they view as the Trump Administration's reduced or more selective emphasis on, or indifference to, defending and promoting freedom, democracy, and human rights as universal values, and on criticizing and resisting authoritarian and illiberal forms of government, as well as President Trump's apparent affinity for, or admiration of, the leaders of authoritarian and illiberal governments, is emboldening the leaders of authoritarian and illiberal governments to take increased or accelerated actions—including actions for suppressing political opposition and dissent, and for reducing freedom of the press—that are aimed at consolidating or strengthening their authoritarian or illiberal forms of government and perhaps spreading them to other countries. Countries sometimes mentioned in connection with this point include China, Russia, Turkey, Hungary, Poland, the Philippines, Egypt, Syria, and Saudi Arabia, to list some examples. Actions by authoritarian and illiberal governments along these lines could contribute to a resurgent global challenge that some observers perceive to democracy as a form of government and to the idea that freedom, democracy, and human rights are universal values. The 2019 edition of Freedom House's annual report on freedom in the world, for example, states that In 2018, [the annual] Freedom in the World [report] recorded the 13th consecutive year of decline in global freedom. The reversal has spanned a variety of countries in every region, from long-standing democracies like the United States to consolidated authoritarian regimes like China and Russia. The overall losses are still shallow compared with the gains of the late 20th century, but the pattern is consistent and ominous. Democracy is in retreat…. Victories for antiliberal movements in Europe and the United States in recent years have emboldened their counterparts around the world, as seen most recently in the election of Jair Bolsonaro as president of Brazil. These movements damage democracies internally through their dismissive attitude toward core civil and political rights, and they weaken the cause of democracy around the world with their unilateralist reflexes. For example, antiliberal leaders' attacks on the media have contributed to increasing polarization of the press, including political control over state broadcasters, and to growing physical threats against journalists in their countries. At the same time, such attacks have provided cover for authoritarian leaders abroad, who now commonly cry "fake news" when squelching critical coverage…. Similarly, punitive approaches to immigration are resulting in human rights abuses by democracies—such as Australia's indefinite confinement of seaborne migrants in squalid camps on the remote island of Nauru, the separation of migrant children from their detained parents by the United States, or the detention of migrants by Libyan militias at the behest of Italy—that in turn offer excuses for more aggressive policies towards migrants and refugees elsewhere in the world. Populist politicians' appeals to "unique" or "traditional" national values in democracies threaten the protection of individual rights as a universal value, which allows authoritarian states to justify much more egregious human rights violations. And by unilaterally assailing international institutions like the United Nations or the International Criminal Court without putting forward serious alternatives, antiliberal governments weaken the capacity of the international system to constrain the behavior of China and other authoritarian powers. The gravity of the threat to global freedom requires the United States to shore up and expand its alliances with fellow democracies and deepen its own commitment to the values they share. Only a united front among the world's democratic nations—and a defense of democracy as a universal right rather than the historical inheritance of a few Western societies—can roll back the world's current authoritarian and antiliberal trends. By contrast, a withdrawal of the United States from global engagement on behalf of democracy, and a shift to transactional or mercenary relations with allies and rivals alike, will only accelerate the decline of democratic norms…. The stakes in this struggle are high. For all the claims that the United States has lost global influence over the past decade, the reality is that other countries pay close attention to the conduct of the world's oldest functioning democracy. The continuing deterioration of US democracy will hasten the ongoing decline in global democracy. Indeed, it has already done so. Ronald Reagan declared in his first inaugural address, "As we renew ourselves here in our own land, we will be seen as having greater strength throughout the world. We will again be the exemplar of freedom and a beacon of hope for those who do not now have freedom." Nearly four decades later, the idea that the United States is such an exemplar is being steadily discredited…. Our poll found that a strong majority of Americans, 71 percent, believe the US government should actively support democracy and human rights in other countries. But America's commitment to the global progress of democracy has been seriously compromised by the president's rhetoric and actions. His attacks on the judiciary and the press, his resistance to anticorruption safeguards, and his unfounded claims of voting fraud by the opposition are all familiar tactics to foreign autocrats and populist demagogues who seek to subvert checks on their power. Such leaders can take heart from Trump's bitter feuding with America's traditional democratic allies and his reluctance to uphold the nation's collective defense treaties, which have helped guarantee international security for decades. As former US defense secretary James Mattis put it in his resignation letter, "While the US remains the indispensable nation in the free world, we cannot protect our interests or serve that role effectively without maintaining strong alliances and showing respect to those allies." Trump has refused to advocate for America's democratic values, and he seems to encourage the forces that oppose them. His frequent, fulsome praise for some of the world's worst dictators reinforces this perception. Particularly striking was his apparent willingness, at a summit in Helsinki, to accept the word of Vladimir Putin over his own intelligence agencies in assessing Russia's actions in the 2016 elections. The president's rhetoric is echoed in countries with weaker defenses against attacks on their democratic institutions, where the violation of norms is often followed by systemic changes that intensify repression and entrench authoritarian governance…. As the United States ceases its global advocacy of freedom and justice, and the president casts doubt on the importance of basic democratic values for our own society, more nations may turn to China, a rising alternative to US leadership. The Chinese Communist Party has welcomed this trend, offering its authoritarian system as a model for developing nations. The resulting damage to the liberal international order—a system of alliances, norms, and institutions built up under Trump's predecessors to ensure peace and prosperity after World War II—will not be easily repaired after he leaves office. Other observers argue that what they view as the Trump Administration's reduced or more selective emphasis on, or indifference to, defending and promoting human rights may be tacitly encouraging violations by other governments around the world of basic human rights—including extrajudicial killings, mass atrocities, and forced relocations—by sending a signal to those governments that they can commit such acts without having to fear repercussions from the United States. Still other observers, perhaps particularly supporters of the Trump Administration's foreign policy, might argue that violations of human rights predate the Trump Administration and are more of a consequence of changes in foreign governments and the international security environment. U.S. Allies and Current or Emerging Partner Countries Overview Given the significant role of alliances and partner relationships in U.S. foreign policy and defense strategy, reactions by U.S. allies and current or emerging partner countries to a possible change in the U.S. role in the world could have major implications for U.S. national security. Among other things, they could affect specific U.S. foreign policy and defense initiatives that could depend on or benefit from allied or partner support. More generally, they could have implications for what are sometimes referred to as the balance-vs.-bandwagon and free-rider issues. The balance-vs.-bandwagon issue refers to whether other countries choose to counter (i.e., balance against) potential regional hegemons, or instead become more accommodating or deferential toward (i.e., bandwagon with) those potential regional hegemons. For observers who assess that the United States has shifted to a more-restrained U.S. role in the world, the situation provides a test—although not one with precisely the features they might have designed—of a question long argued by strategists, political scientists, and others involved in the debate over the merits of the U.S. role in the world of the past 70 years: Would U.S. allies and partner countries respond to a more-restrained U.S. role by taking stronger actions on their own to balance against potential regional hegemons in Eurasia (i.e., China and Russia), or would they instead respond by bandwagoning with those potential regional hegemons? In discussions of the balance-vs.-bandwagon issue, supporters of continuing the U.S. role of the past 70 years tend to argue that a more-restrained U.S. role in the world could encourage enough of these countries to bandwagon rather than balance that it would shift the global balance of power and regional balances of power against the United States. Those making this argument tend to believe that strong actions by the United States to balance against potential regional hegemons give other countries more confidence to do the same, encouraging what is (for these observers) a virtuous cycle in the direction of balancing against potential regional hegemons. Supporters of a more-restrained U.S. role in the world tend to argue the obverse—that a more-restrained U.S. role would encourage more of these countries, out of a sense of self-preservation, to balance against rather than bandwagon with potential regional hegemons, helping to preserve global and regional balances of power that are favorable to the United States at lower cost to the United States. Those making this argument tend to believe that strong actions by the United States to balance against potential regional hegemons provide room for other countries to act as free riders under the U.S. security umbrella by reducing their own efforts to balance those potential regional hegemons, and that a more-restrained U.S. role will help address a long-term challenge that some observers believe the United States has faced in reducing the free-rider effect among its allies. Europe (Other Than Russia) and Canada The transatlantic alliance—the alliance of the United States and Canada with the United Kingdom and other European countries, particularly under the NATO treaty—is generally viewed as a bedrock of post-World War II U.S. national security strategy and a key supporting element of the U.S. role in the world since World War II. Some observers are concerned that President Trump's skeptical or critical views about NATO and other actions by the Trump Administration are straining, weakening, or threatening to rupture the transatlantic alliance, perhaps permanently, with potentially significant or profound effects for U.S. security and diplomacy. Other observers argue that the transatlantic alliance has weathered strains in the past and is doing so again now. Within the general issue of the status of the transatlantic alliance, the free-rider issue and how to address it has been a recurring concern for the United States in its relationship with its NATO allies, where it forms part of a long-standing issue sometimes referred to as the burden-sharing issue. The Trump Administration and its supporters argue that President Trump's skeptical and critical views about NATO, combined with sustained pressure on NATO from the President Trump and senior Administration officials for those countries to spend more on their own defense capabilities, have had the effect of extracting stronger commitments from the NATO allies about increasing their defense spending levels—something that previous U.S. administrations had repeatedly tried to obtain, but with little success. Critics of the Trump Administration agree with a goal of reducing free riding within the alliance where possible, but argue that the commitments on increased defense spending recently articulated by NATO allies do not go substantially beyond commitments those allies made prior to the start of the Trump Administration, and are not worth the damage to alliance relationships that was caused by the confrontational tactics employed by the Trump Administration to obtain them. A number of European countries appear to have responded to a possible change in the U.S. role in the world by announcing an intention to take actions to increase their ability to act autonomously and independently from the United States. Actions that European countries might take autonomously or independent of the United States might or might not be viewed by U.S. observers as being in the U.S. interest. The member states of the European Union (EU) have announced steps to increase the EU's ability to act on security issues, and the Baltic and Nordic states (i.e., countries in Europe that are among those relatively close to Russia) have announced actions to increase their defense capabilities and work more closely with one another on defense and other security issues. European countries have also announced or taken steps to defend existing international trade arrangements and the continued implementation of the Iran nuclear agreement. Some press reports suggest that the Trump Administration's policies toward U.S. allies in Europe may have raised doubts among those allies about the reliability of the United States as an ally, and may have encouraged Germany to work more closely with Russia, at least on trade issues. Asia and Indo-Pacific In Asia and the Indo-Pacific, supporters of a more-restrained U.S. role in the world might argue that Japan, Vietnam, Australia, New Zealand, and India are taking (or appear increasingly ready to take) greater actions to counter China in various parts of the Indo-Pacific region. Supporters of continuing the U.S. role in the world of the past 70 years, on the other hand, might argue that the Philippines under Philippine President Rodrigo Duterte has adopted a largely nonconfrontational policy toward China regarding China's actions in the South China Sea, that the ASEAN countries as a group are split on the question of how much to confront China regarding China's actions in the South China Sea, that the question of policy toward China has been a matter of debate in Australia, and that there may be limits to how far and how fast India is willing to go in terms of increasing its efforts to counter China and cooperate with the United States, Japan, and Australia in countering China. Japan responded to the U.S. withdrawal from the TPP negotiations by leading an effort to finalize the agreement among the 11 remaining partners in the pact—an action that may help forestall the emergence of a more China-centric trading system in the Indo-Pacific region, but which also left the United States on the outside of a major regional trade pact. Japan also supports the concept of a free and open Indo-Pacific—indeed, officials in Japan (and India) articulated the Indo-Pacific concept before it was adopted as a policy initiative by the Trump Administration—and is taking a variety of actions to support the concept. Latin America and Africa Some observers argue that certain Latin American and African countries have concluded, correctly or not, that the United States has reduced its engagement with them, and as a consequence have become more open to Chinese overtures for expanded economic and other ties. More recently, senior Trump Administration officials have traveled to Latin America to underscore the U.S. commitment to the region and to caution countries there about the potential downsides for those countries of increasing their engagement and cooperation with China. Countries in General Observing the reactions of various countries around the world to the Trump Administration's foreign policy, two observers stated in March 2018 that President Trump "is reshaping the way other states interact with America and with one another," and that "as Trump shakes up American policy, he is also shaking up the policies of countries around the globe." They state that These global responses, however, are neither as uniform nor as straightforward as one might expect. Policy responses to Trump's America First agenda can be separated into two baskets: those by countries that mostly decry Trump's rhetoric and policies as a crisis of American global leadership, and those by countries that mostly welcome those rhetoric and policies as an opportunity. Within those baskets, there are a total of nine analytically distinct—yet not mutually exclusive—approaches. These approaches run the gamut from resistance to appeasement to exploitation, and have varying prospects for the states pursuing them and varying implications for U.S. global interests. Some of these behaviors are relatively new; others existed prior to Trump and have simply been accentuated by his agenda. Yet all of these behaviors are shifting the relationship between the United States and the world, and all of them will affect the contours of the international environment. Both the prevalence and the effectiveness of these behaviors, in turn, will be affected by how Trump and his ever-shifting cast of advisers chart America's course during the remainder of his presidency, and by how permanent the changes Trump has already made turn out to be. After surveying how various countries are responding, the authors conclude their discussion as follows: Over a year into Trump's presidency, the basic patterns of the world's response are coming into sharper focus. Some countries are seeking to minimize or compensate for the effects of an America First agenda; others are seeking to make the most of them. Yet governments around the world are adjusting in some way or another, which is itself a testament to just how disruptive Trump's presidency has already been. Some of the strategies that foreign actors are pursuing do have potential benefits for the United States, particularly insofar as they lead to greater and perhaps more equitable efforts to sustain the post-World War II international order. Yet there are inherent limits to allied efforts to pick up the geopolitical slack that the United States is creating, and America's own interests will not be as well served by those efforts as they would be by deeper U.S. engagement to shape key negotiations and outcomes. Other strategies, such as hijacking and exploiting the vacuum, are far more dangerous for the United States and the broader global order. Overall, it thus appears that the liabilities of these patterns of global adjustment significantly outweigh the benefits from a U.S. perspective. To put it more sharply, it is surely troubling that many democracies and longtime U.S. partners are scrambling to mitigate the effects of America First, while a number of revisionist or authoritarian powers look to take advantage. Global adjustment to America First is a process, however, and one that has not reached its conclusion. Rather, in a climate of great geopolitical uncertainty, most states appear to be feeling their way and hedging their bets across a range of responses because they are unsure of which is optimal. Germany, for example, has pursued all five of the responses undertaken by states that are mostly discomfited by Trump's approach. Many other states have pursued a similarly diverse range of options as they try to discern where, precisely, Trump's America is headed. This uncertainty leads to a further point, which is that the current instability in U.S. policy could easily shift the patterns of response we have described. Although the America First label and much of the president's rhetoric has remained relatively consistent, there have been significant debates within the administration on what it means in practice on any given policy dispute. The outcomes of those disputes, in turn, seem to be heavily dependent on the rising and declining influence of key personnel, which has itself been an especially fluid variable in this administration.… In short, if global reactions to Trump's presidency reflect global assessments of where that presidency is headed, then continued volatility in U.S. policy so far is likely to cause continued volatility in patterns of global response…. … international responses to America First will depend heavily on how lasting other countries assume that shift to be. If international observers conclude that America First is here to stay, then some approaches—hedging, exploiting the vacuum, America First as a model—will become more appealing, while others—riding out the storm, hugging and appeasing—will seem less feasible. If, however, states conclude that America First is more the aberration than the norm, they will be cautious about pursuing strategies that carry great risk should U.S. policy "snap back" in the foreseeable future. In this, as in so many areas, the effects of the Trump era will be determined by how long that era ends up lasting. The discussion above is only one perspective on the issue of how other countries are responding to a possible change in the U.S. role in the world. Other observers may differ regarding how to characterize the ways that certain countries are responding, or the resulting costs and benefits to the United States of those responses. Is a Changed U.S. Role Affecting World Order? Another issue for Congress is whether a changed U.S. role in the world is affecting world order in some way. As mentioned earlier, certain countries, such as Russia, are viewed by some observers as wanting to erode or tear down the liberal international order, while China is generally viewed as being potentially capable not only of challenging key elements of the current world order, but of acting on its own to revise the current world order or build a new successor world order. Whether caused primarily by a change in the U.S. role in the world or by one or more other factors, a collapse of the liberal international order could lead to the emergence of a less ordered world or a new international order based on a different set of characteristics and values—outcomes that could have significant and potentially profound implications for U.S. security, freedom, and prosperity. Some observers—particularly those who believe that the U.S. role is undergoing a potentially historic change—argue that the change in the U.S. role is contributing, perhaps substantially, to a weakening, erosion, or potential collapse of the liberal international order. Other observers argue that a weakening or erosion of the liberal international order is less a consequence of a changed U.S. role in the world, and more a reflection of the growth in wealth and power of China and other countries and the effect this is having on reducing U.S. dominance in world affairs. Still other observers argue that the weakening, erosion, or potential collapse of the liberal international order has been exaggerated. They might argue that the U.S. role in the world has not changed as much as others have argued, that the institutions undergirding the order are stronger or more resilient than others have argued, that China is more interested in revising than replacing the liberal international order, that China and Europe are taking steps to buttress the trade aspects of the order, or some combination of these points. What Implications Might a Changed U.S. Role Have for Congress? Another issue for Congress is what implications a changed U.S. role might have for Congress, particularly regarding the preservation and use of congressional powers and prerogatives relating to foreign policy, national security, and international economic policy, and more generally the role of Congress relative to that of the executive branch in U.S. foreign policymaking. Article I, Section 8, of the Constitution vests Congress with several powers that can bear on the U.S. role in the world, while Article II, Section 2, states that the President shall have power to make treaties, by and with the advice and consent of the Senate, provided two-thirds of the Senators present concur. Congress can also influence the U.S. role in the world through, among other things, its "power of the purse" (including its control over appropriations for the Department of Defense, the Department of State, and foreign assistance programs); authorizations for the use of military force; approval of trade agreements and other agreements; the Senate's power to confirm the President's nominees for certain executive branch positions (including the Secretaries and other high-ranking officials in the Departments of State and Defense, as well as U.S. ambassadors); and general oversight of executive branch operations. While the Constitution enumerates certain specific powers for Congress and the executive branch that bear on U.S. foreign policy, various observers over the years have argued that the Constitution in effect sets the stage for a perpetual debate regarding the relative roles of Congress and the executive branch in U.S. foreign policymaking. From a congressional perspective, questions in this debate in recent years have included whether Congress over the years has ceded too much authority to the executive branch in the area of war powers—and what the meaning of the war powers function might be in today's world, given ongoing counterterrorist operations, so-called hybrid warfare and gray-zone operations, and cyberwarfare; whether Congress should consider legislation that would limit the President's authority to withdraw the United States from NATO without two-thirds consent of the Senate; whether Congress over the years has ceded too much authority to the executive branch in the area of tariffs and trade negotiations; whether the executive branch is following congressional direction for spending funds and implementing programs bearing on U.S. foreign policy; and whether the executive branch is keeping Congress adequately informed regarding U.S. diplomacy with other countries and U.S. government operations in other countries bearing on the U.S. role in the world, including those carried out by U.S. intelligence agencies or U.S. special operations forces. In a context of a potentially historic change in the U.S. role in the world, a key issue for Congress is whether the general pattern of presidential and congressional activities in foreign policy-related areas that developed over the past 70 years would continue to be appropriate in a situation of a changed U.S. role. Regarding this issue, one observer stated in February 2017 that Like other wide congressional grants of authority to the executive branch—the power to levy "emergency" tariffs comes to mind—the vast discretion over immigration Trump has inherited was a product of a different time. Lawmakers during the post-World War II era assumed presidents of both parties agreed on certain broad lessons of prewar history, such as the need to remain widely engaged through trade and collective security, and the importance of humanitarian values—"soft power"—in U.S. foreign policy. They did not anticipate today's breakdown in national consensus, much less that heirs to the America Firsters who had failed to attain national power before World War II could ever attain it afterward. Congressional decisions on issues relating to the U.S. role in the world could include measures affecting areas such as war powers, tariffs and trade negotiations, use of appropriated funds for foreign policy-related programs, and executive branch actions to keep Congress informed of U.S. government operations in other countries. A related potential issue for Congress is whether a change in the U.S. role would have any implications for congressional organization, capacity, and operations relating to foreign policy, national security, and international economic policy. Congress's current organization, capacity, and pattern of operations for working on these issues evolved during a long period of general stability in the U.S. role, and may or may not be optimal for carrying out Congress's role in U.S. foreign policy given a changed U.S. role. How Might the Operation of Democracy in the United States Affect the U.S. Role? Another potential issue for Congress is how the operation of democracy in the United States might affect the U.S. role in the world, particularly in terms of defending and promoting democracy and criticizing and resisting authoritarian and illiberal forms of government. During the Cold War—a period that featured an ongoing ideological competition between the United States and the Soviet Union regarding the relative merits of Western-style democracy and Soviet-style governance—the effective operation of U.S. democracy at the federal level and lower levels was viewed as helpful for arguing on the world stage that Western-style democracy was superior, for encouraging other countries to adopt that model, and for inspiring people in the Soviet Union and other authoritarian countries to resist authoritarianism and seek change in the direction of more democratic forms of government. The ability of the United State to demonstrate the effectiveness of democracy as a form of government was something that in today's parlance would be termed an element of U.S. soft power. The end of the Cold War in 1989-1991 and the start of the post-Cold War era in the early 1990s led to a diminution in the ideological debate about the relative merits of democracy versus authoritarianism as forms of government. As a possible consequence, there may have been less of a perceived need during this period for focusing on the question of whether the operation of U.S. democracy was being viewed positively or otherwise by observers in other countries. As discussed in another CRS report, the shift in the international environment over the past few years from the post-Cold War era to a new situation featuring renewed great power competition has led to a renewed ideological debate about the relative merits of Western-style democracy versus 21 st -century forms of authoritarian and illiberal government. Articles in China's state-controlled media, for example, sometimes criticize the operation of U.S. democracy and argue that China's form of governance is more advantageous, and at least one Russian official has argued that Russia's authoritarian form of government, which he referred to as "sovereign democracy," offers certain advantages over Western-style democracy. The potential issue for Congress is whether, in a period of renewed ideological competition, there is now once again a need for focusing more on the question of whether the operation of U.S. democracy is being viewed positively or otherwise by observers in other countries. Would a Change in the U.S. Role Be Reversible? Another potential issue for Congress is whether a change in the U.S. role in the world would at some point in the future be reversible, should U.S. policymakers in the future desire to return to a U.S. role in the world more like that of the past 70 years. Potential questions for Congress include the following: What elements of change in the U.S. role might be more reversible, less reversible, or irreversible? What elements might be less reversible due to technological developments, changes in international power dynamics, or changes in U.S. public opinion? How much time and effort would be required to implement a return to a U.S. role like that of the past 70 years? How might the issue of reversibility be affected by the amount of time that a change in the U.S. role remains in place before an attempt might be made to reverse it? How might decisions that Congress and the executive branch make in the near term affect the question of potential downstream reversibility? What actions, if any, should be taken now with an eye toward preserving an option for reversing nearer-term changes in the U.S. role? What are the views of other countries regarding the potential reversibility of a change in the U.S. role, and how might those views affect the foreign policies of those countries? Appendix A. Glossary of Selected Terms Some key terms used in this report include the following: Role in the world The term role in the world generally refers in foreign policy discussions to the overall character, purpose, or direction of a country's participation in international affairs or the country's overall relationship to the rest of the world. A country's role in the world can be taken as a visible expression of its grand strategy (see next item). In this report, the term U.S. role in the world is often shortened for convenience to U.S. role . Grand strategy The term grand strategy generally refers in foreign policy discussions to a country's overall approach for securing its interests and making its way in the world, using all the national instruments at its disposal, including diplomatic, informational, military, and economic tools (sometimes abbreviated in U.S. government parlance as DIME). A country's leaders might deem elements of a country's grand strategy to be secret, so that assessments, assumptions, or risks included in the strategy are not revealed to potential adversaries. Consequently, a country's leaders might say relatively little in public about the country's grand strategy. As mentioned above, however, a country's role in the world can be taken as a visible expression of its grand strategy. For the United States, grand strategy can be viewed as strategy at a global or interregional level, as opposed to U.S. strategies for individual regions, countries, or issues. International order/world order The term international order or world order generally refers in foreign policy discussions to the collection of organizations, institutions, treaties, rules, norms, and practices that are intended to organize, structure, and regulate international relations during a given historical period. International orders tend to be established by major world powers, particularly in the years following wars between major powers, though they can also emerge at other times. Though often referred to as if they are fully developed or firmly established situations, international orders are usually incomplete, partly aspirational, sometimes violated by their supporters, rejected (or at least not supported) by certain states and nonstate actors, and subject to various stresses and challenges. Unipolar/bipolar/tripolar/multipolar In foreign policy discussions, terms like unipolar , bipolar , tripolar , and multipolar are sometimes used to refer to the number of top-tier world powers whose actions tend to characterize or give structure to a given historical period's international security situation. The Cold War that lasted from the late 1940s to the late 1980s or early 1990s is usually described as a bipolar situation featuring a competition between two superpowers (the United States and the Soviet Union) and their allies. The post-Cold War era, which followed the Cold War, is sometimes described as the unipolar moment, with the United States being the unipolar power, meaning the world's sole superpower. As discussed in another CRS report, observers have concluded that in recent years, there has been a shift from the post-Cold War era to a new international security situation characterized by renewed great power competition between the United States, China, and Russia, leading observers to refer to the new situation as a tripolar or multipolar world. Observers who might list additional countries (or groups of countries, such as the European Union) as additional top-tier world powers, along with the United States, China, and Russia, might also use the term multipolar. Eurasia The term Eurasia is used in this report to refer to the entire land mass that encompasses both Europe and Asia, including its fringing islands, extending from Portugal on its western end to Japan on its eastern end, and from Russia's Arctic coast on its northern edge to India on its southern edge, and encompassing all the lands and countries in between, including those of Central Asia, Southwest Asia, South Asia, and Southeast Asia. Eurasia's fringing islands include, among others, the United Kingdom and Ireland in Europe, Sri Lanka in the Indian Ocean, the archipelagic countries of Southeast Asia, and Japan. There are also other definitions of Eurasia, some of which are more specialized and refer to subsets of the broad area described above. Regional hegemon The term regional hegemon generally refers to a country so powerful relative to the other countries in its region that it can dominate the affairs of that region and compel other countries in that region to support (or at least not oppose) the hegemon's key policy goals. The United States is generally considered to have established itself in the 19 th century as the hegemon of the Western Hemisphere. Spheres-of-influence world The term spheres-of-influence world generally refers to a world that, in terms of its structure of international relations, is divided into multiple regions (i.e., spheres), each with its own hegemon. A spheres-of-influence world, like a multipolar world, is characterized by having multiple top-tier powers. In a spheres-of-influence world, however, at least some of those top-tier powers have achieved a status of regional hegemon, while in a multipolar world, few or none of those major world powers (other than the United States, the regional hegemon of the Western Hemisphere) have achieved a status of regional hegemon. As a result, in a spheres-of-influence world, international relations are more highly segmented on a regional basis than they are in a multipolar world. Geopolitics The term geopolitics is often used as a synonym for international politics or for strategy relating to international politics. More specifically, it refers to the influence of basic geographic features on international relations, and to the analysis of international relations from a perspective that places a strong emphasis on the influence of such geographic features. Basic geographic features involved in geopolitical analysis include things such as the relative sizes and locations of countries or land masses; the locations of key resources such as oil or water; geographic barriers such as oceans, deserts, and mountain ranges; and key transportation links such as roads, railways, and waterways. Hard power and soft power In foreign policy discussions, the term hard power generally refers to coercive power, particularly military and economic power, while the term soft power generally refers to the ability to persuade or attract support, particularly through diplomacy, development assistance, support for international organizations, education and cultural exchanges, and the international popularity of cultural elements such as music, movies, television shows, and literature. Appendix B. Citations for Certain Footnotes This appendix provides the citations to certain footnotes in the report. Citations for each footnote are generally listed with the most recent on top. Citations for Footnote 7 See, for example: Stephen Grand, "America's Foreign Policy Power Is Changing Under Trump; No Other Country Can Yet Match America in Terms of Power, But Washington No Longer Possesses the Ability to Shape World Events As It Did in the Cold War's Aftermath," National Interest , September 30, 2018. Anne Gearan and David Nakamura, "Trump Delivers Defiant Defense of His Foreign Policy Approach to Skeptical U.N. Audience," Washington Post , September 25, 2018. Colum Lynch, "Trump Takes Aim at Iran, China, and the Global System in Big U.N. Speech," Foreign Policy , September 25, 2018. Vivian Salama, "At U.N., Trump Defends His Administration's Hard-Line Trade Policies; President Trump Criticized International Organizations and Alliances as Unaccountable, But Received Pushback from Other World Leaders," Wall Street Journal , September 25, 2018. David Nakamura, "'I'm Not the President of the Globe': Trump Goes It Alone as He Faces World Leaders Amid Trade War Against China," Washington Post , September 23, 2018. Griff Witte and Michael Birnbaum, "A Year of Trump's 'America First' Agenda Has Radically Changed the U.S. Role in the World," Washington Post , January 20, 2018. Rebecca Kheel, "Trump Roils the Globe in First Year as Commander in Chief," The Hill , December 25, 2017. Reuben Fischer-Baum and Julie Vitkovskaya, "How Trump is Changing America's Foreign Policy," Washington Post , updated August 10, 2017. Citations for Footnote 8 See, for example: John Micklethwait, Margaret Talev, and Jennifer Jacobs, "Trump Threatens to Pull U.S. Out of WTO If It Doesn't 'Shape Up,'" Bloomberg , August 30 (updated August 31), 2018. Adam Taylor, "No President Has Used Sanctions and Tariffs Quite Like Trump," Washington Post , August 29, 2018. Ana Swanson and Jack Ewiing, "Trump's National Security Claim for Tariffs Sets Off Crisis at W.T.O.," New York Times , August 12, 2018. Ben White, Nancy Cook, Andrew Restuccia, and Doug Palmer, "Trump's Trade War Was Decades in the Making," Politico , July 9, 2018. Greg Rushford, "Trump's War on the WTO," Wall Street Journal , July 4, 2018. Zeeshan Aleem, "Trump Is Single-Handedly Trying to Blow Up International Trade," Vox , July 2, 2018. Heather Long and Steven Mufson, "Trump Thinks He's Saving Trade. The Rest of the World Thinks He's Blowing It Up." Washington Post , June 2, 2018. Peter Rough, "Trump's Views on Trade Aren't a Passing Fad," Foreign Policy , April 3, 2018. "Disaster Management; The WTO Is Flawed. But the Trump Administration's Undermining of It Is Bad for the World and for America." Economist , December 9, 2017: 18. Citations for Footnote 11 See, for example: Uri Friedman, "Donald Trump Issues a Scathing Rejection of 'Globalism,'" Atlantic , September 25, 2018. Dalibor Rohac, "What Donald Trump Got Right—and Wrong—About the United Nations," American Enterprise Institute, September 25, 2018. Nahal Toosi, "Laughter, Frowns and Shrugs: Trump Speaks to the UN; President Tells World Leaders the US Would Always Put Its Interests Above Theirs, Rejecting the Rise of 'Globalism,'" Politico , September 25, 2018. Katie Bo Williams, "A Solitary and Defiant Message to the UN In Trump's Second Speech," Defense One , September 25, 2018. Farnaz Fassihi, "Trump to Emphasize 'Sovereignty' in U.S. Visit, Haley Says," Wall Street Journal , September 20, 2018. Anna Simons, "Yes, Mr. President—Sovereignty!" American Interest, October 10, 2017. Rich Lowry, "Sovereignty Is Not a Dirty Word," National Review , September 22, 2017. Max de Haldevang, "Trump Mentioned Sovereignty 21 Times in A Speech Heralding A New American Worldview," Quartz, September 19, 2017. Greg Jaffe and Karen DeYoung, "In Trump's U.N. Speech, An Emphasis on Sovereignty Echoes His Domestic Agenda," Washington Post , September 19, 2017. For more on the concept of sovereignty as applied to both the United States and other countries, see, for example, National Security Strategy of the United States of America , December 2017, pp. I-II, 1, 4, 7, 9-10, 25, 39, 40, 41, 45, 46-52, 55. For an alternative view, see Bruce Jones, "American Sovereignty Is Safe From the UN," Foreign Affairs, September 28, 2018. Citations for Footnote 12 See, for example: Daniel R. DePetris, "Has the State Department Been Stripped of Its Swagger? Washington's Diplomatic Missions Are Being Held Together with Duct Tape and Special Envoys," National Interest , January 27, 2019. Jackson Diehl, "Mike Pompeo Swaggers His Way to Failure," Washington Post , December 9, 2018. Doyle McManus, "Almost Half the Top Jobs in Trump's State Department Are Still Empty," Atlantic , November 4, 2018. Daniel R. DePetris, "'Swagger' Doesn't Make up for Bad American Foreign Policy; An Evaluation of Mike Pompeo's Four Months on the Job," National Interest , October 2, 2018. Robbie Gramer, "Washington Blame Game Ensues as Ambassador Posts Sit Empty; The Disappearance of the Saudi Journalist Jamal Khashoggi Spotlights a Staffing Problem," Foreign Policy , October 11, 2018. Robbie Gramer, "Pompeo's Pledge to Lift Hiring Freeze at State Department Hits Big Snag," Foreign Policy , June 7, 2018. Carol Morello, "More Than 200 Former Diplomats Are Alarmed at the State of American Diplomacy," Washington Post , March 28, 2018. Stephen M. Walt, "The State Department Needs Rehab," Foreign Policy , March 5, 2018. Jack Corrigan, "State Department Lost 12% of its Foreign Affairs Specialists in Trump's First 8 Months," Defense One , February 12, 2018. Dan De Luce and Robbie Gramer, "State Department, USAID Face Drastic Budget Cut," Foreign Policy , February 12, 2018. Carol Morello, "Foreign Aid Cuts Proposed, But 'Friends' Might Be Protected," Washington Post , February 12, 2018. Jack Corrigan and Government Executive, "The Hollowing Out of the State Department Continues," Atlantic , February 11, 2018. Gordon Adams and Robert Goldberg, "Rex Tillerson Is About to make a Terrible Mistake; The Knives Are Out for 'F' at the State Department. The Secretary Should Be Strengthening Rather Than Dismantling It." Foreign Policy , December 14, 2017 (the article identifies "F" a the State Department's foreign assistance planning and budgeting staff.). Dexter Filkins, "How Rex Tillerson Wrecked the State Department," New Yorker , November 30, 2017. Madeleine K. Albright, "The National Security Emergency We're Not Talking About," Washington Post , November 29, 2017. Felicia Schwartz, "Tillerson Rebuts Criticism of State Department Staff Declines," Wall Street Journal , November 28, 2017. Nicholas Burns and Ryan C. Crocker, "Dismantling the Foreign Service," New York Times , November 27, 2018. Gardiner Harris, "Diplomats Sound the Alarm as They Are Pushed Out in Droves," New York Times , November 24, 2017. Editorial Board, "The Trump Administration Is Making War on Diplomacy," New York Times , November 18, 2017. Carol Morello, "State Department's Plan for Staff Cuts Causing New Worry in Congress," Washington Post , November 15, 2017. Abigail Tracy, "'Total Bulls**t': Ex-Staffers Say Tillerson's 'Disdain' Is Killing the State Department," Vanity Fair , November 14, 2017. [The "**" was inserted by CRS. In the original article, the word is spelled out.] Jason Zengerle, "Rex Tillerson and the Unraveling of the State Department," New York Times , October 17, 2017. Kevin Quealy, "'The Lowest-Profile State Department in 45 Years,' in 2 Charts," New York Times , August 1, 2017. Robbie Gramer, Dan De Luce, and Colum Lynch, "How the Trump Administration Broke the State Department," Foreign Policy , July 31, 2017. Roger Cohen, "The Desperation of Our Diplomats," New York Times , July 28, 2017. Colum Lynch, "Tillerson to Shutter State Department War Crimes Office," Foreign Policy , July 17, 2017. Steven Erlanger and Julie Hirschfeld Davis, "Once Dominant, the United States Finds Itself Isolated at G-20," New York Times , July 7, 2017. Colum Lynch, "Trump's Budget Blueprint: Pulling Up the Diplomatic Drawbridge," Foreign Policy, March 16, 2017. Nicholas Burns, "Trump's Cuts Would Cripple the Country's Diplomats When We Need Them Most," Washington Post, March 3, 2017. For more on the State Department and U.S. foreign assistance programs, see, for example, CRS Report R45203, U.S. Department of State Personnel: Background and Selected Issues for Congress , by Cory R. Gill, and CRS Report R45168, Department of State, Foreign Operations and Related Programs: FY2019 Budget and Appropriations , by Susan B. Epstein, Marian L. Lawson, and Cory R. Gill. Citations for Footnote 18 See, for example: Uri Friedman, "The President of the United States Asks, 'What's an Ally?'" Atlantic , October 15, 2018. Philip Gordon and Ivo Daalder, "Trump's Biggest Gift to Putin; Qualifying and Conditioning the Notion of NATO's Defense Guarantee Is a Major Step on the Path to Abandoning It," Atlantic, July 19, 2018. Eileen Sullivan, "Trump Questions the Core of NATO: Mutual Defense, Including Montenegro," New York Times, July 18, 2018. Ezra Klein, "Why is Trump Undermining NATO and the EU? He Just Told Us." Vox, July 13, 2018. Uri Friedman, "Trump vs. NATO: It's Not Just About the Money; The President's Emphasis on Spending Obscures a Much Deeper Skepticism of Alliances," Atlantic, July 12, 2018. Ivan Krastev, "Sorry, NATO. Trump Doesn't Believe in Allies." New York Times, July 11, 2018. Alex Ward, "Trump Blasted US Allies Within Minutes of Arriving at NATO Summit," Vox, July 11, 2018. Paul Waldman, "Will Trump Destroy NATO and Every Other American Alliance?" Washington Post, July 9, 2018. Krishnadev Calamur, "Trump Keeps His Friends Distant and His Enemies Closer," Atlantic, July 4, 2018. John Hudson, Paul Sonne, Karen DeYoung, and Josh Dawsey, "U.S. Assessing Cost of Keeping Troops in Germany as Trump Battles with Europe," Washington Post, June 29, 2018. Jay Nordlinger, "Trump, and Us, in the World," National Review, June 29, 2018. Robbie Gramer, "Ahead of NATO Summit, U.S. President Exhorts Allies to Pay Up," Foreign Policy, June 27, 2018. Ashley Parker, "Going It Alone: Trump Increasingly Relies on Unilateral Action to Wield Power," Washington Post, June 11, 2018. Susan B. Glasser, "Under Trump, 'America First' Really Is Turning Out To Be America Alone," New Yorker, June 8, 2018. Fred Kaplan, "The Free World's Landlord; Trump's Persistent Attacks on NATO Can Only Undermine America's Economy and Security," Slate, December 12, 2017. Citations for Footnote 22 See, for example: Ben Rhodes, "A Fatal Abandonment of American Leadership; The Disappearance of Jamal Khashoggi Drives Home the Consequences of the Trump Administration's Refusal to Champion Democratic Values Around the Globe," Atlantic , October 12, 2018. David A. Graham, "The End of American Lip Service to Human Rights; The Administration's Reticence About the Disappearance of a Saudi Journalist Is Offensive, But It's Also Clarifying," Atlantic , October 12, 2018. Krishnadev Calamur, "Nikki Haley's Concern for Human Rights Only Went So Far; The Outgoing U.S. Ambassador to the UN Criticized U.S. Allies Like Saudi Arabia, But Also Pulled Out of the UN Human Rights Council," Atlantic , October 9, 2018. Thomas Carothers, "Can U.S. Democracy Policy Survive Trump?" Carnegie Endowment for International Peace, October 1, 2018. Abby Bard, "Trump's UN Speech Hurts America and the International System; America Threatens to Let Everyone Fend for Themselves," National Interest , September 26, 2018. David A. Andelman, "Trump Presides Over a Global Sunset to Democracy," CNN , June 18, 2018. Joshua Keating, "Under Trump, the U.S. Is Becoming More of a Human Rights Outlaw," Slate , June 5, 2018; Robbie Gramer, "Human Rights Groups Bristling at State Department Report; What's Not in the Report Is As Important As What's In It," Foreign Policy , April 21, 2018. Josh Rogin, "The Trump Administration Wants to Dismantle Ronald Reagan's 'Infrastructure of Democracy,'" Washington Post , March 4, 2018. Richard Fontaine and Daniel Twining, "Defending America Means Defending Democracy," Foreign Policy , February 13, 2018. Adrian A. Basora and Kenneth Yalowitz, "The Trump Team Is Underestimating the Power of Democracy," National Interest , January 28, 2018. Nahal Toosi, "Leaked Memo Schooled Tillerson on Human Rights; A Tutorial from Policy Aide Brian Hook Followed the Secretary of State's Controversial Remarks About Balancing U.S. Values and Interests," Politico , December 19, 2017. Dominic Tierney, "'Human Rights Are Largely Irrelevant to the Emerging Trump Doctrine,'" Atlantic ," November 14, 2017. Editorial Board, "Trump Loves Human Rights—When Convenient," Washington Post , November 14, 2017. Stephen M. Walt, "Trump Isn't Sure If Democracy Is Better Than Autocracy; America's President Is Voluntarily Abdicating One of the Country's Biggest Strategic Advantages," Foreign Policy , November 13, 2017. Sarah Wildman, "'America First' Means Human Rights Last During Trump's Visit to Asia," Vox , November 8, 2017. Michael H. Fuchs, Shannon McKeown, and Brian Harding, "If Trump Forgets About Human Rights in Asia, the World Will Suffer," Foreign Policy , November 2, 2017. Justin Worland, "Trump Administration Says It doesn't Want to 'Yell About' Human Rights," Time , November 2, 2017. Joshua Keating, "Wait, Does the Trump Administration Care About Human Rights Now?" Slate , August 23, 2017. Rukmani Bhatia, "Quietly Erasing Democracy Promotion at the U.S. State Department," Freedom House, August 8, 2017. Josh Rogin, "State Department Considers Scrubbing Democracy Promotion from Its Mission," Washington Post , August 1, 2017. Karen DeYoung, "Trump Takes a Selective Approach to the Promotion of Human Rights," Washington Post , April 25, 2017. Doyle McManus, "Has the United States Abandoned Its Commitment to Human Rights?" Los Angeles Times , April 5, 2017. Shannon N. Green, "When the U.S. Gives Up on Human Rights, Everyone Suffers," Foreign Policy , April 4, 2017. Peter Baker, "For Trump, a Focus on U.S. Interests and a Disdain for Moralizing," New York Times , April 4, 2017. See also: Paul R. Pillar, "The U.S.-Canadian Relationship Must Remain Strong; The White House's Treatment of Canada Is Deeply Disturbing," National Interest , August 14, 2018. Ashifa Kassam, "'We Don't Have a Single Friend': Canada's Saudi Spat Reveals Country is Alone; As Saudi Officials Lashed Out at Canada, the US Remained on the Sidelines, Signaling a Blatant Shift in the Relationship," Guardian , August 11, 2018. Joshua Keating, "The Administration's Infuriating Both Sides-ing of the Canada-Saudi Arabia Dispute," Slate , August 8, 2018; Jonathan Lemire and Matthew Pennington, "AP Analysis: Trump Retreats from US Moral Leadership Stance," Associated Press , June 12, 2018. Citations for Footnote 23 See, for example: Colum Lynch, "In Parting Shot, Nikki Haley Shuns Human Rights Groups at U.N.; She Fashioned Herself a Human Rights Champion but Routinely Clashed with Potential Allies over the Human Rights Council," Foreign Policy , October 11, 2018. Krishnadev Calamur, "Nikki Haley's Concern for Human Rights Only Went So Far; The Outgoing U.S. Ambassador to the UN Criticized U.S. Allies Like Saudi Arabia, But Also Pulled Out of the UN Human Rights Council," Atlantic , October 9, 2018. For more on the United Nations Human Rights Council, including the U.S. withdrawal, see, for example: CRS In Focus IF10861, Global Human Rights: Multilateral Bodies & U.S. Participation , by Michael A. Weber. CRS Report RL33608, The United Nations Human Rights Council: Issues for Congress , by Luisa Blanchfield. Citations for Footnote 26 See, for example: William Saletan, "Trump Is More Loyal to Dictators Than to the U.S.; His Lies About Jamal Khashoggi's Murder Are a Threat to National Security." Slate , December 4, 2018. Emily Stewart, "Trump Says He and Kim Jong Un 'Fell in Love' over Denuclearization Letters; The President's Public Admiration of Brutal Dictators and Strongmen Continued at a Rally in West Virginia," Vox , September 30, 2018. Marc Santora and Joanna Berendt, "Poland's Leader Finds an Ally in Trump, Even as He Brings Courts to Heel," New York Times , September 17, 2018. Patrick Kingsley, "Hungary's Leader Was Shunned by Obama, but Has a Friend in Trump," New York Times , August 15, 2018. Krishnadev Calamur, "Trump Keeps His Friends Distant and His Enemies Closer," Atlantic , July 4, 2018. Edward-Isaac Dovere, "Donald Dreams of Dictators," Politico , June 15, 2018. Philip Rucker, "'Dictator Envy': Trump's Praise of Kim Jong Un Widens His Embrace of Totalitarian Leaders," Washington Post , June 15, 2018. Jack Crowe, "Trump Downplays Kim's Brutality, Says 'A Lot of People' Are Guilty of Atrocities," National Review , June 13, 2018. Ishaan Tharoor, "Trump's Affinity for Dictators over Democrats," Washington Post , June 12, 2018. William Saletan, "Trump's Favorite Animals," Slate , May 23, 2018. Fred Hiatt, "McMaster Warned Against Officials Who 'Glamorize and Apologize' for Dictators. Hmm." Washington Post , April 8, 2018. Krishnadev Calamur, "Nine Notorious Dictators, Nine Shout-Outs From Donald Trump," Atlantic , March 4, 2018. Zack Beauchamp, "Trump Is Embracing a New Generation of Strongmen," Vox , February 27, 2018. Zack Beauchamp, "A Top Adviser Says the Leaders Trump 'Most Admires' Are All Authoritarians," Vox , December 14, 2017. Editorial Board, "President Trump's Thing for Thugs," New York Times , November 13, 2017. Jay Nordlinger, "The American President and American Values," National Review , November 13, 2017. Krishnadev Calamur, "Trump's Gratitude for the 'Bad Guys,'" The Atlantic , August 11, 2017. Michael Gerson, "Trump's Embrace of Strongmen is a Very Bad Strategy," Washington Post , June 22, 2017. Anne Applebaum, "How Trump Makes Dictators Stronger," Washington Post , May 4, 2017. Philip Rucker, "Trump Keeps Praising International Strongmen, Alarming Human Rights Advocates," Washington Post , May 1, 2017. Citations for Footnote 27 See, for example: Jeffrey, "U.S. Foreign Policy in Free Fall; The Direct Damage to the Reputation of the United States Has Never Been More Substantial," National Interest , January 24, 2019. Jake Sullivan, "What Donald Trump and Dick Cheney Got Wrong About America," Atlantic , January/February 2019. Dana Milbank, "It's Official. We Lost the Cold War." Washington Post , December 21, 2018. Carolyn Kormann, "How the U.S. Squandered Its Leadership at the U.N. Climate Conference," New Yorker , December 15, 2018. Joseph Curtin, "Trump Has Officially Ruined Climate Change Diplomacy for Everyone; The Evidence Is In: the Paris Agreement Doesn't Work Without the United States." Foreign Policy , December 12, 2018. David Pring-Mill, "Trump Is Failing on Human Rights; It Is Time to Restore Truth and Moral Clarity in the White House," National Interest , December 11, 2018. Jennifer Rubin, "Trump's Not Winning Anything, Anywhere," Washington Post , December 3, 2018. Stephen M. Walt, "Trump's Problem in Europe Isn't Optics; The President's Latest Trip Was a Disaster—But Not Because He Acted Like a Boorish Bully." Foreign Policy , November 14, 2018. Robin Wright, "Trump Completes a Shameful Trip to Paris, Just As He Needs the Global Stage," New Yorker , November 12, 2018. Abby Bard, "Trump's UN Speech Hurts America and the International System; America Threatens to Let Everyone Fend for Themselves," National Interest , September 26, 2018. Michael Gerson, "Trump Is Smashing the Hopes of Oppressed People Everywhere," Washington Post , July 19, 2018. Susan B. Glasser, "'No Way to Run a Superpower': The Trump-Putin Summit and the Death of American Foreign Policy," New Yorker , July 19 2018. Will Inboden, "How Much Damage Did Trump Cause in Helsinki?" Foreign Policy , July 19, 2018. Ishaan Tharoor, "Is Trump at War with the West?" Washington Post , July 18, 2018. Rich Lowry, "Trump's Helsinki Discord; His Dismaying Comments Undercut the Country He Leads." National Review , July 17, 2018. Zack Beauchamp, "Donald Trump, Vladimir Putin, and America's 'Geopolitical Suicide'; the Trump-Putin Meeting Reveals How Trump Is Killing American Power," Vox , July 16, 2018. David Brooks, "The Murder-Suicide of the West; Trump Forcefully Caps Off Years of Deterioriation in European-American Ties," New York Times , July 16, 2018. Abigail Tracy, "'Appalling,' 'A Mess,' 'Nothing Short of Cowardly': Washington Insiders Reel As Trump Caves to Putin in Helsinki," Vanity Fair , July 16, 2018. Amy Zegart, "The Self-Inflicted Demise of American Power; The Effect of Trump's Foreign-Policy Doctrine Can Be Summed Up as 'Make America Weak Again,'" Atlantic , July 12, 2018. Anne Applebaum, "Trump Hates the International Organizations That Are the Basis of U.S. Wealth, Prosperity and Military Power," Washington Post , July 2, 2018. Jonathan S. Tobin, "Trump's G-7 Debacle: The Downside to 'America First'; Does Trump want an end to the Western alliance?" National Review , June 11, 2018. Michael Mandelbaum, "America's Global Role in Question," American Interest , March 26, 2018. Julie Smith, "At the Munich Security Conference, the United States Lacked Bravery and Leadership," Foreign Policy , February 20, 2018. Fred Kaplan, "Don't Know What You've Got Til It's Gone; America's Retreat from the World Under Trump Has Shown Why We're Still the Indispensable Nation," Slate , January 19, 2018. John R. Schindler, "The Year American Hegemony Ended," Observer , December 31, 2017. Richard Haass, "America and the Great Abdication; Don't Mistake Donald Trump's Withdrawal from the World for Isolationism," Atlantic , December 28, 2017. Laura Zhou and Viola Zhou, "Donald Trump's Early East Asia Summit Exit Casts Doubt Over US Ties to Asia," South China Morning Post , November 14 (updated November 15), 2017. Adam Davidson, "How Trump Is Quietly Dismantling the Architecture of Global Governance," New Yorker , November 10, 2017. Robert Delaney, "Donald Trump Has Ceded Global Leadership to China, Says Nixon Trip Aide," South China Morning Post , November 9, 2017. "America's Global Influence Has Dwindled Under Donald Trump," Economist , November 9, 2017. Fred Kaplan, "Lost in Asia; Trump's Trip Shows What Happens When a World Leader Is Set Adrift in the World with No Strategy or Goals." Slate , November 8, 2017. Josef Joffe, "Donald Trump and the Future of U.S. Power; The President Underestimates the Unique Genius of Postwar American Grand Strategy: That by Serving Others' Interests, the United States Has Also Served Its Own." American Interest , November 3, 2017. Eliot A. Cohen, "How Trump Is Ending the American Era," The Atlantic , October 2017. Hal Brands, "How to Diminish a Superpower: Trump's Foreign Policy After Six Months," War on the Rocks , August 1, 2017. Robert J. Samuelson, "Trump's Extraordinary Surrender of Power," Washington Post , July 9, 2017. Tom Malinowski, "What America Stood For," The Atlantic , March 25, 2017. Alissa J. Rubin, "Allies Fear Trump Is Eroding America's Moral Authority," New York Times , March 10, 2017. Colin Kahl and Hal Brands, "Trump's Grand Strategic Train Wreck," Foreign Policy , January 31, 2017. Richard Stengel, "The End of the American Century," The Atlantic , January 26, 2017. Citations for Footnote 29 See, for example: Nahal Toosi, "Even Skeptics Winder: Does Trump Deserve Some Foreign Policy Credit?" Politico , February 5, 2019. Richard Fontaine, "U.S.-India Relations: The Trump Administration's Foreign Policy Bright Spot," War on the Rocks , January 24, 2019. Michael Auslin, "Trump's Successful Pivot to Asia; America's Regional Allies Are Relieved to Learn That the U.S. Isn't Going Anywhere—for Now." Wall Street Journal , January 15, 2019. Greg R. Lawson, "America's Old School Foreign Policy Ways Must Change; Washington's Policy Elites Are Determined to Mire America Down in a Morass of Multiple Distractions in Peripheral Theaters. Donald Trump Wants to Change Their Boorish Ways." National Interest , January 9, 2019. Jon Finer and Robert Malley, "Trump Is Right to Seek an End to America's Wars," New York Times , January 8, 2019. David J. Lynch, "Trump a Global Loner, Finds His China Trade War Complaints Draw a Crowd," Washington Post , December 14, 2018. Greg Autry, "Trump's China Policy Is a Triumph; The President's Trade War Is Bringing Beijing to Heel." Foreign Policy , November 28, 2018. Rebeccah L. Heinrichs, "Decisive, Disruptive, and Overdue: The Trump Foreign Policy," Hudson Institute, November 1, 2018. Richard Javad Heydarian, "Trump is Forcing China to Reassess its Strategy," National Interest , October 20, 2018. Steven W. Mosher, "Trump Has China Quaking in its Boots," New York Post , October 6, 2018. Krishnadev Calamur, "Trump Is Winning on Trade; The World Might Protest, But Ultimately Countries Have to Deal with the U.S.," Atlantic , October 1, 2018. Damian Paletta and Erica Werner, "Trump Says USMCA Trade Deal with Mexico and Canada Proves Tough Talk and Tariffs Work," Washington Post , October 1, 2018. Salvatore Babones, "Trump's Foreign Policy Successes Show Principled Realism in Action; Trump Has Overcome Internal Resistance and External Pressure to Deliver a Strong of Foreign Policy Successes," National Interest , September 26, 2018. Brett D. Schaefer, "President Trump at the UN: An Unapologetic Defense of 'Principled Realism'; Donald Trump's United Nations Speech Took Stock of the Results of Eighteen Months of 'Principled Realism' in American Foreign Policy. The Record of Achievement Is Surprisingly Strong." National Interest , September 26, 2018. Marc A. Thiessen, "Chaos or Not, Trump Is Racking Up a Record of Foreign Policy Success," Washington Post , September 18, 2018. Randall Schweller, "Three Cheers for Trump's Foreign Policy," Foreign Affairs , September/ October 2018: 133-143. Daniel R. DePetris, "Great Expectations: Trump in Helsinki; Is This the Start of a Russian Reconciliation?" National Interest , July 16, 2018. Harry J. Kazianis, "The Coming American-Russian Alliance Against China," American Conservative , July 16, 2018. Washington Examiner, "Trump's Diplomatic Belligerence," Washington Examiner , July 12, 2018. Edwin Feulner, "President Donald Trump and the New International Order," Heritage Foundation, June 15, 2018. Conrad Black, "Trump's North Korean Policy Is Succeeding; He Has Secured Kim Jong-un's Acquiescence to the Agreed Objective." National Review , June 13, 2018. Scott Simon, "A Perspective From A Pro-Trump Political Science Professor," NPR , June 9, 2018. (Interview with Randall Schweller.) Raymond Tanter and Ivan Sascha Sheehan, "Trump's Foreign Policy Plans Put America First," National Interest , May 1, 2018. Jonathan S. Tobin, "Trump Is Still the Leader of the Free World; Despite His Faults, His Realism on the Threat from Tehran Makes Him, and Not Macron or Merkel, the True Defender of the West." National Review , April 30, 2018. Stephen M. Walt, "Has Trump Become a Realist? America Finally Has a President Who Grasps the Basic Logic of Offshore Balancing in the Middle East." Foreign Policy , April 17, 2018. Christian Whiton, "China Gets Trumped," National Interest , April 5, 2018. Bruno Macaes, "The Trump Doctrine," American Interest , March 29, 2018. Josh Rogin, "The United States Is Finally Confronting China's Economic Aggression," Washington Post , March 25, 2018. Carol Morello, "Head of USAID Defends Big Cuts in Foreign Aid Budget," Washington Post , March 21, 2018. James Jay Carafano, "Inside Trump's National Security Team: Unmasking Captain Chaos," National Interest , March 7, 2018. Thitinan Pongsudhirak, "Trump Puts America Back in Asia," Daily Star , February 21, 2018. Jeremy Hobson, "President Trump's Policies Mark 'Return To Realist Principles,' Scholar Says," WBUR, January 29, 2018. (Interview with Randall Schweller.). Nile Gardiner, "Far from Being the Disaster His Critics Predicted, President Trump's World Strategy Is to Lead from the Front," Telegraph (UK) , January 15, 2018. Zack Beauchamp, "The Case for Trump's Foreign Policy, According to a Leading International Relations Scholar," Vox , January 11, 2018. (Reports on views of Randall Schweller.). Andrew Exum, "What Trump Got Right in Foreign Policy in 2017," Atlantic , January 4, 2018. Walter Russell Mead, "Trump Brings Foreign Policy Back to Earth," Wall Street Journal , November 29, 2017. Joseph Bosco, "Trump's 'Principled Realism,'" Real Clear Defense , September 21, 2017. See also Dmitri K. Simes, "A Trump Foreign Policy; With the Right Mix of Hard and Soft Power Coupled with Skillful Diplomacy, Trump Can Still Achieve Major Successes." National Interest , June 17, 2018. James Jay Carafano, "The Real Meaning Behind Trump's UN Speech," National Interest , September 20, 2017. Nile Gardiner, "At the UN, Trump Ends the Era of Leading From Behind," Heritage Foundation , September 20, 2017. Jonathan S. Tobin, "Trumpian Rhetoric and U.S. Imperatives," National Review , September 20, 2017. Eliott Abrams, "Trump's Successful U.N. Speech," National Review , September 19, 2017. James Roberts and Brett Schaefer, "An Overhaul of America's Foreign Assistance Programs Is Long Overdue," Heritage Foundation , September 19, 2017. Tom Rogan, "Trump's UN Speech Was A Grand Slam," Washington Examiner , September 19, 2017. Stephen M. Walt, "What Trump Got Right About Foreign Policy," Foreign Policy , August 28, 2017. James Jay Carafano, "Trump and the Art of Rope-A-Dope Diplomacy," Heritage Foundation , August 14, 2017. Paul Kengor, "Trump's Excellent Speech in Poland, on Poland, and About Poland," American Spectator , July 9, 2017. Michael Barone, "Trump's 'Remarkable' Speech in Poland," Washington Examiner , July 6, 2017. Robert Charles, "Trump Speech in Poland—Reagan Is Nodding," Fox News , July 6, 2017. James P. Rubin, "Trump Is Huge in Poland. So, There's That." Politico , July 6, 2017. Brett D. Schaefer, "Trump's Budget Grasps What Congress Doesn't: America's Global Leadership Doesn't Come Free," Heritage Foundation, May 29, 2017. Theodore R. Bromund, "Donald Trump is Right To Cut the State Department's Budget," Heritage Foundation, March 27, 2017. James M. Roberts, "Why Trump's Budget Proposal for the State Department Makes Sense," Heritage Foundation, March 17, 2017. Al Mariam, "Trump's Suspicion of Foreign Aid to Africa Is Right on The Money" The Hill , March 9, 2017. James M. Roberts, "The US Needs a New Foreign Aid Model," Heritage Foundation, March 7, 2017. Randall L. Schweller, "A Third-Image Explanation for Why Trump Now: A Response to Robert Jervis' 'President Trump and IR [international relations] Theory," ISSF Policy Series , February 8, 2017. Brett D. Schaefer, "Trump's Plan to Reduce UN Spending Is a Step in the Right Direction," Heritage Foundation, February 2, 2017. Citations for Footnote 30 See, for example: Henry R. Nau, "Return of the Balance of Power; But the Problem Is Neither Nationalism nor Globalism. In Today's World, the Two Are Complementary." National Interest , October 18, 2018. Ted Galen Carpenter, "Where Is Trump's Alleged Isolationism? If You Look At His Actions and Not His Words, You Won't Find It." National Interest , October 9, 2018. Dalibor Rohae, "The New NAFTA Shows Trump's Protectionism Can Be Curbed," American Enterprise Institute, October 2, 2018. Reid Standish, "Europe Should Look to What the United States Does—Not What Trump Says," Foreign Policy , August 3, 2018. James Kirchick, "Trump Wants to Destroy the World Order. So What? Whatever the President's Intentions, His Efforts to Rock the Foundation of International Politics Are Hopeless," Foreign Policy , July 26, 2018. Noah Bierman, "Trump Talks Tough, But After 15 Months, He's Actually Been Risk Averse When It Comes To Military Force," Task and Purpose , April 30, 2018. Stephen M. Walt, "Trump's Sound and Fury Has Signified Nothing, The President's Style Has Been Unique, But the Substance of His Foreign Policy Is Surprisingly Familiar," Foreign Policy , January 30, 2018. Gerald F. Seib, "Trump's 'America First' Message Is a Case of Rhetoric vs. Reality—So Far," Wall Street Journal , January 22, 2018. Christopher A. Preble, "The World Is Reacting to Trump's Words—Not His Actions," National Interest , January 10, 2018. David Gordon and Michael O'Hanlon, "President Trump's Twitter-Fueled Foreign Policy: Not As Bad As You Might Think," USA Today , January 5, 2018. Curt Mills, "Can America's Foreign Policy Be Restrained?" National Interest , December 12, 2017. Jacob Heilbrunn, "Is Trump Really a Foreign-Policy Populist?; We Haven't Seen the Sharp Realignment You'd Have Expected from the Campaign." National Interest , November 30, 2017. Uri Friedman, "What's Dangerous About Donald Trump's Foreign Policy? His Unorthodox Approach Has Frightened Some Observers. But It's His More Conventional Moves That Have Cost the Most Lives." Atlantic , November 26, 2017. Curt Mills, "A Year on, Foreign Policy Restrainers Assess the Trump Administration," National Interest , November 7, 2017. Brett D. Schaefer, "Trump's "Rocketman" Speech Marked a Welcome Return to Assertive U.S. Foreign Policy," Heritage Foundation, September 26, 2017. David French, "A Donald Trump Speech, a Barack Obama Foreign Policy," National Review , September 19, 2017. Joshua Keating, "The Blob Ate Donald Trump," Slate , August 22, 2017. Andrew J. Bacevich, "The Beltway Foreign-Policy 'Blob' Strikes Back," American Conservative , May 26, 2017. Citations for Footnote 31 See, for example: Alex Ward, "Trump's China Strategy Is the Most Radical in Decades—and It's Failing," Vox , September 18, 2018. Joel Gehrke, "Pentagon Vows to 'Confront and Compete' with China," Washington Examiner , August 7, 2018. Walter Russell Mead, "The Return of James Monroe," Wall Street Journal , August 6, 2018. Diego Leiva, "The Monroe Doctrine Revival," Interpreter , February 14, 2018. Daniel P. Vajdich, "Trump Should Abide by His Own National Security Strategy," Foreign Policy , January 24, 2018. Benjamin H. Firedman, "Trump's Conventional National Security Strategy," National Interest , January 11, 2018. Philippe Le Corre and Erik Brattberg, "Trump's New Strategy Is America's Old Strategy: Gathering Allies," National Interest , January 7, 2018. Don Tse and Larry Ong, "Trump's National Security Strategy a Timely Counter to China's Expansionism," Real Clear Defense , January 4, 2018. James S. Robbins, "The National Security Strategy Will Work; It Is the Difference Between 'Leading from Behind' and Actually Leading." National Interest , December 28, 2017. Zalmay Khalilzad, "Trump Has Unveiled a Strong National Security Strategy," National Interest , December 26, 2017. Walter Russell Mead, "Trump's 'Blue Water' Foreign Policy; The Administration's New Security Strategy Is Reminiscent of Pax Britannica," Wall Street Journal , December 25, 2017. Patrick Porter, "Tradition's Quiet Victories: Trumps National Security Strategy," War on the Rocks , December 22, 2017. Niharika Tagotra, "The US National Security Strategy and Great Power Relations; The NSS Institutionalizes Trends in U.S. Engagement with Both China and India." Diplomat , December 20, 2017. Dan Blumenthal, "Trump Sets the Tone on China: America Will Not Be Challenged," The Hill , December 19, 2017. Andrew Browne, "Trump's New National-Security Policy: Paper Tiger or Hidden Dragon? Some Experts Say the Writing Is Already on the Wall for the U.S. in the Struggle for Dominance in Asia," Wall Street Journal , December 19, 2017. Editorial Board, "Trump's Security Strategy Is Sound, If He Believes It," Bloomberg , December 19, 2017. Thomas Wright, "The National Security Strategy Papers Over a Crisis; The Document Itself Is Generally Coherent. But Can the Bureaucracy Contain the President?" Atlantic , December 19, 2017. Dov Zakheim, "Two Cheers for Trump's National Security Strategy; Its Survey of the World is Mostly Accurate, but the Discussion of Domestic Policy Falls Flat," Foreign Policy , December 19, 2017. Anne Gearan, "National Security Strategy Plan Paints China, Russia as U.S. Competitors," Washington Post , December 18, 2017. Mike Green, "The NSS and the China Challenge; The President and His Team Deserve Credit for Formulating a Coherent, Cohesive Approach to Battling Beijing." Foreign Policy , December 18, 2017. Jacob Heilbrunn, "Decoding Trump's New National Security Strategy; What the Document Reveals Most Clearly is the Mental Scaffolding of the Trump Administration, Which Is to Seek American Dominance," National Interest , December 18, 2017. James Stavridis, "Trump's National Security Strategy Is Shockingly Normal; The White House's 'Four Pillars' Could Have Emerged from a Hillary Clinton Administration," Bloomberg , December 18, 2017. Patrick Tucker, "New National Security Strategy See s Rising Russia, Retreat on 'Democratic Peace,'" Defense One , December 18, 2017. For alternative reactions to the NSS, see: James Stavridis, "The Danger of Trump's National Security Plan Is In What It Doesn't Say," Time , January 11, 2018. Ian Ona Johnson and Ionut Popescu, "The Missing Element in Trump's NSS: A Competitive National Strategy," National Interest , January 2, 2018. Jeremy Maxie, "Trump's National Security Strategy: Long on Realism, Short on Geoeconomics," Diplomat , December 23, 2017. Salman Ahmed, "Trump Has Set a Scary Strategic Precedent; There's a Reason Why Other Administrations Didn't Plan National Security This Way," Foreign Policy , December 21, 2017. Richard Fontaine, "Trump Should Mind the Gaps in His National Security Strategy," War on the Rocks , December 21, 2017. Daniel Goure, "The Trump National Security Strategy in One Word: Sovereignty," Real Clear Defense , December 21, 2017. Susan E. Rice, "Susan Rice: When America No Longer Is a Global Force for Good," New York Times , December 20, 2017. Daniel W. Drezner, "A Straussian National Security Strategy; There Is a Massive Disconnect Between Trump's Speech and His National Security Strategy. Why?" Washington Post , December 19, 2017. Kori Schake, "How to Grade Trump's National Security Strategy on a Curve; Strategizing for This President Isn't Easy. But That Excuse Only Gets You So Far." Foreign Policy , December 19, 2017. Eliot A. Cohen, "Three Ways to Read Trump's National Security Strategy; Is It Better Approached as a Sacred Text, or Examined Like the Scat of a Shaggy, Woodland Beast?" Atlantic , December 18, 2017. Joshua Keating, "Trump National Security Strategy Isn't the Slightest Bit Worried About Threat of Climate Change," Slate , December 18, 2017. Fred Kaplan, "Strategic Confusion; Donald Trump's New National Security Strategy Will Baffle Allies and Delight Foes," Slate , December 18, 2017. David Frum, "A National-Security Strategy Devoid of Values," Atlantic , December 12, 2017. Citations for Footnote 38footnote 37 For press accounts of this policy, see, for example: Demetri Savastopulo, "Why Trump's America Is Rethinking Engagement with China; The More Aggressive US Approach Is Part of a Strategic Shift That Goes Well Beyond the Trade War," Financial Times , January 14, 2019. David S. Cloud, "U.S. Policy Toward China Shifts from Engagement to Confrontation," Los Angeles Times, December 31, 2018. Jun Mai, "Picking a Fight: Is Trump's Hawkish Behavior Towards China the Start of a New Cold War?; With Washington Taking a New, Profoundly Aggressive Tack in Its Dealings with Beijing, Analysts Speak of 'Active Competition with Occasional Confrontation' as the New Normal," South China Morning Post , October 17 (updated October 18), 2018. Michael C. Bender, Gordon Lubold, Kate O'Keeffe, and Jeremy Page, "U.S. Edges Toward New Cold-War Era With China; A More Hard-Nosed Stance with Beijing Is Emerging from the Trump Administration as China's Help with North Korea wanes and Trade Talks Stall," Wall Street Journal , October 12, 2018. Walter Russel Mead, "Mike Pence Announces Cold War II; The Administration Is Orchestrating a Far-Reaching Campaign Against China." Wall Street Journal , October 8, 2018. Keith Johnson, "It's No Longer Just a Trade War Between the U.S. and China; Vice Persident Pence's Fierce Attack and Allegations of Tech Spying Escalate the Conflict." Foreign Policy , October 4, 2018. Josh Rogin, "The Trump Administration Just 'Reset' the U.S.-China Relationship," Washington Post , October 4, 2018. Citations for Footnote 39 See, for example: Department of State, Advancing a Free and Open Indo-Pacific Region , Fact Sheet, November 18, 2018. Dave Majumdar, "Trump Has Big Plans for Asia. Well, More Like the 'Indo-Pacific' Region." National Interest , April 3, 2018. Jeff M. Smith, "Unpacking the Free and Open Indo-Pacific," War on the Rocks , March 14, 2018. Peter Martin, Justin Sink, and Iain Marlow, "Trump Discovers 'Indo-Pacific' on Asia Tour in Boost for India," Bloomberg , November 14, 2017. Rush Doshi, "Trump's 'Indo-Pacific Dream' Stumbles—But China Alone Won't Fill the Void," War on the Rocks , November 15, 2017. Nikhil Sonnad, "'Indo-Pacific' Is the Trump Administration's New Name for Asia," Defense One , November 8, 2017. Nirmal Ghosh, "Asia-Pacific? Think Indo-Pacific, Says the US, As It Pursues a Wider Asian Strategy," Straits Times , November 7, 2017. Louis Nelson, "In Asia, Trump Keeps Talking About Indo-Pacific," Politico , November 7, 2017. For more on the FOIP, see, for example: White House, "President Donald J. Trump's Administration is Advancing a Free and Open Indo-Pacific," July 20, 2018, accessed August 21, 2018, at: https://www.whitehouse.gov/briefings-statements/president-donald-j-trumps-administration-advancing-free-open-indo-pacific/ . Department of State, "Advancing a Free and Open Indo-Pacific," July 30, 2018, accessed August 21, 2018, at: https://www.state.gov/r/pa/prs/ps/2018/07/284829.htm . Department of State, "Briefing on The Indo-Pacific Strategy," April 2, 2018, accessed August 21, 2018, at: https://www.state.gov/r/pa/prs/ps/2018/04/280134.htm U.S. Department of State, "Remarks on 'America's Indo-Pacific Economic Vision,'" remarks by Secretary of State Michael R. Pompeo, Indo-Pacific Business Forum, U.S. Chamber of Commerce, Washington, DC, July 30, 2018. Daniel Blumenthal, "The Outlines of Trump's Asia Strategy," American Interest , November 17, 2017 "Donald Trump Still Has No Proper Asia Policy; But Asia Hands in Washington Are Not Working Against Him," Economist , September 13, 2018. Tom Switzer, "Leadership in Asia: Don't Count the U.S. Out," Strategist (ASPI) , October 19, 2017. Citations for Footnote 41 See, for example: Krishnadev Calamur, "Nikki Haley's Concern for Human Rights Only Went So Far; The Outgoing U.S. Ambassador to the UN Criticized U.S. Allies Like Saudi Arabia, But Also Pulled Out of the UN Human Rights Council," Atlantic , October 9, 2018. Edwin J. Feulner, "'Moral Clarity Becomes a Casualty of the Need to Placate Tyrants,'" Heritage Foundation, July 25, 2018. Theodore R. Bromund, "U.S. Right to Quit Human Rights Panel," Heritage Foundation, June 26, 2018. Brett D. Schaefer, "America Is Right to Leave the UN Human Rights Council," Heritage Foundation, June 22, 2018. Jimmy Quinn, "America's Withdrawal from the UNHRC Is a Win for Human-Rights Promotion; There's More to Be Gained at the U.N. by Sidelining Dictators Through Structural Reform Than by Abetting Their Treachery Through Acquiescence." National Review , June 21, 2018. Brett D. Schaefer, "U.S. Withdrawal From the UN Human Rights Council Is the Right Decision," Heritage Foundation, June 21, 2018. Brett D. Schaefer, "U.S. Makes the Right Call to Quit UN Human Rights Council," Heritage Foundation, June 19, 2018. "Relative Moralism; Unnoticed by Donald Trump, the Government He Heads is Still Promoting Democracy and Human Rights in the World," Economist , December 9, 2017: 32, 34. Citations for Footnote 43 See, for example: Joe Scarborough, "Trump is Harming the Dream of America More Than Any Foreign Adversary Ever Could," Washington Post , September 10, 2018. Victor Davis Hanson, "Peter Beinart's Amnesia; NATO's Problems, Putin's Aggression, and American Passivity Predate Trump, Who Had My Vote in 2016 — a Vote I Don't Regret." National Review , July 17, 2018. Robert Kagan, "Things Will Not Be Okay," Washington Post , July 12, 2018. Paul Miller, "Reassessing Obama's Legacy of Restraint," War on the Rocks , March 6, 2017. John Vinocur, "Obama's European Legacy," Wall Street Journal , May 29, 2017. Thomas Donnelly, "Retreat from Reliability," Weekly Standard , June 12, 2017. Eli Lake, "Obama Choked on Russia Long Before the 2016 Election," Bloomberg , June 27, 2017. Lawrence J. Haas, "Encouraging Putin's Recklessness, From Obama to Trump, Washington's Muddled Response to Russia's Behavior Has Left Putin Emboldened," U.S. News & World Report , June 27, 2017. James Kirchick, "Why It's Hard to Take Democrats Seriously on Russia," Politico , July 24, 2017 Paul Miller, "Reassessing Obama's Legacy of Restraint," War on the Rocks , March 6, 2017. For articles predating the start of the Trump Administration that make similar arguments, see, for example: Kenneth R. Weinstein, "Brexit Has Nothing on Obama's Global Amexit," Wall Street Journal , July 6, 2016. Fred Hyatt, "The U.S. Steps Back from the World Stage, and the Consensus for Leadership Dissolves," Washington Post , July 31, 2016. Lee Smith, "Who Lost NATO?" Weekly Standard , August 1, 2016. Charles Krauthammer, "The Price of Powerlessness," Washington Post , August 18, 2016. William A. Galston, "Obama's Toothless Foreign Policy," Wall Street Journal , September 6, 2016. John Hannah, "Russia's Middle East Offensive," Foreign Policy , September 13, 2016. Anders Fogh Rasmussen "The United States Must Be the World's Policeman," Wall Street Journal , September 20, 2016. Daniel Henninger, "Aleppo Is Obama's Sarajevo," Wall Street Journal , October 5, 2016. Charles Krauthammer, "The Stillborn Legacy of Barack Obama," Washington Post , October 6, 2016. Benjamin Runkle, "First as Tragedy, Then as Farce: The Echoes of Woodrow Wilson in Barack Obama's Foreign Policy," Foreign Policy , October 19, 2016. Frederic C. Hof, "Russia and Risk: Who is Answerable?" Atlantic Council, November 1, 2016. Leon Wieseltier, "Aleppo's Fall Is Obama's Failure," Washington Post , December 15, 2016. Stephen F. Hayes, "Obama's Syria Legacy Is a Betrayal of 'Who We Are,'" Weekly Standard, December 21, 2016. Asle Toje, "A Sad Metaphor," American Interest , December 21, 2016. Leonid Bershidsky, "The U.S. Is Now a Country That Can Be Ignored," Bloomberg , December 21, 2016. Uri Friedman, "Obama: Reaching Out to Adversaries, Alienating Allies," Atlantic , December 31, 2016. See also: Victor Davis Hanson, "Was the Pre-Trump World Normal or Abnormal?" National Review , August 21, 2018. J.J. McCullough, "Does the World Actually Want American Leadership?; Only When It Follows European Priorities." National Review , June 11, 2018. Citations for Footnote 46 See, for example: Jacob Heilbrunn, "Donald Trump's Real Foreign Policy Has Arrived," National Interest , February 9, 2019. Eileen Sullivan, "Trump Calls His Intelligence People 'Naïve' After They Disagree With Him," New York Times , January 30, 2019. John Wagner and Shane Harris, "Trump Blasts U.S. Intelligence Officials, Disputes Assessments on Iran and Other Global Threats," Washington Post , January 30, 2019. Katie Bo Williams, "Trump Renews Attacks on US Intelligence Community for Contradicting Him," Defense One , January 30, 2019. Shane Harris, "Testimony by Intelligence Chiefs on Global Threats Highlights Differences with President," Washington Post , January 29, 2019. Rebecca Morin and Nahal Toosi, "U.S. Intelligence Chief Breaks with Trump on North Korea, Iran, ISIS," Politico , January 29, 2019. David E. Sanger and Julian E. Barnes, "On North Korea and Iran, Intelligence Chiefs Contradict Trump," New York Times , January 29, 2019. Patrick Tucker, "Intelligence Chiefs Diverge From Trump On Main Threats to US," Defense One , January 29, 2019. Peter Baker, "U.S. Policy on Russia? Trump and His Team Might Give Different Answers," New York Times , January 20, 2019. Alex Ward and Jennifer Williams, "Who Speaks for American Foreign Policy? No One Knows Who to Listen to When the Trump Administration Talks About US Aims Around the World." Vox , January 8, 2019. Kevin Baron, "Trump Just Killed His Own Defense Strategy," Defense One , January 3, 2019. Ted Galen Carpenter, "Why Trump's Advisors Keep Quashing His Realist Aims; Donald Trump Has Time and Again Allowed His Advisors to Talk Him Out of His Realist Foreign-Policy Positions," National Interest , January 2, 2019. Kori Schake, "Trump Doesn't Need a Second 'Solarium,'" Atlantic , October 30, 2018. Stephen Tankel, "Has Trump Read His Own Counterterrorism Strategy? The President's Views Don't Seem to Line Up with Those of His Team." Foreign Policy , October 12, 2018. Aaron Blake, "What Putin Whispers in Trump's Ear," Washington Post , September 19, 2018. Curt Mills, "The Rise of John Bolton; John Bolton, National Security Advisor, Appears to Be Charting a Foreign Policy Course of His Own," National Interest , September 14, 2018. Mark Landler, "Bolton Expands on His Boss's Views, Except on North Korea," New York Times , September 10, 2018. Zack Cooper, "A Tale of Two Asia Policies," War on the Rocks , September 7, 2018. Helene Cooper and Julian E. Barnes, "U.S. Officials Scrambled Behind the Scenes to Shield NATO Deal From Trump," New York Times , August 9, 2018. Amanda Macia, "Trump and Defense Secretary Mattis Often Appear at Odds on Key Policies. Here's a Breakdown of Their Differences," CNBC , July 31, 2018. Fred Kaplan, "The 'Reverse Kissinger' Theory of Trump and Putin Doesn't Hold Up," Slate , July 27, 2018. Uri Friedman, "Secretary of a State of Confusion," Atlantic , July 26, 2018. Robin Wright, "The Trump Administration Struggles to Defend Its Unruly Foreign Policy," New Yorker , July 26, 2018. Nahal Toosi and Stephanie Murray, "Trump Team Tries to Show Spine on Russia," Politico , July 25, 2018. Bryan Bender, "Pompeo, Mattis on Cleanup Duty After Trump Diplomatic Blowups," Politico , July 24, 2018. Abigail Tracy, "'There Is a Reason We Tried to Kill This': After Helsinki, The Deep State Fears Trump Cannot Be Saved," Vanity Fair , July 19, 2018. Amy Cheng and Humza Jilani, "Trump on Putin: The U.S. President's Views, In His Own Words; A History of Contradictory Statements from 2015 to the Present," Foreign Policy , July 18, 2018. David Nakamura and Carol Morello, "'To What End?': Trump's Disruptive Diplomacy Inspires Fears Over U.S. Standing Abroad," Washington Post , July 17, 2018. Missy Ryan and Carol Morello, "No One Can Explain What Trump's Russia Summit Means, Not Even the U.S. Government," Washington Post , July 17, 2018. Ashley Parker, "'Very Much Counter to the Plan,' Trump Defies Advisers in Embrace of Putin," Washington Post , July 16, 2018. Mark Landler and Julie Hirschfield Davis, "Trump Opens His Arms to Russia. His Administration Closes Its Fist," New York Times , July 14, 2018. Rebecca Ballhaus and Laurence Norman, "Trump Reaffirms Commitment to NATO After Strained Emergency Meeting; President Says It Is 'Unnecessary' for the U.S. to Withdraw After Demanding That Allies Immediately Meet Military-Spending Goal," Wall Street Journal , July 12, 2018. David M. Herszenhorn and Lili Bayer, "Trump's Whiplash NATO Summit; President Says US Can Go It Alone If Allies Don't Meet Spending Target," Politico , July 12, 2018. David M. Herszenhorn, "Trump at NATO: From 'Sad' to 'Tremendous,'" Politico , July 11, 2018. Philip Rucker and Ashley Parker, "Confusion and Squabbling Undermine Trump's Steps Forward on the World Stage," Washington Post , May 20, 2018. Dion Nissenbaum, "In His Foreign Policy, Trump Values Action Over D.C.'s Caution," Wall Street Journal , May 9, 2018. Jonah Goldberg, "Trump's Message to Syria Is a Muddled One; The Strike on Syria Was the Right Call, But the Reason Why Is More Unclear." National Review , April 18, 2018. Greg Jaffe, John Hudson, and Philip Rucker, "Trump, A Reluctant Hawk, Has Battled His Top Aides on Russia and Lost," Washington Post , April 15, 2018. Emily Tamkin and Robbie Gramer, "Will the Real Trump Russia Policy Please Stand Up?" Foreign Policy , April 2, 2018. Brian Bennett, "McMaster Caught in the Middle as Mattis and Tillerson Maneuver to Constrain Trump on National Security Issues," Los Angeles Times , March 4, 2018. Dave Majumdar, "Is McMaster Breaking with Trump's Foreign Policy Vision?" National Interest , February 26, 2018. Andrew Exum, "The Burden of Trump's National-Security Staff," Atlantic , February 19, 2018. Thomas Wright, "Trump Wants Little to Do With His Own Foreign Policy; The Clash Between America First and the Global Shift to Great-Power Competition," Atlantic , January 31, 2018. Josh Lederman and Matthew Lee, "For Trump's Security Advisers, Tempering an Impetuous Boss," Associated Press, January 18, 2018. Hal Brands, "Trump Doesn't Believe in His Own Foreign Policy. Does That Matter?" Foreign Policy, January 16, 2018. Peter Beinart, "Trump Doesn't Seem to Buy His Own National Security Strategy; The Notion of 'Principled Realism' May Please Foreign-Policy Advisers, But It's Not Clear the President Knows What It Is." Atlantic , December 19, 2017. Roger Cohen, "Trump's National Security Strategy Is a Farce," New York Times , December 19, 2017. Paul Pillar, "America Alone," National Interest , December 19, 2017. Ishaan Tharoor, "Trump's Tough Talk Can't Hide the Incoherence of His Foreign Policy," Washington Post , December 19, 2017. Eliana Johnson, "Don't Call Trump Strategy a 'Return to Sanity,' Aide Says; Even As he Unveiled a Strategy Document Warning About Moscow's Intentions, the President Still Hailed Cooperation with Vladimir Putin," Politico , December 18, 2017. Mark Lander and David E. Sanger, "Trump Delivers a Mixed Message on His National Security Approach," New York Times , December 18, 2017. Kate Brannen, "Trump's National Security Strategy is Decidedly Non-Trumpian; An Exclusive Preview of the White House's Plan Highlights the Wide Gulf between What the President Says and What He Does." Atlantic , December 8, 2017. Ishaan Tharor, "Trump's 'Principled Realism' Is an Incoherent Mess," Washington Pos t, September 20, 2017. Daniel L. Davis, "Is H. R. McMaster's Worldview Compatible with the President's?" National Interest , September 28, 2017. John Cassidy, "There Is No Trump Doctrine, Only Contradictions and Bluster," New Yorker , September 21, 2017. Krishnadev Calamur, "'The President Speaks for Himself,'" The Atlantic , August 27, 2017. Daniel Politi, "Did Secretary of State Rex Tillerson Just Turn on Trump?" Slate , August 27, 2017. James Kitfield, "Trump's Generals Are Trying to Save the World. Starting With the White House." Politico , August 4, 2017. Richard Haass, "Donald Trump and the Danger of 'Adhocracy,'" The Atlantic , July 18, 2017. Citations for Footnote 49 See, for example: Damian Paletta and Philip Rucker, "'Chaos Breeds Chaos': Trump's Erratic and False Claims Roil the Globe. Again." Washington Post , December 4, 2018. Stephen M. Walt, "Does It Matter That Trump Is a Liar?" Foreign Policy , September 17, 2018. Jackson Diehl, "Trump's Foreign Policy Has Devolved into Chaos," Washington Post , September 16, 2018; Max Boot, "Why Would Any Ally Trust the United States Ever Again?" Washington Post , September 5, 2018. Andrew Restuccia, "In Abrupt Shift, Trump Makes Nice with EU, Gets Tough on Russia," Politico , July 25, 2018. David M. Herszenhorn and Jacopo Barigazzi, "'Very Stable' Trump? European Leaders Beg to Differ," Politico , July 12, 2018. David Frum, "Trump's Reckoning Arrives; The President's Unpredictability Once Worked to His Advantage—But Now, It Is Producing a Mounting List of Foreign Policy Failures," Atlantic , May 24, 2018. Brent D. Griffiths, "Trump's Approach Is Hurting the U.S., Foreign Policy Experts Say," Politico , May 14, 2018. Stephen M. Walt, "America Can't Be Trusted Anymore, It's Hard to Be Powerful When Nobody Believes a Word You Say," Foreign Policy , April 10, 2018. Steven Erlanger, "Trump's Twitter Threats Put American Credibility on the Line," New York Times , January 7, 2018. Paul D. Miller, "Trump's Nationalism Is Arbitrary, Dangerous, Incoherent, and Silly," Foreign Policy , January 3, 2018. Susan B. Glasser, "Donald Trump's Year of Living Dangerously; It's Worse Than You Think," Politico , January/February 2018. Robert B. Zoellick, "The Peril of Trump's Populist Foreign Policy; His Style of Deal-Making Prizes Uncertainty and Brinkmanship, Without a Plan for What Comes Next," Wall Street Journal , November 28, 2017. Kathy Gilsinan, "What Happens When No One Believes American Threats?" The Atlantic , August 14, 2017. Citations for Footnote 51 See, for example: Micah Zenko, "Trump Is America's First Contradiction-in-Chief," Foreign Policy , February 12, 2019. Jacob Heilbrunn, "Donald Trump's Real Foreign Policy Has Arrived," National Interest , February 9, 2019. Loren Thompson, "Trump's Strategic Vision Is More Coherent Than His critics Imagine," Forbes , January 22, 2019. Richard Fontaine, "A Troubling Pattern of Personal Diplomacy; Trump Has a Tendency to Agree Spontaneously to Requests Pitched by Foreign Leaders," Atlantic , December 29, 2019. David E. Sanger, "With the Generals Gone, Trump's 'America First' Could Fully Emerge," New York Times , December 21, 2018. Thomas Wright, "Trump, Unchecked; With Mattis Gone, the President Is Now Free to Indulge His Most Visceral Instincts," Atlantic , December 21, 2018. Alex Ward, "Trump's Saudi Arabia Decision Is the Perfect Distillation of His Worldview; Here's What Trump's Response to Jamal Khashoggi's Murder Really Tell[s] Us About America's Foreign Policy Today." Vox , November 21, 2018. William Saletan, "Trump's Saudi Arabia Response Show His Foreign Policy Is Only About Money; To the President, Jamal Khashoggi's Death Isn't An Outrage. It's the Possible Loss of a Deal." Slate , October 26, 2018. Josh Rogin, "Trump's Only Foreign Policy Doctrine Is Trumpism," Washington Post , October 25, 2018. Henry R. Nau, "Return of the Balance of Power; But the Problem Is Neither Nationalism nor Globalism. In Today's World, the Two Are Complementary." National Interest , October 18, 2018. Nahal Toosi, "Some See Christian First Bias in Trump Foreign Policy," Politico , October 4, 2018. Harry J. Kazianis, "Trump Doctrine Just Declared at UN—and It's Called 'Maximum Pressure,'" The Hill , September 25, 2018. Danielle Allen, "Trump's Foreign Policy Is Perfectly Coherent," Washington Post , July 23, 2018. Alex Ward, "What We Learned from Trump's Worst Foreign Policy Week Ever," Vox , July 20, 2018. Jonah Goldberg, "The Trump Doctrine Is Trumpism Writ Large; How 'Make America Great Again' Translates on the World Stage," National Review , July 11, 2018. Dov S. Zakheim, "Trump's Perilous Path; To the Extent Donald Trump Has a Strategy, It Is One Grounded in Assumptions and Realities That Were Far More Relevant 150 Years Ago Than They Are Today," National Interest , June 18, 2018. (For a response, see Conrad Black, "No, Donald Trump Is Not Millard Fillmore or James Buchanan," National Interest , August 22, 2018.) Jeffrey Goldberg, "A Senior White House Official Defines the Trump Doctrine: 'We're America, Bitch,'" Atlantic , June 11, 2018. Jeremi Suri, "Trump's Kaiser Wilhelm Approach to Diplomacy; For the U.S. President, Like the Last German Monarch, Foreign Policy Is All About Personal Ego, Not National Interests," Foreign Policy , May 29, 2018. David A. Graham, "Trump Almost Always Folds," Atlantic , May 23, 2018. Fred Hiatt, "Trump Is Proving to Be the Most Predictable of Presidents," Washington Post , May 20, 2018. Daniel Levy, "Trump Is Following, Not Leading," Foreign Policy , May 11, 2018. Uri Friedman, "Trumpism: Speak Loudly and Carry a Big Stick," Atlantic , April 6, 2018. Mark Landler, "On Foreign Policy, President Trump Reverts to Candidate Trump," New York Times , April 3, 2018. William Saletan, "Trump's Perversion; He Rewards America's Enemies and Punishes Its Friends," Slate , March 11, 2018. Joshua Zeitz, "How Trump Is Making Us Rethink American Exceptionalism," Politico , January 7, 2018. John Bew and David Martin Jones, "Is There a Trump Doctrine?" National Interest , December 22, 2017. Karen DeYoung, "Trump's Foreign Policy Driven by Campaign Vows, Instinct and Unconventional Thinking," Washington Post , December 10, 2017. Peter Beinart, "Trump Insults People From Afar, Then Praises Them in Person," Atlantic , November 9, 2017. Uri Friedman, "Donald Trump, Dealbreaker," The Atlantic , October 12, 2017. Stephen M. Walt, "The Donald Trump-Kaiser Wilhelm Parallels Are Getting Scary," Foreign Policy , October 12, 2017. Paul R. Pillar, "The Operational Code of President Trump," National Interest , October 10, 2017. Citations for Footnote 53 See, for example: John J. Mearsheimer, "The Great Delusion: Liberal Dreams and International realities; An Excerpt from John Mearsheimer's Latest Book," National Interest , October 5, 2018. Daniel L. Davis, "Reagan's Powerful Legacy Is Being Squandered," National Interest , September 15, 2018. Stephen M. Walt, "America Needs the Muhammad Ali Doctrine," Foreign Policy , August 24, 2018. Jacob Heilbrunn, "How America's Wars Have Created Piles of Debt (And Little Strategic Benefit)," National Interest , August 21, 2018. Daniel L. Davis, "America Cannot Keep Hoping the Military Will Solve Everything," National Interest , August 19, 2018. Christopher A. Preble, "Is This the End of the Liberal World Order?" National Interest , August 3, 2018. Stephen M. Walt, "Why I Didn't Sign Up to Defend the International Order," Foreign Policy , August 1, 2018. William Ruger, Michael C. Desch, "Conservatism, Realism and Foreign Policy: Kissing Cousins if Not Solutions," National Interest , July 30, 2018. Ted Galen Carpenter, "Russia Is Not the Soviet Union," National Interest , July 28, 2018. Doug Bandow, "The Case for Refashioning NATO," National Interest , July 10, 2018. Stephen M. Walt, "The World Wants You to Think Like a Realist," Foreign Policy , May 30, 2018. William Ruger, "To Defend America, Don't Overreach," New York Times , March 19, 2018. Ted Galen Carpenter, "America Needs to Get Back to the Basics I Foreign Policy," National Interest , February 25, 2018. Doug Bandow, "Europe Still Doesn't Take Its Own Defense Seriously," National Interest , February 24, 2018. William Ruger, "Groupthink, Not the Deep State, Is the Real Culprit," National Interest , February 18, 2018. Christopher A. Preble, "Americans Aren't Ready for Another Big War," National Interest , January 17, 2018. Monica Duffy Toft, "Why is American Addicted to Foreign Interventions?" National Interest , December 10, 2017. Stephen M. Walt, "Who's Afraid of a Balance of Power? The United States Is Ignoring the Most Basic Principle of International Relations, to Its Own Detriment," Foreign Policy , December 8, 2017. Doug Bandow, "Why Isn't Europe Preparing for a War with Russia?" National Interest , December 4, 2017. Christopher A. Preble, "Libertarianism and Restraint," National Interest , November 28, 2017. Doug Bandow, "Endless War Is No Honor to America's Veterans," National Interest , November 19, 2017. Citations for Footnote 57 See, for example: James Traub, "American Can't Win Great-Power Hardball; As Other Countries Rise, Global Stability Depends on the United States Holding Onto Its Moralism." Foreign Policy , November 16, 2017. Stephen M. Walt, "Trump Isn't Sure If Democracy Is Better Than Autocracy; America's President Is Voluntarily Abdicating One of the Country's Biggest Strategic Advantages," Foreign Policy , November 13, 2017. Joshua Muravchik, "What Trump and Tillerson Don't Get About Democracy Promotion," Washington Post , August 4, 2017. Nicole Bibbins Sedaca, "What Trump and Tillerson Get Wrong About Democracy Promotion," Foreign Policy , August 4, 2017. Kate Bateman, "Wanted: A Trump Team Foreign-Policy Plan with Democratic Values," National Interest , June 5, 2017; Elliott Abrams, "Does Trump Care About Human Rights?" Politico , May 24, 2017. Joshua Keating, "Trump and Tillerson's Shortsighted Contempt for Human Rights," Slate , May 4, 2017. "What Rex Tillerson Gets Right About American Values—and What He Gets Wrong," Washington Post , May 4, 2017. Heather Timmons, "The Trump Presidency is Systematically Destroying Any Global Moral High Ground the US Had Left," Quartz , March 13, 2017. Citations for Footnote 60 For additional discussion on the costs and benefits of allies, see, for example: Erin Dunne, "With Threats from China, America's Allies Are More Important Than Ever," Washington Examiner , December 13, 2018. Benjamin H. Friedman, "Bad Idea: Permanent Alliances," Defense 360 (Center for Strategic and International Studies, Bad Ideas in National Security Series) , December 13, 2018. Richard Fontaine, "Trump Gets NATO Backwards; The U.S. Defends Europe Out of Self-Interest," Atlantic , November 15, 2018. Michael Miklaucic, "America's Allies: The Fourth Strategic Offset," The Hill , October 24, 2018. Doug Bandow, "The Dangers of Creating a New Arab Alliance; Donald Trump Doesn't Like the Original NATO, So Why Does He Want a Second One?" National Interest , October 1, 2018. Kevin Baron, "On the Campaign Trail for NATO, With Secretary General Stoltenberg," Defense One , September 14, 2018. Courtney McBride, "NATO Chief Defends Value of Military Alliance," Wall Street Journal , September 14, 2018. Brian Blankenship, "Control vs. Cost-Sharing: The Dilemma at the Heart of NATO," War on the Rocks , August 7, 2018. Melanie W. Sisson, "NATO Isn't Cheap—and It's Still Worth the Price," National Interest , July 28, 2018. Stephen M. Walt, "NATO Isn't What You Think It Is," Foreign Policy , July 26, 2018. Matthew Continetti, "Why NATO Matters; The Atlantic Alliance is Crucial to American Deterrence," National Review , July 21, 2018. Rich Lowry, "Don't Dismiss NATO's Faraway Members; Any Chink in the Alliance Undermines the Strength of the Whole Organization." National Review , July 20, 2018. Jay Nordlinger, "Tiny, Faraway Countries and Us," National Review , July 20, 2018. David French, "Yes, We Should Fight for Montenegro; Allied Military Hegemony Keeps the Peace." National Review , July 18, 2018. Peter Beinart, "What's the Point of NATO, Anyway? Trump Isn't the First Republican to Ask That Question," Atlantic , July 12, 2018. Daniel Fried, "The Meaning of the Western Alliance; It Wasn't Just Military Strength That Won the Cold War," Atlantic , July 12, 2018. Ira Strauss, "NATO: The Greatest Bargain America Ever Got," National Interest , July 12, 2018. Christian Whiton, "NATO Is Obsolete," National Interest , July 6, 2018; Hugh White, "Why Is America Still Defending Europe?; Washington Doesn't Have to Bear the Cost of Maintaining Forces in Europe," National Interest , July 3, 2018. Mark Hertling, "NATO Matters, and Trump's Trashing of It Is Dangerous," CNN , July 2, 2018. Jordan Cohen, "Alliances Are a Net Gain, Not a Loss, for America," National Interest , June 28, 2018. Bonnie S. Glaser, "America, Hold On to Your Allies. You'll Need Them," New York Times , June 5, 2018. Doug Bandow, "Time to Terminate Washington's Defense Welfare," National Interest , August 30, 2017. John Glaser, "Withdrawing From Overseas Bases, Why a Forward-Deployed Military Posture Is Unnecessary, Outdated, and Dangerous," Cato Institute , July 18, 2017. (Policy Analysis 816). Doug Irving, "Are America's Overseas Security Commitments Worth It?" RAND , July 7, 2017. (This post summarizes a RAND report—Daniel Egel, et al, Estimating the Value of Overseas Security Commitments, RAND Corporation, 2016, 81 pp. [Report RR-518]). Hal Brands and Peter D. Feaver, "What Are America's Alliances Good For?" Parameters , Summer 2017: 15-30. Hugh White, "China v US: Who Needs Allies?" Interpreter , May 29, 2017. Kori Schake, "NATO Without America?" American Interest , May 25, 2017. Christopher A. Preble, "Should the United States Wage War for Friends?" National Interest , December 15, 2016. Barry R. Posen, "The High Costs and Limited Benefits of America's Alliances," National Interest , August 7, 2016. Charles Lane, "The Logic Behind Our Alliances," Washington Post , July 28, 2016. Jim Talent, "Why Alliances Matter," National Review, July 27, 2016. Jeremy Shapiro and Richard Sokolsky, "How America Enables Its Allies' Bad Behavior," Order from Chaos (Brookings Institution) , May 4, 2016. Walter Russell Mead, "The Global Vote of No Confidence in Pax Americana," American Interest , April 5, 2016. Frank Hoffman, "Manning the Frontier: Allies and the Unraveling of the World Order," War on the Rocks , March 7, 2016. Citations for Footnote 63 For additional discussion of the question of whether a change of some kind in the U.S. role in the world is unavoidable, see, for example: Doug Bandow, "The One Reason America Can't Police the World Anymore: Washington Is Broke," National Interest , December 26, 2018. Noah Smith, "Commentary: Get Used to It, America: We're No Longer No. 1," Chicago Tribune , December 18, 2018. Fareed Zakaria, "Are We At 'Peak America'?" Washington Post , November 29, 2018. Douglas Macgregor, "Donald Trump Meets the End of the Empire; Trump Knows That the American Empire is Crumbling. What Is He Going to Do About It?" National Interest , October 24, 2018. Steve LeVine, "How AI Helps Tyrants," Axios , October 8, 2018. Stephen Grand, "America's Foreign Policy Power Is Changing Under Trump; No Other Country Can Yet Match America in Terms of Power, But Washington No Longer Possesses the Ability to Shape World Events As It Did in the Cold War's Aftermath," National Interest , September 30, 2018. Weizhen Tan, "China's Military and Economic Power 'Cannot Be Denied' and US 'Has to Make Room," CNBC , September 18, 2018 (reports remarks made by Robert Kaplan). Thomas Wright, "The Return of Great-Power Rivalry Was Inevitable; With Neo-Authoritarianism on the Rise, the Old Assumptions Undergirding a Common Set of Western Values Just Won't Do," Atlantic , September 12, 2018. Yuval Noah Harari, "Why Technology Favors Tyranny," Atlantic , October 2018; Stephen M. Walt, "America's Anxiety of Influence, The Power of the United States Is Declining—and That's Nothing to Worry About," Foreign Policy , August 17, 2018. Zeynep Tufekci, "How Social Media Took Us from Tahrir Square to Donald Trump," MIT Technology Review , August 14, 2018. Bruno Macaes, "What the West Is Becoming; Countries That Were Once under Western Influence Are Beginning to Assert Themselves, Heralding a New, Democratic—or Chaotic—World Order," National Review , August 8, 2018. Ivan Krastev, "3 Versions of Europe Are Collapsing at the Same Time," Foreign Policy , July 10, 2018. Gordon Adams, "A New World Is Dawning, and the US Will No Longer Lead It," The Conversation , June 26, 2018. Ali Wyne, "Is America Choosing Decline?" New Republic , June 21, 2018. David M. Smick, "Who Unraveled the New World Order? It Wasn't Trump. The Global Economic Consensus Began Falling Apart Years Before He Entered Politics." Wall Street Journal , June 12, 2018. Victor Davis Hanson, "The Post-War Order Is Over; And Not Because Trump Wrecked it." National Review , May 29, 2018. Rana Dasgupta, "The Demise of the Nation State, After Decades of Globalisation, Our Political System Has Become Obsolete—and Spasms of Resurgent Nationalism Are a Sign of Its Irreversible Decline," Guardian , April 5, 2018. Polina Sinovets, "The Decline of Cold-War-Era Regimes Could Lead to an International Security Crisis; The Decline of International-Security Regimes Is Inveitable—In Part Because the Majority of Them Were Created During the Cold War," National Interest , February 24, 2018. Martin Wolf, "The Long and Painful Journey to World Disorder," Financial Times , January 5, 2017. Citations for Footnote 67 See, for example: Jeanne Wilson, "Russia and China Beyond Realpolitik: The Bond of Respect and Values," Russia Matters , February 4, 2019. Graham T. Allison and Dimitri Simes, "A Sino-Russian Entente Again Threatens America; The U.S. Must Revise Its Policy Toward Moscow If It Is To Meet the Threat from a Rising China," Wall St reet Journal , January 29, 2019. John S. Van Oudenaren, "America's Nightmare: The Sino-Russian Entente; The Most Dangerous Threat to America 'Would Be a Grand Coalition of China and Russie, United Not by Ideology, But by Complementary Grievance.'" Natio nal Interest , January 12, 2019. Dimitri K. Simes, "Dangerous Liaisons; Ignoring Possible Sino-Russian Cooperation Against the United States, and the Factors That Can Exacerbate It, Could Be Very costly," Nation al Interest , December 16, 2018. Graham T. Allison, "China and Russia: A Strategic Alliance in the Making," National Interest , December 14, 2018 (a similar version was published on the same date by Russia Matters). David Lawler, "China and Russia Inch Closer Together," Axios , December 14, 2018. Jonathan Hillman, "China and Russia's Awkward Romance," Wash ington Post , November 15, 2018. Marc Champion, "trump's trade War Is Making Russia and China Comrades Again; Facing U.S. Sanctions and Tariffs, Moscow and Beijing Are Finding Lots of Common Ground," Bloomberg , November 5, 2018. Robert Sutter, Confronting Growing China-Russia Cooperation; Options for Congress , National Bureau of Asian Research, November 2018, 4 pp. Citations for Footnote 72 See, for example: Hans Binnendijk, "Despite Infighting, Here's How NATO Can Persevere," Defense News , September 20, 2018. Ishaan Tharoor, "Trump's NATO Trip Shows 'America First' Is 'America Alone,'" Washington Post , July 11, 2018. John Vandiver, "Ex-NATO Commander: Trump's Disdain for US-Led Alliance Leads to 'New and Dangerous' Situation," Stars and Stripes , July 3, 2018; \\. Stephen M. Walt, "The EU and NATO and Trump—Oh My!" Foreign Policy , July 2, 2018. Josh Rogin, "Trump Is Trying to Destabilize the European Union," Washington Post , June 28, 2018. Alex Ward, "Trump Said 'NATO Is As Bad As NAFTA.' That's Scary," Vox , June 28, 2018. David Ignatius, "Trump Hurls a Wrecking Ball at the Transatlantic Alliance," Washington Post , June 21, 2018. Jim Stavridis, "Trump's Attack on Allies Are Widening the Atlantic," Bloomberg , June 14, 2018. Walter Russell Mead, "Why Trump Clashes With Europe; Sharp Differences in Style and Substance Threaten the Trans-Atlantic Alliance." Wall Street Journal , June 11, 2018. Krishnadev Calamur, "America Alone? A Bitter End to the G7 Summit Could Have Consequences for America's Alliances." Atlantic , June 10, 2018. David Frum, "Trump Goes to War Against the Democracies," Atlantic , June 10, 2018. David Leonhardt, "Trump Tries to Destroy the West," New York Times , June 10, 2018. John Harwood, "Trump Is Helping Putin with a Key Goal When He spurns US Allies," CNBC , June 8, 2018. James Goldgeier, "Less Whole, Less Free, Less at Peace: Whither America's Strategy for a Post-Cold War Europe?" War on the Rocks , February 12, 2018. Citations for Footnote 80 See, for example: Stephen M. Walt, "A Playbook for Training Donald Trump; Four Strategies That Other Countries Can Use to Deal with a Suddenly Unpredictable Superpower," Foreign Policy , August 13, 2018, which identifies the four strategies as "balancing," "balking," "bonding," and "delegitimization." See also Stewart Patrick, "The World Order Is Starting to Crack; America's Allies and Adversaries Are Adapting to Donald Trump in Ways That Can't Easily Be Reversed," Foreign Policy , July 25, 2018, which identifies three approaches that other countries have taken, referred to as "aligning with China to defend globalization," "pursuing strategic autonomy," and "filling the void." See also: Andrew Restuccia and Hans Von Der Burchard, "The World Makes Room for Trump; The G-20 Illustrates Global Philosophy in Trump era: Everybody Plus One." Politico , December 1, 2018. Edward Wong and Alan Rappeport, "In Race for Global Power, U.S. and China Push Nations to Pick a Side," New York Times , November 21, 2018. David Ignatius, "The World Is Moving On from Trump. And Others Are Stepping Forward." Washington Post , November 13, 2018. Uri Friedman, "The World Adjusts to Donald J. Trump," Atlantic , September 29, 2018. Colum Lynch and Robbie Gramer, "U.N. Brief: Trump Manages to Untie the U.N.—Against His Isolationist Vision," Foreign Policy, September 26, 2018. Uri Friedman, "UN Secretary-General: American Power Is in Decline, the World Is 'in Pieces,'" Atlantic , September 13, 2018. Stewart Patrick, "The World Order Is Starting to Crack; America's Allies and Adversaries Are Adapting to Donald Trump in Ways That Can't Easily Be Reversed," Foreign Policy , July 25, 2018. Yasmeen Serhan, "U.S. Allies Are Helping Trump Undermine Global Trade," Atlantic , June 11, 2018. Peter Schechter, "On Trade, No One Is Waiting for Washington; Trump's Protectionism Hasn't Stopped Increasing Cooperation in the Rest of the World." National Review , April 23, 2018. Bates Gill, "US Allies Aren't Buying Its New Strategies to Confront China," Diplomat , February 5, 2018. Stewart Patrick, "How U.S. Allies Are Adapting to 'America First,'" Foreign Affairs , January 23, 2018. Isobel Thompson, "'Catastrophic': World Leaders Fear the Worst As Trump Goes Rogue; Foreign-Policy Relationships Are Falling Apart as the White House Dismantles the Post-War Order," Vanity Fair , January 4, 2018. Charles Kupchan, "Why Cozying Up to Trump Works; The Rest of the World May Not Like the U.S. President's Bluster, But Playing to His Ego Is a Pretty Good Strategy," Foreign Policy , November 16, 2017. Krishnadev Calamur, "How the Rest of the World Heard Trump's UN Speech," The Atlantic , September 20, 2017. Colum Lynch, "Before U.N. Summit, World Tells Trump His 'America-First Fun' Must End," Foreign Policy , September 16, 2017. Richard Wike, et al., "U.S. Image Suffers as Publics Around World Question Trump's Leadership," Pew Research Center, June 26, 2017. Citations for Footnote 92 See, for example: Suzanne Nossel, "Trump and May Are Discrediting Democracy; Chaos and Dysfunction in Washington and London Make Liberal Democratic Government Look Bad—and Embolden China and Russia to Market Authoritarianism As an Efficient Alternative," Foreign Policy , January 24, 2019. Curtis Stone, "US Government Dysfunction Should Alarm More Than Just Panda Fans," People's Daily Online , January 8, 2019. Fred Hiatt, "Trump Is Disarming America in the Face-Off Against China," Washington Post , December 2, 2018. Maria Repnikova, "China's 'Responsive' Authoritarianism," Washington Post , November 27, 2018. Fred Hiatt, "If the Chinese Look to the West for a Democratic Model, What Are We Showing Them?" Washington Post, November 4, 2018. Nathan VanderKlippe, "In 'Failure of U.S. Democracy,' China's Strongmen See a Chance to Get Stronger," Globe and Mail , November 12, 2017. Li Qingqing, "US Divide May Deepen Further After Midterm Elections," Global Times , November 4, 2018. "Pittsburgh Attack Exposes US Governance Woes," Global Times , October 28, 2018. "Spotlight: The Three Dimensions of Chinese Governance," Xinhuanet , October 23, 2018. Martin Wolf, "How the Beijing Elite Sees the World, The Charms of Democracy and Free Markets Have Withered for China's Leaders," Financial Times , May 1, 2018. David Runciman, "China's Challenge to Democracy," Wall Street Journal , April 26, 2018. "Western Political Elections Degraded to Taking Power Instead of Actions: Experts," People's Daily Online , April 3, 2018. Curtis Stone, "Op-Ed: The Western Model of Democracy Is No Longer the Only Game in Town," People's Daily Online , March 20, 2018. Zhong Sheng, "Op-ed: China's New Type of Party System Enlightens World," People's Daily Online , March 12, 2018. Zheping Huang, "Xi Jinping Says China's Authoritarian System Can Be a Model for the World," Quartz , March 9, 2018. "Constitutional Amendment Responds to New Era," Global Times , February 26, 2018. Brendon Hong, "The Shutdown Drama in D.C. Was Beijing's Cup of Tea," Daily Beast , January 22, 2018. "Government Shutdown Exposes System Flaws," China Daily , January 22, 2018; "US Divisions Threaten Leadership Role," Global Times , January 13, 2018. Curtis Stone, "Op-Ed: Trump's Fake News Mantra Speaks to a Larger Truth About Western Media," People's Daily Online , December 11, 2017. Thomas Barker, "The Real Source of China's Soft Power; Chinese Soft Power Is Not Measured by Blockbuster Films, But By the Appeal of Its Development Model," Diplomat , November 18, 2017. Curtis Stone, "Op-Ed: Yep, the World Has a New Role Model for Political and Economic Development," People's Daily Online , November 2, 2017. Li Laifang, "Enlightened Chinese Democracy Puts the West in the Shade," China Daily , October 17, 2017. See also John Keane, "Phantom Democracy: A Puzzle at the Heart of Chinese Politics," South China Morning Post , August 25, 2018. Citations for Footnote 95 See, for example: James Traub, "Trump's Foreign Policy Is Here to Stay; Democrats Have the Upper Hand to Take the White House—But Whoever Wins May Have to Adopt the Current Occupant's Worldview," Foreign Policy , January 2, 2019. Kadira Pethiyagoda, "A Restrained Foreign Policy is Becoming More Popular in Washington," National Interest , January 1, 2019. Stephen Grand, "America's Foreign Policy Power Is Changing Under Trump; No Other Country Can Yet Match America in Terms of Power, But Washington No Longer Possesses the Ability to Shape World Events As It Did in the Cold War's Aftermath," National Interest , September 30, 2018. Robert Kagan, "'America First' Has Won; The Three Pillars of the Ideology—Isolationism, Protectionism and Restricting Immigration—Were Gaining Popularity Before Donald Trump Became President and May Outlast His Tenure," New York Times , September 23, 2018. Ankit Panda, "The Damage Is Done: Trump and the Asia-Pacific; The President's Successor Will Need to Offer a Path Forward That Addresses Our Current Self-Serving American Approach," Diplomat , September 14, 2018. Anne Gearan, "The Next Administration Should Revive Support of Democratic Values Abroad, New Report Says," Washington Post , September 5, 2018. Stephen M. Walt, "Planning for the Post-Trump Wreckage," Foreign Policy , August 30, 2018. Stewart Patrick, "The World Order Is Starting to Crack; America's Allies and Adversaries Are Adapting to Donald Trump in Ways That Can't Easily Be Reversed," Foreign Policy , July 25, 2018. Ronald Brownstein, "Has Trump Irreversibly Altered the GOP's Foreign Policy?" Atlantic , June 14, 2018. Appendix C. Recent Writings on Whether U.S. Role Should Change This appendix lists recent examples of writings on the question of whether the U.S. role in the world should change, with the most recent in top. See also the citations for footnote 53 (regarding proposals for a more-restrained U.S. role in the world) in Appendix B . Nathan Gardels, "The U.S.-China Trade War May Kill the WTO. And That Is a Good Thing." Washington Post , August 24, 2018. Hal Brands, "America's Global Order Is Worth Fighting For; The Longest Period of Great-Power Peace in Modern History Is Not a 'Myth.'" Bloomberg , August 14, 2018. Emile Simpson, "There's Nothing Wrong With the Liberal Order That Can't Be Fixed by What's Right With It; Realists Need to Get a Lot More Realistic about the Global Legal System." Foreign Policy , August 7, 2018. Dani Rodrik, "The WTO Has Become Dysfunctional," Financial Times , August 5, 2018. Hal Brands, "Trump Can't Split Russia From China—Yet," Bloomberg , July 31, 2018. Bruno Macaes, "Why We Need a New Transatlantic Alliance; Trump's Crudity is Unnecessary, But He's Right That Some Rethinking Is Needed." National Review , July 13, 2018. Zalmay Khalilzad, "A Strategic Reset for NATO," National Interest , July 10, 2018. Jay Cost, "Where Should America Stand on the World Stage? Self-Determination and the Liberal Order of Free Trade Must Be Balanced." National Review , June 11, 2018. Dov S. Zakheim, "Clash of the Strategists," National Interest , April 15, 2018. (Review of three books on U.S. grand strategy and foreign policy by Robert D. Kaplan, Elliott Abrams, and Harlan K. Ullman.) Hal Brands, "The Chinese Century? Regardless of How America Responds to the Chinese Challenge, Its Policy Must Be Rooted in Reality," National Interest , February 19, 2018. David C. Hendrickson, "Is America an Empire?" National Interest , October 17, 2017. Thomas Donnelly and William Kristol, "An Empire for Liberty," Weekly Standard , October 2, 2017. Christopher A. Preble, "Why Isn't There a Debate About America's Grand Strategy?" National Interest , September 16, 2017. James Jay Carafano, "America Desperately Needs a New Grand Strategy for its Role in the World," Heritage Foundation, September 11, 2017. Andrew Beddow, "America Cannot Become a Global Rome," National Interest , July 25, 2017. Enea Gjoza, "America Historically Had a Restrained Foreign Policy: It's Time to Return to It," National Interest , July 25, 2017. Walter Russell Mead, "A Debate on America's Role—25 Years Late," Wall Street Journal , May 22, 2017. Stephen Sestanovich, "The President Is Preventing the Foreign-Policy Debate America Needs To Have," Defense One , April 13, 2017. Hal Brands, "U.S. Grand Strategy in an Age of Nationalism: Fortress America and Its Alternatives," The Washington Quarterly , Spring 2017, 73-93. Stephen M. Walt, "The Donald versus 'The Blob,'" ISSF Policy Series , February 14, 2017. David H. Petraeus, "America Must Stand Tall," Politico , February 7, 2016. Robert Kagan, "Backing Into World War III," Foreign Policy , February 6, 2017. Eliot Cohen, "5 Bad Reasons for Pulling Back From the World," Politico , January 24, 2017. Richard Fontaine and Mira Rapp-Hooper, "If America Refuses to Lead," Wall Street Journal , January 23, 2017. Eliot Cohen, "Should the U.S. Still Carry A 'Big Stick,'" Los Angeles Times , January 18, 2017. Sydney J. Freedberg Jr., "Fear China Most, 'Flip' Russia, Beware Iran: CSBA," Breaking Defense , January 18, 2017. Frank Hoffman, "The Case for Strategic Discipline During the Next Presidency," War on the Rocks , January 10, 2017. Ali Wyne, "Did the United States Really Win the Cold War?" National Interest , January 8, 2017. Robert D. Kaplan, "Why Trump Can't Disengage America From the World," New York Times , January 6, 2017. Mina Pollmann, "Naval Strategy: Restraint Rather Than Hegemon," Maritime Executive , January 5, 2017. (Interview with Barry Posen) Hal Brands, et al., Critical Assumptions and American Grand Strategy , Center for Strategic and Budgetary Assessments, 2017, 57 pp. Appendix D. Recent Writings on How Other Countries Are Responding This appendix lists recent examples of writings on the question of how other countries are responding to a possible change in the U.S. role in the world, with the most recent on top. China, Russia, and Authoritarian and Illiberal Countries in General China Hal Brands, "Don't Let China Take the World Hostage," Bloomberg , February 6, 2019. Patrick M. Cronin, "What is Causing China's Recent War of Words on Washington?" National Interest , February 3, 2019. David Wainer, "China Is Eyeing a Widening Void at UN Thanks to Trump," Bloomberg , February 1, 2019. Gerald F. Seib, "As U.S. Footprint Shrinks, Others Happily Fill the Void," Wall Street Journal , January 7, 2019. Jackson Diehl, "While Trump Wallows in the White House, America's Allies Are Left on Their Own," Washington Post , January 6, 2019. Jim Hoagland, "China Is Trying to Woo U.S. Allies. The White House's Response Contains Glaring Failures." Washington Post , January 6, 2019. Cao Desheng, "China's Role in Shaping global Governance Hailed," China Daily , December 29, 2018. Bruno Macaes, "A Preview of Your Chinese Future; China's Vision of World Order Is a More Radical Departure—and More Realistic Alternative—Than the West Understands," Foreign Policy , December 7, 2018. Liza Tobin, "Xi's Vision for Transforming Global Governance: A Strategic Challenge for Washington and Its Allies," Texas National Security Review , December 2018. Elizabeth Rosenberg and Edoardo Saravalle, "China and the EU Are Growing Sick of U.S. Financial Power; They Are Trying Their Best to Erode Washington's Rules." Foreign Policy , November 16, 2018. Christopher Bodeen and Emily Wang, "China-Japan Drawing Closer Amid Trade Pressure from US," Associated Press, October 26, 2018. WSJ Staff, "China, Japan Push for Free Trade as Both Grapple With Trump Demands," Wall Street Journal , October 26, 2018. Stephen Nagy, "Is Trump Pushing China and Japan Together? Not Quite. Security Concerns Will Remain a Barrier to Beijing-Tokyo Rapprochement," National Interest , October 25, 2018. Jane Perlez, "Japan and China, Asian Rivals, Are Trying to Get Along," New York Times , October 24, 2018. Anna Fifield and Simon Denyer, "Japan's Prime Minister, a Trump Buddy, Now Tries to Cozy Up to China's President," Washington Post , October 22, 2018. Hu Weijia, "Bilateral FTAs Can Be Beijing's Opportunity in New Era of Multipolar Trade World," Global Times , October 18, 2018. "In a Divided U.N., China Blazes Quiet Path to Power," Japan Times , October 7, 2018. Erik Khzmalyan and Armen Sahakyan, "Russia and China Aren't Full Allies—Yet; And Here's What Washington Can Do to Keep It That Way," National Interest , October 4, 2018. John S. Van Oudenaren, "America's Iran Policy is Helping China Advance Its Vision of a Multipolar World; Beijing Is Using Washington's Maximalist Approach to Tehran as a Transatlantic Wedge," National Interest , October 1, 2018. Yadong Liu, "How Trump's Policies Are Helping China; Beijing Still Can't Believe Its Luck," Foreign Affairs , September 28, 2018. Josh Chin, "Trump's 'Meddling' Claim Plays Into China's Trade Narrative; By Alleging Without Proof That Beijing Is Interfering in the U.S. Midterms, the President Helped Bolster the Argument That His Real Aim Is to Stop China's Ascent as a Global Power," Wall Street Journal , September 27, 2018. Anna Fifield, "China Thinks the Trade War Isn't Really About Trade," Washington Post , September 24, 2018. Richard Gowan, "China Fills a Trump-Sized Vacuum at the U.N.," Politico , September 24, 2018. Jane Perlez, "China Is Confronting New U.S. Hostility. But Is It Ready for the Fight?" New York Times , September 23, 2018. Abigail Grace, "China and America May Be Forging a New Economic Order; It's Not a Cold War. But the Dispute Between the World's Largest Economies is Taking the World into Unknown Territory," Atlantic , September 20, 2018. Elena Holodny, "Russia, China Embrace Uneasily, Aim for 'Desirable World Order,'" NBC News , September 20, 2018. Gerry Shih, "In Trump's Trade Wars, China's Unexpected Win: More Friends," Washington Post , September 14, 2018. Robert Sutter, "When Will Closer China-Russia Cooperation Impact US Policy Debate? Washington is Debating Russia and China Policy Separately. It Needs to Consider the Emerging Russia-China Axis." Diplomat , September 14, 2018. Peter Landers, "Japan and China Find Common Ground in Trump's Tariffs as Leaders Meet," Wall Street Journal , September 12, 2018. Anton Troianovski, Anna Fifield, and Paul Sonne, "War Games and Business Deals: Russia, China Sends a Signal to Washington, Washington Post , September 11, 2018. John Van Oudenaren, "Why China Is Wooing Eastern and Central Europe," National Interest , September 4, 2018. Peter Apps, "Commentary: Why China and Russia Are Obsessed with Vast New War Games," Reuters , August 29, 2018. Owen Daniels, "How China Is Trying to Dominate the Middle East," National Interest , August 28, 2018. Catherine Wong, "China Aims for 'Sustainable' Debt with Africa as Belt and Road Initiative Comes Under Fire from West," South China Morning Post , August 28, 2018. Marc Champion, "What Does a Chinese Superpower Look Like? Nothing Like the U.S.," Bloomberg , August 27, 2018. John Pomfret, "China's Debt Traps Around the World Are a Trademark of Its Imperialist Ambitions," Washington Post, August 27, 2018. Mark Beeson, "China Rises, America Falters, and Geoeconomics Rears Its Head," War on the Rocks , August 23, 2018. Wang Peng, "Opinion: China's Countermeasures to US Indo-Pacific Strategy," China Military Online , August 23, 2018. Xie Tao, "How China Is Polarized by America," Diplomat , August 22, 2018. Thorsten Benner, et al, "How to Fight China's Sharp Power," ChinaFile , August 20, 2018. Eric X. Li, "The Rise and Fall of Soft Power, Nye's Concept Lost Relevance, But China Could Bring It Back," Foreign Policy , August 20, 2018. Matthew Carney, "China and Russia Strengthening Relationship in Bid to Thwart US Dominance," ABC (Australian Broadcasting Corporation) , August 19, 2018. Bloomberg News, "China, Unsure of How to Handle Trump, Braces for 'New Cold War,'" Bloomberg , August 17, 2018. Amanda Erickson, "China Has a New Message for the U.S.: Don't Be Alarmed, We're Not That Great," Washington Post , August 16, 2018. Keith Bradsher and Steven Lee Myers, "Trump's Trade War Is Rattling China's Leaders," New York Times , August 14, 2018. Jamil Anderlini, "China-Russia: A Dangerous Liaison," Financial Times , August 10, 2018. Abigail Grace, "China Doesn't Want to Play by the World's Rules," Foreign Policy , August 8, 2018. Joel Wuthnow, "PacNet #55—Why China Discounts the Indo-Pacific Quad," Center for Strategic and International Studies, August 7, 2018. Daniel Kliman and Abigail C. Grace, "China Dreams of America Alone; Washington's Poor Treatment of Its Allies Isn't Helping Either," National Interest , August 6, 2018. Timothy R. Heath, "China Prepares for an International Order After U.S. Leadership," Lawfare , August 1, 2018. Nathan Gardels, "China Is Laying the Groundwork for a Post-American World Order," Washington Post , July 27, 2018. Mark Leonard, "The Chinese Are Wary of Trump's Creative Destruction," Financial Times , July 25, 2018. Huong Le Thu, "Has China Got Everyone Wrong? Beijing Is Wrong to Think Other Countries Will Roll Over When Confronted," National Interest , July 24, 2018. Editorial Board, ANU, "China's Reform Momentum and Global Security," East Asia Forum , July 23, 2018. Jonathan Hillman, "A Chinese World Order," Washington Post , July 23, 2018. Elizabeth Economy, "Xi Jinping's Superpower Plans," Wall Street Journal , July 19, 2018. Steven Erlanger and Jane Perlez, "Europe and Asia Move to Bolster Global Systems That Trump Has Attacked," New York Times , July 18, 2018. Kevin Rudd, "Hi Jinping's Vision for Global Governance," Project Syndicate , July 11, 2018. Nicholas Grossman, "As America Forfeits International Influence, China Takes Advantage; President Trump's Protectionist Foreign Policy Has Created Global Openings That Beijing Is Only Too Happy to Exploit." National Review , July 10, 2018. "Xhi's World Order: July 2024; As America Defies and Dismantles the International Rules-Based Order, a Report from the Future Imagines What Might Replace It," Economist , July 7, 2018. Richard Javad Heydarian, "China Is Making a Bid for Global Primacy," National Interest , July 1, 2018. Barbara Demick and Ttracy Wilkinson, "Under Trump, America's Influence in the Western Pacific May Be on the Decline," Los Angeles Times , June 29, 2018. Reuters Staff, "Xi Says China Must Lead Way in Reform of Global Governance," Reuters , June 23, 2018. Kerry Brown, "China's Exceptionalism Rewrites the Western Political Playbook," Economist , June 13, 2018. Hal Brands, "China's Master Plan: A Global Military Threat," Bloomberg , June 10, 2018. Stephen M. Walt, "Bullies Don't Win at Diplomacy," Foreign Policy , June 7, 2018. Lucio Blanco Pitlo III, "Is China Changing the Postwar Consensus or Enhancing It?" National Interest , May 14, 2018. Andrew Polk, "China Is Quietly Setting Global Standards," Bloomberg , May 6, 2018. Grant Newsham, "China-US Trade: A Long-Term Battle of System Versus System," Asia Times , May 5, 2018. Chen Guangcheng, "Chinese Dissident: Trump, Don't Trade Away Democratic Values," Washington Post , May 3, 2018. Martin Wolf, "How the Beijing Elite Sees the World, The Charms of Democracy and Free Markets Have Withered for China's Leaders ," May 1, 2018. Evan A. Feigenbaum, "Reluctant Stakeholder: Why China's Highly Strategic Brand of Revisionism is More Challenging than Washington Thinks," Macro Polo , April 27, 2018. Jamie Tarabay, "China's Xi Has A Single-Mindedness Trump Can Only Dream Of," CNN , April 14, 2018. Marcel Plichta, "China Is Filling the Africa-Sized Gap in US Strategy," Defense One , March 28, 2018. Hal Brands and Peter Feaver, "Living in Trump's World: The Global Reaction to 'America First,'" War on the Rocks , March 27, 2018. Colum Lynch, "At the U.N., China and Russia Score Win in War on Human Rights," Foreign Policy , March 26, 2018. Helena Legarda, "China Upgrades Diplomacy While the US Pulls Back," Diplomat , March 20, 2018. Robert E. McCoy, "Beijing Testing the Fault Lines of US Support for Allies Across Asia," Asia Times , March 14, 2018. Motoko Rich, "Trump's Unpredictability on Trade and North Korea Opens a Door for China," New York Times , March 10, 2018. Max Fisher and Audrey Carlsen, "How China Is Challenging American Dominance in Asia," New York Times , March 9, 2018. Gerry Shih and Christopher Bodeen, "China Eyes Greater Global Leadership Role, Downplays Fears," Associated Press , March 8, 2018. Benjamin Carolson, "China Loves trump; The People Love a Winner. The Leadership Loves a Dupe." Atlantic , March 2018. Jane Perlez, "Xi Jinping Extends Power, and China Braces for a New Cold War," New York Times , February 27, 2018. Nadege Rolland, "Beijing's Vision for a Reshaped International Order," China Brief , February 26, 2018. Tom Phillips, "While Trump Eyes Latin America with Malign Neglect, China Sees Opportunity," Guardia n, February 9, 2018. Bloomberg News, "As U.S. Culls Diplomats, China Is Empowering Its Ambassadors," Bloomberg , February 7, 2018. Andreas Boje Forsby, "Trump, Xi, and the Eclipse of the Liberal World Order; As the United States Abdicates, an Illiberal China Steps onto the World Stage," DIIS (Dansk Institut for Internationale Studier), February 6, 2018. David Pilling, "US Abdication in Africa Hands Political Opportunities to China," Financial Times , February 7, 2018. Tobin Harshaw and Daniel Moss, "What Happens When China Eclipses the U.S. in Asia; A Q&A with Hugh White, a Former Top Australian Official Who Feels Beijing Has Already Filled the U.S. Leadership Void," Bloomberg , February 3, 2018. Andrew Browne, "China Builds Bridges and Highways While the U.S. Mouths Slogans; The Marshall Plan Birthed a U.S.-Led Global Order—Now China is Building a New World," Wall Street Journal , January 30, 2018. Keith Bradsher, "At Davos, the Real Star May Have Been China, Not Trump," New York Times , January 28, 2018. Peter Baker, "Souring World Views of Trump Open Doors for China and Russia," New York Times , January 18, 2018. Ishaan Tharoor, "China's Inexorable Rise Is Helped by Trump's Retreat," Washington Post , January 11, 2018. Evan Osnos, "Making China Great Again; As Donald Trump Surrenders America's Global Commitments, Xi Jinping Is Learning to Pick Up the Pieces," New Yorker , January 8, 2018. Antonio C. Hsiang, "As America Withdraws From Latin America, China Steps In," Diplomat , January 4, 2018. David Frum, "Trump's Bellicosity Is Ceding America's Influence to China," Atlantic , January 3, 2018. Russia Gerald F. Seib, "As U.S. Footprint Shrinks, Others Happily Fill the Void," Wall Street Journal , January 7, 2019. Jackson Diehl, "While Trump Wallows in the White House, America's Allies Are Left on Their Own," Washington Post , January 6, 2019. Liz Sly, "In the Middle East, Russia is Back," Washington Post , December 5, 2018. James J. Coyle, "Russian Influence Growing at American Expense," The Hill , October 9, 2018. Erik Khzmalyan and Armen Sahakyan, "Russia and China Aren't Full Allies—Yet; And Here's What Washington Can Do to Keep It That Way," National Interest , October 4, 2018. Elena Holodny, "Russia, China Embrace Uneasily, Aim for 'Desirable World Order,'" NBC News , September 20, 2018. Zi Yang, "Vostok 2018: Russia and China's Diverging Common Interests," Diplomat , September 17, 2018. Michael Hirsh, "How Putin's Syrian War Is Humbling Trump," Foreign Policy , September 19, 2018. Robert Sutter, "When Will Closer China-Russia Cooperation Impact US Policy Debate? Washington is Debating Russia and China Policy Separately. It Needs to Consider the Emerging Russia-China Axis." Diplomat , September 14, 2018. Anton Troianovski, Anna Fifield, and Paul Sonne, "War Games and Business Deals: Russia, China Sends a Signal to Washington," Washington Post , September 11, 2018. Peter Apps, "Commentary: Why China and Russia Are Obsessed with Vast New War Games," Reuters , August 29, 2018; Matthew Bodner, "Russia, the Victim? Opposite NATO's Eastern Flank, It's an Expansionist West Causing Anxiety," Defense News , August 27, 2018. Matthew Carney, "China and Russia Strengthening Relationship in Bid to Thwart US Dominance," ABC (Australian Broadcasting Corporation) , August 19, 2018. Kevin Ryan, "Trump Is Your Yeltsin, This Brief Analogy Speaks Volumes About How Russian Security Elites View the Trump Presidency," National Interest , August 19, 2018. David Ignatius, "The Unintended Consequences of U.S. Disengagement in the Middle East," Washington Post , August 14, 2018. Evelyn N. Farkas and James M. Ludes, "We Regret to Inform You That Russia Is (Probably) At It Again," Atlantic , August 16, 2018; Chuck Freilich, "In the Middle East the Russians Aren't Coming: They Are Back," National Interest , August 13, 2018. Jamil Anderlini, "China-Russia: A Dangerous Liaison," Financial Times , August 10, 2018. Harry J. Kazianis, "The Coming American-Russian Alliance Against Russia," American Conservative , July 16, 2018. Anton Troianovski, "Putin's View Triumphs in Helsinki as Trump Questions U.S. Intelligence," Washington Post , July 16, 2018. Hal Brands and Peter Feaver, "Living in Trump's World: The Global Reaction to 'America First,'" War on the Rocks , March 27, 2018. Colum Lynch, "At the U.N., China and Russia Score Win in War on Human Rights," Foreign Policy , March 26, 2018. Peter Baker, "Souring World Views of Trump Open Doors for China and Russia," New York Times , January 18, 2018. Authoritarian and Illiberal Countries in General Griff Witte, Carol Morello, Shibani Mahtani, and Anthony Faiola, "Around the Globe, Trump's Style Is Inspiring Imitators and Unleashing Dark Impulses," Washington Post , January 22, 2019. Alex Ward, "North Korea, China, and Iran Are Not Happy With Trump's Foreign Policy; The Three Countries Heavily Criticized the US Over the Last 72 Hours for Its Tough Economic Policies Meant to Change Their Behaviors," Vox , November 5, 2018. Uri Friedman, "Khashoggi's Murder Heralds a New era of Impunity; The Ugly Geopolitics in the Wake of the Saudi Journalist's Death Point to a World in Which Impunity Reigns," Atlantic , October 25, 2018. Jackson Diehl, "Trump Understands Something That the World's Other Power-Hungry Leaders Don't," Washington Post , August 19, 2018. Jen Kirby, "Top UN Human Rights Official Rebukes Trump's Press Attacks as 'Close to Incitement of Violence,'" Vox , August 13, 2018. Rick Gladstone, "China and Russia Move to Cut Human Rights Jobs in U.N. Peacekeeping," New York Times , June 27, 2018. Colum Lynch, "Russia and China See in Trump Era a Chance to Roll Back Human Rights Promotion at U.N.," Foreign Policy , June 26, 2018. Ishaan Tharoor, "Washington Wakes Up to 'Authoritarian' Populism in the U.S. and Europe," Washington Post , May 10, 2018. (The article discusses reports entitled "Drivers of Authoritarian Populism in the United States: A Primer," and "Europe's Populist Challenge: Origins, Supporters, and Responses," released jointly by the American Enterprise Institute and the Center for American Progress.) Hal Brands and Peter Feaver, "Living in Trump's World: The Global Reaction to 'America First,'" Wa r on the Rocks , March 27, 2018. Henri J. Barkey, "Springtime for Autocrats," Ame rican Interest , March 19, 2018. Stein Ringen, "Who in the World Will Defend Democracy?" Los Angeles Times , March 13, 2018. Robin Wright, "The Rise of the World's New Emperors—With America's Help," New Yorker , February 27, 2018. Steven Lee Myers, "With Xi's Power Grab, China Joins New Era of Strongmen," New York Times , February 26, 2018. Vikram J. Singh and Danielle Pletka, "It's Time for the World's Democracies to Stand Up for What They Believe In," Wash ington Post , February 20, 2018. Alan Dupont, "New World Order: Momentum Is Shifting in Favour of Dictators," Australian , February 10, 2018. Ishaan Tharoor, "Trump Is Spreading the Global Erosion of Democracy, Watchdog Says," Was hington Post , January 18, 2018. Michael J. Abramowitz, Freedom in the World 2018, Democracy in Crisis, Freedom House, undated, released January 2018, 19 pp. Uri Friedman, "The Real-World Consequences of 'Fake News,'" Atlantic , December 23, 2017. Colum Lynch, "U.N. Human Rights Chief To leave, Citing 'Appalling' Climate for Advocacy," For eign Policy , December 20, 2017. Krishnadev Calamur, ""From Ttrump's Twitter Feed to Dictators' Mouths; A Partial List of the World Leaders Taking Their Cues from the U.S. President's Fight with the Press," Atlantic , December 14, 2017. Steven Erlanger, "'Fake News,' Trump's Obsession, Is Now a Cudgel for Strongmen," New York Times , December 12, 2017. Nikhil Sonnad, "Trump's Ally in His War on 'Fake News': the Chinese Communist Party," Quartz , December 12, 2017. Anne Applebaum, "Why Neo-Fascists Are Making a Shocking Surge in Poland," Washington Post , November 13, 2017. Erica Frantz and Andrea Kendall-Taylor, "The Evolution of Autocracy: Why Authoritarianism Is Becoming More Formidable," IISS, September 18, 2017 (reprint of article published in Survival , October-November 2017: 57-68). Asia and the Indo-Pacific Japan Steven Erlanger and Jane Perlez, "America's Allies Fear That Traditional Ties No Longer Matter Under Trump," New York Times , December 21, 2018. Christopher Bodeen and Emily Wang, "China-Japan Drawing Closer Amid Trade Pressure from US," Associated Press, October 26, 2018. WSJ Staff, "China, Japan Push for Free Trade as Both Grapple With Trump Demands," Wall Street Journal , October 26, 2018. Stephen Nagy, "Is Trump Pushing China and Japan Together? Not Quite. Security Concerns Will Remain a Barrier to Beijing-Tokyo Rapprochement," National Interest , October 25, 2018. Catherine Wong, "The Fine Line Japan Must Walk Between Frenemy China and Donald Trump'sw 'America First' Agenda," South China Morning Post , October 25, 2018. Jane Perlez, "Japan and China, Asian Rivals, Are Trying to Get Along," New York Times , October 24, 2018. Anna Fifield and Simon Denyer, "Japan's Prime Minister, a Trump Buddy, Now Tries to Cozy Up to China's President," Washington Post , October 22, 2018. Brad Glosserman, "PacNet #70—Japan's Search for Plan C," Center for Strategic and International Studies, October 22, 2018. Simon Denyer, "Japan's Abe Stakes Out new Identity in Region: Stronger Leadership and Wider Military Reach," Washington Post , October 20, 2018. Shiro Armstrong, "Japan's High Stakes Diplomacy with the US and China," East Asia Forum , October 14, 2018. Peter Landers, "Japan and China Find Common Ground in Trump's Tariffs as Leaders Meet," Wall Street Journal , September 12, 2018. Rupakjyoti Borah, "Japan's Indo-Pacific Defense Outreach Continues in Sri Lanka and India," Diplomat , August 27, 2018. Associated Press, "Japan and EU Sign Trade Deal to Eliminate Nearly All Tariffs," Los Angeles Times , July 17, 2018. Robin Wright, "Japan Stands to Gain as America Refuses Involvement in TPP-11 Trade Deal," National Interest , July 8, 2018. Australia James Curran, "Ausralia's Diplomatic Course between China and the United States," East Asia Forum , December 16, 2018. Greg Raymond, "With China-US Tension on the Rise, Does Australia Need a New Defence Strategy?" The Conversation , November 21, 2018. Jason Scott and James Mayger, "Australia Vows Pacific Pivot Amid China Concerns," Bloomberg , November 7, 2018. Peter Hartcher, "Goodbye to Australia's Dangerous Delusion," Sydney Morning Herald , October 30, 2018. "Australia Is 'Sleepwalking into an Era of Unprecedented Danger', Warns Former ADF Member Cate McGregor," News.com.au , October 5, 2018. Catherine McGregor, "We Are Sleepwalking into an Era of Unprecedented Danger," Sydney Morning Herald, October 4, 2018. Greg Colton, "US National Defense Strategy May Force Australia to Get Off the Fence," Interpreter , January 23, 2018. Hugh White, "Australia in the New Asia: Without America," Australian Outlook (Australian Institute of International Affairs) , December 14, 2017. (Edited extract from speech by Hugh White on December 5, 2017, at launch of his essay "Without America: Australia in the New Asia," Quarterly Essay , Issue 68, November 2017.) Jamie Tarabay, "China or the US? Australia's Tricky Balancing Act," CNN , December 6, 2017. Jane Perlez and Damien Cave, "As China Rises, Australia Asks Itself: Can It Rely on America?" New York Times , December 3, 2017. Robert A. Manning, "Australia Is Worried About America's Ability to Lead," Foreign Policy , November 30, 2017. India Tanvi Madan, "Between a Cold War Ally and an Indo-Pacific Partner: India's U.S.-Russia Balancing Act," War on the Rocks , October 16, 2018. Editorial Board, ANU, "India's Cautious Courtship with the US-Led Order in Asia," East Asia Forum , September 24, 2018. T.V. Paul, "How India Will React to the Rise of China: The Soft-Balancing Strategy Reconsidered," War on the Rocks , September 17, 2018. Robert Farley, "The Question of the Decade: How Closely Will the US and India Align?" Diplomat , August 30, 2018. Atman Trivedi and Aparna Pande, "India Is Getting Cold Feet About Trump's America," Foreign Policy , August 30, 2018. Hamza Shad, "Can America and India Really Be Strategic Partners?" National Interest , August 29, 2018. Oriana Skylar Mastro, "Can India Help the United States Against China?" Lawfare , August 26, 2018. Derek Grossman, "India Is the Weakest Link in the Quad," Foreign Policy , July 23, 2018. Asia and the Indo-Pacific in General John S. Van Oudenaren, "What Does Growing U.S.-China Rivalry Mean for America's Allies in Asia?" National Interest , December 13, 2018. Richard Javad Heydarian, "Trump is Forcing China to Reassess its Strategy," National Interest , October 20, 2018. Ankit Panda, "The Damage Is Done: Trump and the Asia-Pacific; The President's Successor Will Need to Offer a Path Forward That Addresses Our Current Self-Serving American Approach," Diplomat , September 14, 2018. Shiro Armstrong, "Building a Coalition for Openness in Asia," East Asia Forum , August 19, 2018. Scott D McDonald, "Wanted: A Strategy for the Indo-Pacific Region; Indo-Pacific Leaders Fear That the United States Is Not Wholly Committed to a Role in the Region," National Interest , August 7, 2018. Steven Erlanger and Jane Perlez, "Europe and Asia Move to Bolster Global Systems That Trump Has Attacked," New York Times , July 18, 2018. Donald Kirk, "Trump Hands Xi Jinping A Win in Singapore—and May Have Handed All of Asia to China," South China Morning Post , June 15, 2018. Motoko Rich, "Trump-Kim Summit Creates New Anxieties for Asian Allies," New York Times , June 13, 2018. Simon Roughneen, "Shifting US Policy Leaves Asian Allies at Sea," Nikkei Asian Review , June 13, 2018. Frederick Kempe, "Fighting the Wrong War? Reaching the Right Peace? Trump's Foreign Policy Unleashed," Atlantic Council , June 4, 2018. Christopher Woody, "Countries in Asia Are Looking for Ways to Counter China's Growing Power—With and Without the US's Help," Business Insider , May 26, 2018. Hal Brands, "Xi May Scare Asia Back Into Washington's Orbit," Bloomberg, March 4, 2018; Greg Sheridan, "Donald Trump's Team Making Headway in Asia," Australian , February 3, 2018. Debra Killalea, "Why Australia and Asian Allies Are Turning Away from US to China," news.com.au , January 29, 2018. Ben Westcott, "Asia Under Trump: How the US Is Losing the Region to China," CNN , January 29, 2018. David Camroux, "Is Trump's America the 'Dispensable' Power in Asia?" East Asia Forum , December 31, 2017. TJ Pempei, "Trump's Democratic Destruction and Asian Absenteeism," East Asia Forum , December 30, 2017. Andrew Phillips, "Trump's Truancy in Asia Could Hasten a Hegemon's Demise," Interpreter , November 22, 2017. See Sang Tan, "Can East Asian Regionalism Be a Bulwark Against a 'Post-Liberal' West?" East Asia Forum , November 18, 2017. Mark Landler, "Trump's Mixed Messages Fail to Reassure Asian Allies," New York Times , November 14, 2017. Foster Klug, "Asia Braces for Trump and His Unpredictable Foreign Policy," Associated Press , November 2, 2017. Robert Dujarric, "US Allies in the Age of Trump; As Trump Prepares to Visit Asia, U.S. Allies in the Region Are Wondering How to Best Respond to His Administration," Diplomat , October 31, 2017. Europe and Canada Leonid Bershidsky, "Europeans Grow Tired of the U.S.-Led Alliance; Trump Is Downgrading America's Pre-eminent Role in Liberal World Order. Second-Tier Powers Are Trying to Figure Out What Comes Next." Bloomberg , February 14, 2019. David M. Herszenhorn, "Europe's NATO Problem; EU Wants to Expand Military Capabilities, But Reliance on America Stands in the Way." Politico, February 14, 2019. Helene Fouquet, "The Moment Macron Gave Up on Trump," Bloomberg , February 13, 2019. Bojan Pancevski, "In Germany, a Cold War Deal to Hose U.S. Nuclear Weapons Is Now in Question," Wall Street Journal , February 12, 2019. Emily Tamkin, "The Problem with Pompeo's Plan to Rival China and Russia in Central Europe," Washington Post , February 12, 2019. Christian Whiton, "Dump NATO and Defense New Europe," National Interest , February 12, 2019. Robbie Gramer, "When European Countries Retreat From Democracy, How Should the U.S. Respond?" Foreign Policy , February 11, 2019. Sebastian Sprenger, "Europe Risks Losing Its Footing amid Shifting World Order, Report Warns," Defense News , February 11, 2019. Ruth Bender, "As U.S. and China Draw Up Trade Barriers, Germany Fights Back," Wall Street Journal , February 5, 2019. Dan Balz and Griff Witte, "Europeans Fear Trump May Threaten Not Just the Transatlantic Bond, But the State of Their Union," Washington Post , February 4, 2019. Edward Alden, "The United States Doesn't Have Your Back; The Trump Administration's Message to Canada and Other U.S. Allies Is Clear: If You Take Heat for Helping Washington, You're On Your Own," Foreign Policy , January 29, 2019. Ted Galen Carpenter, "What the Evolution of NATO's Missions Means for the Future; Washington Is Pushing the Alliance to Adopt an Increasingly Offensive Focus, and the Allies Could Ber Making a Major, Self-Destructive Blunder to Follow Its Lead." National Interest , January 27, 2019. Colin Robertson, "Donald Trump Has Ushered in a New Global Order. Here's How Canada Can Protect Itself," Global and Mail , January 22, 2019. Dave Lawler, "Canada Faces Saudi Arabia and China On Its Own," Axios , January 14, 2019. Yaroslav Trofimov, "Is Europe Ready to Defend Itself? As Donald Trump's America Pulls back and Vladimir Putin's Russia Looms, France and Germany Are Leading a Renewed Drive for a Common European Union Military," Wall Street Journal , January 4, 2019. Susan B. Glasser, "How Trump Made War on Angela Merkel and Europe; The German Chancellor and Other European Leaders Have Run Out of Patience with the President." New Yorker , December 24, 2018. Hal Brands, "Allied Relied on Mattis. Now They're Worried." Bloomberg , December 21, 2018. Steven Erlanger and Jane Perlez, "America's Allies Fear That Traditional Ties No Longer Matter Under Trump," New York Times , December 21, 2018. Elizabeth Rosenberg and Edoardo Saravalle, "China and the EU Are Growing Sick of U.S. Financial Power; They Are Trying Their Best to Erode Washington's Rules." Foreign Policy , November 16, 2018. Benjamin Haddad, "Trump Is Getting the European Army He Wanted; US President Pushed NATO Allies to Get Serious on Defense. Now They're Listening." Politico , November 14, 2018. Katrin Bennhold and Steven Erlanger, "Merkel Joins Macron in Calling for a European Army 'One Day,'" New York Times , November 13, 2018. Rachel Donadio, "Trump's Bromance With Macron Fizzles Spectacularly; A Weekend of Presidential Drama in Paris Culminated in the French President's Warning Against an Emerging Global Disorder." Atlantic , November 11, 2018. David Nakamura, Seung Min Kim, and James McAuley, "Macron Denounces Nationalism As a 'Betrayal of Patriotism' in Rebuke to Trump at WWI Remembrance," Washington Post , November 11, 2018. Stacy Meichtry and Laurence Norman, "France's Macron Calls for Creating a 'European Army'; French President Sharply Criticizes Europe's Military Reliance on the U.S., Days Before President Trump Is to Visit," Wall Street Journal , November 6, 2018. "France's Macron Pushes for 'True European Army,'" BBC , November 6, 2018. Jacob M. Schlesinger, Paul Vieira, and Emre Peker, "WTO Members Work to Overhaul Trade Watchdog Amid Trump's Criticism; Failure to Meet U.S. Demands Could Leave Global Commercial Court in Limbo; 'Every Case Potentially Becomes a Trade War,' One WTO Official Says," Wall Street Journal , October 23, 2018. "EU Builds Ties with Asia in Face of US Protectionism," Agence France-Presse, October 18, 2018. Rick Noack, "Yes, World Leaders Laughed at Trump. But There Was Another, Less Obvious Sign of Diminishing U.S. Influence," Washington Post , September 26, 2018. Agence France-Presse, "Macron at UN Rebukes Trump's 'Law of the Strongest,'" Daily Mail (UK) , September 25, 2018. Angela Charlton, "Trump and Macron: Realism Replaces Unlikely Bromance," Associated Press , September 25, 2018. Frank Jordans and Angela Charlton, "AP Interview: NATO Chief Plays Balancing Act with Russia," Associated Press , September 25, 2018. Amy J. Nelson and Emily Byrne, "To Improve Transatlantic Relations Look to History and Identity; Without Leadership by Example from Europe or America, the World Order Will Shift in China's Favor," National Interest , September 25, 2018. Sten Running, "A Europeanized NATO? The Alliance Contemplates the Trump Era and Beyond," War on the Rocks , September 25, 2018. Tim Ruhlig, "The EU's New China Resolution: Principled But Not Strategic," Diplomat , September 13, 2018. Hans Binnendijk, "Despite Infighting, Here's How NATO Can Persevere," Defense News , September 20, 2018. Kristin Huang, "Russia-China Military Cooperation 'Could Worry Europe,'" South China Morning Post , September 14, 2018. Pierre Tran, "France Wonders: Can We Always Count on American Support?" Defense News , September 14, 2018. Catherine Wong, "EU and China Need Closer Ties Urgently to Offset Trade Disruption, Says Bloc's New Ambassador in Beijing," South China Morning Post , September 14, 2018. Ben Sills and Esteban Duarte, "Europe Pushing for Euro Dominance to Fend Off Trump, Spain Says," Bloomberg , September 13, 2018. Pierre Tran, "French Joint Chiefs Call for Coordinated European Force," Defense News , September 11, 2018. Keith Johnson, "The Buck Stops Here: Europe Seeks Alternative to U.S.-Dominated Financial System; German and France Complain That the U.S. Is Abusing Sanctions Power to Bully Even Its Allies," Foreign Policy , September 5, 2018. John Van Oudenaren, "Why China Is Wooing Eastern and Central Europe," National Interest , September 4, 2018. John Detrixhe, "The Divide Between the US and Europe Is Growing, Just as Putin Hoped," Quartz, September 1, 2018. Anne Kauranen, "It's Time for Realism in EU-Russia Ties: France's Macron," Reuters , August 30, 2018. Agence France-Presse, "German Foreign Minister Brands Trump's EU Policy 'Irritating,'" Agence-France-Presse , August 28, 2018. Agence France-Presse, "French President Emmanuel Macron Insists EU Can No Longer Rely on US to Guarantee Its Security," South China Morning Post , August 27, 2018. Angelique Chrisafis, "Europe Can No Longer Rely on US for Security, Says Emmanuel Macron, Guardian , August 27, 2018. Remi Adekoya, "Europe's Donald Can Fight Dirty, Too," Foreign Policy , August 20, 2018. Ilya Arkhipov and Arne Delfs, "Putin and Merkel, Pushed Together by Trump, Talk Syria, Pipeline," Bloomberg , August 18, 2018. Melissa Eddy, "Another Surprise Meeting With Putin. This Time, It's Merkel," New York Times , August 13, 2018. Ott Ummelas, "NATO's East Is Rearming, But It's Because of Putin, Not Trump," Bloomberg , August 13, 2018. David M. Herszenhorn, "EU Vows to Thwart Trump's Sanctions on Iran," Politico , August 6, 2018. Chrystia Freeland, "In Defence of the Rules-Based International Order: How Canada and Its Partners Must Fight Back, 32 nd IISS Fullerton Lecture, August 2, 2018. Derek, "Trump's Performance in Helsinki Shouldn't Have Come as a Surprise; U.S. Allies in Europe Are Resigned to a Trans-Atlantic Relationship That Keeps Getting Worse," Foreign Policy , July 19, 2018. Steven Erlanger and Jane Perlez, "Europe and Asia Move to Bolster Global Systems That Trump Has Attacked," New York Times , July 18, 2018. Associated Press, "Japan and EU Sign Trade Deal to Eliminate Nearly All Tariffs," Los Angeles Times , July 17, 2018. Raf Casert, "EU, US Relations Sinking Further After Divisive Trump Tour," Associated Press , July 17, 2018. Jack Ewing, "E.U. Courts New Partners With Japan Trade Deal," New York Times , July 17, 2018. Michael Birnbaum, "Europe Fears Trump-Putin Summit Will Embolden Kremlin, Weaken Transatlantic Unity," Washington Post , July 16, 2018. Michelle Goldberg, "'Evil Has Won'; Pro-American Germans Feel Betrayed," New York Times , July 13, 2018. Abigail Tracy, "'He Chooses the Hammer Every Time': NATO Left Fuming As Trump Turns Toward Putin," Vanity Fair , July 13, 2018. Zachary Cohen, Michelle Kosinski, and Barbara Starr, "Trump's Barrage of Attacks 'Beyond Belief,' Reeling NATO Diplomats Say," CNN , July 12, 2018. Steven Erlanger, Julie Hirschfeld Davis, and Katie Rogers, "NATO Survives Trump, but the Turmoil Is Leaving Scars," New York Times , July 12, 2018. Vanessa Gera, "Trump's Tough NATO Talk Plays Well on Eastern Flank," Associated Press , July 12, 2018. Valentina Pop, Laurence Norman, and Robert Wall, "Trump Unsettles NATO Allies With Demands as He Backs Alliance," Wall Street Journal , July 12, 2018. Reihan Salam, "The Coming Split in NATO; Trump Wants Our European Allies to Build Their Military Strength. What Will It Look Like If they Do?" Atlantic , July 12, 2018. Richard Fontaine and Vance Serchuk, "The West Will Survive Trump," Atlantic , July 12, 2018. Robert Burns, "Trump's Attacks on NATO Raise Questions About Its Future," Associated Press , July 10, 2018. Ulrike Franke, "Watching for Signs of NATO's End of Times," War on the Rocks , July 10, 2018. David M. Herszenhorn, "Trump's Neglect of Europe Goes Beyond Angry Tweets; Unfilled Positions, Truncated Communications, Lack of Policy Clarity Combine to Provoke Anger Across the Continent," Politico , July 10, 2018. Phil Stewart, "As Trump Confounds, Mattis Seen as Quiet Champion Among NATO Allies," Reuters , July 9, 2018. Michael Birnbaum, "Ahead of NATO Summit, Allies Wonder: Will NATO Survive Trump?" Washington Post , July 8, 2018. Greg Jaffe, Josh Dawsey, and Carol D. Leonnig, "Ahead of NATO and Putin Summits, Trump's Unorthodox Diplomacy Rattles Allies," Washington Post , July 6, 2018. Jimmy Quinn, "'America First' Is the EU's Greatest Opportunity," National Review , June 28, 2018. Reuters Staff, "EU Leaders to Strengthen Defenses, Seek 'Strategic Autonomy' At Summit: Draft," Reuters , June 27, 2018. Josh Rogin, "Biden: European Leaders Reeling from Trump's Hostile Behavior," Washington Post , June 26, 2018. Daniel Boffey, "Nato Chief Warms Over Future of Transatlantic Relationship," Guardian , June 19, 2018. Simon Nixon, "Europe Ponders New World Order as Trans-Atlantic Ties Fray," Wall Street Journal, June 12, 2018. Stephen Collinson, "The West Is in Crisis, Despite Trump's Glowing Assessment," CNN , June 9, 2018. Frederick Kempe, "Fighting the Wrong War? Reaching the Right Peace? Trump's Foreign Policy Unleashed," Atlantic Council , June 4, 2018. Erik Brattberg, "Why Trump's Tariffs May Push Europe Toward China and Russia," National Interest , June 3, 2018. Joergen Oerstroem Moeller, "The End of the Atlantic Alliance," National Interest , May 28, 2018. Yasmeen Serhan, "Is the U.S. Bringing Europe and Russia Closer Together?" Atlantic , May 25, 2018. Robbie Gramer, "NATO Chief Worried About Fissures Between United States and Europe," Foreign Policy , May 18, 2018. Keith Johnson, Dan De Luce, Emily Tamkin, "Can the U.S.-Europe Alliance Survive Trump?" Foreign Policy , May 18, 2018. James Traub, "RIP the Trans-Atlantic Alliance, 1945-2018; The Partnership with America Had a Long Life—But Europe Is Ready to Start Over." Foreign Policy , May 11, 2018. Stephen M. Walt, "Europe Has No Clue How to Handle an American Bully," Foreign Policy , May 2, 2018. Kevin Baron, "Macron Mic-Drops on Trump, Offers a New Call to Western Leadership," Defense One , April 25, 2018. Steven Erlanger, "Europe Once Saw Xi Jinping as a Hedge Against Trump. Not Anymore." New York Times , March 4, 2018. Doug Bandow, "Europe Still Doesn't Take Its Own Defense Seriously," National Interest , February 24, 2018. Michael Birnbaum and Griff Witte, "German Defense Minister Slams Trump's Military-Heavy Approach to Security," Washington Post , February 16, 2018. Teri Schultz, "Is Europe Bold Enough to Counter US Ambivalence?" Deutsche Welle , February 15, 2018. Mercy A. Kuo, "What the EU Thinks of the US 'Indo-Pacific' Strategy, Insights from Bernt Berger," Diplomat , January 31, 2018. Matt Peterson, "A Glimpse of a Canadian-Led International Order; The U.S. Ditched a Massive Trade Agreement—Which Turned Out Slightly Better Without It," Atlantic , January 24, 2018. Freddy Gray, "The 'Special Relationship' Is in Trouble, And That's Bad News for London," National Interest , January 16, 2018. Christiane Hoffmann and Claus Brinkbaumer, "'We Are Seeing What Happens When the U.S. Pulls Back,'" Spiegel , January 8, 2018. (Interview with German Foreign Minister Sigmar Gabriel.) Anna Sauerbrey, "Is the Trans-Atlantic Relationship Dead?" New York Times , January 3, 2018. Appendix E. Recent Writings on U.S. Role and World Order This appendix lists recent examples of writings on the question whether a changed U.S. role in the world is affecting world order in some way, with the most recent on top. Andreas Illmer, "China Disappearances Show Beijing Sets Its Own Rules," BBC , October 17, 2018. Bethany Allen-Ebrahimian, "Can the Chinese Be Trusted to Lead International Institutions?" Defense One , October 14, 2018. Bethany Allen-Ebrahimian, "Can the Chinese Be Trusted to Lead Global Institutions? The Abduction of Interpol's President Shows That Beijing's Officials Will Be Subordinate to the Orders of the Communist Party," Atlantic , October 11, 2018. Matt Stoller, "If the U.S. Doesn't Control Corporate Power, China Will; Laissez-Faire Economics Has left Firms Bending the Knee to Beijing," Foreign Policy , October 11, 2018. Charlotte Gao, "Abrupt Detention of Meng Hongwei Further Damages China's International Reputation; Meng, Like All Other Chinese Citizens, Deserves Procedural Justice, One Core Value of the Rule of Law Which China Often Ignores," Diplomat , October 9, 2018. Julian Ku, "Why China's Disappearance of Interpol's Chief Matters," Lawfare , October 9, 2018. Sophie Richardson, "China Disappeared Interpol's Chief. The World Can't Pretend It's Business as Usual." Washington Post , October 9, 2018. Timothy R. Heath, "PacNet #68—What Does China's Pursuit of a Global Coalition Mean for World Politics?" Center for Strategic and International Studies, October 3, 2018. Bradley A. Thayer and John M. Friend," The World According to China; Understanding the World China Seeks to Create by 2049, When the PRC Turns 100," Diplomat , October 3, 2018. William Dobson, "China Unbound: What An Emboldened China means For The World," NPR , October 2, 2018. Andrea Kendall-Taylor and David Shullman, "How Russia and China Undermine Democracy; Can the West Counter the Threat?" Foreign Affairs , October 2, 2018. Amy J. Nelson and Emily Byrne, "To Improve Transatlantic Relations Look to History and Identity; Without Leadership by Example from Europe or America, the World Order Will Shift in China's Favor," National Interest , September 25, 2018. Michelle Nichols, "U.N. Chief Warms Leaders of 'Increasingly Chaotic' World Order," Reuters , September 25, 2018. Steven Erlanger, "Is the World Becoming a Jungle Again? Should Americans Care?" New York Times , September 22, 2018. Abigail Grace, "China and America May Be Forging a New Economic Order; It's Not a Cold War. But the Dispute Between the World's Largest Economies is Taking the World into Unknown Territory," Atlantic , September 20, 2018. Elena Holodny, "Russia, China Embrace Uneasily, Aim for 'Desirable World Order,'" NBC News , September 20, 2018. Graham Allison, "The Truth About the Liberal Order," Foreign Affairs , August 28, 2018. Jackson Janes and Peter S. Rashish, "The West's Greatest Challenge Lies in Washington, Not Moscow," National Interest , August 17, 2018. Christopher A. Preble, "Is This the End of the Liberal World Order?" National Interest , August 3, 2018. James Kirchick, "Trump Wants to Destroy the World Order. So What? Whatever the President's Intentions, His Efforts to Rock the Foundation of International Politics Are Hopeless," Foreign Policy , July 26, 2018. Stewart Patrick, "The World Order Is Starting to Crack; America's Allies and Adversaries Are Adapting to Donald Trump in Ways That Can't Easily Be Reversed," Foreign Policy , July 25, 2018. Uri Friedman, "The Rise of 'Revisionist America,'" Atlantic , July 19, 2018. Christopher Cadelago, "Trump's Step Toward Putin Seals a New World Order; The President Has Upended the Global Definitions of Friends and Foes," Politico , July 16, 2018. Max Fisher, "Trump Shakes the International Order. Could It Break?" New York Times , July 15, 2018. Robert Kagan, "Things Will Not Be Okay," Washington Post , July 12, 2018. Amitav Acharya, "Asia After the Liberal International Order," East Asia Forum , July 10, 2018. David A. Graham, "Can Anyone Fill the U.S. Leadership Vacuum on Climate Change? American Withdrawal from the Paris Agreement Is a Test for the Future of the Globe, But Also for the International Order." Atlantic , June 25, 2018. George Packer, "Donald Trump Goes Rogue; In Half a Week, Between Quebec and Singapore, Trump Showed That the Liberal Order Is Hateful to Him, and That He Wants Out," New Yorker , June 25, 2018. Kori Schake, "The Trump Doctrine Is Winning and the World Is Losing," New York Times , June 15, 2018. Graham Allison, "The Myth of the Liberal Order," Foreign Affairs , June 14, 2018. Michael Hirsh, "The International System He Disdains Was Created by Americans—to Advance American Interests." Washington Post , June 14, 2018. Robert Kagan, "Trump's America Does Not Care," Washington Post , June 14, 2018. Fred Kaplan, "Demolition Donald, It's Undeniable That the President Is Wrecking the U.S.-Led International Oder. The Only Question Left Is Whether He's Doing It on Purpose." Slate , June 14, 2018. Jeremy Diamond, "Trump Resets the World Stage," CNN , June 13, 2018. Ben Steil, "The West Will Die So That Trump Can Win," Foreign Policy , June 12, 2018. Zachary Karabell, "Trump's Creative Destruction of the International Order," Foreign Policy , June 11, 2018. "Present at the Destruction; America's President Is Undermining the Rules-Based International Order. Can Any Good Come of It?" Economist , June 9, 2018: 18-20, 22. Frederick Kempe, "Present at the Destruction?" Atlantic Council , June 9, 2018. Aris Folley, "Top EU Figure: Trump Is 'Undermining' World Order US Created," The Hill , June 8, 2018. Karebn DeYoung, "In Trump, Some Fear the End of the World Order," Washington Post , June 8, 2018. Ana Campoy, "Trump Is a Globalist. Just a Chaotic One." Quartz , April 7, 2018. Frerd Bauer, "To Preserve the 'Liberal World Order,' Reform It; The Political Establishment's Decisions Have Contributed Mightily to the Problems We Face." National Review , April 2, 2018. Michael Brendan Dougherty, "The Endless Hysteria about the Liberal World Order," National Review , March 27, 2018. Stewart M. Patrick, "China and Trump May Bury the Liberal International Order," Defense One , March 25, 2018. Joseph S. Nye, "Human Rights and the Fate of the Liberal Order," Project Syndicate , May 9, 2018. Richard N. Haass, "Liberal World Order, RIP," Strategist (ASPI) , March 24, 2018. Hal Brands, "The 'American Century' Is Over, and It Died in Syria," Bloomberg , March 8, 2018; Robert Farley, "How Can the US Manage a Rising China? The United States Needs to Rethink How It Approaches International Oder," Diplomat , February 27, 2018. Eliot A. Cohen, "Witnessing the Collapse of the Global Elite," Atlantic , February 19, 2018. Ash Jain, "Is the Democratic Order Doomed?" Atlantic Council , February 15, 2018. Tunku Varadarajan, "Will China Impost a New World Order? When Pax Britannica Gave Way to Pax Americana, the Transition Was Peaceful. A Repeat Is unlikely, Says the Author of 'Safe Passage.'" Wall Street Journal , February 9, 2018. Andreas Boje Forsby, "Trump, Xi, and the Eclipse of the Liberal World Order; As the United States Abdicates, an Illiberal China Steps onto the World Stage," DIIS (Dansk Institut for Internationale Studier) , February 6, 2018. Salvatore Babones, "America Has Little to Fear from a China-Centered World," Washington Post , January 25, 2018. Aaron Friedberg, "China's Understanding of Global Order Shouldn't Be Ours," Foreign Policy , January 24, 2018; Matt Peterson, "A Glimpse of a Canadian-Led International Order; The U.S. Ditched a Massive Trade Agreement—Which Turned Out Slightly Better Without It," Atlantic , January 24, 2018. Chengxin Pan, "Time to Worry About a Chinese-Led Global Order," Interpreter , January 10, 2018. Isobel Thompson, " 'Catastrophic': World Leaders Fear the Worst As Trump Goes Rogue; Foreign-Policy Relationships Are Falling Apart as the White House Dismantles the Post-War Order," Vanity Fair , January 4, 2018. Charlotte Gao, "2018: China Vows to Be the Keeper of International Order," Diplomat , January 2, 2018; Jennifer Lind, "Will the Liberal Order Destroy Itself? While cosmopolitan Americans Grieved on November 9, 2016, That Trump Would Ruin the Liberal International Order, the Order Was Already Straining Under Its Own Ambitions," National Interest , December 18, 2017. H. Brands and C. Edel [Hal Brands and Charles Edel], "The Disharmony of the Spheres; The U.S. Will Endanger Itself If It Accedes to Russian and Chinese Efforts to Change the International System to Their Liking," Commentary , December 14, 2017. Korber-Stiftung, "Yan Xuetong on How Germany and China Should Rethink the Global Order; 'The Current Norms Are No Longer Suitable,'" Diplomat , December 6, 2017. Oliver Stuenkel, "No Need to Fear a Post-Western World," Global Times , November 28, 2017. Richard Heydarian, "Trump Humbled in China as Beijing Visit Underlines the New World Order in Asia," South China Morning Post , November 13, 2017. David Usborne, "Donald Trump's America First Doctrine Will Destroy the United Nations," Independent (UK) , September 19, 2017. Philip Zelikow, "Is the World Slouching Toward a Grave Systemic Crisis?" The Atlantic , August 11, 2017. Fareed Zakaria, "Say Hello to a Post-America World," Washington Post , July 27, 2017. Hal Brands and Eric Edelman, "America and the Geopolitics of Upheaval," National Interest , June 21, 2017. George Fujii, "The End of American Liberal Internationalism?" ISSF Policy Series , March 30, 2017. Uri Friedman, "What a World Led by China Might Look Like," The Atlantic , March 29, 2017. Bjorn Jerden, et al., "Don't Call it the New Chinese Global Order (Yet)," Foreign Policy , March 7, 2017. Kori Schake, "Will Washington Abandon the Order?" Foreign Affairs , January/February 2017. See also the following RAND reports, written under RAND's "Building a Sustainable International Order" project: Michael J. Mazarr, Summary of the Building a Sustainable International Order Project , RAND, 2018, 32 pp. Michael J. Mazarr, Astrid Stuth Cevallos, Andrew Radin, and Miranda Priebe, Building a Sustainable International Order, Summary of the First Workshop in the International Order Project Series , RAND, 2016, 8 pp. Michael J. Mazarr, Miranda Priebe, Andrew Radin, and Astrid Stuth Cevallos, Understanding the Current International Order , RAND, 2016, 80 pp. Michael J. Mazarr and Ashley L. Rhoades, Testing the Value of the Postwar International Order , RAND, 2018, 124 pp. Michael J. Mazarr, et al, Measuring the Health of the Liberal International Order , RAND, 2017, 228 pp. Kyle Lascurettes, The Concert of Europe and Great-Power Governance Today: What Can the Order of 19th-Century Europe Teach Policymakers About International Order in the 21st Century? RAND, 2017, 36 pp. Michael J. Mazarr, Miranda Priebe, Andrew Radin, and Astrid Stuth Cevallos, Alternative Options for U.S. Policy Toward the International Order , RAND, 2017, 130 pp. Hal Brands, American Grand Strategy and the Liberal Order: Continuity, Change, and Options for the Future , RAND, 2016, 40 pp. Michael J. Mazarr, Timothy R. Heath, and Astrid Stuth Cevallos, China and the International Order , RAND, 2018, 172 pp. Andrew Radin and Clinton Bruce Reach, Russian Views of the International Order, RAND, 2017, 124 pp. Appendix F. Background Information on U.S. Public Opinion About U.S. Role This appendix presents background information on U.S. public opinion relating to the U.S. role in the world. November 2018 Pew Research Center Survey A November 2018 article by the Pew Research Center regarding a survey of U.S. foreign policy attitudes conducted in November 2018 states The public's leading long-range foreign policy goals for the United States are focused on security, including economic security. About seven-in-ten (72%) say that taking measures to protect the U.S. from terrorist attacks should be a top priority for the country, while about as many (71%) say the same about protecting the jobs of American workers. Two-thirds (66%) say preventing the spread of weapons of mass destruction (WMD) should be a top long-range priority for the United States. With only a handful of exceptions, including stopping the spread of WMD, there are sizable differences between Republicans and Democrats on the 26 foreign policy goals in the survey by Pew Research Center, which was conducted Nov. 7-16 among 10,640 adults. And on several foreign policy goals, particularly the importance of maintaining U.S. military superiority, there also are notable gaps between older and younger adults. U.S. allies. Improving relationships with U.S. allies ranks at the top of Democrats' foreign policy goals (70% top priority) but is a middle-tier objective for Republicans (44%). In addition, Republicans are 30 percentage points more likely to say that getting other countries to assume more of the costs of maintaining world order should be a top priority for U.S. foreign policy (56% vs. 26%). U.S. military superiority. A large majority of Republicans and Republican-leaning independents (70%) say that maintaining the U.S. military advantage over all other countries should be a top priority for the U.S.; just 34% of Democrats and Democratic leaners rate this as a top priority. Notably, maintaining U.S. military superiority is a top priority for a majority of adults ages 50 and older (62%). But just 30% of those younger than 30 say this should be a top foreign policy priority. Refugees and immigration. While only about four-in-ten Democrats (39%) say that aiding refugees fleeing violence should be a top foreign policy priority, far fewer Republicans (11%) say the same. Republicans are far more likely than Democrats to rate reducing both illegal immigration and legal immigration into the U.S. as major priorities. The partisan divide on the importance of reducing illegal immigration, 48 percentage points, is wider than at any point in the past two decades (68% of Republicans vs. 20% of Democrats). Climate change. Partisans have long differed over the importance of dealing with climate change. But the gap is especially wide today, with 64% of Democrats and just 22% of Republicans saying that dealing with climate change should be a top foreign policy priority for the U.S. (The survey was conducted before the Nov. 23 release of the National Climate Assessment.) Russia, Iran, China and North Korea. Partisan opinions about limiting the power and influence of Iran and Russia are nearly mirror images: 52% of Democrats say reducing Russia's power and influence should be a top priority, compared with 32% of Republicans. By contrast, 52% of Republicans rate limiting Iran's power as a top goal, compared with 29% of Democrats. Reducing China's power and influence is not a leading goal for either party, but more Republicans (39%) than Democrats (26%) rate this as a top priority. There is greater partisan agreement on North Korea: 43% of Republicans and 35% of Democrats say limiting North Korea's power and influence is a top priority. Trade and economic relations. Reducing the U.S. trade deficit with other countries is viewed as a top foreign policy priority by 54% of Republicans, compared with 33% of Democrats. And more Republicans (51%) than Democrats (40%) say promoting U.S. economic interests abroad should be a top foreign policy priority. Among the public overall, attracting skilled workers from other countries (16% top priority), promoting democracy in other countries (17%) and finding a solution to the conflict between Israel and the Palestinians (18%) rank near the bottom of the long-range foreign policy goals. However, for each of these items – indeed, for all 26 priorities in the survey – majorities say they should be given top priority or some priority. Young and old differ over importance of foreign policy goals Younger Americans (those under 30) are generally less likely to say that the issues presented in the survey should be a "top priority." Across the 26 items included in the survey, those under 30 are an average of 10 points less likely than those 65 or older to say each should be a "top priority." In some cases the gaps between older and younger Americans are much larger. Younger Americans are much less likely than their older counterparts to prioritize limiting the power and influence of several prominent foreign powers. Only about three-in-ten young people feel that the U.S. should place top priority on limiting the power and influence of Russia (29%), Iran (29%) and North Korea (26%). Even fewer say the same about China (21%). By contrast, Americans 65 or older are much more likely to say that limiting the influence of these countries should be a top priority. For instance, 54% say limiting the power and influence of Russia should be a top priority for the U.S. There are a few issues that younger people place greater importance on than older adults. About half (49%) of those ages 18 to 29 say the U.S. should make protecting groups or nations threatened with genocide a top priority; fewer of those 65 or older (36%) say the same. Younger people are 18 percentage points more likely than the oldest adults to say that promoting and defending human rights in other countries should be a top priority (41% vs. 23%). When it comes to aiding refugees fleeing violence around the world, those younger than 65 are more likely than those ages 65 and older to say this should be a top foreign policy priority for the U.S. There's also a substantial age divide in the priority given to goals involving the U.S. military. Americans 65 and older are more than twice as likely as those under 30 to say that the U.S. maintaining its military advantage over all other countries is a top priority (64% vs. 30%). Younger people are more likely than older people to say that reducing U.S. military commitments overseas should be a top priority (34% vs. 20%). Age gaps also are seen in dealing with terrorism. About eight-in-ten of those 50 and older (81%) say that taking measures to protect the U.S. from terrorist attacks should be a top priority, this figure drops nearly 20 points among those under 50 (63%). When asked about whether the U.S. should prioritize taking measures to seek out and destroy terrorist groups in other countries, about a quarter of Americans under 50 (27%) say it should be a top priority compared with 44% of those 50 or older. Shifting views of U.S. foreign policy goals The public's views of long-term goals for U.S. foreign policy have shifted over the past two decades. In many cases, partisan divides have emerged – or widened – when it comes to how much priority should be placed on key international goals. In the current survey, a sizable majority of Democrats and Democratic leaners (70%) say improving relationships with our allies should be a top priority, while significantly fewer Republicans and Republican leaners say this should be a top priority (44%). This is one of the largest gaps observed on this issue since the question was first asked in 2004. The share of Democrats who view improved relationships with allies as a top priority is much higher than it was in 2011, during Barack Obama's first term, when 48% said this. There is a wide partisan gap over the importance of getting other countries to assume more of the costs of maintaining world order: 56% of Republicans say this is a top priority, compared with just 26% of Democrats. When the question was last asked in 2004, comparable shares of Republicans (59%) and Democrats (58%) said this issue should be a top priority. Democrats are far more likely than Republicans to prioritize promoting democracy in other nations, promoting and defending human rights abroad, and helping improve living standards in developing nations. Though neither party rates the promotion of democracy in other nations as a particularly high priority, Democrats are twice as likely as Republicans to say this should be a top foreign policy goal (22% vs. 11%). Views are about the same as they were in a telephone survey conducted in 2013. A similar pattern emerges on promoting and defending human rights in other countries. About four-in-ten Democrats (39%) say promoting human rights abroad should be a top priority. Fewer Republicans (20%) prioritize this goal. This partisan gap is little different from 2013, but wider than at most other points measured over the past 25 years. Today, just 12% of Republicans say improving living standards in developing nations should be a top priority. More than twice as many Democrats (32%) say this should be a top priority. Republicans are more likely than Democrats to view the promotion of U.S. business and economic interests a top foreign policy priority. This also is the case in views of protecting U.S. jobs and reducing the trade deficit with other countries. Today, roughly half of Republicans (51%) say promoting U.S. business and economic interests abroad should be a top priority in foreign policy. Fewer Democrats (40%) say this should be prioritized. In 2004, 40% of Republicans and 32% of Democrats said promoting U.S. business interests should be a top priority. Among the public overall, protecting the jobs of American workers continues to rank among the top priorities for U.S. foreign policy, though the share who calls this a top priority is somewhat lower today (71%) than in 2013 (81%). More Republicans (81%) than Democrats (65%) say protecting American jobs should be a top U.S. foreign policy priority; this issue is among the top three priorities for members of both parties. When it comes to reducing the U.S. trade deficit with other countries, a double-digit gap currently divides Republicans and Democrats. Over half of Republicans (54%) say "reducing our trade deficit with other countries" should be a top priority, while just a third of Democrats (33%) say the same. When the question was last asked in 1997, about equal shares of partisans called this issue a top priority. Some of the largest differences between Republicans and Democrats are seen in views of how much priority should be given to reducing illegal immigration and dealing with global climate change. Nearly seven-in-ten Republicans (68%) say that reducing illegal immigration into the U.S. should be a top U.S. foreign policy goal; just 20% of Democrats say the same. A partisan gap on prioritizing reducing illegal immigration has existed since 2005, but the current gap is especially wide. Since 2013, the share of Democrats who say reducing illegal immigration should be a top priority has declined significantly, from 38% then to 20% today. Democrats continue to be more likely than Republicans to say dealing with global climate change should be a top priority. About two-thirds of Democrats (64%) say this, compared with just 22% of Republicans. A partisan gap has existed since this question was first asked in 2001, but it is as wide as it has ever been during this period. October 2018 Chicago Council on Global Affairs Report A 2018 Chicago Council on Global Affairs report on U.S. public opinion data regarding U.S. foreign policy that was released in October 2018 stated the following: In the wake of the 2016 US presidential election, political analysts warned of a dark era ahead. Newly elected President Donald Trump had long expressed opposition to US security alliances, skepticism of free trade, and support for authoritarian leaders such as Vladimir Putin. Since the American public generally relies on their political leaders for foreign policy decisions, many policy watchers cautioned that the country was headed for a populist, unilateralist, and protectionist retreat from global leadership. While the Trump administration has taken action along this path—unilaterally withdrawing from the Paris and Iran agreements, pulling the United States out from the Trans-Pacific Partnership (TPP) trade agreement, and questioning the value of long-time alliances like NATO—the majority of the American public has not followed this lead. To the contrary, most Americans have moved in the opposite direction. The largest majority since 1974—except for just after the September 11 attacks—now support active US engagement in world affairs. A solid majority supports multilateral diplomacy, underscored by public willingness to accept international decisions that are not the first choice for the United States. A record number of Americans now acknowledge the benefits of international trade. Even though the United States withdrew from both the Paris Agreement and the Iran nuclear deal, public support for these agreements has actually increased. And as the ultimate indicator of commitment to allies, increased majorities express support for sending US troops to defend both NATO and Asian allies if they are attacked. Americans Want the United States to Remain Engaged Despite attempts by the White House to pull the United States back from global engagement, seven in 10 Americans… favor the United States taking an active part in world affairs (70%). This reading is a 7 percentage point increase from the 2017 Chicago Council Survey and is the highest recorded level of support since 1974 except for 2002, the first Chicago Council Survey conducted after the September 11 attacks…. A Majority Wants Shared Action on Global Issues The American public does not envision the United States working alone when playing an active role on the world stage. Rather, a striking majority (91%) say that it is more effective for the United States to work with allies and other countries to achieve its foreign policy goals. Just 8 percent say that it is more effective for the United States to tackle world problems on its own. Sharing leadership on global issues may mean that the United States does not always achieve its preferred policy outcomes. Yet a majority support the United States making decisions with its allies even if it means the United States will sometimes have to go along with a policy that is not its first choice (66% agree, 32% disagree). Similarly, two-thirds of Americans believe that the United States should be more willing to make decisions within the United Nations even if it means that the United States will sometimes have to go along with a policy that is not its first choice (64% agree, 34% disagree)—the highest level of support on this question since it was first asked in 2004, when 66 percent agreed. Support Is Up for the Iran Deal and the Paris Agreement President Trump has broken away from several international agreements since taking office, including the Paris Agreement on climate change and the Iran nuclear deal. But the American public has not followed the president's cues. Majorities of the public say that the United States should participate in the Iran deal (66%) and the Paris Agreement (68%). In fact, support for US participation in both of these high-profile international agreements has risen 6 percentage points over the past year…. It's More Important to be Admired than Feared The administration has attempted to change the nature of US influence around the world by using coercive rhetoric toward both allies and hostile actors. Perhaps reflective of this approach, more Americans think that the United States is now more feared (39%) than admired (20%) around the world today, though many volunteer an alternative response, ranging from "a joke" to "weak" to "falling apart." But almost three times as many Americans think admiration (73%) of the United States is more important than fear (26%) of the United States to achieve US foreign policy goals. As interactions with US allies have strained over the course of the past year, majorities of Americans say that relations with other countries are worsening (56%) and that the United States is losing allies (57%). Just 12 percent of the public says that the United States is gaining allies and 31 percent state there has been no change. US Public Wants to Maintain or Increase Commitment to NATO While some administration officials have praised NATO, the president has repeatedly criticized European allies for not spending enough on defense. Yet his attacks do not seem to have dented public support for the transatlantic alliance. A majority of Americans continue to favor maintaining (57%) or increasing (18%) US commitment to NATO; in fact, a higher percentage of Americans now favor increasing the US commitment to NATO than ever before…. Support for Using US Troops to Defend Key Allies Has Grown Americans continue to favor contributing to allies' security through bases and security commitments, and their willingness to do so has increased since last year. Majorities of Americans support maintaining long-term military bases in South Korea (74%) and Japan (65%); both responses are at record levels since the question was first asked in the 2002 Chicago Council Survey. As in past surveys, a majority continue to support maintaining US bases in Germany (60%). Further, two-thirds of Americans support sending US troops to defend South Korea (64%) and Japan (64%) if attacked by North Korea, and 54 percent support defending Baltic NATO allies with US troops if Russia invades. Each of these measures is at a peak since the Council began asking these questions. Americans Are High on Trade The White House is waging trade battles on multiple fronts, but the American public is more positive about the benefits of trade than ever before, surpassing even the previous record ratings of 2017…. Large majorities of Americans now say that trade is good for consumers like you (85%), the US economy (82%), and creating jobs in the United States (67%)…. While the president has criticized the North American Free Trade Agreement (NAFTA) and withdrawn from the TPP trade agreement, 63 percent of Americans now say NAFTA is good for the US economy, up from 53 percent in 2017, and another record level in Chicago Council surveys. A majority of Americans (61%) also believe the United States should participate in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, or the CPTPP, a trade agreement formed by the 11 signatories to the original TPP after US withdrawal. Americans face the possibility of serious trade disruptions, as the United States and China are currently exchanging several rounds of tariffs. While only four in 10 Americans consider a possible trade war with China a critical threat (42%), a combined seven in 10 Americans are very (31%) or somewhat (41%) concerned that a trade war with China will hurt their local economy.5 Trade disputes with Mexico, America's third-largest trading partner, are somewhat less concerning to the US public: just over half of the public are very (19%) or somewhat (33%) concerned about the impact of a trade war with Mexico on their local economy. Conclusion The Trump administration's bold attempts to reshape US foreign policy have not convinced many Americans to join the bandwagon. The past two years have given the American public a glimpse of President Trump's alternative vision for the role of the United States in the world. And while Trump's base continues to share his vision, the majority of Americans do not. Instead, most Americans are more convinced about the benefits of active US engagement and the need to work with allies. They see US soft power as more effective than muscular intimidation in accomplishing US foreign policy goals and believe the United States is losing allies and world respect. On those specific issues where the White House has taken action—withdrawing from the Iran nuclear deal, the Paris Agreement, and the TPP agreement—Americans are less likely to see them as "wins" and more likely to endorse participating in these agreements. On traditional approaches to US foreign policy, including maintaining military bases abroad, defending key allies if attacked, and supporting trade, Americans have doubled down. The bottom line is that two years into the Trump administration, solid majorities of the American public have rejected the "America First" platform. June 2018 Chicago Council on Global Affairs Report A 2018 Chicago Council on Global Affairs report on U.S. public opinion data regarding generational differences in U.S. public opinion regarding U.S. foreign policy stated that was released in June 2018 stated the following: Since World War II the United States has maintained an active foreign policy agenda, deeply engaged in both the economic and military domains. Many observers over the past few years, however, have begun to voice doubts about public support for the critical pillars of American internationalism. Some have argued that the American public has lost its appetite for military intervention after more than 15 years at war in the greater Middle East. Others have suggested that Donald Trump's election revealed weakening support for free trade and for the global alliance system the United States built after World War II. Many observers have worried, in particular, about whether younger Americans will be willing to take up the mantle of global leadership. This question matters a good deal in light of the fact that the Millennial Generation, those born between 1981 and 1996, is now the largest generation of Americans. Like the Baby Boomers before them, Millennials have already had an outsized impact on American culture. As they age and begin to take leadership positions in business, government, and across society, their views – not those of their parents and grandparents – will be decisive. Those worried about Millennials' willingness to embrace the traditional liberal internationalism of the post-World War II era may find some evidence for their concerns in survey data. As the 2012 Chicago Council Survey report noted, "Millennials…are much less alarmed about major threats facing the country, particularly international terrorism, Islamic fundamentalism, and the development of China as a world power, and are less supportive of an activist approach to foreign affairs than older Americans." In order to understand where foreign policy attitudes are headed, we employ a generational perspective to analyze a wide range of survey data collected by the Chicago Council on Global Affairs since 1974. The findings reveal that generations share many opinions about international threats, foreign policy goals, and the best approaches to engaging the world. Yet, each generation from the Silent Generation onward entered adulthood somewhat less supportive of expansive American internationalism, with more recent generations expressing lower support for militarized approaches to achieve foreign policy goals. Today, each successor generation is less likely than the previous to prioritize maintaining superior military power worldwide as a goal of US foreign policy, to see US military superiority as a very effective way of achieving US foreign policy goals, and to support expanding defense spending. At the same time, support for international cooperation and free trade remains high across the generations. In fact, younger Americans are more inclined to support cooperative approaches to US foreign policy and more likely to feel favorably towards trade and globalization. Key Findings Each generation since the Silent Generation reports less support than its predecessors for taking an active part in world affairs, as measured by responses to the standard Chicago Council Survey question: "Do you think it will be best for the future of the country if we take an active part in world affairs or if we stay out of world affairs?" Sometimes, this difference split Millennials from older Americans; at other times, Millennials and Gen Xers both differ from prior generations. Long-term shifts in ideology and party identification mean that younger Americans today are more liberal than their elders, less likely to identify as Republican, but also more likely not to identify with either party. Because ideology and partisanship exert such powerful influences on public opinion, these trends play a significant role in explaining the size and direction of generation gaps on foreign policy issues. Yet even when the pull of partisanship and party loyalty is greatest, the differences across generations remain visible and large enough to be politically significant. It is difficult to predict how much these generation gaps will influence the direction of US foreign policy. As younger Americans continue to replace older Americans, especially at the voting booth, shifting demographics and attitudes are likely to influence debates about how the United States should engage the world. As younger Americans move through the stages of life it will be interesting to see if these generational differences result in a permanent break from previous patterns of foreign policy attitudes. 2017 Chicago Council on Global Affairs Report A 2017 Chicago Council on Global Affairs report on U.S. public opinion data regarding the Trump Administration's theme of America First stated President Trump's inaugural address, like his campaign, signaled a major departure from the past seven decades of American foreign policy and engagement with the rest of the world. While never fully parsed, the slogans "Make America Great Again," "America First," and "Americanism, not Globalism," along with the president's speeches and tweets, prescribed greater protectionism in trade, a new financial reckoning with our security allies, and a withdrawal from major international agreements. The 2017 Chicago Council Survey, conducted roughly six months into the Trump administration, tested the appeal of these ideas among the American public. The results suggest their attraction remains limited. For now, public criticism of trade deals, support for withholding US security guarantees from allies, and calls for restricting immigration mainly appeal to a core group of Trump supporters (defined in this report as those Americans with a very favorable view of President Trump). Yet, aside from the president's core supporters, most Americans prefer the type of foreign policy that has been typical of US administrations, be they Republican or Democrat, since World War II. Majorities continue to endorse sustaining American engagement abroad... as well as maintaining alliances, supporting trade, and participating in international agreements. Indeed, in key instances, Americans have doubled down on these beliefs. Public support has risen to new highs when it comes to willingness to defend allies, the perceived benefits of trade, and a desire to grant undocumented workers a path to citizenship. Americans Value Allies and Are More Willing Than Ever to Defend Them During the 2016 campaign and into his presidency, Donald Trump has repeatedly criticized allies of freeriding on America's security guarantee and argued that US alliances were not serving American interests. But the US public disagrees. Americans have repeatedly rated alliances as one of the most effective ways for the United States to achieve its foreign policy goals since the question was first asked in 2014. Today, the US public is more convinced than ever of their importance. Americans rate maintaining existing alliances as the most effective foreign policy tool, with 49 percent responding "very effective".... followed by maintaining US military superiority (47%) and building new alliances with other countries (36%).... Americans also express confidence in Asian and European allies to deal responsibly with world problems, and solid majorities favor maintaining or increasing the US military presence in the Asia-Pacific (78%), Europe (73%), and the Middle East (70%). A slightly larger majority now (69%) compared with a year ago (65%) say NATO is essential to US security. And for the first time, majorities of Americans are willing to use US troops to defend South Korea if it is invaded by North Korea (62%) or if NATO allies like Latvia, Lithuania, or Estonia are invaded by Russia (52%). The most specific wish that President Trump has for NATO is for allied countries to contribute more to collective defense; he and other administration officials have advocated for withholding US commitment to defend allies until they have paid more. But a majority of Americans think that NATO allies should be convinced to do their part through persuasion and diplomatic channels (59%) rather than threatening to withhold the US security guarantee to NATO allies to get them to pay more for defense (38%). Given these views, it is clear that Americans appreciate the advantages that alliances bring. Majorities say that alliances with Europe and East Asia (60% each) are either mutually beneficial or mostly benefit the United States, and 48 percent say the same about alliances in the Middle East. Core Trump supporters are the most skeptical of the benefits regarding alliances for the United States. Perhaps taking their lead from the president, a majority favor withholding US security guarantee from NATO allies until they pay more (60%); 51 percent of overall Republicans agree. But even core Trump supporters do not seem to believe the alliance is "obsolete," given that a majority (54%) think NATO is still essential to US security. A Record Percentage of Americans Recognize Benefits of Trade Americans are feeling more optimistic about the positive impact of trade. Compared with a year ago, record numbers of Americans now say that international trade is good for US consumers (78%), for the US economy (72%), and for job creation (57%)..... Additionally, the perceived benefits of trade are up across all party affiliations.... A majority of Americans believe that trade deals between the United States and other countries benefit both countries (50%) or mostly benefit the United States (7%). But a substantial percentage of Americans—including a majority of core Trump supporters and a plurality of Republicans overall—think other countries mostly benefit (34%) or neither country benefits (6%). President Trump has blamed poor trade deals for the loss of American jobs, and on this point, Americans agree. A majority say that manufacturing job losses are due to outsourcing (56%) rather than increased automation (42%). Yet, more Americans say that the current administration's policies will harm (41%) rather than help (32%) US workers, and 24 percent say they will make no difference. There are clear partisan divides on expectations for the new administration. Solid majorities of core Trump supporters (82%) and Republicans (64%) expect this administration's policies will do more to protect US workers, which may help explain why they are more optimistic about the overall benefits of international trade to the US economy, consumers, and job creation. For their part, Democrats may feel the need to underscore their support for international trade as a reaction against the trade-bashing rhetoric from both Republican and Democratic candidates in 2016. Concern over Immigration at Lowest Point Yet Immigration was a central issue during the 2016 presidential campaign, and it remains a key pillar in Donald Trump's America First platform. But the American public is less alarmed than last year by the potential threat of large numbers of immigrants and refugees entering the United States. Just 37 percent of Americans characterize immigration as a critical threat, down from 43 percent in 2016, marking a new low in concern for this issue.... There are, however, still large differences between Democrats (20%) and Republicans (61%), with core Trump supporters the most likely of all to consider immigration a critical threat (80%).... As the overall perceived threat from immigration has gone down, support for providing an opportunity for illegal workers in the United States to become citizens has gone up. Among all Americans, two-thirds (65%) support providing illegal immigrants a path to citizenship either immediately or with a waiting period and a financial penalty—an increase of 7 percentage points since last year. Conversely, fewer Americans now say that illegal immigrants should be required to leave their jobs and the United States (22%, down from 28% in 2016). A clear majority of Democrats (77%, up from 71% in 2016) favor a pathway to citizenship either immediately or with conditions. A smaller majority of Republicans now also favor the same solution as Democrats (52%, up from 44%), although 36 percent of Republicans favor deportation (down from 42% in 2016). Even core Trump supporters are divided in their views, with equal numbers supporting deportation (45%) and a path to citizenship (45%) for illegal immigrants. Majority Continue to Support Paris Agreement Conducted just weeks after President Trump kept his campaign promise to withdraw from the Paris Agreement on climate change, the 2017 Chicago Council Survey reveals that 6 in 10 Americans (62%) continue to favor US participation in the agreement. However, overall public support of the Paris Agreement has declined since 2016 (when 71% favored participation) largely because of a 20-point drop in Republican support (37%, down from 57% in 2016), perhaps following the president's lead on this issue. Just 24 percent of core Trump supporters want the United States to participate in the agreement. In contrast, majorities of Democrats (83%) and Independents (60%) continue to support the Paris Accord, though also at slightly lower levels than in 2016 (when it was backed by 87% of Democrats and 68% of Independents). Overall, 46 percent of Americans say that climate change is now a critical threat facing the United States; while still not a majority, this view reflects the highest point of concern recorded by the Chicago Council Survey. Yet, Republicans and Democrats markedly disagree on the gravity of this issue. Seven in 10 Democrats think that climate change is a critical threat, compared with just 16 percent of Republicans and 12 percent of core Trump supporters.... Fractures within the Republican Party Base Headlines over the past year have proclaimed an internal battle within the Republican Party between President Trump's supporters and those who oppose his policies. The 2017 Chicago Council Survey data illustrate these fissures between self-described Republicans who have a very favorable view of President Trump ("Trump Republicans") and those who do not ("non-Trump Republicans"). Non-Trump Republicans align more with average US public opinion than they do with Trump Republicans. Non-Trump Republicans are closer to the overall public than to Trump Republicans in their views on NAFTA (53% overall public, 49% non-Trump Republicans, 20% Trump Republicans believe the agreement is good for the US economy). Non-Trump Republicans are also closer to the overall public when asked the best way to get US allies to pay more for their defense (61% Trump Republicans, 40% non-Trump Republicans, and 38% overall favor withholding the US security guarantee). And on immigration, the overall public (65%) and non-Trump Republicans (62%) are more aligned in supporting a path to citizenship for illegal immigrants than Trump Republicans (43%). Specific examples of other differences among Republicans are included in each chapter of this report.... Conclusion Despite the politically charged environment over the past year, Americans express remarkably enduring support for an active US role in world affairs, for security alliances, and for trade relationships. They also favor offering illegal immigrants an opportunity to earn citizenship, either immediately or with conditions—a fact often overlooked by political leaders. Even though a portion of Americans have some questions about how much the United States gets out of security alliances and trade agreements, the American public as a whole seems to recognize clear value in maintaining them. President Trump appears to have noticed, and he has begun to adjust some of his campaign positions since moving into the Oval Office. He has declared that NATO is no longer obsolete and has taken some steps to reassure allies that the United States will honor its defense commitments. Officials in Trump's administration, including the vice president and the secretaries of state and defense, hold more mainstream views on defense issues, and they have repeatedly traveled to allied nations to smooth ruffled feathers. President Trump has also moderated some of his anti-trade rhetoric, backing away from accusations of Chinese currency manipulation and seeking to renegotiate rather than abandon NAFTA. These moderated positions are closer to mainstream American views; they are also closer to the views of those Republicans who are not core supporters of Donald Trump. 2016 Pew Research Center Survey A May 2016 article by the Pew Research Center regarding a survey of U.S. foreign policy attitudes conducted in April 2016 states The public views America's role in the world with considerable apprehension and concern. In fact, most Americans say it would be better if the U.S. just dealt with its own problems and let other countries deal with their own problems as best they can. With the United States facing an array of global threats, public support for increased defense spending has climbed to its highest level since a month after the 9/11 terrorist attacks, when 50% favored more defense spending. Currently, 35% say the U.S. should increase spending on national defense, 24% say it should be cut back and 40% say it should be kept about the same as today. The share favoring more defense spending has increased 12 percentage points (from 23%) since 2013.... The new survey, conducted April 12 to 19 among 2,008 U.S. adults, finds the public remains wary of global involvement, although on some measures, support for U.S. internationalism has increased modestly from the historically low levels found in the 2013 study. Still, 57% of Americans want the U.S. to deal with its own problems, while letting other countries get along as best they can. Just 37% say the U.S. should help other countries deal with their problems. And more Americans say the U.S. does too much (41%), rather than too little (27%), to solve world problems, with 28% saying it is doing about the right amount. The public's wariness toward global engagement extends to U.S. participation in the global economy. Nearly half of Americans (49%) say U.S. involvement in the global economy is a bad thing because it lowers wages and costs jobs; fewer (44%) see this as a good thing because it provides the U.S. with new markets and opportunities for growth.... While Americans remain skeptical of U.S. international involvement, many also view the United States as a less powerful and important world leader than it was a decade ago. Nearly half (46%) say the United States is a less powerful and important world leader than it was 10 years ago, while 21% say it is more powerful, and 31% say it is about as powerful as it was then. U.S. seen as leading economic, military power. The share saying the U.S. has become less powerful has declined since 2013, from 53% to 46%, but is among the highest numbers expressing this view in the past four decades. These attitudes also are divided along partisan lines: Republicans (67%) remain more likely than independents (48%) or Democrats (26%) to say that the U.S. has become less powerful and important. However, although many Americans believe the U.S. has become less powerful than it was in the past, the predominant view among the public is that the United States is the world's leading economic and military power. In a separate Pew Research Center survey conducted April 4 to 24 among 1,003 U.S. adults, a majority of Americans (54%) say the United States is the world's leading economic power, with China a distant second at 34%. This is the first time, in surveys dating back to 2008, that more than half of the public has named the United States as the leading economic power. 2016 Chicago Council on Global Affairs Report A 2016 Chicago Council on Global Affairs report on U.S. public opinion data regarding U.S. foreign policy stated Over the past year, Donald Trump has been able to channel the anxieties of a significant segment of the American public into a powerful political force, taking him to the doorstep of the White House. These public anxieties stem from growing concerns about the effects of globalization on the American economy and about the changing demographics of the United States. Although Trump has been able to mobilize many of those who are most concerned about these developments, their motivating concerns are not new. They existed before Donald Trump entered the race, and they are likely to persist even if he loses the election in November 2016. Yet, uniquely among the candidates running for president this cycle, Trump has given voice to this group of Americans, notably through his tough stances on immigration and trade. At the same time, while this segment of the American public has given Donald Trump traction in the presidential race, his views on important issues garner only minority support from the overall American public. While they are divided on expanding a wall on the US border with Mexico, Americans overall support continued immigration into the United States and favor reform to address the large population of unauthorized immigrants already in the country. Americans overall think globalization is mostly good for the United States, and they see many benefits to free trade. And the American public as a whole—including the core supporters of Donald Trump—still favors the country's traditional alliances, a shared leadership role for the United States abroad, and the preservation of US military superiority.... While Trump's views on immigration and trade clearly resonate with his core supporters, some of his other criticisms of US foreign policy are less popular among his base. For example, core Trump supporters are somewhat more cautious than other Americans of alliances and an active US role in world affairs, but in most cases they continue to favor international engagement. This serves as a reminder that despite divides on issues such as immigration and trade, the American public finds a great deal of common ground on American leadership in the world and how to achieve American goals.... 2016 Charles Koch Institute and Center for the National Interest Survey The Charles Koch Institute and the Center for the National Interest stated the following regarding the results of a December 2016 survey of U.S. public opinion regarding U.S. foreign policy: The Charles Koch Institute and the Center for the National Interest today released a poll of 1,000 Americans that shows voters believe focusing on diplomacy and trade are better methods of improving U.S. security than military intervention. "More than half of Americans think that U.S. foreign policy over the last 15 years has made us less safe," said William Ruger, vice president for research and policy at the Charles Koch Institute. "Americans want the next administration to take a different approach, with many favoring more caution about committing military forces abroad while preferring greater burden sharing by our wealthy allies and diplomacy over regime change. This poll is the second since October where the Charles Koch Institute and the Center for the National Interest have identified Americans' disenchantment with the status quo. The public's call for peace and change reflect the same views they held before the election. It's time that Washington listens to a public expressing greater prudence." "Americans see trade and diplomacy as contributing more to U.S. national security than regime change in foreign lands," said Paul J. Saunders, executive director of the Center for the National Interest. "Voters also support a strong military and more balanced alliances—though many have reservations about unconditional commitments, particularly to some new U.S. allies. The incoming administration and Congress have an important opportunity to define a new model of American leadership that moves beyond the mistakes of the last two decades." Poll results show: Americans Still Believe Recent U.S. Foreign Policy Has Made Them Less Safe: • When asked if U.S. foreign policy over the last 15 years had made Americans more or less safe, a majority (52%) said less safe. Just 12% said more, while one quarter said U.S. foreign policy had no impact on their level of safety. • When asked if U.S. foreign policy over the last 15 years had made the world more or less safe, 51% said less safe, 11% said more, and 24% said safety levels had stayed the same. • These findings are largely the same as results from a joint CKI-CFTNI October [2016] poll. Americans Favor Peaceful Engagement Over Military Intervention: • More than two-thirds of respondents (70%) agreed with the statement, "The U.S. should work with existing governments and heads of state to try to promote peace" rather than seeking to oust government by force. • When asked which of two options would make the United States safer, 49% said prioritizing diplomacy over military intervention while just 26% said prioritizing military power over diplomacy. Another 25% were not sure. • When asked whether the U.S. government should increase U.S. military spending, decrease it, or keep spending the same, a plurality (40%) wanted to increase spending, while nearly half either wanted to keep it the same (32%) or cut it (17%). Another 12% were not sure. • When asked which of two options would make the United States safer, only 20% said making more attempts at regime change would improve safety, while 45% said cutting the number of U.S. attempts at regime change would improve safety. 35% were not sure. • More than half (54%) said working more through the United Nations would improve U.S. safety, while only 26% thought working less through the United Nations would be better. 24% were not sure. • When asked broadly about what would make the United States safer, respondents preferred expanding U.S. alliance commitments (50%) to reducing U.S. alliance commitments (27%). However, Americans did not see U.S. commitments as necessarily unconditional. Only 26% of the respondents either somewhat or strongly agreed with the statement, "In a military conflict between Russia and Latvia, Lithuania, or Estonia, the United States should automatically defend that country with American military forces." Thirty-two percent either somewhat or strongly disagreed. • Increased trade should be part of the United States' diplomatic efforts. More than half of respondents (55%) said increasing trade would improve U.S. safety. Only 22% said decreasing trade would make the country safer. Another 23% were not sure. • Notwithstanding significant reservations about Russia, over half of voters see that country as a potential partner. When asked whether the United States should view Russia an adversary or as a potential partner, more than half either said Russia should be viewed as both (38%) or should be viewed as a potential partner (17%). Only 33% said Russia definitely should be viewed solely as an adversary. Another 12% said they were unsure. • American voters are unsure about the U.S. relationship with China. When asked whether they viewed China as an ally, 93% of respondents said no. However, 89% also indicated they would not characterize China as an enemy. The most accepted term for China was "competitor"—42% of respondents said they agreed with that characterization. Americans Want Washington to Exercise Restraint Abroad: • When asked whether Congress should impeach a president who does not get congressional approval before committing the United States to military action abroad, a plurality (39%) said yes, while just 27% said no. Another 34% were not sure. • When asked which of two options would make the United States safer, 45% of respondents said reducing U.S. military presence abroad, 31% said increasing it, and 24% said they did not know. • When asked which of two options would make the United States safer, 40% of respondents said decreasing the use of U.S. military force for democracy promotion internationally, 31% said increasing it, and 29% were not sure. • When asked about troop levels in Europe, three quarters said the United States should either keep levels the same as they are today (46%) or bring home at least some of the troops (28%). Only 12% said troop levels in Europe should be expanded. A plurality (44%) said the media had not provided enough information about recent U.S. troop deployments in Europe. • When a sked whether the United States should deploy ground troops to Syria, 55% of Americans said no, 23% said yes, and 23% were not sure. Those opposing ground troops in Syria increased by 4 percentage points since the October survey. • When asked whether the United States should increase its military presence in the Middle East, only 22% of respondents said yes, while 35% said they would reduce U.S. presence in the Middle East. Another 29% said they wouldn't change troop levels. Voters Want President-Elect Donald Trump to Exercise Restraint and Audit the Military: • When asked whether President-elect Trump should audit the Pentagon, 57% said yes, 28% weren't sure, and 15% said no. • Americans think our allies should shoulder more of the burden. When asked whether President-elect Trump should encourage NATO countries to increase or decrease their defense spending, only 8% said decrease while 41% said increase, and another 33% said President-elect Trump should encourage NATO countries to keep spending levels stable. • When asked whether the Trump administration should strengthen the U.S. military's relationship with Saudi Arabia, only 20% said it should while 23% suggested the United States should loosen its ties with Saudi Arabia. One third (33%) said the relationship should be kept as is, while another 24% were not sure. • When asked whether President-elect Trump should respect, renegotiate, or walk away from the Iran deal that lifted international sanctions on Iran in exchange for more scrutiny of their nuclear facilities, 32% said renegotiate, 28% said respect, 17% said walk away, and 23% were not sure. Comments from Observers In September 2018, one observer stated the following: President Trump may not enjoy majority support these days, but there's good reason to believe that his "America First" approach to the world does. There has been no popular outcry against Mr. Trump's trade battles with Canada, Mexico and the European allies. Experts suggest we are in for a long international trade war, no matter who the next president may be. After all, even Hillary Clinton had to disown her support for the Trans-Pacific Partnership in the last election. The old free-trade consensus is gone. Mr. Trump's immigration policies may be more popular with Republicans than with Democrats, but few Democratic politicians are running on a promise to bring more immigrants into the country. And just as in the 1920s, isolationism joins anti-immigration sentiment and protectionism as a pillar of America Firstism. The old consensus about America's role as upholder of global security has collapsed in both parties. Russia may have committed territorial aggression against Ukraine. But Republican voters follow Mr. Trump in seeking better ties, accepting Moscow's forcible annexation of Crimea and expanding influence in the Middle East (even if some of the president's subordinates do not). They applaud Mr. Trump for seeking a dubious deal with North Korea just as they once condemned Democratic presidents for doing the same thing. They favor a trade war with China but have not consistently favored military spending increases to deter a real war. Democrats might seem to be rallying behind the liberal order, but much of this is just opposition to Mr. Trump's denigration of it. Are today's rank-and-file Democrats really more committed to defending allies and deterring challengers to the liberal world order? Most Democratic politicians railing against Mr. Trump's "appeasement" of Moscow hailed Obama's "reset" a few years ago and chastised Republicans for seeking a new Cold War. Most Democratic voters want lower military spending and a much smaller United States military presence overseas, which hardly comports with getting tougher on Russia, Korea or China — except on trade. Most Americans in both parties also agree with Mr. Trump that America's old allies need to look out for themselves and stop relying on the United States to protect them. Few really disagreed with the president's stated reluctance to commit American lives to the defense of Montenegro. Britons in the 1930s did not want to "die for Danzig," and Americans today don't want to die for Taipei or Riga, never mind Kiev or Tbilisi. President Obama was less hostile to the allies than Mr. Trump, but even he complained about "free riders." In retrospect it's pretty clear that Mr. Obama was too internationalist for his party base. He expanded NATO, intervened in Libya, imposed sanctions on Russia and presided over the negotiation of the Trans-Pacific Partnership. Democrats may miss Mr. Obama for many reasons, but there's little evidence that the rank-and-file miss those policies. Mr. Trump's narrower, more unilateralist and nationalist approach to the world is probably closer to where the general public is than Mr. Obama's more cosmopolitan sensibility. It would be comforting to blame America's current posture on Mr. Trump. But while he may be a special kind of president, even he can't create a public mood out of nothing. Now as always, presidents reflect public opinion at least as much as they shape it. Between the two world wars, and especially from 1921 through 1936, an American public disillusioned by World War I was averse to further overseas involvement, and it didn't matter whether the presidents were supposed "isolationists" like Warren Harding and Calvin Coolidge or supposed "internationalists" like Herbert Hoover and Franklin Roosevelt. It took a lot more than fireside chats to turn public opinion around. It took Hitler's conquest of Europe, near-conquest of Britain and, finally, Pearl Harbor to onvince a majority of Americans that America First was a mistake. In our own time, the trend toward an America First approach has been growing since the end of the Cold War. George H.W. Bush, the hero of the Gulf War, had to play down foreign policy in 1992 and lost to a candidate promising to focus on domestic issues. George W. Bush won in 2000 promising to reduce United States global involvement, defeating an opponent, Al Gore, who was still talking about America's indispensability. In 2008, Mr. Obama won while promising to get out of foreign conflicts for good. In 2016, Republican internationalists like Jeb Bush and Marco Rubio were trounced in the primaries. Hillary Clinton struggled to hold off Bernie Sanders, a progressive isolationist, and it was certainly not because of her foreign policy views. Now we have Mr. Trump. Is he an aberration or a culmination? Many foreign policy experts, and most of the foreign leaders pouring into New York this week for the United Nation's General Assembly, have been counting on the former. They place their hopes on the 2020 elections to get America back on its old path. But they may have to start facing the fact that what we're seeing today is not a spasm but a new direction in American foreign policy, or rather a return to older traditions — the kind that kept us on the sidelines while fascism and militarism almost conquered the world. In a May 2017 blog post, one foreign policy specialist stated the following: Over a period of decades, the American people and their elected representatives funded defense expenditures far greater than what would have been necessary simply to protect the continental United States. They faced up to the idea that American troops might fight and die to defend faraway frontiers. And they accepted—often reluctantly—the notion that Washington should take primary responsibility for leading the global economy, U.S. alliances, and international institutions, despite the myriad costs and frustrations involved. Americans accepted these costs not out of any special altruism, of course, but because they believed the benefits of living in—and leading—a stable, prosperous, and liberal world order were ultimately greater. But if the postwar era was thus characterized, as G. John Ikenberry and Daniel Deudney write, by a "bipartisan consensus…on the paramount importance of American leadership," then the 2016 presidential election and its results surely called into question whether that consensus still exists.... So, was the 2016 election merely an aberration within the long history of American internationalism? Or does Trump's victory indicate deeper and perhaps more irrevocable changes in American attitudes on foreign affairs? As it turns out, there are two plausible interpretations of this issue, and they point in very different directions.... If political support for American internationalism was plummeting, one would expect to see unambiguous downturns in public opinion toward U.S. alliances, international trade, and other key initiatives. Yet while there certainly are signs of public alienation from American internationalism – as discussed subsequently – most recent polling data tells a different story. According to public opinion surveys taken in the heat of the 2016 campaign, for instance, 65 percent of Americans saw globalization as "mostly good" for the United States, and 64 percent saw international trade as "good for their own standard of living." Even the Trans-Pacific Partnership – which Clinton disowned under pressure from Sanders, and which Trump used as a political punching bag – enjoyed 60 percent support. Reaching back slightly further to 2013, an overwhelming majority – 77 percent – of Americans believed that trade and business ties to other countries were either "somewhat good" or "very good" for the United States. In other words, if Americans are in wholesale revolt against globalization, most public opinion polls are not capturing that discontent. Nor are they registering a broad popular backlash against other aspects of American internationalism. Although Trump delighted in disparaging U.S. alliances during the campaign, some 77 percent of Americans still saw being a member of NATO as a good thing. A remarkable 89 percent believed that maintaining U.S. alliances was "very or somewhat effective at achieving U.S. foreign policy goals." Similarly, recent opinion polls have revealed little evidence that the American public is demanding significant military retrenchment. In 2016, three-quarters of respondents believed that defense spending should rise or stay the same. The proposition favoring more defense spending had actually increased significantly (from 23 percent to 35 percent) since 2013. Support for maintaining overseas bases and forward deployments of U.S. troops was also strong. And regarding military intervention, recent polls have indeed shown a widespread belief that the U.S. wars in Iraq and Afghanistan were not worth the cost, but these sentiments do not seem to have translated into a broader skepticism regarding the utility of military force. In 2016, for instance, 62 percent of Americans approved of the military campaign against the Islamic State, demonstrating broad agreement that the United States should be willing to use the sword – even in faraway places – when threats emerge. Polling on other issues reveals still more of the same. For all of Trump's critiques of international institutions, international law, and multilateralism, nearly two-third of Americans (64 percent) viewed the United Nations favorably in 2016 and 71 percent supported U.S. participation in the Paris Agreement on combating climate change. And, although polls indicating that over 50 percent of Americans now prefer to let other countries "get along as best they can" on their own are far more troubling, here too the overall picture painted by recent survey data is somewhat brighter. As of 2016, more than half – 55 percent – of Americans believed that the United States either did too little or the right amount in confronting global problems. When asked if the United States should continue playing an active role in world affairs, nearly two-thirds answered affirmatively. As one comprehensive analysis of the survey data thus concluded, at present there is just not overwhelming evidence—in the polls, at least—to suggest a broad-gauged public rejection of internationalism: "The American public as a whole still thinks that the United States is the greatest and most influential country in the world, and bipartisan support remains strong for the country to take an active part in world affairs."... ... there is also a far more pessimistic – and equally plausible – way of reading the national mood. From this perspective, Trump's rise is not an aberration or a glitch. It is, rather, the culmination of a quiet crisis that has gradually but unmistakably been weakening the political foundations of American internationalism. That crisis may not yet be manifesting in dramatic, across-the-board changes in how Americans view particular foreign policy issues. But as Trump's election indicates, its political effects are nonetheless becoming profound.... After all, it was not Trump but Obama who first called for the country to shift from nation-building abroad to nation-building at home. Whatever their views on other parts of American internationalism, many Americans apparently agreed. Whereas 29 percent of Americans believed that promoting democracy abroad should be a key diplomatic priority in 2001, by 2013 the number was only 18 percent. When Trump slammed these aspects of American internationalism, he was pushing on an open door.... What Trump intuitively understood, however, was that the credibility of the experts had been badly tarnished in recent years. As Tom Nichols has observed, the deference that experts command from the U.S. public has been declining for some time, and this is certainly the case in foreign policy.... These issues related to another, more fundamental contributor to the crisis of American internationalism: the rupturing of the basic political-economic bargain that had long undergirded that tradition. From its inception, internationalism entailed significant and tangible costs, both financial and otherwise, and the pursuit of free trade in particular inevitably disadvantaged workers and industries that suffered from greater global competition. As a result, the rise of American internationalism during and after World War II went hand-in-hand with measures designed to offset these costs by ensuring upward social mobility and rising economic fortunes for the voters—particularly working- and middle-class voters—being asked to bear them.... This bargain has gradually been fraying since as far back as the late 1970s, however, and in recent years it increasingly seems to have broken. For the fact is that many Americans—particularly less-educated Americans—are not seeing their economic fortunes and mobility improve over time. Rather, their prospects have worsened significantly in recent decades.... Indeed, although there is plenty of public opinion polling that paints a reassuring picture of American views on trade and globalization, there are also clear indications that such a backlash is occurring. In 2016, a plurality of Americans (49 percent) argued that "U.S. involvement in the global economy is a bad thing because it lowers wages and costs jobs," a sentiment perfectly tailored to Trump's protectionist message.... More broadly, it is hard not to see concerns about economic insecurity looming large in the growing proportion of Americans who believe that the United States is overinvested internationally—and who therefore prefer for the "U.S. to deal with its own problems, while letting other countries get along as best they can." In 2013, 52 percent of Americans—the highest number in decades—agreed with a version of this statement. In 2016, the number was even higher at 57 percent. In sum, American voters may still express fairly strong support for free trade and other longstanding policies in public opinion surveys. But it is simply impossible to ignore the fact that, among significant swaths of the population, there is nonetheless an unmistakable and politically potent sense that American foreign policy has become decoupled from the interests of those it is meant to serve. And this point, in turn, illuminates a final strain that Trump's rise so clearly highlighted: the growing sense that American internationalism has become unmoored from American nationalism. American internationalism was always conceived as an enlightened expression of American nationalism, an approach premised on the idea that the wellbeing of the United States was inextricably interwoven with that of the outside world. But the inequities of globalization have promoted a tangible feeling among many voters that American elites are now privileging an internationalist agenda (one that may suit cosmopolitan elites just fine) at the expense of the wellbeing of "ordinary Americans." Likewise, insofar as immigration from Mexico and Central America has depressed wages for low-skilled workers and fueled concerns that the white working class is being displaced by other demographic groups, it has fostered beliefs that the openness at the heart of the internationalist project is benefitting the wrong people. "Many Jacksonians," writes Walter Russell Mead of the coalition that brought Trump to power, "came to believe that the American establishment was no longer reliably patriotic." What does all this tell us about the future of American internationalism? The answer involves elements of both interpretations offered here. It is premature to say that a "new isolationism" is taking hold, or that Americans are systematically turning away from internationalism, in light of the idiosyncrasies of Trump's victory and the fact that so many key aspects of internationalism still poll fairly well. Yet no serious observer can contend that American internationalism is truly healthy given Trump's triumph, and the 2016 election clearly revealed the assorted maladies that had been quietly eroding its political vitality. American internationalism may not be slipping into history just yet, but its long-term trajectory seems problematic indeed. Later in May 2017, this same foreign policy specialist stated in a different blog post that On the one hand, it is easy to make the case that Trump's election was more of a black-swan, anomalous event than something that tells us much about the state of public opinion on foreign policy. The election campaign was dominated not by deeply substantive foreign policy debates, in this interpretation, but by the historic unpopularity of both candidates. And of course, Trump was decisively defeated in the popular vote by a card-carrying member of the U.S. foreign policy establishment—and he might well have lost decisively in the electoral college, too, if not for then-FBI Director James Comey's intervention and a series of other lucky breaks late in the campaign. There is, moreover, substantial polling data to suggest that American internationalism is doing just fine. According to surveys taken during the 2016 campaign, 65 percent of Americans believed that globalization was "mostly good" for the United States, and 89 percent believed that maintaining U.S. alliances was "very or somewhat effective at achieving U.S. foreign policy goals." Support for U.S. military primacy and intervention against threats such as the Islamic State also remained strong, as did domestic backing for the United Nations and the Paris climate change accords. As an extensive analysis of this polling data by the Chicago Council concluded, there does not seem to be any wholesale public rejection of American internationalism underway: "The American public as a whole still thinks that the United States is the greatest and most influential country in the world, and bipartisan support remains strong for the country to take an active part in world affairs." And indeed, insofar as Trump has had to roll back some of the more radical aspects of his "America first" agenda since becoming president—tearing up the North American Free Trade Agreement, declaring NATO obsolete, launching a trade war with China—he seems to be adjusting to this reality. That's the good news. But on the other hand, American internationalism simply cannot be all that healthy, because Trump did win the presidency by running on the most anti-internationalist platform seen in decades. American voters may not have been voting for that platform itself, but at the very least they did not see Trump's radical views on foreign policy as disqualifying. And as one digs deeper into the state of American internationalism today, it becomes clear that there are indeed real problems with that tradition—problems that Trump exploited on his road to the White House, and that are likely to confront his successors as well. Trump's rise has highlighted five key strains that have been weakening the political foundations of American internationalism for years now. First, since the end of the Cold War, it has become harder for Americans to identify precisely why the United States must undertake such extraordinary exertions to shape the global order. Without a pressing, easily identifiable global threat, in other words, it is harder to intuitively understand what American alliances, forward force deployments, and other internationalist initiatives are for. Second, although U.S. internationalism has proven very valuable in shaping a congenial international system, it is undeniable that aspects of that tradition—such as nation building missions in Afghanistan and Iraq—have proven costly and unrewarding in recent years. Not surprisingly, many Americans are thus questioning if the resources that the country devotes to foreign policy are being used effectively. This disillusion has shown up in public opinion polling: Whereas 29 percent of Americans believed that promoting democracy should be a key foreign policy objective in 2001, only 18 percent thought so in 2013. Third, the credibility of the U.S. foreign policy establishment has also been weakened over the past 15 years. This is because policy elites in both parties pursued policies—the Iraq War under President George W. Bush, the subsequent withdrawal from Iraq and creation of a security vacuum in that country under President Barack Obama—that led to high-profile disasters. As a result, when Trump—who actually supported the invasion of Iraq before later opposing it—answered establishment criticism by pointing out that the establishment had brought the United States the Iraq War and the Islamic State, his rejoinder probably made a good deal of sense to many voters. Fourth, U.S. internationalism has been weakened by the declining economic fortunes of the working and middle classes—a phenomenon that has made those groups less enthusiastic about bearing the costs and burdens associated with U.S. foreign policy. The pursuit of globalization and free trade has not been the primary culprit here—issues like automation and the transition to a postindustrial economy have been more important. But it is undeniable that globalization has exacerbated economic insecurity for the working class in particular, and China's integration into the global economy has taken a significant toll on manufacturing and related employment in the United States. During the Republican primaries, in fact, 65 percent of Trump voters believed that U.S. involvement in the international economy was a bad thing. During the general election, Trump overperformed in areas hardest hit by competition from international trade. Fifth, and finally, one can discern among many voters an amorphous but powerful sense that U.S. internationalism has become unmoored from U.S. nationalism—that America's governing classes have pursued an agenda that has worked nicely for the well-to-do, but brought fewer benefits to the ordinary Americans whom U.S. foreign policy is meant to serve. This dynamic is evident in the 57 percent of the population who believed in 2016 that the United States was focusing too much on other countries' problems and not enough on its own. Cracks are growing in the political consensus that has traditionally undergirded American internationalism—cracks through which Trump was able emerge in 2016. The bottom line is that American internationalism is not dead yet, but that it faces serious longterm maladies that could, perhaps, ultimately prove fatal. Also in May 2017, a different foreign policy specialist stated the following: When the Soviet Union collapsed in 1991, the bipartisan foreign-policy establishment was united in seeing a historic opportunity to deepen the liberal order and extend it into the rest of the world. Yet the public had always been skeptical about this project. Jacksonians in particular believed that American global policy was a response to the Soviet threat, and that once the threat had disappeared, the U.S. should retrench. After World War I, and again at the start of the Cold War, Americans had held great debates over whether and how to engage with the world. But that debate didn't happen after the Soviet collapse. Elites felt confident that the end of history had arrived, that expanding the world order would be so easy and cheap it could be done without much public support. Washington thus embarked on a series of consequential foreign-policy endeavors: enlarging the North Atlantic Treaty Organization to include much of Central and Eastern Europe, establishing the World Trade Organization in the mid-'90s, promoting a global democracy agenda whenever possible. American voters have never shared the establishment's enthusiasm for a foreign policy aimed at transforming the post-Cold War world. When given the choice at the ballot box, they consistently dismiss experienced foreign-policy hands who call for deep global engagement. Instead they install untried outsiders who want increased focus on issues at home. Thus Clinton over Bush in 1992, Bush over Gore in 2000, Obama over McCain in 2008, and Trump over Clinton in 2016. Today the core problem in American foreign policy remains the disconnect between the establishment's ambitious global agenda and the limited engagement that voters appear to support. As Washington's challenges abroad become more urgent and more dangerous, the divide between elite and public opinion grows more serious by the day. The establishment is now beginning to discover what many voters intuitively believed back in the 1990s. Building a liberal world order is much more expensive and difficult than it appeared in a quarter-century ago, when America was king. Further, Washington's foreign-policy establishment is neither as wise nor as competent as it believes itself to be. Meantime, the world is only becoming more dangerous.... And the U.S. still lacks a strong consensus on what its foreign policy should be. Washington's foreign policy needs more than grudging acquiescence from the American people if it is to succeed. How to build broad support? First, the Trump administration should embrace a new national strategy that is more realistic than the end-of-history fantasies that came at the Cold War's conclusion. The case for international engagement should be grounded in the actual priorities of American citizens. Second, Mr. Trump and other political leaders must make the case for strategic global engagement to a rightfully skeptical public. For much of the establishment, focusing on the Trump administration's shortcomings is a way to avoid a painful inquest into the failures and follies of 25 years of post-Cold War foreign policy. But Mr. Trump's presidency is the result of establishment failure rather than the cause of it. Until the national leadership absorbs this lesson, the internal American crisis will deepen as the world crisis grows more acute. In an April 2017 blog post, one foreign policy specialist stated the following: Every 20 years or so—the regularity is a little astonishing—Americans hold a serious debate about their place in the world. What, they ask, is going wrong? And how can it be fixed? The discussion, moreover, almost always starts the same way. Having extricated itself with some success from a costly war, the United States then embraces a scaled-down foreign policy, the better to avoid overcommitment. But when unexpected challenges arise, people start asking whether the new, more limited strategy is robust enough. Politicians and policy makers, scholars and experts, journalists and pundits, the public at large, even representatives of other governments (both friendly and less friendly) all take part in the back-and-forth. They want to know whether America, despite its decision to do less, should go back to doing more—and whether it can. The reasons for doubt are remarkably similar from one period of discussion to the next. Some argue that the U.S. economy is no longer big enough to sustain a global role of the old kind, or that domestic problems should take priority. Others ask whether the public is ready for new exertions. The foreign-policy establishment may seem too divided, and a viable consensus too hard to reestablish. Many insist that big international problems no longer lend themselves to Washington's solutions, least of all to military ones. American "leadership," it is said, won't work so well in our brave new world.... Polls suggested [in 2016] that [the public], too, was open to new approaches—but unsure how to choose among them. In May 2016, the Pew Research Center reported that 70 percent of voters wanted the next president to focus on domestic affairs rather than foreign policy. In the same poll, Pew found that majorities of Democrats, Republicans, and independents favored policies that would keep the United States "the only military superpower." Not for the first time, it seemed that Americans wanted to have it all.... ... the two halves of Trump's formula worked together better than critics appreciated. He sensed that the public wanted relief from the burdens of global leadership without losing the thrill of nationalist self-assertion. America could cut back its investment in world order with no whiff of retreat. It would still boss others around, even bend them to its will. Trump embraced Bernie Sanders's economics without George McGovern's geopolitics. Of self-identified conservative Republicans, 70 percent told Pew last year that they wanted the U.S. to retain its global military dominance. "Make America Great Again" was a slogan aimed right at them. Trump's more-and-less strategy also helped him with those who wanted a bristly, muscular America but did not want endless military involvements. Rejecting "nation building" abroad so as to focus on the home front was Trump's way of assuring voters that he knew how to avoid imperial overstretch. He offered supporters the glow of a Ronald Reagan experience—without the George W. Bush tab. Commenting on the 2016 Charles Koch Institute-Center for the National Interest poll discussed earlier, a December 2016 blog post from staff of The National Interest stated With the election of Donald Trump to the presidency, the American public opted for change. A new poll from the Charles Koch Institute and Center for the National Interest on America and foreign affairs indicates that the desire for a fresh start may be particularly pronounced in the foreign policy sphere. In many areas the responses align with what Donald Trump was saying during the presidential campaign—and in other areas, there are a number of Americans who don't have strong views. There may be a real opportunity for Trump to redefine the foreign policy debate. He may have a ready-made base of support and find that other Americans are persuadable. Two key questions centering on whether U.S. foreign policy has made Americans more or less safe and whether U.S. foreign policy has made the rest of the world more or less safe show that a majority of the public is convinced that—in both cases—the answer is that it has not. 51.9 percent say that American foreign policy has not enhanced our security; 51.1 percent say that it has also had a deleterious effect abroad. The responses indicate that the successive wars in the Middle East, ranging from Afghanistan to Iraq to Libya, have not promoted but, rather, undermined a sense of security among Americans. The poll results indicate that this sentiment has translated into nearly 35 percent of respondents wanted a decreased military footprint in the Middle East, with about 30 percent simply wanting to keep things where they stand. When it comes to America's key relationship with Saudi Arabia, 23.2 percent indicate that they would favor weaker military ties, while 24 percent say they are simply unsure. Over half of Americans do not want to deploy ground troops to Syria. Overall, 45.4 percent say that they believe that it would enhance American security to reduce our military presence abroad, while 30.9 percent say that it should be increased. That Americans are adopting a more equivocal approach overall towards other countries seems clear. When provided with a list of adjectives to describe relationship, very few Americans were prepared to choose the extremes of friend or foe. The most popular term was the fairly neutral term "competitor." The mood appears to be similarly ambivalent about NATO. When asked whether the U.S. should automatically defend Latvia, Lithuania, or Estonia in a military conflict with Russia, 26.1 percent say that they neither agree nor disagree. 22 percent say that they disagree and a mere 16.8 percent say that they agree. Similarly, when queried about whether the inclusion of Montenegro makes America safer, no less than 63.6 percent say that they don't know or are not sure. About Russia itself, 37.8 percent indicate they see it as both an adversary and a potential partner. That they still see it as a potential partner is remarkable given the tenor of the current media climate. The poll results underscore that Americans are uneasy with the status quo. U.S. foreign policy in particular is perceived as a failure and Americans want to see a change, endorsing views and stands that might previously have been seen as existing on the fringe of debate about America's proper role abroad. Instead of militarism and adventurism, Americans are more keen on a cooperative world, in which trade and diplomacy are the principal means of engaging other nations. 49 percent of the respondents indicate that they would prioritize diplomacy over military power, while 26.3 percent argue for the reverse. 54 percent argue that the U.S. should work more through the United Nations to improve its security. Moreover, a clear majority of those polled stated that they believed that increasing trade would help to make the United States safer. In a year that has been anything but normal, perhaps Trump is onto something with his talk of burden sharing and a more critical look at the regnant establishment foreign policy that has prevailed until now. In December 2016, two Australian foreign policy analysts stated the following: The 2016 presidential election demonstrated the rise of a "restraint constituency" in American politics that openly questions Washington's bipartisan post-Cold War pursuit of a grand strategy of primacy or liberal hegemony. This constituency has been animated by the return of the Jacksonian tradition of American foreign policy, most notably in the candidacy of Donald Trump, which directly questions the benefits of alliance relationships as well as U.S. underwriting of an open global economic system. It also stresses the need for the United States to act unilaterally in defense of its core foreign policy interests. The resurgence of the Jacksonian tradition will make it difficult for the next President to reestablish a foreign policy consensus and combat perceptions of American decline." In a June 2016 blog post, one foreign policy specialist (the same one quoted above for the April 2017 blog post) stated the following: Few things make professors happier than thinking that the public has finally begun to agree with them. No surprise, then, that John Mearsheimer of the University of Chicago and Stephen Walt of Harvard open their article in Foreign Affairs —in which they propose a new "grand strategy" for the United States—by observing that "[f]or the first time in recent memory, a large number of Americans" are saying they want the same thing. The ideas Mr. Mearsheimer and Mr. Walt propose—big cuts in defense spending, withdrawals from Europe and the Middle East, a focus on China as our only real rival—deserve the discussion they will surely get. But let's put the policy merits to one side. Are the professors right to say they've now got the people behind them? The data say no. Mr. Mearsheimer and Mr. Walt rely on an April Pew poll that found that 57% of Americans want the U.S. "to deal with its own problems." But this is what most Americans always say, no matter what "grand strategy" their leaders follow. In 2013, 80% of Pew respondents wanted to "concentrate more on our own national problems." Twenty years earlier, 78% said the same thing. And 20 years before that, 73%. On this particular question, the number today (it's dropped to 69% since 2013) is lower than it has been "in recent memory," but it's always high.... Pew's pollsters, of course, ask many different questions, and the results don't always seem entirely consistent. Still, one trend is very clear: Fewer Americans are saying they want a less activist foreign policy. Three years ago, 51% said the U.S. did "too much in helping solve world problems." This year, 41% did. This pattern—a 10-point drop in three years—holds among Democrats, Republicans, and independents. Ask questions with a sharper policy focus, and the result is steady—sometimes growing—support for a strong U.S. global role. Majorities of Democrats, Republicans, and independents favor policies that would keep the U.S. "the only military superpower." Mr. Mearsheimer and Mr. Walt, by contrast, want to cut defense spending. Only 24% of Americans agree. (That share, also, is down from five years ago, and support for an increase has almost tripled, from 13% to 35%.) The professors want to pull all U.S. forces out of Europe and let our allies handle Russia on their own. Fine, but 77% of the American public thinks that NATO is good for the United States, and almost as many Americans (42%) view Russia as a "major threat" as see China that way (50%).

Some observers perceive that after remaining generally stable for a period of about 70 years, the U.S. role in the world—meaning the overall character, purpose, or direction of U.S. participation in international affairs and the country's overall relationship to the rest of the world—is undergoing a potentially historic change. A change in the U.S. role in the world could have significant and even profound effects on U.S. security, freedom, and prosperity. It could significantly affect U.S. policy in areas such as relations with allies and other countries, defense plans and programs, trade and international finance, foreign assistance, and human rights. The U.S. role in the world since the end of World War II in 1945 (i.e., over the past 70 years or so) is generally described as one of global leadership and significant engagement in international affairs. A key element of that role has been to defend and promote the liberal international order that the United States, with the support of its allies, created in the years after World War II. Other key elements have been to defend and promote freedom, democracy, and human rights as universal values, while criticizing and resisting authoritarian and illiberal forms of government where possible; and to oppose the emergence of regional hegemons in Eurasia or a spheres-of-influence world. The fact that the U.S. role in the world has been generally stable over the past 70 years does not necessarily mean that this role was the right one for the United States, or that it would be the right one in the future. Although the role the United States has played in the world since the end of World War II has many defenders, it also has critics, and the merits of that role have been a matter of long-standing debate among foreign policy specialists, strategists, policymakers, and the public, with critics offering potential alternative concepts for the U.S. role in the world. One major dimension of the debate is whether the United States should attempt to continue playing the active internationalist role that it has played for the past 70 years, or instead adopt a more-restrained role that reduces U.S. involvement in world affairs. A number of critics of the U.S. role in the world over the past 70 years have offered multiple variations on the idea of a more-restrained U.S. role. The overall issue for Congress is how to respond to recent developments regarding the U.S. role in the world. Potential key issues for Congress include but are not necessarily limited to the following: Is the U.S. role changing, and if so, in what ways? Should the U.S. role change? Is a change of some kind in the U.S. role unavoidable? How are other countries responding to a possibly changed U.S. role? Is a changed U.S. role affecting world order? What implications might a changed U.S. role in the world have for Congress's role relative to that of the executive branch in U.S. foreign policymaking? How might the operation of democracy in the United States affect the U.S. role in the world, particularly in terms of defending and promoting democracy and criticizing and resisting authoritarian and illiberal forms of government? Would a change in the U.S. role be reversible, and if so, to what degree? Congress's decisions on this issue could have significant implications for numerous policies, plans, programs, and budgets, and for the role of Congress relative to that of the executive branch in U.S. foreign policymaking.

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Introduction The term child nutrition programs refers to several U.S. Department of Agriculture Food and Nutrition Service (USDA-FNS) programs that provide food to children in institutional settings. The largest are the National School Lunch Program (NSLP) and School Breakfast Program (SBP), which subsidize free, reduced-price, and full-price meals in participating schools. Also operating in schools, the Fresh Fruit and Vegetable Program provides funding for fruit and vegetable snacks in participating elementary schools, and the Special Milk Program provides support for milk in schools that do not participate in NSLP or SBP. Other child nutrition programs include the Child and Adult Care Food Program, which provides meals and snacks in child care and after-school settings, and the Summer Food Service Program, which provides food during the summer months. The child nutrition programs were last reauthorized by the Healthy, Hunger-Free Kids Act of 2010 (HHFKA, P.L. 111-296 ). On September 30, 2015, some of the authorities created or extended by the HHFKA expired. However, these expirations had a minimal impact on program operations, as the child nutrition programs have continued with funding provided by annual appropriations acts. In the 114 th Congress, lawmakers began but did not complete child nutrition reauthorization, which refers to the process of reauthorizing and potentially making changes to multiple permanent statutes—the Richard B. Russell National School Lunch Act, the Child Nutrition Act, and sometimes Section 32 of the Act of August 24, 1935. Both committees of jurisdiction—the Senate Committee on Agriculture, Nutrition, and Forestry and the House Committee on Education and the Workforce—reported reauthorization legislation ( S. 3136 and H.R. 5003 , respectively). This legislation died at the end of the 114 th Congress, as is the case for any bill that has not yet passed both chambers and been sent to the President at the end of a Congress. There were no significant child nutrition reauthorization efforts in the 115 th Congress; however, 2018 farm bill proposals and the final enacted bill included a few provisions related to child nutrition programs. The implementation of the HHFKA, child nutrition reauthorization efforts in the 114 th Congress, and the child nutrition-related topics raised during 2018 farm bill negotiations have raised issues that may be relevant for Congress in future reauthorization efforts or other policymaking opportunities. These issues often relate to the content and type of foods served in schools: for example, the nutritional quality of foods and whether foods are domestically sourced. Other issues relate to access, including alternatives to on-site consumption in summer meals and implementation of the Community Eligibility Provision, an option to provide free meals to all students in certain schools. Stakeholders in these issues commonly include school food authorities (SFAs; school food service departments that generally operate at the school district level), hunger and nutrition-focused advocacy organizations, and food industry organizations, among others. This report provides an overview of these and other current issues in the child nutrition programs. It does not cover every issue, but rather provides a high-level review of some recent issues raised by Congress and/or program stakeholders, drawing examples from legislative proposals in the 114 th and 115 th Congresses . References to CRS reports with more detailed information or analysis on specific issues are provided where applicable, including the following: For an overview of the structure and functions of the child nutrition programs, see CRS Report R43783, School Meals Programs and Other USDA Child Nutrition Programs: A Primer . For more information on the child nutrition reauthorization proposals in the 114 th Congress, see CRS Report R44373, Tracking the Next Child Nutrition Reauthorization: An Overview . For a summary of the HHFKA, see CRS Report R41354, Child Nutrition and WIC Reauthorization: P.L. 111-296 . Current Issues Nutrition Standards for School Meals and Snacks Background School meals must meet certain requirements to be eligible for federal reimbursement, including nutritional requirements. These nutrition standards were last updated following the enactment of the HHFKA, which required USDA to update the standards for school meals and create new nutrition standards for "competitive" foods (e.g., foods sold in vending machines, a la carte lines, and snack bars) within a specified timeframe. Specifically, the law required USDA to issue proposed regulations for competitive foods nutrition standards within one year after enactment and for school meals nutrition standards within 18 months after enactment. The law also provided increased federal subsidies (6 cents per lunch) for schools meeting the new requirements and funding for technical assistance. The nutrition standards in the HHFKA were championed by a variety of organizations and stakeholders, including nutrition and public health advocacy organizations, food and beverage companies, school nutrition officials, retired military leaders, and then-First Lady Michelle Obama. The precise nutritional requirements were largely written in the subsequent regulations, not the HHFKA. USDA-FNS published the final rule for school meals in January 2012 and the final rule for competitive foods in July 2016. As required by law, the nutrition standards were based on the Dietary Guidelines for Americans and recommendations from the Institute of Medicine (now the Health and Medicine Division of the National Academies). For school meals, the updated standards increased the amount of fruits, vegetables, and whole grains in school lunches and breakfasts. They also instituted limits on calories, sodium, whole grains, and proteins in meals and restricted milk to low-fat (unflavored) and fat-free (flavored or unflavored) varieties. Other requirements included a provision that senior high school students must select a half-serving of fruits or vegetables with a reimbursable meal. Similarly, the nutrition standards for competitive foods limited calories, sodium, and fat in foods sold outside of meals, among other requirements. The standards applied only to non-meal foods and beverages sold during the school day (defined as midnight until 30 minutes after dismissal) and include some exceptions for fundraisers. Implementation and Changes The meal standards began phasing in during school year (SY) 2012-2013, and the competitive foods standards took effect in SY2014-2015. However, sodium limits and certain whole grain requirements for school meals were scheduled to phase in over multiple school years. Some schools experienced challenges implementing the changes, reporting difficulty obtaining whole grain and low-sodium products, issues with student acceptance of foods, reduced participation, increased costs, and increased food waste. These accounts were shared in news stories and by the School Nutrition Association (SNA), a national, nonprofit professional and advocacy organization representing school nutrition professionals. Studies by the U.S. Government Accountability Office and USDA confirmed that many of these issues were present in SY2012-2013 and SY2013-2014, the first two years of implementation. SNA advocated for certain changes to the standards, while other groups called for maintaining the standards, arguing that they were necessary for children's health and that implementation challenges were easing with time. In January 2014, USDA removed weekly limits on grains and protein. Then, in the FY2015, FY2016, and FY2017 appropriations laws, Congress enacted provisions that loosened the milk, whole grain, and/or sodium requirements from SY2015-2016 through SY2017-2018. USDA implemented similar changes for SY2018-2019 in an interim final rule. In December 2018, USDA published a final rule that indefinitely changes these three aspects of the standards starting in SY2019-2020. Specifically, the rule allows all SFAs to offer flavored, low-fat (1%) milk as part of school meals and as beverages sold in schools, and requires unflavored milk to be offered alongside flavored milk in school meals; requires SFAs to adhere to a 50% whole grain-rich requirement (the original regulations required 100% whole grain-rich starting in SY2014-2015); states may make exemptions to allow SFAs to offer nonwhole grain-rich products; and maintains Target 1 sodium limits from SY2019-2020 through SY2023-2024, implements Target 2 limits starting in SY2024-2025 and thereafter, and eliminates Target 3 limits (the strictest target). Table 2 provides a timeline from the 2012 final rule to the 2018 final rule, showing the ways in which milk, whole grain, and sodium requirements have been modified over time. Apart from these changes, the nutrition standards for school meals remain largely intact. The changes to the milk requirements also affect other beverages sold in schools; otherwise, the nutrition standards for competitive foods have not been changed substantially. Other Proposals Legislative proposals related to the nutrition standards were considered in the 115 th Congress. For example, the House-passed version of 2018 farm bill (one version of H.R. 2 ) would have required USDA to review and revise the nutrition standards for school meals and competitive foods. According to the bill, the revisions would have had to ensure that the standards, particularly those related to milk, "(1) are based on research based on school-age children; (2) do not add costs in addition to the reimbursements required to carry out the school lunch program … and (3) maintain healthy meals for students." This provision was not included in the enacted bill. Child nutrition reauthorization proposals in the House and Senate during the 114 th Congress also would have altered the nutrition standards. The House committee's proposal ( H.R. 5003 ) would have required USDA to review the school meal standards at least once every three years and revise them as necessary, following certain criteria. In addition, under the proposal, fundraisers by student groups/organizations would no longer have had to meet the competitive food standards and any foods served as part of a federally reimbursable meal would have been allowed to be sold a la carte. The Senate committee's proposal ( S. 3136 ) would have required USDA to revise the whole grain and sodium requirements for school meals within 90 days after enactment. Although not included in the proposal itself, negotiations between the Senate committee, the White House, USDA, and the School Nutrition Association resulted in an agreement that these revisions, if enacted, would have reduced the 100% whole grain-rich requirement to 80% and delayed the Target 2 sodium requirement for two years. "Fresh" in the Fresh Fruit and Vegetable Program (FFVP) Under current law, fruit and vegetable snacks served in FFVP must be fresh. According to USDA guidance, fresh refers to foods "in their natural state and without additives." In recent years, some have advocated for the inclusion of frozen, dried, canned, and other types of fruits and vegetables in the program, while others have advocated for continuing to maintain only fresh products. Stakeholders on both sides include agricultural producers and processors. The 2014 farm bill (Section 4214 of P.L. 113-79 ) funded a pilot project that incorporated canned, dried, and frozen (CDF) fruits and vegetables in FFVP in a limited number of states. USDA selected schools in four states (Alaska, Delaware, Kansas, and Maine) that reported difficulty obtaining, storing, and/or preparing fresh fruits and vegetables. According to the final (2017) evaluation, 56% of the pilot schools chose to incorporate CDF fruits and vegetables during an average week of the demonstration. Schools most often introduced dried and canned fruits, which resulted in decreased vegetable offerings and increased fruit offerings in the FFVP. However, there was no significant impact on students' vegetable consumption, while fruit consumption declined on FFVP snack days (likely because students consumed a smaller quantity of fruit when it was dried or canned). There was also no significant impact on student participation. Student satisfaction with FFVP decreased slightly during the pilot, parents' responses to the pilot were mixed, and school administrators (who opted into the pilot) generally favored the changes. Legislative proposals to change FFVP offerings on a more permanent basis have also been considered. For example, in the 115 th Congress, the House version of H.R. 2 would have allowed CDF and puréed forms of fruits and vegetables in FFVP and removed "fresh" from the program name. This provision was not included in the enacted bill. In the 114 th Congress, child nutrition reauthorization legislation in the House ( H.R. 5003 ) included a similar proposal to allow participating schools to serve "all forms" of fruits and vegetables as well as tree nuts. The Senate committee's proposal ( S. 3136 ) would have provided temporary hardship exemptions for schools with limited storage and preparation facilities or limited access to fresh fruits and vegetables that would have allowed them to serve CDF fruits and vegetables in FFVP. Such schools would have to transition to 100% fresh products over time. "Buy American" in School Meals Programs Schools participating in the National School Lunch Program (NSLP) and/or School Breakfast Program (SBP) must comply with federal requirements related to sourcing foods domestically. These requirements are outlined in the school meals programs' authorizing laws and clarified in USDA guidance. Under the Buy American requirements, schools participating in the NSLP and/or SBP in the 48 contiguous states must purchase "domestic commodities or products … to the maximum extent practicable." Statute defines "domestic commodities or products" as those that are both produced and processed substantially in the United States. Accompanying conference report language elaborated that "processed substantially" means the product is processed in the United States and contains over 51% domestically grown ingredients, and this definition is also included in USDA guidance (discussed below). USDA regulations essentially restate the statutory requirement. USDA has issued guidance on how SFAs and state agencies should implement the Buy American requirements. The most recent guidance (as of the date of this report) was published in a June 2017 memorandum. According to USDA-FNS guidance, the Buy American requirements apply to any foods purchased with funds from the nonprofit school food service account, whether or not they are federal funds (children's paid lunch fees, for example, also go into the nonprofit school food service account). The guidance encourages SFAs to integrate Buy American into their procurement processes; for example, by monitoring the USDA catalog for appropriate products and placing Buy American language in solicitations, contracts, and other procurement documents. The guidance explains that SFAs are permitted to make exceptions to the Buy American requirements on a limited basis when a product "is not produced or manufactured in the U.S. in sufficient and reasonably available quantities of a satisfactory quality" or when "competitive bids reveal the costs of a U.S. product are significantly higher than the non-domestic product." SFAs must interpret when this is the case and document any exceptions they make. SFAs may also request a waiver from the requirements for a product that does not meet these criteria. State agencies must review SFAs' compliance with the Buy American requirements, including any exceptions an SFA has made, and take corrective action when necessary. The enacted 2018 farm bill (Section 4207 of P.L. 115-334 ) included a provision requiring USDA to "enforce full compliance" with the Buy American requirements and "ensure that States and school food authorities fully understand their responsibilities" within 180 days of enactment. In addition, the bill requires USDA to submit a report to Congress by the 180-day deadline on actions taken and plans to comply with the provision. The provision clarifies the definition of domestic products for the purposes of USDA's enforcement, stating that domestic products are those that are "processed in the United States and substantially contain … meats, vegetables, fruits, and other agricultural commodities" produced in the United States, the District of Columbia, Puerto Rico, or any territory or possession of the United States, or "fish harvested" in the Exclusive Economic Zone or by a U.S.-flagged vessel. The provision in the enacted bill amended a related provision in the Senate-passed version of the farm bill. Proponents of stricter requirements have cited economic and food safety reasons for domestic sourcing and expressed particular concern over sourcing from China. Others have argued for maintaining or increasing schools' discretion in food procurement, arguing that high-quality domestic options are not always available or cost-effective. Alternatives to Congregate Feeding in Summer Meals Under current law, summer meals are generally provided in "congregate" or group settings where children come to eat while supervised. These meals are provided through the Summer Food Service Program (SFSP) and the National School Lunch Program's Summer Seamless Option (SSO). In recent years, policymakers have weighed different proposals and tested alternatives to congregate meals in SFSP and SSO. Some of these alternatives focus on rural areas, which may face particular barriers to onsite consumption of summer meals. According to a May 2018 study by the U.S. Government Accountability Office, states commonly reported that reaching children in rural areas was "very" or "extremely" challenging in SFSP. Summer EBT Demonstration The 2010 Agriculture Appropriations Act (Section 749(g) of P.L. 111-80 ) provided $85 million in discretionary funding for "demonstration projects to develop and test methods of providing access to food for children in urban and rural areas during the summer months." One of these is the Summer Electronic Benefit Transfer for Children (SEBTC or Summer EBT) project, which began in summer 2011 and has continued each summer since (as of the date of this report) 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 electronic benefits transfer (EBT) card for the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) or Supplemental Nutrition Assistance Program (SNAP). 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 the smaller set of WIC-eligible foods at WIC-authorized retailers. An evaluation of Summer EBT was conducted from FY2011 through FY2013. The study, which used a random assignment design, found a significant decline in the prevalence of very low food security among participants (9.5% of control group children experienced very low food security compared to 6.4% in the Summer EBT group). It also showed improvements in children's consumption of fruits, vegetables, and whole grains. Both the WIC and SNAP models showed increased consumption, but increases were greater at sites operating the WIC model. Congress has provided subsequent funding for Summer EBT projects (see Table 3 ). Most recently, the third FY2019 Consolidated Appropriations Act ( P.L. 116-6 ) provided $28 million for the Summer EBT demonstration. Awardees for summer 2017 were Connecticut, Delaware, Michigan, Missouri, Nevada, Oregon, Virginia, and the Chickasaw and Cherokee nations. For summer 2018, USDA also awarded grants to Tennessee and Texas. Many of these jurisdictions participated in Summer EBT in previous summers as well. In October 2018, USDA-FNS announced a new strategy for determining grant recipients in FY2019, stating that the agency will prioritize new states that have not participated before, statewide projects, and projects that can operate in the summers of 2019 through 2021. There were proposals in the 114 th and 115 th Congresses to expand Summer EBT. For example, the Senate committee's child nutrition reauthorization proposal in the 114 th Congress ( S. 3136 ) would have allowed a portion of SFSP's mandatory funding to cover Summer EBT and authorized up to $50 million in discretionary funding for the program. In addition, in its FY2017 budget proposal, the Obama Administration recommended expansion of Summer EBT nationwide with a phase-in over 10 years. Freestanding bills in the 114 th and 115 th Congresses had similar objectives. Other Summer Demonstrations Funding from the 2010 Agriculture Appropriations Act (Section 749(g) of P.L. 111-80 ) was also used for other demonstration projects. One of these, the Enhanced Summer Food Service Program (eSFSP), took place during the summers of 2010 through 2012 in eight states. It included four initiatives: (1) incentives for SFSP sites to lengthen operations to 40 or more days, (2) funding to add recreational or educational activities at meal sites, (3) meal delivery for children in rural areas, and (4) food backpacks that children could take home on weekends and holidays. Evaluations of eSFSP were published from 2011 to 2014. Summer meal participation rates rose during the demonstration periods for all four initiatives. In addition, children in the meal delivery and backpack demonstrations had consistent rates of food insecurity from summer to fall (this was not measured for the other initiatives). However, the results from these evaluations should be interpreted with caution due to a small sample size, the lack of a comparison group, and potential confounding factors. Another demonstration project, also operating under authority provided by the 2010 Agriculture Appropriations Act, provided exemptions from the congregate feeding requirement to SFSP and SSO outdoor meal sites experiencing excessive heat each summer since 2015 (as of the date of this report). Exempted sites must continue to serve children in congregate settings on days when heat is not excessive, and provide meals in another form (e.g., a take-home form) on days of excessive heat. USDA also offers exemptions on a case-by-case basis for other extreme weather conditions. This demonstration has not been evaluated. Other Proposals There were other proposals and hearings related to congregate feeding in SFSP in recent years. For example, in the 114 th Congress, committee-reported child nutrition reauthorization proposals in the Senate and the House ( S. 3136 and H.R. 5003 , respectively) would have enabled some rural meal sites to provide SFSP meals for consumption offsite. Specifically, both proposals would have allowed offsite consumption for children (1) in rural areas ( H.R. 5003 to a more limited extent than S. 3136 ) and (2) in nonrural areas in which more than 80% of students are certified as eligible for free or reduced-price meals. The bills would have also permitted congregate feeding sites to provide meals to be consumed offsite episodically under certain conditions such as extreme weather or public safety concerns. Community Eligibility Provision The HHFKA created the Community Eligibility Provision (CEP), an option to provide free meals (lunches and breakfasts) to all students in schools with high proportions of students who automatically qualify for free or reduced-price lunches. CEP became available to schools nationwide starting in SY2014-2015, and participation has increased since then. As of SY2016-2017, more than 20,700 schools participated in CEP, according to data from the Food Research and Action Center (FRAC), a nonprofit advocacy organization. This is roughly 22% of NSLP schools. Several groups have expressed support for CEP during its implementation, arguing that the provision improves access to meals, reduces stigma associated with receiving free or reduced-price meals, and reduces schools' administrative costs. Others have sought to change the option. For example, in the 114 th Congress, the House's committee-reported child nutrition reauthorization bill ( H.R. 5003 ) would have restricted schools' eligibility for CEP, which the committee majority argued was "to better target resources to those students in need, while also ensuring all students who are eligible for assistance continue to receive assistance." One secondary effect of CEP is that it has created data issues for other nonnutrition federal and state programs. Many programs, most notably the federal Title I-A program (the primary source of federal funding for elementary and secondary schools), use free and reduced-price lunch data to determine eligibility and/or funding allocations. These data come from school meal applications, which are no longer collected under CEP's automatic eligibility determination process. For more information on this issue, see CRS Report R44568, Overview of ESEA Title I-A and the School Meals' Community Eligibility Provision . Unpaid Meal Costs and "Lunch Shaming" Students may qualify for free meals, or they may have to pay for reduced-price or full-price meals. In recent years, the issue of students owing and not paying their meal costs, and schools' responses to such situations, has received increased attention. In many cases, schools serve students a regular meal, charging the unpaid meal cost and creating a debt that they may try to collect later from the family. In other cases, schools respond with what some have called "lunch shaming" practices—most commonly, taking or throwing away a student's selected hot foods and providing an alternative cold meal or, less commonly, barring children from participation in school events until debt is repaid or having children wear a visual indicator of meal debt (e.g., a stamp or sticker). Lunch shaming instances have largely been reported in news articles from different states, and there are limited national data available on the prevalence of such practices (available data are discussed in the text box below). Many school districts report that unpaid meal costs create a financial burden on their meal programs (see text box below for more detail). In addition to federal funds, student payments for full and reduced-price meals are a primary source of revenue for school food programs. Schools have an interest in collecting this revenue to help fund operations. Also, according to federal regulations, if schools are unable to recover unpaid meal funds, the money becomes "bad debt" and the school or school district must use other nonfederal funding sources to cover the costs. Starting in 2010, Congress and USDA have taken actions to address the issue of unpaid meal costs. Section 143 of the HHFKA required USDA to examine states' and school districts' policies and practices regarding unpaid meal charges. As part of the review, the law required USDA to "prepare a report on the feasibility of establishing national standards for meal charges and the provision of alternate meals" and, if applicable, make recommendations related to the implementation of the standards. The law also permitted USDA to take follow-up actions based on the findings from the report. USDA's subsequent Report to Congress in June 2016 ultimately did not recommend national standards, but instead recommended "clarifying and updating policy guidance on specific national policies impacting unpaid meal charges and facilitating the development and distribution of best practices to support decision making by States and localities." USDA-FNS followed up with a memorandum requiring SFAs to institute and communicate, by July 1, 2017, a written meal charge policy, which was to include instructions on how to address situations in which a child does not pay for a meal. USDA-FNS also provided clarification through webinars, other memoranda, and a best practice guide. In the Report to Congress, USDA stated that its recommendation was based on findings from a study published by USDA-FNS in March 2014 and a Request for Information (RFI) on "Unpaid Meal Charges" published by USDA-FNS in October 2014. The findings from both the study and the RFI—which garnered 462 comments—showed that meal charge policies were largely determined at the school and school district levels rather than the state level. The responses to the RFI also indicated that such policies ranged in formality, with varying degrees of review (e.g., some required school board approval while others did not) and enforcement. In the RFI comments, school and district officials generally expressed a preference for local control of meal charge policies, while national advocacy groups generally favored national standards. The topics of lunch shaming and unpaid meal costs also surfaced in the 115 th Congress. For example, a provision in the FY2018 appropriations law stated that funds appropriated in the law could not be used in ways that result in discrimination against children eligible for free or reduced-price meals, including the practices of segregating children and overtly identifying children by special tokens or tickets (note that this does not pertain to children paying for full-price meals). Legislative proposals in the 115 th Congress included the Anti-Lunch Shaming Act of 2017 ( H.R. 2401 / S. 1064 ), which sought to establish national standards for how schools treat children unable to pay for a meal. Unpaid meal costs and lunch shaming have also been active topics at the state level. In recent years, a number of states have enacted legislation aimed at addressing these issues. For example, in 2018, Illinois passed legislation that requires schools to serve a regular (reimbursable) meal to students who do not pay and allows school districts to request an offset from the state for debts exceeding $500. Paid Lunch and Other School Food Pricing The HHFKA created new requirements related to schools' pricing of paid lunches (sometimes referred to as "paid lunch equity" requirements). Specifically, the law required all NSLP-participating SFAs to review their average price of paid lunches and, if necessary, gradually increase prices based on a formula. The law also gave SFAs the option to meet the requirements with specified nonfederal funding sources instead of raising prices. According to the Senate committee report on the HHFKA, the requirements were intended "to ensure that children receiving free and reduced price lunches receive the full value of federal funds." Prior to the paid lunch equity requirements, a USDA study found that federal subsidies for free and reduced-price lunches were cross-subsidizing other aspects of the meals programs, likely including paid lunches. This can occur because federal reimbursements for free, reduced-price, and paid lunches are all mixed into the same SFA-run "nonprofit school food service account" (NSFSA). Some observers argue, however, that raising prices may reduce participation in paid lunches. Under the paid lunch equity formula, the price per paid lunch must eventually match or exceed the difference between the federal reimbursements for free and paid lunches. If this is not the case, schools must increase prices over time until they make up the difference. For example, the federal reimbursement was $3.37 for free lunches and $0.37 for paid lunches SY2018-2019 for some schools. Under the requirements, if schools were not charging at least $3.00 per paid lunch, they would be required to increase the price of a paid lunch gradually, based on a formula, until they closed the gap (see Figure 1 ). Schools cannot be required to raise the price by more than 10 cents annually, but they may choose to do so. The HHFKA also included related requirements for revenue from "nonprogram" (i.e., competitive) foods. The law required that any revenue from nonprogram foods accrue to the SFA-run NSFSA. In practice, this prevents revenue from competitive foods from being used for other school purposes outside of food service. The law also required that, broadly speaking, revenue from nonprogram foods equal or exceed the costs of obtaining nonprogram foods (see the regulations for a specific formula). In June 2011, USDA-FNS published an interim final rule implementing the requirements starting in SY2011-2012, offering some flexibility for that first year. USDA subsequently provided certain exemptions through agency guidance for SY2013-2014 through SY2017-2018 for SFAs "in strong financial standing," as determined by state agencies based on different criteria. For SY2018-2019, the enacted FY2018 appropriation (Section 775 of P.L. 115-141 ) expanded the exemptions, requiring only SFAs with a negative balance in the NSFSA as of January 31, 2018, potentially to have to raise prices for paid meals. Other legislative proposals related to the paid lunch equity requirements were considered in recent Congresses. For example, the House committee's child nutrition reauthorization proposal in the 114 th Congress would have eliminated the requirements. The Senate committee's proposal would have replaced the requirements with a broader "non-federal revenue target," which could have come from household payments for full-price lunches or other state and local contributions. Appendix. Acronyms Used in This Report CACFP: Child and Adult Care Food Program CDF: Canned, dried, or frozen CEP: Community Eligibility Provision eSFSP: Enhanced Summer Food Service Program FFVP: Fresh Fruit and Vegetable Program HHFKA: Healthy, Hunger-Free Kids Act NSFSA: Nonprofit school food service account NSLP: National School Lunch Program SBP: School Breakfast Program SFA: School food authority SFSP : Summer Food Service Program SMP: Special Milk Program SSO: Summer Seamless Option Summer EBT or SEBTC : Summer Electronic Benefit Transfer for Children SY: school year USDA-FNS: U.S. Department of Agriculture Food and Nutrition Service

The term child nutrition programs refers to several U.S. Department of Agriculture Food and Nutrition Service (USDA-FNS) programs that provide food for children in institutional settings. These include the school meals programs—the National School Lunch Program and School Breakfast Program—as well as the Child and Adult Care Food Program, Summer Food Service Program, Special Milk Program, and Fresh Fruit and Vegetable Program. The most recent child nutrition reauthorization, the Healthy, Hunger-Free Kids Act of 2010 (HHFKA; P.L. 111-296), made a number of changes to the child nutrition programs. In some cases, these changes spurred debate during the law's implementation, particularly in regard to updated nutrition standards for school meals and snacks. On September 30, 2015, some of the authorities created by the HHFKA expired. Efforts to reauthorize the child nutrition programs in the 114th Congress, while not completed, considered several related issues and prompted further discussion about the programs. There were no substantial reauthorization attempts in the 115th Congress. Current issues discussed in this report include the following: Nutrition standards for school meals and snacks. The HHFKA required USDA to update the nutrition standards for school meals and other foods sold in schools. USDA issued final rules on these standards in 2012 and 2016, respectively. Some schools had difficulty implementing the nutrition standards, and USDA and Congress have taken actions to change certain parts of the standards related to whole grains, sodium, and milk. Offerings in the Fresh Fruit and Vegetable Program (FFVP). There have been debates recently over whether the FFVP should include processed and preserved fruits and vegetables, including canned, dried, and frozen items. Currently, statute permits only fresh offerings. "Buy American" requirements for school meals. The school meals programs' authorizing laws require schools to source foods domestically, with some exceptions, under Buy American requirements. Efforts both to tighten and loosen these requirements have been made in recent years. The enacted 2018 farm bill (P.L. 115-334) instructed USDA to "enforce full compliance" with the Buy American requirements and report to Congress within 180 days of enactment. Congregate feeding in summer meals. Under current law, children must consume summer meals on-site. This is known as the "congregate feeding" requirement. Starting in 2010, Congress funded demonstration projects, including the Summer Electronic Benefit Transfer (EBT) demonstration, to test alternatives to congregate feeding in summer meals. Congress has increased funding for Summer EBT in recent appropriations cycles and there have been discussions about whether to continue or expand the program. Implementation of the Community Eligibility Provision (CEP). The HHFKA created CEP, an option for qualifying schools, groups of schools, and school districts to offer free meals to all students. Because income-based applications for school meals are no longer required in schools adopting CEP, its implementation has created data issues for federal and state programs relying on free and reduced-price lunch eligibility data. Unpaid meal costs and "lunch shaming." The issue of students not paying for meals and schools' handling of these situations has received increasing attention. Some schools have adopted what some term as "lunch shaming" practices, including throwing away a student's selected hot meal and providing a cold meal alternative when a student does not pay. Congress and USDA have taken actions recently to reduce instances of student nonpayment and stigmatization. Paid lunch pricing. One result of new requirements in the HHFKA was price increases for paid (full price) lunches in many schools. Attempts have been made—some successfully—to loosen these "paid lunch equity" requirements in recent years.

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Introduction1 Since its founding in 2006, the National Popular Vote (NPV) initiative has promoted an agreement among the states, an interstate compact that would effectively establish direct popular election of the President and Vice President without a constitutional amendment, while retaining the structure of the electoral college system. The United States is unique among "presidential" republics by providing an indirect election to choose its chief executive. The President and Vice President of the United States are selected not by registered voters, but by the electoral college, electors appointed in the states "in such Manner as the Legislature thereof may direct.... " Alexander Hamilton, who was "present at the creation" of the Constitution in 1787, commented favorably on the electoral college system in The Federalist : The mode of appointment of the Chief Magistrate of the United States is almost the only part of the system, of any consequence, which has escaped without severe censure, or which has received the slightest mark of approbation from its opponents.... I venture somewhat further, and hesitate not to affirm that if the manner of it be not perfect, it is at least excellent. It unites in an eminent degree all the advantages the union of which was to be wished for. Notwithstanding Hamilton's endorsement, the first proposal to change the electoral college system by constitutional amendment was introduced as early as 1800, and since that time more than 700 proposals to reform or eliminate the college have been introduced in Congress. Reform advocates have long focused on the fact that it does not provide for direct democratic election, that less-populous states are afforded an arithmetical advantage due to the assignment of two electors to each state, regardless of population, and that the winner-take-all system makes it possible for candidates to win an electoral college majority and the presidency, while gaining fewer votes than their principal opponents in the popular election. Between 1949 and 1979, Congress considered amendments to reform the electoral college, or replace it with direct popular election, in committee and on the floor of both chambers. Proposed amendments must, however, meet the requirements of the Constitution's Article V, which calls for two-thirds approval by both houses of Congress, and ratification by three-fourths of the states; to date, no electoral college reform proposal has met these requirements. Proponents of the National Popular Vote initiative contend that their plan will achieve direct popular election while circumventing the requirements of Article V, and will guarantee that the popular vote winners will always be elected President and Vice President. The Electoral College in Brief6 The fundamentals of the electoral college system were established by Article II, Section 1 of the U.S. Constitution, and subsequently revised by the Twelfth Amendment. The Constitution's minimal provisions have been complemented over the past two centuries by a range of federal and state laws, political party procedures, and enduring political traditions, leading to the system as it exists today. The salient features of the contemporary system are detailed below. The electors are collectively known as the electoral college; although this phrase does not appear in the Constitution, it gained currency in the early days of the republic, and was recognized in federal law in 1845. The electoral college has no continuing existence; its sole purpose is to elect the President and Vice President. Each state is allocated a number of electors equal to the combined total of its U.S. Senate and House of Representatives delegations. The District of Columbia is also allocated three electors. At present, the total is 538, reflecting the combined size of the Senate (100 Members), the House (435 Members), and the District of Columbia electors. Any person may serve as an elector, except Senators and Representatives, or any other person holding an office of "trust or profit" under the United States. Article II, Section 1 of the Constitution empowers the states to "appoint [electors], in such Manner as the Legislature thereof may direct.... " This grant of authority provides the constitutional basis claimed for the NPV initiative. In practice, all states currently provide for popular election of their electoral college delegations. Candidates for the office of elector are nominated by political parties and other groups on the presidential ballot in each state. In most cases, the candidates for the office of elector are nominated by the state party committee or the party's statewide convention. The winning presidential nominees must gain a national majority of 270 or more electoral votes, out of the 538 total, in order to be elected. If no ticket of candidates attains a majority, then the House of Representatives elects the President, and the Senate the Vice President, in a procedure known as contingent election. Candidates for the office of elector are selected by their respective political parties. They are expected to vote for the presidential and vice presidential candidates to whom they are pledged. Some states seek to require them to so vote by law or other means, but most constitutional scholars hold that the electors remain free agents under the Constitution, and that they may vote for any person they choose. On rare occasions, an elector will vote for a different candidate, or abstain from casting a vote for any candidate; he or she is known as a "faithless elector." The goal of presidential campaigns under the existing system is to win by carrying states that collectively cast a majority of electoral votes. Political parties and presidential campaigns tend to focus on states that are closely contested (widely referred to as "battleground" states), or that have large delegations of electoral votes, or both. Winning a majority of the more populous and/or battleground states is considered crucial to obtaining the necessary electoral vote majority. In 48 states and the District of Columbia, the presidential/vice presidential ticket winning the most popular votes (a plurality or more) in that state is awarded all its electoral votes. That is to say, the winning party's entire ticket of electors is elected. This is referred to as the "winner-take-all" or "general ticket" system. Presidential Election Day is set by law for Tuesday after the first Monday in November every fourth year succeeding the election of President and Vice President. On Presidential Election Day, voters cast one vote for the candidates they support. They are, however, actually voting for the state political party "ticket" of electors supporting those presidential and vice presidential candidates. Presidential electors assemble on the first Monday after the second Wednesday in December following the general election. They meet in their respective states, not collectively, and cast separate votes by ballot for the President and Vice President. After the electors vote, the results are sent by the states to Congress and various other federal authorities. On January 6 of the year following a presidential election, Congress meets in a joint session to count the electoral votes and make a formal declaration of which candidates have been elected President and Vice President. The National Popular Vote Initiative: Background22 A range of factors contributed to the emergence of the National Popular Vote initiative in the first decade of the 21 st century. A major source was frustration by reform advocates after three decades of failed attempts to secure congressional approval for a direct popular election amendment. A more immediate spur was the contentious and disputed presidential election of 2000, which is regarded as having been a major factor contributing to the development of the NPV proposal. Electoral College Reform, 1948-1979: Three Decades of Unsuccessful Efforts to Propose a Constitutional Amendment One of the factors cited for the emergence of the NPV initiative has been the exacting requirements set by the Constitution for amendments, in this case, a direct popular election constitutional amendment. As noted previously, approval by two-thirds of Members present and voting is required in both houses when Congress proposes an amendment, followed by ratification by three-fourths of the states, 38 at present, usually within a seven-year period specified by Congress. Between 1948 and 1979, Congress debated electoral college reform at length; throughout this time, hundreds of reform proposals were introduced in both chambers. They generally centered on one of two courses: "end it" by eliminating the entire electoral college system and establishing direct popular election, or "mend it" by reforming its more controversial provisions. Between 1948 and 1979, proposed amendments were the subject of hearings in the Senate and House Judiciary Committees on 17 different occasions, while electoral college reform was debated in the Senate on five occasions and twice in the House during this period. Proposals were approved by the necessary two-thirds majority twice in the Senate and once in the House, but never in the same Congress. Following the 1979 defeat of a direct popular election amendment on the Senate floor, and the retirement or defeat of prominent congressional advocates, the question of electoral college reform largely disappeared from public attention and Congress's legislative agenda. Although Senators and Representatives continued to introduce reform proposals, few received action beyond routine committee referral, and in time, the number of measures introduced dropped to zero. Even after the presidential elections of 2000 and 2016, in which the winner of the electoral vote won fewer popular votes than his opponent (a so-called "misfire") , there was little evidence that Congress was prepared to consider an electoral college reform amendment. Proposals to replace the electoral college system with direct popular election continued to be introduced, but in dwindling numbers as the years passed. No proposal for direct popular election was introduced in the 113 th Congress. By comparison, 41 direct popular election or electoral college reform amendments were proposed in the 95 th Congress (1977-1978). Following the 2016 election, however, four constitutional amendments introduced late in the 114 th Congress proposed eliminating the electoral college and replacing it with direct election. To date in the 116 th Congress, three amendments to establish direct popular election by constitutional amendment have been introduced, but no action beyond committee referral has been taken on them. Survey Research: Trends in Public Support for Direct Popular Election Until recently, survey research findings showed public support for presidential election reform through direct popular election by sizable margins. As early as 1967, the Gallup Poll reported that 58% of respondents supported direct election, compared with 22% who favored retaining the electoral college. More recently, Gallup's 2013 survey recorded that 63% of respondents favored an amendment providing for direct election, while 29% favored retention of the electoral college. Following the 2016 election, however, overall support for direct election was measured at 49% in favor to 47% opposed. It is arguable that the change in public attitudes was influenced by the 2016 election results, in which the Republican nominees won the election with a majority of electoral votes, but fewer popular votes than their Democratic opponents. For instance, Gallup reported a shift to greater support for the electoral college system by respondents who identified themselves as "Republican" or "Lean Republican." Conversely, already high levels of support for direct popular election among respondents who identified themselves as "Democratic" or "Lean Democratic" rose still further in the post-2016 election Gallup Poll. To date, CRS has identified one survey that was specifically designed to measure public commitment to the NPV initiative. A March 27, 2019, Politico/Morning Consult poll posed relevant questions on the presidential election process and the NPV compact. The first question, which presented a general outline of the existing electoral college system and the generic alternative of direct popular election, reported that respondents preferred direct election by 50% to 34% for retaining the electoral college, and 16% reporting "Don't know/No opinion." The next question explained the proposed NPV compact and asked respondents' preference for NPV or the electoral college method. Although the level of support for NPV was lower than that measured for generic direct popular election, a plurality of respondents to this question favored the "National Popular Vote Interstate Compact" by a plurality of 43% in favor, to 33% opposed and 23% who reported "Don't know/No opinion." The Elections of 2000 and 2016 and Electoral College Reform The disputed presidential election of 2000 was arguably a catalyst for new thinking on electoral college reform . Following a closely contested campaign, Republican candidates George W. Bush and Richard Cheney were elected over Democratic nominees Al Gore Jr. and Joseph Lieberman following a bitter dispute over election results in Florida tha t was ultimately decided by the Supreme Court . The high court's decision left Bush and Cheney with a narrow plurality in Florida of 537 popular votes and a similarly narrow electoral college majority of 30 states with 271 electoral votes, while their Democratic opponents took 20 states and the District of Columbia with 266 electoral votes (one District of Columbia elector cast a blank ballot in protest against the outcome) . It was the first election since 1888 in which the candidates elected uncontestably won fewer popular votes than their principal opponents : the Gore / Lieberman Democratic ticket gained 50,992,335 popular votes to 50,455,156 for Bush / Cheney. The se election results generated considerable discontent with the system. Some critics argued for a constitutional amendment, but the 107 th Congress faced a heavy legislative workload throughout this period, which initially included enactment of President George W. Bush's legislative program and was later expanded to urgent responses to the terrorist attacks of September 1 1, 2001 . Rather than focus on the lengthy process associated with consideration of a constitutional amendment, Congress focused on legislati ve remedies. The Help America Vote Act of 2002, passed in response to the numerous irregularities in voting systems and procedures revealed by the 2000 election, mandated election administration reforms and v oting system technology enhancements (funded in part by federal grants to the states) intended to ensure accurate and timely voting and vote tabulation in future elections. In 2016, the presidential election was again won by nominees who gained a majority of electoral votes but fewer popular votes than their major party opponents. Although proposals to amend the Constitution to provide direct popular election were introduced in response to this occurrence late in the 114 th Congress , and again in the 115 th Congress, the 2016 results did not result in the degree of c ontroversy a nd activism that followed the electoral college "misfire " of 2000. T he following factor may have contributed to this situation : i n 2000, a shift in Florida's electoral votes from Bush/Cheney to Gore/Lieberman would have changed the election result; by comparison, in 2016, a shift in the state with the closest vote margin, Michigan , would not have altered the election. Bypassing Constitutional Amendment Procedures to Attain Direct Popular Election: Emergence of the National Popular Vote Concept While the 2000 election's "misfire" did not result in consideration of a constitutional amendment, it did prompt considerable study and investigation into new approaches to electoral reform among scholars of the presidential election process and political activists. Law professors Robert W. Bennett of Northwestern University, Vikram Amar of the University of California-Davis, and Akhil Amar of Yale University School of Law are generally credited as the intellectual godparents of the concept that ultimately evolved into the National Popular Vote Interstate Compact, which relies on the Constitution's broad grant of power to each state to "appoint, in such Manner as the Legislature thereof may direct [emphasis added], a Number of Electors, equal to the whole Number of Senators and Representatives to which the State may be entitled in the Congress." Project FairVote, an issue advocacy group self-described as a nonprofit, nonpartisan "501(c)(4)" organization, appears to have been an incubator of the NPV concept. FairVote has supported NPV for "over a decade," and was an early supporter of National Popular Vote Inc., the plan's official advocacy group; moreover, longtime FairVote board members Robert Richie and the late Representative John B. Anderson were early supporters of the National Popular Vote initiative and contributors to its manifesto, Every Vote Equal . The National Popular Vote (NPV) Initiative49 As noted previously, the NPV initiative was the ultimate result of the various studies and proposals offered following the presidential election of 2000. How the NPV Would Work The NPV initiative seeks to establish direct popular election of the President and Vice President through an interstate compact, rather than by constitutional amendment. Ideally, under the compact's provisions, legislatures of the 50 states and the District of Columbia would pass legislation binding the signatories to appoint presidential electors committed to the presidential/vice presidential ticket that gained the most votes nationwide . If all 50 states and the District of Columbia were compact members, this would deliver a unanimous electoral college decision for the candidates winning a plurality of the popular vote. Specifically, the plan calls for an agreement among the states, an interstate compact effected through state legislation, in which the legislature in each of the participating states agrees to appoint electors pledged to the candidates who won the nationwide popular vote . State election authorities would count and certify the popular vote in each state, which would be aggregated and certified as the "nationwide popular vote." The participating state legislatures would then choose the slate of electors pledged to the "nationwide popular vote winner," notwithstanding the results within their particular state s . To ensure success, the initiative would come into effect only if states whose total electoral votes equal or exceed the constitutional majority of 270 were to approve the plan. If the nationwide popular vote were effectively tied, the states would be released from their commitment under the compact, and could choose electors who represented the presidential ticket that gained the most votes in each particular state. One novel NPV provision would enable the presidential candidate who won the national popular vote to fill any vacancies in the electoral college with electors of his or her own choice. States would retain the right to withdraw from the compact, but if a state chose to withdraw within six months of the end of a presidential term, the withdrawal would not be effective until after the succeeding President and Vice President had been elected. Managing the NPV Campaign: National Popular Vote Inc. The NPV advocacy effort is managed by National Popular Vote Inc., a "501(c)(4)" nonprofit corporation established in California in 2006 by Barry Fadem, an attorney specializing in initiative and referendum law, and John R. Koza, Ph.D., an automated systems scientist and entrepreneur. As a 501(c)(4) entity, it is permitted to engage in political activity in furtherance of its goal, without forfeiting its tax-exempt status, so long as this is not its primary activity. NPV states on its website that its "specific purpose is to study, analyze and educate the public regarding its proposal to implement a nationwide popular election of the President of the United States." Dr. Koza serves as chairman of NPV Inc., and Mr. Fadem serves as president. NPV's advisory board includes former Senators and Representatives of both major political parties. In 2006, National Popular Vote Inc. published a detailed handbook, Every Vote Equal: A State-Based Plan for Electing the President by National Popular Vote . This publication, in its fourth edition at the time of this writing, provides a detailed account of various issues related to the NPV initiative, including the electoral college, earlier reform efforts, interstate compacts, the text of the proposed compact, a strategy for advancing the initiative, and a 340-page section addressing "myths about the National Popular Vote Compact." National Popular Vote Inc. maintains an office in Mountain View, CA. Supporters in various state legislatures began to introduce measures to adopt the interstate compact shortly after NPV's inaugural press conference on February 23, 2006. The NPV Compact has been introduced at various sessions in the legislatures of all 50 states and the Council of the District of Columbia, which performs the functions of a state legislature in the nation's capital, and has received some form of active consideration in 38 states and the D.C. Council. Among other activities, NPV maintains a regular communications program of email newsletters announcing activities and soliciting readers to petition governors and state legislators to support the compact. At the time of this writing, NPV claims that 3,112 state legislators have either sponsored or cast a recorded vote in their respective legislatures for the compact. NPV also claims endorsements from legislators and endorsements by the New York Times , Los Angeles Times , Chicago Sun-Times , Minneapolis Star Tribune , Boston Globe , Miami Herald , and other newspapers. NPV also advocates use of the citizen initiative process where available to enact state adherence to the compact; it asserts that when Article II, Section 1, clause 2 grants authority to the states to appoint "in such Manner as the Legislature thereof may direct," the authority extends to the states' entire lawmaking process, which in some states includes the proposal and passage of legislation and constitutional amendments through citizen initiative. The citizen initiative approach to the interstate compact, however, has yet to be used at the time of this writing. Status of the National Popular Vote Interstate Compact in 2019: How Many States Have Ratified the NPV Initiative? At the time of this writing, in May 2019, the following 14 states and the District of Columbia have adopted the National Popular Vote Compact. Collectively, they are assigned a total of 189 electoral votes. The National Popular Vote Interstate Compact has been introduced since its inception in all 50 states and the District of Columbia. States that have adopted NPV at the time of this writing are listed in chronological order, by year of adoption, as follows: Hawaii (4 electoral votes), 2008; Illinois (20 electoral votes), 2008; Maryland (10 electoral votes), 2008; New Jersey (14 electoral votes), 2008; Washington (12 electoral votes), 2009; Massachusetts (11 electoral votes), 2010; District of Columbia (3 electoral votes), 2010; Vermont (3 electoral votes), 2011; California (55 electoral votes), 2011; Rhode Island (4 electoral votes), 2013; New York (29 electoral votes), 2014; Connecticut (7 electoral votes), 2018; Colorado (9 electoral votes), 2019; Delaware (3 electoral votes), 2019; and New Mexico (5 electoral votes), 2019. After initial momentum in 2008, when four states joined the compact in one year, NPV made slower progress toward its goal of approval by states accounting for 270 electoral votes. Highlights were California's approval in 2011, which added 55 electoral votes to the tally, and New York's accession to the compact in 2014. Beginning with Connecticut's approval in 2018, followed in 2019 by Colorado, Delaware, and New Mexico, 24 additional electoral votes were added to the NVP count, bringing the total to 189, 70% of the 270 votes needed for NPV to go into effect. By early May 2019, legislation to join the NPV had been introduced in the current session of at least one chamber of the legislature in 14 states that controlled a combined total of 150 electoral votes. As of April 17, the compact had been approved in Nevada by the Assembly (lower chamber of the legislature) and in Oregon by the Senate. Accession by these two states would raise the NPV member total to 202 electoral votes. Conversely, proposals to rescind approval of the NPV Interstate Compact have been introduced in the legislatures of Connecticut, Hawaii, Maryland, Massachusetts, New Jersey, and Washington, to date; none has been approved. Some observers note that, despite NPV's assertion of bipartisan support, all the jurisdictions that have joined the compact to date could be identified as "leaning" Democratic or "solid" Democratic in their support of the Democratic Party, as classified by a recent Gallup survey. For instance, 11 of the 14, including California, Delaware, the District of Columbia, Hawaii, Illinois, Maryland, Massachusetts, New Jersey, New Mexico, Rhode Island, and Vermont, were found by Gallup to be among the "most solidly Democratic states in 2017." Alluding to this fact, one commentator observed that [a]ll the states to have joined so far are very blue. Until some purple states and red states sign on, the compact has little in the way of territory to conquer.... The seven states where President Obama won [in 2012] by the widest margins, along with D.C., have joined. So have three others—New Jersey, Illinois and Washington—where Obama won by at least 15 percentage points. But none below that threshold have done so. The 2016 presidential election results in Colorado, Connecticut, Delaware, and New Mexico, the most recent adherents to the NPV compact, arguably confirm this observation—the Democratic candidates won the popular vote in all four states, by margins of between 4.9% in Colorado to 13.7% in Connecticut. On the other hand, several states where the NPV remained under active consideration in 2019—Arizona, Florida, Georgia, Idaho, Indiana, Kansas, North Carolina, Ohio, and South Carolina—were carried by the Republican presidential ticket in 2016. As the NPV campaign developed momentum in the states, particularly between 2008 and 2011, defenders of the existing arrangements and the electoral college announced measures to promote retention of the electoral college system. In October 2011, the Heritage Foundation, a conservative public policy institute, released a report opposing the NPV compact. That same month, Roll Call reported that the State Government Leadership Foundation, a project of the Republican State Leadership Committee, would begin a campaign to defend the electoral college and counter recent NPV gains. Further activity, however, does not appear to have been undertaken by these groups by the time of this writing. The National Popular Vote Initiative: Pro and Con73 Arguments in support of and opposed to the National Popular Vote proposal resemble those advanced in favor of and against direct popular election of the President. The central issue turns on the question of the asserted simplicity and democratic attractiveness of the direct election idea as compared to a more complex array of factors cited by supporters of the electoral college system. Arguments Favoring the NPV Compact Proponents of the NPV initiative arguably share the philosophical criticism voiced by proponents of direct popular election, who maintain that the electoral college system is intrinsically undemocratic—it provides for "indirect" election of the President and Vice President. This, they assert, is an 18 th century anachronism, dating from a time when communications were poor, the literacy rate was much lower, and the nation had yet to develop the durable, sophisticated, and inclusive democratic political system it now enjoys. They maintain that only direct popular election of the President and Vice President is consistent with modern democratic values and practice. Beyond this fundamental challenge, critics cite what they identify as a wide range of technical failings of the electoral college arrangement. Perhaps the most prominent of these is that the electoral college system can result in the election of a President and Vice President who have won the electoral vote, but gained fewer popular votes than their major opponent. This condition results at least in part from the nearly universal reliance on the "winner-take-all" or general ticket system of awarding electoral votes in the states, which is also criticized by NPV advocates. Under the general ticket system, the candidates winning the most popular votes in a state (a plurality is sufficient) are awarded all that state's electors and electoral votes; under these circumstances, a presidential ticket can gain all of a state's electoral votes on even a slim margin of popular votes. Presidents were elected in 1876, 1888, 2000, and 2016 who received fewer popular votes than their major party opponents, while the runner-up in both popular and electoral votes was elected by the House of Representatives when four candidates split the vote in the presidential election of 1824. NPV supporters advocate the compact on the grounds of fairness and respect for the voters' choice. At the core of their arguments, they assert that the process would be simple, national, and democratic; the NPV interstate compact would provide de facto for a single, democratic choice, allowing all the nation's voters to choose the President and Vice President directly, with no intermediaries. The "people's choice," they assert, would win in every election, and every vote would carry the same weight in the election, no matter where in the nation it was cast. No state would be advantaged, nor would any be disadvantaged. According to NPV, the central argument in favor is that the compact "would guarantee the Presidency to the candidate who receives the most popular votes [or at least a plurality] in all 50 states (and the District of Columbia)." According to NPV, there would never again be a presidential election "misfire" or another "wrong winner." Other elements of the electoral college system criticized by NPV advocates (and other electoral college reformers) would arguably disappear or be rendered irrelevant. These include the faithless elector phenomenon, the general ticket system's asserted "disfranchisement" of voters who backed the losing candidates, and various asserted "voting power" advantages attributed to large (populous) states, small states, states with large populations of noncitizens, states with low rates of voter participation, and populous states with concentrations of minority-group voters. In addition, the NPV compact would almost certainly eliminate the need for contingent election of the President and Vice President under the Twelfth Amendment. NPV advocates also assert the compact would provide a practical benefit to states that tend to be noncompetitive in presidential elections and which therefore receive fewer campaign visits by major party candidates. With "every vote equal," NPV maintains that presidential and vice presidential nominees and their organizations would need to spread their presence and resources more evenly as they campaigned for every vote nationwide, rather than concentrate on winning key "battleground" states. They assert that, under the present system candidates have no reason to poll, visit, organize, campaign, or worry about the concerns of voters of states that they cannot possibly win or lose. This means that voters in two thirds of the states are effectively disenfranchised in presidential elections because candidates concentrate their attention on a small handful of "battleground" states. In 2004, candidates concentrated over two-thirds of their money and campaign visits in just five states; over 80% in nine states, and over 99% of their money in just 16 states. For instance, NPV notes that California voters seldom see the presidential or vice presidential nominees or benefit from campaign spending because the Golden State, having voted Democratic since 1988, is considered to be reliably "blue," and Democratic Party candidates are said to take its 55 electoral votes for granted. They also note that Republican candidates make few California appearances, but, NPV asserts, for the opposite reason: why spend time and resources in support of an apparently hopeless cause? Similar arguments made by NPV on the Republican side apply to Texas, a state that has voted for Republican presidential nominees since 1980. In 2016 for instance, NPV claims that no Democratic nominee participated in a general election campaign event in California or Texas, while a Republican nominee appeared in only one campaign event in each of those states. By comparison, according to their calculations, the hotly contested battleground states of Florida, North Carolina, and Pennsylvania received, respectively, 71, 55, and 54 candidate appearances. According to NPV's analysis of campaign appearances, the 2016 major party candidates for President and Vice President appeared at a total of 375 campaign events during the general election campaign, but they visited only 12 states; by NPV's calculation, 38 states and the District of Columbia were bypassed during the campaign. NPV advocates also maintain that the concentration of campaign resources, advertising, and candidate appearances in battleground states depresses turnout in "flyover" states, where candidates make few campaign appearances. The U.S. Elections Project report, America Goes to the Polls, 2016 , appears to offer statistics consistent with this assertion, finding that the participation rate of the population eligible to vote in 14 battleground states was 65% in the 2016 presidential election, as opposed to comparable nationwide turnout of 60%. It also reports findings similar to those advanced by NPV: 95% of campaign visits during the 2016 campaign were made in battleground states, as was 99% of "ad spending." The NPV manifesto also cites a Brookings Institution study of the 2004 presidential election in support of its argument, stating, "Because the electoral college has effectively narrowed elections like the last one to a quadrennial contest for the votes of a relatively small number of states, people elsewhere are likely to feel that their votes don't matter." It should be noted, however, that a range of other political, social, cultural, and economic factors may also contribute to the disparity in turnout between battleground and non-battleground states. NPV further suggests that the disparity in participation may ultimately damage the ability to govern on the state and local levels and could have a negative impact on the legitimacy of public institutions: Diminished voter turnout in presidential races in non-battleground states weakens down-ballot candidates, thereby making the state even less competitive in the future. Governance—not just electioneering—is affected by the winner-take-all rule. Arguments Opposing the NPV Compact National Popular Vote opponents oppose the compact on various grounds. Some argue that it is unconstitutional or "anticonstitutional," that is, contrary to the Founders' intentions and the spirit of the nation's fundamental charter. It is also asserted that NPV would solve few of the electoral college system's alleged problem issues and would create some of its own. Finally, some observers note that the NPV compact is an interstate compact as defined in Article I, Section 10, clause 3 of the Constitution, and as such would be subject to congressional approval. This issue is examined in greater detail in a separate section of this report. On the most fundamental philosophical basis, opponents might argue that the NPV compact violates one of the basic principles of majoritarian democracy: it does not require that candidates win a majority of the popular vote in order to gain the presidency. Rather, it would anoint as winner the ticket that gains more popular votes than any other. A majoritarian democracy, it may be argued, should require a majority in order to elect; it may be further noted that the existing system, by comparison, requires a majority in the electoral college. As one commentary noted only the strictest of majoritarians desire a purely majoritarian presidential election system, and those individuals should be deeply troubled by the prospect of plurality presidencies, which the NPVC [sic] expressly countenances. Indeed, the NPVC promises to create more difficulties and "misfires" in its own way than the Electoral College system its proponents so earnestly seek to replace. Further, opponents might ask how the NPV compact would function in the event of a multicandidate election, a phenomenon that recurs from time to time in U.S. presidential elections. One commentator posited the following problematic scenario under such circumstances: Under the compact, one can easily imagine a multi-candidate race in which a candidate would win, say, a thirty-four percent plurality of the popular vote nationwide while losing in every state and D.C. If all of the states and D.C. were signatories to the compact, all the electoral votes in such a hypothetical race would be awarded contrary to the will of voters choosing electors (still not voting directly for President under this plan). Would the United States accept a President who wasn't the choice of sixty-six percent of those voting, nor even the choice of a single state? The existing electoral college system, NPV skeptics might also assert, is a fundamental element in the federal constitutional arrangements established by the Constitution. Fearing "the tyranny of the majority," the Founders established a system of government that provides checks and balances designed to restrain the majority and secure minority rights. These principles are also embedded in the structure of federal elections: the Senate, the House of Representatives, and the presidency were deliberately provided with different terms of office and different electorates, and the states were given an important role in the federal election process. In particular, through the electoral college the United States elects its national Presidents and Vice Presidents in a state-based federal election. Successful nominees are compelled under this system to present a broad political vision that commands nation-spanning "concurrent majorities" and appeals to the great variety of Americans. As in the case of the Senate, less populous states are accorded a small numerical advantage by assignment of two at-large electors reflecting the Constitution's equal apportionment of Senators to each state regardless of its population. The NPV initiative, they could claim, would discard the Founders' intentions in favor of what they consider to be a flawed "majoritarian" presidency that would ill-serve a continent-spanning and profoundly diverse republic. Another criticism centers on the use of the NPV compact to effect a fundamental change in the presidential election process and a de facto amendment to the Constitution, but without following the procedures set out in Article V. Critics may note that NPV's founders admit their plan is an "end run" around the Constitution. Proponents might counter with the argument that Article V presents too high a hurdle for what they consider a necessary reform of the system. Opponents, however, could respond that the Founders intended the various supermajority requirements in Congress and the states to ensure that successful constitutional amendments enjoy broad national support. The bare majority of electoral votes required to implement NPV, they might note, meets none of these supermajority requirements. As one study critical of the NPV initiative concluded, because the use of an interstate compact "does not conform to the constitutional means of changing the original decisions of the Framers, NPV could not [therefore] be a legitimate innovation." A final argument on this line might be that one "end run" around the amendment process might lead to others, setting a dangerous precedent for similar efforts in the future. Opponents might note that the NPV would eliminate the electoral college system's multiplier effect generated by the winner-take-all or general ticket system used in 48 states and the District of Columbia, which tends to magnify the winning ticket's margin of victory, and is said to confer greater legitimacy to the victors. For instance, in 2016, Republican nominee Donald Trump's clear electoral vote majority of 304 votes (56.5% of the total), compared with Democratic nominee Hillary Clinton's 227 (42.2% of the total) could be said to reinforce and confirm his victory, notwithstanding Clinton's plurality of the popular vote (48.2%), compared with Trump's 46.1%. From a practical standpoint, NPV opponents might argue that the NPV would actually lead to an increase in contested election results and legal challenges in the states, as the political parties maneuver to claim every possible vote. They assert that the existing tabulation of popular votes within each state reduces contested results and recounts. Under NPV, the incentive to gain every vote would arguably lead to far broader disputes and widespread recounts at every level of election administration. As a Heritage Foundation study concluded Under the NPV … any suspicions necessitating a recount in even a single district would be an incentive for a national recount.... The prospect of a candidate challenging "every precinct, in every county, in every state of the Union" should be abhorrent to anyone who witnessed the drama, cost, delay, and undue litigation sparked by the Florida recount of 2000. Opponents might also assert that the increased incidence of recounts would be further complicated by wide-ranging disparities in state procedures, potentially leading to prolonged periods of uncertainty following close presidential elections. Critics may also note that the NPV plan contains no "statute of limitations," unlike proposed constitutional amendments, for which Congress typically sets a seven-year ratification period. Where, critics may ask, is a similar time limit that would "sunset" the NPV compact, after which it would expire or return to "square one"? According to its website, NPV was launched on February 23, 2006; if it were a constitutional amendment proposed by Congress, it would have expired on February 23, 2013, since by the end of the customary seven-year deadline it was "ratified" by only eight states and the District of Columbia. By what reasoning, they might ask, should the NPV be exempt from the standards of timeliness and contemporaneity Congress customarily sets for constitutional amendments? Opponents might reject claims that, under NPV, campaign spending and candidate appearances would be spread and scheduled more widely, beyond the current concentration of time and resources in battleground states. They might argue that spreading campaign resources and candidate events in non-battleground states is a questionable argument to justify a fundamental change in the presidential election process. Campaign appearances and spending, they could assert, should not be considered to be a local economic stimulus package, nor are the amounts in question sufficient to make much of a difference in the economic condition of most states. As one critical analysis notes, "... the nation does not hold presidential elections to foster local economic development." Moreover, they might continue, it is equally dubious to assert that nominees will slight the concerns of citizens of the non-battleground states from which they draw their greatest support, or that concentrated campaigning in the battleground states somehow "disenfranchises" voters in others. In the modern era, a small percentage of voters actually attends an in-person presidential or vice presidential candidate appearance. Television (especially broadcast and cable TV news networks), social media, the internet, and newspapers—not the traditional rallies, torchlight parades, and handbills—dominate presidential election campaigns in the 21 st century. National Popular Vote: Legal Issues102 In addition to policy issues discussed previously, some observers have also raised questions related to the NPV initiative based on the fact that it is an interstate compact as defined in the Constitution. Others have questioned whether NPV might conflict with some provisions of the Voting Rights Act. The NPV Initiative As an Interstate Compact The NPV initiative has been described by its supporters variously as a bill, a state-level statute, and an interstate compact. The latter reference necessitates an analysis of whether the initiative complies with the Compact Clause of the Constitution. An interstate compact—under the broadest understanding—is a contract between two or more consenting states. The Supreme Court has further suggested that an interstate compact often requires reciprocal commitments between the governments of two or more states, such that one state's commitment is conditioned on the action of another state and no state can unilaterally repeal its commitment. The use of interstate compacts predates the Constitution, as the Articles of Confederation contained a similar Compact Clause that provided a qualified prohibition on states entering into any agreements between them without the consent of Congress. The chaos resulting from the disunity created by the Articles of Confederation prompted the Framers of the Constitution generally to "impose more uniformity" among the states, resulting in a Constitution that wholly prohibits states from entering into any treaties, alliances, and federations. Nonetheless, the Constitution maintained the Articles of Confederation's qualified prohibition on interstate compacts and agreements, allowing states to enter into an interstate compact so long as the participating states seek the consent of Congress. Specifically, the Compact Clause provides that "No State shall, without the Consent of Congress ... enter into any Agreement or Compact with another State.... " While the historical rationale for Article I's qualified prohibition on interstate compacts is unclear, the Compact Clause generally reflects the view of the Framers that states should be able to work cooperatively together, as well as the concern that unchecked interstate alliances might threaten the harmony of the Union or the authority vested by the Constitution in the federal government. As the Supreme Court noted in Cuyler v. Adams , "By vesting in Congress the power to grant or withhold consent, or to condition consent on the states' compliance with specified conditions, the Framers sought to ensure that Congress would maintain ultimate supervisory power over cooperative state action that might otherwise interfere with the full and free exercise of federal authority." The Compact Clause places no limits on what might be done through an interstate compact other than the requirement of congressional consent. In the early years of government under the Constitution, compacts were used almost exclusively to settle boundary disputes. Beginning with the establishment of the Port of New York Authority in 1921, however, compacts began to be used to address more complex, regional issues requiring intergovernmental cooperation. Some compacts are merely advisory in form, but others may be regulatory, with significant powers granted to multistate commissions. More recently, compacts have addressed such wide-ranging concerns as mental health treatment, law enforcement and crime control, education, driver licensing and enforcement, environmental conservation, energy, nuclear waste control, facilities operations, transportation, economic development, insurance regulation, placement of children and juveniles, disaster assistance, and pollution control. Approximately 200 interstate compacts are in effect today. Accordingly, the central legal issue with respect to the Compact Clause is whether a given interstate compact requires the consent of Congress. While a "literal" reading of the Compact Clause "would require the States to obtain congressional approval before entering into any agreement among themselves, irrespective of form, subject, duration, or interest to the United States [emphasis added]," the Supreme Court has repeatedly rejected such a reading. In 1893, in Virginia v. Tenness e e , Justice Stephen Field, writing for the Court, contended that a broad reading of the Compact Clause would "embrace all forms of stipulation, written or verbal, and relating to all kinds of subjects[,]" requiring congressional consent to agreements "which the United States can have no possible objection or have any interest in interfering with," as well as those that "may tend to increase ... the political influence of the contracting states, so as to encroach upon or impair the supremacy of the United States.... " Surmising that the Compact Clause could not have been intended to have such a broad reach, Justice Field concluded that the Clause prohibits states from entering into compacts without congressional consent only when the underlying compact is "directed to the formation of any combination tending to the increase of political power in the States, which may encroach upon or interfere with the just supremacy of the United States." The Supreme Court has subsequently reaffirmed Justice Field's "functional view of the Compact Clause," and, accordingly, generally where an agreement does not fall within the scope of the Compact Clause as envisioned by the Court in Virginia v. Tennessee , the agreement "will not be invalidated for lack of congressional consent." Whether the NPV initiative requires congressional consent under the Compact Clause first requires a determination as to whether NPV even constitutes an interstate compact. At times, its supporters have resisted framing the initiative as an interstate compact, arguably out of concern for running afoul of the Compact Clause's provisions. For example, Professor Akhil Amar has argued that because the initiative does not create a "new interstate governmental apparatus," the NPV should not be considered an interstate compact, as NPV compact signatory states are merely exercising power collectively that each state could exercise on its own. It is unclear, however, whether the creation of a new interstate governmental entity formed out of an agreement between two or more states is necessary, as opposed to sufficient, in order to deem an agreement as being an interstate compact subject to the Compact Clause. While the Supreme Court, in Northeast Bancorp , suggested that a "joint organization or body" formed out of an interstate agreement is a "classic indic[ium] of a compact," the Court has never adopted a definition of an interstate compact that solely rests on the existence of an interstate governmental body. Instead, the Court appears to have adopted a broader definition of what an interstate compact can entail. For example, in Virginia v. Tennessee , the Court noted that the words "compacts" and "agreements" are synonymous and "cover all stipulations affecting the conduct or claims of the parties." In other words, when two or more states enter into a stipulated agreement whereby one state agrees to perform an act in consideration for a reciprocal act by the other state(s), that agreement can be considered an interstate compact. This broad definition of a compact appears to encompass the NPV compact, as the initiative requires signatory states to agree mutually to appoint their electors to the winner of the national popular vote. Moreover, NPV binds each assenting state, as no member state can withdraw from it within six months or less of the end of a President's term. Because NPV prohibits states from freely "modify[ing] or repeal[ing] [the agreement] unilaterally" and requires "reciprocation" of mutual obligations, it appears that the initiative can be described as an interstate compact. Assuming the NPV initiative is an interstate compact, the question remains whether it is one that implicates the Compact Clause. The answer to that question primarily depends on whether NPV is "directed to the formation of any combination tending to the increase of political power in the States, which may encroach upon or interfere with the just supremacy of the United States ." In other words, the "test" for whether a particular interstate compact requires congressional consent is centrally concerned with vertical balances of power between the federal government and the states; namely, "whether the Compact enhances state power quoad the National Government." While the NPV arguably increases the political power of the states that have consented to it by ensuring that those states' desired outcome for the presidential election—the awarding of the majority of electoral votes to the presidential candidate supported by the majority of the voting populace—it is unclear how that increase in political power would be at the expense of the power of the federal government. After all, the Constitution provides the federal government with no role in determining the members of the electoral college. One scholar has suggested that the NPV initiative would lead to a vertical alteration of power by eliminating the possibility that the House of Representatives would resolve a presidential election in the absence of an electoral majority for a single candidate because it is premised on a majority of electoral votes going to a single candidate. The House of Representatives, however, has decided only two presidential elections in American history, and whether such an arguably hypothetical and de minimis diminishment of federal power through the NPV would be sufficient to require congressional consent under the Compact Clause is simply unresolved by the relevant case law. While the Supreme Court's case law interpreting the Compact Clause is centrally concerned with vertical federalism concerns (i.e., the balance of power between the state and federal governments), the Court has recognized a potential secondary rationale suggested for the Compact Clause: to preserve the horizontal balance of powers among the various states. And horizontal federalism concerns could very well be implicated by the Compact Clause, as the provision appears to have been included in the Constitution out of concern both for the supremacy of the federal government and unity among the various states. Whether the NPV compact threatens the powers of nonconsenting states has been the subject of much debate among academics. Those in support of the initiative have contended that the nonconsenting states do not lose any power as a result of the NPV. According to this line of argumentation, even under the NPV, all states would retain their right to select the electors of their choosing, as nonmember state electors would still be counted in the electoral vote. Others, however, have pointed to the underlying premise of the NPV—to enhance the political power of more populous states in presidential elections—as evidence that the initiative diminishes the power of nonconsenting states. In other words, while non-compacting states would still retain the power to appoint electors, the influence that comes with that power would arguably be diminished because a state's role in the national election would be defined by its percentage of the popular vote and not by its percentage of electors, warranting congressional interest in approving a compact that effectuated such a change in national elections. Ultimately, however, whether the NPV actually threatens the power of nonconsenting states is a debate that remains active within academia but would likely be the source of considerable litigation if the initiative ever became effective. If congressional consent is needed for the NPV, that consent can take various forms. Usually congressional consent to an interstate compact takes the form of a joint resolution or act of Congress specifying its approval of the text of the compact and adding any conditions or provisions it deems necessary, often embodying the compact document. As with most congressional actions, consent to an interstate compact must occur with the approval of both houses and must be signed by the President before it becomes law. Rarely has the President vetoed or threatened to veto consent legislation by Congress. While congressional consent to an interstate compact is most often explicit, consent by Congress may also be implied by subsequent acts of Congress as "[a]n inference clear and satisfactory that Congress ... intended to consent" to a compact may be sufficient. Congress may also delegate its power to approve a compact to a federal official so long as an "intelligible principle" against which approval can be measured is apparent. Ultimately, if congressional consent is truly needed for NPV to be effective, the initiative might have difficulty ever being enacted because the approval of both houses of Congress and the President would likely necessitate additional hurdles beyond the already challenging task of amassing support at the state level for the NPV. The NPV Initiative and Article II of the Constitution Beyond the legal issues raised with respect to the Compact Clause, the NPV initiative also potentially raises other broader constitutional concerns, including whether the states can functionally obviate the role of the electoral college through the NPV. Article II of the Constitution establishes that the election of the President should occur indirectly through the election by the electoral college. The choice of an indirect election for the President was a deliberate one by the Framers of the Constitution, because, while noting the importance that the "sense of the people" should influence the choice for President, they found it "equally desirable" for the "immediate election" of the President to be made by a body representative of distinct state interests and removed from the threat of unchecked majoritarianism. The result was that the Constitution established a presidential election process that was "manifestly nonmajoritarian," with the electoral college, a body established to represent the distinct views of each state, as the centerpiece of the election process. The central constitutional issue presented by the NPV, therefore, is whether the states, through an interstate compact, can functionally transform the presidential election system enshrined in the Constitution into a more majoritarian process. Supporters of the NPV argue that the Constitution provides the legal means for states to transform the presidential election system into one where the President is elected based solely on the result of the national popular vote. Specifically, clause 2 of Article II, Section 1 of the Constitution provides the states with the power to "appoint, in such Manner as the Legislature thereof may direct," the electors who represent the state in the electoral college. Facially, the Constitution's primary limitation on the power of a state to select its electors is the final number of electors awarded to each state. While perhaps an argument can be made that the structure, logic, and history of the Constitution place limits on the manner or method in which a state chooses its electors, the text of the Constitution simply does not impose any such limits. Supreme Court case law also supports reading Article II of the Constitution to broadly provide states with wide discretion as to the manner in which its electors are selected. Specifically, in 1892 in McPherson v. Blacker, a unanimous Supreme Court upheld a Michigan law providing for the election by individual congressional district of presidential electors against a challenge that the law violated Article II of the Constitution. In so holding, the Court placed great emphasis on a number of state laws that existed shortly after the ratification that provided a variety of "modes of choosing the electors," including selection by the legislature itself, by a "vote of the people for a general ticket," "by vote of the people in districts," or by some permutation of those methods. Viewing this evidence together with the text of Article II and the historical evidence from the Constitutional Convention led the Court to broadly conclude state legislatures have "conceded plenary power ... in the matter of the appointment of electors," allowing the Michigan law to stand. Applying McPherson to the case of the NPV, the argument can and has been made that if the states have plenary power with respect to the manner of how electors are appointed, the power necessarily allows states to select electors in line with the results of the national popular vote. More recently, supporters of the NPV have relied on the Supreme Court's 2015 ruling in Arizona Legislature v. Arizona Independent Redistricting Commission (AIRC) —which held that the State of Arizona had wide discretion under the Elections Clause of the Constitution to select the method by which the state provided for redistricting —to argue that the states retain broad discretion in selecting electors under Article II, which uses similar language to the provision interpreted in AIRC. Others have argued that the structure of the Constitution and historical evidence suggest that the states do not have such vast discretion in appointing electors as to functionally transform the election for President into a national popular referendum. As noted elsewhere in this report, the electoral college was created by the Framers to ensure that states with the least population retained power in the selection of the President, providing a check against domination by the most populous states. The electoral college, being a product of the choices of individual state legislatures, was envisioned by the Framers as a body that would represent the specific interests of a given state, as opposed to the undifferentiated nation at large. Accordingly, it may be argued that allowing the most populous states to collude to ensure that the national popular vote, as opposed to the wishes of an individual state, dictates the results of a state's slate of electors, could arguably be irreconcilable with the Framers' intentions with respect to the electoral college. As such, for those who find the NPV compact constitutionally suspect under Article II, McPherson 's broad pronouncements about the nature of a state's power to appoint electors should be viewed in the context of that particular case, where the state of Michigan was attempting to appoint its electors based on the votes of an individual district in the state, as opposed to the state as a whole. In contrast to the law at issue in McPherson , with NPV, there appears to be no evidence contemporaneous with the ratification of the Constitution of a state selecting its electors in accordance with the results of the national popular vote. Unlike the State of Michigan in McPherson , an NPV state's electors might not be a product of the views of the state at the time of the election, but instead would reflect national popular sentiment about who should be the President. Moreover, the Supreme Court, in interpreting arguably analogous language from Article I of the Constitution allowing states to regulate the manner of the selection of the Members of the House of Representatives and Senate, concluded that the states cannot exercise their delegated authority in a way that would "effect a fundamental change in the constitutional structure." The question that remains is whether the Court in a future case challenging the NPV compact would interpret the states' authority under Article II to appoint electors to be broad enough to allow the President to be selected as a result of the national popular vote, a question that, given the lack of any precise precedent respecting the constitutionality of the NPV compact under Article II, will likely remain unresolved until such time. The NPV Compact and the Voting Rights Act175 Other critics claim the NPV compact might violate Sections 2 and 5 of the Voting Rights Act (VRA). Writing in Columbia Law Review , David Gringer invokes the voting power theory. He argues that the plan conflicts with Section 2 of the VRA because moving from "a state-based [vote] to a national popular vote dilutes the voting strength of a given state's minority population by reducing its ability [voting power] to influence the outcome of presidential elections." Gringer also asserts that the NPV compact may violate Section 5 of the act. In 2013, however, the U.S. Supreme Court invalidated Section 4(b) of the VRA, which contained a formula prescribing which states and jurisdictions with a history of discrimination were required to obtain prior approval or "preclearance" under Section 5 before changing any voting standard, practice, or procedure. Although the Court invalidated only the coverage formula in Section 4, by extension, Section 5 has been rendered currently inoperable. Prior to the Supreme Court ruling, Gringer argued that the NPV compact would qualify as a covered practice under Section 5, and that the legislatures of all the "covered" states would have been required to obtain preclearance before implementing the compact. Responding to this point, National Popular Vote Inc. noted the following: The National Popular Vote bill manifestly would make every person's vote for President equal throughout the United States in an election to fill a single office (the Presidency). It is entirely consistent with the goal of the Voting Rights Act. There have been court cases under the Voting Rights Act concerning contemplated changes in voting methods for various representative legislative bodies.... However, these cases do not bear on elections to fill a single office (i.e., the Presidency). In 2012, the Justice Department's Civil Rights Division specifically declined to challenge California's accession to the NPV compact on VRA grounds. The states' authority to appoint electors by any method their legislatures choose is not absolute. Federal court decisions have struck down state laws concerning appointment of electors that were found to be in violation of the Fourteenth Amendment's guarantee of equal protection: Although Clause 2 (of Article II, Section 1 of the Constitution) seemingly vests complete discretion in the states, certain older cases had recognized a federal interest in protecting the integrity of the process. Thus, the Court upheld the power of Congress to protect the right of all citizens who are entitled to vote to lend aid and support in any legal manner to the election of any legally qualified person as a presidential elector.... [I]n Oregon v. Mitchell (42 U.S. 112 (1970)), the Court upheld the power of Congress to reduce the voting age in presidential elections and to set a thirty-day durational residency period as a qualification for voting in presidential elections. Although the Justices were divided on the reasons, the rationale emerging from this case, considered with Williams v. Rhodes , (393 U.S. 20 1968)) is that the Fourteenth Amendment limits state discretion in prescribing the manner of selecting electors and that Congress in enforcing the Fourteenth Amendment may override state practices that violate that Amendment and may substitute standards of its own. Concluding Observations185 Critics of the electoral college system have sought direct election of the President and Vice President without success for more than two centuries. The NPV initiative represents a novel effort to achieve this goal by use of an interstate compact that would circumvent the stringent requirements necessary for the proposal and ratification of constitutional amendments. Since its inception in 2006, NPV has achieved a degree of success: 14 states and the District of Columbia, controlling a total of 189 electoral votes, have joined the compact since 2008. Progress has arguably been sporadic, however, notwithstanding active campaigning by National Popular Vote Inc. Over the course of more than a decade, NPV has heretofore failed to develop a sustained momentum toward its stated goal of states controlling 270 electoral votes. The action of three states in joining NPV to date in 2019 marks the most activity in a single year since 2008; it remains to be seen whether this trend will continue. To date, certain Democratic-leaning states have joined the compact. The arguable lack of support in Republican-controlled state legislatures raises questions about further accessions to the compact in the immediate future, particularly given the fact that the GOP controlled both legislative chambers in 30 states following the 2018 elections. To date, while the NPV initiative has generated interest among supporters of direct popular election of the President, it does not appear to have gained widespread awareness among the public at large. The findings of the March 27, 2019, Politico/Morning Consult survey cited earlier in this report arguably suggest that greater public knowledge of NPV might spur popular support for the compact. This might then contribute to further momentum if additional states were to join, particularly populous ones like Florida (29 electoral votes), Georgia (16 electoral votes), and Ohio (18 electoral votes) where the compact was under active consideration in 2019. Under these circumstances, proponents might be energized and encouraged by a sense of progress for the initiative. At the same time, NPV opponents could be expected to coalesce around the issues identified earlier in this report, and renew and increase their efforts in defense of the electoral college system. The activities of both might ultimately bring the NPV initiative to the more immediate attention of Congress.

The National Popular Vote (NPV) initiative proposes an agreement among the states, an interstate compact that would effectively achieve direct popular election of the President and Vice President without a constitutional amendment. It relies on the Constitution's grant of authority to the states in Article II, Section 1 to appoint presidential electors "in such Manner as the Legislature thereof may direct.... " Any state that joins the NPV compact pledges that if the compact comes into effect, its legislature will award all the state's electoral votes to the presidential ticket that wins the most popular votes nationwide, regardless of who wins in that particular state. The compact would, however, come into effect only if its success has been assured; that is, only if states controlling a majority of electoral votes (270 or more) join the compact. By early May 2019, 14 states and the District of Columbia had joined the compact. After early momentum—eight states and the District of Columbia joined the NPV Compact between 2007 and 2011—the pace of state accessions slowed through 2018. Since then, four additional states joined, bringing the total number of electoral votes controlled by NPV member states to 189. During the same period, legislation to join the compact had been introduced during the current session in at least one chamber of the legislature in 14 additional states that control an additional 150 electors. The NPV initiative emerged following the presidential election of 2000, in which one ticket gained an electoral vote majority, winning the presidency, but received fewer popular votes than its opponents. NPV grew out of subsequent discussions among scholars and activists about how to avoid similar outcomes in the future and to achieve direct popular election. Proponents of NPV assert that it would guarantee the presidential candidates who win the most popular votes nationwide will always win the presidency; that it would end the inequities of the general ticket/winner-take-all system of awarding electoral votes; and that candidates would extend their focus beyond winning the "battleground states," campaigning more widely and devoting greater attention to issues of concern to other parts of the country. They further assert that NPV would accomplish this while avoiding the exacting standards set for the proposal and ratification of constitutional amendments. Opponents argue that NPV would undermine the authority of states under the Constitution and the Founders' intention that presidential elections should be both national and federal contests; that it is an admitted "end run" around the Constitution that would circumvent the amendment process; and that it might actually lead to more disputed presidential elections characterized by politically contentious state recounts. The NPV has also been debated on legal grounds. Some observers maintain that it must be approved by Congress, because it is an interstate compact that would affect key provisions of constitutional presidential election procedures. NPV Inc., the organization managing the initiative's advocacy campaign, responds that congressional approval is not necessary because NPV concerns the appointment of electors, a subject that falls within state constitutional authority, and that the Supreme Court has previously rejected arguments that similar compacts would impair the rights of nonmember states. Other critics claim that NPV might violate the Voting Rights Act by diluting minority voter influence and avoiding the recently invalidated preclearance requirement for election procedure changes in covered jurisdictions. In response, NPV Inc. has asserted that the compact is "entirely consistent with the goal of the Voting Rights Act." This report monitors the NPV's progress in the states and will identify and analyze further developments as warranted.

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Introduction The Railroad Retirement Board (RRB), an independent federal agency, administers retirement, survivor, disability, unemployment, and sickness insurance for railroad workers and their families under the Railroad Retirement Act (RRA) and the Railroad Unemployment Insurance Act (RUIA). These acts cover workers who are employed by railroads engaged in interstate commerce and related subsidiaries, railroad associations, and railroad labor organizations. Lifelong railroad workers receive railroad retirement benefits instead of Social Security benefits; railroad workers with nonrailroad experience receive benefits either from railroad retirement or Social Security, depending on the length of their railroad service. The number of railroad workers has been declining since the 1950s, although the rate of decline has been irregular and recent years have seen increases in railroad employment after reaching an all-time low of 215,000 workers in January 2010. Recently, railroad employment peaked in April 2015 to 253,000 workers, the highest level since November 1999, and then declined through FY2017, falling to 221,000 workers. The total number of beneficiaries under the RRA and RUIA decreased from 623,000 in FY2008 to 574,000 in FY2017, and total benefit payments increased from $10.1 billion to $12.6 billion during the same time. During FY2017, the RRB paid nearly $12.5 billion in retirement, disability, and survivor benefits to approximately 548,000 beneficiaries. Almost $105.4 million in unemployment and sickness benefits were paid to approximately 28,000 claimants. This report explains the programs under RRA and RUIA, including how each program is financed, the eligibility rules, and the types of benefits available to railroad workers and family members. It also discusses how railroad retirement relates to the Social Security system. For a quick overview of this topic, see CRS In Focus IF10481, Railroad Retirement Board: Retirement, Survivor, Disability, Unemployment, and Sickness Benefits . Railroad Retirement, Survivor, and Disability Benefits The RRA authorizes retirement, survivor, and disability benefits for railroad workers and their families. In December 2017, there were a total of 526,100 RRA beneficiaries, decreasing from 672,400 in 2001. This decline might partly result from the decline in railroad employment in the past five decades. The average monthly benefit for each beneficiary was about $1,986 in 2017, which increased from $1,043 in 2001, reflecting the growth in average wages and prices (see Figure 1 ). Financing The railroad retirement, disability, and survivor program is mainly financed by payroll taxes, financial interchanges from Social Security, and transfers from the National Railroad Retirement Investment Trust (NRRIT) (see Figure 2 ), all of which accounted for 93.9% of the $12.7 billion gross funding of the RRA program during FY2017. The remaining 6.1% of the program was financed by federal income taxes levied on railroad retirement benefits, interest on investment and other revenue, and general appropriations to pay the costs of phasing out vested dual benefits. Payroll taxes, which provided 47.0% of gross RRA funding in FY2017, are the largest funding source for railroad retirement, survivor, and disability benefits. Railroad retirement payroll taxes are divided into two tiers—Tier I and Tier II taxes. The Tier I tax is the same as the Social Security payroll tax: railroad employers and employees each pay 6.2% on earnings up to $132,900 in 2019. The Tier II tax is set each year based on the railroad retirement system's asset balances, benefit payments, and administrative costs. In 2019, the Tier II tax is 13.1% for employers and 4.9% for employees on earnings up to $98,700. Tier II taxes are used to finance Tier II benefits, the portion of Tier I benefits in excess of Social Security retirement benefits (such as unreduced early retirement benefits for railroad employees with at least 30 years of railroad service), and supplemental annuities. Tier I payroll taxes are deposited in the Social Security Equivalent Benefit Account (SSEBA), which pays the Social Security level of benefits and administrative expenses allocable to those benefits. The SSEBA also receives or pays the financial interchange transfers between the railroad retirement and Social Security systems. The financial interchange with Social Security provided 32.6% of gross RRA funding in FY2017. The purpose of the financial interchange is to place the Social Security trust funds in the same position they would have been in, if railroad employment had been covered under Social Security since that program's inception. Tier II tax revenues that are not needed to pay current benefits or associated administrative costs are held in the National Railroad Retirement Investment Trust (NRRIT), which is invested in both government securities and private equities. NRRIT transfers provide another revenue source for railroad benefits, and they were 14.3% of gross RRA funding in FY2017. Prior to the Railroad Retirement and Survivors' Improvement Act of 2001 ( P.L. 107-90 ), surplus railroad retirement assets could only be invested in U.S. government securities—just as the Social Security trust funds must be invested in securities issued or guaranteed by the U.S. government. The 2001 act established the NRRIT to manage and invest the assets in the Railroad Retirement Account in the same way that the assets of private-sector and most state and local government pension plans are invested. The remainder of the railroad retirement system's assets, such as assets in SSEBA, continues to be invested solely in U.S. government-issued or -granted securities. The combined fair market value of Tier II taxes and NRRIT assets is designed to maintain four to six years' worth of RRB benefits and administrative expenses. To maintain this balance, the Railroad Retirement Tier II tax rates automatically adjust as needed. This tax adjustment does not require congressional action, according to Section 204 of the 2001 act. Eligibility and Types of Benefits To be insured for railroad benefits, a worker must generally have at least 10 years of covered railroad work or 5 years performed after 1995 and "insured status" under Social Security rules (generally 40 earnings credits) based on combined railroad retirement and Social Security-covered earnings. An insured railroad worker's family may be entitled to receive railroad retirement benefits. If a worker does not qualify for railroad retirement benefits, his or her railroad work counts toward Social Security benefits. Of the total $12.5 billion benefit payments during FY2017, 60.0% (or $7.5 billion) were paid in retirement annuities to retired workers, 8.0% (or $1.0 billion) in disability annuities, 14.4% (or $1.8 billion) in spouse annuities, and 16.8% (or $2.1 billion) in survivor annuities. Tier I Retirement Annuities Tier I annuities are designed to be nearly equivalent to Social Security Old Age, Survivors, and Disability Insurance benefits. Tier I annuities are calculated using the Social Security benefit formula and are based on both railroad retirement and Social Security-covered employment. However, Tier I annuities are more generous than Social Security benefits in certain situation. For example, at the age of 60, railroad workers with at least 30 years of covered railroad work may receive unreduced retirement annuities. At the full retirement age (FRA), which is gradually increasing from 65 to 67 for Social Security and railroad retirement beneficiaries, insured workers with fewer than 30 years of service may receive full retirement ann uities. Alternatively, workers with fewer than 30 years of service may, starting at the age of 62, receive annuities that have been reduced actuarially for the additional years the worker is expected to spend in retirement. Tier I benefit reductions for early retirement are similar to those in the Social Security system. As the FRA rises, so will the reduction for early retirement. If a railroad employee delays retirement past FRA, Tier I annuities are increased by a certain percentage for each month up until the age of 70, which is identical to the benefit increase provided by Delayed Retirement Credits under the Social Security system. In general, Social Security benefits are subtracted from Tier I annuities, because work covered by Social Security is counted toward Tier I annuities. Beneficiaries insured by both systems receive a single check from the RRB. Railroad retirement annuities may also be reduced for certain pensions earned through federal, state, and local government work that is not covered by Social Security. For early retirees who continue to work for a nonrailroad employer while receiving the retirement benefit during the year prior to FRA, Tier I benefits are reduced by $1 for every $2 earned above an exempt amount ($17,040 in 2018). After Tier I benefits are first paid, they increase annually with a cost-of-living adjustment (COLA) in the same manner as Social Security benefits. Retirement annuities are not payable to workers who continue to work in a covered railroad job or who return to railroad work after retirement. Tier II Retirement Annuities Tier II retirement annuities are paid in addition to Tier I annuities and any private pension and retirement saving plans offered by railroad employers. They are similar to private pensions and based solely on covered railroad service. Tier II annuities for current retirees are equal to seven-tenths of 1% of the employee's average monthly earnings in the 60 months of highest earnings, times the total number of years of railroad service. Tier II annuities are increased annually by 32.5% of the Social Security COLA. Tier II annuities are not (in contrast to Tier I annuities) reduced if a worker receives Social Security benefits or a government pension that was not covered by Social Security. For railroad retirees and spouses who work for their last pre-retirement nonrailroad employer while receiving retirement benefits, Tier II annuities are reduced by $1 for every $2 earned, capped at 50% of the Tier II annuity. There is no cap to the earnings-related reduction in railroad Tier I or Social Security benefits. In addition, the earnings-related reduction applies to all Tier II beneficiaries regardless of age, whereas for railroad Tier I and Social Security benefits, the earnings-related reduction applies only until the beneficiary reaches FRA. Other Retired Worker Benefits: Supplemental Annuities and Vested Dual Benefits Tier II payroll taxes also finance a supplemental annuity program. Supplemental annuities are payable to employees first hired before October 1981, aged 60 with at least 30 years of covered railroad service or aged 65 and older with at least 25 years of covered railroad service, and a current connection with the railroad industry. In addition, general revenues finance a vested dual benefit for those who were insured for both railroad retirement and Social Security in 1974 when the two-tier railroad retirement benefit structure was established. Neither supplemental annuities nor vested dual benefits are adjusted for changes in the cost of living during retirement. Supplemental annuities are subject to the same earnings reductions as Tier II benefits; vested dual benefits are subject to the same earnings reductions as Tier I benefits. Disability Annuities Railroad workers may be eligible for disability annuities if they become disabled regardless of whether the disability is caused by railroad work. The RRB determines whether a worker is disabled based on the medical evidence provided during the application process. Railroad workers found to be totally and permanently disabled from all work may be eligible for Tier I benefits at any age if the worker has at least 10 years of railroad service. Totally disabled workers may also receive Tier II benefits at the age of 62 if they have 10 or more years of service. Occupational disability annuities are also payable to workers found to be permanently disabled from their regular railroad occupations, if the worker is at least 60 years old with 10 years of service (or any age with 20 years of service), and with a current connection to the railroad industry. A five-month waiting period after the onset of disability is required before any disability annuity can be payable. Disability annuities are not payable if a worker is currently employed in a covered railroad job. Disability benefits are suspended if a beneficiary earns more than a certain amount after deducting certain disability-related work expenses. The Tier I portion of disability benefits may be reduced for the receipt of workers compensation or government disability benefits. Spouse Annuities In any month that a worker collects a railroad retirement or disability annuity, his or her spouse may also be eligible for a spousal annuity equal to or greater than the benefit he or she would have received if the worker's railroad work had been covered by Social Security. A spouse is eligible for a spousal annuity when he or she reaches the same minimum age required for the worker (i.e., either at the age of 60 or 62, depending on years of the worker's service). At any age, a spouse may be eligible for a spousal annuity if he or she cares for the worker's unmarried child under the age of 18 (or a child of any age that was disabled before the age of 22). An individual must have been married to the railroad worker for at least one year before he or she applies for the spousal annuities, with certain exceptions. A qualifying spouse receives 50% of the worker's Tier I benefit before any reductions (or, if higher, a Social Security benefit based on his or her own earnings). Spouses may also receive 45% of the worker's Tier II benefit before any reductions. Divorced spouses of retired or disabled railroad workers may also be eligible for spousal annuities. A divorced spouse may receive 50% of the worker's Tier I benefit before reductions, but no Tier II benefits. To qualify, the former spouse must have been married to the worker for at least 10 years and must not currently be married (remarriages if any must have terminated); both the worker and former spouse must be at least 62 years old. For spouses, as for railroad workers, Social Security benefits are subtracted from Tier I annuities. The Tier I portion of a spouse annuity may also be reduced for receipt of any pension from government employment not covered by Social Security based on the spouse's own earnings. Spouses are subject to reductions based on the primary worker's earnings as well as on their own earnings. For example, for early retirement, spouses are subject to different benefit reductions from workers. Finally, spouse annuities are reduced by the amount of any railroad benefits earned based on their own work. Survivor Annuities After the worker's death, surviving spouses, former spouses, children, and other dependents may be eligible to receive survivor annuities, which are paid in addition to any private life insurance offered by railroad employers. To be insured for survivor annuities, the worker must have had a current connection with the railroad industry at the time of death. Railroad survivor annuities are generally higher than comparable Social Security benefits because railroad workers' families may be entitled to Tier II annuities as well as Tier I annuities (as noted above, Tier I annuities are equivalent to Social Security benefits). In cases where no monthly survivor annuities are paid, a lump-sum payment may be made to certain survivors. The widows and widowers of railroad workers may be eligible to receive survivor annuities. At FRA, a surviving spouse may be eligible for 100% of the worker's Tier I annuity (or his or her own Social Security or railroad retirement Tier I benefit, if higher). The widow(er) may also receive up to 100% of the worker's Tier II annuity. As early as the age of 60 (or age 50, if disabled), widows and widowers may receive reduced survivor annuities. A qualifying widow(er) must have been married to the deceased railroad worker for at least nine months, with certain exceptions. At any age, a widow(er) caring for a deceased worker's child under the age of 18 may receive a survivor annuity equal to 75% of the worker's Tier I annuity, as well as up to 100% of the worker's Tier II annuity. Widow(er)s who are the natural or adoptive parent of the deceased worker's child do not have to meet the length of marriage requirement. Survivor annuities may also be payable to a surviving divorced spouse or remarried widow(er). To qualify for benefits, a surviving divorced spouse has to be married to the employee for at least 10 years and is unmarried or remarried after age 60 (age 50 for disabled surviving divorced spouse). A surviving divorced spouse who is unmarried can qualify for benefits at any age if caring for the employee's child who is under age 16 or disabled. Benefits are limited to the amounts Social Security would pay (Tier I only) and therefore are less than the amount of the survivor annuity otherwise payable. Railroad workers' children may also receive survivor annuities. To qualify, a child must be unmarried and under the age of 18 (or 19 if still in high school). Disabled adult children may qualify if their disability began before the age of 22. Eligible children receive 75% of the worker's Tier I annuity and 15% of the worker's Tier II annuity. In addition, if a worker's parent was dependent on the worker for at least half of the parent's support, he or she may receive 82.5% of the worker's Tier I annuity and 35% of the worker's Tier II annuity after reaching age 60. Survivor annuities are not payable to a current railroad employee, and survivor annuities are reduced by any railroad retirement benefit the survivor has earned through his or her own railroad work. Survivors receive the same reductions as retired workers for Social Security benefit receipt; they also have reductions from government pension receipts that are not covered by Social Security. A family maximum applies to survivor benefits, usually applicable when three or more survivors receive benefits on a worker's record (not counting divorced spouses). In summary, Table 1 provides data on railroad retirement, survivor, and disability annuities as of June 2018. Railroad Unemployment and Sickness Benefits Railroad workers may qualify for daily unemployment and sickness benefits under the Railroad Unemployment Insurance Act (RUIA). These monetary benefits are paid in addition to any paid leave or private insurance an employee may have. For sickness benefits, a worker must be unable to work because of illness or injury. Sickness benefits are distinct from disability benefits because they are intended to cover a finite, temporary period of time. Workers may not earn any money while receiving unemployment or sickness benefits. Figure 3 displays the monthly number of beneficiaries with unemployment and sickness benefits from January 2002 to July 2018, respectively. Although the number of sickness beneficiaries stayed relatively stable over time, the number of unemployment insurance beneficiaries increased significantly during and after the most recent economic recession from 2007 to 2009. Financing Railroad unemployment and sickness benefits are financed solely by railroad employers' payroll taxes, based on the taxable earnings of their employees. Employers' tax rates depend on the past rates of unemployment and employees' sickness claims. For calendar year 2018, the employer tax rate ranges from 2.2% to 12.0% on the first $1,560 of each employee's monthly earnings. The payroll tax proceeds not needed immediately for unemployment and sickness insurance benefits or operating expenses are deposited in the Railroad Unemployment Insurance Account maintained by the Treasury. This account, together with similar unemployment insurance accounts for each state, forms a Federal Unemployment Insurance Trust Fund whose deposits are invested in U.S. government securities, and the Railroad Unemployment Insurance Account receives interest based on these deposits. During FY2017, payroll tax contributions from railroad employers totaled $126.4 million and interest income was about $4 million. The RUIA provides for employers to pay a surcharge if the Railroad Unemployment Insurance Account falls below an indexed threshold amount. The surcharge is added to the employer's tax rate. However, the total tax rate plus the surcharge cannot exceed the maximum rate of 12.0%, unless the surcharge is 3.5%, in which case the maximum tax rate is increased to 12.5%. From 2004 through 2010, the surcharge was 1.5%. The surcharge in 2011 was 2.5% and 1.5% in 2012 with no surcharges in 2013 or 2014. The surcharge in 2018 was 1.5%, the same as the level in the past three years. Eligibility and Benefits Eligibility for railroad unemployment and sickness benefits is based on recent railroad service and earnings. The annual benefit year begins on July 1. Eligibility is based on work in the prior year, or the base year. To qualify in the benefit year beginning July 1, 2018, railroad workers must have base year earnings of $3,862.50 in calendar year 2017, counting no more than $1,545 per month. New railroad workers must also have at least five months of covered railroad work in the base year. To receive unemployment benefits, a worker must be ready, willing, and able to work. The maximum daily unemployment and sickness benefit payable in the benefit year that began July 1, 2018, is $77, and the maximum benefit for a biweekly claim is $770. However, due to sequestration pursuant to the Budget Control Act of 2011 ( P.L. 112-25 , as amended), the maximum daily benefit of $77 is reduced by 6.2% to $72.23 and the maximum biweekly benefit is reduced by 6.2% to $722.26 through September 30, 2019. Railroad workers receive these benefits only to the extent that they are higher than other benefits they receive under the RRA, the Social Security Act, or certain other public programs, including workers compensation. Unemployment and sickness beneficiaries may receive normal benefits for up to 26 weeks in a benefit year or until the benefits they receive equal their creditable earnings in the base year if sooner. Employees with at least 10 years of covered railroad service may qualify for extended benefits for 13 weeks after they have exhausted normal benefits. Table 2 displays the number and average weekly amount of RUIA benefits paid in June 2018. Workers who apply for unemployment benefits are automatically enrolled in a free job placement service operated by railroad employers and the RRB.

The Railroad Retirement Board (RRB), an independent federal agency, administers retirement, survivor, disability, unemployment, and sickness insurance for railroad workers and their families. During FY2017, the RRB paid nearly $12.5 billion in retirement, disability, and survivor benefits to approximately 548,000 beneficiaries and paid $105.4 million in unemployment and sickness benefits to approximately 28,000 claimants. Of the total $12.5 billion benefit payments in the same fiscal year, 60.0% was paid to retired workers, 8.0% to disabled workers, 14.4% to spouses, and 16.8% to survivors. The Railroad Retirement Act (RRA) authorizes retirement, disability, and survivor benefits for railroad workers and their families. RRA is financed primarily by payroll taxes, financial interchanges from Social Security, and transfers from the National Railroad Retirement Investment Trust (NRRIT). Railroad retirement payroll taxes have two tiers: the Tier I tax is essentially the same as the Social Security payroll tax and the Tier II tax is set each year based on the railroad retirement system's asset balances, benefit payments, and administrative costs. In FY2017, the gross RRA funding was about $12.7 billion. Railroad retirement annuities are also divided into two tiers. Tier I annuities are designed to be nearly equivalent to Social Security benefits and are based on both railroad retirement and Social Security-covered employment. However, Tier I annuities are more generous than Social Security benefits in certain situations. For example, at the age of 60, railroad workers with at least 30 years of covered railroad work may receive unreduced retirement annuities. Tier II annuities are similar to private pensions and based solely on covered railroad service. Tier II annuities are paid in addition to Tier I annuities. Railroad disability annuities may be payable to totally disabled railroad workers who are permanently disabled from all work and occupational disabled workers who are found to be permanently disabled from their regular railroad occupations. Eligible spouses and survivors of railroad workers may receive a certain portion of Tier I and Tier II benefits, but divorced spouses and surviving divorced spouses are eligible for only a certain portion of Tier I benefits. The Railroad Unemployment Insurance Act (RUIA) authorizes unemployment and sickness benefits for railroad workers. RUIA is financed solely by railroad employers, whose contributions are based on the taxable earnings of their employees. Eligibility for railroad unemployment and sickness benefits is based on recent railroad service and earnings. The maximum daily unemployment and sickness benefit payable in the benefit year that began July 1, 2018, is $77, and the maximum benefit for a biweekly claim is $770. Normal benefits are paid for up to 26 weeks in a benefit year. The railroad unemployment and sickness system remains affected by sequestration, as unemployment benefits will continue to be reduced through at least September 30, 2019.

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Introduction This report provides background information and issues for Congress on the Navy's Littoral Combat Ship (LCS) program. A total of 35 LCSs have been procured through FY2019. The Navy wants FY2019 to be the final year of LCS procurement, and it has not requested the procurement of any additional LCSs in its FY2020 budget submission. The Navy wants to shift procurement of small surface combatants in FY2020 from the LCS to a new frigate called the FFG(X). The Navy's proposed FY2020 budget requests funding for the procurement of the first FFG(X). The FFG(X) program is covered in detail in CRS Report R44972, Navy Frigate (FFG[X]) Program: Background and Issues for Congress , by Ronald O'Rourke. A current issue for Congress regarding the LCS program is whether to procure any additional LCSs in FY2020, and if so, how many. Another issue for Congress concerns 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. Congress's decisions on the LCS program will affect Navy capabilities and funding requirements, and the shipbuilding industrial base. For an overview of the strategic and budgetary context in which the LCS program and other Navy shipbuilding programs may be considered, see CRS Report RL32665, Navy Force Structure and Shipbuilding Plans: Background and Issues for Congress , by Ronald O'Rourke. Background Navy's Force of Small Surface Combatants (SSCs) SSC Definition 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. SSC Force Levels 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. LCS Program Overview The LCS is a relatively inexpensive Navy surface combatant that is to be equipped with modular "plug-and-fight" mission packages, including unmanned vehicles (UVs). The Navy announced the start of the LCS program on November 1, 2001. The first LCS was procured in FY2005, and a total of 35 have been procured through FY2018, including three in FY2019. As noted above, of the 35 that have been procured through FY2019, 16 had entered service as of the end of FY2018. The LCS was designed to operate in contested littoral waters in conjunction with other Navy forces. The LCS's primary missions are antisubmarine warfare (ASW), mine countermeasures (MCM), and surface warfare (SUW) against small boats (including so-called "swarm boats"), particularly in littoral (i.e., near-shore) waters. The LCS program includes the development and procurement of ASW, MCM, and SUW modular mission packages. Additional potential missions for LCSs include peacetime engagement and partnership-building operations; intelligence, surveillance, and reconnaissance (ISR) operations; maritime security and intercept operations (including anti-piracy operations); support of Marines or special operations forces; and homeland defense operations. An LCS might perform these missions at any time, regardless of its installed mission package, although an installed mission package might enhance an LCS's ability to perform some of these missions. The LCS program has been controversial over the years due to past cost growth, design and construction issues with the first LCSs, concerns over the survivability of LCSs (i.e., their ability to withstand battle damage), concerns over whether LCSs are sufficiently armed and would be able to perform their stated missions effectively, and concerns over the development and testing of the modular mission packages for LCSs. The LCS program has been modified or restructured several times over the years, in part to address these issues. The Navy's execution of the program has been a matter of congressional oversight attention for several years, particularly for a period of about 10 years starting around 2007, when significant cost growth in the program came to light. Annual Procurement Quantities Table 1 shows past annual procurement quantities for LCSs. The Navy wants FY2019 to be the final year of LCS procurement, and it has not requested the procurement of any additional LCSs in its FY2020 budget submission. Two Designs Built by Two Shipyards The LCS program includes two very different LCS designs (see Figure 1 ). One, called the LCS-1 or Freedom-class design, was developed by an industry team led by Lockheed. The other, called the LCS-2 or Independence-class design, was developed by an industry team that was then led by General Dynamics. The LCS-1 design is based on a steel semi-planing monohull (with an aluminum superstructure), while the LCS-2 design is based on an all-aluminum trimaran hull. The two LCS designs also use different built-in combat systems (i.e., different collections of built-in sensors, computers, software, and tactical displays) that were designed by each industry team. The Navy states that both LCS designs meet the Key Performance Parameters (KPPs) for the LCS program. LCS procurement has been divided more or less evenly between the two designs. The LCS-1 design is built at the Fincantieri/Marinette Marine shipyard at Marinette, WI, with Lockheed as the prime contractor; these ships are designated LCS-1, LCS-3, LCS-5, and so on. The LCS-2 design is built at the Austal USA shipyard at Mobile, AL, with Austal USA as the prime contractor; these ships are designated LCS-2, LCS-4, LCS-6, and so on. Two Block Buy Contracts for Ships 5-26 Ships 1 through 4 in the program were procured with single-ship contracts. The next 22 ships in the program (ships 5 through 26) were procured under two 10-ship block buy contracts that the Navy awarded to the two LCS builders in December 2010, and which were later extended in each case to include an 11 th ship. The Navy sought and received legislative authority from Congress in 2010 to award these block buy contracts. Modular Mission Packages Current Navy plans call for procuring a total of 44 LCS mission packages (10 ASW, 24 MCM, and 10 SUW). The Navy has not announced whether the figure of 44 mission packages will be adjusted upward to account for the procurement of a total of 35 rather than 32 LCSs. LCS mission packages have been under development since the early days of the LCS program. The Navy's plan is to develop and deploy initial versions of these packages, followed by development and procurement of more capable versions. The development, testing, and certification of LCS mission packages has been a significant and continuing oversight issue for Congress for the LCS program. The Navy states that The Navy achieved Initial Operating Capability (IOC) of the final component of the SUW Mission Package (MP), the Surface to Surface Missile module. The Navy worked with the Director, Operational Test and Evaluation to improve the test design, employ best practices, and make data driven decisions. The team jointly delivered a fully compliant test outcome, while simultaneously reducing the number of developmental test and operational test raid events. As a result, the Department reduced costs while completing operational tests of the SUW MP two months early. The ASW Mission Package Pre-Production Test Article was delivered in November 2018 and ASW MP conducted end-to-end testing at the Navy's Atlantic Undersea Test and Evaluation Center in January 2019. All of the MCM Mission Package aviation systems have reached IOC and are being delivered to the Fleet. The modular nature of the Mission Packages enables the Navy to deliver these capabilities now, while continuing to mature the remainder of the systems. Additionally, the Navy continues to evaluate employment of the MCM Mission Package off of Vessels of Opportunity. Manning and Deployment The LCS employs automation to achieve a reduced-sized crew. An LCS with an embarked MCM mission package and an aviation detachment to operate the ship's embarked aircraft might total about 88 sailors, compared to more than 200 for a Navy frigate and more than 300 for a Navy cruiser or destroyer. In general, most LCSs are to be operated with alternating dual crews so as to increase the percentage of time they can be deployed. For additional information on the manning and deployment of LCSs, see Appendix A . Potential Foreign Sales Industry has marketed various modified versions of the LCS to potential foreign buyers. Saudi Arabia has purchased four modified LCSs. FY2020 Funding Request The Navy wants FY2019 to be the final year of LCS procurement, and it has not requested any finding for the procurement of additional LCSs in its FY2020 budget submission. The Navy's proposed FY2020 does request $14 million in procurement funding to cover cost growth on LCSs procured in prior fiscal years. And as shown in Table 2 in the " Legislative Activity for FY2020 " section of this report, the Navy's proposed FY2020 budget requests funding for the procurement of LCS mission packages. The Navy's FY2020 budget submission estimates the combined procurement cost of the three LCSs procured in FY2019 at $1,571.2 million, or an average of about $523.7 million each. Issues for Congress for FY2020 Procurement of LCSs in FY2020 One issue for Congress is whether to procure any LCSs in FY2020, and if so, how many. As noted above, the Navy wants FY2019 to be the final year of LCS procurement, and it has not requested the procurement of any additional LCSs in its FY2020 budget submission. Opponents of procuring one or more LCSs in FY2020 could argue that the total number of LCSs procured in prior years exceeds the Navy's stated requirement, and that adding funding to the Navy's FY2020 shipbuilding account for procuring one or more additional LCSs could reduce FY2020 funding for other Navy programs. Supporters of procuring one or more LCSs could argue that it could provide a hedge against delays in the FFG(X) program and help the Navy achieve its small surface combatant force-level goal more quickly. Future Workloads and Employment Levels at the Two LCS Shipyards Another issue for Congress concerns 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. As noted earlier, the Navy wants to shift procurement of small surface combatants in FY2020 to a new frigate called the FFG(X). The Navy's proposed FY2020 budget requests funding for the procurement of the first FFG(X). Five industry teams are currently competing for the FFG(X) program. Two of these teams are offering designs for the FFG(X) that are modified versions of the two LCS designs that the Navy has procured in prior years. The other three industry teams are offering designs for the FFG(X) that are based on other existing ship designs. One of these three other industry teams is proposing to build its design at the LCS-1 shipyard. The Navy plans to announce the outcome of the FFG(X) competition in the fourth quarter of FY2020. The FFG(X) program is covered in detail in CRS Report R44972, Navy Frigate (FFG[X]) Program: Background and Issues for Congress , by Ronald O'Rourke. 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)—that is, if the winner of the FFG(X) competition is a design to be built at a shipyard other than the two LCS shipyards—then 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. The Navy's current baseline plan for the FFG(X) program is to build FFG(X)s at a single shipyard. One possible alternative would be to build FFG(X)s at two or three shipyards, including one or both of the LCS shipyards. One possible approach for doing this, for example, would be to select a winner in the FFG(X) competition and begin procuring that design in FY2020, as the Navy currently plans, but also build FFG(X)s at one or both of the LCS yards. Supporters of this option might argue that it could boost FFG(X) production from the currently planned two ships per year to as many as many as four to six 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 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 FFG(X) competition by offering the winner a smaller prospective number of FFG(X)s and 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 as many as four to six FFG(X)s per year rather than two per year, which in a situation of finite Department of Defense (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. Another possible alternative to the Navy's plan to end LCS procurement in FY2019 and shift to FFG(X) procurement starting in FY2020 would be would be to select a winner in the FFG(X) competition and begin procuring that design in FY2020, as the Navy currently plans, but 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 be converted into feeder yards supporting 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 feeder yards in naval shipbuilding was examined at length in a 2011 RAND report. Navy Plans for Retrofitting LCSs with Additional Weapons Another issue for Congress concerns the Navy's plans for retrofitting LCSs with additional weapons, so as to give them capabilities more like those of the FFG(X). The Navy states that it "is beginning to retrofit an Over the Horizon Weapon System (OTH WS) on all LCS for increased lethality. The award in May 2018 of the Naval Strike Missile contract for OTH WS brings a technologically mature weapons system and extends the offensive capability of the ship." Survivability, Lethality, Technical Risk, and Test and Evaluation Issues A broad oversight area for Congress for the LCS program for the past several years concerns survivability, lethality, technical risk, and test and evaluation issues relating to LCSs and their mission packages. Over the years, the annual report from DOD's Director, Operational Test and Evaluation (DOT&E) has contained extensive comments, many of them very critical, regarding numerous aspects of LCSs and LCS mission packages. DOT&E's January 2018 report for FY2017 contains such comments. Similarly, over the years, GAO has provided numerous reports and testimony about the LCS program that have raised a variety of issues with the program. GAO also provides a summary assessment of risk in the LCS mission packages in an annual report it publishes that surveys selected DOD weapon acquisition programs. A July 25, 2018, DOD Inspector General (IG) report on LCS MCM mission package systems stated that "the Navy declared IOC [initial operational capability] for the three MCM mission package systems reviewed prior to demonstrating that the systems were effective and suitable for their intended operational uses." Legislative Activity for FY2020 Summary of Congressional Action on FY2020 Funding Request Table 2 summarizes congressional action on the Navy's FY2020 procurement funding request for the LCS program. Appendix A. Manning and Deployment of LCSs This appendix provides additional background information on the manning and deployment of LCSs. The Navy originally planned to maintain three crews for each two LCSs, and to keep one of those two LCSs forward deployed—an approach Navy officials referred to as the 3-2-1 plan. Under this plan, LCSs were to be deployed at forward station (such as Singapore) for 16 months at a time, and crews were to rotate on and off deployed ships at 4- to 6-month intervals. The 3-2-1 plan was intended to permit the Navy to maintain 50% of the LCS force in deployed status at any given time—a greater percentage than would be possible under the traditional approach of maintaining one crew for each LCS and deploying LCSs for seven months at a time. The Navy planned to forward-station three LCSs in Singapore and additional LCSs at another Western Pacific location, such as Sasebo, Japan, and at Bahrain. In September 2016, the Navy announced a new plan for crewing and operating the first 28 LCSs. Key elements of the new plan include the following: the first four LCSs (LCSs 1 through 4) will each by operated by a single crew and be dedicated to testing and evaluating LCS mission packages (though they could be deployed as fleet assets if needed on a limited basis); the other 24 LCSs (LCSs 5 through 28) will be divided into six divisions (i.e., groups) of four ships each; three of the divisions (i.e., 12 of the 24 ships), all of them built to the LCS-1 design, will be homeported at Mayport, FL; the other three divisions (i.e., the remaining 12 ships), all of them built to the LCS-2 design, will be homeported at San Diego, CA; among the three divisions on each coast, one division will focus on MCM, one will focus on ASW, and one will focus on SUW; in each of the six divisions, one ship will be a designated training ship, and will focus on training and certifying the crews of the other three ships in the division; the other three ships in each division will each be operated by dual crews (i.e., Blue and Gold crews), like the Navy's ballistic missile submarines; the crews for the 24 ships in the six divisions will be permanently fused with their associated mission package crews—the distinction between core crew and mission package crew will be eliminated; the 24 ships in the six divisions will experience changes in their mission packages (and thus in their mission orientations) infrequently, if at all; and at program maturity (i.e., by about FY2023), 13 of the 24 ships in the six divisions (i.e., more than 50%) are to be forward stationed at any given point for periods of 24 months, with 3 at Singapore, 3 at another Western Pacific location, such as Sasebo, Japan, and 7 at Bahrain. The Navy states that this crewing and operating plan is intended to reduce disruptions to the deployment cycles of the 24 LCSs in the six divisions that under the 3-2-1 plan would have been caused by the need to test and evaluate LCS mission packages; improve training and proficiency of LCS crews; enhance each LCS crew's sense of ownership of (and thus responsibility for taking good care of) the ship on which it operates; and achieve a percentage of LCSs in deployed status, and numbers of forward-stationed LCSs, similar to or greater than what the Navy aimed to achieve under the 3-2-1 plan. The Navy further states that as the fleet continues to accumulate experience in operating and maintaining LCSs, elements of this new plan might be modified. Appendix B. Defense-Acquisition Policy Lessons In reviewing the LCS program, one possible question concerns what defense-acquisition policy lessons, if any, the program may offer to policymakers, particularly in terms of the rapid acquisition strategy that the Navy pursued for the LCS program, which aimed at reducing acquisition cycle time (i.e., the amount of time between starting the program and getting the first ship into service). One possible perspective is that the LCS program demonstrated that reducing acquisition cycle time can be done. Supporters of this perspective might argue that under a traditional Navy ship acquisition approach, the Navy might have spent five or six years developing a design for a new frigate or corvette, and perhaps another five years building the lead ship, for a total acquisition cycle time of perhaps 10 to 11 years. For a program announced in November 2001, this would have resulted in the first ship entering service in between late 2011 and late 2012. In contrast, supporters of this perspective might argue, LCS-1 entered service on November 8, 2008, about seven years after the program was announced, and LCS-2 entered service on January 16, 2010, a little more than eight years after the program announced. Supporters of this perspective might argue that this reduction in acquisition cycle time was accomplished even though the LCS incorporates major innovations compared to previous larger Navy surface combatants in terms of reduced crew size, "plug-and fight" mission package modularity, high-speed propulsion, and (in the case of LCS-2) hull form and hull materials. Another possible perspective is that the LCS program demonstrated the risks or consequences of attempting to reduce acquisition cycle time. Supporters of this perspective might argue that the program's rapid acquisition strategy resulted in design-construction concurrency (i.e., building the lead ships before their designs were fully developed), a practice long known to increase risks in defense acquisition programs. Supporters of this perspective might argue that the cost growth, design issues, and construction-quality issues experienced by the first LCSs were due in substantial part to design-construction concurrency, and that these problems embarrassed the Navy and reduced the Navy's credibility in defending other acquisition programs. They might argue that the challenges the Navy faces today in terms of developing an LCS concept of operations (CONOPS), LCS manning and training policies, and LCS maintenance and logistics plans were increased by the rapid acquisition strategy, because these matters were partly deferred to later years (i.e., to today) while the Navy moved to put LCSs into production. Supporters of this perspective might argue that the costs of the rapid acquisition strategy are not offset by very much in terms of a true reduction in acquisition cycle time, because the first LCS to be equipped with a mission package that had reached IOC (initial operational capability) did not occur until late FY2014—almost 13 years after the LCS program was announced. Supporters of this perspective could argue that the Navy could have avoided many of the program's early problems and current challenges—and could have had a fully equipped first ship enter service in 2011 or 2012—if it had instead pursued a traditional acquisition approach for a new frigate or corvette. They could argue that the LCS program validated, for defense acquisition, the guideline from the world of business management that if an effort aims at obtaining something fast, cheap, and good, it will succeed in getting no more than two of these things, or, more simply, that the LCS program validated the general saying that haste makes waste. A third possible perspective is that the LCS program offers few if any defense-acquisition policy lessons because the LCS differs so much from other Navy ships and the Navy (and DOD generally) consequently is unlikely to attempt a program like the LCS in the future. Supporters of this perspective might argue that the risks of design-construction concurrency have long been known, and that the experience of the LCS program did not provide a new lesson in this regard so much as a reminder of an old one. They might argue that the cost growth and construction delays experienced by LCS-1 were caused not simply by the program's rapid acquisition strategy, but by a variety of factors, including an incorrectly made reduction gear from a supplier firm that forced the shipbuilder to build the lead ship in a significantly revised and suboptimal construction sequence.

The Navy began procuring a small surface combatant called the Littoral Combat Ship (LCS) in FY2005, and a total of 35 LCSs have been procured through FY2019, including three in FY2019. The total of 35 LCSs is three more than the 32 the Navy says are required under its 355-ship force-level goal. The Navy wants FY2019 to be the final year of LCS procurement, and it has not requested the procurement of any additional LCSs in its FY2020 budget submission. The Navy wants to shift procurement of small surface combatants in FY2020 to a new frigate called the FFG(X). The Navy's proposed FY2020 budget requests funding for the procurement of the first FFG(X). Five industry teams are currently competing for the FFG(X) program. Two of these teams are offering designs for the FFG(X) that are modified versions of the two LCS designs that the Navy has procured in prior years. The other three industry teams are offering designs for the FFG(X) that are based on other existing ship designs. One of these three other industry teams is proposing to build its design at one of the LCS shipyards. The Navy plans to announce the outcome of the FFG(X) competition in the fourth quarter of FY2020. The FFG(X) program is covered in detail in another CRS report. The Navy's 355-ship force-level goal is the result of a Force Structure Analysis (FSA) that the Navy conducted in 2016. The 2016 FSA established a force-level goal for a 355-ship Navy with 52 small surface combatants, including 32 LCSs and 20 frigates. The Navy conducts a new or updated FSA every few years, and 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 fleet architecture that will include, among other thing, a larger proportion of small surface combatants. The LCS is a relatively inexpensive surface combatant equipped with modular mission packages. The LCS program includes two very different LCS designs. One, called the LCS-1 or Freedom-class design, was developed by an industry team led by Lockheed. The other, called the LCS-2 or Independence-class design, was developed by an industry team that was then led by General Dynamics. LCS procurement has been divided more or less evenly between the two designs. The LCS-1 design is built at the Marinette Marine shipyard at Marinette, WI, with Lockheed as the prime contractor. The LCS-2 design is built at the Austal USA shipyard at Mobile, AL, with Austal USA as the prime contractor. The LCS program has been controversial over the years due to past cost growth, design and construction issues with the first LCSs, concerns over the survivability of LCSs (i.e., their ability to withstand battle damage), concerns over whether LCSs are sufficiently armed and would be able to perform their stated missions effectively, and concerns over the development and testing of the modular mission packages for LCSs. The Navy's execution of the program has been a matter of congressional oversight attention for several years. A current issue for Congress is whether to procure any LCSs in FY2020, and if so, how many. Opponents could argue that the total number of LCSs procured in prior years exceeds the Navy's stated requirement, and that adding funding to the Navy's FY2020 shipbuilding account for procuring one or more additional LCSs could reduce FY2020 funding for other Navy programs. Supporters could argue that procuring additional LCSs in FY2020 could provide a hedge against delays in the FFG(X) program and help the Navy achieve its small surface combatant force-level goal more quickly. Another issue for Congress concerns 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.

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Introduction Review of Clean Air Act regulations issued under the Obama Administration, with the possibility of their modification or repeal, has been a major focus of the Trump Administration since it took office in 2017. The U.S. Environmental Protection Agency (EPA) has conducted these reviews as part of the Trump Administration's "regulatory reform" initiative under which the Administration has directed federal agencies to evaluate existing regulations and identify those that should be considered for replacement, repeal, or modification. In addition, Executive Order (E.O.) 13783 has directed EPA and other federal agencies to review existing regulations and policies that "potentially burden the development or use of domestically produced energy resources" for consistency with policies that the E.O. enumerates, and as soon as practicable, to "suspend, revise, or rescind the guidance, or publish for notice and comment proposed rules suspending, revising, or rescinding those rules." EPA rules to regulate greenhouse gas (GHG) emissions from power plants, cars and trucks, and the oil and gas sector have been of particular interest. EPA's Greenhouse Gas Regulations EPAs regulatory actions to limit GHG emissions have relied on authority that Congress granted the agency in the Clean Air Act (CAA) Amendments of 1970. Since 2007, the Supreme Court has ruled on two separate occasions that the CAA, as amended, authorizes EPA to set standards for GHG emissions. In the first case, Massachusetts v. EPA , the Court held that GHGs are air pollutants within the CAA's definition of that term and that EPA must regulate their emissions from motor vehicles if the agency finds that such emissions cause or contribute to air pollution which may reasonably be anticipated to endanger public health or welfare. Following the Court's decision, in 2009, the agency made an endangerment finding. In the second case, American Electric Power, Inc. v. Connecticut , the Court held that corporations cannot be sued for GHG emissions under federal common law, because the CAA delegates the management of carbon dioxide and other GHG emissions to EPA: "... Congress delegated to EPA the decision whether and how to regulate carbon-dioxide emissions from power plants; the delegation is what displaces federal common law." EPA's GHG regulations have focused on six gases or groups of gases that multiple scientific studies have linked to climate change. Of the six gases, carbon dioxide (CO 2 ), which is produced by combustion of fossil fuels and is the most prevalent, accounts for about 80% of annual emissions of the combined group when measured as CO 2 equivalents. Of the GHG emission standards promulgated by EPA, four sets of standards, which have had the broadest impacts, are discussed below: those for power plants, the oil and gas industry, trucks, and light-duty vehicles (the latter two topics are combined under the heading " Standards for Motor Vehicles "). EPA finalized GHG standards for power plants in August 2015; set GHG emission standards for oil and gas industry sources in June 2016; finalized a second round of GHG standards for trucks in August 2016; and completed a Mid-Term Evaluation (MTE) of the already promulgated GHG standards for model years 2022-2025 light-duty vehicles (cars and light trucks) in January 2017. Most of these rules are under review at EPA; the agency has proposed repeal or modification in several cases. Standards for Power Plants (Clean Power Plan and NSPS) The electricity sector has historically accounted for the largest percentage of anthropogenic U.S. CO 2 emissions, though transportation activities have more recently accounted for a slightly larger share. In 2017, the electricity sector accounted for 27.5% of total U.S. GHG emissions and transportation activities accounted for 28.9%. EPA finalized GHG (CO 2 ) emission standards under CAA Section 111 for new, existing, and modified fossil-fueled power plants in August 2015. The standards would primarily affect coal-fired units, which emit twice the amount of CO 2 that would be emitted by an equivalent natural gas combined cycle (NGCC) electric generating unit. The final rules were controversial: EPA received more than 4 million public comments as it considered the proposed standards for existing units, by far the most comments on a rulemaking in the agency's 48-year history. The Clean Power Plan (CPP), which is the rule for existing units, would set state-specific goals for CO 2 emissions or emission rates from existing fossil-fueled power plants. EPA established different goals for each state based on three "building blocks": improved efficiency at coal-fired power plants; substitution of NGCC generation for coal-fired power; and zero-emission power generation from increased renewable energy, such as wind or solar. The goals would be phased in, beginning in 2022, with final average emission rates for each state to be reached by 2030. Independently of the CPP, the period since its proposal in 2014 has seen rapid changes in the electric power industry. Coal-fired power plants have been retired in record numbers and cleaner sources of electric power (both renewable and natural-gas-fired) have taken their place. Coal, which accounted for 39% of electric power generation in 2014, declined to 28% of the total in 2018; natural gas generation rose from 28% to 35% of the total, and wind and solar from 7% to 11% in the same period. As a result of this shift in power sources, emissions of CO 2 from the electric power sector have declined faster than would have been required by the CPP. Cheap and abundant natural gas, state and federal incentives to develop wind and solar power, and tighter EPA standards for non-CO 2 emissions from coal-fired power plants have all played a role in this transition. New Source Performance Standards (NSPS) for new and modified power plants, promulgated at the same time as the CPP, would affect fewer plants, but they too are controversial, because of the technology the rule assumed could be used to reduce emissions at new coal-fired units. As promulgated in 2015, the NSPS would have relied in part on carbon capture and sequestration (CCS) technology to reduce emissions by about 20% compared to the emissions of a state-of-the-art coal-fired plant without CCS. Critics stated that CCS is a costly and unproven technology, and because of this, the NSPS would effectively have prohibited the construction of new coal-fired plants. No operating commercial U.S. power plant was capturing and storing CO 2 as of the date the rule was promulgated. (The first commercial CCS facility in the United States, the Petra Nova project at the W.A. Parish Generating Station in Texas, came on line in 2016.) For additional information on the Clean Power Plan and the 2015 NSPS, see CRS Report R44744, Clean Air Act Issues in the 115th Congress: In Brief . Implementation of the CPP has been stayed by the Supreme Court since February 2016, pending the completion of judicial review. Prior to the stay, challenges to the rule were filed with the U.S. Court of Appeals for the D.C. Circuit by more than 100 parties, including 27 states. These challenges were consolidated into a single case, West Virginia v. EPA . The D.C. Circuit heard oral argument in the case in September 2016; as of this writing, the court has not issued a decision. (For a discussion of the legal issues, see CRS Report R44480, Clean Power Plan: Legal Background and Pending Litigation in West Virginia v. EPA .) The NSPS have also been challenged ( North Dakota v. EPA ). EPA requested (and the court granted) a pause in that litigation to give EPA time to conduct a review. Under the Trump Administration, EPA has reviewed both the CPP and the NSPS. This review concluded, among other things, that the CPP exceeded EPA's statutory authority by using measures that applied to the power sector as a whole rather than measures carried out within an individual facility. The agency therefore proposed repeal of the CPP on October 16, 2017, and a rule to replace it (the Affordable Clean Energy (ACE) rule) on August 21, 2018. The ACE rule would apply a narrower interpretation than the CPP of the best system of emission reduction (BSER), defining it as on-site heat rate improvements for existing coal-fired units. The rule would not establish a numeric performance standard for existing coal-fired units. Instead, EPA proposed a list of candidate technologies that would constitute the BSER. The ACE rule does not establish BSER for other types of existing power plants, such as natural gas single cycle or combined cycle plants or petroleum-fired plants. EPA proposed two additional actions in ACE—one to revise regulations that implement CAA Section 111(d) and another to modify an applicability determination for a CAA preconstruction permitting program for new and modified stationary sources, known as New Source Review (NSR). The former seeks to codify EPA's current legal interpretation that states have broad discretion to establish emission standards consistent with BSER. The latter would revise the NSR applicability test for certain power plants and, according to EPA, prevent NSR from discouraging the installation of energy-efficiency measures. (For more information about the ACE proposal, see CRS Report R45393, EPA's Affordable Clean Energy Proposal .) The agency also proposed to revise the NSPS on December 6, 2018. In the December 2018 proposal, EPA determined that the BSER for newly constructed coal-fired units would be the most efficient demonstrated steam cycle in combination with the best operating practices. This proposed BSER would replace the determination from the 2015 rule, which identified the BSER as partial carbon capture and storage. According to the agency, "the primary reason for this proposed revision is the high costs and limited geographic availability of CCS." Another issue of interest to Congress relates to the agency's legal basis for the 2015 NSPS, including EPA's conclusion in 2015 that power plants emit a significant amount of CO 2 . Prior to the power sector GHG rules, EPA made two findings under CAA Section 202: (1) that GHGs currently in the atmosphere potentially endanger public health and welfare and (2) that new motor vehicle emissions cause or contribute to that pollution. These findings are collectively referred to as the endangerment finding. The endangerment finding triggered EPA's duty under CAA Section 202(a) to promulgate emission standards for new motor vehicles. In the 2015 NSPS rule, EPA concluded that it did not need to make a separate endangerment finding under Section 111, which directs EPA to list categories of stationary sources that cause or contribute significantly to "air pollution which may reasonably be anticipated to endanger public health or welfare." EPA reasoned that because power plants had been listed previously under Section 111, it was unnecessary to make an additional endangerment finding for a new pollutant emitted by a listed source category. The agency also argued that, even if it were required to make a finding, electric generating units (EGUs) would meet that endangerment requirement given the significant amount of CO 2 emitted from the source category. While neither ACE nor the 2018 NSPS rule proposes to reconsider the endangerment finding or the conclusions related to the endangerment finding in the 2015 NSPS, the 2018 NSPS requested comments on these issues, "either as a general matter or specifically applied to GHG emissions." For example, EPA noted that power sector GHG emissions are declining and requested comment on whether EPA has "a rational basis for regulating CO 2 emissions from new coal-fired" units. EPA also requested comment on whether the CAA requires the agency to make an endangerment finding once for a source category or if the act requires EPA to make a new endangerment finding each time it regulates an additional pollutant from a listed source category. The NSPS revision and repeal and replacement of the CPP are still at the proposal stage. Revising, repealing, or replacing a promulgated rule require the agency to follow the administrative steps involved in proposing and promulgating a new rule, including allowing public comment, and responding to significant comments upon promulgation of a final rule. Following promulgation, the repeal action, revisions, and replacement rules are subject to judicial review. A large group of stakeholders, including some states, are seen as likely to oppose the changes associated with repealing the CPP and replacing it with ACE. The EPA and judicial processes could be short-circuited by Congress, through legislation overturning, modifying, or affirming the CPP or NSPS. Congressional action is considered unlikely, however, as the threat of a filibuster, requiring 60 votes to proceed, could prevent Senate action. The new House majority has expressed a strong interest in addressing climate change. As a result, oversight hearings are considered likely as EPA finalizes actions on the ACE rule and NSPS. Standards for the Oil and Gas Industry On June 3, 2016, EPA promulgated a suite of New Source Performance Standards (NSPS) under CAA Section 111 to set controls for the first time on methane emissions from sources in the crude oil and natural gas production sector and the natural gas transmission and storage sector. The rule builds on the agency's 2012 NSPS for volatile organic compound (VOC) emissions and would extend controls for methane and VOC emissions beyond the existing requirements to include new or modified hydraulically fractured oil wells, pneumatic pumps, compressor stations, and leak detection and repair at well sites, gathering and boosting stations, and processing plants. The Obama Administration stated that the rule was a key component under the "Climate Action Plan," and that the plan's Strategy to Reduce Methane Emissions was needed to set the United States on track to achieve the Administration's goal to cut methane emissions from the oil and gas sector by 40%-45% from 2012 levels by 2025, and to reduce all domestic GHG emissions by 26%-28% from 2005 levels by 2025. Methane—the key constituent of natural gas—is a potent greenhouse gas with a global warming potential (GWP) more than 25 times greater than that of carbon dioxide (CO 2 ). According to EPA's Inventory of U.S. Greenhouse Gas Emissions and Sinks , methane is the second most prevalent GHG emitted in the United States from human activities, and over 25% of those emissions come from oil production and the production, transmission, and distribution of natural gas. EPA projected that the standards for new, reconstructed, and modified sources would reduce methane emissions by 510,000 tons in 2025, the equivalent of reducing 11 million metric tons of CO 2 . In conjunction with the proposal, EPA conducted a Regulatory Impact Analysis (RIA) that looked at the illustrative benefits and costs of the proposed NSPS: in 2025, EPA estimated the rule will have costs of $530 million and climate benefits of $690 million (in constant 2012 dollars). The rule would also reduce emissions of VOCs and hazardous air pollutants (HAPs). EPA was not able to quantify the benefits of the VOC/HAP reductions. The methane rule is among the rules subject to review under E.O. 13783, signed by President Trump on March 28, 2017. Section 7 of the E.O. directed EPA to review the rule for consistency with policies that the E.O. enumerates, and, if appropriate, as soon as practicable, to "suspend, revise, or rescind the guidance, or publish for notice and comment proposed rules suspending, revising, or rescinding those rules." On March 12, 2018, EPA published a final rule to make two "narrow" revisions to the 2016 NSPS. The rule removes the requirement that leaking components be repaired during unplanned or emergency shutdowns and provides separate monitoring requirements for well sites located on the Alaskan North Slope. On October 15, 2018, EPA proposed a larger set of amendments to the 2016 NSPS. The proposed changes would decrease the frequency for monitoring fugitive emissions at well sites and compressor stations; decrease the schedule for making repairs; expand the technical infeasibility provision for pneumatic pumps to all well sites; and amend the professional engineer certification requirements to allow for in-house engineers. Upon the proposal's release, the agency stated that it "continues to consider broad policy issues in the 2016 rule, including the regulation of greenhouse gases in the oil and natural gas sector," and that "these issues will be addressed in a separate proposal at a later date." The comment period for the proposed amendments closed on December 17, 2018. (For more discussion, see CRS Report R42986, Methane and Other Air Pollution Issues in Natural Gas Systems , by Richard K. Lattanzio.) Standards for Motor Vehicles Controversy regarding GHG standards promulgated by the Obama EPA for new motor vehicles has surfaced under the Trump Administration. In May 2009, President Obama reached agreement with major U.S. and foreign auto manufacturers, the state of California (which has separate authority to set motor vehicle emission standards, if EPA grants a waiver), and other stakeholders regarding the substance of GHG emission and related fuel economy standards. A second round of standards for cars and light trucks, promulgated in October 2012, was also preceded by an agreement with the auto industry and key stakeholders. Under the agreements, EPA, the U.S. Department of Transportation (DOT, which has authority to set fuel economy standards), and California would establish "One National Program" for GHG emissions and fuel economy. The auto industry supported national standards, in part, to avoid having to meet standards on a state-by-state basis. The second round of GHG standards for cars and light trucks is being phased in over model years (MY) 2017-2025. It would reduce GHG emissions from new light-duty vehicles (i.e., cars, SUVs, crossovers, minivans, and most pickup trucks) by about 50% compared to 2010 levels, and average fuel economy will rise to nearly 50 miles per gallon (mpg) when fully phased in, in 2025. As part of the rulemaking, EPA made a commitment to conduct a Mid-Term Evaluation (MTE) for the MY2022-2025 standards by April 2018. The agency deemed an MTE appropriate given the long time frame at issue, with the final standards taking effect as long as 12 years after promulgation. Through the MTE, EPA was to determine whether the standards for MYs 2022-2025 were still appropriate given the latest available data and information, with the option of strengthening, weakening, or retaining the standards as promulgated. On November 30, 2016, EPA released a proposed determination under the MTE stating that the MY2022-2025 standards remained appropriate and that a rulemaking to change them was not warranted. EPA based its findings on a Technical Support Document, a previously released Draft Technical Assessment Report (which was issued jointly by EPA, DOT, and the California Air Resources Board [CARB]), and input from the auto industry and other stakeholders. The proposed determination opened a public comment period that ran through December 30, 2016. On January 12, 2017, the EPA Administrator made a final determination to retain the MY2022-2025 standards as originally promulgated. The final action arguably accelerated the timeline for the MTE (which called for a final determination by April 2018), and EPA announced it separately from any DOT or California announcement. EPA noted its "discretion" in issuing a final determination, saying that the agency "recognizes that long-term regulatory certainty and stability are important for the automotive industry and will contribute to the continued success of the national program." Some auto manufacturer associations and other industry groups criticized the results of EPA's review and reportedly vowed to work with the Trump Administration to revisit EPA's determination. These groups sought actions such as easing the MY2022-2025 requirements or better aligning DOT's and EPA's standards. The Trump Administration reopened the MTE in mid-March 2017. On April 2, 2018, EPA released a revised final determination, stating that the MY2022-2025 standards are "not appropriate in light of the record before EPA and, therefore, should be revised." The notice stated that the January 2017 final determination was based on "outdated information, and that more recent information suggests that the current standards may be too stringent." Following the revised final determination, on August 24, 2018, EPA and DOT proposed amendments to the existing fuel economy and GHG emission standards. The proposal offers eight alternatives. The agencies' preferred alternative, if finalized, is to retain the existing standards through MY2020 and then to freeze the standards at this level for both programs through MY2026. The preferred alternative also removes the current CO 2 equivalent air conditioning refrigerant leakage, nitrous oxide, and methane requirements after MY2020. The proposed standards would lead to an estimated average fuel economy of 37 mpg for MY2020-2026 vehicles, causing a projected increase in fuel consumption of about 0.5 million barrels per day (equivalent to about 186,000 metric tons of carbon dioxide per day), according to EPA and DOT. The agencies project a net benefit from revising the standards, relying on new estimates of compliance costs, fatalities, and injuries. The proposed standards were subject to public comment for 60 days following their publication in the Federal Register . Until the new rulemaking is completed, the standards promulgated in 2012 remain in effect. (For additional information, see CRS Report R45204, Vehicle Fuel Economy and Greenhouse Gas Standards: Frequently Asked Questions , by Richard K. Lattanzio, Linda Tsang, and Bill Canis.) Further, under the proposal, EPA aims to withdraw California's CAA preemption waiver for its vehicle GHG standards applicable to MYs 2021-2025. DOT contends that the Energy Policy and Conservation Act of 1975 (EPCA), which authorizes the department's fuel economy standards, preempts California's GHG emission standards. DOT argues that state laws regulating or prohibiting tailpipe CO 2 emissions are related to fuel economy and can therefore be preempted under EPCA. The agencies accepted comments on the proposal through October 26, 2018. EPA and DOT have also promulgated joint GHG emission and fuel economy standards for medium- and heavy-duty trucks, which have generally been supported by the trucking industry and truck and engine manufacturers. This rule was finalized on August 16, 2016. The new standards cover MYs 2018-2027 for certain trailers and MYs 2021-2027 for semi-trucks, large pickup trucks, vans, and all types and sizes of buses and work trucks. According to EPA, The Phase 2 standards are expected to lower CO 2 emissions by approximately 1.1 billion metric tons, save vehicle owners fuel costs of about $170 billion, and reduce oil consumption by up to 2 billion barrels over the lifetime of the vehicles sold under the program. In the Regulatory Impact Analysis accompanying the rule's promulgation, EPA projected the total cost of the Phase 2 standards at $29-$31 billion over the lifetime of MY2018-2029 trucks. The standards would increase the cost of a long haul tractor-trailer by as much as $13,500 in MY2027, according to the agency; but the buyer would recoup the investment in fuel-efficient technology in less than two years through fuel savings. In EPA's analysis, fuel consumption of 2027 model tractor-trailers will decline by 34% as a result of the rule. In general, the truck standards have been well received. The American Trucking Associations, for example, described themselves as "cautiously optimistic" that the rule would achieve its targets: "We are pleased that our concerns such as adequate lead-time for technology development, national harmonization of standards, and flexibility for manufacturers have been heard and included in the final rule." The Truck and Engine Manufacturers Association highlighted its work providing input to assure that EPA and DOT established a single national program, and concluded: "A vitally important outcome is that EPA and DOT have collaborated to issue a single final rule that includes a harmonized approach to greenhouse gas reductions and fuel efficiency improvements." Neither group filed a petition for judicial review of the rule. The only challengers were the Truck Trailer Manufacturers Association and the Racing Enthusiasts and Suppliers Coalition. In April 2017, EPA took steps to review the rule, asking the D.C. Circuit Court of Appeals to hold the legal challenge ( Truck Trailer Manufacturers Association v. EPA ) in abeyance while EPA conducts a review of the standards. The court granted EPA's request on May 8, 2017. On October 27, 2017, the D.C. Circuit Court granted the Truck Trailer Manufacturers Association's request to stay certain requirements for trailers pending the judicial review of the medium- and heavy-duty vehicles rule. The rest of the rule remains in effect. (For additional information, see CRS In Focus IF10927, Phase 2 Greenhouse Gas Emissions and Fuel Efficiency Standards for Medium- and Heavy-Duty Engines and Vehicles , by Richard K. Lattanzio.) The truck rule also established emission standards for vehicles manufactured from "glider kits" (truck bodies produced without a new engine, transmission, or rear axle). On November 16, 2017, EPA proposed a repeal of the emission standards and other requirements on heavy-duty glider vehicles, glider engines, and glider kits based on a proposed interpretation of the CAA. EPA's proposed repeal has not been finalized, and efforts to expedite the proposal or provide regulatory relief to the industry have been met with resistance from a number of states, environmental groups, and stakeholders in the trucking sector. EPA's fall 2018 regulatory agenda characterizes its glider rulemaking as a "long-term action," which is defined as a measure for which the agency "does not expect to have a regulatory action within" a year of publishing the agenda. (For additional information, see CRS Report R45286, Glider Kit, Engine, and Vehicle Regulations , by Richard K. Lattanzio and Sean Lowry.) Air Quality Standards Background Air quality has improved substantially since the passage of the CAA in 1970. Annual emissions of the six air pollutants for which EPA has set national ambient air quality standards (NAAQS)—ozone, particulate matter, sulfur dioxide, carbon monoxide, nitrogen dioxide, and lead—have declined by more than 70%, despite major increases in population, motor vehicle miles traveled, and economic activity. Nevertheless, the goal of clean air continues to elude many areas, in part because evolving scientific understanding of the health effects of air pollution has caused EPA to tighten standards for most of these pollutants. Congress anticipated that the understanding of air pollution's effects on public health and welfare would change with time, and it required, in Section 109(d) of the act, that EPA review the NAAQS at five-year intervals and revise them, as appropriate. The most widespread air quality problems involve ozone and fine particles (often referred to as "smog" and "soot," respectively). A 2013 study by researchers at the Massachusetts Institute of Technology concluded that emissions of particulate matter (PM) and ozone caused 210,000 premature deaths in the United States in 2005. Many other studies have found links between air pollution, illness, and premature mortality, as well. EPA summarizes these studies in what are called Integrated Science Assessments (ISAs) and Risk Analyses when it reviews a NAAQS. The most recent ISA for particulate matter—a draft version that EPA published as part of the PM NAAQS review currently underway—concludes that there is a "causal relationship" between total mortality and both short-term and long-term exposure to PM. The most recent ozone ISA states that there is "likely to be a causal relationship" between short-term exposures to ozone and total mortality. With input from the states, EPA identifies areas where concentrations of pollution exceed the NAAQS following its promulgation. As of March 31, 2019, 124 million people lived in areas classified as "nonattainment" for the current ozone NAAQS; 23 million lived in areas that were nonattainment for the current fine particulate matter (PM 2.5 ) NAAQS. Figure 1 identifies areas that had not attained one or more of the NAAQS as of March 31, 2019. EPA's Review of the NAAQS EPA's statutorily mandated reviews of the ozone and particulate matter NAAQS are underway and may be more contentious than usual. The CAA has minimal requirements for how the agency is to conduct NAAQS reviews, leaving the details to the EPA Administrator. Congress may undertake oversight, as EPA moves forward with these reviews. EPA also intends to streamline NAAQS reviews and obtain Clean Air Scientific Advisory Committee (CASAC) advice regarding background pollution and potential adverse effects from NAAQS compliance strategies. In October 2018, EPA made an unprecedented change and eliminated the pollutant-specific scientific review panels, which have historically helped agency staff conduct the five-year reviews. Specifically, EPA disbanded the Particulate Matter Review Panel, which was appointed in 2015, and stated that it would not form an Ozone Review Panel. Instead, the seven-member CASAC is to lead "the review of science for any necessary changes" to the ozone or particulate matter NAAQS. Since then, however, some members of CASAC have raised concerns about this approach. In April 2019, the CASAC recommended that EPA either "reappoint the previous CASAC [particulate matter] panel or appoint a panel with similar expertise." Others, including former members of CASAC and previous ozone review panels, stated that the current CASAC lacks the depth and breadth of expertise required for the ozone review. Additional stakeholder views—in particular, those that may support this particular change—are not readily available. 2020 Review of the Ozone NAAQS Since 2008, review of the NAAQS for ozone has sparked recurrent controversy. In 2008, EPA promulgated a more stringent ozone NAAQS, and for the first time ever, the Administrator chose a health-based standard outside the range recommended by the independent scientific review committee established by the CAA. In 2015, EPA strengthened the ozone NAAQS again. The final ozone standards were released on October 1, 2015, and appeared in the Federal Register , October 26, 2015. Areas of the United States exceeding the new NAAQS were identified on May 1 and July 17, 2018. The standards have been challenged in court; the D.C. Circuit Court of Appeals heard oral argument in the case on December 18, 2018. The 2015 revision sets more stringent standards than the 2008 ozone NAAQS, lowering both the primary (health-based) and secondary (welfare-based) standards from 75 parts per billion (ppb)—the level set in 2008—to 70 ppb. EPA has identified 52 nonattainment areas with a combined population of 124 million, where air quality exceeds the 2015 NAAQS: 201 counties or partial counties in 22 states, the District of Columbia, and 2 tribal areas. EPA's analysis of the rule's potential effects—undertaken when the rule was promulgated—showed all but 14 of the nonattainment counties could reach attainment with a 70 ppb ozone NAAQS by 2025 as a result of already promulgated standards for power plants, motor vehicles, gasoline, and other emission sources. EPA estimated the cost of meeting a 70 ppb ozone standard in all states except California at $1.4 billion annually in 2025. Because most areas in California would have until the 2030s to reach attainment, EPA provided separate cost estimates for California ($0.8 billion in 2038). These cost estimates are substantially less than widely circulated estimates from the National Association of Manufacturers (NAM) and other industry sources. (For a discussion of the differences, see CRS Report R43092, Implementing EPA's 2015 Ozone Air Quality Standards .) EPA faces a statutory deadline of October 2020 to complete a review of the ozone NAAQS and decide whether to modify or retain it. As previously noted, the agency announced plans to speed up the review process and declined to convene a scientific review panel specific to ozone. EPA is expected to grapple with issues raised during the 2015 ozone review, such as background ozone. In addition, EPA stated that it intends to seek CASAC advice regarding potential adverse effects from NAAQS compliance strategies. 2020 Review of Particulate Matter NAAQS EPA completed its most recent review of the particulate matter NAAQS in late 2012 and promulgated revisions to strengthen the standards. During the 2012 particulate matter review, congressional deliberations focused on the regulatory costs associated with implementing more stringent standards as well as the potential impacts on economic growth, employment, and consumers. Some Members of Congress also raised concerns about potential impacts that more stringent particulate matter standards may have on industry and agricultural operations. For more information about the 2012 revision and related congressional deliberations, see CRS Report R42934, Air Quality: EPA's 2013 Changes to the Particulate Matter (PM) Standard . EPA initiated the current particulate matter review in 2014. In October 2018, EPA released a draft version of its ISA for Particulate Matter to CASAC for review and public comment. The ISA, which summarizes the scientific literature published since the last NAAQS review, serves as the scientific basis for reviewing the NAAQS. The CASAC's review of the particulate matter ISA is ongoing. In April 2019, CASAC found that EPA's Draft ISA did "not provide a sufficiently comprehensive, systematic assessment of the available science relevant to understanding the health impacts of exposure to particulate matter," and recommended "substantial revisions" to the Draft ISA. As previously noted, the CASAC also recommended that EPA reconvene a particulate matter review panel. EPA's response to these recommendations is not yet available. EPA stated that it intends to complete the particulate matter NAAQS review by December 2020. Other Issues Other issues are likely to arise as EPA continues to review CAA regulations. The agency is reviewing additional regulations, among them air toxics rules applicable to power plants, brick and ceramic kilns, and industrial sources of ethylene oxide as well as NSPS rules applicable to particulate matter from wood heaters. In addition, the Renewable Fuel Standard program may be of interest to Congress, in particular Renewable Fuel Standard management, the potential impacts such management could have on the associated stakeholders, and related biofuel matters. Air Toxics Regulations The CAA directs EPA to promulgate emission standards for sources of the 187 hazardous air pollutants, informally referred as "air toxics," that are listed in Section 112(b). In general, these standards, known as National Emission Standards for Hazardous Air Pollutants (NESHAPs), require major sources to meet numeric emission limits that have been achieved in practice by the best performing similar sources. These standards are generally referred to as Maximum Achievable Control Technology (MACT) standards. EPA is to "review, and revise as necessary" the emission standards promulgated under Section 112(d) at least every eight years. The remainder of this section highlights some of the air toxic standards that have garnered interest in the 116 th Congress. Revision of Brick and Clay Standards EPA promulgated MACT standards for brick, structural clay, and ceramic clay kilns in 2015 that may garner interest in the 116 th Congress. The 2015 rulemaking established emission standards for mercury, particulate matter, acid gases, dioxins, and furans. EPA estimated the cost of the rule at $25 million annually, with monetized co-benefits three to eight times the cost. The Brick Industry Association called the proposal "a much more reasonable rule than the one EPA first envisioned several years ago," but they and others have continued to express concerns regarding the cost and achievability of the standards. Environmental groups and an association of state air pollution officials are concerned for different reasons: in their view, EPA improperly set standards under a section of the CAA that allows an alternative to the MACT requirement that generally applies to hazardous air pollutant standards. After reviewing petitions filed by industry groups and environmental groups, the D.C. Circuit in 2018 ordered EPA to revise the 2015 standards but did not vacate them. Review of Ethylene Oxide Standards EPA's most recent National Air Toxics Assessment (NATA)—published in August 2018—concluded that ethylene oxide is carcinogenic to humans and that it "significantly contributes to potential elevated cancer risks" in some areas of the country. EPA subsequently announced it is "addressing ethylene oxide" based on the NATA results. EPA has begun to review the NESHAP for miscellaneous organic chemical manufacturing ("MON"), an industrial source category that includes facilities emitting ethylene oxide. EPA is under a court order to complete the MON NESHAP review by March 2020. Additional NESHAP regulations apply to sources of ethylene oxide. EPA has stated that it will "take a closer look" at these NEHSAPs, starting with the commercial sterilizers source category." EPA reported that it anticipates proposing any necessary revisions for the commercial sterilizer NESHAP in mid-2019 and that it will publish schedules for other rules as they are determined. Regardless of the NATA findings on ethylene oxide, the CAA requires EPA to "review, and revise as necessary" the NESHAPs promulgated under CAA 112(d) at least every eight years. EPA has not met the statutory deadline for periodic reviews of various NESHAPs, including the MON NESHAP and the commercial sterilization NESHAP, which were both due in 2014. Legislative proposals introduced in the 116 th Congress would require EPA to update NESHAPs applicable to ethylene oxide. For example, S. 458 would, among other things, direct EPA to update the MON and commercial sterilization NESHAPs within 180 days. Similarly, H.R. 1152 would, among other things, require EPA to revise the MON and commercial sterilization NESHAPs within 180 days, and to base the revision on an EPA report, "Evaluation of the Inhalation Carcinogenicity of Ethylene Oxide." Mercury from Power Plants EPA is reviewing the benefit-cost analysis it prepared in 2011 for the Mercury and Air Toxics (MATS) rule, raising questions about whether the agency will take additional action on the rulemaking in 2019. Promulgated in February 2012, the MATS rule established MACT standards under Section 112 of the CAA to reduce mercury and acid gases from most existing coal- and oil-fired power plants. EPA's 2011 analysis estimated that the annual benefits of the MATS rule, including the avoidance of up to 11,000 premature deaths annually, would be between $37 billion and $90 billion. Virtually all of the avoided deaths and monetized benefits come from the rule's effect on emissions of particulates, rather than from identified effects of reducing mercury and air toxics exposure. Numerous parties petitioned the courts for review of the rule, contending in part that EPA had failed to conduct a benefit-cost analysis in its initial determination that control of air toxics from electric power plants was "appropriate and necessary." In June 2015, the Supreme Court agreed with the petitioners, remanding the rule to the D.C. Circuit for further consideration. EPA prepared a supplemental "appropriate and necessary" finding based on the agency's review of the 2012 rule's estimated costs in 2016. The 2016 supplemental finding concluded that it is appropriate and necessary to regulate air toxics, including mercury, from power plants after including a consideration of the costs. As of this writing, the MATS rule remains in effect and litigation remains on hold, at the agency's request. In late 2018, however, EPA proposed to reverse the 2016 finding that it is appropriate and necessary to regulate air toxics under Section 112 ("2018 A&N proposal"). The proposal, even when finalized, would not revoke the mercury and acid gas emissions limits established in the 2012 MATS rule. That would require a separate regulatory action, which EPA has not proposed. Some Members of Congress and various stakeholder groups have raised concerns about the 2018 A&N proposal and advised against further actions that would revoke the MATS standards. For example, a bipartisan group of U.S. Senators wrote to EPA to "strongly oppose any action that could lead to the undoing" of the 2012 MATS rule and requested the agency withdraw the 2018 A&N proposal. A group of power sector trade organizations—representing all U.S. investor-owned electric companies, over 2,000 community-owned, not-for-profit electric utilities, over 900 not-for-profit electric utilities, and others—wrote to "urge that EPA leave the underlying MATS rule in place and effective" and "take no action that would jeopardize" the industry's estimated $18 billion investment in the MATS rule. Not all stakeholders have disagreed with the 2018 A&N proposal, however. Murray Energy Corporation, which describes itself as the largest privately owned U.S. coal company, testified that "MATS should never have been adopted" and "urge[d] EPA to take the only reasonable action flowing from its repudiation of the legal basis for MATS, and rescind the [2012 MATS] rule immediately." While it is unclear whether EPA will take additional action on the MATS standards, the 2018 A&N proposal reveals changes in EPA's interpretation of the CAA and use of benefit-cost analysis. EPA's analysis for the 2018 A&N proposal excludes co-benefits—the human health benefits from reductions in pollutants not targeted by MATS—from its consideration of whether MATS is "appropriate and necessary" under CAA Section 112(n). With this exclusion, the 2018 analysis finds that monetized costs outweigh monetized benefit estimates by several orders of magnitude. (For additional discussion, see CRS In Focus IF11078, EPA Reconsiders Basis for Mercury and Air Toxics Standards , by Kate C. Shouse.) New Source Performance Standards for Wood Heaters In 2015, EPA published final emission standards for new residential wood heaters, including wood stoves, pellet stoves, hydronic heaters, and forced air furnaces. The 2015 wood heater regulations generated a substantial amount of interest, particularly in areas where wood is used as a heating fuel. House and Senate hearings in the 115 th Congress highlighted concerns about inadequate time to demonstrate compliance with emission standards by the 2020 deadline. Others have expressed concerns about the air quality impacts of delaying the 2020 deadline. On March 7, 2018, the House passed H.R. 1917 , which would have delayed implementation of the standards for three years. More recently, EPA proposed to add a two-year "sell-through" period for new hydronic heaters and forced-air furnaces. Specifically, EPA's proposal would allow all affected new hydronic heaters and forced-air furnaces that are manufactured or imported before the May 2020 deadline to be sold at retail through May 2022. In addition, EPA published an advance notice of proposed rulemaking (ANPR) in late 2018 on new residential wood heaters, new residential hydronic heaters, and new residential air furnaces. The 2018 ANPR does not propose specific changes to the standards, but it requests comments on various regulatory issues "in order to inform future rulemaking to improve these standards and related test methods." Citing stakeholder feedback about ways to improve implementation of the 2015 NSPS, EPA requested comment on 10 topics, including the cost and feasibility of meeting the emission limits that become effective in 2020, the timing of the 2020 compliance date, and test methods used for certification. (For additional information on the wood heater rule, see CRS Report R43489, EPA's Wood Stove / Wood Heater Regulations: Frequently Asked Questions , by James E. McCarthy and Kate C. Shouse.) Renewable Fuel Standard The Renewable Fuel Standard (RFS) is a mandate that requires U.S. transportation fuel to contain a minimum volume of renewable fuel. The RFS is an amendment of the CAA, having been established by the Energy Policy Act of 2005 ( P.L. 109-58 ; EPAct05) and expanded in 2007 by the Energy Independence and Security Act ( P.L. 110-140 ; EISA). It is a volume mandate that increases annually, starting with 4 billion gallons in 2006 and ascending to 36 billion gallons in 2022, with the EPA determining the volume amounts post-2022. Renewable fuels that may be applied toward the mandate include transportation fuel, jet fuel, and heating oil. To be eligible as a renewable fuel under the RFS, fuels must meet certain environmental and biomass feedstock criteria. Thus far, the predominant fuel used to meet the mandate has been corn starch ethanol. At issue for Congress are RFS management, the potential impacts such management could have on the associated stakeholders, and related biofuel matters. The topics of interest include small refinery exemptions under the RFS, the year-round sale of E15, RFS compliance and compliance costs, the RFS "reset," and approval of advanced biofuel pathways for the RFS (e.g., renewable electricity). The associated stakeholders include renewable fuel producers, agricultural producers, the petroleum industry, and environmental organizations, among others. One legislative proposal specific to the RFS has been introduced in the 116 th Congress— H.R. 104 , the Leave Ethanol Volumes at Existing Levels Act or LEVEL Act—which would decrease the amount of biofuel that must be contained in gasoline and would eliminate the advanced biofuel portion of the mandate. Other legislation was introduced in the 115 th Congress and may be reintroduced in the 116 th Congress. (For further information, contact Kelsi Bracmort, Specialist in Natural Resources and Energy Policy, and see CRS Report R43325, The Renewable Fuel Standard (RFS): An Overview , by Kelsi Bracmort.)

Review and rollback of Clean Air Act rules to regulate greenhouse gas (GHG) emissions from power plants, cars and trucks, and the oil and gas sector has been a major focus of the Trump Administration since it took office in 2017. On March 28, 2017, President Trump signed Executive Order 13783, to require the review of regulations and policies that "burden the development or use of domestically produced energy resources." The E.O. directed the U.S. Environmental Protection Agency (EPA) to review the Clean Power Plan (CPP), which set limits on GHG emissions from existing power plants, and several other regulations for consistency with policies that the E.O. enumerates, and as soon as practicable, to "suspend, revise, or rescind the guidance, or publish for notice and comment proposed rules suspending, revising, or rescinding those rules." GHG rules for new power plants, for cars and trucks, and for methane emissions from the oil and gas industry, in addition to the CPP, are subject to the executive order and are under review at EPA, as well as being challenged in the courts. The CPP, which was promulgated by the Obama Administration's EPA in 2015 and would limit GHG emissions from existing fossil-fueled power plants, has been one focus of debate. The Trump Administration's EPA has proposed to repeal the CPP and replace it with the Affordable Clean Energy rule (ACE), a rule that defines the "best system of emission reduction" for coal-fired power plant GHGs as efficiency improvement technologies. As proposed, the CPP repeal and ACE rules would remove federal numerical carbon dioxide (CO2) emission limits for existing coal- and natural gas-fired power plants, eliminating one backstop on power plant GHG emissions. Final agency action on ACE is expected later this year. Some Members of Congress have submitted comments to EPA on the ACE proposal. Congress may be interested in conducting oversight of the ACE rule. Clean Air Act GHG standards for cars and light trucks are the subject of another EPA review. An August 2018 proposal would freeze EPA's GHG standards for new cars and light trucks at the level required in model year (MY) 2020. Current regulations, promulgated in 2012 and reaffirmed in January 2017, set increasingly stringent emission standards through MY2025. The EPA proposal would cause a projected increase in vehicle fuel consumption of about a half million barrels of gasoline per day (equivalent to about 186,000 metric tons of carbon dioxide per day) when fully implemented, according to EPA and the Department of Transportation. The proposal would also withdraw California's Clean Air Act waiver for new vehicle GHG standards applicable to MY2021-MY2025. The California standards have been adopted by 12 other states and cover about 35% of the new vehicle market. Following promulgation of these or other Clean Air Act regulations, Congress could address the issues through legislation affirming, modifying, or overturning them. The threat of a filibuster, requiring 60 votes to proceed, however, has generally prevented Senate action. In the 116th Congress, the new majority in the House has indicated a greater interest in addressing climate change issues rather than rolling back regulations. One result may be a new focus on oversight of agency actions to address climate change and its impacts. The 116th Congress may also be interested in issues related to EPA air quality standards for what are called "conventional" or "criteria" pollutants. EPA faces statutory deadlines to complete reviews of the National Ambient Air Quality Standards (NAAQS) for the two most widespread of this group: ozone and particulate matter (PM). The agency has proposed to speed up the review process, while simultaneously eliminating the scientific review panels that have historically assisted agency staff in conducting the reviews. The Clean Air Act has minimal requirements for how the agency is to conduct NAAQS reviews, leaving the details to the EPA Administrator. Nevertheless, congressional oversight is considered possible as EPA moves forward with the ozone and PM reviews. Other issues Congress might consider include air toxics regulations (e.g., the Mercury and Air Toxics rule for power plants), standards for new residential wood heaters, and the Renewable Fuel Standard.

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Introduction Focus of Report This report provides background information and issues for Congress regarding China's actions in the South China Sea (SCS) and East China Sea (ECS), with a focus on implications for U.S. strategic and policy interests. Other CRS reports focus on other aspects of maritime territorial disputes involving China. Issue for Congress The issue for Congress is how the United States should respond to China's actions in the SCS and ECS—particularly China's island-building and base-construction activities in the Spratly Islands in the SCS—and to China's strengthening position in the SCS. A key oversight question for Congress is whether the Trump Administration has an appropriate strategy—and an appropriate amount of resources for implementing that strategy—for countering China's "salami-slicing" strategy or gray zone operations for gradually strengthening its position in the SCS, for imposing costs on China for its actions in the SCS and ECS, and for defending and promoting U.S. interests in the region. Decisions that Congress makes on these issues could substantially affect U.S. strategic, political, and economic interests in the Indo-Pacific region and elsewhere. Terminology Used in This Report In this report, the term China's near-seas region refers to the SCS, ECS, and Yellow Sea. The term first island chain refers to a string of islands, including Japan and the Philippines, that encloses China's near-seas region. The term second island chain , which reaches out to Guam, refers to a line that can be drawn that encloses both China's near-seas region and the Philippine Sea between the Philippines and Guam. The term exclusive economic zone ( EEZ ) dispute is used in this report to refer to a dispute principally between China and the United States over whether coastal states have a right under international law to regulate the activities of foreign military forces operating in their EEZs. Background U.S. Interests in SCS and ECS Although maritime territorial disputes in the SCS and ECS involving China and its neighbors may appear at first glance to be disputes between faraway countries over a few rocks and reefs in the ocean that are of seemingly little importance to the United States, the situation in the SCS and ECS can engage U.S. interests for a variety of strategic, political, and economic reasons, including but not necessarily limited to those discussed in the sections below. U.S. Regional Allies and Partners, and U.S. Regional Security Architecture The SCS, ECS, and Yellow Sea border three U.S. treaty allies—Japan, South Korea, and the Philippines. In addition, the SCS and ECS (including the Taiwan Strait) surround Taiwan, regarding which the United States has certain security-related policies under the Taiwan Relations Act ( H.R. 2479 / P.L. 96-8 of April 10, 1979), and the SCS borders Southeast Asian nations that are current, emerging, or potential U.S. partner countries, such as Singapore, Vietnam, and Indonesia. In a conflict with the United States, Chinese bases in the SCS and forces operating from them would add to a regional network of Chinese anti-access/area-denial (A2/AD) forces intended to keep U.S. military forces outside the first island chain (and thus away from China's mainland). Among other things, Chinese bases in the SCS and forces operating from them could help create a bastion (i.e., a defended operating sanctuary) in the SCS for China's emerging sea-based strategic deterrent force of nuclear-powered ballistic missile submarines (SSBNs). In a conflict with the United States, Chinese bases in the SCS and forces operating from them would be vulnerable to U.S. attack. Attacking the bases and the forces operating from them, however, would tie down the attacking U.S. forces for a time at least, delaying the use of those U.S. forces elsewhere in a larger conflict, and potentially delay the advance of U.S. forces into the SCS. Short of a conflict with the United States, Chinese bases in the SCS, and more generally, Chinese domination over or control of its near-seas region could help China to do one or more of the following on a day-to-day basis: control fishing operations and oil and gas exploration activities in the SCS; coerce, intimidate, or put political pressure on other countries bordering on the SCS; announce and enforce an air defense identification zone (ADIZ) over the SCS; announce and enforce a maritime exclusion zone (i.e., a blockade) around Taiwan; facilitate the projection of Chinese military presence and political influence further into the Western Pacific; and help achieve a broader goal of becoming a regional hegemon in its part of Eurasia. In light of some of the preceding points, Chinese bases in the SCS, and more generally, Chinese domination over or control of its near-seas region could complicate the ability of the United States to intervene militarily in a crisis or conflict between China and Taiwan; fulfill U.S. obligations under U.S defense treaties with Japan and the Philippines and South Korea; operate U.S. forces in the Western Pacific for various purposes, including maintaining regional stability, conducting engagement and partnership-building operations, responding to crises, and executing war plans; and prevent the emergence of China as a regional hegemon in its part of Eurasia. A reduced U.S. ability to do one or more of the above could encourage countries in the region to reexamine their own defense programs and foreign policies, potentially leading to a further change in the region's security architecture. Some observers believe that China is trying to use disputes in the SCS and ECS to raise doubts among U.S. allies and partners in the region about the dependability of the United States as an ally or partner, or to otherwise drive a wedge between the United States and its regional allies and partners, so as to weaken the U.S.-led regional security architecture and thereby facilitate greater Chinese influence over the region. Some observers remain concerned that maritime territorial disputes in the ECS and SCS could lead to a crisis or conflict between China and a neighboring country such as Japan or the Philippines, and that the United States could be drawn into such a crisis or conflict as a result of obligations the United States has under bilateral security treaties with Japan and the Philippines. Most recently, those concerns have focused more on the possibility of a crisis or conflict between China and Japan over the Senkaku Islands. Principle of Nonuse of Force or Coercion A key element of the U.S.-led international order that has operated since World War II is the principle that force or coercion should not be used as a means of settling disputes between countries, and certainly not as a routine or first-resort method. Some observers are concerned that China's actions in SCS and ECS challenge this principle and—along with Russia's actions in Crimea and eastern Ukraine—could help reestablish the very different principle of "might makes right" (i.e., the law of the jungle) as a routine or defining characteristic of international relations. Principle of Freedom of the Seas Another key element of the U.S.-led international order that has operated since World War II is the treatment of the world's seas under international law as international waters (i.e., as a global commons), and the principle of freedom of operations in international waters. The principle of freedom of operations in international waters is often referred to in shorthand as freedom of the seas. It is also sometimes referred to as freedom of navigation, although this term can be defined—particularly by parties who might not support freedom of the seas—in a narrow fashion, to include merely the freedom for commercial ships to navigate (i.e., pass through) sea areas, as opposed to the freedom for both commercial and naval ships to conduct various activities at sea. A more complete way to refer to the principle of freedom of the seas, as stated in the Department of Defense's (DOD's) annual Freedom of Navigation (FON) report, is "all of the rights, freedoms, and lawful uses of the sea and airspace, including for military ships and aircraft, guaranteed to all nations under international law." The principle of freedom of the seas dates back hundreds of years. Some observers are concerned that China's actions in the SCS appear to challenge the principle that the world's seas are to be treated under international law as international waters. If such a challenge were to gain acceptance in the SCS region, it would have broad implications for the United States and other countries not only in the SCS, but around the world, because international law is universal in application, and a challenge to a principle of international law in one part of the world, if accepted, could serve as a precedent for challenging it in other parts of the world. Overturning the principle of freedom of the seas, so that significant portions of the seas could be appropriated as national territory, would overthrow hundreds of years of international legal tradition relating to the legal status of the world's oceans and significantly change the international legal regime governing sovereignty over much of the surface of the world. Some observers are concerned that if China's position that coastal states have a right under international law to regulate the activities of foreign military forces in their EEZs were to gain greater international acceptance under international law, it could substantially affect U.S. naval operations not only in the SCS and ECS, but around the world, which in turn could substantially affect the ability of the United States to use its military forces to defend various U.S. interests overseas. Significant portions of the world's oceans are claimable as EEZs, including high-priority U.S. Navy operating areas in the Western Pacific, the Persian Gulf, and the Mediterranean Sea. The legal right of U.S. naval forces to operate freely in EEZ waters—an application of the principle of freedom of the seas—is important to their ability to perform many of their missions around the world, because many of those missions are aimed at influencing events ashore, and having to conduct operations from more than 200 miles offshore would reduce the inland reach and responsiveness of ship-based sensors, aircraft, and missiles, and make it more difficult to transport Marines and their equipment from ship to shore. Restrictions on the ability of U.S. naval forces to operate in EEZ waters could potentially require changes (possibly very significant ones) in U.S. military strategy or U.S. foreign policy goals. Trade Routes and Hydrocarbons Major commercial shipping routes pass through the SCS, which links the Western Pacific to the Indian Ocean and the Persian Gulf. An estimated $3.4 trillion worth of international shipping trade passes through the SCS each year. DOD states that "the South China Sea plays an important role in security considerations across East Asia because Northeast Asia relies heavily on the flow of oil and commerce through South China Sea shipping lanes, including more than 80 percent of the crude oil [flowing] to Japan, South Korea, and Taiwan." In addition, the ECS and SCS contain potentially significant oil and gas exploration areas. Exploration activities there could potentially involve U.S. firms. The results of exploration activities there could eventually affect world oil prices. Interpreting China's Rise as a Major World Power As China continues to emerge as a major world power, observers are assessing what kind of international actor China will ultimately be. China's actions in the SCS and ECS could influence assessments that observers might make on issues such as China's approach to settling disputes between states (including whether China views force and coercion as acceptable means for settling such disputes, and consequently whether China believes that "might makes right"), China's views toward the meaning and application of international law, and whether China views itself more as a stakeholder and defender of the current international order, or alternatively, more as a revisionist power that will seek to change elements of that order that it does not like. U.S.-China Relations in General Developments in the SCS and ECS could affect U.S.-China relations in general, which could have implications for other issues in U.S.-China relations. Overview of Maritime Disputes in SCS and ECS Maritime Territorial Disputes China is a party to multiple maritime territorial disputes in the SCS and ECS, including in particular the following (see Figure 1 for locations of the island groups listed below): a dispute over the Paracel Islands in the SCS, which are claimed by China and Vietnam, and occupied by China; a dispute over the Spratly Islands in the SCS, which are claimed entirely by China, Taiwan, and Vietnam, and in part by the Philippines, Malaysia, and Brunei, and which are occupied in part by all these countries except Brunei; a dispute over Scarborough Shoal in the SCS, which is claimed by China, Taiwan, and the Philippines, and controlled since 2012 by China; and a dispute over the Senkaku Islands in the ECS, which are claimed by China, Taiwan, and Japan, and administered by Japan. The island and shoal names used above are the ones commonly used in the United States; in other countries, these islands are known by various other names. These island groups are not the only land features in the SCS and ECS—the two seas feature other islands, rocks, and shoals, as well as some near-surface submerged features. The territorial status of some of these other features is also in dispute. There are additional maritime territorial disputes in the Western Pacific that do not involve China. Maritime territorial disputes in the SCS and ECS date back many years, and have periodically led to diplomatic tensions as well as confrontations and incidents at sea involving fishing vessels, oil exploration vessels and oil rigs, coast guard ships, naval ships, and military aircraft. Dispute Regarding China's Rights within Its EEZ, and Associated U.S.-Chinese Incidents at Sea In addition to maritime territorial disputes in the SCS and ECS, China is involved in a dispute, principally with the United States, over whether China has a right under international law to regulate the activities of foreign military forces operating within China's EEZ. The position of the United States and most other countries is that while the United Nations Convention on the Law of the Sea (UNCLOS), which established EEZs as a feature of international law, gives coastal states the right to regulate economic activities (such as fishing and oil exploration) within their EEZs, it does not give coastal states the right to regulate foreign military activities in the parts of their EEZs beyond their 12-nautical-mile territorial waters. The position of China and some other countries (i.e., a minority group among the world's nations) is that UNCLOS gives coastal states the right to regulate not only economic activities, but also foreign military activities, in their EEZs. In response to a request from CRS to identify the countries taking this latter position, the U.S. Navy states that countries with restrictions inconsistent with the Law of the Sea Convention [i.e., UNCLOS] that would limit the exercise of high seas freedoms by foreign navies beyond 12 nautical miles from the coast are [the following 27]: Bangladesh, Brazil, Burma, Cambodia, Cape Verde, China, Egypt, Haiti, India, Iran, Kenya, Malaysia, Maldives, Mauritius, North Korea, Pakistan, Portugal, Saudi Arabia, Somalia, Sri Lanka, Sudan, Syria, Thailand, United Arab Emirates, Uruguay, Venezuela, and Vietnam. Other observers provide different counts of the number of countries that take the position that UNCLOS gives coastal states the right to regulate not only economic activities but also foreign military activities in their EEZs. For example, one set of observers, in an August 2013 briefing, stated that 18 countries seek to regulate foreign military activities in their EEZs, and that 3 of these countries—China, North Korea, and Peru—have directly interfered with foreign military activities in their EEZs. The dispute over whether China has a right under UNCLOS to regulate the activities of foreign military forces operating within its EEZ appears to be at the heart of incidents between Chinese and U.S. ships and aircraft in international waters and airspace, including incidents in March 2001, September 2002, March 2009, and May 2009, in which Chinese ships and aircraft confronted and harassed the U.S. naval ships Bowditch , Impeccable , and Victorious as they were conducting survey and ocean surveillance operations in China's EEZ; an incident on April 1, 2001, in which a Chinese fighter collided with a U.S. Navy EP-3 electronic surveillance aircraft flying in international airspace about 65 miles southeast of China's Hainan Island in the South China Sea, forcing the EP-3 to make an emergency landing on Hainan Island; an incident on December 5, 2013, in which a Chinese navy ship put itself in the path of the U.S. Navy cruiser Cowpens as it was operating 30 or more miles from China's aircraft carrier Liaoning , forcing the Cowpens to change course to avoid a collision; an incident on August 19, 2014, in which a Chinese fighter conducted an aggressive and risky intercept of a U.S. Navy P-8 maritime patrol aircraft that was flying in international airspace about 135 miles east of Hainan Island —DOD characterized the intercept as "very, very close, very dangerous"; and an incident on May 17, 2016, in which Chinese fighters flew within 50 feet of a Navy EP-3 electronic surveillance aircraft in international airspace in the South China Sea—a maneuver that DOD characterized as "unsafe." Figure 2 shows the locations of the 2001, 2002, and 2009 incidents listed in the first two bullets above. The incidents shown in Figure 2 are the ones most commonly cited prior to the December 2013 involving the Cowpens , but some observers list additional incidents as well. DOD stated in 2015 that The growing efforts of claimant States to assert their claims has led to an increase in air and maritime incidents in recent years, including an unprecedented rise in unsafe activity by China's maritime agencies in the East and South China Seas. U.S. military aircraft and vessels often have been targets of this unsafe and unprofessional behavior, which threatens the U.S. objectives of safeguarding the freedom of the seas and promoting adherence to international law and standards. China's expansive interpretation of jurisdictional authority beyond territorial seas and airspace causes friction with U.S. forces and treaty allies operating in international waters and airspace in the region and raises the risk of inadvertent crisis. There have been a number of troubling incidents in recent years. For example, in August 2014, a Chinese J-11 fighter crossed directly under a U.S. P-8A Poseidon operating in the South China Sea approximately 117 nautical miles east of Hainan Island. The fighter also performed a barrel roll over the aircraft and passed the nose of the P-8A to show its weapons load-out, further increasing the potential for a collision. However, since August 2014, U.S.-China military diplomacy has yielded positive results, including a reduction in unsafe intercepts. We also have seen the PLAN implement agreed-upon international standards for encounters at sea, such as the Code for Unplanned Encounters at Sea (CUES), which was signed in April 2014. A recent incident in the SCS occurred on September 30, 2018, between the U.S. Navy destroyer Decatur (DDG-73) and a Chinese destroyer, as the Decatur was conducting a freedom of navigation (FON) operation near Gaven Reef in the Spratly Islands. In the incident, the Chinese destroyer overtook the U.S. destroyer close by on the U.S. destroyer's port (i.e., left) side, requiring the U.S. destroyer to turn starboard (i.e., to the right) to avoid the Chinese ship. U.S. officials stated that at the point of closest approach between the two ships, the stern (i.e., back end) of the Chinese ship came within 45 yards (135 feet) of the bow (i.e., front end) of the Decatur . As the encounter was in progress, the Chinese ship issued a warning by radio stating, "If you don't change course your [sic] will suffer consequences." One observer, commenting on the incident, stated, "To my knowledge, this is the first time we've had a direct threat to an American warship with that kind of language." U.S. officials characterized the actions of the Chinese ship in the incident as "unsafe and unprofessional." A November 3, 2018, press report states the following: The US Navy has had 18 unsafe or unprofessional encounters with Chinese military forces in the Pacific since 2016, according to US military statistics obtained by CNN. "We have found records of 19 unsafe and/or unprofessional interactions with China and Russia since 2016 (18 with China and one with Russia)," Cmdr. Nate Christensen, a spokesman for the US Pacific Fleet, told CNN. A US official familiar with the statistics told CNN that 2017, the first year of the Trump administration, saw the most unsafe and or unprofessional encounters with Chinese forces during the period. At least three of those incidents took place in February, May and July of that year and involved Chinese fighter jets making what the US considered to be "unsafe" intercepts of Navy surveillance planes. While the 18 recorded incidents only involved US naval forces, the Air Force has also had at least one such encounter during this period…. The US Navy told CNN that, in comparison, there were 50 unsafe or unprofessional encounters with Iranian military forces since 2016, with 36 that year, 14 last year and none in 2018. US and Iranian naval forces tend to operate in relatively narrow stretches of water, such as the Strait of Hormuz, increasing their frequency of close contact. DOD states that Although China has long challenged foreign military activities in its maritime zones in a manner that is inconsistent with the rules of customary international law as reflected in the LOSC, the PLA has recently started conducting the very same types of military activities inside and outside the first island chain in the maritime zones of other countries. This contradiction highlights China's continued lack of commitment to the rules of customary international law. Even though China is a state party to the LOSC [i.e., UNCLOS], China's domestic laws restrict military activities in its exclusive economic zone (EEZ), including intelligence collection and military surveys, contrary to LOSC. At the same time, the PLA is increasingly undertaking military operations in other countries' EEZs. The map on the following page [not reproduced here] depicts new PLA operating areas in foreign EEZs since 2014. In 2017, the PLAN conducted air and naval operations in Japan's EEZ; employed an AGI [intelligence-gathering ship] ship, likely to monitor testing of a THAAD system in the U.S. EEZ near the Aleutian Islands; and employed an AGI ship to monitor a multi-national naval exercise in Australia's EEZ. PLA operations in foreign EEZs have taken place in Northeast and Southeast Asia, and a growing number of operations are also occurring farther from Chinese shores. Relationship of Maritime Territorial Disputes to EEZ Dispute The issue of whether China has the right under UNCLOS to regulate foreign military activities in its EEZ is related to, but ultimately separate from, the issue of territorial disputes in the SCS and ECS: The two issues are related because China can claim EEZs from inhabitable islands over which it has sovereignty, so accepting China's claims to sovereignty over inhabitable islands in the SCS or ECS could permit China to expand the EEZ zone within which China claims a right to regulate foreign military activities. The two issues are ultimately separate from one another because even if all the territorial disputes in the SCS and ECS were resolved, and none of China's claims in the SCS and ECS were accepted, China could continue to apply its concept of its EEZ rights to the EEZ that it unequivocally derives from its mainland coast—and it is in this unequivocal Chinese EEZ that several of the past U.S.-Chinese incidents at sea have occurred. Press reports of maritime disputes in the SCS and ECS sometimes focus on territorial disputes while devoting little or no attention to the EEZ dispute, or do relatively little to distinguish the EEZ dispute from the territorial disputes. From the U.S. perspective, the EEZ dispute is arguably as significant as the maritime territorial disputes because of the EEZ dispute's proven history of leading to U.S.-Chinese incidents at sea and because of its potential for affecting U.S. military operations not only in the SCS and ECS, but around the world. For background information on treaties and international agreements related to the disputes, see Appendix C . For background information on the July 2016 tribunal award in the SCS arbitration case involving the Philippines and China concerning maritime territorial issues in the SCS, see Appendix D . China's Approach to the SCS and ECS In General In general, China's approach to the maritime disputes in the SCS and ECS, and to strengthening its position over time in the SCS, can be characterized as follows: China appears to have identified the assertion and defense of its maritime territorial claims in the SCS and ECS, and the strengthening of its position in the SCS, as important national goals. To achieve these goals, China appears to be employing an integrated, whole-of-society strategy that includes diplomatic, informational, economic, military, paramilitary/law enforcement, and civilian elements. In implementing this integrated strategy, China appears to be persistent, patient, tactically flexible, willing to expend significant resources, and willing to absorb at least some amount of reputational and other costs that other countries might seek to impose on China in response to China's actions. "Salami-Slicing" Strategy and Gray Zone Operations Observers frequently characterize China's approach to the SCS and ECS as a "salami-slicing" strategy that employs a series of incremental actions, none of which by itself is a casus belli , to gradually change the status quo in China's favor. At least one Chinese official has used the term "cabbage strategy" to refer to a strategy of consolidating control over disputed islands by wrapping those islands, like the concentric leaves of a cabbage, in successive layers of occupation and protection formed by fishing boats, Chinese Coast Guard ships, and then finally Chinese naval ships. Other observers have referred to China's approach as a strategy of gray zone operations (i.e., operations that reside in a gray zone between peace and war), of creeping annexation or creeping invasion, or as a "talk and take" strategy, meaning a strategy in which China engages in (or draws out) negotiations while taking actions to gain control of contested areas. Island Building and Base Construction Perhaps more than any other set of actions, China's island-building (aka land-reclamation) and base-construction activities at sites that it occupies in the Paracel Islands and Spratly Islands in the SCS have heightened concerns among U.S. observers that China is rapidly gaining effective control of the SCS. China's island-building and base-construction activities in the SCS appear to have begun around December 2013, and were publicly reported starting in May 2014. Awareness of, and concern about, the activities appears to have increased substantially following the posting of a February 2015 article showing a series of "before and after" satellite photographs of islands and reefs being changed by the work. China occupies seven sites in the Spratly Islands. It has engaged in island-building and facilities-construction activities at most or all of these sites, and particularly at three of them—Fiery Cross Reef, Subi Reef, and Mischief Reef, all of which now feature lengthy airfields as well as substantial numbers of buildings. Although other countries, such as Vietnam, have engaged in their own island-building and facilities-construction activities at sites that they occupy in the SCS, these efforts are dwarfed in size by China's island-building and base-construction activities in the SCS. DOD stated in 2017 that In 2016, China focused its main effort on infrastructure construction at its outposts on the Spratly Islands. Although its land reclamation and artificial islands do not strengthen China's territorial claims as a legal matter or create any new territorial sea entitlements, China will be able to use its reclaimed features as persistent civil-military bases to enhance its presence in the South China Sea and improve China's ability to control the features and nearby maritime space. China reached milestones of landing civilian aircraft on its airfields on Fiery Cross Reef, Subi Reef, and Mischief Reef for the first time in 2016, as well as landing a military transport aircraft on Fiery Cross Reef to evacuate injured personnel.... China's Spratly Islands outpost expansion effort is currently focused on building out the land-based capabilities of its three largest outposts—Fiery Cross, Subi, and Mischief Reefs—after completion of its four smaller outposts early in 2016. No substantial land has been reclaimed at any of the outposts since China ended its artificial island creation in the Spratly Islands in late 2015 after adding over 3,200 acres of land to the seven features it occupies in the Spratlys. Major construction features at the largest outposts include new airfields—all with runways at least 8,800 feet in length—large port facilities, and water and fuel storage. As of late 2016, China was constructing 24 fighter-sized hangars, fixed-weapons positions, barracks, administration buildings, and communication facilities at each of the three outposts. Once all these facilities are complete, China will have the capacity to house up to three regiments of fighters in the Spratly Islands. China has completed shore-based infrastructure on its four smallest outposts in the Spratly Islands: Johnson, Gaven, Hughes, and Cuarteron Reefs. Since early 2016, China has installed fixed, land-based naval guns on each outpost and improved communications infrastructure. The Chinese Government has stated that these projects are mainly for improving the living and working conditions of those stationed on the outposts, safety of navigation, and research; however, most analysts outside China believe that the Chinese Government is attempting to bolster its de facto control by improving its military and civilian infrastructure in the South China Sea. The airfields, berthing areas, and resupply facilities on its Spratly outposts will allow China to maintain a more flexible and persistent coast guard and military presence in the area. This would improve China's ability to detect and challenge activities by rival claimants or third parties, widen the range of capabilities available to China, and reduce the time required to deploy them.... China's construction in the Spratly Islands demonstrates China's capacity—and a newfound willingness to exercise that capacity—to strengthen China's control over disputed areas, enhance China's presence, and challenge other claimants.... In 2016, China built reinforced hangars on several of its Spratly Island outposts in the South China Sea. These hangars could support up to 24 fighters or any other type of PLA aircraft participating in force projection operations. In April, May, and June 2018, it was reported that China has landed aircraft and moved electronic jamming equipment, surface-to-air missiles, and anti-ship missile systems to its newly built facilities in the SCS. In July 2018, it was reported that "China is quietly testing electronic warfare assets recently installed at fortified outposts in the South China Sea…." Also in July 2018, Chinese state media announced that a Chinese search and rescue ship had been stationed at Subi Reef—the first time that such a ship had been permanently stationed by China at one of its occupied sites in the Spratly Islands. For additional discussion of China's island-building and facility-construction activities, see CRS Report R44072, Chinese Land Reclamation in the South China Sea: Implications and Policy Options , by Ben Dolven et al. Other Chinese Actions That Have Heightened Concerns In addition to the island-building and base-construction activities discussed above, additional Chinese actions in the SCS and ECS have heightened concerns among U.S. observers. Following a confrontation in 2012 between Chinese and Philippine ships at Scarborough Shoal, China gained de facto control over access to the shoal and its fishing grounds. Subsequent Chinese actions that have heightened concerns among U.S. observers, particularly since late 2013, include the following, among others: China's announcement on November 23, 2013, of an air defense identification zone (ADIZ) over the ECS that includes airspace over the Senkaku Islands; frequent patrols by Chinese Coast Guard ships—some observers refer to them as harassment operations—at the Senkaku Islands; Chinese pressure against the small Philippine military presence at Second Thomas Shoal in the Spratly Islands, where a handful of Philippine military personnel occupy a beached (and now derelict) Philippine navy amphibious ship; the implementation on January 1, 2014, of fishing regulations administered by China's Hainan province applicable to waters constituting more than half of the SCS, and the reported enforcement of those regulations with actions that have included the apprehension of non-Chinese fishing boats; and a growing civilian Chinese presence on some of the sites in the SCS occupied by China in the SCS, including both Chinese vacationers and (in the Paracels) permanent settlements. Use of Coast Guard Ships and Maritime Militia China asserts and defends its maritime claims not only with navy ships, but also with coast guard cutters and maritime militia vessels. Indeed, China employs its coast guard and maritime militia more regularly and extensively than its navy in its maritime sovereignty-assertion operations. DOD states that China's navy, coast guard, and maritime militia together "form the largest maritime force in the Indo-Pacific." Coast Guard Ships DOD states that the China Coast Guard (CCG) is the world's largest coast guard. It is much larger than the coast guard of any country in the region, and it has increased substantially in size in recent years through the addition of many newly built ships. China makes regular use of CCG ships to assert and defend its maritime claims, particularly in the ECS, with Chinese navy ships sometimes available over the horizon as backup forces. The Defense Intelligence Agency (DIA) states the following: Under Chinese law, maritime sovereignty is a domestic law enforcement issue under the purview of the CCG. Beijing also prefers to use CCG ships for assertive actions in disputed waters to reduce the risk of escalation and to portray itself more benignly to an international audience. For situations that Beijing perceives carry a heightened risk of escalation, it often deploys PLAN combatants in close proximity for rapid intervention if necessary. China also relies on the PAFMM—a paramilitary force of fishing boats—for sovereignty enforcement actions…. China primarily uses civilian maritime law enforcement agencies in maritime disputes, employing the PLAN [i.e., China's navy] in a protective capacity in case of escalation. The CCG has rapidly increased and modernized its forces, improving China's ability to enforce its maritime claims. Since 2010, the CCG's large patrol ship fleet (more than 1,000 tons) has more than doubled in size from about 60 to more than 130 ships, making it by far the largest coast guard force in the world and increasing its capacity to conduct extended offshore operations in a number of disputed areas simultaneously. Furthermore, the newer ships are substantially larger and more capable than the older ships, and the majority are equipped with helicopter facilities, high-capacity water cannons, and guns ranging from 30-mm to 76-mm. Among these ships, a number are capable of long-distance, long-endurance out-of-area operations. In addition, the CCG operates more than 70 fast patrol combatants ([each displacing] more than 500 tons), which can be used for limited offshore operations, and more than 400 coastal patrol craft (as well as about 1,000 inshore and riverine patrol boats). By the end of the decade, the CCG is expected to add up to 30 patrol ships and patrol combatants before the construction program levels off. In March 2018, China announced that control of the CCG would be transferred from the civilian State Oceanic Administration to the Central Military Commission. The transfer occurred on July 1, 2018. On May 22, 2018, it was reported that China's navy and the CCG had conducted their first joint patrols in disputed waters off the Paracel Islands in the SCS, and had expelled at least 10 foreign fishing vessels from those waters. Maritime Militia China also uses the People's Armed Forces Maritime Militia (PAFMM)—a force that essentially consists of fishing ships with armed crew members—to defend its maritime claims. In the view of some observers, the PAFMM—even more than China's navy or coast guard—is the leading component of China's maritime forces for asserting its maritime claims, particularly in the SCS. U.S. analysts in recent years have paid increasing attention to the role of the PAFMM as a key tool for implementing China's salami-slicing strategy, and have urged U.S. policymakers to focus on the capabilities and actions of the PAFMM. DOD states that "the PAFMM is the only government-sanctioned maritime militia in the world," and that it "has organizational ties to, and is sometimes directed by, China's armed forces." DIA states that The PAFMM is a subset of China's national militia, an armed reserve force of civilians available for mobilization to perform basic support duties. Militia units organize around towns, villages, urban subdistricts, and enterprises, and they vary widely from one location to another. The composition and mission of each unit reflects local conditions and personnel skills. In the South China Sea, the PAFMM plays a major role in coercive activities to achieve China's political goals without fighting, part of broader Chinese military doctrine that states that confrontational operations short of war can be an effective means of accomplishing political objectives. A large number of PAFMM vessels train with and support the PLA and CCG in tasks such as safeguarding maritime claims, protecting fisheries, and providing logistic support, search and rescue (SAR), and surveillance and reconnaissance. The Chinese government subsidizes local and provincial commercial organizations to operate militia ships to perform "official" missions on an ad hoc basis outside their regular commercial roles. The PAFMM has played a noteworthy role in a number of military campaigns and coercive incidents over the years, including the harassment of Vietnamese survey ships in 2011, a standoff with the Philippines at Scarborough Reef in 2012, and a standoff involving a Chinese oil rig in 2014. In the past, the PAFMM rented fishing boats from companies or individual fisherman, but it appears that China is building a state-owned fishing fleet for its maritime militia force in the South China Sea. Hainan Province, adjacent to the South China Sea, ordered the construction of 84 large militia fishing boats with reinforced hulls and ammunition storage for Sansha City, and the militia took delivery by the end of 2016. Apparent Narrow Definition of "Freedom of Navigation" China regularly states that it supports freedom of navigation and has not interfered with freedom of navigation. China, however, appears to hold a narrow definition of freedom of navigation that is centered on the ability of commercial cargo ships to pass through international waters. In contrast to the broader U.S./Western definition of freedom of navigation (aka freedom of the seas), the Chinese definition does not appear to include operations conducted by military ships and aircraft. It can also be noted that China has frequently interfered with commercial fishing operations by non-Chinese fishing vessels—something that some observers would regard as a form of interfering with freedom of navigation for commercial ships. An August 12, 2015, press report states the following (emphasis added): China respects freedom of navigation in the disputed South China Sea but will not allow any foreign government to invoke that right so its military ships and planes can intrude in Beijing's territory, the Chinese ambassador [to the Philippines] said. Ambassador Zhao Jianhua said late Tuesday [August 11] that Chinese forces warned a U.S. Navy P-8A [maritime patrol aircraft] not to intrude when the warplane approached a Chinese-occupied area in the South China Sea's disputed Spratly Islands in May.... "We just gave them warnings, be careful, not to intrude," Zhao told reporters on the sidelines of a diplomatic event in Manila.... When asked why China shooed away the U.S. Navy plane when it has pledged to respect freedom of navigation in the South China Sea, Zhao outlined the limits in China's view. "Freedom of navigation does not mean to allow other countries to intrude into the airspace or the sea which is sovereign. No country will allow that," Zhao said. "We say freedom of navigation must be observed in accordance with international law. No freedom of navigation for warships and airplanes ." A July 19, 2016, press report states the following: A senior Chinese admiral has rejected freedom of navigation for military ships, despite views held by the United States and most other nations that such access is codified by international law. The comments by Adm. Sun Jianguo, deputy chief of China's joint staff, come at a time when the U.S. Navy is particularly busy operating in the South China Sea, amid tensions over sea and territorial rights between China and many of its neighbors in the Asia-Pacific region. "When has freedom of navigation in the South China Sea ever been affected? It has not, whether in the past or now, and in the future there won't be a problem as long as nobody plays tricks," Sun said at a closed forum in Beijing on Saturday, according to a transcript obtained by Reuters. "But China consistently opposes so-called military freedom of navigation, which brings with it a military threat and which challenges and disrespects the international law of the sea," Sun said. A March 4, 2017, press report states the following: Wang Wenfeng, a US affairs expert at the China Institute of Contemporary International Relations, said Beijing and Washington obviously had different definitions of what constituted freedom of navigation. "While the US insists they have the right to send warships to the disputed waters in the South China Sea, Beijing has always insisted that freedom of navigation should not cover military ships," he said. A February 22, 2018, press report states the following: Hundreds of government officials, experts and scholars from all over the world conducted in-depth discussions of various security threats under the new international security situation at the 54 th Munich Security Conference (MSC) from Feb. 16 to 18, 2018. Experts from the Chinese delegation at the three-day event were interviewed by reporters on hot topics such as the South China Sea issue and they refuted some countries' misinterpretation of the relevant international law. The conference included a panel discussion on the South China Sea issue, which China and the Association of Southeast Asian Nations (ASEAN) countries have been committed to properly solving since the signing of the draft South China Sea code of conduct. Senior Colonel Zhou Bo, director of the Security Cooperation Center of the International Military Cooperation Office of the Chinese Ministry of National Defense, explained how some countries' have misinterpreted the international law. "First of all, we must abide by the United Nations Convention on the Law of the Sea (UNCLOS)," Zhou said. "But the problem now is that some countries unilaterally and wrongly interpreted the 'freedom of navigation' of the UNCLOS as the 'freedom of military operations', which is not the principle set by the UNCLOS," Zhou noted. A June 27, 2018, opinion piece in a British newspaper by China's ambassador to the UK stated that freedom of navigation is not an absolute freedom to sail at will. The US Freedom of Navigation Program should not be confused with freedom of navigation that is universally recognised under international law. The former is an excuse to throw America's weight about wherever it wants. It is a distortion and a downright abuse of international law into the "freedom to run amok". Second, is there any problem with freedom of navigation in the South China Sea? The reality is that more than 100,000 merchant ships pass through these waters every year and none has ever run into any difficulty with freedom of navigation.... The South China Sea is calm and the region is in harmony. The so-called "safeguarding freedom of navigation" issue is a bogus argument. The reason for hyping it up could be either an excuse to get gunboats into the region to make trouble, or a premeditated intervention in the affairs of the South China Sea, instigation of discord among the parties involved and impairment of regional stability…. China respects and supports freedom of navigation in the South China Sea according to international law. But freedom of navigation is not the freedom to run amok. For those from outside the region who are flexing their muscles in the South China Sea, the advice is this: if you really care about freedom of navigation, respect the efforts of China and Asean countries to safeguard peace and stability, stop showing off your naval ships and aircraft to "militarise" the region, and let the South China Sea be a sea of peace. A September 20, 2018, press report stated the following: Chinese Ambassador to Britain Liu Xiaoming on Wednesday [September 19] said that the freedom of navigation in the South China Sea has never been a problem, warning that no one should underestimate China's determination to uphold peace and stability in the region…. Liu stressed that countries in the region have the confidence, capability and wisdom to deal with the South China Sea issue properly and achieve enduring stability, development and prosperity. "Yet to everyone's confusion, some big countries outside the region did not seem to appreciate the peace and tranquility in the South China Sea," he said. "They sent warships and aircraft all the way to the South China Sea to create trouble." The senior diplomat said that under the excuse of so-called "freedom of navigation," these countries ignored the vast sea lane and chose to sail into the adjacent waters of China's islands and reefs to show off their military might. "This was a serious infringement" of China's sovereignty, he said. "It threatened China's security and put regional peace and stability in jeopardy." Liu stressed that China has all along respected and upheld the freedom of navigation and over-flight in the South China Sea in accordance with international law, including the United Nations Convention on the Law of the Sea. "Freedom of navigation is not a license to do whatever one wishes," he said, noting that freedom of navigation is not freedom to invade other countries' territorial waters and infringe upon other countries' sovereignty. "Such 'freedom' must be stopped," Liu noted. "Otherwise the South China Sea will never be tranquil." In contrast to China's narrow definition, the U.S./Western definition of freedom of navigation is much broader, encompassing operations of various types by both commercial and military ships and aircraft in international waters and airspace. As discussed earlier in this report, an alternative term for referring to the U.S./Western definition of freedom of navigation is freedom of the seas, meaning "all of the rights, freedoms, and lawful uses of the sea and airspace, including for military ships and aircraft, guaranteed to all nations under international law." When Chinese officials state that China supports freedom of navigation, China is referring to its own narrow definition of the term, and is likely not expressing agreement with or support for the U.S./Western definition of the term. Preference for Treating Territorial Disputes on Bilateral Basis China prefers to discuss maritime territorial disputes with other regional parties to the disputes on a bilateral rather than multilateral basis. Some observers believe China prefers bilateral talks because China is much larger than any other country in the region, giving China a potential upper hand in any bilateral meeting. China generally has resisted multilateral approaches to resolving maritime territorial disputes, stating that such approaches would internationalize the disputes, although the disputes are by definition international even when addressed on a bilateral basis. (China's participation with the ASEAN states in the 2002 declaration of conduct DOC and in negotiations with the ASEAN states on the follow-on binding code of conduct (COC) [see Appendix C ] represents a departure from this general preference.) Some observers believe China is pursuing a policy of putting off a negotiated resolution of maritime territorial disputes so as to give itself time to implement the salami-slicing strategy. Depiction of United States as Outsider Seeking to "Stir Up Trouble" Along with its above-discussed preference for treating territorial disputes on a bilateral rather than multilateral basis, China resists and objects to U.S. involvement in maritime disputes in the SCS and ECS. Statements in China's state-controlled media sometimes depict the United States as an outsider or interloper whose actions (including freedom of navigation operations) are seeking to "stir up trouble" in an otherwise peaceful regional situation. Potential or actual Japanese involvement in the SCS is sometimes depicted in China's state-controlled media in similar terms. Depicting the United States in this manner can be viewed as consistent with goals of attempting to drive a wedge between the United States and its allies and partners in the region and of ensuring maximum leverage in bilateral (rather than multilateral) discussions with other countries in the region over maritime territorial disputes. July 2018 Press Report Regarding Chinese Radio Warnings A July 31, 2018, press report stated the following: The Philippines has expressed concern to China over an increasing number of Chinese radio messages warning Philippine aircraft and ships to stay away from newly fortified islands and other territories in the South China Sea claimed by both countries, officials said Monday. A Philippine government report showed that in the second half of last year alone, Philippine military aircraft received such Chinese radio warnings at least 46 times while patrolling near artificial islands built by China in the South China Sea's Spratly archipelago. The Chinese radio messages were "meant to step up their tactics to our pilots conducting maritime air surveillance in the West Philippine Sea", the report said, using the Philippine name for the South China Sea. A Philippine air force plane on patrol near the Chinese-held islands received a particularly offensive radio message in late January according to the Philippine government report. It was warned by Chinese forces that it was "endangering the security of the Chinese reef. Leave immediately and keep off to avoid misunderstanding," the report said. Shortly afterwards, the plane received a veiled threat: "Philippine military aircraft, I am warning you again, leave immediately or you will pay the possible consequences." The Filipino pilot later "sighted two flare warning signals from the reef", said the report, which identified the Chinese-occupied island as Gaven Reef. Philippine officials have raised their concern twice over the radio transmissions, including in a meeting with Chinese counterparts in Manila earlier this year that focused on the Asian countries' long-unresolved territorial disputes, according to two officials who spoke on condition of anonymity because they were not authorised to discuss the issue publicly. It is a new problem that emerged after China transformed seven disputed reefs into islands using dredged sand in the Spratlys… The messages used to originate from Chinese coastguard ships in past years but US military officials suspect transmissions now are also being sent from the Beijing-held artificial islands, where far more powerful communications and surveillance equipment has been installed along with weapons such as surface-to-air missiles. "Our ships and aircraft have observed an increase in radio queries that appear to originate from new land-based facilities in the South China Sea," Commander Clay Doss, public affairs officer of the US 7th Fleet, said by email in response to questions about the Chinese messages. "These communications do not affect our operations," Doss said…. US Navy ships and aircraft communicate routinely with regional navies, including the Chinese navy. "The vast majority of these communications are professional, and when that is not the case, those issues are addressed by appropriate diplomatic and military channels," Doss said. For discussion of some additional elements of China's approach to maritime disputes in the SCS and ECS, including China's nine-dash line in the SCS, see Appendix E . U.S. Position on Maritime Disputes in SCS and ECS Some Key Elements The U.S. position on territorial and EEZ disputes in the Western Pacific (including those involving China) includes the following elements, among others: The United States supports the principle that disputes between countries should be resolved peacefully, without coercion, intimidation, threats, or the use of force, and in a manner consistent with international law. The United States supports the principle of freedom of seas, meaning the rights, freedoms, and uses of the sea and airspace guaranteed to all nations in international law. The United States opposes claims that impinge on the rights, freedoms, and lawful uses of the sea that belong to all nations. The United States takes no position on competing claims to sovereignty over disputed land features in the ECS and SCS. Although the United States takes no position on competing claims to sovereignty over disputed land features in the ECS and SCS, the United States does have a position on how competing claims should be resolved: Territorial disputes should be resolved peacefully, without coercion, intimidation, threats, or the use of force, and in a manner consistent with international law. Claims of territorial waters and EEZs should be consistent with customary international law of the sea and must therefore, among other things, derive from land features. Claims in the SCS that are not derived from land features are fundamentally flawed. Parties should avoid taking provocative or unilateral actions that disrupt the status quo or jeopardize peace and security. The United States does not believe that large-scale land reclamation with the intent to militarize outposts on disputed land features is consistent with the region's desire for peace and stability. The United States, like most other countries, believes that coastal states under UNCLOS have the right to regulate economic activities in their EEZs, but do not have the right to regulate foreign military activities in their EEZs. U.S. military surveillance flights in international airspace above another country's EEZ are lawful under international law, and the United States plans to continue conducting these flights as it has in the past. The Senkaku Islands are under the administration of Japan and unilateral attempts to change the status quo raise tensions and do nothing under international law to strengthen territorial claims. For additional information regarding the U.S. position on the issue of operational rights of military ships in the EEZs of other countries, see Appendix F . Freedom of Navigation (FON) Program U.S. Navy ships challenge what the United States views as excessive maritime claims and carry out assertions of operational rights as part of the U.S. Freedom of Navigation (FON) program for challenging maritime claims that the United States believes to be inconsistent with international law. The FON program began in 1979, involves diplomatic activities as well as operational assertions by U.S. Navy ships, and is global in scope, encompassing activities and operations directed not only at China, but at numerous other countries around the world, including U.S. allies and partner states. DOD's record of "excessive maritime claims that were challenged by DoD operational assertions and activities during the period of October 1, 2016, to September 30, 2017, in order to preserve the rights, freedoms, and uses of the sea and airspace guaranteed to all nations by international law" includes a listing for multiple challenges that were conducted to challenge Chinese claims relating to "excessive straight baselines; jurisdiction over airspace above the exclusive economic zone (EEZ); restriction on foreign aircraft flying through an Air Defense Identification Zone (ADIZ) without the intent to enter national airspace; domestic law criminalizing survey activity by foreign entities in the EEZ; prior permission required for innocent passage of foreign military ships through the TTS; and actions/statements that indicate a claim to a TTS [territorial sea] around features not so entitled." Assessments of China's Strengthening Position in SCS Some observers now assess that China's actions in the SCS have achieved for China a more dominant or more commanding position in the SCS. One observer, for example, writes in a March 28, 2018, commentary piece that as Beijing's regional clout continues to grow, it can be hard for weaker nations to resist it, even with these allies' support. Barely three weeks after the [the U.S. aircraft carrier Carl] Vinson's visit [to Vietnam], the Vietnamese government bowed to Chinese pressure and canceled a major oil drilling project in disputed South China waters. It was yet another sign of the region's rapidly shifting dynamics. For the last decade, the United States and its Asian allies have been significantly bolstering their military activities in the region with the explicit aim of pushing back against China. But Beijing's strength and dominance, along with its diplomatic, economic and military reach, continues to grow dramatically.... Western military strategists worry that China will, in time, be able to block any activity in the region by the United States and its allies. Already, satellite photos show China installing sophisticated weapons on a range of newly-reclaimed islands where international law says they simply should not be present. In any war, these and other new weapons that China is acquiring could make it all but impossible for the U.S. Navy and other potential enemies of China to operate in the area at all.... China's increasing confidence in asserting control over the South China Sea has clearly alarmed its neighbors, particularly the Philippines, Vietnam, Malaysia, Indonesia and Brunei, all of whom have competing territorial claims over waters that China claims for itself. But it also represents a major and quite deliberate challenge to the United States which, as an ally to all these nations, has essentially staked its own credibility on the issue. Over the last several years, it has become common practice for U.S. warships to sail through nearby waters, pointedly refusing to acknowledge Chinese demands that they register with its unilaterally-declared air and maritime "identification zones" (which the United States and its allies do not recognize).... None of this, however, addresses the seismic regional change produced by China's island-building strategy.... ... China sees this confrontation as a test case for its ability to impose its will on the wider region—and so far it is winning.... The United States remains the world's preeminent military superpower, and there is little doubt it could win a fight with China almost anywhere else in the world. In its own backyard, however, Beijing is making it increasingly clear that it calls the shots. And for now, there is little sign anyone in Washington—or anywhere else—has the appetite to seriously challenge that assumption. An April 9, 2018, article from a Chinese media outlet states the following: The situation in the South China Sea has been developing in favor of China, said Chinese observers after media reported that China is conducting naval drills in the region, at the same time as "three US carrier battle groups passed by" the area. "The regional strategic situation is tipping to China's side in the South China Sea, especially after China's construction of islands and reefs," Chen Xiangmiao, a research fellow at the National Institute for the South China Sea, told the Global Times on Sunday. China has strengthened its facilities in the region and conducted negotiations and cooperation on the South China Sea, which have narrowed China's gap in power with the US, while gaining advantages over Japan and India, according to Chen. U.S. Navy Admiral Philip Davidson, in responses to advance policy questions from the Senate Armed Services Committee for an April 17, 2018, hearing before the committee to consider nominations, including Davidson's nomination to become Commander, U.S. Pacific Command (PACOM), stated the following in part (emphasis added): With respect to their actions in the South China Sea and more broadly through the Belt and Road Initiative, the Chinese are clearly executing deliberate and thoughtful force posture initiatives. China claims that these reclaimed features and the Belt and Road Initiative [BRI] will not be used for military means, but their words do not match their actions.... While Chinese air forces are not as advanced as those of the United States, they are rapidly closing the gap through the development of new fourth and fifth generation fighters (including carrier-based fighters), long range bombers, advanced UAVs, advanced anti-air missiles, and long-distance strategic airlift. In line with the Chinese military's broader reforms, Chinese air forces are emphasizing joint operations and expanding their operations, such as through more frequent long range bomber flights into the Western Pacific and South China Sea. As a result of these technological and operational advances, the Chinese air forces will pose an increasing risk not only to our air forces but also to our naval forces, air bases and ground forces.... In the South China Sea, the PLA has constructed a variety of radar, electronic attack, and defense capabilities on the disputed Spratly Islands, to include: Cuarteron Reef, Fiery Cross Reef, Gaven Reef, Hughes Reef, Johnson Reef, Mischief Reef and Subi Reef. These facilities significantly expand the real-time domain awareness, ISR, and jamming capabilities of the PLA over a large portion of the South China Sea, presenting a substantial challenge to U.S. military operations in this region.... China's development of forward military bases in the South China Sea began in December 2013 when the first dredger arrived at Johnson Reef. Through 2015, China used dredging efforts to build up these reefs and create manmade islands, destroying the reefs in the process. Since then, China has constructed clear military facilities on the islands, with several bases including hangars, barracks, underground fuel and water storage facilities, and bunkers to house offense and defensive kinetic and non-kinetic systems. These actions stand in direct contrast to the assertion that President Xi made in 2015 in the Rose Garden when he commented that Beijing had no intent to militarize the South China Sea. Today these forward operating bases appear complete. The only thing lacking are the deployed forces. Once occupied, China will be able to extend its influence thousands of miles to the south and project power deep into Oceania. The PLA will be able to use these bases to challenge U.S. presence in the region, and any forces deployed to the islands would easily overwhelm the military forces of any other South China Sea-claimants. In short, China is now capable of controlling the South China Sea in all scenarios short of war with the United States .... Ultimately, BRI provides opportunities for China's military to expand its global reach by gaining access to foreign air and maritime port facilities. This reach will allow China's military to extend its striking and surveillance operations from the South China Sea to the Gulf of Aden. Moreover, Beijing could leverage BRI projects to pressure nations to deny U.S. forces basing, transit, or operational and logistical support, thereby making it more challenging for the United States to preserve international orders and norms.... With respect to the Indo-Pacific region, specifically, I am concerned that some nations, including China, assert their interests in ways that threaten the foundational standards for the world's oceans as reflected in the Law of the Sea Convention. This trend is most evident off the coast of China and in the South China Sea where China's policies and activities are challenging the free and open international order in the air and maritime domains. China's attempts to restrict the rights, freedoms, and lawful uses of the sea available to naval and air forces is inconsistent with customary international law and as President Reagan said in the 1983 Statement on United States Oceans Policy, "the United States will not, however, acquiesce in unilateral acts of other states designed to restrict the rights and freedoms of the international community in navigation and overflight." A May 8, 2018, press report states the following: China's neighbors and rivals fear that the Asian powerhouse is slowly but surely establishing the foundation of an Air Defense Identification Zone (ADIZ) in one of the world's most important and busy waterways…. Boosting China's missile defense system in the area would allow it to progressively restrict the movement as well as squeeze the supply lines of smaller claimant states, all of which maintain comparatively modest military capabilities to fortify their sea claims." Another observer writes in a May 10, 2018, commentary piece that All these developments [in the SCS], coupled with the lack of any concerted or robust response from the United States and its allies and partners in the region, point to the inevitable conclusion that the sovereignty dispute in the SCS has – irreversibly – become a foregone conclusion. Three compelling reasons justify this assertion…. First, China sees the SCS issue as a security matter of paramount importance, according it the status of a "core interest" – on par with resolution of the Taiwan question…. Second, the sovereignty of SCS waters is a foregone conclusion partly because of U.S. ambivalence toward Chinese military encroachment…. Third, the implicit acquiescence of ASEAN [Association of Southeast Asian Nations] states toward China's moves in the SCS has strengthened its position that all features and waters within the "nine-dashed line" belongs to Beijing…. The above three factors – Beijing's sharpened focus on national security, lack of American resolve to balance China in the SCS, and ASEAN's prioritization of peace and stability over sovereignty considerations – have contributed to the bleak state of affairs today…. From the realist perspective, as Beijing accrues naval dominance in the SCS, the rules meant to regulate its behavior are likely to matter less and less—underscoring the geopolitical truism that 'might is right.' While China foreswears the use of coercive force on its Southeast Asian neighbors and may indeed have no offensive intentions today, it has now placed itself in a position to do so in future. In other words, while it had no capacity nor intent to threaten Southeast Asian states previously, it has developed the requisite capabilities today. Another observer writes in a separate May 10, 2018, commentary piece that the South China Sea is being increasingly dominated militarily by China at both its eastern and western ends. This is what researchers at the US Naval War College meant when they told the author that Chinese militarization activities in the region are an attempt to create the equivalent of a "strategic strait" in the South China Sea. In other words, through the more or less permanent deployment of Chinese military power at both extreme ends of the South China Sea – Hainan and Woody Island in the west, and the new (and newly militarized) artificial islands in the east – Beijing is seeking to transform the South China Sea from an international SLOC into a Chinese-controlled waterway and a strategic chokepoint for other countries…. This amalgamation of force means that China's decades-long "creeping assertiveness" in this particular body of water has become a full-blown offensive. What all this means is that China is well on its way toward turning the South China Sea in a zone of anti-access/area denial (A2/AD). This means keeping military competitors (particularly the US Navy) out of the region, or seriously impeding their freedom of action inside it. A June 1, 2018, press report states the following: Through its navy, coast guard, a loose collection of armed fishing vessels, and a network of military bases built on artificial islands, Beijing has gained de facto control of the South China Sea, a panel of Indo-Pacific security experts said Friday. And the implications of that control—militarily, economically, diplomatically—are far-reaching for the United States and its partners and allies in the region. "Every vessel [sent on a freedom of navigation transit] is shadowed" by a Chinese vessel, showing Beijing's ability to respond quickly events in areas it considers its own, retired Marine Lt. Gen. Wallace "Chip" Gregson said during an American Enterprise Institute forum. Another observer writes in a June 5, 2018, commentary piece that It's over in the South China Sea. The United States just hasn't figured it out yet…. It is past time for the United States to figure out what matters in its relationship with China, and to make difficult choices about which values have to be defended, and which can be compromised. A June 21, 2018, editorial states the following: America's defence secretary, James Mattis, promised "larger consequences" if China does not change track [in the SCS]. Yet for now [Chinese President Xi Jinping], while blaming America's own "militarisation" as the source of tension, must feel he has accomplished much. He has a chokehold on one of the world's busiest shipping routes and is in a position to make good on China's claims to the sea's oil, gas and fish. He has gained strategic depth in any conflict over Taiwan. And, through the sheer fact of possession, he has underpinned China's fatuous historical claims to the South China Sea. To his people, Mr Xi can paint it all as a return to the rightful order. Right now, it is not clear what the larger consequences of that might be. Another observer writes in a July 17, 2018, commentary piece that Two years after an international tribunal rejected expansive Chinese claims to the South China Sea, Beijing is consolidating control over the area and its resources. While the U.S. defends the right to freedom of navigation, it has failed to support the rights of neighboring countries under the tribunal's ruling. As a result, Southeast Asian countries are bowing to Beijing's demands…. In late July 2017, Beijing threatened Vietnam with military action if it did not stop oil and gas exploration in Vietnam's exclusive economic zone, according to a report by the BBC's Bill Hayton. Hanoi stopped drilling. Earlier this year, Vietnam again attempted to drill, and Beijing issued similar warnings…. Other countries, including the U.S., failed to express support for Vietnam or condemn China's threats. Beijing has also pressured Brunei, Malaysia and the Philippines to agree to "joint development" in their exclusive economic zones—a term that suggests legitimate overlapping claims. Meanwhile China is accelerating its militarization of the South China Sea. In April, it deployed antiship cruise missiles, surface-to-air missiles and electronic jammers to artificial islands constructed on Fiery Cross Reef, Subi Reef and Mischief Reef. In May, it landed long-range bombers on Woody Island. The Trump administration's failure to press Beijing to abide by the tribunal's ruling is a serious mistake. It undermines international law and upsets the balance of power in the region. Countries have taken note that the tide in the South China Sea is in China's favor, and they are making their strategic calculations accordingly. This hurts U.S. interests in the region. Issues for Congress U.S. Response to China's Actions in SCS and ECS Overview Up through 2014, U.S. concern over maritime territorial and EEZ disputes involving China centered more on their potential for causing tension, incidents, and a risk of conflict between China and its neighbors in the region, including U.S. allies Japan and the Philippines and emerging partner states such as Vietnam. While that concern remains, particularly regarding the potential for a conflict between China and Japan involving the Senkaku Islands, U.S. concern since 2014 (i.e., since China's island-building activities in the Spratly Islands were first publicly reported) has shifted increasingly to how China's strengthening position in the SCS may be affecting the risk of a U.S.-China crisis or conflict in the SCS and the broader U.S.-Chinese strategic competition. A key issue for Congress is how the United States should respond to China's actions in the SCS and ECS—particularly its island-building and base-construction activities in the Spratly Islands—and to China's strengthening position in the SCS. A key oversight question for Congress is whether the Trump Administration has an appropriate strategy for countering China's "salami-slicing" strategy or gray zone operations for gradually strengthening its position in the SCS, for imposing costs on China for its actions in the SCS and ECS, and for defending and promoting U.S. interests in the region. Review of China's Approach In considering how to respond to China's actions in the SCS and ECS, an initial step can be to review China's approach to the region. As stated earlier, in general, China's approach to the maritime disputes in the SCS and ECS, and to strengthening its position over time in the SCS, can be characterized as follows: China appears to have identified the assertion and defense of its maritime territorial claims in the SCS and ECS, and the strengthening of its position in the SCS, as important national goals. To achieve these goals, China appears to be employing an integrated, whole-of-society strategy that includes diplomatic, informational, economic, military, paramilitary/law enforcement, and civilian elements. In implementing this integrated strategy, China appears to be persistent, patient, tactically flexible, willing to expend significant resources, and willing to absorb at least some amount of reputational and other costs that other countries might seek to impose on China in response to China's actions. The above points raise a possible question as to how likely a U.S. response might be to achieve U.S. goals if it were one-dimensional rather than multidimensional or whole-of-government; halting or intermittent rather than persistent; insufficiently resourced; reliant on imposed costs that are not commensurate with the importance that China appears to have assigned to achieving its goals in the region, or some combination of these things. Potential U.S. Goals General Goals Potential general U.S. goals in responding to China's actions in the SCS and ECS include but are not necessarily limited to the following, which are not mutually exclusive: fulfilling U.S. security commitments in the Western Pacific, including treaty commitments to Japan and the Philippines; maintaining and enhancing the U.S.-led security architecture in the Western Pacific, including U.S. security relationships with treaty allies and partner states; maintaining a regional balance of power that is favorable to the United States and its allies and partners; de fending the principle of peaceful resolution of disputes , under which disputes between countries should be resolved peacefully, without coercion, intimidation, threats, or the use of force, and in a manner consistent with international law, and resisting the emergence of an alternative "might-makes-right" approach to international affairs; defending the principle of freedom of the seas , meaning the rights, freedoms, and uses of the sea and airspace guaranteed to all nations in international law, including the interpretation held by the United States and many other countries concerning operational freedoms for military forces in EEZs; and preventing China from becoming a regional hegemon in East Asia, and potentially as part of that, preventing China from controlling or dominating the ECS or SCS. Specific Goals Potential specific U.S. goals in responding to China's actions in the SCS and ECS include but are not necessarily limited to the following, which are not mutually exclusive: dissuading China from carrying out any additional base-construction activities that it might be planning for sites that it occupies in the SCS; dissuading China from moving any additional military personnel, equipment, and supplies to bases at sites that it occupies in the SCS, and persuading China to remove military personnel, equipment, and supplies that have already been moved to those bases; dissuading China from initiating island-building or base-construction activities at Scarborough Shoal; dissuading China from declaring an ADIZ over the SCS; encouraging China to reduce or end Chinese Coast Guard ships at the Senkaku Islands in the ECS; encouraging China to halt actions intended to put pressure against the small Philippine military presence at Second Thomas Shoal in the Spratly Islands (or against any other Philippine-occupied sites in the Spratly Islands); encouraging China to provide greater access by Philippine fisherman to waters surrounding Scarborough Shoal or in the Spratly Islands; encouraging China to adopt the U.S./Western definition regarding freedom of the seas, including the freedom of U.S. and other non-Chinese military vessels to operate freely in China's EEZ; and encouraging China to accept and abide by the July 2016 tribunal award in the SCS arbitration case involving the Philippines and China (see Appendix D ). Aligning Actions with Goals In terms of identifying specific actions that are intended to support U.S. policy goals, a key element would be to have a clear understanding of which actions are intended to support which goals, and to maintain an alignment of actions with policy goals. For example, U.S. freedom of navigation (FON) operations, which often feature prominently in discussions of actual or potential U.S. actions, can directly support a general goal of defending principle of freedom of the seas, but might support other goals only indirectly, marginally, or not at all. Contributions from Allies and Partners In assessing how the United States should respond to China's actions in the SCS, another factor that policymakers may consider is the potential contribution that could be made by allies such as Japan, the Philippines, Australia, the UK, and France, as well as potential or emerging partner countries such as Vietnam, Indonesia, and India. Most or all of the countries just mentioned have taken steps of one kind or another in response to China's actions in the SCS and ECS. For U.S. policymakers, one key question is how effective those steps by allies and partner countries have been, whether those steps could be strengthened, and whether they should be undertaken independent of or in coordination with the United States. A second key question concerns the kinds of actions that Philippine president Rodrigo Duterte might be willing to take, given his largely nonconfrontational policy toward China regarding the SCS, and what implications Philippine reluctance to take certain actions may have for limiting or reducing the potential effectiveness of U.S. options for responding to China's actions in the SCS. U.S. Actions During Obama Administration In apparent response to China's actions in the SCS and ECS, the United States during the Obama Administration took a number of actions, including the following: reiterating the U.S. position on maritime territorial claims in the area in various public fora; expressing strong concerns about China's island-building and base-construction activities, and calling for a halt on such activities by China and other countries in the region; taking steps to improve the ability of the Philippines, Vietnam, Malaysia, and Indonesia to maintain maritime domain awareness (MDA) and patrol their EEZs, including the Southeast Asia Maritime Security Initiative (MSI), an initiative (since renamed the Indo-Pacific MSI) announced by the Obama Administration in May 2015 and subsequently legislated by Congress to provide $425 million in maritime security assistance to those four countries over a five-year period; taking steps to strengthen U.S. security cooperation with Japan, the Philippines, Vietnam, and Singapore, including signing an agreement with the Philippines that provides U.S. forces with increased access to Philippine bases, increasing the scale of joint military exercises involving U.S. and Philippine forces, relaxing limits on sales of certain U.S. arms to Vietnam, and operating U.S. Navy P-8 maritime patrol aircraft from Singapore; expressing support for the idea of Japanese patrols in the SCS; and stating that the United States would support a multinational maritime patrol of the SCS by members of ASEAN. Some observers, both during and after the Obama Administration, have criticized the Obama Administration for not doing enough to counter China's actions in the SCS and ECS. In particular, they have argued that the Obama Administration did not react strongly enough to China's occupation of Scarborough Shoal in 2012; react strongly enough to China's island-building and base-construction activities in the Spratly Islands starting around December 2013; do enough in terms of conducting and offering sufficiently clear and strong legal rationales for U.S. freedom of navigation (FON) operations in the SCS; do enough to publicize, rhetorically support, and enforce the July 2016 tribunal award in the SCS arbitration case involving the Philippines and China; and impose sufficiently strong costs on China's for its actions in the SCS and ECS. As a result of the above, these critics have argued, the Obama Administration in effect sent a message to China that the United States would not strongly oppose China's actions in the SCS and ECS—a message, these critics have argued, that may have encouraged and accelerated China's actions. Supporters of the Obama Administration's actions in response to China's actions in the SCS and ECS have argued that those actions were substantial and proportionate to China's actions and successful in deterring China from initiating island-building and base-construction activities at Scarborough Shoal; having U.S. military aircraft disregard the ADIZ that China declared over the ECS, and in deterring China from declaring an ADIZ over the SCS; imposing political and reputational costs on China for its actions in the ECS and SCS during this time; and working with regional allies and partners to impose costs on China and strengthen the U.S.-led security architecture for the region. U.S. Actions During Trump Administration Overview In addition to continuing to implement the above-mentioned Indo-Pacific MSI and conducting recurring freedom of navigation (FON) operations in the SCS (see next section), the Trump Administration reportedly has taken other actions to promote U.S. interests in that area. These steps include actions to increase U.S. defense and intelligence cooperation with Vietnam and Indonesia, and U.S. assistance to improve the maritime security capabilities of the two countries. A January 9, 2018, press report states the following: The United States has accused China of "provocative militarisation" of disputed areas in the South China Sea and will continue sending vessels to the region to carry out freedom-of-navigation patrols, according to a top US adviser on Asia policy. Brian Hook, a senior adviser to US Secretary of State Rex Tillerson, said on Tuesday [January 9] that the issue of the South China Sea was raised at all diplomatic and security dialogues between China and the US... "China's provocative militarisation of the South China Sea is one area where China is contesting international law. They are pushing around smaller states in ways that put a strain on the global system," Hook said during a media telephone conference. "We are going to back up freedom-of-navigation operations and let them know we will fly, sail and operate wherever international law allows."... "We strongly believe China's rise cannot come at the expense of the values and rule-based order. That order is the foundation of peace and stability in the Indo-Pacific and also around the world," Hook said. "When China's behaviour is out of step with these values and these rules we will stand up and defend the rule of law." May 3, 2018, Statement About "Near-Term and Long-Term Consequences" A May 3, 2018, press report stated the following: The United States has raised concerns with China about its latest militarization of the South China Sea and there will be near-term and long-term consequences, the White House said on Thursday [May 3]. U.S. news network CNBC reported on Wednesday that China had installed anti-ship cruise missiles and surface-to-air missile systems on three manmade outposts in the South China Sea. It cited sources with direct knowledge of U.S. intelligence. Asked about the report, White House spokeswoman Sarah Sanders told a regular news briefing: "We're well aware of China's militarization of the South China Sea. We've raised concerns directly with the Chinese about this and there will be near-term and long-term consequences." Sanders did not say what the consequences might be. May 23, 2018, Withdrawal of Invitation to RIMPAC Exercise On May 23, 2018, DOD announced that it was disinviting China from the 2018 RIMPAC (Rim of the Pacific) exercise. RIMPAC is a U.S.-led, multilateral naval exercise in the Pacific involving naval forces from more than two dozen countries that is held every two years. At DOD's invitation, China participated in the 2014 and 2016 RIMPAC exercises. DOD had invited China to participate in the 2018 RIMPAC exercise, and China had accepted that invitation. Observers who have argued for the United States to take stronger actions in response to China's actions in the ECS and SCS have argued that the United States should, among other things, not invite China to participate in the 2018 RIMPAC exercise, on the grounds that doing so would in effect reward China for its recent actions in the ECS and SCS. They have also argued that the value to the United States and its allies of information gained from observing Chinese naval forces operate during the exercise would be outweighed by the value to China of information that China would gain from observing U.S. and other allied and partner navies operate during the exercise. After DOD had issued the invitation to China to participate in the 2018 RIMPAC exercise, these observers argued that the invitation should be withdrawn. Supporters of having China participate in RIMPAC exercises have argued that they are valuable for maintaining a constructive working relationship with China's navy—something, they argue, that could be of particular value if there were a U.S.-Chinese incident at sea or a U.S.-China crisis over some issue. They have also argued that China's participation in RIMPAC exercises provides opportunities to encourage China's navy to adopt U.S. and Western norms relating to issues such as freedom of the seas and avoidance of incidents at sea, and that the value to the United States and its allies of information gained from observing China's naval forces operate during the exercise is not outweighed by value to China of the information gained by China from observing U.S., allied, and partner navies operate during the exercises, particularly since China could observe the exercise using intelligence-gathering ships or perhaps other means, even without participating in the exercise. A statement from DOD about the withdrawal of the invitation for China to participate in the 2018 RIMPAC exercise states the following: The United States is committed to a free and open Indo-Pacific. China's continued militarization of disputed features in the South China Sea only serve to raise tensions and destabilize the region. As an initial response to China's continued militarization of the South China Sea we have disinvited the PLA Navy from the 2018 Rim of the Pacific (RIMPAC) Exercise. China's behavior is inconsistent with the principles and purposes of the RIMPAC exercise. We have strong evidence that China has deployed anti-ship missiles, surface-to-air missile (SAM) systems, and electronic jammers to contested features in the Spratly Islands region of the South China Sea. China's landing of bomber aircraft at Woody Island has also raised tensions. While China has maintained that the construction of the islands is to ensure safety at sea, navigation assistance, search and rescue, fisheries protection, and other non-military functions the placement of these weapon systems is only for military use. We have called on China to remove the military systems immediately and to reverse course on the militarization of disputed South China Sea features. We believe these recent deployments and the continued militarization of these features is a violation of the promise that President Xi made to the United States and the World not to militarize the Spratly Islands. A May 23, 2018, press report states the following: The Pentagon rescinded an invitation to China to participate in an international military exercise in the Pacific Ocean next month, signaling disapproval to Beijing for what U.S. officials say is its refusal to stop militarizing South China Sea islands. Defense Secretary Jim Mattis, after weeks of internal debate within the Pentagon, concluded that China shouldn't be allowed to participate in the American-led biennial Rim of the Pacific exercise, slated to begin in June, according to U.S. officials. The invitation's withdrawal hasn't been previously disclosed. Chinese officials in Washington were notified of the decision Wednesday morning, said the U.S. officials. China's top diplomat, State Councilor Wang Yi, criticized the Pentagon's decision in comments while visiting the State Department Wednesday. "We find that a very unconstructive move, nonconstructive move," Mr. Wang told reporters. "We hope the U.S. will change such a negative mindset."... After The Wall Street Journal published [an initial version of] this article on Wednesday [May 23], Pentagon officials called their move "an initial response" to China's militarization of the islands. "We have strong evidence that China has deployed anti-ship missiles, surface-to-air missile (SAM) systems, and electronic jammers to contested features in the Spratly Islands region of the South China Sea," Lt. Col. Chris Logan, a Pentagon spokesman, said in a statement. "China's landing of a bomber aircraft at Woody Island has also raised tensions." Eric Sayers, of the Center for Strategic and International Studies, a think tank in Washington, and a former adviser to U.S. Pacific Command, said the Pentagon move "will be a minor blow to the PLA Navy's prestige." He said, "It will also send the signal to Beijing that China cannot expect to continue to militarize the South China Sea and still be treated as a welcomed member of the international maritime community." But, Mr. Sayers added, the Trump administration must still develop an overall strategy in the Indo- Pacific region if it hopes to influence the maritime domain there. "Thus far, there is little evidence or new initiatives one can point to that distinguishes this administration's regional policy from the previous one," he said. The decision to rescind the invitation came after more than a month of internal Trump administration debate about China, including the timing of any rescission, the officials said, especially given the trade talks. Top State Department officials initially advised against rescinding the invitation, hoping that diplomatic interventions would convince China to at least remove missiles from those islands, said the U.S. officials. State Department officials didn't immediately respond to a request for comment. But Pentagon officials held the view that it was time to impose a cost on the Chinese for their behavior in the South China Sea, the officials said. June 3, 2018, Press Report About Potential Increase in U.S. Patrols A June 3, 2018, press report states the following: The United States is considering intensified naval patrols in the South China Sea in a bid to challenge China's growing militarization of the waterway, actions that could further raise the stakes in one of the world's most volatile areas. The Pentagon is weighing a more assertive program of so-called freedom-of-navigation operations close to Chinese installations on disputed reefs, two U.S. officials and Western and Asian diplomats close to discussions said. The officials declined to say how close they were to finalizing a decision. Such moves could involve longer patrols, ones involving larger numbers of ships or operations involving closer surveillance of Chinese facilities in the area, which now include electronic jamming equipment and advanced military radars. U.S. officials are also pushing international allies and partners to increase their own naval deployments through the vital trade route as China strengthens its military capabilities on both the Paracel and Spratly islands, the diplomats said, even if they stopped short of directly challenging Chinese holdings. "What we have seen in the last few weeks is just the start, significantly more is being planned," said one Western diplomat, referring to a freedom of navigation patrol late last month that used two U.S. ships for the first time. "There is a real sense more needs to be done."… Critics have said the patrols have little impact on Chinese behavior and mask the lack of a broader strategy to deal with China's growing dominance of the area…. U.S. Defence Secretary Jim Mattis warned in Singapore on Saturday [June 2] that China's militarization of the South China Sea was now a "reality" but that Beijing would face unspecified consequences. November 13, 2018, Statement Opposing Agreements Limiting Freedom of Navigation A November 13, 2018, press report states the following: National security adviser John Bolton said [on November 13] the U.S. would oppose any agreements between China and other claimants to the South China Sea that limit free passage to international shipping, and that American naval vessels would continue to sail through those waters. Mr. Bolton's remarks served as a warning to Southeast Asian leaders, who are preparing for a regional summit in Singapore this week, and particularly for the Philippines, which is now in talks with Beijing about jointly exploring natural resources in the contested area. In meetings to develop a code of conduct this year for the South China Sea, China has tried to secure a veto over Southeast Asian nations hosting military exercises with other countries in the disputed waters…. Mr. Bolton said the U.S. welcomes the negotiations in principle. In a media briefing in Singapore, he described them as a plus. But he stressed that "the outcome has to be mutually acceptable, and also has to be acceptable to all the countries that have legitimate maritime and naval rights to transit and other associate rights that we don't want to see infringed." Potential Distractions Some observers have expressed concern that the Trump Administration's focus from time to time on North Korea has sometimes distracted the Administration from the situation in the SCS, permitting China to more easily increase or consolidate its gains in the area. Other observers have expressed concern that the Trump Administration's focus on reducing the U.S. trade deficit with China could distract the Administration from other issues relating to China, including China's actions in the SCS. Freedom of Navigation (FON) Operations in SCS Obama Administration FON Operations At a September 17, 2015, hearing before the Senate Armed Services Committee on DOD's maritime security strategy in the Asia-Pacific region, DOD witnesses stated, in response to questioning, that the United States had not conducted a freedom of navigation (FON) operation within 12 miles of a Chinese-occupied land feature in the Spratly Islands since 2012. This led to a public debate in the United States (that was watched by observers in the Western Pacific) over whether the United States should soon conduct such an operation, particularly given China's occupation of Scarborough Shoal in 2012 and China's island-building activities at sites that its occupies in the SCS. Opponents argued that conducting a FON operation could antagonize China and give China an excuse to militarize its occupied sites in the SCS. Supporters argued that not conducting such an operation was inconsistent with the underlying premise of the U.S. FON program that navigational rights which are not regularly exercised are at risk of atrophy; that it was inconsistent with the U.S. position of taking no position on competing claims to sovereignty over disputed land features in the SCS (because it tacitly accepts Chinese sovereignty over those features); that it effectively rewarded (rather than imposed costs on) China for its assertive actions in the SCS, potentially encouraging further such actions; and that China intends to militarize its occupied sites in the Spratly Islands, regardless of whether the United States conducts FON operations there. The Obama Administration reportedly considered, for a period of weeks, whether to conduct such an operation in the near future. Some observers argued that the Obama Administration's extended consideration of the question, and the press reporting on that deliberation, unnecessarily raised the political stakes involved in whether to conduct what, in the view of these observers, should have been a routine FON operation. The Obama Administration decided in favor of conducting the operation, and the operation reportedly was conducted near the Chinese-occupied site of Subi Reef on October 27, 2015 (which was October 26, 2015, in Washington, DC), using the U.S. Navy destroyer Lassen in conjunction with a U.S. Navy P-8 maritime patrol aircraft flying overhead. Statements from executive branch sources about the operation that were reported in the press created some confusion among observers regarding how the operation was conducted and what rationale the Obama Administration was citing as the legal basis for the operation. In particular, there was confusion among observers as to whether the United States was defending the operation as an expression of the right of innocent passage —a rationale, critics argued, that would muddle the legal message sent by the operation, possibly implying U.S. acceptance of Chinese sovereignty over Subi Reef, which would inadvertently turn the operation into something very different and perhaps even self-defeating from a U.S. perspective. A second FON operation in the SCS was conducted on January 29, 2016, near Triton Island in the Paracel Islands, by the U.S. Navy destroyer C urtis Wilber . A third FON operation in the SCS was conducted on May 10, 2016, in which the destroyer William P. Lawrence conducted an innocent passage within 12 nautical miles of Fiery Cross Reef, a Chinese-occupied feature in the Spratly Islands that is also claimed by Taiwan, Vietnam, and the Philippines. A fourth FON operation in the SCS occurred on October 21, 2016, involving the destroyer Decatur operating near the Paracel Islands. This was the final announced FON operation in the South China Sea during the Obama Administration. Trump Administration FON Operations As of early May 2017, the Trump Administration had not conducted any announced FON operations in the SCS, and DOD reportedly had turned down proposals from the Navy to conduct such operations, prompting some observers to argue that the Trump Administration, in its first few months in office, appeared to be more hesitant about conducting FON operations in the SCS than the Obama Administration was during its final 15 months in office (i.e., since October 2015). DOD officials stated that in spite of the absence of announced FON operations in the SCS, U.S. policy on such operations had not changed, and that the United States intended to conduct FON operations in the SCS in the near future. As shown in Table 1 , the Trump Administration conducted an FON operation in the SCS on May 25, 2017, and has conducted multiple additional FON operations in the SCS since then. In general, China has objected to each of these operations and has stated that it sent Chinese Navy ships in each case to warn the U.S. Navy ships to leave the areas in question. The FON operation conducted on September 30, 2018, led to an intense encounter, discussed elsewhere in this report, between the U.S. Navy ship that conducted the operation (the USS Decatur [DDG-73]) and the Chinese Navy ship that was sent to warn it off. In addition to conducting FON operations in the Spratly and Paracel islands, U.S. Navy ships have steamed through the Taiwan Strait on multiple occasions, and Air Force long-range bombers have periodically conducted flyovers above the ECS and SCS. A September 1, 2017, press report states that The Pentagon for the first time has set a schedule of naval patrols in the South China Sea in an attempt to create a more consistent posture to counter China's maritime claims there, injecting a new complication into increasingly uneasy relations between the two powers. The U.S. Pacific Command has developed a plan to conduct so-called freedom-of-navigation operations two to three times over the next few months, according to several U.S. officials, reinforcing the U.S. challenge to what it sees as excessive Chinese maritime claims in the disputed South China Sea. Beijing claims sovereignty over all South China Sea islands and their adjacent waters. The plan marks a significant departure from such military operations in the region during the Obama administration, when officials sometimes struggled with when, how and where to conduct those patrols. They were canceled or postponed based on other political factors after what some U.S. officials said were contentious internal debates. The idea behind setting a schedule contrasts with the more ad hoc approach to conducting freedom-of-navigation operations, known as "fonops" in military parlance, and establish more regularity in the patrols. Doing so may help blunt Beijing's argument that the patrols amount to a destabilizing provocation each time they occur, U.S. officials said.... Officials described the new plan as a more predetermined way of conducting such patrols than in the past, though not immutable. The plan is in keeping with the Trump administration's approach to military operations, which relies on giving commanders leeway to determine the U.S. posture. In keeping with policies against announcing military operations before they occur, officials declined to disclose where and when they would occur.... In a new facet, some freedom-of-navigation patrols may be "multi-domain" patrols, using not only U.S. Navy warships but U.S. military aircraft as well. Thus far, there have been three publicly disclosed freedom-of-navigation operations under the Trump administration. The last one was conducted on Aug. 10 by the navy destroyer, the USS John S. McCain, which days later collided with a cargo ship, killing 10 sailors. That patrol around Mischief Reef—one of seven fortified artificial islands that Beijing has built in the past three years in the disputed Spratlys archipelago—also included an air component. According to U.S. officials, two P-8 Poseidon reconnaissance aircraft flew above the McCain in a part of the operation that hadn't been previously disclosed. More navigation patrols using warships likely now will include aircraft overhead, they said." An October 12, 2017, blog post states the following: The [reported October 10, 2017,] FONOP is the fourth in just five months and demonstrates that the Trump administration is accepting a higher frequency for these operations. After the Obama administration initiated South China Sea operations in October 2015, beginning with challenges to Chinese and other South China Sea claimant state possessions in the Spratly group, it only carried out three additional operations in 2016. Critics of the Obama administration's approach to the U.S. Navy's freedom of navigation operations in the South China Sea suggested that the relative infrequency and perception that the operations were subject of the overall ebbs and flows of the U.S.-China bilateral relationship undermined their stated utility as legal signaling tools. Even with stepped up FONOPs this year, the Trump administration hasn't changed the fundamentals of U.S. South China Sea policy, which continues to remain agnostic about sovereignty claims and focuses exclusively on freedom of navigation, overflight, and the preservation of international law and order in the region. With the exception of USS Dewey's May 2017 FONOP around Mischief Reef—notable for being the first FONOP this year—successive Trump administration FONOPs have attracted comparatively less attention in the press. Proponents of these operations in the United States have argued that they should not be seen as noteworthy events, but more as a fact of life in the South China Sea—a reminder of the U.S. Navy's forward presence in the area and its commitment to freedom of navigation. A corollary of the increased pace of operations this year is that a slowdown in U.S. FONOPs could appear to be motivated by broader diplomatic concerns in the bilateral U.S.-China relationship. Legal Arguments Relating to FON Operations In assessing U.S. FON operations that take place within 12 nautical miles of Chinese-occupied sites in the SCS, one question relates to whether to conduct such operations, exactly where, and how often. A second question relates to the rationale that is cited as the legal basis for conducting them. Regarding this second question, one U.S. specialist on international law of the sea states the following regarding three key legal points in question (emphasis added): Regarding features in the water whose sovereignty is in dispute, "Every feature occupied by China is challenged by another claimant state, often with clearer line of title from Spanish, British or French colonial rule. The nation, not the land, is sovereign, which is why there is no territorial sea around Antarctica—it is not under the sovereignty of any state, despite being a continent. As the United States has not recognized Chinese title to the features, it is not obligated to observe requirements of a theoretical territorial sea. Since the territorial sea is a function of state sovereignty of each rock or island, and not a function of simple geography, if the United States does not recognize any state having title to the feature, then it is not obligated to observe a theoretical territorial sea and may treat the feature as terra nullius . Not only do U.S. warships have a right to transit within 12 nm [nautical miles] of Chinese features, they are free to do so as an exercise of high seas freedom under article 87 of the Law of the Sea Convention, rather than the more limited regime of innocent passage. Furthermore, whereas innocent passage does not permit overflight, high seas freedoms do, and U.S. naval aircraft lawfully may overfly such features.... More importantly, even assuming that one or another state may have lawful title to a feature, other states are not obligated to confer upon that nation the right to unilaterally adopt and enforce measures that interfere with navigation, until lawful title is resolved. Indeed, observing any nation's rules pertaining to features under dispute legitimizes that country's claim and takes sides." Regarding features in the water whose sovereignty has been resolved, "It is unclear whether features like Fiery Cross Reef are rocks or merely low-tide elevations [LTEs] that are submerged at high tide, and after China has so radically transformed them, it may now be impossible to determine their natural state. Under the terms of the law of the sea, states with ownership over naturally formed rocks are entitled to claim a 12 nm territorial sea. On the other hand, low-tide elevations in the mid-ocean do not qualify for any maritime zone whatsoever. Likewise, artificial islands and installations also generate no maritime zones of sovereignty or sovereign rights in international law, although the owner of features may maintain a 500-meter vessel traffic management zone to ensure navigational safety." Regarding features in the water whose sovereignty has been resolved and which do qualify for a 12-nautical-mile territorial sea, " Warships and commercial vessels of all nations are entitled to conduct transit in innocent passage in the territorial sea of a rock or island of a coastal state, although aircraft do not enjoy such a right." These three legal points appear to create at least four options for the rationale to cite as the legal basis for conducting an FON operation within 12 miles of Chinese-occupied sites in the SCS: One option would be to state that since there is a dispute as to the sovereignty of the site or sites in question, that site or those sites are terra nullius , that the United States consequently is not obligated to observe requirements of a theoretical territorial sea, and that U.S. warships thus have a right to transit within 12 nautical miles of the site or sites as an exercise of high seas freedom under article 87 of the Law of the Sea Convention. A second option, if the site or sites were LTEs prior to undergoing land reclamation, would be to state that the site or sites are not entitled to a 12-nautical-mile territorial sea, and that U.S. warships consequently have a right to transit within 12 nautical miles as an exercise of high seas freedom. A third option would be to state that the operation was being conducted under the right of innocent passage within a 12-nautical-mile territorial sea. A fourth option would be to not provide a public rationale for the operation, so as to create uncertainty for China (and perhaps other observers) as to exact U.S. legal rationale. If the fourth option is not taken, and consideration is given to selecting from among the first three options, then it might be argued that choosing the second option might inadvertently send a signal to observers that the legal point associated with the first option was not being defended, and that choosing the third option might inadvertently send a signal to observers that the legal points associated with the first and second options were not being defended. Regarding the FON operation conducted on May 24, 2017, near Mischief Reef, the U.S. specialist on international law of the sea quoted above states the following: This was the first public notice of a freedom of navigation (FON) operation in the Trump administration, and may prove the most significant yet for the United States because it challenges not only China's apparent claim of a territorial sea around Mischief Reef, but in doing so questions China's sovereignty over the land feature altogether.... The Pentagon said the U.S. warship did a simple military exercise while close to the artificial island—executing a "man overboard" rescue drill. Such drills may not be conducted in innocent passage, and therefore indicate the Dewey exercised high seas freedoms near Mischief Reef. The U.S. exercise of high seas freedoms around Mischief Reef broadly repudiates China's claims of sovereignty over the feature and its surrounding waters. The operation stands in contrast to the flubbed transit by the USS Lassen near Subi Reef on October 27, 2015, when it appeared the warship conducted transit in innocent passage and inadvertently suggested that the feature generated a territorial sea (by China or some other claimant). That operation was roundly criticized for playing into China's hands, with the muddy legal rationale diluting the strategic message. In the case of the Dewey, the Pentagon made clear that it did not accept a territorial sea around Mischief Reef—by China or any other state. The United States has shoehorned a rejection of China's sovereignty over Mischief Reef into a routine FON operation. Mischief Reef is not entitled to a territorial sea for several reasons. First, the feature is not under the sovereignty of any state. Mid-ocean low-tide elevations are incapable of appropriation, so China's vast port and airfield complex on the feature are without legal effect. The feature lies 135 nautical miles from Palawan Island, and therefore is part of the Philippine continental shelf. The Philippines enjoys sovereign rights and jurisdiction over the feature, including all of its living and non-living resources.... Second, even if Mischief Reef were a naturally formed island, it still would not be entitled to a territorial sea until such time as title to the feature was determined. Title may be negotiated, arbitrated or adjudicated through litigation. But mere assertion of a claim by China is insufficient to generate lawful title. (If suddenly a new state steps forward to claim the feature—Britain, perhaps, based on colonial presence—would it be entitled to the presumption of a territorial sea?) Even Antarctica, an entire continent, does not automatically generate a territorial sea. A territorial sea is a function of state sovereignty, and until sovereignty is lawfully obtained, no territorial sea inures. Third, no state, including China, has established baselines around Mischief Reef in accordance with article 3 of UNCLOS. A territorial sea is measured from baselines; without baselines, there can be no territorial sea. What is the policy rationale for this construction? Baselines place the international community on notice that the coastal state has a reasonable and lawful departure from which to measure the breadth of the territorial sea. Unlike the USS Lassen operation, which appeared to be a challenge to some theoretical or "phantom" territorial sea, the Dewey transit properly reflects the high seas nature of the waters immediately surrounding Mischief Reef as high seas. As a feature on the Philippine continental shelf, Mischief Reef is not only incapable of ever generating a territorial sea but also devoid of national airspace. Aircraft of all nations may freely overfly Mischief Reef, just as warships and commercial ships may transit as close to the shoreline as is safe and practical. The Dewey transit makes good on President Obama's declaration in 2016 that the Annex VII tribunal for the Philippines and China issued a "final and binding" decision.... The United States will include the Dewey transit on its annual list of FON operations for fiscal year 2017, which will be released in the fourth quarter or early next year. How will the Pentagon account for the operation—what was challenged? The Dewey challenged China's claim of "indisputable sovereignty" to Mischief Reef as one of the features in the South China Sea, and China's claim of "adjacent" waters surrounding it. This transit cuts through the diplomatic dissembling that obfuscates the legal seascape and is the most tangible expression of the U.S. view that the arbitration ruling is "final and binding." Regarding this same FON operation, two other observers stated the following: The Dewey's action evidently challenged China's right to control maritime zones adjacent to the reef—which was declared by the South China Sea arbitration to be nothing more than a low tide elevation on the Philippine continental shelf. The operation was hailed as a long-awaited "freedom of navigation operation" (FONOP) and "a challenge to Beijing's moves in the South China Sea," a sign that the United States will not accept "China's contested claims" and militarization of the Spratlys, and a statement that Washington "will not remain passive as Beijing seeks to expand its maritime reach." Others went further and welcomed this more muscular U.S. response to China's assertiveness around the Spratly Islands to challenge China's "apparent claim of a territorial sea around Mischief Reef…[as well as] China's sovereignty over the land feature" itself. But did the Dewey actually conduct a FONOP? Probably—but maybe not. Nothing in the official description of the operation or in open source reporting explicitly states that a FONOP was in fact conducted. Despite the fanfare, the messaging continues to be muddled. And that is both unnecessary and unhelpful. In this post, we identify the source of ambiguity and provide an overview of FONOPs and what distinguishes them from the routine practice of freedom of navigation. We then explain why confusing the two is problematic—and particularly problematic in the Spratlys, where the practice of free navigation is vastly preferable to the reactive FONOP. FONOPs should continue in routine, low-key fashion wherever there are specific legal claims to be challenged (as in the Paracel Islands, the other disputed territories in the SCS); they should not be conducted—much less hyped up beyond proportion—in the Spratlys. Instead, the routine exercise of freedom of navigation is the most appropriate way to use the fleet in support of U.S. and allied interests.... ... was the Dewey's passage a FONOP designed to be a narrow legal challenge between the US and Chinese governments? Or was it a rightful and routine exercise of navigational freedoms intended to signal reassurance to the region and show U.S. resolve to defend the rule sets that govern the world's oceans? Regrettably, the DOD spokesman's answer was not clear. The distinction is not trivial.... The U.S. should have undertaken, and made clear that it was undertaking, routine operations to exercise navigational freedoms around Mischief Reef—rather than (maybe) conducting a FONOP. The first problem with conducting FONOP operations at Mischief Reef or creating confusion on the point is that China has made no actual legal claim that the U.S. can effectively challenge. In fact, in the Spratlys, no state has made a specific legal claim about its maritime entitlements around the features it occupies. In other words, not only are there no "excessive claims," there are no clear claims to jurisdiction over water space at all. Jurisdictional claims by a coastal state begin with an official announcement of baselines—often accompanied by detailed geographic coordinates—to put other states on notice of the water space the coastal state claims as its own. China has made several ambiguous claims over water space in the South China Sea. It issued the notorious 9-dashed line map, for instance, and has made cryptic references that eventually it might claim that the entire Spratly Island area generates maritime zones as if it were one physical feature. China has a territorial sea law that requires Chinese maritime agencies only to employ straight baselines (contrary to international law). And it formally claimed straight baselines all along its continental coastline, in the Paracels, and for the Senkaku/Diaoyu Islands, which China claims and Japan administers. All of these actions are contrary to international law and infringe on international navigational rights. These have all been subject to American FONOPs in the past—and rightly so. They are excessive claims. But China has never specified baselines in the Spratlys. Accordingly, no one knows for sure where China will claim a territorial sea there. So for now, since there is no specific legal claim to push against, a formal FONOP is the wrong tool for the job. The U.S. Navy can and should simply exercise the full, lawful measure of high seas freedoms in and around the Spratly Islands. Those are the right tools for the job where no actual coastal state claim is being challenged. Second, the conflation of routine naval operations with the narrow function of a formal FONOP needlessly politicizes this important program, blurs the message to China and other states in the region, blunts its impact on China's conduct, and makes the program less effective in other areas of the globe. This conflation first became problematic with the confused and confusing signaling that followed the FONOP undertaken by the USS Lassen in the fall of 2015. Afterward, the presence or absence of a FONOP dominated beltway discussion about China's problematic conduct in the South China Sea and became the barometer of American commitment and resolve in the region. Because of this discussion, FONOPs became reimagined in the public mind as the only meaningful symbol of U.S. opposition to Chinese policy and activity in the SCS. In 2015 and 2016 especially, FONOPs were often treated as if they were the sole available operational means to push back against rising Chinese assertiveness. This was despite a steady U.S. presence in the region for more than 700 ship days a year and a full schedule of international exercises, ample intelligence gathering operations, and other important naval demonstrations of U.S. regional interests. In consequence, we should welcome the apparent decision not to conduct a FONOP around Scarborough Shoal—where China also never made any clear baseline or territorial sea claim. If U.S. policy makers intend to send a signal to China that construction on or around Scarborough would cross a red line, there are many better ways than a formal FONOP to send that message.... The routine operations of the fleet in the Pacific theater illustrate the crucial—and often misunderstood—difference between a formal FONOP and operations that exercise freedoms of navigation. FONOPs are not the sole remedy to various unlawful restrictions on navigational rights across the globe, but are instead a small part of a comprehensive effort to uphold navigational freedoms by practicing them routinely. That consistent practice of free navigation, not the reactive FONOP, is the policy best suited to respond to Chinese assertiveness in the SCS. This is especially true in areas such as the Spratly Islands where China has made no actual legal claims to challenge. What FON Operations Can—and Cannot—Accomplish As mentioned earlier, in terms of identifying specific actions that are intended to support U.S. policy goals, a key element would be to have a clear understanding of which actions are intended to support which goals, and to maintain an alignment of actions with policy goals. U.S. freedom of navigation (FON) operations can directly support a general goal of defending principle of freedom of the seas, but might support other goals only indirectly, marginally, or not at all. Cost-Imposing Actions Some of the actions taken to date by the United States, as well as some of those suggested by observers who argue in favor of stronger U.S. actions, are intended to impose costs on China for conducting certain activities in the ECS and SCS, with the aim of persuading China to stop or reverse those activities. Cost-imposing actions can come in various forms (e.g., reputational/political, institutional, or economic). Although the potential additional or strengthened actions often relate to the Western Pacific, potential cost-imposing actions do not necessarily need to be limited to that region. As a hypothetical example for purposes of illustrating the point, one potential cost-imposing action might be for the United States to respond to unwanted Chinese activities in the ECS or SCS by moving to suspend China's observer status on the Arctic Council. Expanding the potential scope of cost-imposing actions to regions beyond the Western Pacific can make it possible to employ elements of U.S. power that cannot be fully exercised if the examination of potential cost-imposing strategies is confined to the Western Pacific. It may also, however, expand, geographically or otherwise, areas of tension or dispute between the United States and China. Actions to impose costs on China can also impose costs, or lead to China imposing costs, on the United States and its allies and partners. Whether to implement cost-imposing actions thus involves weighing the potential benefits and costs to the United States and its allies and partners of implementing those actions, as well as the potential consequences to the United States and its allies and partners of not implementing those actions. Potential Further U.S. Actions Suggested by Observers Some observers argue that the current response to China's actions in the SCS is inadequate, and have proposed taking stronger actions. Appendix G presents a bibliography of some recent writings by these observers. In general, actions proposed by these observers include (but are not limited to) the following: making a statement (analogous to the one that U.S. leaders have made concerning the Senkaku islands and the U.S.-Japan treaty on mutual cooperation and security) that clarifies what the United States would do under the U.S.-Philippines mutual defense treaty in the event of certain Chinese actions at Scarborough Shoal, Second Thomas Shoal, or elsewhere in the SCS; further increasing and/or accelerating actions to strengthen the capacity of allied and partner countries in the region to maintain maritime domain awareness (MDA) and defend their maritime claims by conducting coast guard and/or navy patrols of claimed areas; further increasing U.S. Navy operations in the region, including sending U.S. Navy ships more frequently to waters within 12 nautical miles of Chinese-occupied sites in the SCS, and conducting FON operations in the SCS jointly with navy ships of U.S. allies; further strengthening U.S. security cooperation with allied and partner countries in the region, and with India, to the point of creating a coalition for balancing China's assertiveness; and taking additional actions to impose costs on China for its actions in its near-seas region, such as inviting Taiwan to participate in the 2018 RIMPAC exercise. Risk of United States Being Drawn into a Crisis or Conflict As mentioned earlier, some observers remain concerned that maritime territorial disputes in the ECS and SCS could lead to a crisis or conflict between China and a neighboring country such as Japan or the Philippines, and that the United States could be drawn into such a crisis or conflict as a result of obligations the United States has under bilateral security treaties with Japan and the Philippines. Regarding this issue, potential oversight questions for Congress include the following: Have U.S. officials taken appropriate and sufficient steps to help reduce the risk of maritime territorial disputes in the SCS and ECS escalating into conflicts? Do the United States and Japan have a common understanding of potential U.S. actions under Article IV of the U.S.-Japan Treaty on Mutual Cooperation and Security (see Appendix B ) in the event of a crisis or conflict over the Senkaku Islands? What steps has the United States taken to ensure that the two countries share a common understanding? Do the United States and the Philippines have a common understanding of how the 1951 U.S.-Philippines mutual defense treaty applies to maritime territories in the SCS that are claimed by both China and the Philippines, and of potential U.S. actions under Article IV of the treaty (see Appendix B ) in the event of a crisis or conflict over the territories? What steps has the United States taken to ensure that the two countries share a common understanding? Aside from public statements, what has the United States communicated to China regarding potential U.S. actions under the two treaties in connection with maritime territorial disputes in the SCS and ECS? Has the United States correctly balanced ambiguity and explicitness in its communications to various parties regarding potential U.S. actions under the two defense treaties? How do the two treaties affect the behavior of Japan, the Philippines, and China in managing their territorial disputes? To what extent, for example, would they help Japan or the Philippines resist potential Chinese attempts to resolve the disputes through intimidation, or, alternatively, encourage risk-taking or brinksmanship behavior by Japan or the Philippines in their dealings with China on the disputes? To what extent do they deter or limit Chinese assertiveness or aggressiveness in their dealings with Japan the Philippines on the disputes? Has the DOD adequately incorporated into its planning crisis and conflict scenarios arising from maritime territorial disputes in the SCS and ECS that fall under the terms of the two treaties? Whether United States Should Ratify UNCLOS Another issue for Congress—particularly the Senate—is the potential impact of China's actions in the SCS and ECS on the question of whether the United States should become a party to the United Nations Convention on the Law of the Sea (UNCLOS). UNCLOS and an associated 1994 agreement relating to implementation of Part XI of the treaty (on deep seabed mining) were transmitted to the Senate on October 6, 1994. In the absence of Senate advice and consent to adherence, the United States is not a party to UNCLOS or the associated 1994 agreement. During the 112 th Congress, the Senate Foreign Relations Committee held four hearings on the question of whether the United States should become a party to the treaty on May 23, June 14 (two hearings), and June 28, 2012. Supporters of the United States becoming a party to UNCLOS argue or might argue one or more of the following: The treaty's provisions relating to navigational rights, including those in EEZs, reflect the U.S. position on the issue; becoming a party to the treaty would help lock the U.S. perspective into permanent international law. Becoming a party to the treaty would give the United States greater standing for participating in discussions relating to the treaty—a "seat at the table"—and thereby improve the U.S. ability to call on China to act in accordance with the treaty's provisions, including those relating to navigational rights, and to defend U.S. interpretations of the treaty's provisions, including those relating to whether coastal states have a right under UNCLOS to regulate foreign military activities in their EEZs. At least some of the ASEAN member states want the United States to become a member of UNCLOS, because they view it as the principal framework for resolving maritime territorial disputes. Relying on customary international law to defend U.S. interests in these issues is not sufficient, because it is not universally accepted and is subject to change over time based on state practice. Opponents of the United States becoming a party to UNCLOS argue or might argue one or more of the following: China's ability to cite international law (including UNCLOS) in defending its position on whether coastal states have a right to regulate foreign military activities in their EEZs shows that UNCLOS does not adequately protect U.S. interests relating to navigational rights in EEZs; the United States should not help lock this inadequate description of navigational rights into permanent international law by becoming a party to the treaty. The United States becoming a party to the treaty would do little to help resolve maritime territorial disputes in the SCS and ECS, in part because China's maritime territorial claims, such as those depicted in the map of the nine-dash line, predate and go well beyond what is allowed under the treaty and appear rooted in arguments that are outside the treaty. The United States can adequately support the ASEAN countries and Japan in matters relating to maritime territorial disputes in the SCS and ECS in other ways, without becoming a party to the treaty. The United States can continue to defend its positions on navigational rights on the high seas by citing customary international law, by demonstrating those rights with U.S. naval deployments (including those conducted under the FON program), and by having allies and partners defend the U.S. position on the EEZ issue at meetings of UNCLOS parties. Legislative Activity in 2018 National Defense Authorization Act for Fiscal Year 2019/John S. McCain National Defense Authorization Act for Fiscal Year 2019 (H.R. 5515/S. 2987/P.L. 115-232) House Committee Report In H.R. 5515 as reported by the House Armed Services Committee ( H.Rept. 115-676 of May 15, 2018), Section 1254 states the following: SEC. 1254. Modification, redesignation, and extension of Southeast Asia Maritime Security Initiative. (a) Modification and redesignation.— (1) IN GENERAL.—Subsection (a) of section 1263 of the National Defense Authorization Act for Fiscal Year 2016 (Public Law 114–92; 129 Stat. 1073; 10 U.S.C. 2282 note), as amended by section 1289 of the National Defense Authorization Act for Fiscal Year 2017 (Public Law 114–328; 130 Stat. 2555), is further amended— (A) in paragraph (1), by striking "South China Sea" and inserting "South China Sea and Indian Ocean"; and (B) in paragraph (2), by striking "the 'Southeast Asia Maritime Security Initiative'" and inserting "the 'Indo-Pacific Maritime Security Initiative'". (2) CONFORMING AMENDMENT.—The heading of such section is amended to read as follows: "Sec. 1263. Indo-Pacific Maritime Security Initiative.". (b) Covered countries.—Subsection (e)(2) of such section is amended by adding at the end the following: "(D) India.". (c) Designation of additional countries.—Such section is further amended— (1) in subsection (e)(1), by striking "subsection (f)" and inserting "subsection (g)"; (2) by redesignating subsections (f), (g), and (h) as subsections (g), (h), and (i), respectively; and (3) by inserting after subsection (e) the following: "(f) Inclusion of additional countries.—The Secretary of Defense, with the concurrence of the Secretary of State, is authorized to include additional foreign countries under subsection (b) for purposes of providing assistance and training under subsection (a) and additional foreign countries under subsection (e)(2) for purposes of providing payment of incremental expenses in connection with training described in subsection (a)(1)(B) if, with respect to each such additional foreign country, the Secretary determines and certifies to the appropriate committees of Congress that it is important for increasing maritime security and maritime domain awareness in the Indo-Pacific region.". (d) Extension.—Subsection (i) of such section, as redesignated, is amended by striking "September 30, 2020" and inserting "September 30, 2023". House Floor Action On May 22, 2018, as part of its consideration of H.R. 5515 , the House agreed to by voice vote H.Amdt. 644 , an en bloc amendment including, inter alia, amendment number 91 as printed in H.Rept. 115-698 of May 21, 2018, providing for consideration of H.R. 5515 . Amendment 91 added Section 1298, which states the following: SEC. 1298. Modification to annual report on military and security developments involving the People's Republic of China. Paragraph (22) of section 1202(b) of the National Defense Authorization Act for Fiscal Year 2000 (Public Law 106–65; 10 U.S.C. 113 note), as most recently amended by section 1261 of the National Defense Authorization Act for Fiscal Year 2018 (Public Law 115–91; 131 Stat. 1688), is further amended by striking "activities in the South China Sea" and inserting the following: ""activities— "(A) in the South China Sea; "(B) in the East China Sea, including in the vicinity of the Senkaku islands; and "(C) in the Indian Ocean region.". Senate In S. 2987 as reported by the Senate Armed Services Committee ( S.Rept. 115-262 of June 5, 2018), Section 1064 states the following: SEC. 1064. United States policy with respect to freedom of navigation and overflight. (a) Declaration of policy.—It is the policy of the United States to fly, sail, and operate throughout the oceans, seas, and airspace of the world wherever international law allows. (b) Implementation of policy.—In furtherance of the policy set forth in subsection (a), the Secretary of Defense should— (1) plan and execute a robust series of routine and regular air and naval presence missions throughout the world and throughout the year, including for critical transportation corridors and key routes for global commerce; (2) in addition to the missions executed pursuant to paragraph (1), execute routine and regular air and maritime freedom of navigation operations throughout the year, in accordance with international law, including the use of expanded military options and maneuvers beyond innocent passage; and (3) to the maximum extent practicable, execute the missions pursuant to paragraphs (1) and (2) with regional partner countries and allies of the United States. Section 1241 of S. 2987 as reported states the following: SEC. 1241. Redesignation, expansion, and extension of Southeast Asia Maritime Security Initiative. (a) Redesignation as Indo-Pacific Maritime Security Initiative.— (1) IN GENERAL.—Subsection (a)(2) of section 1263 of the National Defense Authorization Act for Fiscal Year 2016 (10 U.S.C. 333 note) is amended by striking "the 'Southeast Asia Maritime Security Initiative'" and inserting "the 'Indo-Pacific Maritime Security Initiative'". (2) CONFORMING AMENDMENT.—The heading of such section is amended to read as follows: "SEC. 1263. Indo-Pacific Maritime Security Initiative". (b) Expansion.— (1) EXPANSION OF REGION TO RECEIVE ASSISTANCE AND TRAINING.—Subsection (a)(1) of such section is amended by inserting "and the Indian Ocean" after "South China Sea" in the matter preceding subparagraph (A). (2) RECIPIENT COUNTRIES OF ASSISTANCE AND TRAINING GENERALLY.—Subsection (b) of such section is amended— (A) in paragraph (2), by striking the comma at the end and inserting a period; and (B) by adding at the end the following new paragraphs: "(6) Bangladesh. "(7) Sri Lanka.". (3) COUNTRIES ELIGIBLE FOR PAYMENT OF CERTAIN INCREMENTAL EXPENSES.—Subsection (e)(2) of such section is amended by adding at the end the following new subparagraph: "(D) India.". (c) Extension.—Subsection (h) of such section is amended by striking "September 30, 2020" and inserting "December 31, 2025". Regarding Section 1241, S.Rept. 115-262 states the following: Redesignation, expansion, and extension of Southeast AsiaMaritime Security Initiative (sec. 1241) The committee recommends a provision that would amend section 1263 of the National Defense Authorization Act for Fiscal Year 2016 (Public Law 114–92) to: redesignate the Southeast Asia Maritime Security Initiative as the Indo-Pacific Maritime Security Initiative; add Bangladesh and Sri Lanka as recipient countries of assistance and training; add India as a covered country eligible for payment of certain incremental expenses; and extend the authority under the section through December 31, 2025. The committee continues to strongly support efforts under the Southeast Asia Maritime Security Initiative aimed at enhancing the capabilities of regional partners to more effectively exercise control over their maritime territory and to deter adversaries. The committee is encouraged by the progress that has been made under the initiative, and notes that to date, the Department of Defense has utilized the authority under section 1263 of the National Defense Authorization Act for Fiscal Year 2016 (Public Law 114–92), as amended, to support specified partner capacity-building efforts in the region, to include the provision of training, sustainment support, and participation in multilateral engagements. The committee recognizes that the initiative was designed to support a long-term capacity building effort, which will require increased resources in future years as requirements are established and refined, as programs mature, and as the regional security environment continues to evolve. The committee believes the Department's efforts to improve maritime domain awareness and maritime security should be fully integrated into a U.S. strategy for a free and open Indo-Pacific. Therefore, the committee supports redesignating the authority under section 1263 as the Indo-Pacific Maritime Security Initiative, the inclusion of Bangladesh and Sri Lanka as recipient countries, and the addition of India as a covered country to encourage its participation in regional security initiatives of this kind. Furthermore, as a demonstration of the United States' commitment to allies and partners in the region, the committee supports the extension of the Indo-Pacific Maritime Security Initiative through the end of 2025. Beyond the Indo-Pacific Maritime Security Initiative, the committee encourages the Department to make use of the full complement of security cooperation authorities available to the Department, particularly those under section 1241 of the National Defense Authorization Act for Fiscal Year 2017 (Public Law 114–328), to enhance the capabilities of foreign security partners in South and Southeast Asia to protect mutual security interests. (Pages 296-297) Section 1245 of S. 2987 as reported states the following: SEC. 1245. Prohibition on participation of the People's Republic of China in Rim of the Pacific (RIMPAC) naval exercises. (a) Sense of Congress.—It is the sense of Congress that— (1) the pace and militarization by the Government of the People's Republic of China of land reclamation activities in the South China Sea is destabilizing the security of United States allies and partners and threatening United States core interests; (2) these activities of the Government of the People's Republic of China adversarially threaten the maritime security of the United States and our allies and partners; (3) no country that acts adversarially should be invited to multilateral exercises; and (4) the involvement of the Government of the People's Republic of China in multilateral exercises should undergo reevaluation until such behavior changes. (b) Conditions for future participation in RIMPAC.—The Secretary of Defense shall not enable or facilitate the participation of the People's Republic of China in any Rim of the Pacific (RIMPAC) naval exercise unless the Secretary certifies to the congressional defense committees that China has— (1) ceased all land reclamation activities in the South China Sea; (2) removed all weapons from its land reclamation sites; and (3) established a consistent four-year track record of taking actions toward stabilizing the region. A June 26, 2018, statement of Administration policy regarding S. 2987 stated the following: Prohibition on Participation of the People's Republic of China in Rim of the Pacific (RIMPAC) Naval Exercises. The Administration objects to section 1245 because China's participation in RIMPAC and other military-to-military events may be appropriate or inappropriate in any given year, depending on numerous other factors. Section 1245 would place restrictions on the Secretary of Defense's ability to manage a strategic relationship in the context of competition, limiting DOD's options on China and ability to act in the national security interest of the United States. Section 1251 of S. 2987 as reported states the following: SEC. 1251. Report on military and coercive activities of the People's Republic of China in South China Sea. (a) In general.—Except as provided in subsection (d), immediately after the commencement of any significant reclamation or militarization activity by the People's Republic of China in the South China Sea, including any significant military deployment or operation or infrastructure construction, the Secretary of Defense, in coordination with the Secretary of State, shall submit to the congressional defense committees, and release to the public, a report on the military and coercive activities of China in the South China Sea in connection with such activity. (b) Elements of report to public.—Each report on a significant reclamation or militarization activity under subsection (a) shall include a short narrative on, and one or more corresponding images of, such significant reclamation or militarization activity. (c) Form.— (1) SUBMITTAL TO CONGRESS.—Any report under subsection (a) that is submitted to the congressional defense committees shall be submitted in unclassified form, but may include a classified annex. (2) RELEASE TO PUBLIC.—If a report under subsection (a) is released to the public, such report shall be so released in unclassified form. (d) Waiver.— (1) RELEASE OF REPORT TO PUBLIC.—The Secretary of Defense may waive the requirement in subsection (a) for the release to the public of a report on a significant reclamation or militarization activity if the Secretary determines that the release to the public of a report on such activity under that subsection in the form required by subsection (c)(2) would have an adverse effect on the national security interests of the United States. (2) NOTICE TO CONGRESS.—If the Secretary issues a waiver under paragraph (1) with respect to a report on an activity, not later than 48 hours after the Secretary issues such waiver, the Secretary shall submit to the congressional defense committees written notice of, and justification for, such waiver. Regarding Section 1251, S.Rept. 115-262 states the following: Report on military and coercive activities of the People's Republic of China in the South China Sea (sec. 1251) The committee recommends a provision that would require the Secretary of Defense, in coordination with the Secretary of State, to submit to the congressional defense committees and release to the public, a report on the military and coercive activities of China in the South China Sea in connection with such activity immediately after the commencement of any significant reclamation or militarization activity by the People's Republic of China in the South China Sea, including any significant military deployment or operation or infrastructure construction. The committee is concerned that sufficient information has not been made publicly available in a timely fashion regarding China's reclamation and militarization activities of China in the South China Sea. Therefore, the committee urges the Secretary of Defense to determine that the public interest in selective declassification of China's activities in the South China Sea outweighs the potential damage from disclosure. The Secretary should consider mandating that the directors of National Geospatial-Intelligence Agency and the Defense Intelligence Agency provide the Bureau of Intelligence and Research (INR) at the State Department with declassified aircraft-generated imagery and supporting analysis describing Chinese activities of concern. The committee also urges that the State Department brief and distribute the reports to the media and throughout Southeast Asia. (Page 300) Conference In the conference report ( H.Rept. 115-874 of July 25, 2018) on H.R. 5515 / P.L. 115-232 of August 13, 2018, Section 1086 states the following: SEC. 1086. UNITED STATES POLICY WITH RESPECT TO FREEDOM OF NAVIGATION AND OVERFLIGHT. (a) DECLARATION OF POLICY.—It is the policy of the United States to fly, sail, and operate throughout the oceans, seas, and airspace of the world wherever international law allows. (b) IMPLEMENTATION OF POLICY.—In furtherance of the policy set forth in subsection (a), the Secretary of Defense should— (1) plan and execute a robust series of routine and regular air and naval presence missions throughout the world and throughout the year, including for critical transportation corridors and key routes for global commerce; (2) in addition to the missions executed pursuant to paragraph (1), execute routine and regular air and maritime freedom of navigation operations throughout the year, in accordance with international law, including, but not limited to, maneuvers beyond innocent passage; and (3) to the maximum extent practicable, execute the missions pursuant to paragraphs (1) and (2) with regional partner countries and allies of the United States. Section 1252 of H.R. 5515 states the following: SEC. 1252. REDESIGNATION, EXPANSION, AND EXTENSION OF SOUTHEAST ASIA MARITIME SECURITY INITIATIVE. (a) REDESIGNATION AS INDO-PACIFIC MARITIME SECURITY INITIATIVE.— (1) IN GENERAL.—Subsection (a)(2) of section 1263 of the National Defense Authorization Act for Fiscal Year 2016 (10 U.S.C. 333 note) is amended by striking ''the 'Southeast Asia Maritime Security Initiative' '' and inserting ''the 'Indo-Pacific Maritime Security Initiative' ''. (2) CONFORMING AMENDMENT.—The heading of such section is amended to read as follows: ''SEC. 1263. INDO-PACIFIC MARITIME SECURITY INITIATIVE.''. (b) EXPANSION.— (1) EXPANSION OF REGION TO RECEIVE ASSISTANCE AND TRAINING.—Subsection (a)(1) of such section is amended by inserting ''and the Indian Ocean'' after ''South China Sea'' in the matter preceding subparagraph (A). (2) RECIPIENT COUNTRIES OF ASSISTANCE AND TRAINING GENERALLY.—Subsection (b) of such section is amended— (A) in paragraph (2), by striking the comma at the end and inserting a period; and (B) by adding at the end the following new paragraphs: ''(6) Bangladesh. ''(7) Sri Lanka.''. (3) COUNTRIES ELIGIBLE FOR PAYMENT OF CERTAIN INCREMENTAL EXPENSES.—Subsection (e)(2) of such section is amended by adding at the end the following new subparagraph: ''(D) India.''. (c) EXTENSION.—Subsection (h) of such section is amended by striking ''September 30, 2020'' and inserting ''December 31, 2025''. Section 1259 of H.R. 5515 states the following: SEC. 1259. PROHIBITION ON PARTICIPATION OF THE PEOPLE'S REPUBLIC OF CHINA IN RIM OF THE PACIFIC (RIMPAC) NAVAL EXERCISES. (a) CONDITIONS FOR FUTURE PARTICIPATION IN RIMPAC.— (1) IN GENERAL.—The Secretary of Defense shall not enable or facilitate the participation of the People's Republic of China in any Rim of the Pacific (RIMPAC) naval exercise unless the Secretary certifies to the congressional defense committees that China has— (A) ceased all land reclamation activities in the South China Sea; (B) removed all weapons from its land reclamation sites; and (C) established a consistent four-year track record of taking actions toward stabilizing the region. (2) FORM.—The certification under paragraph (1) shall be in unclassified form but may contain a classified annex as necessary. (b) NATIONAL SECURITY WAIVER.— (1) IN GENERAL.—The Secretary of Defense may waive the certification requirement under subsection (a) if the Secretary determines the waiver is in the national security interest of the United States and submits to the congressional defense committees a detailed justification for the waiver. (2) FORM.—The justification required under paragraph (1) shall be in unclassified form but may contain a classified annex as necessary. Section 1262 of H.R. 5515 states the following: SEC. 1262. REPORT ON MILITARY AND COERCIVE ACTIVITIES OF THE PEOPLE'S REPUBLIC OF CHINA IN SOUTH CHINA SEA. (a) IN GENERAL.—Except as provided in subsection (d), immediately after the commencement of any significant reclamation, assertion of an excessive territorial claim, or militarization activity by the People's Republic of China in the South China Sea, including any significant military deployment or operation or infrastructure construction, the Secretary of Defense, in coordination with the Secretary of State, shall submit to the appropriate congressional committees, and release to the public, a report on the military and coercive activities of China in the South China Sea in connection with such activity. (b) ELEMENTS OF REPORT TO PUBLIC.—Each report on the commencement of a significant reclamation, an assertion of an excessive territorial claim, or a militarization activity under subsection (a) shall include a short narrative on, and one or more corresponding images of, such commencement of a significant reclamation, assertion of an excessive territorial claim, or militarization activity. (c) FORM.— (1) SUBMISSION TO CONGRESS.—Any report under subsection (a) that is submitted to the appropriate congressional committees shall be submitted in unclassified form, but may include a classified annex. (2) RELEASE TO PUBLIC.—If a report under subsection (a) is released to the public, such report shall be so released in unclassified form. (d) WAIVER.— (1) RELEASE OF REPORT TO PUBLIC.—The Secretary of Defense may waive the requirement in subsection (a) for the release to the public of a report on the commencement of any significant reclamation, an assertion of an excessive territorial claim, or a militarization activity by the People's Republic of China in the South China Sea if the Secretary determines that the release to the public of a report on such activity under that subsection in the form required by subsection (c)(2) would have an adverse effect on the national security interests of the United States. (2) NOTICE TO CONGRESS.—If the Secretary issues a waiver under paragraph (1) with respect to a report on an activity, not later than 48 hours after the Secretary issues such waiver, the Secretary shall submit to the appropriate congressional committees written notice of, and justification for, such waiver. (e) APPROPRIATE CONGRESSIONAL COMMITTEES DEFINED.—In this section, the term ''appropriate congressional committees'' means— (1) the congressional defense committees; and (2) the Committee on Foreign Relations of the Senate and the Committee on Foreign Affairs of the House of Representatives. Regarding Section 1262, H.Rept. 115-874 states the following: Report on military and coercive activities of the People's Republic of China in South China Sea (sec. 1262) The House bill contained a provision (sec. 1261) that would require Secretary of Defense, in consultation with the Director of National Intelligence and the Secretary of State, to submit a report to appropriate congressional committees on a quarterly basis describing China's activities in the Indo-Pacific region, and to disseminate the report to regional allies and partners and provide public notification, as appropriate. The provision would require that the dissemination and availability of the report and public notification be made in a manner consistent with national security and the protection of classified national security information. The Senate amendment contained a similar provision (sec. 1251) that would require the Secretary of Defense, in coordination with the Secretary of State, to submit to the congressional defense committees and release to the public, a report on the military and coercive activities of China in the South China Sea in connection with such activity immediately after the commencement of any significant reclamation or militarization activity by the People's Republic of China in the South China Sea, including any significant military deployment or operation or infrastructure construction. The House recedes with an amendment that would clarify that the required report shall be submitted to the congressional defense committees immediately after the commencement of any significant reclamation, assertion of an excessive territorial claim, or military activity by the People's Republic of China in the South China Sea. The conferees are concerned that sufficient information has not been made publicly available in a timely fashion regarding China's reclamation and militarization activities in the South China Sea. Moreover, the conferees recognize that China has engaged in provocative military activities elsewhere throughout the Indo-Pacific Region, including the East China Sea, the Taiwan Strait, and the Indian Ocean. The conferees urge the Secretary of Defense to give full consideration to the strategic and public interest in selective declassification of China's activities in the South China Sea and elsewhere in the Indo-Pacific region. (Pages 993-994) Section 1288 of H.R. 5515 states the following: SEC. 1288. MODIFICATION OF FREEDOM OF NAVIGATION REPORTING REQUIREMENTS. Subsection (a) of section 1275 of the National Defense Authorization Act for Fiscal Year 2017 (Public Law 114–328; 130 Stat. 2540), as amended by section 1262(a)(1) of the National Defense Authorization Act for Fiscal Year 2018 (Public Law 115–91; 131 Stat. 1689), is further amended by striking ''the Committees on Armed Services of the Senate and the House of Representatives'' and inserting ''the Committee on Armed Services and the Committee on Foreign Relations of the Senate and the Committee on Armed Services and the Committee on Foreign Affairs of the House of Representatives''. Appendix A. Strategic Context from U.S. Perspective This appendix presents a brief discussion of some elements of the strategic context from a U.S. perspective in which the issues discussed in this report may be considered. There is also a broader context of U.S.-China relations and U.S. foreign policy toward the Indo-Pacific that is covered in other CRS reports. Shift in International Security Environment World events have led some observers, starting in late 2013, to conclude that the international security environment has undergone a shift from the familiar post-Cold War era of the past 20 to 25 years, also sometimes known as the unipolar moment (with the United States as the unipolar power), to a new and different situation that features, among other things, renewed great power competition with China and Russia and challenges by these two countries and others to elements of the U.S.-led international order that has operated since World War II. China's actions in the SCS and ECS can be viewed as one reflection of that shift. Uncertainty Regarding Future U.S. Role in World The overall U.S. role in the world since the end of World War II in 1945 (i.e., over the past 70 years) is generally described as one of global leadership and significant engagement in international affairs. A key aim of that role has been to promote and defend the open international order that the United States, with the support of its allies, created in the years after World War II. In addition to promoting and defending the open international order, the overall U.S. role is generally described as having been one of promoting freedom, democracy, and human rights, while criticizing and resisting authoritarianism where possible, and opposing the emergence of regional hegemons in Eurasia or a spheres-of-influence world. Certain statements and actions from the Trump Administration have led to uncertainty about the Administration's intentions regarding the future U.S. role in the world. Based on those statements and actions, some observers have speculated that the Trump Administration may want to change the U.S. role in one or more ways. A change in the overall U.S. role could have profound implications for U.S. foreign policy, including U.S. policy regarding maritime territorial and EEZ disputes involving China. U.S. Grand Strategy Discussion of the above-mentioned shift in the international security environment has led to a renewed emphasis in discussions of U.S. security and foreign policy on grand strategy and geopolitics. From a U.S. perspective, grand strategy can be understood as strategy considered at a global or interregional level, as opposed to strategies for specific countries, regions, or issues. Geopolitics refers to the influence on international relations and strategy of basic world geographic features such as the size and location of continents, oceans, and individual countries. From a U.S. perspective on grand strategy and geopolitics, it can be noted that most of the world's people, resources, and economic activity are located not in the Western Hemisphere, but in the other hemisphere, particularly Eurasia. In response to this basic feature of world geography, U.S. policymakers for the past several decades have chosen to pursue, as a key element of U.S. grand strategy, a goal of preventing the emergence of a regional hegemon in one part of Eurasia or another, on the grounds that such a hegemon could represent a concentration of power strong enough to threaten core U.S. interests by, for example, denying the United States access to some of the other hemisphere's resources and economic activity. Although U.S. policymakers have not often stated this key national strategic goal explicitly in public, U.S. military (and diplomatic) operations in recent decades—both wartime operations and day-to-day operations—can be viewed as having been carried out in no small part in support of this key goal. Focus on Great Power Competition with China and Russia The Trump Administration's December 2017 National Security Strategy (NSS) and the 11-page unclassified summary of its January 2018 National Defense Strategy (NDS) reorient U.S. national security strategy and, within that, U.S. defense strategy, toward an explicit primary focus on great power competition with China and Russia and on countering Chinese and Russian military capabilities. The new U.S. strategy orientation set forth in the 2017 NSS and 2018 NDS 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). Concept of a Free and Open Indo-Pacific (FOIP) In addition to the 2017 NSS and 2018 NDS, the Trump Administration has highlighted the concept of a free and open Indo-Pacific (FOIP), with the term Indo-Pacific referring to the Indian Ocean, the Pacific Ocean, and the countries (particularly those in Eurasia) bordering on those two oceans. The concept, which is still being fleshed out by the Trump Administration, appears to be a general U.S foreign policy and national security construct for the region, but observers view it as one that includes a military component. Challenge to U.S. Sea Control and U.S. Position in Western Pacific Observers of Chinese and U.S. military forces view China's improving naval capabilities as posing a potential challenge in the Western Pacific to the U.S. Navy's ability to achieve and maintain control of blue-water ocean areas in wartime—the first such challenge the U.S. Navy has faced since the end of the Cold War. More broadly, these observers view China's naval capabilities as a key element of an emerging broader Chinese military challenge to the long-standing status of the United States as the leading military power in the Western Pacific. Regional U.S. Allies and Partners The United States has certain security-related policies pertaining to Taiwan under the Taiwan Relations Act ( H.R. 2479 / P.L. 96-8 of April 10, 1979). The United States has bilateral security treaties with Japan, South Korea, and the Philippines, and an additional security treaty with Australia and New Zealand. In addition to U.S. treaty allies, certain other countries in the Western Pacific can be viewed as current or emerging U.S. security partners. Appendix B. U.S. Treaties with Japan and Philippines This appendix presents brief background information on the U.S. security treaties with Japan and the Philippines. U.S.-Japan Treaty on Mutual Cooperation and Security The 1960 U.S.-Japan treaty on mutual cooperation and security states in Article V that Each Party recognizes that an armed attack against either Party in the territories under the administration of Japan would be dangerous to its own peace and safety and declares that it would act to meet the common danger in accordance with its constitutional provisions and processes. The United States has reaffirmed on a number of occasions over the years that since the Senkaku Islands are under the administration of Japan, they are included in the territories referred to in Article V of the treaty, and that the United States "will honor all of our treaty commitments to our treaty partners." (At the same time, the United States, noting the difference between administration and sovereignty, has noted that such affirmations do not prejudice the U.S. approach of taking no position regarding the outcome of the dispute between China, Taiwan, and Japan regarding who has sovereignty over the islands.) Some observers, while acknowledging the U.S. affirmations, have raised questions regarding the potential scope of actions that the United States might take under Article V. U.S.-Philippines Mutual Defense Treaty The 1951 U.S.-Philippines mutual defense treaty states in Article IV that Each Party recognizes that an armed attack in the Pacific Area on either of the Parties would be dangerous to its own peace and safety and declares that it would act to meet the common dangers in accordance with its constitutional processes. Article V states that For the purpose of Article IV, an armed attack on either of the Parties is deemed to include an armed attack on the metropolitan territory of either of the Parties, or on the island territories under its jurisdiction in the Pacific or on its armed forces, public vessels or aircraft in the Pacific. The United States has reaffirmed on a number of occasions over the years its obligations under the U.S.-Philippines mutual defense treaty. On May 9, 2012, Filipino Foreign Affairs Secretary Albert F. del Rosario issued a statement providing the Philippine perspective regarding the treaty's application to territorial disputes in the SCS. U.S. officials have made their own statements regarding the treaty's application to territorial disputes in the SCS. Appendix C. Treaties and Agreements Related to the Maritime Disputes This appendix briefly reviews some international treaties and agreements that bear on the issues discussed in this report. UN Convention on Law of the Sea (UNCLOS) The United Nations Convention on the Law of the Sea (UNCLOS) establishes a treaty regime to govern activities on, over, and under the world's oceans. UNCLOS was adopted by Third United Nations Conference on the Law of the Sea in December 1982, and entered into force in November 1994. The treaty established EEZs as a feature of international law, and contains multiple provisions relating to territorial waters and EEZs. As of May 10, 2018, 168 nations were party to the treaty, including China and most other countries bordering on the SCS and ECS (the exceptions being North Korea and Taiwan). The treaty and an associated 1994 agreement relating to implementation of Part XI of the treaty (on deep seabed mining) were transmitted to the Senate on October 6, 1994. In the absence of Senate advice and consent to adherence, the United States is not a party to the convention and the associated 1994 agreement. A March 10, 1983, statement on U.S. ocean policy by President Ronald Reagan states that UNCLOS contains provisions with respect to traditional uses of the oceans which generally confirm existing maritime law and practice and fairly balance the interests of all states. Today I am announcing three decisions to promote and protect the oceans interests of the United States in a manner consistent with those fair and balanced results in the Convention and international law. First, the United States is prepared to accept and act in accordance with the balance of interests relating to traditional uses of the oceans—such as navigation and overflight. In this respect, the United States will recognize the rights of other states in the waters off their coasts, as reflected in the Convention, so long as the rights and freedoms of the United States and others under international law are recognized by such coastal states. Second, the United States will exercise and assert its navigation and overflight rights and freedoms on a worldwide basis in a manner that is consistent with the balance of interests reflected in the convention. The United States will not, however, acquiesce in unilateral acts of other states designed to restrict the rights and freedoms of the international community in navigation and overflight and other related high seas uses. Third, I am proclaiming today an Exclusive Economic Zone in which the United States will exercise sovereign rights in living and nonliving resources within 200 nautical miles of its coast. This will provide United States jurisdiction for mineral resources out to 200 nautical miles that are not on the continental shelf. UNCLOS builds on four 1958 law of the sea conventions to which the United States is a party: the Convention on the Territorial Sea and the Contiguous Zone, the Convention on the High Seas, the Convention on the Continental Shelf, and the Convention on Fishing and Conservation of the Living Resources of the High Seas. 1972 Convention on Preventing Collisions at Sea (COLREGs) China and the United States, as well as more than 150 other countries (including all those bordering on the South East and South China Seas, but not Taiwan), are parties to an October 1972 multilateral convention on international regulations for preventing collisions at sea, commonly known as the collision regulations (COLREGs) or the "rules of the road." Although commonly referred to as a set of rules or regulations, this multilateral convention is a binding treaty. The convention applies "to all vessels upon the high seas and in all waters connected therewith navigable by seagoing vessels." It thus applies to military vessels, paramilitary and law enforcement (i.e., coast guard) vessels, maritime militia vessels, and fishing boats, among other vessels. In a February 18, 2014, letter to Senator Marco Rubio concerning the December 5, 2013, incident involving the Cowpens , the State Department stated the following: In order to minimize the potential for an accident or incident at sea, it is important that the United States and China share a common understanding of the rules for operational air or maritime interactions. From the U.S. perspective, an existing body of international rules and guidelines—including the 1972 International Regulations for Preventing Collisions at Sea (COLREGs)—are sufficient to ensure the safety of navigation between U.S. forces and the force of other countries, including China. We will continue to make clear to the Chinese that these existing rules, including the COLREGs, should form the basis for our common understanding of air and maritime behavior, and we will encourage China to incorporate these rules into its incident-management tools. Likewise, we will continue to urge China to agree to adopt bilateral crisis management tools with Japan and to rapidly conclude negotiations with ASEAN on a robust and meaningful Code of Conduct in the South China in order to avoid incidents and to manage them when they arise. We will continue to stress the importance of these issues in our regular interactions with Chinese officials. In the 2014 edition of its annual report on military and security developments involving China, the DOD states the following: On December 5, 2013, a PLA Navy vessel and a U.S. Navy vessel operating in the South China Sea came into close proximity. At the time of the incident, USS COWPENS (CG 63) was operating approximately 32 nautical miles southeast of Hainan Island. In that location, the U.S. Navy vessel was conducting lawful military activities beyond the territorial sea of any coastal State, consistent with customary international law as reflected in the Law of the Sea Convention. Two PLA Navy vessels approached USS COWPENS. During this interaction, one of the PLA Navy vessels altered course and crossed directly in front of the bow of USS COWPENS. This maneuver by the PLA Navy vessel forced USS COWPENS to come to full stop to avoid collision, while the PLA Navy vessel passed less than 100 yards ahead. The PLA Navy vessel's action was inconsistent with internationally recognized rules concerning professional maritime behavior (i.e., the Convention of International Regulations for Preventing Collisions at Sea), to which China is a party. 2014 Code for Unplanned Encounters at Sea (CUES) On April 22, 2014, representatives of 21 Pacific-region navies (including China, Japan, and the United States), meeting in Qingdao, China, at the 14 th Western Pacific Naval Symposium (WPNS), unanimously agreed to a Code for Unplanned Encounters at Sea (CUES). CUES, a nonbinding agreement, establishes a standardized protocol of safety procedures, basic communications, and basic maneuvering instructions for naval ships and aircraft during unplanned encounters at sea, with the aim of reducing the risk of incidents arising from such encounters. The CUES agreement in effect supplements the 1972 COLREGs Convention (see previous section); it does not cancel or lessen commitments that countries have as parties to the COLREGS Convention. Two observers stated that "the [CUES] resolution is non-binding; only regulates communication in 'unplanned encounters,' not behavior; fails to address incidents in territorial waters; and does not apply to fishing and maritime constabulary vessels [i.e., coast guard ships and other maritime law enforcement ships], which are responsible for the majority of Chinese harassment operations." DOD stated in 2015 that Going forward, the Department is also exploring options to expand the use of CUES to include regional law enforcement vessels and Coast Guards. Given the growing use of maritime law enforcement vessels to enforce disputed maritime claims, expansion of CUES to MLE [maritime law enforcement] vessels would be an important step in reducing the risk of unintentional conflict. U.S. Navy officials have stated that the CUES agreement is generally working well, and that the United States (as noted in the passage above) is interested in expanding the agreement to cover coast guard ships. Officials from Singapore and Malaysia reportedly have expressed support for the idea. An Obama Administration fact sheet about Chinese President Xi Jinping's state visit to the United States on September 24-25, 2015, stated the following: The U.S. Coast Guard and the China Coast Guard have committed to pursue an arrangement whose intended purpose is equivalent to the Rules of Behavior Confidence Building Measure annex on surface-to-surface encounters in the November 2014 Memorandum of Understanding between the United States Department of Defense and the People's Republic of China Ministry of National Defense. A November 3, 2018, press report published following an incident in the SCS between a U.S. Navy destroyer and a Chinese destroyer stated the following: The U.S. Navy's chief of naval operations has called on China to return to a previously agreed-upon code of conduct for at-sea encounters between the ships of their respective navies, stressing the need to avoid miscalculations. During a Nov. 1 teleconference with reporters based in the Asia-Pacific region, Adm. John Richardson said he wants the People's Liberation Army Navy to "return to a consistent adherence to the agreed-to code that would again minimize the chance for a miscalculation that could possibly lead to a local incident and potential escalation." The CNO cited a case in early October when the U.S. Navy's guided-missile destroyer Decatur reported that a Chinese Type 052C destroyer came within 45 yards of the Decatur as it conducted a freedom-of-navigation operation in the South China Sea. However, he added that the "vast majority" of encounters with Chinese warships in the South China Sea "are conducted in accordance with the Code of Unplanned Encounters at Sea and done in a safe and professional manner." The code is an agreement reached by 21 Pacific nations in 2014 to reduce the chance of an incident at sea between the agreement's signatories. 2014 U.S.-China MOU on Air and Maritime Encounters In November 2014, the U.S. DOD and China's Ministry of National Defense signed a Memorandum of Understanding (MOU) regarding rules of behavior for safety of air and maritime encounters. The MOU makes reference to UNCLOS, the 1972 COLREGs convention, the Conventional on International Civil Aviation (commonly known as the Chicago Convention), the Agreement on Establishing a Consultation Mechanism to Strengthen Military Maritime Safety (MMCA), and CUES. The MOU as signed in November 2014 included an annex on rules of behavior for safety of surface-to-surface encounters. An additional annex on rules of behavior for safety of air-to-air encounters was signed on September 15 and 18, 2015. An October 20, 2018, press report states the following: Eighteen nations including the U.S. and China agreed in principle Saturday [October 20] to sign up to guidelines governing potentially dangerous encounters by military aircraft, a step toward stabilizing flashpoints but one that leaves enough wiggle room to ignore the new standards when a country wants. The guidelines essentially broaden a similar agreement reached by the U.S. and China three years ago and are an attempt to mitigate against incidents and collisions in some of the world's most tense areas…. The in-principle agreement, which will be put forward for formal adoption by the group of 18 nations next year, took place at an annual meeting of defense ministers under the aegis of the 10-country Association of Southeast Asian Nations, hosted by Singapore. Asean nations formally adopted the new guidelines themselves Friday. "The guidelines are very useful in setting norms," Singapore's defense minister Ng Eng Hen told reporters after the meeting. "All the 18 countries agreed strong in-principle support for the guidelines."… The aerial-encounters framework agreed to Saturday includes language that prohibits fast or aggressive approaches in the air and lays out guidelines on clear communications including suggestions to "refrain from the use of uncivil language or unfriendly physical gestures." Signatories to the agreement, which is voluntary and not legally binding, would agree to avoid unprofessional encounters and reckless maneuvers…. The guidelines fall short on enforcement and geographic specifics, but they are "better than nothing at all," said Evan Laksmana, senior researcher with the Center for Strategic and International Studies in Jakarta. "Confidence-building surrounding military crises or encounters can hardly move forward without some broadly agreed-upon rules of the game," he said. Negotiations on SCS Code of Conduct (COC) In 2002, China and the 10 member states of ASEAN signed a nonbinding Declaration on the Conduct (DOC) of Parties in the South China Sea in which the parties, among other things, ... reaffirm their respect for and commitment to the freedom of navigation in and overflight above the South China Sea as provided for by the universally recognized principles of international law, including the 1982 UN Convention on the Law of the Sea.... ... undertake to resolve their territorial and jurisdictional disputes by peaceful means, without resorting to the threat or use of force, through friendly consultations and negotiations by sovereign states directly concerned, in accordance with universally recognized principles of international law, including the 1982 UN Convention on the Law of the Sea.... ... undertake to exercise self-restraint in the conduct of activities that would complicate or escalate disputes and affect peace and stability including, among others, refraining from action of inhabiting on the presently uninhabited islands, reefs, shoals, cays, and other features and to handle their differences in a constructive manner.... ...reaffirm that the adoption of a [follow-on] code of conduct in the South China Sea would further promote peace and stability in the region and agree to work, on the basis of consensus, towards the eventual attainment of this objective.... In July 2011, China and ASEAN adopted a preliminary set of principles for implementing the DOC. U.S. officials since 2010 have encouraged ASEAN and China to develop the follow-on binding Code of Conduct (COC) mentioned in the final quoted paragraph above. China and ASEAN have conducted negotiations on the follow-on COC, but China has not yet agreed with the ASEAN member states on a final text. On March 8, 2017, China announced that the first draft of a framework for the COC had been completed, and that "China and ASEAN countries feel satisfied with this." On May 18 and 19, 2017, it was reported that the China and the ASEAN countries had agreed on the framework. An article from a Chinese news outlet stated the following: All countries involved have agreed not to release the framework document, but to maintain it as an internal document at this time since the consultation will continue and they do not want any external interference, [Vice-Foreign Minister] Liu [Zhenmin] said. "Against the backdrop of economic globalization, China and ASEAN countries should continue making our regional rules to guide our own actions and protect our common interests," Liu said. A May 18, 2017, press report stated that Liu Zhemin "called on others to stay out [of the negotiations], apparently a coded message to the United States. 'We hope that our consultations on the code are not subject to any outside interference,' Liu said." An August 3, 2017, press report stated the following: Southeast Asian ministers meeting this week are set to avoid tackling the subject of Beijing's arming and building of manmade South China Sea islands, preparing to endorse a framework for a code of conduct that is neither binding nor enforceable. The Association of South East Asian Nations (ASEAN) has omitted references to China's most controversial activities in its joint communique, a draft reviewed by Reuters shows. In addition, a leaked blueprint for establishing an ASEAN-China code of maritime conduct does not call for it to be legally binding, or seek adherence to the United Nations Convention on the Law of the Sea (UNCLOS).... Analysts and some ASEAN diplomats worry that China's sudden support for negotiating a code of conduct is a ploy to buy time to further boost its military capability.... The agreed two-page framework is broad and leaves wide scope for disagreement, urging a commitment to the "purposes and principles" of UNCLOS, for example, rather than adherence. The framework papers over the big differences between ASEAN nations and China, said Patrick Cronin of the Center for a New American Security. "Optimists will see this non-binding agreement as a small step forward, allowing habits of cooperation to develop, despite differences," he said. "Pessimists will see this as a gambit favorable to a China determined to make the majority of the South China Sea its domestic lake." An August 6, 2017, press report stated the following: Southeast Asian nations agreed with China on Sunday [August 6] to endorse a framework for a maritime code of conduct that would govern behavior in disputed waters of the South China Sea, a small step forward in a negotiation that has lasted well over a decade. Though not the long-discussed code itself, the framework sets out parameters for discussion of an agreement intended to bring predictability to a potential flashpoint as China increasingly asserts its military presence over the area in the face of rival claims. The 10 countries of the Association of Southeast Asian Nations will meet with China at the end of August to discuss legalities for negotiations on the code of conduct, with formal talks beginning soon after, Philippines department of foreign affairs spokesman Robespierre Bolivar said Sunday. The endorsement of the framework, which was tentatively agreed to in May, came during a bilateral meeting between China and Asean on the sidelines of a series of security-oriented meetings that will conclude Tuesday. The unsticking of the framework after years of obstruction is widely seen as a concession by China, which has opposed any legally binding code on maritime engagement, stepped up naval patrols and built artificial islands to enforce its claims, equipping them with military weapons. Beijing's move to allow discussion on the code of conduct follows a resetting of ties with the Philippines under President Rodrigo Duterte, who in October—just four months after taking office—visited Beijing and declared a new friendship between the two countries. An August 8, 2017, blog post about the framework states the following: In Manila on 6 August 2017, the foreign ministers of ASEAN and China endorsed the framework for the Code of Conduct for the South China Sea (COC). While the framework is a step forward in the conflict management process for the South China Sea, it is short on details and contains many of the same principles and provisions contained in the 2002 ASEAN-China Declaration on the Conduct of Parties in the South China Sea (DOC) which has yet to be even partially implemented. The text includes a new reference to the prevention and management of incidents, as well as a seemingly stronger commitment to maritime security and freedom of navigation. However, the phrase "legally binding" is absent, as are the geographical scope of the agreement and enforcement and arbitration mechanisms. The framework will form the basis for further negotiations on the COC. Those discussions are likely to be lengthy and frustrating for those ASEAN members who had hoped to see a legally binding, comprehensive and effective COC. Some observers have argued that China has been dragging out the negotiations on the COC for years as part of a "talk and take strategy," meaning a strategy in which China engages in (or draws out) negotiations while taking actions to gain control of contested areas. A May 25, 2017, news report states the following: To call negotiations between China and the ten-country Association of South-East Asian Nations (ASEAN) over rival claims in the South China Sea "drawn out" would be a gross understatement. At the centre of the matter is an unsquareable circle: the competing claims of China and several South-East Asian countries. Nobody wants to go to war; nobody wants to be accused of backing down. Still, at a meeting of senior Chinese and ASEAN officials on May 18 th , something happened: the two sides agreed on a "framework" for a code of conduct. An official from Singapore (which currently co-ordinates ASEAN-China relations) called the agreement a sign of "steady progress".... ASEAN members called for a legally binding code of conduct as far back as 1996.... Since then, code-of-conduct negotiations have proceeded glacially.... Last July, after China received an unfavourable ruling on its maritime claims in a case brought by the Philippines to a tribunal in The Hague, China agreed to expedite the talks.... The draft framework will be presented to ASEAN and Chinese foreign ministers at a conference in August. This will then form the basis for the thorny negotiations to follow. The text has not (yet) been leaked. But its most salient feature may be what it appears to lack: any hint of enforcement mechanisms or consequences for violations. China has long rejected a legally binding agreement—or indeed any arrangement that could limit its actions in the South China Sea. The result, explains Ian Storey, of the ISEAS-Yusof Ishak Institute, a think-tank in Singapore, is a framework "that makes China look co-operative…without having to do anything that might constrain its freedom of action". ASEAN, meanwhile, gets the appearance of progress. "The ASEAN secretariat is a bureaucracy, and bureaucrats like process," explains Mr Storey. A July 13, 2018, blog post states the following: The COC has become a "holy grail," highly desired but unattainable. A major concern should be that this holy grail could turn into a tool for China to legitimize its actions in the South China Sea by engaging in the process while subverting its spirit. To this end, the challenges to the COC process are likely to be: China will use the COC talks to delay, exploit, and divert focus from any ASEAN consensus on the South China Sea; China will seek to include unhelpful and imprecise language in the COC which it could then use to justify its actions; China will nonetheless claim the COC as a diplomatic success and will use it as cover to avoid criticism while still pursuing its unilateral strategy to control the South China Sea…. If the COC process continues on its current trajectory, and China succeeds in filling the document with vague articles that would have little impact on its behavior, it would effectively be abusing the rules-based order to its own benefit. Instead of protecting against unilateral actions in the South China Sea, the rules-based order in the form of the COC could assist and justify China's expansion and ultimately its sole control of the South China Sea. Other regional actors need to recognize these traps of concluding a counter-productive COC, and resist the urge to reach an agreement just to be able to say they made progress. Instead, they should insist on negotiating the terms and conditions of a real COC, one that would establish effective rules-based dispute management mechanisms, not one that would by-pass them for the sake of an easy "win." An August 2, 2018, press report states the following: After more than a decade of talks, a bloc of Southeast Asian nations and China have agreed on a draft code of conduct that will lay the foundation for negotiations over the disputed South China Sea. Observers said the agreement showed that China and the Association of Southeast Asian Nations (Asean) could make progress through talks despite rising regional tensions, but they also warned that there was still a long way to go until a final deal. The agreement on the "Single Draft COC Negotiating Text" was announced at a meeting of Asean foreign ministers in Singapore on Thursday [August 2], after being nailed down at a China-Asean meeting in the central Chinese city of Changsha in June. An August 9, 2018, press report stated the following: Talks on completing a code of conduct for the disputed South China Sea will be long and complex and it would be unrealistic to set a timetable, state media on Thursday [August 9] cited a senior Chinese diplomat as saying…. In an interview with China Newsweek magazine, Yi Xianliang, Director General of the Chinese Foreign Ministry's Department of Boundary and Ocean Affairs, said the talks were continuing. Many of the topics were complex and sensitive and there were many different points of view, he said. "If these issues are to be resolved, and the code finally comes together, all sides need to keep looking for the greatest common denominator," Yi added. "There are voices from the outside, who are trying to set a timetable for the talks on the code. I think this is unrealistic," he said. Any multilateral talks take time, especially on such a complex issue as the South China Sea, Yi added. "It is impossible to define a timetable. Instead of setting the timetable unrealistically, and binding one's hands, it's better to step forward one foot at a time."… "Certain countries outside the region have been agitating that the code must be legally binding. This issue is quite complicated, including the domestic legal procedures involved in the countries concerned," he added, without elaborating. An October 22, 2018, press report stated the following: As China moves to complete the creation of military outposts in the South China Sea, Beijing's negotiation with southeastern Asian nations over a binding code of conduct is gaining momentum. But U.S. officials and experts warn China's insertions in the draft South China Sea code of conduct may put Washington and Beijing on a collision course. The text of the draft also shows that deep divisions remain among claimants. One of the Chinese provisions in the text states, "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." China also proposed cooperation on the marine economy "shall not be conducted in cooperation with companies from countries outside the region." A State Department spokesperson told VOA the United States is concerned by reports China has been pressing members of the Association of Southeast Asian Nations "in the closed-door talks, to accept restrictions on their ability to conduct exercises with security partners, and to agree not to conduct oil and gas exploration in their claimed waters with energy firms based in countries which are not part of the ongoing negotiations." "These proposals, if accepted, would limit the ability of ASEAN nations to conduct sovereign, independent foreign and economic policies and would directly harm the interests of the broader international community," added the State Department spokesperson…. "In other words, China would like a veto over all the military exercises held by ASEAN countries with other nations. I think this really provides some evidence that China indeed is trying to limit American influence in the region, one might go so far as to say to push American military presence out of the region eventually, but certainly in the area of the South China Sea," said Bonnie Glaser, director of the China Power Project at the Center for Strategic and International Studies in Washington…. The United States is also calling for ongoing discussions on the South China Sea code of conduct to be transparent and consultative with the rest of the international community. U.S. officials said the international community has direct stakes in the outcome. A September 6, 2018, blog post stated the following: After two decades of talks, scepticism about the development of a South China Sea Code of Conduct (COC) is well-deserved, but it is also important to acknowledge progress when it happens. The agreement on a single draft negotiating text, revealed ahead of the ASEAN–China Post Ministerial Meeting on 2 August 2018, is an important step in the process that deserves recognition. The COC will not resolve the South China Sea disputes, nor was it ever meant to. Instead the COC is intended to manage disputes to avoid conflict pending their eventual resolution by direct negotiation or arbitration among the claimants. But any system to effectively manage the South China Sea disputes would require three things, none of which are achieved yet in the draft text. First, an effective COC would need to be geographically defined…. Second, an effective COC would need a dispute settlement mechanism…. Third, any effective regime to manage the South China Sea disputes would need detailed provisions on fisheries management and oil and gas development…. The solution to this problem could be a COC signed by all 10 ASEAN members and China that establishes general rules of behaviour within a clear geographic area, sets up an effective dispute settlement mechanism and endorses the immediate start of follow-on negotiations involving only the relevant claimants on fisheries management and oil and gas cooperation. Such a document would be a major step towards peacefully managing the South China Sea disputes and there are hints that at least some sections of the negotiating text might be on the right track. But the differences between parties remain considerable and final agreement on an effective COC still seems some way off. An October 29, 2018, press report states the following: The Philippines on Monday said a set of rules intended to prevent conflict in the South China Sea need not legally compel countries to follow it—an issue of importance for the Chinese government. Philippine Foreign Affairs Secretary Teodoro Locsin Jr. raised this possibility during a joint news conference with Wang Yi, his Chinese counterpart, in Davao City where they held bilateral talks to firm up preparations for President Xi Jinping's visit to Manila next month. The Association of Southeast Asian Nations and China are negotiating a code of conduct in the South China Sea. The 10-member bloc wants it to be legally binding, but Beijing prefers just "binding," ASEAN diplomats have said. "Perhaps, we will not be able to arrive at a legally binding COC, but it will be a standard on how people of ASEAN and governments of ASEAN will behave with each other -- always with honor, never with aggression, and always for mutual progress," Locsin said…. Wang said China will abide by the code whether it is legally binding or not. He said China hopes to finish the negotiations before Manila's term as ASEAN-China coordinator ends. "We welcome constructive opinions within the framework... that has been agreed," Wang said, referring to the general outline agreed last year, which dropped a reference to a legally binding code. The framework essentially repeats the spirit of a 2002 declaration on the South China Sea that called on parties to exercise restraint to avoid escalating tensions, and respect international law, among other things. Critics and ASEAN officials said the declaration failed to manage tensions in the disputed area because it was not legally binding. A November 14, 2018, press report stated the following: A rulebook to settle disputes in the hotly contested South China Sea should be finished in three years, Chinese Premier Li Keqiang said on Tuesday, insisting his nation does not seek "hegemony or expansion." Li's comments appeared to be the first clear timeframe for finishing the code of conduct. Talks have dragged on for years, with China accused of delaying progress as it prefers to deal with less powerful countries on a one-to-one basis. Appendix D. July 2016 Tribunal Award in SCS Arbitration Case Involving Philippines and China This appendix provides background information on the July 2016 tribunal award in the SCS arbitration case involving the Philippines and China. Overview In 2013, the Philippines sought arbitration under UNCLOS over the role of historic rights and the source of maritime entitlements in the South China Sea, the status of certain maritime features and the maritime entitlements they are capable of generating, and the lawfulness of certain actions by China that were alleged by the Philippines to violate UNCLOS. A tribunal was constituted under UNCLOS to hear the case. China stated repeatedly that it would not accept or participate in the arbitration and that, in its view, the tribunal lacked jurisdiction in this matter. China's nonparticipation did not prevent the case from moving forward, and the tribunal decided that it had jurisdiction over various matters covered under the case. On July 12, 2016, the tribunal issued its award (i.e., ruling) in the case. The award was strongly in favor of the Philippines—more so than even some observers had anticipated. The tribunal ruled, among other things, that China's nine-dash line claim had no legal basis; that none of the land features in the Spratlys is entitled to any more than a 12-nm 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 by interfering with Philippine vessels and by damaging the maritime environment and engaging in reclamation work on a feature in the Philippines' EEZ. Under UNCLOS, the award is binding on both the Philippines and China (China's nonparticipation in the arbitration does not change this). There is, however, no mechanism for enforcing the tribunal's award. The United States has urged China and the Philippines to abide by the award. China, however, has declared the ruling null and void. Philippine President Rodrigo Duterte, who took office just before the tribunal's ruling, has not sought to enforce it. The tribunal's press release summarizing its award states the following in part: The Award is final and binding, as set out in Article 296 of the Convention [i.e., UNCLOS] and Article 11 of Annex VII [of UNCLOS]. Historic Rights and the 'Nine-Dash Line': ... On the merits, the Tribunal concluded that the Convention comprehensively allocates rights to maritime areas and that protections for pre-existing rights to resources were considered, but not adopted in the Convention. Accordingly, the Tribunal concluded that, to the extent China had historic rights to resources in the waters of the South China Sea, such rights were extinguished to the extent they were incompatible with the exclusive economic zones provided for in the Convention. The Tribunal also noted that, although Chinese navigators and fishermen, as well as those of other States, had historically made use of the islands in the South China Sea, there was no evidence that China had historically exercised exclusive control over the waters or their resources. The Tribunal concluded that there was no legal basis for China to claim historic rights to resources within the sea areas falling within the 'nine-dash line'. Status of Features: ... Features that are above water at high tide generate an entitlement to at least a 12 nautical mile territorial sea, whereas features that are submerged at high tide do not. The Tribunal noted that the reefs have been heavily modified by land reclamation and construction, recalled that the Convention classifies features on their natural condition, and relied on historical materials in evaluating the features. The Tribunal then considered whether any of the features claimed by China could generate maritime zones beyond 12 nautical miles. Under the Convention, islands generate an exclusive economic zone of 200 nautical miles and a continental shelf, but "[r]ocks which cannot sustain human habitation or economic life of their own shall have no exclusive economic zone or continental shelf." ... the Tribunal concluded that none of the Spratly Islands is capable of generating extended maritime zones. The Tribunal also held that the Spratly Islands cannot generate maritime zones collectively as a unit. Having found that none of the features claimed by China was capable of generating an exclusive economic zone, the Tribunal found that it could—without delimiting a boundary—declare that certain sea areas are within the exclusive economic zone of the Philippines, because those areas are not overlapped by any possible entitlement of China. Lawfulness of Chinese Actions: ... Having found that certain areas are within the exclusive economic zone of the Philippines, the Tribunal found that China had violated the Philippines' sovereign rights in its exclusive economic zone by (a) interfering with Philippine fishing and petroleum exploration, (b) constructing artificial islands and (c) failing to prevent Chinese fishermen from fishing in the zone. The Tribunal also held that fishermen from the Philippines (like those from China) had traditional fishing rights at Scarborough Shoal and that China had interfered with these rights in restricting access. The Tribunal further held that Chinese law enforcement vessels had unlawfully created a serious risk of collision when they physically obstructed Philippine vessels. Harm to Marine Environment: The Tribunal considered the effect on the marine environment of China's recent large-scale land reclamation and construction of artificial islands at seven features in the Spratly Islands and found that China had caused severe harm to the coral reef environment and violated its obligation to preserve and protect fragile ecosystems and the habitat of depleted, threatened, or endangered species. The Tribunal also found that Chinese authorities were aware that Chinese fishermen have harvested endangered sea turtles, coral, and giant clams on a substantial scale in the South China Sea (using methods that inflict severe damage on the coral reef environment) and had not fulfilled their obligations to stop such activities. Aggravation of Dispute: Finally, the Tribunal considered whether China's actions since the commencement of the arbitration had aggravated the dispute between the Parties. The Tribunal found that it lacked jurisdiction to consider the implications of a stand-off between Philippine marines and Chinese naval and law enforcement vessels at Second Thomas Shoal, holding that this dispute involved military activities and was therefore excluded from compulsory settlement. The Tribunal found, however, that China's recent large-scale land reclamation and construction of artificial islands was incompatible with the obligations on a State during dispute resolution proceedings, insofar as China has inflicted irreparable harm to the marine environment, built a large artificial island in the Philippines' exclusive economic zone, and destroyed evidence of the natural condition of features in the South China Sea that formed part of the Parties' dispute. Assessments of Impact of Arbitral Award One Year Later In July 2017, a year after the arbitral panel's award, some observers assessed the impact to date of the award. For example, one observer stated the following: One year ago, China suffered a massive legal defeat when an international tribunal based in The Hague ruled that the vast majority of Beijing's extensive claims to maritime rights and resources in the South China Sea were not compatible with international law. Beijing was furious. At an official briefing immediately after the ruling, Vice Foreign Minister Liu Zhenmin twice called it "nothing more than a piece of waste paper," and one that "will not be enforced by anyone." And yet, one year on, China is, in many ways, abiding by it.... China is not fully complying with the ruling—far from it. On May 1, China imposed a three-and-a-half-month ban on fishing across the northern part of the South China Sea, as it has done each year since 1995. While the ban may help conserve fish stocks, its unilateral imposition in wide areas of the sea violates the ruling. Further south, China's occupation of Mischief Reef, a feature that is submerged at high tide and the tribunal ruled was part of the Philippines' continental shelf, endures. Having built a vast naval base and runway here, China looks like it will remain in violation of that part of the ruling for the foreseeable future. But there is evidence that the Chinese authorities, despite their rhetoric, have already changed their behavior. In October 2016, three months after the ruling, Beijing allowed Philippine and Vietnamese boats to resume fishing at Scarborough Shoal, west of the Philippines. A China Coast Guard ship still blocks the entrance to the lagoon, but boats can still fish the rich waters around it. The situation is not perfect but neither is China flaunting its defiance.... Much more significantly, China has avoided drilling for oil and gas on the wrong side of the invisible lines prescribed by the United Nations Convention on the Law of the Sea (UNCLOS).... ... the ruling means China has no claim to the fish, oil or gas more than 12 nautical miles from any of the Spratlys or Scarborough Shoal. The Chinese authorities appear not to accept this.... There are clear signs from both China's words and deeds that Beijing has quietly modified its overall legal position in the South China Sea. Australian researcher Andrew Chubb noted a significant article in the Chinese press in July last year outlining the new view.... ... China's new position seems to represent a major step towards compliance with UNCLOS and, therefore, the ruling. Most significantly, it removes the grounds for Chinese objections to other countries fishing and drilling in wide areas of the South China Sea.... Overall, the picture is of a China attempting to bring its vision of the rightful regional order (as the legitimate owner of every rock and reef inside the U-shaped line) within commonly understood international rules. Far from being "waste paper," China is taking the tribunal ruling very seriously. It is still some way from total compliance but it is clearly not deliberately flouting the ruling. Another observer stated the following: A year ago today, an arbitral tribunal formed pursuant to the United Nations Convention for the Law of the Sea issued a blockbuster award finding much of China's conduct in the South China Sea in violation of international law. As I detailed that day on this blog and elsewhere, the Philippines won about as big a legal victory as it could have expected. But as many of us also warned that day, a legal victory is not the same as an actual victory. In fact, over the past year China has succeeded in transforming its legal defeat into a policy victory by maintaining its aggressive South China Sea policies while escaping sanction for its non-compliance. While the election of a new pro-China Philippines government is a key factor, much of the blame for China's victory must also be placed on the Obama Administration.... International law seldom enforces itself, and even the reputational costs of violating international law do not arise unless other states impose those costs on the law-breaker. Both the Philippines and the U.S. had policy options that would have raised the costs of China's non-compliance with the award. But neither country's government chose to press China on the arbitral award.... Looking back after one year, we cannot say (yet) that U.S. policy in the South China Sea is a failure. But we can say that the U.S. under President Obama missed a huge opportunity to change the dynamics in the region in its favor, and it is hard to know whether or when another such opportunity will arise in the future. Reported Chinese Characterization of Arbitral Award as "Waste Paper" When the arbitral panel's award was announced, China stated that "China does not accept or recognize it," and that the award "is invalid and has no binding force." The first of the two passages quoted above states that "at an official briefing immediately after the ruling, Vice Foreign Minister Liu Zhenmin twice called it 'nothing more than a piece of waste paper,' and one that 'will not be enforced by anyone.'" A November 22, 2017, press report states the following: An eight-page essay pumped through social media and Chinese state newspapers in recent days extolled the virtues of president Xi Jinping. Among his achievements, in the Chinese language version, was that he had turned the South China Sea Arbitration at The Hague—which found against China—into "waste paper". It was an achievement that state news agency Xinhua's lengthy hymn, entitled "Xi and His Era", did not include in the English version for foreign consumption. Assessments and Events Two Years Later Another observer writes in a May 10, 2018, commentary piece that Two years after an international tribunal rejected expansive Chinese claims to the South China Sea, Beijing is consolidating control over the area and its resources. While the U.S. defends the right to freedom of navigation, it has failed to support the rights of neighboring countries under the tribunal's ruling. As a result, Southeast Asian countries are bowing to Beijing's demands…. While Beijing's dramatic military buildup in the South China Sea has received much attention, its attempts at "lawfare" are largely overlooked. In May, the Chinese Society of International Law published a "critical study" on the South China Sea arbitration case. It rehashed old arguments but also developed a newer one, namely that China is entitled to claim maritime zones based on groups of features rather than from individual features. Even if China is not entitled to historic rights within the area it claims, this argument goes, it is entitled to resources in a wide expanse of sea on the basis of an exclusive economic zone generated from outlying archipelagoes. But the Convention on the Law of the Sea makes clear that only archipelagic states such as the Philippines and Indonesia may draw straight archipelagic baselines from which maritime zones may be claimed. The tribunal also explicitly found that there was "no evidence" that any deviations from this rule have amounted to the formation of a new rule of customary international law. China's arguments are unlikely to sway lawyers, but that is not their intended audience. Rather Beijing is offering a legal fig leaf to political and business elites in Southeast Asia who are already predisposed to accept Beijing's claims in the South China Sea. They fear China's threat of coercive economic measures and eye promises of development through offerings such as the Belt and Road Initiative. Why did Washington go quiet on the 2016 tribunal decision? One reason is Philippine President Rodrigo Duterte's turn toward China and offer to set aside the ruling. The U.S. is also worried about the decision's implications for its own claims to exclusive economic zones from small, uninhabited land features in the Pacific. The Trump administration's failure to press Beijing to abide by the tribunal's ruling is a serious mistake. It undermines international law and upsets the balance of power in the region. Countries have taken note that the tide in the South China Sea is in China's favor, and they are making their strategic calculations accordingly. This hurts U.S. interests in the region. A July 12, 2018, press report stated the following: The Philippines is celebrating today the second anniversary of its landmark arbitration award against China's territorial claims in the South China Sea handed down by an arbitral tribunal in The Hague…. Until now, the Philippines remains sharply divided on how to leverage its arbitration award. Filipino President Rodrigo Duterte has repeatedly downplayed the relevance of the ruling by questioning its enforceability amid China's vociferous opposition. Soon after taking office in mid-2016, Duterte declared that he would "set aside" the arbitration award in order to pursue a "soft landing" in bilateral relations with China. In exchange, he has hoped for large-scale Chinese investments as well as resource-sharing in the South China Sea…. Other major leaders in the Philippines, however, have taken a tougher stance and continue to try to leverage the award to resist China's expanding footprint in the area. The Stratbase-Albert Del Rosario Institute, an influential think tank co-founded by former Philippine Secretary of Foreign Affairs Albert del Rosario, hosted today a high-level forum on the topic at the prestigious Manila Polo Club. Del Rosario oversaw the arbitration proceedings against China under Duterte's predecessor, Benigno Aquino. He opened the event attended by dignitaries from major Western and Asian countries with a strident speech which accused China of trying to "dominate the South China Sea through force and coercion." He defended the arbitration award as an "overwhelming victory" to resist "China's unlawful expansion agenda." The ex-top diplomat also accused the Duterte administration of acquiescence to China by acting as an "abettor" and "willing victim" by soft-pedaling the Philippines' claims in the South China Sea and refusing to raise the arbitration award in multilateral fora. The keynote speaker of the event was Vice President Leni Robredo, who has recently emerged as the de facto leader of the opposition against Duterte. Though falling short of directly naming Duterte, her spirited speech served as a comprehensive indictment of the administration's policy in the South China Sea…. Her keynote address, widely covered by the local media, was followed by an even more spirited speech by interim Supreme Court Chief Justice Antonio Carpio, another leading critic of Duterte's foreign policy. The chief magistrate, who also oversaw the Philippines' arbitration proceedings against China, lashed out at Duterte for placing the landmark award in a "deep freeze." He called on the Duterte administration to leverage the award by negotiating maritime delimitation agreements with other Southeast Asian claimant states such as Malaysia and Vietnam which welcomed the arbitral tribunal's nullification of China's nine-dashed-line map. He also called on the Philippines to expand its maritime entitlement claims in the area, in accordance to the arbitration award, by applying for an extended continental shelf in the South China Sea at the UN. Another July 12, 2018, press report stated the following: Tarpaulins bearing the words "Welcome to the Philippines, province of China" were seen hanging from several footbridges in Metro Manila Thursday, two years after the country won its arbitration case against China. The red banners bore the Chinese flag and Chinese characters. It is unclear who installed the tarpaulins, which are possible reference to a "joke" by President Rodrigo Duterte that the country can be a province of the Asian giant. "He (Xi Jinping) is a man of honor. They can even make us 'Philippines, province of China,' we will even avail of services for free," Duterte said in apparent jest before an audience of Chinese-Filipino business leaders earlier in 2018. "If China were a woman, I'd woo her."… In a Palace briefing, presidential spokesperson Harry Roque said enemies of the government are behind the tarpaulins. A report on ANC said that the Metro Manila Development Authority already took the banners down. The tarpaulins sparked outrage among social media users. A July 17, 2018, press report stated the following: Protesters held a rally in front of the Chinese Consulate [in San Francisco] before proceeding to the Philippine Consulate downtown, demanding that China "get out of Philippine territory in the West Philippine Sea." The protest was timed with others in Los Angeles and Vancouver on the second anniversary of the UN's Permanent Court of Arbitration ruling that China had no right to the territory it was claiming. Filipino American Human Rights Advocates (FAHRA) in a statement celebrated the court's finding that "China's historical claim of the "nine-dash line" [is] illegal and without basis." "China continues to violate the UN's decision with the backing of its puppet Philippine government headed by President Duterte, who is deceived by the 'build, build, build' economic push while China establishes a 'steal, steal, steal' approach to islands and territories belonging to the Exclusive Economic Zone (EEZ) of the Philippines as determined by UN," the statement lamented. FAHRA also found it unacceptable that Filipino fishermen must now ask permission to fish in the Philippine waters from "a Chinese master." "Duterte is beholden to the $15-billion loan with monstrous interest rate and China's investments in Boracay and Marawi, at the expense of Philippine sovereignty," FAHRA claimed. "This is not to mention that China remains to be the premier supplier of illegal drugs to the country through traders that include the son, Paolo Duterte, with his P6 billion shabu shipment to Davao," it further charged. The group demanded that "China abide by the UN International Tribunal Court's decision two years ago, to honor the full sovereignty of the Philippines over all territories at the Exclusive Economic Zone (EEZ) including the West Philippine Sea and the dismantling of the nuclear missiles and all military facilities installed by the Chinese government at the Spratly islands meant to coerce the Filipinos and all peace-loving people of Southeast Asia who clamor for equal respect and equal sovereignty in the area" among others. Appendix E. Additional Elements of China's Approach to Maritime Disputes This appendix presents background information on additional elements of China's approach to the maritime disputes in the SCS and ECS. Map of Nine-Dash Line China depicts its claims in the SCS using the so-called map of the nine-dash line—a Chinese map of the SCS showing nine line segments that, if connected, would enclose an area covering roughly 90% (earlier estimates said about 80%) of the SCS ( Figure E-1 ). The area inside the nine line segments far exceeds what is claimable as territorial waters under customary international law of the sea as reflected in UNCLOS, and, as shown in Figure E-2 , includes waters that are within the claimable EEZs (and in some places are quite near the coasts) of the Philippines, Malaysia, Brunei, and Vietnam. The map of the nine-dash line, also called the U-shaped line or the cow tongue, predates the establishment of the People's Republic of China (PRC) in 1949. The map has been maintained by the PRC government, and maps published in Taiwan also show the nine line segments. In a document submitted to the United Nations on May 7, 2009, which included the map shown in Figure E-1 as an attachment, China stated the following: China has indisputable sovereignty over the islands in the South China Sea and the adjacent waters, and enjoys sovereign rights and jurisdiction over the relevant waters as well as the seabed and subsoil thereof (see attached map [of the nine-dash line]). The above position is consistently held by the Chinese Government, and is widely known by the international community. The map does not always have exactly nine dashes. Early versions of the map had as many as 11 dashes, and a map of China published by the Chinese government in June 2014 includes 10 dashes. The exact positions of the dashes have also varied a bit over time. China has maintained ambiguity over whether it is using the map of the nine-dash line to claim full sovereignty over the entire sea area enclosed by the nine-dash line, or something less than that. Maintaining this ambiguity can be viewed as an approach that preserves flexibility for China in pursuing its maritime claims in the SCS while making it more difficult for other parties to define specific objections or pursue legal challenges to those claims. It does appear clear, however, that China at a minimum claims sovereignty over the island groups inside the nine line segments—China's domestic Law on the Territorial Sea and Contiguous Zone, enacted in 1992, specifies that China claims sovereignty over all the island groups inside the nine line segments. China's implementation on January 1, 2014, of a series of fishing regulations covering much of the SCS suggests that China claims at least some degree of administrative control over much of the SCS. An April 30, 2018, blog post states the following: In what is likely a new bid to reinforce and even expand China's sweeping territorial claims in the South China Sea, a group of Chinese scholars recently published a "New Map of the People's Republic of China." The alleged political national map, reportedly first published in April 1951 but only "discovered" through a recent national archival investigation, could give new clarity to the precise extent of China's official claims in the disputed waters. Instead of dotted lines, as reflected in China's U-shaped Nine-Dash Line claim to nearly all of the South China Sea, the newly discovered map provides a solid "continuous national boundary line and administrative region line." The Chinese researchers claim that through analysis of historical maps, the 1951 solid-line map "proves" beyond dispute that the "U-boundary line is the border of China's territorial sea" in the South China Sea. They also claim that the solid administrative line overlaying the U-boundary "definitely indicated that the sovereignty of the sea" enclosed within the U-boundary "belonged to China." The study, edited by the Guanghua and Geosciences Club and published by SDX Joint Publishing Company, has not been formally endorsed by the Chinese government. April 2018 Press Report of Proposal for Continuous Boundary Line in SCS An April 22, 2018, press report states the following: Researchers are proposing a new boundary in the South China Sea that they say will help the study of natural science while potentially adding weight to China's claims over the disputed waters, according to a senior scientist involved in the government-funded project. The new boundary will help to define more clearly China's claims in the contested region, but it is not clear whether or when it will be officially adopted by Beijing, the scientist said. A precise continuous line will split the Gulf of Tonkin between China and Vietnam, go south into waters claimed by Malaysia, take a U-turn to the north along the west coast of the Philippines and finish at the southeast of Taiwan. For decades, China's sovereign claim in the South China Sea has been murky, in large part because of the use of a segmented, vaguely located borderline known as the 'nine-dash line'. A United Nations tribunal ruled in July 2016 that China had no legal basis to claim the area within the dash lines. One reason for China losing the case was that it could not define the territory precisely. However, analysts said Beijing was unlikely to officially change the nine-dash line any time soon, in the face of potential international opposition.... The vast area of blue outlined by the new boundary, hanging on a map like a Christmas stocking under South China, overlaps the dashes and fills in the gaps. It includes all contested waters, such as the Paracel Islands, the Spratly Islands, James Shoal and Scarborough Shoal. The boundary would determine for the first time the exact area that China claimed to own with historic rights in the South China Sea, according to the researcher. Its purpose was partly the study of natural science and partly driven by a political motivation "to strengthen China's claims" over the waters to prepare for possible changes in its South China Sea policy in the future, the researcher said. Within the boundary, China would claim the right to activities ranging from fishing, prospecting and mining for energy or mineral resources to the construction of military bases with deep water ports or airports. Other countries' access to these rights would, however, be open for discussion, as is the case at Scarborough Shoal, which China controls but allows Philippine fishing boats to access. While Beijing would consider the area within the boundary its territory, other countries would still have freedom of navigation, the researcher said.... "Soon we will have a clear idea of what belongs to us in the South China Sea and what does not," said the researcher. "This will allow us to better plan and coordinate the efforts to protect our national interest in the region while reducing the risk of conflict with other countries caused by the absence of a border over the ocean."... "More often, when we are sending vessels out to the sea or looking down at an area via satellite, we are not sure whether it was our water," said the researcher in the boundary-drawing project. "The nine-dash line can no longer meet the demands of increasing Chinese activities in the South China Sea."... The continuous boundary was generated not only by curve-extending, gap-filling algorithms on computer. It was also based on a solid piece of historic evidence, according to the project team. In 1951, an official map approved by the central government of China marked the China-claimed area in the South China Sea with a pair of non-stopping lines. There was an inner black line indicating the sovereign boundary and an outer red line representing where China could exercise administrative power. "We were thrilled when we found the map," the researcher said. "It is something we can show the world." A detailed description of the map was published by the project team in a paper in domestic academic journal China Science Bulletin in March this year. Its authors recommended using the continuous U-shape boundary line as a replacement for the nine-dash line. The "U-boundary is the border of China's sea in the South China Sea, and its sovereignty belongs to China", the authors wrote in the paper. It "can further express the certainty of the integrity, continuity and border of China's seas in the South China Sea", they wrote, adding that it was "more vivid, accurate, complete and scientific". Professor Yu Minyou, director of the China Institute of Boundary and Ocean Studies at Wuhan University, said that if the old map was published with government approval, which was usually the case in China, "it surely will add legal weight to China's claim" in the region.... But other countries should bear in mind that it did not represent the Chinese government's position as long as the dash lines stayed on official maps, Yu said, adding that China's strategy for the South China Sea was "open and clear". "China wants to achieve peace, stability, harmony and prosperity in the region," he said. "We are willing to share natural resources with other countries and leave the disputes to be solved in the future. "What we are doing now is creating a suitable environment for the final settlement of the issue." A government expert at the National Institute for South China Sea Studies in Haikou, Hainan, said the continuous boundary would serve as a useful tool for some studies of natural science. But it was highly unlikely to be printed on an official map, said the expert, who requested not to be named because he was not allowed to speak to overseas media about sensitive issues. "To my knowledge, the Chinese government currently has no plan to change the dash lines," he said. "Most diplomats and ocean law experts will oppose joining the dashes." The tension in the South China Sea has eased significantly in recent times, with neighbouring countries such as the Philippines and Vietnam no longer seeking direct confrontation with China over disputed areas. "Things are moving towards the right direction," the government expert said. "It is not the best time to cut a boundary." September 2017 Press Report of Potential New "Four-Sha" Legal Claim A September 21, 2017, press report states the following: The Chinese government recently unveiled a new legal tactic to promote Beijing's aggressive claim to own most of the strategic South China Sea. The new narrative that critics are calling "lawfare," or legal warfare, involves a shift from China's so-called "9-Dash Line" ownership covering most of the sea. The new lawfare narrative is called the "Four Sha"—Chinese for sand—and was revealed by Ma Xinmin, deputy director general in the Foreign Ministry's department of treaty and law, during a closed-door meeting with State Department officials last month. China has claimed three of the island chains in the past and recently added a fourth zone in the northern part of the sea called the Pratas Islands near Hong Kong. The other locations are the disputed Paracels in the northwestern part and the Spratlys in the southern sea. The fourth island group is located in the central zone and includes Macclesfield Bank, a series of underwater reefs and shoals. China calls the island groups Dongsha, Xisha, Nansha, and Zhongsha, respectively. Ma, the Foreign Ministry official, announced during the meetings in Boston on Aug. 28 and 29 that China is asserting sovereignty over the Four Sha through several legal claims. He stated the area is China's historical territorial waters and also part of China's 200-mile Exclusive Economic Zone that defines adjacent zones as sovereign territory. Beijing also claims ownership by asserting the Four Sha are part of China's extended continental shelf. U.S. officials attending the session expressed surprise at the new Chinese ploy to seek control over the sea as something not discussed before.... A State Department notice at the end of what was billed as an annual U.S.-China Dialogue on the Law of the Sea and Polar Issues made no mention of the new Chinese lawfare tactic. The statement said only that officials from foreign affairs and maritime agencies "exchanged views on a wide range of issues related to oceans, the law of the sea, and the polar regions." A September 25, 2017, blog post about the claim states the following: While dropping or even de-emphasizing China's Nine-Dash Line claim in favor of the Four Shas has important diplomatic and political implications, the legal significance of such a shift is harder to assess. The constituent parts of China's Four Sha claims have long been set forth publicly in Chinese domestic law and official statements. Based on what we know so far, these new Chinese legal justifications are no more lawful than China's Nine-Dash Line claim. The challenge for critics of Chinese claims in the South China Sea, however, will be effectively explaining and articulating why this shift does not actually strengthen China's legal claims in the South China Sea. The Four Sha claim has a long pedigree in Chinese law and practice. China's 1992 law on the territorial sea and contiguous zone, for example, declared that China's land territory included the "Dongsha island group, Xisha island group, Zhongsha island group, [and] Nansha island group." A 2016 white paper disputing the Philippines' claims in the South China Sea arbitral process similarly claimed that: China's Nanhai Zhudao (the South China Sea Islands) consist of Dongsha Qundao (the Dongsha Islands), Xisha Qundao (the Xisha Islands), Zhongsha Qundao (the Zhongsha Islands) and Nansha Qundao (the Nansha Islands). These Islands include, among others, islands, reefs, shoals and cays of various numbers and sizes.... In a 2016 white paper, Beijing stated that, "China has, based on Nanhai Zhudao [the "Four Sha"], internal waters, territorial sea, contiguous zone, exclusive economic zone and continental shelf." Neither the white paper nor the Beacon's report explain how China derives these maritime zones from the four island groups.... Because China is not constituted "wholly by one or more archipelagos" (think Indonesia or the Philippines), the U.S. and most countries would view straight baselines around an island group as contrary to the UN Convention on the Law of the Sea (UNCLOS).... For this reason, this new Chinese legal strategy is even weaker than the Nine-Dash Line given that it clearly violates UNCLOS (e.g., Articles 46 and 47). Most Chinese defenses of the Nine Dash Line argued that the claim predated China's accession to UNCLOS and therefore not governed by it. Despite the legal weaknesses of its possible new strategy, China may still reap some benefits from trading the Nine-Dash Line for the Four Shas. First, the Chinese leadership may have realized that the Nine Dash Line has become too much of a diplomatic liability. The Nine-Dash Line is completely sui generis and no other state has made a historic maritime claim anything like it. For this reason, the Nine-Dash Line makes China an easy target for foreign criticism in a way that straight baselines around island groups probably will not. Second, by adopting language more similar to that found in UNCLOS, China may be betting that it can tamp down criticism, and win potential partners in the region.... Third, and most intriguingly, China may have concluded that it can better shape (or undermine, depending on your point of view) the law of the sea by adopting UNCLOS terminology.... So while we might be encouraged to see the Nine-Dash Line pass into the (legal) dustbins of history, we should be skeptical about whether the Four Shas herald a new more modest Chinese role in the South China Sea. China's legal justification for the Four Shas is just as weak, if not weaker, than its Nine-Dash Line claim. But explaining why the Four Shas is weak and lawless will require sophisticated legal analysis married with effective public messaging. Comparison with U.S. Actions Toward Caribbean and Gulf of Mexico Some observers have compared China's approach toward its near-seas region with the U.S. approach toward the Caribbean and the Gulf of Mexico in the age of the Monroe Doctrine. It can be noted, however, that there are significant differences between China's approach to its near-seas region and the U.S. approach—both in the 19 th and 20 th centuries and today—to the Caribbean and the Gulf of Mexico. Unlike China in its approach to its near-seas region, the United States has not asserted any form of sovereignty or historical rights over the broad waters of the Caribbean or Gulf of Mexico (or other sea areas beyond the 12-mile limit of U.S. territorial waters), has not published anything akin to the nine-dash line for these waters (or other sea areas beyond the 12-mile limit), and does not contest the right of foreign naval forces to operate and engage in various activities in waters beyond the 12-mile limit. Appendix F. U.S. Position on Operational Rights in EEZs This appendix presents additional background information on the U.S. position on the issue of operational rights of military ships in the EEZs of other countries. Operational Rights in EEZs Regarding a coastal state's rights within its EEZ, Scot Marciel, then-Deputy Assistant Secretary, Bureau of East Asian and Pacific Affairs, stated the following as part of his prepared statement for a July 15, 2009, hearing before the East Asian and Pacific Affairs Subcommittee of the Senate Foreign Relations Committee: I would now like to discuss recent incidents involving China and the activities of U.S. vessels in international waters within that country's Exclusive Economic Zone (EEZ). In March 2009, the survey ship USNS Impeccable was conducting routine operations, consistent with international law, in international waters in the South China Sea. Actions taken by Chinese fishing vessels to harass the Impeccable put ships of both sides at risk, interfered with freedom of navigation, and were inconsistent with the obligation for ships at sea to show due regard for the safety of other ships. We immediately protested those actions to the Chinese government, and urged that our differences be resolved through established mechanisms for dialogue—not through ship-to-ship confrontations that put sailors and vessels at risk. Our concern over that incident centered on China's conception of its legal authority over other countries' vessels operating in its Exclusive Economic Zone (EEZ) and the unsafe way China sought to assert what it considers its maritime rights. China's view of its rights on this specific point is not supported by international law. We have made that point clearly in discussions with the Chinese and underscored that U.S. vessels will continue to operate lawfully in international waters as they have done in the past. As part of his prepared statement for the same hearing, Robert Scher, then-Deputy Assistant Secretary of Defense, Asian and Pacific Security Affairs, Office of the Secretary of Defense, stated that we reject any nation's attempt to place limits on the exercise of high seas freedoms within an exclusive economic zones [sic] (EEZ). Customary international law, as reflected in articles 58 and 87 of the 1982 United Nations Convention on the Law of the Sea, guarantees to all nations the right to exercise within the EEZ, high seas freedoms of navigation and overflight, as well as the traditional uses of the ocean related to those freedoms. It has been the position of the United States since 1982 when the Convention was established, that the navigational rights and freedoms applicable within the EEZ are qualitatively and quantitatively the same as those rights and freedoms applicable on the high seas. We note that almost 40% of the world's oceans lie within the 200 nautical miles EEZs, and it is essential to the global economy and international peace and security that navigational rights and freedoms within the EEZ be vigorously asserted and preserved. As previously noted, our military activity in this region is routine and in accordance with customary international law as reflected in the 1982 Law of the Sea Convention. As mentioned earlier in the report, if China's position on whether coastal states have a right under UNCLOS to regulate the activities of foreign military forces in their EEZs were to gain greater international acceptance under international law, it could substantially affect U.S. naval operations not only in the SCS and ECS (see Figure F-1 for EEZs in the SCS and ECS), but around the world, which in turn could substantially affect the ability of the United States to use its military forces to defend various U.S. interests overseas. As shown in Figure F-2 , significant portions of the world's oceans are claimable as EEZs, including high-priority U.S. Navy operating areas in the Western Pacific, the Persian Gulf, and the Mediterranean Sea. Some observers, in commenting on China's resistance to U.S. military survey and surveillance operations in China's EEZ, have argued that the United States would similarly dislike it if China or some other country were to conduct military survey or surveillance operations within the U.S. EEZ. Skeptics of this view argue that U.S. policy accepts the right of other countries to operate their military forces freely in waters outside the 12-mile U.S. territorial waters limit, and that the United States during the Cold War acted in accordance with this position by not interfering with either Soviet ships (including intelligence-gathering vessels known as AGIs) that operated close to the United States or with Soviet bombers and surveillance aircraft that periodically flew close to U.S. airspace. The U.S. Navy states that When the commonly recognized outer limit of the territorial sea under international law was three nautical miles, the United States recognized the right of other states, including the Soviet Union, to exercise high seas freedoms, including surveillance and other military operations, beyond that limit. The 1982 Law of the Sea Convention moved the outer limit of the territorial sea to twelve nautical miles. In 1983, President Reagan declared that the United States would accept the balance of the interests relating to the traditional uses of the oceans reflected in the 1982 Convention and would act in accordance with those provisions in exercising its navigational and overflight rights as long as other states did likewise. He further proclaimed that all nations will continue to enjoy the high seas rights and freedoms that are not resource related, including the freedoms of navigation and overflight, in the Exclusive Economic Zone he established for the United States consistent with the 1982 Convention. DOD states that the PLA Navy has begun to conduct military activities within the Exclusive Economic Zones (EEZs) of other nations, without the permission of those coastal states. Of note, the United States has observed over the past year several instances of Chinese naval activities in the EEZ around Guam and Hawaii. One of those instances was during the execution of the annual Rim of the Pacific (RIMPAC) exercise in July/August 2012. While the United States considers the PLA Navy activities in its EEZ to be lawful, the activity undercuts China's decades-old position that similar foreign military activities in China's EEZ are unlawful. In July 2014, China participated, for the first time, in the biennial U.S.-led Rim of the Pacific (RIMPAC) naval exercise, the world's largest multilateral naval exercise. In addition to the four ships that China sent to participate in RIMPAC, China sent an uninvited intelligence-gathering ship to observe the exercise without participating in it. The ship conducted operations inside U.S. EEZ off Hawaii, where the exercise was located. A July 29, 2014, press report stated that The high profile story of a Chinese surveillance ship off the cost of Hawaii could have a positive aspect for U.S. operations in the Pacific, the head of U.S. Pacific Command (PACOM) said in a Tuesday [July 29] afternoon briefing with reporters at the Pentagon. "The good news about this is that it's a recognition, I think, or acceptance by the Chinese for what we've been saying to them for sometime," PACOM commander Adm. Samuel Locklear told reporters. "Military operations and survey operations in another country's [Exclusive Economic Zone]—where you have your own national security interest—are within international law and are acceptable. This is a fundamental right nations have." One observer stated the following: The unprecedented decision [by China] to send a surveillance vessel while also participating in the RIMPAC exercises calls China's proclaimed stance on international navigation rights [in EEZ waters] into question... During the Cold War, the U.S. and Soviets were known for spying on each other's exercises. More recently, Beijing sent what U.S. Pacific Fleet spokesman Captain Darryn James called "a similar AGI ship" to Hawaii to monitor RIMPAC 2012—though that year, China was not an official participant in the exercises.... ... the spy ship's presence appears inconsistent with China's stance on military activities in Exclusive Economic Zones (EEZs).... That Beijing's AGI [intelligence-gathering ship] is currently stationed off the coast of Hawaii suggests either a double standard that could complicate military relations between the United States and China, or that some such surveillance activities are indeed legitimate—and that China should clarify its position on them to avoid perceptions that it is trying to have things both ways.... In its response to the Chinese vessel's presence, the USN has shown characteristic restraint. Official American policy permits surveillance operations within a nation's EEZ, provided they remain outside of that nation's 12-nautical mile territorial sea (an EEZ extends from 12 to 200 nautical miles unless this would overlap with another nations' EEZ). U.S. military statements reflect that position unambiguously.... That consistent policy stance and accompanying restraint have characterized the U.S. attitude toward foreign surveillance activity since the Cold War. Then, the Soviets were known for sending converted fishing ships equipped with surveillance equipment to the U.S. coast, as well as foreign bases, maritime choke points, and testing sites. The U.S. was similarly restrained in 2012, when China first sent an AGI to observe RIMPAC.... China has, then, sent a surveillance ship to observe RIMPAC in what appears to be a decidedly intentional, coordinated move—and in a gesture that appears to contradict previous Chinese policy regarding surveillance and research operations (SROs). The U.S. supports universal freedom of navigation and the right to conduct SROs in international waters, including EEZs, hence its restraint when responding to the current presence of the Chinese AGI. But the PRC opposes such activities, particularly on the part of the U.S., in its own EEZ.... How then to reconcile the RIMPAC AGI with China's stand on surveillance activities? China maintains that its current actions are fully legal, and that there is a distinct difference between its operations off Hawaii and those of foreign powers in its EEZ. The PLAN's designated point of contact declined to provide information and directed inquiries to China's Defense Ministry. In a faxed statement to Reuters, the Defense Ministry stated that Chinese vessels had the right to operate "in waters outside of other country's territorial waters," and that "China respects the rights granted under international law to relevant littoral states, and hopes that relevant countries can respect the legal rights Chinese ships have." It did not elaborate. As a recent Global Times article hinted—China's position on military activities in EEZs is based on a legal reading that stresses the importance of domestic laws. According to China maritime legal specialist Isaac Kardon, China interprets the EEZ articles in the United Nations Convention on the Law of the Sea (UNCLOS) as granting a coastal state jurisdiction to enforce its domestic laws prohibiting certain military activities—e.g., those that it interprets to threaten national security, economic rights, or environmental protection—in its EEZ. China's domestic laws include such provisions, while those of the United States do not. Those rules would allow China to justify its seemingly contradictory approach to AGI operations—or, as Kardon put it, "to have their cake and eat it too." Therefore, under the Chinese interpretation of UNCLOS, its actions are neither hypocritical nor illegal—yet do not justify similar surveillance against China. Here, noted legal scholar Jerome Cohen emphasizes, the U.S. position remains the globally dominant view—"since most nations believe the coastal state has no right to forbid surveillance in its EEZ, they do not have domestic laws that do so." This renders China's attempted constraints legally problematic, since "international law is based on reciprocity." To explain his interpretation of Beijing's likely approach, Cohen invokes the observation that a French commentator made several decades ago in the context of discussing China's international law policy regarding domestic legal issues: "I demand freedom from you in the name of your principles. I deny it to you in the name of mine." Based on his personal experience interacting with Chinese officials and legal experts, Kardon adds, "China is increasingly confident that its interpretation of some key rules and—most critically—its practices reinforcing that interpretation can over time shape the Law of the Sea regime to suit its preferences." But China is not putting all its eggs in that basket. There are increasing indications that it is attempting to promote its EEZ approach vis-à-vis the U.S. not legally but politically. "Beijing is shifting from rules- to relations-based objections," Naval War College China Maritime Studies Institute Director Peter Dutton observes. "In this context, its surveillance operations in undisputed U.S. EEZs portend an important shift, but that does not mean that China will be more flexible in the East or South China Seas." The quasi-authoritative Chinese commentary that has emerged thus far supports this interpretation.... [A recent statement from a Chinese official] suggests that Beijing will increasingly oppose U.S. SROs on the grounds that they are incompatible with the stable, cooperative Sino-American relationship that Beijing and Washington have committed to cultivating. The Obama Administration must ensure that the "new-type Navy-to-Navy relations" that Chinese Chief of Naval Operations Admiral Wu Shengli has advocated to his U.S. counterpart does not contain expectations that U.S. SROs will be reduced in nature, scope, or frequency.... China's conducting military activities in a foreign EEZ implies that, under its interpretation, some such operations are indeed legal. It therefore falls to China now to clarify its stance—to explain why its operations are consistent with international law, and what sets them apart from apparently similar American activities. If China does not explain away the apparent contradiction in a convincing fashion, it risks stirring up increased international resentment—and undermining its relationship with the U.S. Beijing is currently engaging in activities very much like those it has vociferously opposed. That suggests the promotion of a double standard untenable in the international system, and very much at odds with the relationships based on reciprocity, respect, and cooperation that China purports to promote.... If, however, China chooses to remain silent, it will likely have to accept—at least tacitly, without harassing—U.S. surveillance missions in its claimed EEZ. So, as we watch for clarification on Beijing's legal interpretation, it will also be important to watch for indications regarding the next SROs in China's EEZ. In September 2014, a Chinese surveillance ship operated in U.S. EEZ waters near Guam as it observed a joint-service U.S. military exercise called Valiant Shield. A U.S. spokesperson for the exercise stated the following: "We'd like to reinforce that military operations in international commons and outside of territorial waters and airspace is a fundamental right that all nations have.... The Chinese were following international norms, which is completely acceptable." Appendix G. Options Suggested by Observers for Strengthening U.S. Actions This appendix presents a bibliography of some recent writings by observers who have suggested options (or are reporting on options suggested by others) for strengthening U.S. actions for responding to China's actions in the SCS and ECS, organized by date, beginning with the most-recent item. Andrew S. Erickson, "Maritime Numbers Game, Understanding and Responding to China's Three Sea Forces," Indo-Pacific Defense Forum , January 28, 2019. James R. Holmes, "Use It or Lose It: Seagoing Nations Must Defend Embattled Waterways," The Hill , January 27, 2019. Gregory Poling and Eric Sayers, "Time to Make Good on the U.S.-Philippine Alliance," War on the Rocks , January 21, 2019. Gregory Poling and Bonnie S. Glaser, "How the U.S. Can Step Up in the South China Sea," Foreign Affairs , January 16, 2019. Zack Cooper and Gregory Poling, "America's Freedom of Navigation Operations Are Lost at Sea, Far Wider Measures Are Needed to Challenge Beijing's Maritime Aggression," Foreign Policy , January 8, 2019. Andrew S. Erickson, "Shining a Spotlight: Revealing China's Maritime Militia to Deter its Use," National Interest , November 25, 2018. Eric Sayers, "Assessing America's Indo-Pacific Budget Shortfall," War on the Rocks , November 15, 2018. Patrick N. Cronin and Richard Javad Heydarian, "This Is How America and the Philippines Can Upgrade Their Alliance," National Interest , November 12, 2018. John Lee, Freedom of Navigation and East Asian Stability: Countering Beijing's Campaign of Historical Revisionism ," Hudson Institute, November 2018, 8 pp. Ryan Martinson and Peter Dutton, "Chinese Scientists Want to Conduct Research in U.S. Waters—Should Washington Let Them?" National Interest , November 4, 2018. Hunter Stires, "Understanding and Defeating China's Maritime Insurgency in the South china Sea," National Interest , November 1, 2018. Robert D. Kaplan, "How President Trump Is Helping Beijing Win in the South China Sea," Washington Post , October 9, 2018. Tuan Pham, "China's Worth Nightmare: RIMPAC 2020 in the South China Sea?" National Interest , September 29, 2018. Patrick M. Cronin, "China is Waging a Maritime Insurgency in the South China Sea. It's Time for the Unitd States to Counter It." National Interest , August 6, 2018. Shigeki Sakamoto, "China's South China Sea Project Must Not Succeed; The International Community Shouldn't Quietly Let China Ignore the 2016 [Arbitral Tribunal] Decision." Diplomat , August 6, 2018. James Amedeo, "America Needs a Clear Strategy to Counter China's Expansion in the South China Sea," National Interest , August 1, 2018. Lynn Kuok, "Countering China's Actions in the South China Sea," Lawfare , August 1, 2018. Timothy Perry, "Use Maritime-Law Trends to Offset Beijing's Gains in the South China Sea," Defense One , July 24, 2018. J. Michael Cole, "It's Time to Stop China's Seaward Expansion," National Interest , July 21, 2018. Lindsey W. Ford, "Was China's RIMPAC Exclusion An Opening or a Wasted Shot?" East Asia Forum , July 20, 2018. Lynn Kuok, "China Is Winning in the South China Sea," Wall Street Journal , July 17, 2018. "Washington and Its Allies Need to Contain Beijing," Financial Times , July 1, 2018. Patrick M. Cronin and Melodiw Ha, "Toward a New maritime Strategy in the South China Sea," The Diplomat , June 22, 2018. (A similar version was posted as: Patrick M. Cronin and Melodie Ha, "Toward a New Maritime Strategy in the South China Sea," CSIS, June 21, 2018 (PacNet #42). Paul J. Leaf, "Taiwan and the South China Sea Must Be Taken Off the Back Burner," National Interest , June 18, 2018. Robert E. McCoy, "A Better Way to Repel China in the South China Sea," Asia Times , June 8, 2018. Robert Farley, "The South China Sea Conundrum for the United States," The Diplomat , June 5 2018. Joel Gehrke, "Marco Rubio: US Must Develop Plan to 'Destroy' Chinese Assets in South China Sea," Washington Examiner , June 4, 2018. Duncan DeAeth, "Taiwan Should Invite US to Open Military Base on Taiping Island, Says DPP Think-Tank," Taiwan News , June 4, 2018. Julian Ku, "It's Time for South China Sea Economic Sanctions," Lawfare , June 1, 2018. Eric Sayers, "Time to Launch a Combined Maritime Task Force for the Pacific," War on the Rocks , June 1, 2018. Matthew Krull, "America's Annual Naval Patrol Report and How to Fix It," National Interest , May 29, 2018. Tuan N. Pham, "A Sign of the Times: China's Recent Actions and the Undermining of Global Rules, Pt. 3," CIMSEC (Center for International Maritime Security), May 24, 2018. Ryan D. Martinson and Andrew Erickson, "Re-Orienting American Seapower for the China Challenge," War on the Rocks , May 10, 2018. Ben Cipperley, "In the Era of Great Power Competition, the US Needs to Step Up Its Game," The Diplomat , May 8, 2018. Stephen Bryen, "How to Counter China's Fortified Islands in South China Sea," Asia Times , May 5, 2018. Ely Ratner, "Exposing China's Actions in the South China Sea," Council on Foreign Relations, April 6, 2018. Shawn Lansing, "A White Hull Approach to Taming the Dragon: Using the Coast Guard to Counter China," War on the Rocks , February 22, 2018. Dean Cheng, "Wanted: A Strategy to Limit China's Grand Plans for the South China Sea," National Interest , January 30, 2018. Hal Brands, "China Hasn't Won the Pacific (Unless You Think It Has)," Bloomberg , January 5, 2018.

China's actions in recent years in the South China Sea (SCS)—particularly its island-building and base-construction activities at sites that it occupies in the Spratly Islands—have heightened concerns among U.S. observers that China is rapidly gaining effective control of the SCS, an area of strategic, political, and economic importance to the United States and its allies and partners, particularly those in the Indo-Pacific region. U.S. Navy Admiral Philip Davidson, in his responses to advance policy questions from the Senate Armed Services Committee for an April 17, 2018, hearing to consider his nomination to become Commander, U.S. Pacific Command (PACOM), stated that "China is now capable of controlling the South China Sea in all scenarios short of war with the United States." Chinese control of the SCS—and, more generally, Chinese domination of China's near-seas region, meaning the SCS, the East China Sea (ECS), and the Yellow Sea—could substantially affect U.S. strategic, political, and economic interests in the Indo-Pacific region and elsewhere. China is a party to multiple territorial disputes in the SCS and ECS, including, in particular, disputes with multiple neighboring countries over the Paracel Islands, Spratly Islands, and Scarborough Shoal in the SCS, and with Japan over the Senkaku Islands in the ECS. Up through 2014, U.S. concern over these disputes centered more on their potential for causing tension, incidents, and a risk of conflict between China and its neighbors in the region, including U.S. allies Japan and the Philippines and emerging partner states such as Vietnam. While that concern remains, particularly regarding the potential for a conflict between China and Japan involving the Senkaku Islands, U.S. concern since 2014 (i.e., since China's island-building activities in the Spratly Islands were first publicly reported) has shifted increasingly to how China's strengthening position in the SCS may be affecting the risk of a U.S.-China crisis or conflict in the SCS and the broader U.S.-Chinese strategic competition. In addition to territorial disputes in the SCS and ECS, China is involved in a dispute, particularly with the United States, over whether China has a right under international law to regulate the activities of foreign military forces operating within China's exclusive economic zone (EEZ). The position of the United States and most other countries is that while international law gives coastal states the right to regulate economic activities (such as fishing and oil exploration) within their EEZs, it does not give coastal states the right to regulate foreign military activities in the parts of their EEZs beyond their 12-nautical-mile territorial waters. The position of China and some other countries (i.e., a minority group among the world's nations) is that UNCLOS gives coastal states the right to regulate not only economic activities, but also foreign military activities, in their EEZs. The dispute appears to be at the heart of multiple incidents between Chinese and U.S. ships and aircraft in international waters and airspace since 2001, and has potential implications not only for China's EEZs, but for U.S. naval operations in EEZs globally, and for international law of the sea. A key issue for Congress is how the United States should respond to China's actions in the SCS and ECS—particularly its island-building and base-construction activities in the Spratly Islands—and to China's strengthening position in the SCS. A key oversight question for Congress is whether the Trump Administration has an appropriate strategy—and an appropriate amount of resources for implementing that strategy—for countering China's "salami-slicing" strategy or gray zone operations for gradually strengthening its position in the SCS, for imposing costs on China for its actions in the SCS and ECS, and for defending and promoting U.S. interests in the region.

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Introduction World Bank President Jim Yong Kim recently announced that he was stepping down in February 2019 to join Global Infrastructure Partners, a private equity fund that invests in projects in advanced and developing countries. Kim's unexpected resignation, combined with his joining of a private firm that could directly compete with the World Bank for investments, raises questions for policymakers as they nominate and select a new president for the World Bank, a central component of the U.S.-led international economic order for the past eight decades. According to an informal agreement among their member countries, the U.S. nominee is chosen as the World Bank president and a European candidate (typically French or German) is appointed as managing director of the International Monetary Fund (IMF). This custom has been subject to increasing criticism during the past two decades. The first line of criticism is directed at the current distribution of voting power, which critics contend does not account for the increasing integration of developing countries into the global economy. A second line of criticism is directed at the method of selecting World Bank and IMF leadership, which critics argue, elevates nationality above merit and undermines the legitimacy and effectiveness of the institutions. This report provides information on the 2019 World Bank selection process and discusses efforts to reform the selection process. Background What is the World Bank? The World Bank is a multilateral development bank (MDB) that offers loans and grants to low- and middle-income countries to promote poverty alleviation and economic development. The World Bank has near-universal membership, with 189 member nations. U.S. membership in the World Bank is authorized by a federal statute known as the Bretton Woods Agreements Act (22 U.S.C. 286 et seq .). Only Cuba and North Korea, and a few microstates such as the Vatican, Monaco, and Andorra, are nonmembers. Two of the Bank's five facilities, the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA), lend directly to governments to finance development projects and policy programs in member countries. The IBRD provides middle-income developing countries with loans at near-market rates using funds raised by the World Bank on international capital markets. IDA was established in 1960 due to concerns that low-income countries could not afford to borrow at the near-market rate terms offered by the IBRD. IDA provides grants and concessional loans funded by contributions from donors and transfers from the IBRD to low-income countries. A country's eligibility for IBRD or IDA financial assistance depends on its relative poverty, defined as gross national income (GNI). For 2019, countries with a per capita GNI below $1,145 are eligible for IDA funding. IBRD commitments totaled $23.6 billion in 2018. Commitments from IDA to low-income countries were $24 billion in 2018 ( Table 1 ). Three other World Bank-affiliated organizations are dedicated to promoting private sector finance and investment in low-income countries. The International Finance Corporation (IFC) promotes private sector development in developing countries by making loans and investments in small- and medium-sized companies in those countries. The Multilateral Investment Guarantee Agency (MIGA) provides private investors with insurance coverage against noncommercial risk (expropriation, war and civil disturbance, and/or breach of contract) in developing countries. The International Center for the Settlement of Investment Disputes (ICSID) provides dispute resolution for investment disputes between governments and foreign investors. The United States is the largest contributor to the World Bank, having the largest share of the IBRD's subscribed capital, $46.4 billion (16.88%) of a total of $275 billion. As the largest contributor, the United States holds a single seat on the 25-member Board of Executive Directors and carries 16.32% of the total votes in Bank decisionmaking, which provides veto power on decisions requiring an 85% majority vote. The largest shareholders after the United States are Japan (6.89% of voting power), China (4.45%), Germany (4.03%), France (3.78%), and the United Kingdom (3.78%). The large voting power of the United States ensures the U.S. ability to veto major policy decisions at the Bank. A citizen of the United States has always held the presidency of the World Bank. The World Bank's president is chairman of the Board and elected by the Board of Directors. The president is the chief of the operating staff of the Bank and conducts, under direction of the executive directors, the ordinary business of the Bank. The Bank's 12 th president, Jim Yong Kim, has served since 2012. On September 27, 2016, Dr. Kim was reelected as the World Bank president, for a second five-year term beginning July 1, 2017. The Trump Administration has continued to support U.S. participation in the international financial institutions (IFIs) and has funded recent U.S. MDB commitments. The Trump Administration is supporting a $60.1 billion capital increase for the World Bank's main lending facility, the IBRD, which would raise its capital from $268.9 billion to $329 billion. World Bank members also endorsed a $5.5 billion capital increase for the IFC, which would more than triple the IFC's capital base from $2.57 billion to $8.2 billion. The Trump Administration supports the capital increase, which is to be accompanied by reforms designed, in part, to address a long-standing concern for many U.S. policymakers: high levels of World Bank lending to upper-middle income countries, especially China. In a statement at the 2017 IMF and World Bank spring meetings, U.S. Treasury Secretary Steven Mnuchin stated that, "the relationship between the World Bank and more creditworthy countries [such as China] should mature over time, with the absolute level of borrowing declining as countries become better able to finance their own development objectives." Leadership Selection at the World Bank Selecting the leadership at the two major international financial institutions—the IMF and the World Bank—is guided by a tradition that the World Bank president is an American and that the IMF managing director is a European. The informal agreement reflects the political and economic balance of power at the end of World War II. At the time, the United States believed that the World Bank should be headed by an American since the United States was the only capital surplus nation, and World Bank lending would be dependent on American financial markets. The U.S. Secretary of the Treasury at the time, Fred Vinson, believed that if an American representative headed the World Bank, the IMF must be headed by a non-American. Moreover, he noted, "it would be impracticable to appoint U.S. citizens to head both the Bank and the Fund." Despite the growth of world capital markets, and the fact that the World Bank is no longer reliant on U.S. capital markets, the convention on the IMF and World Bank selection has remained intact. The U.S.-EU agreement is not unique. A 2009 study finds that Informal agreements allocating positions of authority and decision making pervade international organizations. Whether in secretariats or political, judicial, and administrative bodies, tacit understandings that assign representation to certain states or groups of states are the norm, not the exception... The Articles of Agreement of the African Development Bank (AfDB) and the Asian Development Bank (AsDB) each specify that only citizens of regional countries may serve as presidents of those banks. By tradition, the Japanese Finance Ministry nominates a Japanese citizen to be president of the AsDB. The Articles of the Inter-American Development Bank (IDB) and the European Bank for Reconstruction and Development (EBRD) specify only that their president must come from a member country. By tradition, the IDB president is selected by a competitive process from among citizens of the Latin American countries. The EBRD president is also elected by a presumably competitive process, though only French and German citizens have served to date in that capacity and there is normally only one nominee. Second-tier offices in these institutions have also traditionally been reserved for U.S. citizens. First deputy managing director at the IMF and executive vice president at the IDB are traditionally U.S. citizens. These individuals are appointed by the chief executive of the institution, but in the case of the IMF and IDB an individual is typically designated by the U.S. Government. At the Asian Development Bank and EBRD, one of the vice presidents for an operational region has typically been a U.S. citizen. However, despite these restrictions, there have been successful efforts to open up the selection process across the MDBs. In 2015, the AfDB members elected Akinwumi Adesina of Nigeria, after a transparent election involving seven other candidates. Adesina garnered 58% of the total vote of AfDB shareholders. The 2012 World Bank election was the first to include several candidates and Kim's nomination was, unlike past nominations, not unanimous. The announcement of Kim's selection noted that a new selection process (introduced in 2011) yielded multiple nominees (former Nigerian Finance Minister Ngozi Okonjo-Iweala and former Colombian Finance Minister and United Nations Under Secretary-General for Economic and Social Affairs Jose Antonio Ocampo) and that the nominees received support from different member countries. Formal Process for Selecting the World Bank President The formal guidelines for choosing the World Bank president are laid out in the Bank's Articles of Agreements and Bylaws. Article V, Section 5, states that "[t]he Executive Board shall select a President who shall not be a Governor or an Executive Director. " This decision may be reached by a simple majority of the Executive Board. Section 13(c) of the Bank's bylaws stipulates the terms of service. World Bank presidents are elected for renewable five-year terms. Neither the articles nor the bylaws articulate any specific qualifications for the position of president of the World Bank. The Bank's Articles of Agreement, however, are silent on any requirements on how individuals are selected, on what criteria, or by what process they are vetted. There is no formal search process for candidates. Nominations can only be made by the 25 World Bank executive directors and there is no concerted search process of the Executive Board to identify and vet possible candidates. In 2000, two internal working groups (the World Bank Working Group to Review the Process for Selection of the President and the International Monetary Fund Working Group to Review the Process for Selection of the Managing Director) were created to discuss the selection procedure. A joint draft report of the working groups was endorsed by the executive directors on April 26, 2001, but never formally implemented. The report declared, among other things, that transparency and accountability are critical to the selection process. Instead of implementing the 2001 report's recommendations, the Executive Board adopted in 2011 a procedure that specified qualification criteria, established a nomination period, and provided for an interview process. Critics point out that the agreed procedures remain vague and largely nontransparent. Most notably, development expertise is not included as a qualification and the decision will be taken not by public vote, but rather by consensus according to prior practice. Declaring the importance of an "open, transparent, and merit-based" process, yet continuing to perpetuate the status quo, according to three former World Bank chief economists, is hypocritical, and "destroys the trust and spirit of collaboration needed to manage the profound problems facing the world." The decision to select a new World Bank president is to be made by a majority vote of the World Bank's Executive Board. Unlike the United Nations General Assembly, which relies on a one-person, one-vote governance system, the World Bank uses a weighted voted system. Voting is loosely based on contributions to the Bank. The five largest shareholders (United States, Japan, Germany, France, and the United Kingdom) have their own seat on the Executive Board. In addition to the five largest shareholders, China, Russia, and Saudi Arabia have enough votes to elect their own executive directors. All other countries have gravitated into mixed-state groupings or constituencies. These constituencies range in size from 3 countries (South Africa, Angola, and Nigeria) to 21. The mixed-state constituencies are flexible in their membership. Countries have periodically switched constituencies, often to a new group that will allow them to have a bigger vote or leadership role. Unlike the eight countries that have their own ED, the influence of countries in mixed-state constituencies is not equivalent to their quota-determined voting weight. Since they vote in constituencies, small countries can easily be sidestepped by the larger countries in the constituency. For many countries at the World Bank, they "can at best express a divergent opinion orally but cannot bring it to bear in the form of a vote." Executive directors must cast their votes as single unit, even though some of the countries they represent may disagree with their position. There is no provision for splitting a constituency's vote. There is no formal congressional involvement in the selection of Bank management. U.S. participation in the World Bank is authorized by the Bretton Woods Agreement Act of 1945. The act delegates to the President ultimate authority under U.S. law to direct U.S. policy and instruct the U.S. representatives at the Bank. The President, in turn, has generally delegated authority to the Secretary of the Treasury. With the advice and consent of the Senate, the President names individuals to represent the United States on the Executive Board of the World Bank. The position of U.S. executive director is currently vacant. The alternate executive director is Erik Bethel. The Executive Board has authority over operations and policy and must approve any loan or policy decision. The U.S. executive director is supported primarily by Treasury Department staff. Unique among the founding members, the Bretton Woods Agreement Act requires specific congressional authorization for certain decisions, such as changing the U.S. share at the Bank or amending the Articles of Agreement. However, neither the approval of individual loans nor the selection of the managing director requires congressional approval. Reform Efforts and the 2019 Selection Process The European-U.S. arrangement to split the leadership at the IMF and World Bank has generated controversy, which may undermine the effectiveness of the eventual nominee. Critics of the current selection process make two general arguments. First, the gentlemen's agreement on IMF and World Bank leadership is seen as a relic of a global economy that no longer exists. Whereas the United States and Europe dominated the postwar economy, the current international economy is more diverse. Developing and emerging market countries contribute half of global output, up from 25% 30 years ago. Over the past several decades, the balance of global economic power has been shifting from the United States and Europe to China and a number of other fast-developing countries ( Figure 1 ). These economies account for rising shares of global GDP, manufacturing, and trade, and also are driven by a significant expansion of trade among the developing countries (South-South trade). These shifts are driven by growing economic integration and interdependence among economies, particularly through new global production and supply chains that incorporate inputs from many different countries. In recent years, China has also invested in, created, and led a range of institutions and initiatives, including the Asian Infrastructure Investment Bank (AIIB) and other funding mechanisms, such as the Silk Road Fund and the New Development Bank (also known as the BRICS Bank), a collective arrangement with Brazil, Russia, India, and South Africa. At the same time, China is pursuing its own bilateral and regional trade agreements, such as the proposed Regional Comprehensive Economic Partnership (RCEP) with 15 other countries in the Asia Pacific. China has also positioned itself to act as a lender of last resort through monetary arrangements such as the BRICs Contingent Reserve Arrangement (CRA) and the Chiang Mai Initiative Multilateralization (CMIM). In such a diverse global economy, any agreement that grants the leadership position based on nationality, critics argue, unnecessarily limits the pool of potential candidates that may be exceptionally competent in addressing the issues before the Bank. "Since the creation of the International Monetary Fund and World Bank at the end of the second world war, an American has led the Bank and a European the IMF," noted Mark Sobel, U.S. chairman of the Official Monetary and Financial Institutions Forum (OMFIF), an independent think tank, and former U.S. representative at the IMF. "It is time for a change." According to Nancy Birdsall, senior fellow and founding president of the Center for Global Development, "the logic of an American president to ensure sustained U.S. support for the World Bank is no longer as clear as it has been." According to Birdsall, and others, the Trump Administration's "America First" rhetoric may make it harder for the United States to coalesce support for the U.S. candidate. Others argue that these concerns are overblown and that any serious effort to block the U.S. nominee would backfire. David Dollar, a former U.S. Treasury and senior World Bank official, says that, "it's a very complicated game. My instinct is that there is a very strong likelihood that the U.S. nominee will be approved. The world has an interest in the United States staying engaged with the World Bank." Devesh Kapur, a professor at Paul H. Nitze School of Advanced International Studies at Johns Hopkins University, puts it more bluntly, saying "powerful nations' relationships with the United States matter much more than who heads the World Bank." Following Kim's announcement of his resignation, the Bank's Executive Board met on January 9, 2019, and issued a formal statement on the selection process. The nomination period for the next president ends on March 14, after which the Executive Board is to decide on a shortlist of three candidates. Following interviews, the Executive Board aims to select the next president before the spring meetings in April 2019. On February 6, President Trump nominated David Malpass, Treasury's Under Secretary for International Affairs, to be the next World Bank president. Reportedly, Ivanka Trump, President Trump's oldest daughter and senior advisor, played a role in selecting the U.S. nominee. In 2017, Ms. Trump helped start a World Bank-administered fund, the Women Entrepreneurs Finance Initiative, which aims to generate $1.6 billion in capital for female entrepreneurs. The White House, according to reports, also considered Indra Nooyi, the former chief executive officer of PepsiCo; Ray Washburne, President and Chief Executive of the Overseas Private Investment Corporation; Mark Green, U.S. Agency for International Development Administrator; and Robert Kimmitt, Deputy Treasury Secretary under George W. Bush.

On January 7, 2018, World Bank President Jim Yong Kim announced that he would resign by February 1, three years before the expiration of his second five-year term in 2022. Following his resignation, Dr. Kim is to join Global Infrastructure Partners (GIP), a private equity fund that invests in projects in advanced and developing countries. Prior to his nomination to the World Bank by President Barack Obama in 2012, Dr. Kim served as the president of Dartmouth College. The nomination period for the next president ends on March 14, after which the Executive Board is to select three candidates for interviews. To date, the only candidate is David Malpass, the Treasury Department's Under Secretary for International Affairs, nominated by President Trump on February 6, 2019. Following the interviews, the Executive Board is to select the next president, something which it aims to do before the spring meetings in April 2019. Since its founding after World War II, the presidency of the World Bank has been held by a citizen of the United States, the Bank's largest shareholder. According to an informal agreement among World Bank member countries, a U.S. candidate is chosen as the president of the World Bank and a European candidate (typically French or German) is appointed as the managing director of the International Monetary Fund (IMF). The formal requirement for the selection of the World Bank president is that the executive directors appoint, by at least a 50% majority, an individual who is neither a member of the Board of Governors nor Board of Executive Directors. There are no requirements on how individuals are selected, on what criteria, or by what process they are vetted. Although the executive directors may select the IMF managing director by a simple majority vote, they historically aim to reach agreement by consensus. With these factors combined, the custom guaranteeing European leadership at the IMF and American leadership at the World Bank has remained in place. This custom has been subject to increasing criticism during the past two decades. The first line of criticism is directed at the current distribution of voting power, which critics contend does not account for the increasing integration of developing countries into the global economy. A second line of criticism is directed at the method of selecting World Bank and IMF leadership, which critics argue elevates nationality above merit and undermines the legitimacy and effectiveness of the institutions. Calls for a more open, transparent, and merit-based leadership selection process have been made consistently in the past, and at times have been incorporated into communiqués of various summits, but have yet to change the leadership selection process at either institution.

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Governance Kuwait's optimism after the 2003 fall of its nemesis, Saddam Hussein, soured after the January 15, 2006, death of Amir (ruler) Jabir Ahmad al-Jabir Al Sabah. From then until 2013, Kuwait underwent repeated political crises that produced economic stagnation. Leadership Structure Under Kuwait's 1962 constitution, an Amir (Arabic word for prince, but which is also taken as "ruler") is the head of state and ruler of Kuwait. He is Commander-in-Chief of the Armed Forces, appoints all judges, and can suspend the National Assembly. The Amir appoints a Prime Minister as head of government, who in turn appoints a cabinet. The Prime Minister has always been a member of the Sabah family, and until 2003 the Prime Minister and Crown Prince/heir apparent posts were held by a single person. It is typical of Kuwaiti cabinets that most of the key ministries (defense, foreign policy, and finance) are led by Sabah family members. At the time of Amir Jabir's death, his designated successor, Shaykh Sa'ad bin Abdullah Al Sabah, was infirm. A brief succession dispute among rival branches of the ruling Al Sabah family was resolved with then-Prime Minister Shaykh Sabah al-Ahmad al-Jabir Al Sabah, the younger brother of the late Amir, becoming Amir on January 29, 2006, although the long-standing tacit agreement to alternate succession between the Jabir and Salem branches of the family was suspended. Amir Sabah appointed two members of his Jabir branch as Crown Prince/heir apparent and as prime minister (Shaykh Nawwaf al-Ahmad Al Sabah and Shaykh Nasser al Muhammad al-Ahmad Al Sabah respectively). The succession dispute was unprecedented for the involvement of an elected legislature in replacing a Kuwait leader. Amir Sabah tends to be more directly involved in governance than was his predecessor. He is 87 years old, but remains actively engaged in governing. Still, there reportedly is growing discussion within Al Sabah circles about the succession. The current Prime Minister, Shaykh Jabir al-Mubarak Al Sabah, has been in office since December 2011. Elected National Assembly The National Assembly, established by Kuwait's November 1962 constitution, is the longest-serving all-elected body among the Gulf monarchies. Fifty seats are elected, and up to 15 members of the cabinet serve in the Assembly ex-officio . The government has expanded the electorate gradually: in the 1990s, the government extended the vote to sons of naturalized Kuwaitis and Kuwaitis naturalized for at least 20 (as opposed to 30) years. Kuwaiti women obtained suffrage rights when the National Assembly passed a government bill to that effect in May 2005. In recent elections, about 400,000 Kuwaitis have been eligible to vote. Kuwait's National Assembly has more scope of authority than any legislative or consultative body in the GCC states. It can draft legislation, rather than merely act on legislation introduced by the government. The Assembly does not confirm cabinet nominees (individually or en bloc), but it frequently questions ministers ("grilling"). It can, by simple majority, remove ministers in a vote of "no confidence," and can oust a prime minister by voting "inability to cooperate with the government." The Assembly reviews government decrees issued during periods of Assembly suspension. Kuwait's leaders have, on nine occasions (1976-1981, 1986-1992, 2003, 2006, 2008, 2009, 2011, 2012, and 2016), used their constitutional authority to dissolve the Assembly. Suspension mandates new elections within 60 days. Some oppositionists seek a constitutional monarchy in which an elected Assembly majority would name a Prime Minister, who would form a cabinet. Political Factions in and Outside the National Assembly Political parties are not permitted, and factions compete in Assembly elections as "currents," "trends," or "political societies." These factions also organize at a parallel traditional Kuwaiti forum called the diwaniyya —informal evening social gatherings, hosted by elites of all ideologies. Factions in Kuwait generally group as follows. Government Supporters " T ribalists ." Generally less educated but who dominate two out of the five electoral districts. At times, some tribalists in the Assembly have grouped into a faction widely referred to as "service deputies"—members primarily focused on steering government largesse and patronage to their constituents. Shia s. Most Shias in the Assembly are Islamists, organized in a bloc called the National Islamic Alliance. These deputies tend to side with the government, perhaps out of concern about Sunni Islamists. Women . Elected women deputies have tended to align with the government. Critics/Opponents "Liberals. " Highly educated and mostly secular elites, many of whom supported Arab nationalist movements in the 1960s and 1970s. In prior years adherents of this view banded together in the "Kuwait Democratic Forum" political society. Sunni Islamists . There are two major Sunni Islamist tendencies in Kuwait: supporters of the Muslim Brotherhood, and harder-line "Salafists." Muslim Brotherhood supporters operate in Kuwait under a banner called the Islamic Constitutional Movement (ICM), with no record of violence. However, the government has sought to disband the Brotherhood's Kuwait charity arm, Islah . Youths . Since 2008, Kuwaiti youth groups have organized to support "liberal" deputies, using such names as the "Orange Movement" or "Fifth Fence." These groups participated in street protests in Kuwait during the 2011 Arab uprisings. Post-2006 Political Turmoil: Assembly Suspensions and Elections Disputes between the Al Sabah and oppositionists in the Assembly after Amir Jabir's death in 2006 manifested as repeated Assembly suspensions and elections, none of which has resolved differences over the power balance between the executive and the Assembly. Elections during 2006-2009 June 29, 2006, E lection . Five months after taking power, Amir Sabah suspended the Assembly in May 2006 to prevent oppositionists from questioning the Prime Minister over the government's refusal to reduce the number of electoral districts to 5 (from 25). The proposal sought to reduce "vote buying" and the effects of intratribal politics. In elections set for June 29, 2006, the opposition, backed by youths supporting the "Orange" banner, won 34 out of the 50 seats. Women were allowed to vote and run for the first time, but none of the 27 women won. After the election, the government reduced the number of electoral districts to 5. May 17, 2008 , Election . In March 2008, amid Assembly demands for government employee pay raises, the Amir dissolved the Assembly and set new elections for May 17, 2008. Sunni Islamists and conservative tribal leaders won 24 seats, and "liberals" won seven. Progovernment and other independent tribalists and Shias held the remaining 19 seats. No woman was elected. May 16, 2009 , Election . Amid an Assembly demand to question the Prime Minister for alleged misuse of public funds, the Amir suspended the Assembly and set elections for May 16, 2009. More than 20 new parliamentarians were elected, including 4 women (the first ever elected). Two votes of no confidence in the Prime Minister (in December 2009 and January 2011) failed, although the second vote was narrow (22 of the 50 Assembly deputies voted no confidence). Arab Uprisings Intensify Political Strife The Arab uprisings that began in early 2011 broadened Kuwait's opposition. In January 2011, opposition deputies, supported by youths using names such as the "Fifth Fence," forced the Interior Minister to resign for failing to prevent the torture to death of a man in custody. In March 2011, a Shia parliamentarian's request to "grill" the Foreign Minister about Kuwait's sending of naval forces to support Bahrain's Sunni minority government against a Shia-led uprising prompted a cabinet resignation and reshuffling. Following reports that two Kuwaiti banks had deposited $92 million into the accounts of several parliamentarians, thousands protested in September 2011, compelling the cabinet to adopt an anticorruption law. On November 16, 2011, oppositionists in and outside the Assembly stormed the Assembly building, demanding the Prime Minister's resignation. On November 28, 2011, he did so, and the Amir appointed another royal family member, then-Defense Minister Shaykh Jabir al-Mubarak Al Sabah. He was sworn in without first naming a new cabinet, a technical constitutional breach. February 2, 2012, Election . On December 6, 2011, Amir Sabah dissolved the National Assembly and set new elections for February 2, 2012 (within the mandated 60 days). About 20 opposition deputies competed as one "Opposition Bloc," supported by youth leaders, advocating a fully elected government and legalization of political parties. Opposition candidates won 32 of the 50 seats, but none of the 19 woman candidates was elected. Turnout was about 62%. A leading opposition figure, Ahmad al-Sadun, returned to the Speaker post he held during 1985-1999, replacing the progovernment Jassim Al-Khurafi. The Prime Minister appointed four oppositionists to the cabinet. In June 2012, when the Assembly requested to grill the Interior Minister, the Amir exercised his authority, under Article 106 of the constitution, to suspend the Assembly for one month (renewable for two months, with the concurrence of the Assembly). December 2012 Election Triggered by Court Decision . On June 20, 2012, the constitutional court voided the December 2011 Assembly suspension on technical grounds and reinstated the May 2009 Assembly. The Amir set new elections for December 1, 2012, and decreed that each voter would cast a ballot for one candidate (per district), rather than four. In October 2012, an estimated 50,000-150,000 protesters called the decree an effort to complicate opposition efforts to forge alliances. The government responded by banning large public gatherings. A boycott by Sunni Islamist factions lowered turnout to 40% and produced a "progovernment" Assembly, including an unprecedented number of Shias (17). Three women were elected, as were some independent Sunni Islamists. Another Court-Triggered Election . On June 16, 2013, the Constitutional Court upheld the Amir's decree that each person would vote for only one candidate per district (see above), but dissolved the Assembly on the basis of improper technicalities in the Amir's election decree. New elections—the sixth in five years—were held on July 27, 2013, and eight women ran (out of 418 candidates registered). Several opposition groups, including the ICM, boycotted again, producing another progovernment Assembly that included nine Shias and several tribalists. Two women initially won seats, but a miscount deprived one of them of her seat, and the other resigned in 2014. Shaykh Jabir continued as Prime Minister, and his cabinet included one Shia and four Salafists. November 2016 Election . Public demonstrations generally subsided after 2013, and oppositionists indicated they would participate in the next Assembly elections. Citing "circumstances in the region" (an apparent reference to the Islamic State challenge and conflicts in Syria and Yemen), the Amir suspended the National Assembly and set new elections for November 26, 2016—earlier than planned. Of the 454 candidates, 15 were women. The main opposition political societies participated, and the vote produced an Assembly roughly split between progovernment and opposition deputies. The State Department called the elections "generally free and fair." Recent Developments Reflecting its altered balance of factions, the Assembly "grilled" the Prime Minister in 2017 for "administrative regularities." To forestall further Assembly challenges, the Amir dissolved the cabinet in October 2017. A new government was appointed on December 11, 2017, with a policy outlook similar to that of the previous cabinet. The Amir's son was appointed First Deputy Prime Minister and Defense Minister. Two of the appointees were women—the Minister of Social and Labor Affairs, and the Minister of State for Housing and for Services Affairs. The next National Assembly elections are due to be held in 2020. Elections for vacant seats are held periodically, including by-elections for two vacant seats to be held in March 2019. Broader Human Rights Issues2 On broad human rights issues, the State Department identifies the principal human rights problems in Kuwait as allegations of torture of detainees; political prisoners; restrictions on freedom of speech, including criminalization of criticism of government officials and defamation of religion; limited rights for a stateless population referred to as Bidoon s ; trafficking in persons; criminalization of male same-sex sexual activity; and reports of forced labor, especially among foreign workers. Since 2011, Kuwait's government has increasingly imprisoned and revoked the citizenship of social media critics for "insulting the Amir," tarnishing Kuwait's reputation for political tolerance. In 2017, Kuwait also revived, after a four-year hiatus, the practice of executions by executing seven prisoners—one of which was a member of the ruling family—for capital offenses. Most were expatriates. Of the 140 Gulf-based activists identified in November 2016 by Human Rights Watch as struggling against government repression, 44 are from Kuwait. Two of the most prominent independent human rights organizations in Kuwait are the Kuwait Society for Human Rights and the Kuwait Association for the Basic Evaluation of Human Rights, both of which have been allowed access to Kuwait's prisons. U.S. democracy programs in Kuwait funds discussions with Kuwaiti leaders, public diplomacy, training civil society activists, enhancing the capabilities of independent Kuwaiti media, promoting women's rights, and providing a broad spectrum of educational opportunities. However, published readouts of most high-level U.S.-Kuwait meetings indicate that U.S.-Kuwait discussions focus mostly on security and regional issues. The National Endowment for Democracy, which obtains funds from the State Department, has in recent years given grants to Kuwaiti groups that promote civil society, human rights, women's rights, and the rights of noncitizens in Kuwait. Women's Rights Women enjoy substantial, but not equal, rights in Kuwait. Women serve in national appointed positions and, since 2006, have been able to run and vote in National Assembly elections. Women in Kuwait can drive, and many women own businesses. An estimated 16% of the oil sector workforce is female. Women run several nongovernmental organizations, such as the Kuwait Women's Cultural and Social Society, dedicated to improving rights for women. Still, Kuwait remains a traditional society and Islamists who want to limit women's rights have substantial influence. The law does not specifically prohibit domestic violence, although courts try such cases as assault. Kuwaiti women who marry non-Kuwaiti men cannot give their spouses or children Kuwaiti citizenship. Numerous international reports assert that violence, particularly against expatriate domestic workers, is frequent. Female police officers in public places combat sexual harassment. Trafficking in Persons and Labor Rights5 For eight years ending in 2015, Kuwait was designated by the State Department's Trafficking in Persons report as "Tier Three" (worst level). Kuwait's rating was assessed in the 2016, 2017, and 2018 reports as "Tier 2: Watch List," on the grounds that it is making significant efforts to meet minimum standards for the elimination of trafficking in persons. The 2018 report credited Kuwait for implementing a labor law that prohibits employers from confiscating domestic workers' passports, increases penalties for employers who engage in unscrupulous recruiting practices, makes more aggressive efforts to investigate and prosecute traffickers, and funds a five-year national strategy to combat trafficking in persons. Over many years, there have been repeated reports of beatings and rapes of domestic workers by their Kuwaiti employers, occasionally causing diplomatic difficulties for Kuwait. In July 2016, Kuwait set a minimum monthly wage for maids working in Kuwait, almost all of whom are expatriate women. In February 2018, following reports that a Filipina maid had been found dead in an apartment freezer in Kuwait, Philippines President Rodrigo Duterte barred travel by Philippines citizens to Kuwait. In April 2018, Kuwait expelled the Philippines' ambassador and recalled its ambassador from Manila. Kuwait's labor laws protect the right of workers to form and join unions, conduct legal strikes, and bargain collectively, but contain significant restrictions. The government allows one trade union per occupation, but the only legal trade federation is the Kuwait Trade Union Federation (KTUF). Foreign workers, with the exception of domestic workers, are allowed to join unions. Since 2011, strikes have taken place among customs officers and employees of Kuwait Airways, and oil workers conducted a three-day strike in April 2016. In 2014, the government prevented a strike by Kuwait Petroleum Company employees by threatening to imprison strikers. Status of Noncitizens and "Stateless Persons"(Bidoons) Non-Gulf Arabs, Asians, and stateless residents continue to face discrimination largely because of the perception that they are seeking to take advantage of generous Kuwaiti social benefits. The legal status of the approximately 100,000 stateless persons ("bidoons," the Arabic word for "without"), who have no proof of citizenship but claim that they have lived in Kuwait for many generations, has vexed Kuwait for decades. The U.N. High Commission on Refugees (UNHCR) estimates that about 43,000 of the bidoons have a legitimate claim to citizenship. In March 2011, the government set a deadline of 2017 to resolve the status of the bidoons. That deadline was not met, although over the past few years, the government has been giving citizenship to small numbers of bidoons who were children of soldiers killed resisting the 1990 Iraqi invasion of Kuwait. In 2017, the government opened a hospital closed to noncitizens. Freedom of Expression and Media Freedoms Successive State Department human rights reports have asserted that the government does not always respect constitutional provisions for freedom of speech and the press. Governmental press censorship ended in 1992, fostering the growth of a vibrant press, but the Press and Publications Law establishes topics that are off limits for publication and discussion. Publishers and bloggers must be licensed by the Ministry of Information. Kuwait (and other GCC states) has increasingly used and enacted laws against the use of social media to criticize the government. Kuwait's penal code (Article 25) provides for up to five years in jail for "objecting to the rights and authorities of the Amir or faulting him." In July 2015, Kuwait enacted a cybercrimes law that punishes insulting religious figures, criticizing the Amir, or harming Kuwait's relations with other countries. Since 2014, the government has revoked the citizenship of some naturalized Kuwaitis for criticizing the government, but Kuwait-born citizens cannot legally have their citizenship revoked. Religious Freedom6 Recent State Department religious freedom reports have noted little change in Kuwait's respect for religious freedoms. Of the 30% of Kuwait's population that are Shia Muslims, about half are Arabs originally from Saudi Arabia, and half are of Persian origin. Kuwaiti Shias are well represented in the rank and file of the military and security apparatus as well as government institutions, and are able to select their own clerics without government interference. A national unity law prohibits "stirring sectarian strife," and the government continues to prosecute Sunnis for alleged violations. However, Kuwaiti Shias continue to report official discrimination, including limited access to religious education and places of worship. In contrast to some of the other Gulf states, there is no registration requirement for religious groups, but all non-Muslim religious groups must obtain a license to establish an official place of worship. Religious groups are generally able to worship without interference. Members of these groups report difficulties obtaining permission to construct new facilities. Despite opposition from Kuwaiti Islamists, the government has licensed seven Christian churches to serve the approximately 750,000 Christians in Kuwait (almost all are expatriates): Protestant, Roman Catholic, Greek Catholic (Melkite), Coptic Orthodox, Armenian Orthodox, Greek Orthodox, and Anglican. Members of religions not sanctioned in the Quran—including about 400 Baha'i's, 100,000 Buddhists, 100,000 Hindus, and 10,000 Sikhs—are mostly noncitizens working in Kuwait. In addition to a few hundred Christians, there are some Baha'i citizens. U.S.-Kuwait Relations and Defense Cooperation Kuwait was not strategically or politically close to the United States until the Iran-Iraq War (1980-1988), when Kuwait—a backer of Iraq—sought U.S. help against Iranian attacks. A U.S. consulate opened in Kuwait in October 1951 and was elevated to an embassy upon Kuwait's independence from Britain in 1961. Kuwait was the first Gulf state to establish relations with the Soviet Union in the 1960s, perhaps reflecting the political strength in Kuwait of relatively left-wing figures. Lawrence Robert Silverman is U.S. Ambassador to Kuwait. Defense Cooperation Agreement (DCA), Strategic Dialogue, and Major Non-NATO Ally (MNNA) Status Iraq's invasion of Kuwait in August 1990, and the U.S. role in ending the Iraqi occupation, deepened the U.S.-Kuwait defense relationship. A formal bilateral Defense Cooperation Agreement (DCA) was signed on September 19, 1991, seven months after the U.S.-led expulsion of Iraqi forces from Kuwait in the 1991 Operation Desert Storm. The DCA had an initial duration of 10 years, but remains in effect. The text is classified, but reportedly provides for mutual discussions in the event of a crisis; joint military exercises; U.S. evaluation of, advice to, and training of Kuwaiti forces; U.S. arms sales; prepositioning of U.S. military equipment; and U.S. access to a range of Kuwaiti facilities. The DCA includes a Status of Forces Agreement (SOFA) that provides that U.S. forces in Kuwait be subject to U.S. rather than Kuwaiti law—a common feature of such accords. The visit of Amir Sabah to Washington, DC, on September 8, 2017, included convening of the second U.S.-Kuwait "Strategic Dialogue," which reaffirmed the U.S. commitment to enhance Kuwait's military capabilities. During a December 3-5, 2017, visit to Kuwait, then-Defense Secretary James Mattis said that the U.S.-Kuwait military relationship is "very close." The Amir has met with President Trump on three occasions, most recently September 5, 2018, focusing on regional issues including the U.S. concept of an anti-Iran Middle East Strategic Alliance (MESA). Another U.S.-Kuwait Strategic Dialogue meeting was to be held during Secretary of State Michael Pompeo's trip to the Gulf states in January 2019, but the Secretary was compelled to return to the United States before reaching Kuwait due to a death in his family. Kuwait's military has regained its pre-Iraq invasion strength of 17,000. U.S. officials say that the U.S. training and mentorship has improved the quality of the Kuwaiti military, particularly the Air Force. U.S. Troops in Kuwait and Facilities Used Since the U.S. withdrawal from Iraq in 2011, there have been about 13,500 U.S. troops in Kuwait under the DCA —constituting more than one-third of the 35,000 total U.S. forces in the Gulf. Defense Secretary Mattis noted during his December 2017 visit to Kuwait that only Germany, Japan, and South Korea host more U.S. forces than Kuwait does. The U.S. force includes Army combat troops, not purely support forces, giving the United States the capability to project ground force power in the region. Each spring, these forces participate in an annual three-week "Eagle Resolve" military exercise with forces from Kuwait and other GCC states. As discussed below, Kuwait hosts the headquarters for the U.S.-led operations against the Islamic State (Operation Inherent Resolve) and has made its military facilities available to coalition partners in that military campaign. U.S. forces in Kuwait are stationed at several facilities that include Camp Arifjan (the main U.S. headquarters in Kuwait, 40 miles south of Kuwait City); a desert training base and firing range called Camp Buehring (near the border with Saudi Arabia); Ali al-Salem Air Base; Shaykh Ahmad al-Jabir Air Base; and a naval facility called Camp Patriot. Under the DCA, the United States maintains 2,200 Mine Resistant Ambush Protected (MRAP) vehicles in Kuwait. U.S. armor prepositioned in Kuwait was used for the 2003 invasion of Iraq. (In December 2005, U.S. forces vacated Camp Doha, the headquarters for U.S. forces in Kuwait during the 1990s.) Major Non-NATO Ally Status Recognizing Kuwait's consistent and multifaceted cooperation with the United States, on April 1, 2004, the Bush Administration designated Kuwait as a "major non-NATO ally (MNNA)," a designation held by only one other Gulf state (Bahrain). The designation opens Kuwait to increased defense-related research and development cooperation with the United States, but does not expedite U.S. executive branch approval of arms sales to Kuwait. Operational U.S.-Kuwait Defense Cooperation: 1987-2011 The following sections discuss U.S.-Kuwait defense cooperation in recent regional conflicts. Iran-Iraq War . During the Iran-Iraq War, Iran had sought to compel Kuwait to end its financial and logistical support for Iraq by striking Kuwaiti oil facilities, such as the Al Ahmadi terminal, with cruise missiles. In 1987-1988, the United States established a U.S. naval escort and tanker reflagging program to protect Kuwaiti and international shipping from Iranian naval attacks (Operation Earnest Will). As part of the skirmishes between the United States and Iran in the course of that operation, Iran attacked a Kuwaiti oil installation (Sea Island terminal). Operation Desert Storm . Asserting that Kuwait was one of Iraq's key financiers during its fight against Iran in the Iran-Iraq War, Kuwait's leaders were shaken by the August 2, 1990, Iraqi invasion of Kuwait. Most experts believe that the invasion was a result of Saddam Hussein's intent to dominate the Persian Gulf. Iraq's occupation lasted until U.S.-led coalition forces of nearly 500,000 expelled Iraqi forces from Kuwait in "Operation Desert Storm" (January 16, 1991-February 28, 1991). Kuwait's leaders, who spent the occupation period in Saudi Arabia, were restored to power. Kuwait paid $16.059 billion to offset the U.S. incremental war costs. Iraq Containment Operations ( 199 1-2003 ) . After the 1991 war, about 4,000 U.S. military personnel—and enough prepositioned U.S. armor to outfit two combat brigades—were stationed at Kuwaiti facilities to contain Iraq. The 1992-2003 enforcement of a "no fly zone" over southern Iraq (Operation Southern Watch, OSW) involved 1,000 U.S. Air Force personnel deployed at Kuwaiti air bases. Kuwait contributed about $200 million per year for U.S. costs of these operations, and two-thirds of the $51 million per year U.N. budget for the 1991-2003 Iraq-Kuwait Observer Mission (UNIKOM) that monitored the Iraq-Kuwait border. Kuwait also hosted U.S. forces en route to participate in Operation Enduring Freedom in Afghanistan. Operation Iraqi Freedom (OIF) and Post-Saddam Iraq . Kuwait supported the U.S. decision to militarily overthrow Saddam Hussein by hosting the bulk of the U.S. OIF force of about 250,000, as well as the other coalition troops that entered Iraq in March 2003. Kuwait closed off its entire northern half for weeks before the invasion; allowed U.S. use of two air bases, its international airport, and sea ports; and provided $266 million to support the combat. Kuwaiti forces did not enter Iraq. During 2003-2011, there were about 25,000 U.S. troops based in Kuwait, not including those deploying to Iraq, and Kuwait was the gateway for U.S. troops deploying to that war zone. According to Defense Department budget documents, Kuwait contributed about $210 million per year in similar in-kind support to help defray the costs incurred by the U.S. military personnel that rotated through Kuwait into or out of Iraq during 2003-2011. Defense Cooperation with Other Countries/NATO Center Kuwait has supported efforts to promote greater military coordination among the GCC countries, including the GCC decision in 2013 to form a joint military command. Kuwait has also sought cooperation with other non-Arab U.S. partners. In December 2011, NATO and Kuwait began discussing opening a NATO center in Kuwait City as part of the Istanbul Cooperation Initiative (ICI) initiated in 2004. Kuwait joined the ICI in December 2004. The NATO center, formally titled the NATO-ICI Regional Center, opened on January 24, 2017, in a formal ceremony attended by NATO Secretary-General Jens Stoltenberg. On October 1, 2018, the NATO-ICI Regional Center held its first annual meeting to review the center's performance, discussing programs including maritime security, cybersecurity, and protection against the use of weapons of mass destruction. On November 26, 2018, Kuwait opened a diplomatic office at NATO. In late November 2017, Kuwait signed an agreement with France to strengthen their defense cooperation. In November 2018, the two countries held ground forces exercises in Kuwait. As do the other manpower-short GCC states, Kuwait has enlisted some military help from Pakistan; in April 2014, Kuwait set up an office in Pakistan to recruit Pakistani trainers for Kuwaiti soldiers. U.S. Arms Sales to Kuwait U.S. arms sales to Kuwait are intended, at least in part, to promote interoperability with U.S. forces. Kuwait is considered a wealthy state that can fund its own purchases. Kuwait has, in some years, received small amounts of U.S. assistance in order to qualify Kuwait for a discount to send its officers for training in the United States. As part of the U.S. effort to promote U.S. defense relations with the GCC as a whole, rather than individually, a December 16, 2013, Presidential Determination authorized U.S. defense sales to the GCC. Major U.S. Arms Sales to Kuwait U.S. arms sales have sought to enhance Kuwait's capability and the interoperability of its military with U.S. forces. Because of its ample financial resources, Kuwait is not eligible to receive U.S. excess defense articles. Major U.S. Foreign Military Sales (FMS) include the following: Missile Defense System s . In 1992, Kuwait bought five Patriot antimissile fire units, which were delivered by 1998. The system intercepted Iraqi missiles during the 2003 Iraq War. In July 2012, the Administration notified a sale of 60 Patriot Advanced Capability ("PAC-3") missiles and 20 Patriot launching stations, plus associated equipment, valued at $4.2 billion. Kuwait has not announced whether it will buy the more sophisticated Theater High Altitude Air Defense (THAAD) missile defense system that the United States has offered to the Gulf states. The United States also has deployed four U.S.-owned Patriot systems in Kuwait since the 1991 Gulf War, but the United States announced on September 26, 2018, that it was redeploying that system, as well as U.S. Patriots in Bahrain and Jordan, to areas pertinent to U.S. strategic competition with Russia and China. Combat Aircraft /F-18s . The core of Kuwait's fleet of combat aircraft is 40 F/A-18 combat aircraft Kuwait bought in 1992. In mid-2015, Kuwait asked to buy up to 40 additional F/A-18s, and the following year expressed frustration at delays in the DOD approval process, threatening to buy 28 Eurofighters instead. The Obama Administration notified to Congress on November 17, 2016, the potential sale of up to 32 F-18s to Kuwait along with support, equipment, and training. On November 28, 2016, U.S. officials stated that Kuwait had proceeded to order 28 of the jets—an agreement with a value of $5 billion. Tanks . In 1993, Kuwait bought 218 M1A2 tanks at a value of $1.9 billion. Delivery was completed in 1998. On October 16, 2017, the Defense Security Cooperation Agency notified Congress of a determination to sell Kuwait new tank hulls, armament, and engines for its U.S.-made tank force, at an estimated sale value of $29 million. Apache Helicopters . In September 2002, Kuwait ordered 16 AH-64 (Apache) helicopters equipped with the Longbow fire-control system, valued at about $940 million. Kuwait reportedly is seeking to buy additional Apaches. Tactical Missiles . In 2008, Kuwait bought 120 AIM-120C-7 Advanced Medium Range Air-to-Air Missiles (AMRAAM), along with equipment and services, with a total value of $178 million. In February 2012, the Administration notified Congress of a sale of 80 AIM-9X-2 SIDEWINDER missiles and associated parts and support, with an estimated value of $105 million. On July 30, 3018, DSCA notified Congress of a potential sale to Kuwait of 300 Hellfire air-to-ground missiles, with an estimated value of $30.4 million. Kuwait already has Hellfires in its inventory, according to DSCA. DSCA announced in June 2014, that Kuwait would fund $1.7 billion for the U.S. Army Corps of Engineers to build a Kuwait Armed Forces Hospital. In December 2015 Kuwait's government asked the National Assembly to approve $20 billion in additional funds for arms purchases. The funds will presumably pay for the F-18s Kuwait has ordered, as well as for additional U.S. Apache helicopters, French naval vessels and light armored vehicles, and Russian-made missile systems and heavy artillery. International Military Education and Training (IMET) In some past years, Kuwait received very small amounts of funding under the International Military Education and Training (IMET) program—for the primary purpose of earning Kuwait discounts on the training it pays for its officers to undergo in the United States. It received $19,000 in IMET in FY2007, $14,000 in FY2008, and $10,000 in FY2010. Approximately 200 Kuwaiti military personnel study intelligence, pilot training, and other disciplines at various U.S. military institutions. Kuwait spends a total of about $10 million per year on this program. Foreign Policy Issues After the United States, Kuwait's most important alliances are with the other GCC states. Kuwait has tended to act within a GCC consensus and to try to preserve GCC unity. Intra-GCC Issues Kuwaiti leaders argue for GCC unity as the optimal means for dealing with regional threats. Amir Sabah has been the key Gulf mediator of the intra-GCC rift that erupted in June 2017 when Saudi Arabia, UAE, and Bahrain—asserting that Qatar implements policies fundamentally at odds with other GCC states—broke relations with Qatar and denied it land, air, and sea access to their territories. Then-Secretary of State Rex Tillerson conducted unsuccessful "shuttle diplomacy" on the issue from Kuwait in July 2017. After Amir Sabah's meeting with President Trump in September 2017, President Trump brokered brief direct talks between Qatar's Amir and Saudi Arabia's heir apparent, Crown Prince Mohammad bin Salman Al Saud. Kuwait convened the annual GCC summit on December 4, 2017), but Amir Sabah adjourned it after a few hours. The rift reportedly was a focus of Amir Sabah's meeting with President Trump on September 5, 2018, but, with no apparent imminent resolution of the rift, the Administration has repeatedly postponed a U.S.-GCC summit planned first planned for early 2018. Kuwait's reluctance to adopt the Saudi/UAE/Bahrain hard-line position on Qatar reportedly caused the abbreviation of the visit of Saudi Crown Prince Mohammad bin Salman Al Saud to Kuwait on September 30, 2018—his first visit to a Gulf state since becoming Crown Prince. In support of a resolution of the rift, Kuwait hosted the military chiefs of staff of the GCC, Egypt, and Jordan, as well as the commander of U.S. Central Command, on September 12, 2018. Kuwait did not join Saudi Arabia, Bahrain, and UAE in withdrawing their ambassadors from Qatar for several months in 2014 over similar issues. Kuwait has sometimes acted militarily to defend GCC leaderships. Kuwait sent a naval unit to support the March 14, 2011, intervention of the GCC's "Peninsula Shield" unit to assist Bahraini security forces, but did not send ground troops into Bahrain. The Kuwaiti naval unit departed in July 2011. Kuwait's involvement came despite opposition from some Kuwaiti Shias. Relations with Iraq Kuwait has built political ties to the Shia-dominated government in Iraq in order to move beyond the legacy of the Saddam era invasion of Kuwait and to prevent any Iraqi Shia-led violence in Kuwait such as occurred in the 1980s. On July 18, 2008, Kuwait named its first ambassador to Iraq since the 1990 Iraqi invasion. On January 12, 2011, then-Prime Minister Nasser became the first Kuwait Prime Minister to visit Iraq since the 1990 invasion. Then-Iraqi Prime Minister Nuri al-Maliki visited Kuwait in 2011 and 2012, paving the way for Amir Sabah's attendance at the March 27-29, 2012, Arab League summit in Baghdad that marked Iraq's return to the Arab fold. The speaker of Kuwait's National Assembly visited Iraq on February 28, 2019, to mark the anniversary of the liberation from the Iraqi invasion. As part of its outreach to post-Saddam Iraq, Kuwait ran a humanitarian operation center (HOC) that gave over $550 million in assistance to Iraqis from 2003 to 2011. In 2008, Kuwait hosted a regional conference on Iraq's stability attended by the United States and Iran. In 2018, Kuwait held a conference that raised $30 billion for Iraq reconstruction to help it recover from the Islamic State challenge. Some residual issues from the Iraqi invasion remain. In August 2012, the Iraqi government vowed to "end all pending issues with Kuwait before the start of [2013]"—a statement that furthered Iraq's argument that the U.N. Security Council should remove any remaining "Chapter 7" (of the U.N. Charter) mandates on Iraq stemming from the invasion. During a visit to Iraq by Kuwait's Prime Minister on June 12, 2013, the two countries agreed to take the issues of still-missing Kuwaitis and Kuwaiti property out of the Chapter 7 supervision of the United Nations and replace them with alternative mechanisms, as discussed below. On December 15, 2010, the U.N. Security Council passed three resolutions—1956, 1957, and 1958. These resolutions ended Saddam-era sanctions against Iraq, but did not end the "Chapter 7" U.N. mandate on Iraq and continued the 5% automatic revenue deductions for reparations payments, discussed below. Reparations Payments . Until 2014, 5% of Iraq's oil revenues were devoted to funding a U.N. escrow account that, since 1991, has been compensating the victims of the Iraqi invasion of Kuwait. The U.N. Compensation Commission (UNCC), created by the post-Desert Storm U.N. resolutions, paid out about $52 billion awarded to over 100 governments and 1.5 million individual claimants by the time it ended in April 2015. As of that time, the process had paid $48 billion of that amount, leaving only about $4.6 billion left to be paid—the last remaining amount due from the $14.7 billion awarded for damage to Kuwaiti oilfields during the Iraqi occupation. In 2014, the UNCC, accounting for Iraqi budget shortfalls, extended the deadline for Iraq to make the final payments to early 2016. In 2015, Kuwait extended that deadline until 2018, and Iraq paid Kuwait $90 million in April 2018. The two countries agreed to retire the remaining balance through the payment of 1.5% of Iraq's oil revenues in 2019, and 3% in each of 2020 and 2021. However, budgetary difficulties in Iraq have caused Iraq's new government to request in November 2018 that Kuwait agree to another suspension of the payments. Missing Kuwaitis and Kuwaiti National Archives . The U.N. resolutions adopted in December 2010 also continued the effort, required under post-1991 war U.N. Security Council resolutions (primarily 687), to resolve the fate of the 605 Kuwaitis and third party nationals missing and presumed dead from the 1991 war, as well as that of the missing Kuwaiti national archives. A special U.N. envoy, Gennady Tarasov, was U.N. High-Level Coordinator for these issues. In September 2011 and in June 2012, Iraq called for an end to the mandate of that post and for Iraq and Kuwait to pursue the issue bilaterally. The June 16, 2013, visit of the Kuwaiti Prime Minister to Iraq—which followed progress on border demarcations issues—resulted in an Iraq-Kuwait joint recommendation to remove these issues of missing property and persons from the Chapter 7 U.N. mandate. That recommendation was endorsed in the U.N. Secretary-General's report of June 17, 2013. U.N. Security Council Resolution 2107 of June 27, 2013, abolished the High-Level Coordinator mandate and transferred the supervision of these issues to the U.N. Assistance Mission—Iraq (UNAMI)—under Chapter VI of the U.N. Charter. The search process has resulted in finding the remains of 236 Kuwaitis, to date. The cases of 369 Kuwaitis remain unresolved. Kuwait has been a donor to the Iraqi Ministry of Human Rights, which is the lead Iraqi agency trying to determine the fate of the Kuwaitis. More than 10,000 trenches have been dug to search for remains, and former members of Saddam's regime have been interviewed. In February 2019, a U.N. Security Council presidential statement urged reinvigoration of the process of determining the fate of the Kuwaiti missing, noting that no human remains had been exhumed since 2004. As far as the Kuwaiti National Archives, U.N. reports on December 14, 2012, and June 17, 2013, say there has been no progress locating the archives. However, Annex I to the June 17, 2013, report (U.N. document S/2013/357) contains a list of all the Kuwaiti property returned to Kuwait by Iraq since 2002. In June 2012, Iraq returned to Kuwait numerous boxes of tapes from Kuwait's state radio, books belonging to Kuwait University, and keys to Kuwait's Central Bank. In November 2018, visiting Iraqi President Barham Salih brought with him to Kuwait some Kuwaiti archival material that had been found. Kuwait-Iraq Border. Disputes over the Iraq-Kuwait border, some of which apparently were a factor in Iraq's 1990 invasion of Kuwait, have been mostly resolved. Under post-1991 Gulf War U.N. Security Council Resolution 833, the Council accepted the U.N.-demarcated border between them. Kuwait insisted that post-Saddam Iraqi governments formally acknowledge Iraq's commitments under that resolution to pay some of the costs of border markings and signs. As a consequence of the March 2012 Maliki visit to Kuwait, Iraq agreed to pay its portion of the costs of maintaining the border markings, and sea border markings and related issues were resolved in 2013. In 2017, Iraq ceded to Kuwait greater access to the shared Khor Abdullah waterway. Other Outstanding Bilateral Disputes /Iraqi Airways . Kuwait has not forgiven about $25 billion in Saddam-era debt, but Kuwait does not appear to be pressing the Iraqi government for payment. The March 2012 Maliki visit resolved Kuwait Airways' assertion that Iraq owed Kuwait $1.2 billion for planes and parts stolen during the Iraqi invasion with agreement for Iraq to pay Kuwait $300 million in compensation, and to invest $200 million in an Iraq-Kuwait joint airline venture. Subsequent to the visit, Iraq-Kuwait direct flights resumed. Threat from Iraqi Extremist Groups . Kuwait remains wary of pro-Iranian Shia militia groups operating in Iraq, most of which grew out of pro-Iranian anti-Saddam elements. The December 1983 bombings of the U.S. and French embassies in Kuwait and an attempted assassination of the Amir in May 1985 were attributed to the Iran-inspired Iraqi Da'wa (Islamic Call) Party, composed of Shias. Seventeen Da'wa activists were arrested for those attacks, and Da'wa activists hijacked a Kuwait Airlines plane in 1987. Da'wa is the party that two of Iraq's previous prime ministers headed, although the party disbanded its militia wing long ago. In July 2011, the Iran-supported militia of Shia cleric Moqtada Al Sadr rocketed Kuwait's embassy in Iraq. Iran Kuwait has undertaken consistent high-level engagement with Iran, reflecting a legacy of Kuwait's perception of Iran as a counterweight to Saddam Hussein's Iraq. After 1991, Kuwait often hosted pro-Iranian anti-Saddam Iraqi Shia oppositionists for talks, even though some of these same groups had conducted attacks in Kuwait in the 1980s. Amir Sabah visited Iran in June 2014, including meetings with Iran's Supreme Leader, Ayatollah Ali Khamene'i. Iran's President Hassan Rouhani visited Kuwait and Oman in February 2017, in conjunction with Kuwait's role as a mediator in an unsuccessful attempt to establish a broader Iran-GCC dialogue. Like the other GCC states, and despite engaging Iranian leaders, Kuwaiti leaders support U.S. efforts to reduce Iran's efforts to expand its influence in the region, while supporting continued implementation of the 2015 Iran nuclear agreement (Joint Comprehensive Plan of Action, JCPOA) to curb Iran's nuclear program. Kuwait has also purchased missile defense equipment that supports U.S. efforts to forge a joint GCC missile defense network against Iran, and it participates in all U.S.-led military exercises in the Persian Gulf. Kuwait enforces all U.S. sanctions against Iran, and it has not pursued a long-discussed plan to import Iranian natural gas. In January 2016, Kuwait downgraded relations with Iran over the sacking of Saudi diplomatic facilities in Tehran and Mashhad by demonstrators protesting the Saudi execution of dissident Saudi Shia cleric Nimr al Baqr Al Nimr. Kuwait recalled its Ambassador from Iran but it did not follow Saudi Arabia and Bahrain in breaking relations. In September 2018, Kuwait rebuffed Iranian entreaties to return its ambassador to Tehran. Amir Sabah represented Kuwait at the May 13-14, 2015, and April 21, 2016, U.S.-GCC summits in Camp David and in Riyadh respectively, during which then-President Obama reassured the GCC states of the U.S. commitment to Gulf security. Kuwait's Foreign Ministry reacted to the Trump Administration's May 8, 2018, announcement of its exit from the JCPOA by expressing "understanding" that U.S. suggestions for improving the accord were not adopted. Kuwaiti officials have indicated the country will join the U.S.-backed Middle East Strategic Alliance to counter Iran, if such a bloc is formed. Kuwait has been vigilant in preventing Iran from undermining security inside Kuwait. In 2010, Kuwait arrested some Kuwaiti civil servants and stateless residents for allegedly helping the Qods Force of the Islamic Revolutionary Guard Corps (IRGC-QF) of Iran (the IRGC unit that supports pro-Iranian movements in the region) plot to blow up Kuwaiti energy facilities. In September 2015, Kuwait arrested 25 Kuwaiti Shias and 1 Iranian who had reportedly hidden explosives near the border with Iraq. In January 2016, a criminal court sentenced 2 of the defendants, including the Iranian (in absentia), to death, and 12 to prison terms. Another 12 were acquitted. Syria and the Islamic State Kuwait joined the U.S.-led coalition against the Islamic State, along with the other GCC states, in September 2014. It has hosted the operational headquarters for Operation Inherent Resolve (OIR). "ARCENT"—the U.S. Army component of U.S. Central Command—is based in Kuwait, and the ARCENT commander serves as overall U.S. commander of OIR. Kuwait also has allowed Canada and Italy to base reconnaissance and combat aircraft in Kuwait for their participation in OIR. Unlike some of the other GCC states, Kuwait did not conduct any air operations against Islamic State forces in Syria. No GCC state deployed ground forces to Syria or Iraq, and Kuwaiti officials say the government does not fund or arm any rebel groups fighting in Syria. Kuwait's leaders asserted that Syrian President Bashar Al Asad should leave office and, along with the other GCC states, Kuwait closed its embassy in Damascus in 2012. In December 2014, Kuwait allowed Syria to reopen its embassy in Kuwait to perform consular services for the approximately 140,000 Syrians living there. Kuwait has focused on helping civilian victims of the conflicts in Syria and Iraq, including hosting several major donors' conferences for victims of the Syria and cochairing a donors' conference for victims of the conflict, held on April 4-5, 2017, in Brussels. It has provided over $9 billion in humanitarian support for this purpose, making Kuwait the largest single country donor to these efforts after the United States. All of Kuwait's donations have been composed mostly of donations to nine U.N. agencies and to the International Committee of the Red Cross (ICRC). Kuwait hosts about 145,000 Syrians who fled that conflict. In October 2018, Kuwait joined Saudi Arabia and the UAE in finalizing a $2.5 billion donation to Jordan to help it cope with the financial burdens of hosting Syrian and Iraqi refugees. The refugees are an economic burden that likely contributed to protests in Jordan over unemployment, rising prices, and the imposition of additional income taxes. Yemen After an Arab Spring-related uprising in Yemen in 2011, Kuwait and its GCC allies brokered a transition that led to the departure of longtime President Ali Abdullah Saleh in January 2012. However, the elected government of Abdu Rabbu Mansour Al Hadi fled in January 2015 under pressure from Iran-backed Zaydi Shia Houthi rebels. In 2015, Kuwait joined the Saudi-led combat against the Houthis to try to restore the Hadi government. In part because of its willingness to engage diplomatically with Iran, the key backer of the Houthis, and its membership in the GCC, since 2016 Kuwait has hosted U.N.-mediated talks between the warring sides. In July 2016, Kuwait issued an ultimatum to the two warring sides in the Yemen conflict to negotiate a resolution to the conflict by the conflict by the following month, but the maneuver was unsuccessful. Rouhani's visit to Kuwait in February 2017 was intended, at least in part, to explore potential cooperation between Iran and the GCC to resolve the Yemen conflict. Kuwaiti Policy on Other Regional Conflicts and Issues Kuwait has generally acted in concert with—although not always as assertively as—other GCC states on regional issues that have stemmed from post-2011 unrest in the region. Egypt/Muslim Brotherhood Kuwait adopted a position on Egypt's internal struggles that was similar to that of Saudi Arabia and UAE, but at odds with Qatar, which was a major benefactor of Egypt during the presidency of Muslim Brotherhood senior figure Mohammad Morsi. Kuwaiti leaders, as do those of Saudi Arabia and the UAE, assert that the Brotherhood in Egypt supports Brotherhood-linked oppositionists in the GCC. Since Morsi was deposed by the Egyptian military in July 2013, Kuwait has given at least $8 billion to Egypt in grant, loans, and investments, and has arrested and deported some Egyptians in Kuwait for conducting (pro-Muslim Brotherhood) political activities. Still, Kuwaiti leaders assert that differences over the Brotherhood do not justify the Saudi-led ostracism of Qatar. Palestinian-Israeli Dispute For many years after the 1990 Iraqi invasion, Kuwait was at odds with then-Palestinian leader Yasir Arafat for opposing war to liberate Kuwait. Kuwait sought to punish the Palestinian leadership by expelling about 450,000 Palestinian workers from Kuwait and building ties to Hamas, a rival to Arafat's Palestine Liberation Organization (PLO). That tilt was demonstrated again in June 2018 when Kuwait circulated a draft U.N. Security Council resolution calling for an international force at the Gaza border to protect pro-Hamas demonstrators who confronted Israeli forces at the border in March 2018. However, Kuwait remains staunchly critical of Israel. in line with the positions of the other GCC and Arab states, Kuwait has supported U.N. recognition of a Palestinian State and opposed the Trump Administration's recognition that Israel's capital is in Jerusalem. Kuwait's Foreign Ministers attended the U.S.-sponsored Middle East conference in Warsaw, Poland during February 13-14, 2019, during which the Arab states attending held discussions on regional topics, particularly Iran, alongside Israeli Prime Minister Benjamin Netanyahu. However, Kuwaiti officials denied that their participation indicated that they would follow the lead of Oman, UAE, and Saudi Arabia in building increasingly public ties to Israel's government. Kuwait's foreign minister visited the Old City of Jerusalem in September 2014, but the Kuwaiti government asserted it did not coordinate the visit with Israeli officials and that the Old City represents a part of Palestine that is occupied. In 2018, Kuwait used its seat on the U.N. Security Council to block U.S.-backed efforts to censure PA President Mahmoud Abbas for an anti-Semitic speech, and it blocked U.S. condemnation of Hamas attacks on Israel. In 2018, Kuwait pledged $50 million for the United Nations Relief and Works Agency (UNRWA) in part to compensate the agency for reduced U.S. donations. As part of U.S.-led Israeli-Palestinian peace process negotiations, during 1992 to 1997, Kuwait attended—but did not host—multilateral working group talks with Israel on arms control, water resources, refugees, and other issues. In 1994, Kuwait helped persuade the other Gulf monarchies to cease enforcement of the secondary (trade with firms that deal with Israel) and tertiary (trade with firms that do business with blacklisted firms) Arab boycotts of Israel. However, Kuwait did not, as did Qatar and Oman, subsequently exchange trade offices with Israel, and it retained the Arab League boycott on trade with Israel ("primary boycott"). North Korea As do several other GCC states, Kuwait has had a significant number of North Korean laborers working in Kuwait (about 3,000), whose earnings are mostly remitted to the North Korean government. In concert with increased U.S. pressure on North Korea in 2017 for its missile and nuclear tests, Kuwait curtailed its relationship with North Korea. On September 17, 2017, after a meeting between the Amir and President Trump, Kuwait gave North Korea's ambassador (the only North Korean ambassador in the Gulf) and four other North Korean diplomats 30 days to leave Kuwait. North Korea's embassy in Kuwait City subsequently remains open but with only four staff persons, including a charge d'affaires. Kuwait also ceased renewing visas for North Korean workers, causing them to start leaving, and it halted trade ties and direct flights between Kuwait and North Korea. Domestic Terrorism and Counterterrorism Cooperation42 Kuwait has prevented most, but not all, terrorist attacks by the Islamic State and other groups, since an attack on a mosque in Kuwait City on June 26, 2015, killed 27 persons. A local branch of the Islamic State claimed responsibility. In July 2016, Kuwait said its security forces thwarted three planned Islamic State terrorist attacks in Kuwait, including a plot to blow up a Shia mosque. On October 10, 2016, an Islamic State-inspired individual of Egyptian origin drove a truck into a vehicle carrying U.S. military personnel, but no U.S. personnel were injured or killed. In April 2017, a suspected mid-ranking leader of the Islamic State was extradited from the Philippines to Kuwait for involvement in operational planning to attack Kuwait. U.S. agencies help Kuwait's counterterrorism efforts, border control, and export controls. Recent State Department fact sheets on security cooperation with Kuwait, referenced earlier, state that Kuwait's Ministry of Interior and National Guard participate in U.S. programs to work with local counterterrorism units via training and bilateral exercises. At the September 8, 2017, U.S.-Kuwait Strategic Dialogue meeting in Washington, DC, Kuwait's Ministry of Interior signed a counterterrorism information sharing arrangement with the U.S. Federal Bureau of Investigation (FBI). And, the U.S. Customs and Border Control signed an agreement to share customs information with Kuwait's director general of customs. Kuwait also has ratified a Saudi-led GCC "Internal Security Pact" to enhance regional counterterrorism cooperation. In April 2011, Kuwait introduced biometric fingerprinting at Kuwait International Airport and has since extended that system to land and sea entry points. Kuwait long sought the return of two prisoners held at the U.S. facility in Guantanamo Bay, Cuba, under accusation of belonging to Al Qaeda. Both were returned to Kuwait by January 2016. Kuwait built a rehabilitation center to reintegrate them into society after their return. Terrorism Financing Issues The State Department report on international terrorism for 2017, cited above, contains praise for recent Kuwait government steps to counter the financing of terrorism. The report praises Kuwait's October 2017 announcement, with the GCC and the United States, of 13 terrorist designations of individuals associated with the Islam State-Yemen and Al Qaeda in the Arabian Peninsula (AQAP). The report also cites the Central Bank of Kuwait for implementing a "same business-day" turnaround policy for imposing U.N. terrorist financing-related sanctions, requiring Kuwaiti banks to monitor U.N. sanctions lists proactively. Kuwait is a member of the Middle East North Africa Financial Action Task Force (MENAFATF), and many of the steps that Kuwait has taken to address the criticism were the product of an action plan Kuwait developed with the broader FATF to address Kuwait's weaknesses on anti-money laundering and counterterrorism financing (AML/CTF). A law Kuwait enacted in 2013 provided a legal basis to prosecute terrorism-related crimes and freeze terrorist assets. In May 2014, the Ministry of Social Affairs warned Kuwaiti citizens that the fundraising campaigns for Syrian factions were a violation of Kuwait law that requires that financial donations only go to authorized charity organizations. As of mid-2014, Kuwait has been no longer deemed deficient on AML/CFT by the FATF. In June 2015, the National Assembly passed a law that criminalized online fundraising for terrorist purposes. In 2017, Kuwait joined two counter terrorism-financing conventions, the Egmont Group and the U.S.-GCC "Terrorist Financing Targeting Center." Still, Kuwait's record on this issue has been mixed. Kuwaiti donors have been able, in recent years, to raise funds for various regional armed factions, including the Al Qaeda affiliate Al Nusra Front operating in Syria (which publicly severed its connection to Al Qaeda and changed its name in August 2016). The then-Under Secretary for Terrorism and Financial Intelligence of the Department of the Treasury said on March 4, 2014, that the appointment of a leading Kuwaiti donor to Al Nusra, Nayef al-Ajmi, as Minister of Justice and Minister of Islamic Endowments (Awqaf), was "a step in the wrong direction." Subsequently, Ajmi resigned his government posts. On August 6, 2014, the Treasury Department imposed sanctions on two Ajmi tribe members and one other Kuwaiti under Executive Order 13224 sanctioning support for international terrorism. Two Kuwaitis were sanctioned by the United Nations Security Council for allegedly providing financial support to Al Nusra Front, and the Treasury Department sanctioned a Kuwaiti person in March 2017 under E.O 13324 for providing support to Al Nusrah Front and Al Qaeda. Earlier, in June 2008, the Department of the Treasury froze the assets of a Kuwait-based charity—the Islamic Heritage Restoration Society—for alleged links to Al Qaeda, under E.O. 13224. The United States has, at times, provided very small amounts of aid to help Kuwait counter terrorism financing. In FY2013, about $83,000 was provided to training Kuwaiti authorities on methods to counter terrorism financing. In FY2015, about $100,000 was provided for similar purposes. Countering Violent Extremism . State Department terrorism reports also praise Kuwait's programs to encourage moderation in Islam in Kuwait. The government supports a number of local counter-messaging campaigns on radio, television, and billboards. In late 2015, the government moved a "Center for Counseling and Rehabilitation" from Central Prison to a new facility with an expanded faculty and broadened mandate. In July 2017, the government established a new Directorate for Cybersecurity within the Higher Authority for Communication to "fight violent extremism." Economic Issues Political infighting and the drop in oil prices since 2014 have affected Kuwait's economy, but the country is taking steps to try to reduce its economic vulnerability. Hydrocarbons sales still represent about 90% of government export revenues and about 60% of its gross domestic product (GDP). Because Kuwait requires that crude oil sell for about nearly $75 per barrel to balance its budget—well above prices for most of the time since 2014—Kuwait has run budget deficits of about $15 billion per year since 2015. Kuwait deferred capital infrastructure investment and reduced public sector salaries and subsidies, according to the IMF and other observers. Subsidy reductions were contemplated even before the decline in oil prices: in October 2013, Prime Minister Jabir said the subsidies system—which cost the government about $17.7 billion annually—had produced a "welfare state" and was "unsustainable" and must be reduced. On the other hand, Kuwait still has a large sovereign wealth fund, managed by the Kuwait Investment Authority, with holdings estimated at nearly $600 billion. Kuwait, which produces about 3 million barrels per day of crude oil, agreed to slightly reduce its crude oil production (by 130,000 barrels per day) as part of a November 2016 OPEC production cut agreement that remains in effect. Kuwait and Saudi Arabia, including during a September 30, 2018, visit to Kuwait by Saudi Crown Prince Mohammad bin Salman Al Saud, discussed jointly increasing production by 500,000 barrels per day by reactivating two closed fields in their joint "neutral zone." The Khafji field closed in October 2014 due to environmental concerns and the Wafra field closed in May 2015 over technical issues. However, the Crown Prince's visit did not result in any announced agreement to resume production at the two fields. Using National Assembly legislation that took effect in 2010, the government has moved forward with long-standing plans to privatize some state-owned industries. However, the privatization of Kuwait Airways was cancelled, despite the passage of legislation in January 2014 authorizing that privatization, in part because of opposition from the airline's workforce. Political disputes also delayed movement on several major potential drivers of future growth, most notably opening Kuwait's northern oil fields to foreign investment to generate about 500,000 barrels per day of extra production. The Assembly blocked the $8.5 billion project for over 15 years because of concerns about Kuwait's sovereignty. However, a fourth oil refinery, estimated to cost $8 billion, is under construction and is scheduled to open in 2019. At an investment forum in March 2018, Kuwait announced a vision to attract foreign direct investment through development of a large "Northern Gateway" economic opportunity zone encompassing five natural islands in northern Kuwait. That project has since been retitled "Silk City," after attracting investment from China as part of that country's region-wide Belt and Road Initiative (BRI). The project, which might involve almost $90 billion in total investment, will encompass a new airport, railways, and port facilities. Kuwait and China have formed a $10 billion "Kuwait-China Silk Road Fund" to finance initial stages of the expansion. The development of the northern reaches of Kuwait is part of the country's overall "New Kuwait 2035" economic strategy. Nuclear Power. Like other Gulf states, Kuwait sees peaceful uses of nuclear energy as important to its economy, although doing so always raises fears among some in the United States, Israel, and elsewhere about the ultimate intentions of developing a nuclear program. In 2012, Kuwait formally abandoned plans announced in 2011 to build up to four nuclear power reactors. The government delegated any continuing nuclear power research to its Kuwait Institute for Scientific Research (KISR). Kuwait is cooperating with the International Atomic Energy Agency (IAEA) to ensure international oversight of any nuclear work in Kuwait. In FY2015, the United States provided about $38,000 to help train Kuwaiti personnel in nuclear security issues, and about $58,000 was provided in FY2016 for this purpose. U.S.-Kuwait Economic Issues In 1994, Kuwait became a founding member of the World Trade Organization (WTO). In February 2004, the United States and Kuwait signed a Trade and Investment Framework Agreement (TIFA), often viewed as a prelude to a free trade agreement (FTA), which Kuwait has said it seeks. In the course of the September 8, 2017, U.S.-Kuwait Strategic Dialogue, the U.S. Department of Commerce finalized a memorandum of understanding with Kuwait's Direct Investment Promotion Authority to encourage additional investments in both countries. Kuwait gave $500 million worth of oil to U.S. states affected by Hurricane Katrina. The United States' imports of oil from Kuwait have been declining as U.S. oil imports have declined generally. The United States imports about 100,000 barrels per day of crude oil from Kuwait, as of mid-2018. Total U.S. exports to Kuwait were about $5.1 billion in 2017, and total U.S. imports from Kuwait in 2017 were about $3 billion. Based on figures through November 2018, U.S. exports to Kuwait in 2018 were only about half of what they were the prior year, and imports from Kuwait fell by about 25% in that time period. U.S. exports to Kuwait consist mostly of automobiles, industrial equipment, and foodstuffs. Following his meeting with Amir Sabah on September 7, 2017, President Trump stated that Kuwait had taken delivery of 10 U.S.-made Boeing 777 commercial passenger aircraft in 2017, which might account for the spike in U.S. export figures to Kuwait in 2017. U.S. Assistance Because Kuwait's per capita GDP is very high, Kuwait receives negligible amounts of U.S. foreign assistance. The assistance Kuwait does receive is targeted to achieve selected objectives that benefit U.S. national security, including promoting civil society, and training on nuclear security and counterterrorism financing. In FY2016, about $3,000 was provided for counternarcotics programs in Kuwait.

Kuwait has been pivotal to the decades-long U.S. effort to secure the Persian Gulf region because of its consistent cooperation with U.S. military operations in the region and its key location in the northern Gulf. Kuwait and the United States have a formal Defense Cooperation Agreement (DCA), under which the United States maintains over 13,000 military personnel in country and prepositioned military equipment in Kuwait to project power in the region. Only Germany, Japan, and South Korea host more U.S. troops than does Kuwait, which hosts the operational command center for U.S.-led Operation Inherent Resolve (OIR) that has combatted the Islamic State. Kuwait usually acts in concert not only with the United States but also with allies in the Gulf Cooperation Council (GCC: Saudi Arabia, Kuwait, United Arab Emirates, Qatar, Bahrain, and Oman). Kuwait is participating militarily in the Saudi-led coalition that is trying to defeat the Shia "Houthi" rebel movement in Yemen, but Kuwait tends to favor mediation of regional issues over the use of military force. Kuwait is trying to mediate a resolution of the intra-GCC rift that erupted in June 2017 when Saudi Arabia and the UAE moved to isolate Qatar. Kuwait has refrained from intervening in Syria's civil war, instead hosting donor conferences for victims of the Syrian civil conflict, Iraq's recovery from the Islamic State challenge, and the effects of regional conflict on Jordan's economy. Kuwait generally supports U.S. efforts to counter Iran and has periodically arrested Kuwaiti Shias that the government says are spying for Iran, but it also engages Iran at high levels. U.S. government reports have praised recent steps by Kuwait to counter the financing of terrorism, but reports persist that wealthy Kuwaitis are still able to donate to extreme Islamist factions in the region. Kuwait has consistently engaged the post-Saddam governments in Baghdad in part to prevent any repeat of the 1990 Iraqi invasion of Kuwait. Experts have long assessed Kuwait's political system as a potential regional model for its successful incorporation of secular and Islamist political factions, both Shia and Sunni. However, this assessment has evolved since 2011 because Kuwait has followed other GCC states in incarcerating and revoking the citizenship of social media and other critics. Kuwait's political stability has not been in question but long-standing parliamentary opposition to the ruling Sabah family's political dominance has broadened in recent years to visible public pressure for political and economic reform. Parliamentary elections in July 2013 produced a National Assembly amenable to working with the ruling family, but the subsequent elections held in November 2016 returned to the body Islamist and liberal opponents of the Sabah family who held sway in earlier assemblies. Assembly oppositionist challenges to government policy led to a cabinet resignation in early November 2017, although the current cabinet does not differ much from the previous cabinet on key policy questions. Kuwait has increased its efforts to curb trafficking in persons over the past few years. Years of political paralysis contributed to economic stagnation relative to Kuwait's more economically vibrant Gulf neighbors such as Qatar and the United Arab Emirates (UAE). Like the other GCC states, Kuwait has struggled with reduced income from oil exports during 2014-2018. Kuwait receives negligible amounts of U.S. foreign assistance, and has offset some of the costs of U.S. operations in the region since Iraq's 1990 invasion of Kuwait.

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Introduction Historically located between empires, various Georgian kingdoms and principalities were incorporated into the Russian Empire beginning in the early 19 th century. Georgia enjoyed a brief period of independence from 1918 until its forcible incorporation into the Union of Soviet Socialist Republics (USSR, or Soviet Union) in 1921-1922. Georgia gained independence in 1991 with the collapse of the Soviet Union. Georgia is located in the South Caucasus, a region between the Black and Caspian Seas and separated from Russia by the Greater Caucasus mountain range. The South Caucasus also borders Iran and Turkey (see Figure 1 ). Georgia's South Caucasus neighbors, Armenia and Azerbaijan, have been locked in territorial conflict for almost three decades over the predominantly Armenian-populated region of Nagorno-Karabakh, formally part of Azerbaijan. Georgia has its own unresolved conflicts with two Russian-supported regions, Abkhazia and South Ossetia. These regions, in addition to being settled by ethnic Georgians, are home to ethnic groups that more closely identify with ethnic kin in Russia's North Caucasus, located across the Caucasus mountain range. After a short war with Georgia in 2008, Russia unilaterally recognized the independence of these breakaway regions and stationed military forces on their territory. Georgians speak and write their own distinct Caucasian language, with a written literary form that emerged at least as early as the fifth century. The Georgian Orthodox Church, to which most Georgians belong, is autocephalous (independent), with roots that date back to the fourth century. Politics Today, many observers consider Georgia to be one of the most democratic states among the USSR's successor states. The U.S.-based nongovernmental organization (NGO) Freedom House considers Georgia to be the freest post-Soviet state (not including the Baltic states), followed by Ukraine, Moldova, and Armenia. Georgia has a parliamentary system of governance, resulting from constitutional reforms that came into effect in 2013 and 2018. The prime minister is the country's most powerful executive. Georgia's president is commander in chief of the armed forces and has the power to veto legislation and dissolve parliament under certain circumstances. Georgia's prime minister, Mamuka Bakhtadze (aged 36), assumed office in June 2018. Bakhtadze was Georgia's minister of finance from November 2017 to June 2018; he previously served as the head of Georgian Railways and the Georgian International Energy Corporation. Georgia's president, elected in November 2018, is Salome Zurabishvili (aged 67), a former member of parliament (2016-2018) and minister of foreign affairs (2004-2005) who was previously a French national and diplomat. The parliamentary chairman is Irakli Kobakhidze (aged 40), a former professor of law and politics. Georgia has a unicameral legislature with 150 members elected for four-year terms by two methods: 77 by party list and 73 by majoritarian district. The most recent parliamentary elections in 2016 resulted in a sizeable win for Georgia's center-left ruling party, Georgian Dream-Democratic Georgia (GD), which initially led a ruling coalition after coming to power in 2012 and now governs alone. GD won 49% of the party list vote and nearly all majoritarian races, leading to control of more than 75% of parliamentary seats (116 of 150 deputies). Before losing this supermajority in February 2019 (see " Ruling Party Tensions " below), GD had enough votes to unilaterally enact changes to Georgia's constitution. This led many observers and opposition supporters to express concern that there were insufficient checks and balances against the ruling party. GD's main competitor in 2016 was the center-right United National Movement (UNM), the former ruling party previously led by ex-president Mikheil Saakashvili. The UNM received 27% of the party vote and 27 seats (18%). After months of infighting, the UNM fragmented in 2017, and most of its deputies, including much of the party's senior leadership, formed a new opposition party called European Georgia-Movement for Liberty. A third electoral bloc, the nationalist-conservative Alliance of Patriots of Georgia-United Opposition, cleared the 5% threshold to enter parliament with six seats. Georgia's most recent local elections were in 2017. They provided a similar picture of ruling party dominance across the country. In the party-list portion of the vote to local councils, GD won in all 73 districts, with a total of 56% of the vote. The UNM and European Georgia won 27% of the vote (17% and 10%, respectively). The nationalist-conservative Alliance of Patriots won 7%. GD won more than 92% of majoritarian seats, giving it a total of 77% of seats in local councils nationwide. GD also won mayoral elections in all but two districts. 2018 Presidential Election The most recent presidential elections were held in two rounds in October and November 2018. The victor, Salome Zurabishvili, won 60% of the vote in the second round. Zurabishvili ran as an independent candidate, although she was supported by GD. UNM candidate Grigol Vashadze, like Zurabishvili an ex-foreign minister, received 40%. The first round of the election was a closer race (39% to 38%), but Zurabishvili appeared to benefit from greater turnout in the runoff (56%, compared to 46% in the first round). Domestic and international observers considered the election to be competitive but flawed. Observers noted instances of official pressure against state employees to support Zurabishvili, as well as incidents of ballot box stuffing. They also expressed concern about allegations of mass vote-buying, related to Prime Minister Bakhtadze's pre-runoff announcement that a philanthropic foundation associated with GD founder and chairman Bidzina Ivanishvili had agreed to purchase and forgive the small private debts of more than 600,000 individuals. The U.S. Department of State said it shared the concerns of observers and indicated "these actions are not consistent with Georgia's commitment to fully fair and transparent elections." Ruling Party Tensions Since 2018, GD has exhibited signs of internal tension. Many observers believe that GD founder Ivanishvili continued to maintain an influential behind-the-scenes role in government after stepping down as prime minister in 2013. Ivanishvili formally returned to politics as GD's party chairman in 2018, reportedly due to frustration with the party's growing internal divides. Then-Prime Minister Giorgi Kvirikashvili resigned less than two months later, citing "disagreements" with Ivanishvili. Kvirikashvili's resignation also followed a series of anti-government demonstrations against what protestors perceived to be heavy-handed police raids and judicial bias. Prime Minister Bakhtadze succeeded Kvirikashvili in June 2018. More recently, GD suffered parliamentary defections in February 2019, as a result of a dispute concerning judicial appointments (see " Dispute over Judicial Reforms " below). By the end of March 2019, eight members of parliament, led by Eka Beselia, former chairwoman of the parliamentary committee on legal affairs, had left GD. Beselia and most of the defecting MPs were expected to establish a new faction, while two MPs joined the Patriots of Georgia faction. The GD government also has had tense relations with the presidency. Ex-President Giorgi Margvelashvili, who was elected in 2013, initially was allied to GD. He subsequently adopted a more independent stance and fell out of favor with then-Prime Minister Ivanishvili. Margvelashvili frequently criticized the government and vetoed legislation several times, although parliament usually overrode his veto. Margvelashvili chose not to run for reelection in 2018. For the 2018 election, GD did not nominate its own presidential candidate. This possibly reflected a belief within the party leadership that the powers of the presidency were too limited to warrant fielding a candidate for the position. After some deliberation, however, GD decided to support Zurabishvili, an independent candidate. Before making this decision, government officials had criticized Zurabishvili for comments she made on the 10 th anniversary of the August 2008 war that appeared to blame Georgia's ex-leadership for the war. Dispute over Judicial Reforms One of the government's internal disputes concerns judicial reform. A series of reforms from 2013 to 2017 restructured Georgia's judicial institutions. A High Council of Justice oversees the appointment and dismissal of judges. The council has 15 members, a majority of whom are selected by the Conference of Judges, the judiciary's self-governing body. In December 2018, several GD members of parliament criticized the High Council's decision to nominate several judges to Georgia's 28-seat Supreme Court whom they considered tainted by association with the UNM. The dispute sparked an intensive debate within the ruling party, as well as with some NGOs who sided with the dissenting GD members out of a concern that the nominated judges could be susceptible to corruption. Ultimately, the Supreme Court nominees withdrew their candidacies. GD's leadership agreed to further debate the rules of appointment and blamed the dispute on the opposition. Appointments to a nine-member Constitutional Court are divided between the parliament, president, and the Supreme Court. In recent years, the Constitutional Court has been the focus of various disputes concerning possible bias (sometimes against the government, other times against the opposition). In July 2018, the Constitutional Court received international attention for ruling that marijuana use was not a criminal offense, a decision government officials and church representatives heavily criticized. In response, parliament passed legislation imposing strict limitations on marijuana use. Constitutional Reforms After GD won a supermajority in 2016, Georgia's parliament convened a State Constitutional Commission to draft additional reforms to the constitution intended to consolidate Georgia's transition to a parliamentary system of governance. Parliament passed the reforms in September 2017 by a vote of 117-2. Opposition parties, who opposed certain measures that appeared to strengthen the ruling party, refused to participate in the vote; civil society organizations also registered opposition. Then-President Margvelashvili vetoed the amendments and proposed alternative reforms. Parliament overrode his veto, and the president signed the amendments into law. The constitutional reforms entered into force after the 2018 presidential election. The reforms affect Georgia's parliamentary system in several ways. One of the main changes is the abolition of Georgia's directly elected presidency beginning in 2023. Instead, the president is to be indirectly elected by a college of electors made up of parliamentary deputies and local government representatives. Another major change is that parliamentary elections are to be held entirely on the basis of party lists, eliminating single-member districts. In theory, this change is expected to lead to greater opposition representation in parliament, as in Georgia parties that win the party-list vote tend to overwhelmingly win single-member districts. Although this change was to take effect in 2020, parliament voted to push back its implementation to 2024, a move many observers interpreted as an attempt to prolong the ruling party's dominance. In January 2019, several opposition parties launched a petition to pressure the government to implement the shift to a fully proportional system in advance of the 2020 parliamentary elections. In the course of adopting constitutional reforms, parliament considered several recommendations of the Council of Europe's Venice Commission, a legal and democratic advisory body. In the end, the commission provided a "positive assessment" of the reforms, although it noted "the postponement of the entry into force of the proportional election system to October 2024 is highly regrettable and a major obstacle to reaching consensus." The Venice Commission said the reform "completes the evolution of Georgia's political system towards a parliamentary system and constitutes a positive step towards the consolidation and improvement of the country's constitutional order, based on the principles of democracy, the rule of law and the protection of fundamental rights." Economy For more than two decades, Georgia has been recovering from the severe economic decline it experienced after the Soviet Union collapsed. It remains a relatively poor country. In 2018, Georgia's GDP was around $16.7 billion (approximately 16 times less than that of Connecticut, a U.S. state with a similar population size). Its per capita GDP ($4,506) is midsized in comparison to Russia and other post-Soviet states. In 2017-2018, Georgia's economy appeared to enter a period of relatively strong growth. After average GDP growth of around 3% a year from 2013 to 2016, Georgia's GDP grew at 4.8% a year in 2017 and 2018. Increased economic growth has been based on strengthening domestic consumption and external demand, as well as "generally strong policy efforts," according to the International Monetary Fund (IMF). The IMF forecasts a sustained rate of GDP growth of around 4.9% annually from 2019 to 2021. In February 2019, the IMF commended Georgian authorities "for advancing structural reforms [but] stressed the need for continued efforts to promote inclusive growth and higher economic resilience to external shocks." Poverty has declined in recent years, although it is still relatively high. According to official data, 22% of the population lived in poverty in 2017 (down from 39% a decade before). In recent years, recorded unemployment has been around 14%; some surveys suggest a higher rate of unemployment. More than 40% of Georgian laborers work in agriculture, a sector of the economy that accounts for less than 10% of GDP. Georgia's economy depends in part on remittances from labor migration. From 2013 to 2017, remittances made up around 11% of Georgia's GDP. In 2017, Russia was estimated to be the source of almost 60% of Georgian remittances, followed by Ukraine (8%), Greece (5%), and Armenia (4%). In 2017, the IMF approved a three-year Extended Fund Facility arrangement to provide Georgia with around $285 million in loans to support economic reforms focusing, among other things, on financial stability and infrastructure investment. The IMF noted the need for Georgia to increase its agricultural productivity, improve its business environment, and reform its education system. Georgia has suffered in the past from energy shortages and gas cutoffs, but it has improved its energy security in recent years. Georgia has rehabilitated hydropower plants and constructed new ones. Nearly all its natural gas supplies come from neighboring Azerbaijan. In 2018, Georgia's three largest merchandise trading partners were Turkey ($1.7 billion, or 14% of Georgia's trade), Russia ($1.4 billion, 11%), Azerbaijan ($1.1 billion, 9%), and China ($1.0 billion, 8%). Trade with the European Union (EU), as a whole Georgia's largest trading partner, made up around 27% of total trade ($3.4 billion). More than half of Georgia's merchandise exports (51%) went to five countries: Azerbaijan, Russia, Armenia, Bulgaria, and Turkey. Its main exports were copper ores, beverages (wine, water, and spirits), motor vehicles, and iron and steel. Free trade agreements with the EU (signed in 2014) and China (signed in 2017) may improve Georgia's prospects for export-led growth. Georgia is also exploring a trade agreement with India. However, Georgia's manufacturing sector is small, and its top exports include used foreign cars and scrap metal, which provide low added value. The IMF indicates that Georgia could further diversify its agricultural exports but notes the need to improve quality and standards. Tourism to Georgia has increased in recent years and annual tourism-related income has more than quadrupled since 2010. In 2018, the number of international visitors who stayed in the country overnight was around 4.8 million, a 345% increase since 2010. Most tourists are from neighboring countries: Russia, Azerbaijan, Turkey, and Armenia. In recent years, foreign direct investment (FDI) appears to have exceeded the high levels Georgia enjoyed in 2006 to 2008, before the global financial crisis, when FDI averaged $1.5 billion a year. From 2014 to 2018, FDI averaged $1.64 billion a year. More than 60% of the total amount came from Azerbaijan, the Netherlands, the United Kingdom, and Turkey. During this period, most FDI was in transport and communications (28%); other leading sectors were finance (13%), construction (13%), and energy (10%). In 2017, the IMF noted that attracting FDI to sectors with high export potential, including tourism and agriculture, is "crucial to ensure growth in foreign markets." Georgia aspires to be a key transit hub for the growing East-West overland trade route between China and Europe. In pursuit of this goal, a U.S.-Georgian consortium is constructing a major new deepwater port and free industrial zone in Anaklia, which is located on Georgia's Black Sea coast and abuts the Russian-occupied region of Abkhazia. The port, scheduled to begin operations in 2021, is considered Georgia's largest-ever infrastructure investment and is to be accompanied by major government investments in Georgia's road and rail infrastructure. Relations with the European Union and NATO The Georgian government has long made closer integration with the EU and NATO a priority. According to recent polls, over 80% of the Georgian population supports membership in the EU and over 75% supports membership in NATO. In 2014, Georgia concluded an association agreement with the EU that included a Deep and Comprehensive Free Trade Area (DCFTA) and encouraged harmonization with EU laws and regulations. The EU granted Georgia visa-free travel in 2017. The EU also is a major provider of foreign aid to Georgia, providing on average over €120 million (around $135 million) a year in 2017 and 2018. As of 2018, the benefits of the EU free-trade agreement for Georgia remain unclear. In 2018, the total value of Georgian exports to the EU was 17% greater than in 2014. Exports to the EU as a share of Georgia's total exports, however, were the same in 2018 as they were in 2014 (22%). The EU asserts that Georgia is "reaping the benefits of economic integration" with the EU but notes that "further efforts are needed to stimulate exports and improve the trade balance." Georgia has close relations with NATO, which considers Georgia one of its "closest operational partners." A NATO-Georgia Commission, established in 2008, provides the framework for cooperation. At its 2014 Wales Summit, NATO leaders established a "Substantial NATO-Georgia Package" to help Georgia bolster its defense capabilities, including capacity-building, training, exercises, and enhanced interoperability. In 2015, Georgia joined the NATO Response Force, a rapid reaction force. Georgia is one of the top troop contributors (and the top non-NATO contributor) in the NATO-led Resolute Support Mission in Afghanistan. At its height, Georgia's deployment to NATO's previous International Security Assistance Force (ISAF) reached over 1,500 troops, who served with no operational caveats. As of December 2018, Georgia is the fifth-largest contributor to the Resolute Support Mission, with 870 troops. Georgia also contributed more than 2,250 troops to the NATO-led Kosovo Force, or KFOR, between 1999 and 2008. In 2015, NATO opened a Joint Training and Evaluation Center in Georgia to provide training, evaluation, and certification opportunities to enhance interoperability and operational readiness. The center hosted its second joint NATO-Georgia exercise in March 2019 (the first one was held in 2016). Some NATO member states also participate in two sets of annual U.S.-Georgia military exercises: Agile Spirit and Noble Partner (see " Security Assistance Since the August 2008 War ," below). NATO also has established a Defense Institution Building School for professional development and training. Many observers consider that closer integration with the EU and NATO has not enabled Georgia to improve its near-term prospects for membership in these organizations. The EU is unlikely to consider Georgia a candidate for membership soon, given the EU's internal challenges and a lack of support for enlargement among many members. In 2008, NATO members agreed that Georgia and Ukraine would become members of NATO, but Georgia has not been granted a NATO Membership Action Plan (MAP) or other clear path to membership. Many observers attribute Georgia's lack of a clear path to NATO membership to some members' concerns that Georgia's membership could lead to a heightened risk of war with Russia, which currently occupies around 18% of Georgia's territory. Many believe that NATO will not move forward with membership as long as Russia occupies Georgian territory and the conflict remains unresolved. Relations with Russia and Secessionist Regions Georgia's secessionist regions of Abkhazia and South Ossetia broke away from Georgia in the early 1990s, during and after Georgia's pursuit of independence from the USSR. Since then, Georgia's relations with Russia have been difficult, as Tbilisi has blamed Moscow for obstructing Georgia's Western leanings. Many observers believe that Moscow supports Abkhazia and South Ossetia to prevent Georgia from joining NATO. Georgia's relations with Russia worsened after ex-President Saakashvili came to power in 2003 and sought to accelerate Georgia's integration with the West. After clashes increased between Georgian and secessionist forces, Russia invaded Georgia in August 2008 to prevent Georgia from reestablishing control over South Ossetia. Russia subsequently recognized Abkhazia and South Ossetia as independent states. Over the last decade, Russia has tightened control over Abkhazia and South Ossetia. It has constructed border fencing and imposed transit restrictions across the administrative boundary lines dividing the two regions from the rest of Georgia. Russia has established military bases that reportedly house around 3,500 personnel each, and it also stations border guards in the two regions. In 2016, Russia finalized an agreement with the de facto authorities of Abkhazia, establishing a combined group of military forces. In 2017, Russia concluded an agreement with South Ossetia to integrate the breakaway region's military forces with its own. Since coming to power in 2012, the GD government has sought to improve relations with Russia, particularly economic ties. In 2013, Moscow lifted an embargo on popular Georgian exports (including wine and mineral water) that had been in place since 2006. As a result, Russia again became one of Georgia's main trading partners. The share of Georgia's merchandise exports to Russia as a percentage of its total exports rose from 2% in 2012 to 13% in 2018. Improved economic relations with Russia have not led to progress in resolving the conflicts over Abkhazia and South Ossetia. The EU leads an unarmed civilian Monitoring Mission in Georgia (EUMM) that monitors compliance with the cease-fire agreements that ended the August 2008 war. Although the EUMM's mandate covers all of Georgia, local and Russian authorities do not permit it to operate in Abkhazia and South Ossetia; EUMM representatives have been allowed to cross the boundary line on a few occasions to address specific issues. All parties to the conflict, together with the United States, the EU, the United Nations (U.N.), and the Organization for Security and Cooperation in Europe (OSCE), participate in the Geneva International Discussions, convened quarterly to address issues related to the conflict. They also participate in joint Incident Prevention and Response Mechanisms (IPRM), together with the U.N. and OSCE, designed to address local security issues and build confidence. Abkhaz and South Ossetian representatives periodically have suspended their participation in the IPRM, however; the IPRM for Abkhazia did not convene at all from 2012 to 2016. In general, efforts to rebuild ties across conflict lines or return internally displaced persons have made little progress. In 2018, the Georgian government unveiled a peace initiative and enacted related legislative amendments to facilitate greater engagement with Abkhazia and South Ossetia in trade and educational affairs. The United States and the EU have expressed support for this initiative. Whether Russia and the two regions will accept any of the initiative's elements remains to be seen. Improved relations with Russia do not appear to have led to greater public support in Georgia for closer integration with Russia. Several overtly pro-Russian parties performed poorly in the 2016 parliamentary elections. One electoral bloc critical of Georgia's European integration, the nationalist-conservative Alliance of Patriots, cleared the 5% threshold to enter parliament, but even this bloc's leadership did not campaign for membership in the Russia-led Eurasian Union. In a 2018 survey, less than 30% of respondents expressed support for joining the Eurasian Union. U.S.-Georgia Relations Georgia is one of the United States' closest partners among the post-Soviet states. With a history of strong economic aid and security cooperation, the United States and Georgia have deepened their strategic partnership since Russia's 2008 invasion of Georgia and 2014 invasion of Ukraine. A U.S.-Georgia Charter on Strategic Partnership, signed in 2009, provides the framework for much of the two countries' bilateral engagement. A Strategic Partnership Commission convenes annual plenary sessions and working groups to address political, economic, security, and people-to-people issues. Before the 2008 war, the United States supported granting Georgia a NATO Membership Action Plan and backed NATO's April 2008 pledge that Georgia eventually would become a member of NATO. In August 2017, U.S. Vice President Michael Pence said in Tbilisi that the Trump Administration "stand[s] by the 2008 NATO Bucharest statement, which made it clear that Georgia will one day become a member of NATO." At a press conference after the July 2018 NATO summit in Brussels, President Trump said that "at a certain point [Georgia will] have a chance" to join NATO, if "not right now." Support for Georgia's Sovereignty and Territorial Integrity U.S. policy expressly supports Georgia's sovereignty and territorial integrity. In a visit to Tbilisi in August 2017, Vice President Michael Pence said the United States "strongly condemns Russia's occupation on Georgia's soil." In January 2018, the State Department indicated that "the United States' position on Abkhazia and South Ossetia is unwavering: The United States fully supports Georgia's territorial integrity within its internationally recognized borders." The United States supports a resolution to the conflict within these parameters. The United States calls on Russia to comply with the terms of the 2008 cease-fire agreement, including withdrawal of its forces to prewar positions, and to reverse its recognition of Abkhazia and South Ossetia as independent states. The U.S. government has expressed support for Georgia's "commitment to dialogue and a peaceful resolution to the conflict," and in 2018 the State Department welcomed the new peace initiative that the government of Georgia unveiled. The State Department regularly participates in the Geneva International Discussions. Congress also has expressed firm support for Georgia's sovereignty and territorial integrity. The Countering Russian Influence in Europe and Eurasia Act of 2017 ( P.L. 115-44 , Title II, §253) states that the United States "supports the policy known as the 'Stimson Doctrine' and thus does not recognize territorial changes effected by force, including the illegal invasions and occupations" of Abkhazia and South Ossetia, and other territories occupied by Russia. As with previous appropriations, FY2019 foreign operations appropriations prohibit foreign assistance to governments that recognize Abkhazia or South Ossetia and restrict funds from supporting Russia's occupation of Abkhazia and South Ossetia ( P.L. 116-6 , §7047(c)). The 2014 Ukraine Freedom Support Act ( P.L. 113-272 ) provides for sanctions against Russian entities that transfer weapons to Georgian territory. In February 2019, the Georgia Support Act ( H.R. 598 ) was reintroduced in the House. The act originally passed the House by unanimous consent in December 2018, during the 115 th Congress. The act would express support for Georgia's sovereignty, independence, and territorial integrity, as well as for its democratic development, Euro-Atlantic and European integration, and peaceful conflict resolution. The act would require the Secretary of State to submit to Congress reports on U.S. security assistance to Georgia, U.S.-Georgia cybersecurity cooperation, and a strategy to enhance Georgia's capabilities to combat Russian disinformation and propaganda. The act also would require the President to impose sanctions on those responsible for serious human rights abuses in Abkhazia and South Ossetia. Many Members of Congress have expressed their support for Georgia in House and Senate resolutions. In September 2016, during the 114 th Congress, the House of Representatives passed H.Res. 660, which expressed support for Georgia's territorial integrity, in a 410-6 vote. The resolution condemned Russia's military intervention and occupation, called upon Russia to withdraw its recognition of Abkhazia and South Ossetia as independent states, and urged the U.S. government to declare unequivocally that the United States will not recognize Russia's de jure or de facto sovereignty over any part of Georgia under any circumstances. In January 2019, a resolution (H.Res. 93) was reintroduced in the House supporting Georgia's territorial integrity and condemning a decision by the Syrian government to recognize Abkhazia and South Ossetia as independent states. The Senate and House have passed other resolutions in support of Georgian sovereignty and territorial integrity: in 2011-2012 ( S.Res. 175 , H.Res. 526), in September 2008 ( S.Res. 690 ), and, before the conflict, in May-June 2008 (H.Res. 1166, S.Res. 550 ) and December 2007 ( S.Res. 391 ). Foreign Aid Georgia has long been a leading recipient of U.S. foreign and military aid in Europe and Eurasia. In the 1990s (FY1992-FY2000), the U.S. government provided over $860 million in total aid to Georgia ($96 million a year on average). In the later part of the decade, the United States began to provide Georgia with increased amounts of aid to improve border and maritime security and to combat transnational crime, including through the development of Georgia's Coast Guard. In the 2000s, Georgia became the largest per capita recipient of U.S. aid in Europe and Eurasia. From FY2001 to FY2007, total aid to Georgia amounted to over $945 million ($135 million a year, on average). In 2005, Georgia also was awarded an initial five-year (2006-2011) $295 million grant from the U.S. Millennium Challenge Corporation (MCC) for road, pipeline, and municipal infrastructure rehabilitation, as well as for agribusiness development. The United States gave increased amounts of military aid to Georgia after the terrorist attacks of September 11, 2001. At the time, the George W. Bush Administration considered Georgia part of a "second stage" in the "war on terror," together with Yemen and the Philippines, and supported Georgia with a two-year Train and Equip Program. This program was followed by a Sustainment and Stability Operations Program through 2007 that supported a Georgian troop deployment to Operation Iraqi Freedom. After Russia invaded Georgia in August 2008, the United States substantially increased its assistance to Georgia. The U.S. government immediately provided over $38 million in humanitarian aid and emergency relief, using U.S. aircraft and naval and coast guard ships. In September 2008, then-Secretary of State Condoleezza Rice announced a total aid package worth at least $1 billion. Total U.S. assistance to Georgia for FY2008-FY2009 amounted to $1.04 billion, which included $250 million in direct budgetary support and an additional $100 million in MCC funds (taking the total amount of Georgia's initial MCC grant to $395 million). Since the 2008 war, Georgia has continued to be a major recipient of U.S. foreign aid in the Europe and Eurasia region. Nonmilitary aid totaled $60 million a year on average from FY2010 to FY2017. In addition, Georgia was awarded a second five-year (2014-2019) MCC grant of $140 million to support educational infrastructure and training, and to improve the study of science and technology. In FY2018, U.S. nonmilitary aid to Georgia totaled $70.8 million. For FY2019, Congress appropriated $89.8 million in nonmilitary aid. The president's FY2020 nonmilitary aid request for Georgia is $42.4 million. Security Assistance Since the August 2008 War After the 2008 war, Georgia continued to receive U.S. military assistance, including around $144 million in postwar security and stabilization assistance in FY2008-FY2009. Since FY2010, Georgia has received further military assistance, primarily through Foreign Military Financing (FMF) aid, Coalition Support Funds, and Train and Equip and other capacity-building programs. These funds have been used to support Georgia's deployments to Afghanistan in ISAF and the follow-on Resolute Support Mission, as well as for Georgian border security, counterterrorism, and defense readiness. U.S. military assistance to Georgia in FY2010-FY2017 is estimated to have been around $74 million a year on average. For FY2018, military aid to Georgia is estimated to have totaled $40.4 million. This includes $35 million in FMF assistance, $2 million in International Military Education and Training (IMET), and $3.4 million for counter-weapons of mass destruction (WMD) capacity-building assistance. For FY2019, Congress again appropriated $35 million in FMF and $2 million in IMET funds. Additional defense funding includes $4.3 million in maritime capacity-building assistance and $2.5 million in counter-WMD capacity-building assistance. Outside of Afghanistan, the United States has gradually deepened its postwar defense cooperation with Georgia. The Obama Administration refrained from approving defensive (anti-tank and antiaircraft) arms sales to Georgia. Observers considered various reasons for this hesitation, including doubts regarding the deterrent effect of such weapons, concerns about encouraging potential Georgian offensives to retake territory, and a desire to avoid worsening relations with Russia as the Administration embarked on a new "reset" policy with Moscow. In testimony to the Senate Foreign Relations Committee a year after Russia's invasion, then-Assistant Secretary of Defense Alexander Vershbow characterized U.S. defense cooperation with Georgia as "a methodical, yet patient, strategic approach … [focused] on building defense institutions, assisting defense sector reform, and building the strategic and educational foundations" for training and reform. He said the United States was "carefully examining each step [of its military assistance program] to ensure it would not be counterproductive to our goals of promoting peace and stability in the region." U.S.-Georgia defense cooperation deepened over time. In a 2012 visit to Georgia, then-Secretary of State Hillary Clinton said that increased cooperation would help improve Georgia's self-defense capabilities, promote defense reform and modernization, and provide training and equipment to support Georgia's ISAF deployment and NATO interoperability. U.S.-Georgia security cooperation expanded further in 2016. In July 2016, then-U.S. Secretary of State John Kerry and then-Georgian Prime Minister Giorgi Kvirikashvili signed a Memorandum on Deepening the Defense and Security Relationship between the United States and Georgia. In December 2016, the two countries concluded a three-year framework agreement on security cooperation that would focus on "improving Georgia's defense capabilities, establishing [an] effective and sustainable system of defense, enhancing interoperability of the Georgian Armed Forces with NATO, and ensuring effective military management." The framework agreement led to the launching in February 2017 of a three-year, $35 million training initiative, the Georgia Defense Readiness Program. This initiative seeks to build the capacity of Georgia's armed forces "to generate, train and sustain forces in preparation for all national missions." Unlike the Obama Administration, the Trump Administration approved the provision of major defensive lethal weaponry to Georgia. In November 2017, the U.S. State Department approved a Foreign Military Sale of over 400 Javelin portable anti-tank missiles, as well as launchers, associated equipment, and training, at a total estimated cost of $75 million. The Georgian Ministry of Defense confirmed that the "first stage" of two sales was complete as of January 2018. In June 2018, then-U.S. Assistant Secretary of State for European and Eurasian Affairs Wess Mitchell said the United States seeks to "check Russian aggression," including by "building up the means of self-defense for those states most directly threatened by Russia militarily: Ukraine and Georgia." The United States and Georgia have held annual joint military exercises in Georgia since 2011. Initial exercises, dubbed Agile Spirit, began as a counterinsurgency and peacekeeping operations training exercise and shifted to a "conventional warfare focus" in 2015, the year after Russia's invasion of Ukraine. That year, Agile Spirit began to include other NATO partners. A second bilateral exercise, Noble Partner, was launched in 2015; the Department of Defense characterized it as the "most robust" U.S.-Georgia exercise ever, designed to support Georgia's integration into the NATO Response Force. Trade In 2018, the United States was Georgia's seventh-largest source of merchandise imports and eighth-largest destination for exports. The value of Georgia's merchandise imports from the United States—mainly vehicles, industrial machinery, and meat—was $360 million in 2018. The value of merchandise exports to the United States—mainly iron and steel and inorganic chemicals—was $160 million in 2018. Since 2012, the United States and Georgia periodically have discussed the possibility of a free-trade agreement. The two countries have signed a bilateral investment treaty and a Trade and Investment Framework Agreement. They also have established a High-Level Dialogue on Trade and Investment. During Vice President Michael Pence's August 2017 visit to Georgia, he expressed the United States' "keen interest in expanding our trade and investment relationship with Georgia."

Georgia is one of the United States' closest partners among the states that gained their independence after the USSR collapsed in 1991. With a history of strong economic aid and security cooperation, the United States has deepened its strategic partnership with Georgia since Russia's 2008 invasion of Georgia and 2014 invasion of Ukraine. U.S. policy expressly supports Georgia's sovereignty and territorial integrity within its internationally recognized borders, and Georgia is a leading recipient of U.S. aid to Europe and Eurasia. Many observers consider Georgia to be one of the most democratic states in the post-Soviet region, even as the country faces ongoing governance challenges. The center-left Georgian Dream-Democratic Georgia party (GD) has close to a three-fourths supermajority in parliament and governs with limited checks and balances. Although Georgia faces high rates of poverty and underemployment, its economy in 2017 and 2018 appeared to show stronger growth than it had in the previous four years. The GD led a coalition to victory in parliamentary elections in 2012 amid growing dissatisfaction with the former ruling party, Mikheil Saakashvili's center-right United National Movement, which came to power as a result of Georgia's 2003 Rose Revolution. In August 2008, Russia went to war with Georgia to prevent Saakashvili's government from reestablishing control over the regions of South Ossetia and Abkhazia, which broke away from Georgia in the early 1990s and became informal Russian protectorates. Congress has expressed firm support for Georgia's sovereignty and territorial integrity. The Countering Russian Influence in Europe and Eurasia Act of 2017 (P.L. 115-44, Title II, §253) states that the United States "does not recognize territorial changes effected by force, including the illegal invasions and occupations" of Abkhazia, South Ossetia, and other territories occupied by Russia. In September 2016, the House of Representatives passed H.Res. 660, which condemns Russia's military intervention and occupation of Abkhazia and South Ossetia. In February 2019, the Georgia Support Act (H.R. 598), which originally passed the House by unanimous consent in the 115th Congress (H.R. 6219), was reintroduced in the 116th Congress. The act would express support for Georgia's sovereignty, independence, and territorial integrity, as well as for its democratic development, Euro-Atlantic integration, and peaceful conflict resolution in Abkhazia and South Ossetia. The United States provides substantial foreign and military aid to Georgia each year. Since 2010, U.S. nonmilitary aid to Georgia has totaled around $64 million a year on average, in addition to a five-year Millennium Challenge Corporation grant of $140 million to support education. In FY2019, Congress appropriated almost $90 million in nonmilitary aid to Georgia. Since 2010, U.S. military aid to Georgia has been estimated at around $68 million a year on average. In FY2019, Congress appropriated $35 million in Foreign Military Financing and $2 million in International Military Education and Training funds. Defense assistance also includes a three-year, $35 million training initiative, the Georgia Defense Readiness Program.

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Introduction The United Nations (U.N.) Human Rights Council (the Council) is the primary intergovernmental body that addresses human rights worldwide. The United States is not currently a Council member; in June 2018, the Trump Administration announced that the United States would withdraw its membership. Administration officials cited concerns with the Council's disproportionate focus on Israel, ineffectiveness in addressing human rights situations, and lack of reform. Members of the 116 th Congress may continue to consider the Council's role and effectiveness, including what impact, if any, the U.S. withdrawal might have on (1) the Council's efforts to combat human rights and (2) the United States' ability to further its human rights objectives in U.N. fora. Policymakers might also consider the following questions: What role, if any, should the Council play in international human rights policy and in addressing specific human rights situations? Is the Council an effective mechanism for addressing human rights worldwide? If not, what reform measures might improve the Council and how can they be achieved? What role, if any, might the United States play in the Council, or in other U.N. human rights mechanisms, moving forward? Should the United States rejoin the Council? If so, under what circumstances? This report provides background on the Council, including the role of the previous U.N. Commission on Human Rights. It discusses the Council's current mandate and structure, as well as Administration policy and congressional actions. Finally, it highlights policy aspects of possible interest to the 116 th Congress, including the debate over U.S. membership, U.S. funding of the Council, alternatives to the Council in U.N. fora, and the Council's focus on Israel. Background The U.N. Commission on Human Rights was the primary intergovernmental policymaking body for human rights issues before it was replaced by the U.N. Human Rights Council in 2006. Created in 1946 as a subsidiary body of the U.N. Economic and Social Council (ECOSOC), the commission's initial mandate was to establish international human rights standards and develop an international bill of rights. During its existence, the commission played a key role in developing a comprehensive body of human rights treaties and declarations, including the Universal Declaration of Human Rights. Over time, its work evolved to address specific human rights violations and complaints, as well as broader human rights issues. It developed a system of special procedures to monitor, analyze, and report on country-specific human rights violations, as well as thematic cross-cutting human rights abuses such as racial discrimination, religious intolerance, and denial of freedom of expression. In the late 1990s and early 2000s, controversy developed over the human rights records of some commission members that were widely perceived as systematic abusers of human rights. These instances significantly affected the commission's credibility. Critics, including the United States, claimed that countries used their membership to deflect attention from their own human rights violations by questioning the records of others. Some members were accused of bloc voting and excessive procedural manipulation to prevent debate of their human rights abuses. In 2001, the United States was not elected to the commission, whereas widely perceived human rights violators such as Pakistan, Sudan, and Uganda were elected. In 2005, the collective impact of these and other controversies led U.N. Secretary-General Kofi Annan to propose the idea of a new and smaller Human Rights Council to replace the commission. Council Structure and Selected Policy Issues In 2006, as part of broader U.N. reform efforts, the U.N. General Assembly approved resolution 60/251, which dissolved the U.N. Commission on Human Rights and created the Human Rights Council in its place. This section provides an overview of Council structure and selected policy issues and concerns that have emerged over the years. Mandate and Role in the U.N. System The Council is responsible for "promoting universal respect for the protection of all human rights and fundamental freedoms for all." It aims to prevent and combat human rights violations, including gross and systematic violations, and to make recommendations thereon; it also works to promote and coordinate the mainstreaming of human rights within the U.N. system. As a subsidiary of the General Assembly, it reports directly to the Assembly's 193 members. It receives substantive and technical support from the U.N. Office of the High Commissioner for Human Rights (OHCHR), an office within the U.N. Secretariat currently headed by Michelle Bachelet of Chile. The Council is a political body; each of its members has different human rights standards, domestic considerations, and foreign policy priorities. Its decisions, resolutions, and recommendations are not legally binding. Membership and Elections The Council comprises 47 members apportioned by geographic region as follows: 13 from African states; 13 from Asian states; 6 from Eastern European states; 8 from Latin American and Caribbean states; and 7 from Western European and other states ( Table 1 ). Members are elected for a period of three years and may not hold a Council seat for more than two consecutive terms. If a Council member commits "gross and systematic violations of human rights," the General Assembly may suspend membership with a two-thirds vote of members present. All U.N. members are eligible to run for a seat on the Council. Countries are nominated by their regional groups and elected by the General Assembly through secret ballot with an absolute majority required. Since 2006, the Council has held 13 elections, the most recent of which was in October 2018. The next election is scheduled for late 2019. A key concern for some critics has been the lack of competitiveness in Council elections. In some elections, countries have run unopposed after regional groups nominated the exact number of countries required to fill Council vacancies. Most recently, members from all five regional groups ran unopposed in the October 2018 election. Many experts contend that such actions limit the number of choices and guarantee the election of nominated members regardless of their human rights records. On the other hand, supporters contend that the Council's election process is an improvement over that of the commission. They emphasize that countries widely viewed as the most egregious human rights abusers, such as Belarus, Sudan, and Syria, were pressured not to run or were defeated in Council elections because of the new membership criteria and process. Many also highlight the General Assembly's March 2011 decision to suspend Libya's membership as an example of improved membership mechanisms. More broadly, some Council observers have expressed concern that the Council's closed ballot elections in the General Assembly may make it easier for countries with questionable human rights records to be elected to the Council. To address this issue, some experts and policymakers, including the Trump Administration, have proposed requiring open ballots in Council elections to hold countries publicly accountable for their votes. Meetings and Leadership The Council is headquartered in Geneva, Switzerland, and meets for three or more sessions per year for a total of 10 or more weeks. It can hold special sessions on specific human rights situations or issues at the request of any Council member with the support of one-third of the Council membership. Since 2006, the Council has held 39 regular sessions and 28 special sessions. Since the Council was established, eight of its special sessions have focused on Israel or the Occupied Territories. (See Appendix A for a list of special sessions.) The Council president presides over the election of four vice presidents representing other regional groups in the Council. The president and vice presidents form the Council bureau, which is responsible for all procedural and organizational matters related to the Council. Members elect a president from among bureau members for a one-year term. The current president is Coly Seck of Senegal. Universal Periodic Review All Council members and U.N. member states are required to undergo a Universal Periodic Review (UPR) that examines a member's fulfillment of its human rights obligations and commitments. The review is an intergovernmental process that facilitates an interactive dialogue between the country under review and the UPR working group, which is composed of the 47 Council members and chaired by the Council president. Observer states and stakeholders, such as nongovernmental organizations (NGOs), may also attend the meetings and present information. During the first review, the UPR working group makes initial recommendations, with subsequent reviews focusing on the implementation of previous recommendations. The full Council is responsible for addressing any cases of consistent noncooperation with the review. The United States underwent its first UPR in November 2010 and its second in May 2015. Overall, many governments, observers, and policymakers support the Council's UPR process. They maintain that it provides an important forum for governments, NGOs, and others to discuss and bring attention to human rights situations in specific countries that may not otherwise receive international attention. Some countries have reportedly made commitments based on the outcome of the UPR process. Many NGOs and human rights groups operating in various countries also reportedly use UPR recommendations as a political and diplomatic tool for achieving human rights. At the same time, some human rights experts have been critical of UPR. Many are concerned that the UPR submissions and statements of governments perceived to be human rights abusers are taken at face value rather than being challenged by other governments. Some also contend that the UPR process gives these same countries a platform to criticize countries that may have generally positive human rights records. Many experts have also expressed concern regarding member states' response to and participation in the UPR process. Special Procedures The Council maintains a system of special procedures that are created and renewed by members. Country mandates allow for special rapporteurs to examine and advise on human rights situations in specific countries, including Cambodia, North Korea, and Sudan. Under thematic mandates, special rapporteurs analyze major global human rights issues, such as arbitrary detention, the right to food, and the rights of persons with disabilities. The Council also maintains a complaint procedure for individuals or groups to report human rights abuses in a confidential setting. Israel as a Permanent Agenda Item In June 2007, Council members adopted a resolution to address the Council's working methods. In the resolution, Council members included the "human rights situation in Palestine and other occupied Arab territories" as a permanent part of the Council's agenda. No other countries are singled out in this manner. At the time the agenda item was adopted, many U.N. member states and Council observers, including the United States, strongly objected to the Council focusing primarily on human rights violations by Israel. A U.N. spokesperson subsequently noted then-U.N. Secretary-General Ban Ki-moon's "disappointment" with the Council's decision to "single out only one specific regional item, given the range and scope of allegations of human rights violations throughout the world." Budget The Human Rights Council is funded primarily through the U.N. regular budget, of which the United States is assessed 22%. Estimated Council funding for the 2018-2019 regular budget biennium is $44.43 million (or $22.2 million per year). The Council also receives extrabudgetary (voluntary) funding to help cover the costs of some of its activities, including staff postings and Council trust funds and mechanisms. For the 2018-2019 biennium, such contributions are estimated at $16.27 million (about $8.13 million per year). U.S. Policy Most U.S. policymakers have generally supported the Council's overall purpose and mandate; however, many have expressed concern regarding its effectiveness in addressing human rights issues—leading to ongoing disagreements as to whether or not the United States should be a member of or provide funding for the Council. For example, under President George W. Bush, the United States voted against the Assembly resolution creating the Council and did not run for a seat, arguing that the Council lacked mechanisms for maintaining credible membership. (The George W. Bush Administration also withheld Council funding in FY2008 under a provision enacted by Congress in 2007.) On the other hand, the Obama Administration supported U.S. membership and Council funding, maintaining that it was better to work from within to improve the body; the United States was elected as a Council member in 2009, 2012, and 2016. Under President Obama, the United States consistently opposed the Council actions related to Israel and sought to adopt specific reforms during the Council's five-year review in 2011. Congressional perspectives on the issue have been mixed, with some Members advocating continued U.S. participation and others opposing it. A key concern among many Members of Congress is the Council's focus on Israel. Trump Administration Actions On June 18, 2018, then-U.S. Permanent Representative to the United Nations Nikki Haley and Secretary of State Michael Pompeo announced that the United States would withdraw from the Human Rights Council, citing concerns about U.S. sovereignty and the Council's disproportionate focus on Israel. In a September 2018 speech to the U.N. General Assembly, the President further stated that the United States "will not return [to the Council] until real reform is enacted." Although Administration officials stated that the United States would fully withdraw from the Council, the United States has continued to participate in some Council activities, including the Universal Periodic Review process. Administration officials have also continued to comment on Council elections and express support for continued reform of the organization. The United States withheld $7.67 million in Council funding in both FY2017 and FY2018 (for a total of $15.3 million over two years) under legislation enacted by Congress. Prior to withdrawing from the Council, the Trump Administration had expressed strong reservations regarding U.S. membership. It was particularly concerned with the Council's focus on Israel and lack of attention to other human rights abuses. Ambassador Haley called the Council "corrupt" and noted that "bad actors" are among its members; at the same time, she also stated that the United States wanted to find "value and success" in the body. In June 2017, Haley announced that if the Council failed to change, then the United States "must pursue the advancement of human rights outside of the Council." Haley outlined two key U.S. reform priorities: (1) changing the voting process in the General Assembly from a closed to open ballot so that countries can be held publicly accountable for their votes and (2) removing Israel as a permanent agenda item. Congressional Actions Congress maintains an ongoing interest in the credibility and effectiveness of the Council in the context of human rights promotion, U.N. reform, and concerns about the Council's focus on Israel. Over the years, Members have proposed or enacted legislation expressing support for or opposition to the Council, prohibiting U.S. Council funding, or supporting Council actions related to specific human rights situations. Most recently, Members of the 116 th Congress enacted the Consolidated Appropriations Act, 2019 ( P.L. 116-6 ), which requires that none of the funds appropriated by the act be made available for the Council unless the Secretary of State determines and reports to the committees on appropriations that participation in the Council is in the national interest of the United States, and that the Council is taking significant steps to remove Israel as a permanent agenda item and ensure integrity in the election of Council members. (Similar language was included in previous fiscal years' appropriations laws.) P.L. 116-6 also addresses the Council in the context of the human rights situations in Sri Lanka; specifically, it states that funds may be made available to the Sri Lankan government only if the Secretary of State certifies to Congress that the Sri Lankan government is, among other things, supporting a credible justice mechanism in compliance with Human Rights Council resolution 30/1 (October 2015). In previous Congresses, proposed stand-alone bills have called for U.S. withdrawal from the Council or required that the United States withhold assessed contributions to the Council through the U.N. regular budget and any voluntary contributions. Specifically, some Members of the 115 th Congress introduced legislation addressing a range of issues, including expressing concern with the Council's focus on Israel, seeking to defund or withdraw from the Council, and calling on the Council to take action on specific human rights situations. Selected Policy Issues Congressional debate regarding the U.N. Human Rights Council has generally focused on a recurring set of policy issues. U.S. Membership In general, U.S. policymakers have been divided as to whether the United States should serve as a member of the Council. Supporters of U.S. participation contend that the United States should work from within the Council to build coalitions with like-minded countries and steer the Council toward a more balanced approach to addressing human rights situations. Council membership, they argue, places the United States in a position to advocate its human rights policies and priorities. Supporters also maintain that U.S. leadership in the Council has led to several promising Council developments, including increased attention to human rights situations in countries such as Iran, Mali, North Korea, and Sudan, among others. Some have also noted that the number of special sessions addressing Israel has decreased since the United States joined the Council. In addition, some Council supporters are concerned that U.S. withdrawal might lead to a possible leadership gap and countries such as China and Russia could gain increased influence in the Council. Opponents contend that U.S. membership provides the Council with undeserved legitimacy. The United States, they suggest, should not be a part of a body that focuses disproportionately on one country (Israel) while ignoring many human rights situations in countries that are widely believed to violate human rights. Critics further maintain that the United States should not serve on a body that would allow human rights abusers to serve as members. Many also suggest that U.S. membership on the Council provides countries with a forum to criticize the United States, particularly during the UPR process. U.S. Funding Over the years, policymakers have debated to what extent, if any, the United States should fund the Council. Some Members have proposed that the United States withhold a proportionate share of its assessed contributions, approximately 22%, from the U.N. regular budget, which is used to fund the Council. Most recently, FY2017 through FY2019 State-Foreign Operations acts have placed conditions on U.S. funding to the Council, and the Trump Administration subsequently withheld $7.67 million from U.S. contributions to the U.N. regular budget in both FY2017 and FY2018. Information on FY2019 Council funding is currently unavailable. Legislating to withhold Council funds in this manner is a largely symbolic policy action because assessed contributions finance the entire U.N. regular budget and not specific parts of it. The United States had previously withheld funding from the Council in 2008, when the George W. Bush Administration withheld a proportionate share of U.S. Council funding from the regular budget under a law that required the Secretary of State to certify to Congress that funding the Council was in the best national interest of the United States. Alternatives to the Council Some observers and policymakers have argued that if the United States were to withdraw from the Council, it could pursue its human rights objectives in other U.N. fora. Specifically, some suggest that the United States focus on the activities of the General Assembly's Third Committee, which addresses social, humanitarian, and cultural issues, including human rights. Some also recommend that the United States could increase its support for the U.N. Office of the High Commissioner for Human Rights, as well as the Council's independent experts who address country-specific and functional human rights issues. Other U.S. policymakers have proposed addressing human rights in the U.N. Security Council. In April 2017, U.S. Permanent Representative Haley held the Security Council's first ever thematic debate on human rights issues, where she stated the following: The traditional view has been that the Security Council is for maintaining international peace and security, not for human rights. I am here today asserting that the protection of human rights is often deeply intertwined with peace and security. The two things often cannot be separated. On the other hand, critics of this approach might argue that some proposed alternatives do not carry the same level of influence as the Human Rights Council, particularly since bodies such as the General Assembly and Security Council do not focus exclusively on human rights issues. Opponents of U.S. withdrawal contend that unlike the proposed alternatives, the Council includes unique mechanisms to address human rights issues, such as the complaint procedure and Universal Periodic Review process. Focus on Israel The Council's ongoing focus on Israel has continued to concern some Members of Congress. In addition to singling out Israel as a permanent part of the Council's agenda, other Council actions—including resolutions, reports, and statements by some Council experts—have generated significant congressional interest for what many view as an apparent bias against Israel. For example, some Members of Congress demonstrated considerable concern with a September 2009 Council report (often referred to as the "Goldstone Report" after the main author, Richard Goldstone, an independent expert from South Africa), which found "evidence of serious violations of international human rights and humanitarian law," including possible war crimes, by Israel. The report received further attention in April 2011, when Goldstone stated that the report's conclusion that Israel committed possible war crimes may have been incorrect. In addition, the statements and findings of Richard Falk, the Council's previous Special Rapporteur on the Situation of Human Rights on Palestinian Territories Occupied since 1967 , have drawn considerable criticism from many U.S. policymakers for apparent bias against Israel. More recently, some Members of Congress have expressed alarm regarding a March 2016 Council resolution that, among other things, requested OHCHR to produce a database of all business enterprises that have "directly and indirectly, enabled, facilitated and profited from the construction and growth of the (Israeli) settlements." The United States has opposed this resolution. Some experts suggest that the Council's focus on Israel is at least partially the result of its membership composition. After the first elections, members of the Organization of Islamic Cooperation (OIC) held 17 seats on the Council, accounting for about one-third of the votes needed to call a special session (15 OIC members currently serve on the Council). Some experts contend that blocs such as the African Group and Non-Aligned Movement (NAM), who may at times account for the majority of Council seats, tend to view economic and security issues as more important than human rights violations. Appendix A. Special Sessions of the Human Rights Council

Over the years, many Members of Congress have demonstrated an ongoing interest in the role and effectiveness of the United Nations (U.N.) Human Rights Council (the Council). The Council is the primary intergovernmental body mandated with addressing human rights on a global level. During the Obama Administration and the first part of the Trump Administration, the United States served three terms as a Council member. In June 2018, Trump Administration officials announced U.S. withdrawal from the Council, noting concerns with the Council's focus on Israel, overall ineffectiveness in addressing human rights issues, and lack of comprehensive reform. Background The U.N. General Assembly established the Human Rights Council in 2006 to replace the Commission on Human Rights, which was criticized for its apparent ineffectiveness in addressing human rights abuses and for the number of widely perceived human rights abusers that served as its members. Since 2006, many governments and observers have expressed serious concerns with the Council's disproportionate attention to Israel and apparent lack of attention to other pressing human rights situations. In particular, some criticize the inclusion of the "human rights situation in Palestine and other occupied Arab territories" (Israel) as a permanent item on the Council's agenda. No other country-specific human rights situation is singled out in this manner. Some are also concerned that countries widely perceived as human rights abusers, such as Saudi Arabia, China, and the Democratic Republic of the Congo, serve as Council members. On the other hand, supporters argue that the Council is an improvement over the previous commission. They contend that the Council's Universal Periodic Review (UPR) process, which aims to evaluate each member state's fulfillment of its human rights obligations, is an effective means for addressing human rights issues in various countries. Many proponents of the Council are encouraged by its increased attention to human rights situations in countries such as Iran, North Korea, and Syria. U.S. Policy Over the years, U.S. policymakers have debated U.S. participation in and funding of the Human Rights Council. The George W. Bush Administration voted against the General Assembly resolution creating the Council and did not run for membership; it also decided to withhold U.S. funding to the organization in FY2008 under a provision enacted by Congress. Conversely, the Obama Administration supported the overall purpose of the Council and decided that it was better to work from within as a Council member to improve its effectiveness. The Obama Administration was also critical of the Council's focus on Israel, sometimes boycotting debates on the issue. The United States was elected to the Council in 2009 and in 2012. In October 2016, it was elected for a third term, which began in January 2017. The United States remained a member during the Trump Administration until mid-2018, when it announced its withdrawal. The Administration also withheld Council funding in FY2017 and FY2018. Some Members of Congress maintain an ongoing interest in the credibility and effectiveness of the Council. Members have been particularly critical of both the Council's focus on Israel and lack of competitive Council elections. Some Members have proposed or enacted legislation calling for U.S. withdrawal; at the same time, others have introduced legislation urging the Council to address specific human rights situations. Most recently, the Consolidated Appropriations Act, 2019 (P.L. 116-6 ), prohibits Council funding unless the Secretary of State determines that U.S. participation is important to the national interest of the United States, and that the Council is taking steps to remove Israel as a permanent agenda item and ensure the integrity of Council elections.

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Overview of Recent Tariff Actions What are tariffs and what are average U.S. tariff rates? Tariffs or duties are taxes assessed on imports of foreign goods, paid by the importer to the U.S. government, and collected by U.S. Customs and Border Protection (CBP). Current U.S. tariff rates may be found in the Harmonized Tariff Schedule (HTS) maintained by the U.S. International Trade Commission (ITC). The U.S. Constitution grants Congress the sole authority to regulate foreign commerce and therefore impose tariffs, but, through various trade laws, Congress has delegated authority to the President to modify tariffs and other trade restrictions under certain circumstances. To date, President Trump has proclaimed increased tariffs under three different authorities. The President has also proclaimed other import restrictions, including quotas and tariff-rate quotas under these authorities, but the majority of the actions are in the form of ad-valorem tariff increases. The United States played a prominent role in establishing the global trading system after World War II and has generally led and supported global efforts to reduce and eliminate tariffs since that time. Through both negotiated reciprocal trade agreements and unilateral action, countries around the world, including the United States, have reduced their tariff rates over the past several decades, some by considerable margins. According to the World Trade Organization (WTO), U.S. most-favored-nation (MFN) applied tariffs, the tariff rates the United States applies to members of the WTO—nearly all U.S. trading partners—averaged 3.4% in 2017. Globally tariff rates vary, but are also generally low. For example, the top five U.S. trading partners all have average tariff rates below 10%: the European Union (EU) (5.1%), China (9.8%), Canada (4.0%), Mexico (6.9%), and Japan (4.0%). Despite these low averages, most countries apply higher rates on a limited number of imports, often agricultural goods. What are the goals of the President's tariff actions and why are these actions of note? As discussed below (see " What are Section 201, Section 232, and Section 301? ") the authorities under which President Trump has increased tariffs on certain imports allow for import restrictions to address specific concerns. Namely, these authorities allow the President to take action to temporarily protect domestic industries from a surge in fairly traded imports (Section 201), to protect against threats to national security (Section 232), and to respond to unfair trade practices by U.S. trading partners (Section 301). In addition to addressing these specific concerns, the President also states he is using the tariffs to pressure affected countries into broader trade negotiations to reduce tariff and nontariff barriers, such as the announced trade agreement negotiations with the EU and Japan, and to lower the U.S. trade deficit. President Trump's recently imposed tariff increases are of note because they are significantly higher than average U.S. tariffs (most of the increases are in the range of 10-25%), and have resulted in retaliation of a similar magnitude by some of the countries whose exports to the United States have been subject to the tariff increases; they affect approximately 12% of annual U.S. imports and 8% of U.S. exports, magnitudes that could grow if additional proposed or pending actions are carried out, or decrease if additional negotiated solutions are achieved; they represent a significant shift from recent U.S. trade policy as no President has imposed tariffs under these authorities in nearly two decades; and they have potentially significant implications for U.S. economic activity, the U.S. role in the global trading system, and future U.S. trade negotiations. What are Section 201, Section 232, and Section 301? Section 201, Section 232, and Section 301 refer to U.S. trade laws that allow presidential action, based on agency investigations and other criteria. Each allows the President to restrict imports to address specific concerns. The focus of these laws generally is not to provide additional sources of revenue, but rather to alter trading patterns and address specific trade practices. The issues the laws seek to address are noted in italics below. What tariff actions has the Administration taken or proposed to date under these authorities? The Trump Administration has imposed import restrictions under the three authorities noted above, affecting approximately $282 billion in U.S. annual imports, based on 2017 import values ( Figure 1 ). In addition, the President has initiated Section 232 investigations on U.S. imports of motor vehicles and uranium, which could result in increased tariffs on up to $361 billion and $2 billion of U.S. imports, respectively. The President has also suggested he may increase tariffs under Section 301 authorities on an additional $267 billion of U.S. imports from China, depending on the results of ongoing bilateral talks. Which countries are affected by the tariff increases? The import restrictions imposed under Section 201 and Section 232 apply to U.S. imports from most countries. The Section 301 tariffs apply exclusively to U.S. imports from China. Why is China a major focus of the Administration's action? China is a major focus of a Section 301 investigation and related tariff measures largely due to concerns over its intellectual property rights (IPR) and forced technology transfer practices, and the size of its bilateral trade deficit with the United States. China's government policies on technology and IPR have been longstanding U.S. concerns and are cited by U.S. firms as among the most challenging issues they face in doing business in China. Moreover, China is considered to be the largest global source of IP theft. On March 22, 2018, President Trump signed a presidential memorandum on U.S. actions related to the Section 301 investigation. Described by the White House as a response to China's "economic aggression," the memorandum identified four broad Chinese IP-related policies to justify U.S. action under Section 301, stating China uses joint venture requirements, foreign investment restrictions, and administrative review and licensing processes to force or pressure technology transfers from American companies; China uses discriminatory licensing processes to transfer technologies from U.S. companies to Chinese companies; China directs and facilitates investments and acquisitions, which generate large-scale technology transfer; and China conducts and supports cyber intrusions into U.S. computer networks to gain access to valuable business information. The USTR estimated that such policies cost the U.S. economy at least $50 billion annually. During his announcement of the Section 301 action, President Trump also stated that China should reduce the bilateral trade imbalance (which at $376 billion in 2017 for goods trade was the largest U.S. bilateral trade imbalance) and afford U.S. "reciprocal" tariff rates. Has the Administration engaged in negotiations with other countries with regard to these measures? Yes. The Administration negotiated quota arrangements rather than imposing Section 232 tariffs on steel imports from Brazil and South Korea, and Section 232 tariffs on both steel and aluminum imports from Argentina. Although the steel and aluminum tariffs were not addressed in the proposed modifications to the North American Free Trade Agreement (NAFTA), renamed the U.S.-Mexico-Canada Agreement (USMCA), USTR Robert Lighthizer stated the three countries are discussing alternative measures. Side agreements to the USMCA include specific language exempting light trucks and 2.6 million passenger vehicle imports annually each from Canada and Mexico from future U.S. import restrictions under Section 232, as well as $32.4 billion and $108 billion of auto parts imports, respectively. The Administration also informally agreed not to move forward with additional Section 232 import duties on U.S. motor vehicle and parts imports from the European Union (EU) and Japan while broader bilateral trade negotiations are ongoing. Discussions on the steel and aluminum tariffs are also to be part of both negotiations. Additionally, the Administration has participated in talks with China regarding the trade practices that are the subject of the Section 301 tariffs. Negotiations in May 2018 initially appeared to resolve the trade conflict, but were ultimately unsuccessful. After further tariff actions by both sides, on December 1, 2018, Presidents Trump and Xi met at a private dinner during the G-20 Summit in Argentina. According to a White House statement, the two leaders agreed to begin negotiations immediately on "structural changes" with regard to IP and technology issues (related to the Section 301 case). The leaders also agreed to address agriculture and services issues. The parties set a goal of achieving an agreement in 90 days. In addition, the White House reported that President Xi agreed to make "very substantial" purchases of U.S. agricultural, energy, and industrial products. In exchange, President Trump agreed to suspend the planned Stage 3 Section 301 tariff rate increases that were scheduled to take effect on January 1, 2019, but stated that the increases would be implemented if no agreement was reached in 90 days (by March 1, 2019). High level talks continue, and on January 30-31, 2019, Chinese Vice Premier Liu met with President Trump and other U.S. officials, during which China pledged to purchase 5 million metric tons of U.S. soybeans. On January 31, President Trump indicated that a final resolution of the trade dispute would not be achieved until he met with President Xi. Reports suggest the trade talks may be extended beyond the March deadline. President Trump has made clear that the Administration is using these various import restrictions as a tool to get countries to negotiate on other issues. At the announcement of the proposed USMCA, the President stated "without tariffs, we wouldn't be talking about a deal, just for those babies out there that keep talking about tariffs. That includes Congress—'Oh, please don't charge tariffs.' Without tariffs, you wouldn't be standing here." The United States has also engaged or will engage in consultations at the WTO with some trading partners affected by the tariffs. Such consultations are a required first step in dispute settlement proceedings, which U.S. trading parties and the United States in turn, have initiated in response to the U.S. actions and trading partner retaliations. (See " What dispute-settlement actions have U.S. trading partners taken? " and " What dispute-settlement actions has the United States taken? ") Have U.S. trading partners taken or proposed retaliatory trade actions to date? Yes. Some U.S. trading partners subject to the additional U.S. import restrictions have taken or announced proposed retaliations against each of the three U.S. actions. Since April 2018, a number of retaliatory tariffs have been imposed on U.S. goods accounting for $126 billion of U.S. annual exports, using 2017 export values ( Figure 2 ). Has Congress responded to the Administration's tariff actions? Yes. The tariffs impact various stakeholders in the U.S. economy, prompting both support and concern from different Members of Congress. To date, Congress has conducted oversight hearings on the Section 232 and 301 investigations and examined the potential economic and broader policy effects of the tariffs. Many Members have expressed concern over what they view as an expansive use of the delegated tariff authority under Section 232, and some Members have introduced legislation in the 115 th and 116 th Congresses that would amend the current authority in a number of ways, including requiring a greater congressional role before tariffs may be imposed. All actions continue to be actively debated, as some other Members see a need for expanded presidential authority to ensure more reciprocal tariff treatment by U.S. trading partners and have introduced legislation in the 116 th Congress to that effect. Senator Grassley, chairman of the Senate Finance Committee announced that he intends to "review the President's use of power under Section 232 of the Trade Act of 1962" during the 116 th Congress. Has the United States entered into a "trade war" and how does this compare to previous U.S. trade disputes? There is no set definition of what may constitute a trade war. Beginning in 2017, the United States and some of its major trading partners imposed escalating import restrictions, particularly tariffs, on certain traded products. Some contend that with these actions—or threat thereof—the United States has embarked upon a full-scale "trade war." Although the scale and scope of these recent unilateral U.S. tariff increases are unprecedented in modern times, tensions in international trade relations are not uncommon. Over the last 100 years, the United States has been involved in a number of significant or "controversial" trade disputes. Past disputes, however, were more narrowly focused across products and trading partners, and generally temporary. Most were settled, and when unresolved, they were contained or defused through bilateral and multilateral negotiations. From the early 20 th century until this year, one dispute resulted in a worldwide tit-for-tat escalation of tariffs: the trade dispute ignited by the U.S. Tariff Act of 1930, commonly known as the "Smoot-Hawley" Tariff Act. The United States has imposed unilateral, restrictive trade measures in the past, but rarely before attempting to resolve its trade-related concerns through negotiations. The United States has, for the most part, engaged with trading partners in bilateral and multilateral fora to manage frictions over such issues and to achieve expanded market access for U.S. firms and farms and their workers. In particular, the United States has generally sought dispute resolution through the multilateral forum provided by the General Agreement on Tariffs and Trade (GATT) and its successor, the WTO. As part of the dispute settlement process, WTO members may seek authorization to retaliate if trading partners maintain measures determined to be inconsistent with WTO rules. When was the last time a President acted under these laws?24 Presidential action under these trade laws has varied since Congress enacted them in the 1960s and 1970s, but since 2002 past Presidents generally declined to impose trade restrictions under these laws. The use of Sections 201 and 301, which address some issues also covered by trade rules established at the WTO, has decreased since the creation of that institution in 1995 and its dispute-settlement system, considered more rigorous and effective than the dispute-settlement system under its predecessor, the GATT. The use of Section 232, which focuses on national security concerns and was created during the Cold War, has also declined and has been infrequently used over several decades. Have the tariff measures resulted in legal challenges domestically or with regard to existing international commitments? Yes. The President's actions have resulted in legal challenges in the U.S. domestic court system and in the dispute settlement system at the WTO. Specifically, the Section 232 actions on steel and aluminum have been challenged in cases before the U.S. Court of International Trade. Severstal Export Gmbh, a U.S. subsidiary of a Russian steel producer, has challenged whether the Administration's actions were appropriately based on national security considerations, as required by statute. The American Institute for International Steel (AIIS), a trade association opposed to tariffs, has challenged the constitutionality of Congress' delegation of authority to the President under Section 232. Most recently, U.S. importers of Turkish steel have initiated a case arguing that the President's increase of the Section 232 steel tariffs from 25% to 50% on U.S. imports from Turkey did not have a sufficient national security rationale, did not follow statutory procedural mandates, and violates a due process law. At the WTO, U.S. trading partners have initiated dispute settlement proceedings with regard to the President's actions under Section 201, Section 232, and Section 301. For more information, see the section on " What dispute-settlement actions have U.S. trading partners taken? " Do these actions have broader economic and policy implications? Many analysts are concerned that the U.S. measures threaten the rules-based global trading system that the United States helped to establish following World War II. The Trump Administration argues that the unilateral measures are justified under existing multilateral trade rules and as a response to violations of existing commitments under the WTO by other trading partners, particularly China. In contrast, U.S. trading partners contend that the Administration's unilateral actions undermine these existing commitments. They argue that the United States should make use of existing multilateral dispute settlement procedures to address concerns in the trading system rather than resorting to unilateral action. Supporters of the Administration's tariff actions argue that the tariffs and other import restrictions are a useful tool to protect domestic U.S. industries and incentivize U.S. trading partners to enter negotiations, in which they would otherwise have little interest in engaging. Some, including the Administration, also argue that the Section 301 actions address issues not adequately covered by existing WTO rules. Some observers also raise concerns over the scale of the Administration's actions, which have led to import restrictions imposed on nearly all U.S. trading partners, including some close allies such as Canada, Japan, Mexico, South Korea, and the EU. These groups agree with the U.S. concerns over specific trade practices by China, but support a more targeted approach that includes cooperation between the United States and other countries that share U.S. concerns over violations to and shortcomings of the existing international trading system. While the United States is involved in multilateral discussions at various levels on potential reforms to the global trading system, specifically the WTO, some analysts argue ongoing tension resulting from the U.S. unilateral actions could hamper these efforts. The complex nature of international commerce, including its highly integrated global supply chains, makes difficult the accurate prediction of the effects of broad tariff actions on specific industrial sectors or individual companies. For example, the Administration imposed Section 201 safeguard tariffs on washing machines to support domestic manufacturers of washing machines, but these same domestic manufacturers now argue that subsequent Section 232 tariffs on steel and aluminum have led to increases in their input costs and caused further economic harm. U.S. domestic auto production, which the Trump Administration may seek to encourage through additional Section 232 tariffs now under investigation, is similarly negatively affected by the existing steel and aluminum tariffs. Retaliation in the form of increased tariffs on U.S. exports further complicates the economic outcome of the unilateral U.S. actions. Many companies also report that uncertainty resulting from the unpredictable nature of the U.S. and retaliatory actions has made long-term planning difficult; this may be putting a drag on U.S. and global economic activity. Others, including some domestic producers, argue that action was needed to prevent more injurious trade practices from occurring and to eventually achieve broader agreement on reducing tariff barriers and establishing new trading rules. Is further escalation and retaliation possible? Yes. Two pending Section 232 investigations on U.S. motor vehicle and parts imports and uranium are underway, which could lead to future import restrictions. Additionally, the scheduled increase in the tariff rate on the third tranche of Section 301 tariffs on U.S. imports from China could occur in the near future, as well as potential new tariffs on additional U.S. imports from China, absent a trade agreement to resolve the core issues that are the subject of current bilateral trade discussions. U.S. motor vehicle and parts imports totaled $361 billion in 2017, according to the U.S. Census Bureau. These goods are among the top U.S. imports supplied by a number of U.S. trading partners, including Canada, Mexico, Japan, South Korea, and the EU, making an increase in U.S. tariffs that applies to these countries economically significant and likely to result in retaliatory action. Canada and Mexico are currently exempt from future auto 232 tariffs for a limited amount of imports under the proposed USMCA agreement. With respect to the EU and Japan, the Administration has notified Congress of its intent to negotiate bilateral trade agreements and informally agreed to refrain from imposing new auto tariffs while those talks progress. South Korea is the only major U.S. auto supplier without a formal or informal assurance from the Trump Administration that it will be exempt from Section 232 auto tariffs, despite recently implemented modifications to the U.S.-South Korea (KORUS) free trade agreement (FTA). A delay in ratification and implementation of the proposed USMCA, or a breakdown in talks with the EU and Japan could make an escalation on this front more likely. As noted, President Trump has warned that he will follow through with his threat to increase Section 301 tariffs on $200 billion worth of products from China from 10% to 25% if a trade agreement is not reached by March 1, 2019, or potentially soon thereafter. He has also threatened increased tariffs on an additional $267 billion worth of imported Chinese products. China imports far less from the United States than it exports and therefore could not match U.S. tariffs on a comparable level of U.S. products, but it could increase the level of the tariffs on products that have already been impacted by retaliatory Section 301 tariffs, in addition to raising tariffs on U.S. products that have not yet been subject to retaliatory tariffs. Further, the Chinese government could take other retaliatory action, calling on its citizens to boycott the purchase of American goods and services in China, curtailing the operations of U.S. manufacturing firms in China, ordering Chinese firms to halt purchases of certain high-value U.S. products (e.g., Boeing aircraft) or restricting its citizens from traveling to, or investing in, the United States. The Chinese government could also choose to halt purchases of U.S. Treasury securities and possibly sell off some of its holdings. Scale and Scope of U.S. and Retaliatory Tariffs What U.S. imports are included in the tariff actions? The Administration has imposed tariffs on U.S. goods accounting for $282 billion of U.S. annual imports, using 2017 trade values. Section 301 actions currently account for the greatest share (83%) of affected imports. U.S. annual imports of products covered under the Section 301 actions currently total $235 billion, compared with $40 billion (14%) under Section 232, and $7 billion (3%) under Section 201 ( Figure 3 ). The potential Section 232 actions on motor vehicles and uranium could cover an additional $361 billion and $2 billion, respectively in U.S. imports, depending on the countries and products included. The scope of U.S. imports affected vary across the three different actions. Section 201 actions cover U.S. imports of washers, washing machine parts, and solar cells and modules. Section 232 actions cover U.S. imports of steel and aluminum products. Section 301 actions cover a broad range of U.S. imports from China. To date, the Administration has imposed increased tariffs under Section 301 on nearly 7,000 products at the 8-digit harmonized tariff schedule (HTS) level. Figure 4 below lists the top 15 products subject to the Section 301 import tariffs classified according to 5-digit U.S. end-use import codes. The major categories are telecommunications equipment, computer accessories, furniture, and vehicle parts. What U.S. exports face retaliatory tariff measures? To date, U.S. trading partners have retaliated against U.S. Section 232 and Section 301 actions. China, Japan, and South Korea have also announced planned retaliation to U.S. Section 201 actions, but in line with WTO commitments on safeguard retaliations, they are not to be imposed until 2021. The total actions to date affect approximately $126 billion of annual U.S. exports, using 2017 trade values. The retaliations against U.S. Section 232 actions affect U.S. exports to six trade partners: Canada, Mexico, the EU, China, Turkey, and Russia. The retaliation is similar to the U.S. actions both in terms of the tariff rates (most are in the range of 10%-25%) and the products covered (steel or aluminum are among the top products targeted). Other major products targeted include food preparations and agricultural products, yachts, motorcycles, whiskies, and some heavy machinery ( Figure 5 ). In total, approximately $25 billion of U.S. annual exports are potentially affected by trade partner retaliations against the U.S. Section 232 actions. Retaliatory tariffs imposed by China in response to U.S. Section 301 actions affect approximately $101 billion of U.S. annual exports, accounting for about 80% of U.S. exports subject to retaliatory tariffs currently in effect ( Figure 6 ). Like the retaliation in response to U.S. Section 232 actions, agricultural products are a main target. Soybeans, which accounted for $14 billion of U.S. exports to China in 2017, are the top overall export affected. Motor vehicles were the second-largest category of exports under the Section 301 retaliation, but these retaliatory tariffs have been temporarily suspended as part of the recent efforts at bilateral U.S.-China negotiations to resolve the trade conflict. The Chinese retaliatory tariffs, like the U.S. Section 301 tariffs, range from 10%-25% and cover thousands of tariff lines. How do the U.S. tariff actions and subsequent retaliation compare? U.S. and retaliatory tariffs differ in both scale and scope of products covered. The United States has placed increased tariffs on products accounting for approximately $282 billion of annual U.S. imports, while retaliatory tariffs cover approximately $126 billion of annual U.S. exports, using 2017 trade values. China, which is subject to the largest share of new U.S. tariffs and has imposed the largest share of new retaliatory tariffs, imports far less from the United States than the United States imports from China, limiting the amount of retaliatory tariffs China can impose on U.S. exports. (See discussion on " Is further escalation and retaliation possible? ") In terms of the products covered, the largest categories of U.S. imports affected by the tariffs are capital goods and industrial supplies ( Figure 7 ). This suggests that, to date, U.S. tariffs are concentrated on products primarily used as inputs in the production of other goods rather than on final consumption goods; therefore the effects of the tariffs may be most pronounced in increased costs for U.S. producers. Among U.S. exports, food and beverages is the second-largest category of goods facing retaliatory tariffs, suggesting that U.S. agriculture producers are among the groups most negatively affected by the retaliatory actions. What share of annual U.S. trade is affected or potentially affected by the U.S. and retaliatory actions? As a share of overall U.S. trade, approximately 12% of annual U.S. goods imports ($282 billion of $2,342 billion total imports) are subject to increased U.S. tariffs under the Trump Administration's actions ( Figure 8 ). Approximately 8% of annual U.S. goods exports ($126 billion of $1,546 billion total exports) are subject to increased tariffs under partner country retaliatory actions. If the United States moves forward with additional tariffs under the two pending Section 232 investigations on U.S. imports of motor vehicles/parts and uranium, the share of affected U.S. imports could increase up to nearly 30%. U.S. motor vehicle and parts imports totaled $361 billion in 2017. What factors affect the products selected for retaliation? A variety of factors likely go into a country's decision regarding which products to target for retaliation. Retaliatory tariffs are explicitly targeted to encourage the United States to remove its Section 232 and Section 301 tariffs, whereas the Trump Administration's enacted and proposed tariffs aim both to alter U.S. trading partners' practices more broadly, including reducing existing tariff and nontariff barriers, and to protect domestic industries. Retaliatory tariffs can have negative effects on both the exporting country (the United States) and the importing country imposing the retaliation. Therefore, retaliating countries are likely to target products that create the most pressure on the United States to change its policy while minimizing any negative effects on themselves. Some factors that may create greater pressure for U.S. policy change include (1) demand for the targeted product is price sensitive (i.e., demand is price elastic), therefore a small tariff increase will lead to a sharper decline in exports; (2) the retaliating country is a major world market for the product, in which case the exports may not be easily diverted to other markets; and (3) the producers of the targeted products in the United States (i.e., those negatively affected by the tariffs) have high levels of political influence (e.g., the product is made in congressional districts with Members on key committees). Factors that would decrease the negative effects on the importer (retaliating country) include (1) other countries competitively produce the product allowing for alternate sourcing; and (2) importers can easily substitute a different product for the targeted import (e.g., substituting wheat for corn for animal feed). Retaliating countries might also seek to impose similar tariffs as those against which they are retaliating (e.g., steel and aluminum are the top products subject to retaliation in response to the Administration's Section 232 steel and aluminum tariffs). Retaliating countries may also seek to lessen the negative impacts of the tariffs on certain segments of the population (e.g., a country might target luxury goods consumed by higher income groups rather than basic food and apparel products that account for a larger share of low-income household consumption). Once the President imposes tariffs, can the President change them? Yes. The President has the authority to reduce, modify, or terminate import restrictions imposed under Sections 201, 232, and 301. Certain limitations on the President's authority to modify the tariffs apply as specified in the relevant statutes. The President has adjusted several tariff increases since they were initially proclaimed. For example, the President increased the tariff on U.S. steel imports from Turkey under Section 232 from 25% to 50%. However, certain U.S. importers of Turkish steel have brought a challenge to this tariff increase at the U.S. Court of International Trade. Similarly, the President has modified actions taken under Section 301 by increasing the scope of imports from China that are subject to new tariffs. Some products have also received exemptions from the tariff measures, explained below. What exemptions are allowed from the tariffs imposed to date? Section 201 In Presidential Proclamation 9693, announcing the Section 201 action on solar products, the President gave the USTR 30 days to develop procedures for exclusion of particular products from the safeguard measure. On February 14, 2018, the USTR published a notice establishing procedures to consider requests for the exclusion of particular products. Based on that notice, the USTR received 48 product exclusion requests and 213 subsequent comments responding to these requests by the deadline, March 16, 2018. On September 19, 2018, the USTR announced a limited number of solar product exclusions, and indicated that additional requests received by the March 16, 2018 deadline remained under evaluation. Canada is excluded from the additional duties on washers. Certain developing countries were excluded, provided that they account for less than 3% individually or 9% collectively of U.S. imports of solar cells or large residential washers, respectively. All other countries are covered by the Section 201 trade actions. Section 232 Individual countries and products may be exempted from the Section 232 tariffs. Country Exemptions According to the initial presidential proclamation, countries with which the United States has a "security relationship" may discuss "alternative ways" to address the national security threat posed by imports of steel and aluminum and gain an exemption from the tariffs. To date four countries have reached agreements with the United States exempting them from part or all of the Section 232 tariffs: 1. South Korea agreed to an absolute annual quota for 54 separate subcategories of steel in place of the steel tariffs. South Korea did not negotiate an agreement on aluminum and has been subject to the aluminum tariffs since May 1, 2018. 2. Brazil was permanently exempted from the steel tariffs, having reached final quota agreements with the United States on steel imports. Brazil, like South Korea, did not negotiate an agreement on aluminum and has been subject to the aluminum tariffs since June 1, 2018. 3. Argentina was permanently exempted from the steel and aluminum tariffs and agreed to absolute quotas for each. 4. Australia gained a permanent exemption from the tariffs without any quantitative restrictions. Product Exclusions The 232 product exclusion process is administered by the Department of Commerce's Bureau of Industry and Security (BIS). Thousands of requests have been filed to date and the exclusion process has been the subject of criticism and scrutiny by several Members of Congress and other affected stakeholders. To limit potential negative domestic impacts of the tariffs on U.S. consumers and consuming industries, Commerce published an interim final rule for how parties located in the United States may request exclusions for items that are not "produced in the United States in a sufficient and reasonably available amount or of a satisfactory quality." The rule went into effect the same day as publication to allow for immediate submissions. Requesters must complete the official response form spreadsheets for each steel and aluminum exclusion and submit the forms on regulations.gov, where both requests for exclusions and objections to requests are posted. There is no time limit for submitting an exclusion request. Each requester must complete a separate application for each product to be considered for exclusion. Exclusion determinations are to be based on national security considerations, but the specific nature of these considerations remain undefined. To minimize the impact of any exclusion, the interim rule allows only "individuals or organizations using steel articles ... in business activities ... in the United States to submit exclusion requests," eliminating the ability of larger umbrella groups or trade associations to submit petitions on behalf of member companies. A parallel requirement applies for aluminum requests. Any approved product exclusion will be limited to the individual or organization that submitted the specific exclusion request. Parties may also submit objections to any exclusion within 30 days after the exclusion request is posted. The review of exclusion requests and objections will not exceed 90 days. Exclusions will generally last for one year. Companies and some Members of Congress have criticized the intensive, time-consuming process to submit exclusion requests, the lengthy waiting period for a response from Commerce, what some view as an arbitrary nature of acceptances and denials, and the fact that all exclusion requests to date have been rejected when a U.S. steel or aluminum producer has objected to it. (See " Have Members of Congress and other stakeholders raised issues regarding the product exclusion process? ") In response, Commerce announced a new rule to allow companies to rebut objections to petitions. The new rule, published September 11, 2018, includes new rebuttal mechanisms, more information about the exclusion submission requirements and process, and the criteria Commerce uses in deciding whether to grant an exclusion request. In September, Commerce provided revised estimates of the anticipated number of exclusion requests (96,954) and objections (38,781). To streamline and increase the transparency of the process, Commerce developed an online portal for users to submit requests for exclusions, objections, rebuttals, or surrebuttals. Commerce began testing the portal in December 2018 with the goal of implementing it in early 2019. Section 301 During the Section 301 notice and comment period on proposed Section 301 tariff increases, the USTR heard from a number of U.S. stakeholders who expressed opposition and/or concern about how such measures could impact their businesses, as well as U.S. consumers. In response, the USTR created a product exclusion process, whereby firms could petition for an exemption from the Section 301 tariff increases for specific imports. The USTR stated that product exclusion determinations would be made on a case-by-case basis, based on information provided by requesters that showed Whether the particular product is available only from China; Whether the imposition of additional duties on the particular product would cause severe economic harm to the requester or other U.S. interests; and Whether the particular product is strategically important or related to ''Made in China 2025'' or other Chinese industrial programs. To date, USTR has only created this product exclusion process for the first two stages of tariff increases under Section 301. Several Members of Congress have sent letters to the USTR calling for an exclusion process for stage three tariffs as well. The joint explanatory statement to the FY2019 appropriations law ( P.L. 116-6 ), enacted February 15, 2019, directs USTR to establish a product exclusion process for stage three tariffs within 30 days. How many product exclusion requests have been made?57 Have Members of Congress and other stakeholders raised issues regarding the product exclusion process? Several Members of Congress have raised concerns about the Section 232 exclusion process. For example, in a letter to Commerce Secretary Wilbur Ross, and at a June 2018 hearing, then-Chairman of the Senate Finance Committee Chairman Orrin Hatch and Ranking Member Ron Wyden urged improvements to the product exclusion procedures on the basis that the detailed data required placed an undue burden on petitioners and objectors. They also suggested that the process appeared to bar small businesses from relying on trade associations to consolidate data and make submissions on behalf of multiple businesses. The letter further stated that Commerce had not instituted a clear process for protecting business proprietary information. In a follow-up letter to the Secretary of Commerce in December, Senators Hatch and Wyden recognized that some improvements had been made to the exclusion process but identified further issues raised by stakeholders and U.S. businesses. They asked Commerce to address the concerns by adhering to the published timelines for reviewing requests and making specific changes to how the agency handles requests with technical defects. Some Members have used multiple channels to continue to raise issues. A bipartisan group of House Members articulated concerns about the speed of the review process and the significant burden it places on manufacturers, especially small businesses. The Members' letter included specific recommendations, such as allowing for broader product ranges to be included in a single request, allowing trade associations to petition, grandfathering existing contracts to avoid disruptions, and regularly reviewing the tariffs' effects and sunsetting them if they have a "significant negative impact." In September 2018, during an oversight hearing, multiple Senators raised concerns directly to the Assistant Secretary for Export Administration, Bureau of Industry and Security at Commerce, about agency management of the Section 232 exclusion process, including staffing and funding levels, and the need for greater transparency, among other issues. Some Members have questioned the Administration's processes and ability to pick winners and losers through granting or denying exclusion requests. On August 9, 2018, Senator Ron Johnson requested that Commerce provide specific statistics and information on the exclusion requests and process and provide a briefing to the Committee on Homeland Security and Governmental Affairs. Senator Elizabeth Warren requested that the Commerce Inspector General investigate the implementation of the exclusion process, including a review of the processes and procedures Commerce has established, how they are being followed, and if exclusion decisions are made on a transparent, individual basis, free from political interference. She also requested evidence that the exclusions granted meet Commerce's stated goal of "protecting national security while also minimizing undue impact on downstream American industries," as well as evidence that the exclusions granted to date strengthen the national security of the United States. In response to a formal request by Senators Pat Toomey and Tom Carper, the Government Accountability Office (GAO) announced on December 12, 2018, it will investigate the Section 232 product exclusion process in early 2019. Congress authorized additional funds for the Section 232 product exclusion process in the FY2019 appropriations law ( P.L. 116-6 ), and in the accompanying joint explanatory statement, stipulated that Commerce provide quarterly reports to Congress on its administration of the process. The Section 301 exclusion process managed by USTR and effective for the first two tranches of Section 301 tariffs has not attracted the same level of attention from Congress as the Section 232 exclusion process. A bipartisan group of more than 160 Representatives, however, have urged the Administration to allow product exclusions on the third and largest tranche of Section 301 tariffs, and the joint explanatory statement to P.L. 116-6 , directs USTR to establish such an exclusion process within 30 days of the law's enactment. Economic Implications of Tariff Actions What are the general economic dynamics of a tariff increase and who are the economic stakeholders potentially affected? Changes in tariffs affect economic activity directly by influencing the price of imported goods and indirectly through changes in exchange rates and real incomes. The extent of the price change and its impact on trade flows, employment, and production in the United States and abroad depend on resource constraints and how various economic actors (foreign producers of the goods subject to the tariffs, producers of domestic substitutes, producers in downstream industries, and consumers) respond as the effects of the increased tariffs reverberate throughout the economy. Retaliatory tariffs, which U.S. trading partners have imposed in response to U.S. Section 232 and Section 301 tariffs, also affect U.S. exporters. The following outcomes (summarized in Table 1 ) are generally expected at the level of individual firms and consumers: U.S. consumers: Higher tariff rates generally lead to price increases for consumers of the goods subject to the tariffs and for consumers of downstream products as input costs rise. Higher prices in turn lead to decreased consumption depending on consumers' price sensitivity for a particular product. As one example, the monthly price of washing machines in the United States, which are currently subject to tariff increases under Section 201, has increased by as much as 12% compared to January 2018 before the tariffs became effective ( Figure 9 ). U.S. producers of domestic substitutes: U.S. producers competing with the imported goods subject to the tariffs (e.g., domestic steel and aluminum producers) may benefit to the degree they are able to charge higher prices for their domestic goods. However, in the short run, U.S. producers' ability to increase production may be limited. A broad index of U.S. steel producer prices was up 14% in December relative to March, when the Section 232 tariffs first took effect. A similar price indicator for aluminum refining and primary aluminum production shows more volatile prices, with the index down 6.2% between March 2018 and December 2018. U.S. producers in downstream industries: U.S. producers using goods subject to the additional tariffs as inputs may be harmed because the tariffs may cause their costs to increase. U.S. motor vehicle producers may be among the industries most hurt since they face: (1) higher input costs for steel; (2) tariffs on parts accounting for $20 billion of annual imports; and (3) retaliatory tariffs on assembled motor vehicle exports to China accounting for $13 billion of annual exports ( Figure 10 ). U.S. exporters subject to retaliatory tariffs: U.S. exporters facing retaliatory tariffs may be at a price disadvantage in export markets relative to competitors from other countries, which may decrease demand for U.S. exports to those markets. Since Section 232 retaliatory tariffs took effect in the EU, Canada, and Mexico in July, U.S. average monthly exports of the products subject to retaliation have been below their pre-tariff monthly 2018 average by 37%, 23%, and 10%, respectively ( Figure 11 ). China purchases such a large share of certain U.S. agricultural exports—China accounted for 57% of all U.S. soybean exports in 2017—its retaliatory tariffs and the subsequent decline in export sales may have contributed to depressed U.S. prices for some commodities. Foreign producers of the goods subject to the tariffs: Foreign producers can also be affected by tariff increases if consumer demand falls in response to rising prices. In some instances, typically when demand is very price sensitive, or highly elastic, foreign producers may choose to lower their prices and absorb a portion of the tariff increase. The degree to which foreign producers change their prices in response to tariff changes is known as the tariff pass-through rate. Over a longer time horizon, production may shift to other countries to avoid the increased tariffs imposed on products manufactured in the countries affected. In addition to these microeconomic effects, tariffs can also affect macroeconomic variables. With regard to the value of the U.S. dollar, as demand for foreign goods may fall in response to higher tariffs, U.S. demand for foreign currency may also fall, putting upward pressure on the relative exchange value of the dollar. This in turn would reduce demand for U.S. exports and increase demand for foreign imports, partly offsetting the effects of the tariffs. Tariffs may also affect national consumption patterns, depending on how the shift to higher cost domestic substitutes affects consumers' discretionary income and therefore aggregate demand. In the current tight labor environment tariffs may have less impact on overall U.S. employment levels, but may result in some movement of workers between industries and potential industry-specific unemployment as labor demand rises in domestic industries benefitting from the tariffs and falls in industries harmed by increased input costs or retaliatory tariffs. Economists generally agree that a reallocation of resources, including capital and labor, based on price distortions such as tariffs reduces efficiency and productivity over the long run. What do economic studies estimate as the potential impacts of the tariff actions on the U.S. economy? U.S. government and international institutions, think tanks, and consulting groups have prepared estimates of the potential impacts of the tariffs by projecting trade values using historical trade data and various modeling techniques ( Table 2 ). These studies have produced a range of estimates, but generally suggest a moderately negative impact. The Congressional Budget Office, for example, estimates a 0.1% decline in the annual U.S. GDP growth rate resulting from the tariffs currently in place, while the International Monetary Fund (IMF) estimates approximately a 0.2% decline in the annual U.S. GDP growth rate. Most studies show slight employment gains and production increases in U.S. industries competing with the imports subject to additional tariffs and declines in sectors facing retaliation and heavily reliant on inputs subject to additional tariffs. The net estimated effects are relatively modest, because approximately 10.5% of U.S. annual trade (12% of imports and 8% of exports) is affected by the tariff actions to date and trade represents a moderate share of total U.S. economic activity (27% of U.S. GDP in 2017). However, the effects may be substantial for individual firms reliant either on imports subject to the U.S. tariffs or exports facing retaliatory measures, as well as consumers for whom the affected products account for a large share of consumption. The effects could grow if U.S. tariff actions and retaliation escalates. The IMF, for example, estimates that U.S. GDP growth could fall by approximately 1% and global growth could fall by 0.8% if the United States goes forward with an additional 25% tariff on imports from China and on motor vehicle imports from a number of countries, and partner countries retaliate. For context, in 2017 U.S. GDP was $19.5 trillion, making a 1% decline equivalent to a reduction in GDP of $195 billion. Staff from the Federal Reserve Board of Governors, recently noted that "trade policies and foreign economic developments could move in directions that have significant negative effects on U.S. economic growth." Part of this decline in economic growth reflects concern that the tariff escalation also creates a general environment of uncertainty. Economic research on uncertainty suggests it may lead to lower investment and generally restrain economic activity, including trade . These estimates, however, should be interpreted with caution because (1) they require various assumptions that can affect the predicted outcomes; (2) the extent of the U.S. tariffs and retaliation has fluctuated significantly in recent months and is subject to change; and (3) some of the studies were produced or sponsored by stakeholders advancing specific interests. Economists from the Federal Reserve Bank of Atlanta also note that because tariffs have decreased significantly over the past several decades, there is a dearth of recent empirical evidence to inform models on tariff increases. What are some potential long-term effects of escalating tariffs between countries? Most economists agree that the U.S. and global economies have benefitted significantly from the major reduction in global tariff rates that has taken place since the 1940s. If tariff rates were to increase for a significant period of time it could insulate domestic producers from foreign competition, and potentially lead to less efficient and competitive production. This in turn could lead to lower overall economic growth in the United States and abroad, since more closed economies are generally less dynamic, with less innovation and productivity growth. Furthermore, retaliatory tariffs are particularly damaging to U.S. exporters in foreign markets because, unlike multilateral tariffs, the retaliatory tariffs only target U.S. imports. Therefore, exporters from other countries that compete with U.S. firms are likely to be more competitive in the retaliatory markets. Recent trade agreements involving major U.S. trade partners, but not the United States, such as the new EU-Japan FTA and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP or TPP-11) agreement, which consists of the 11 countries remaining in the TPP following the U.S. withdrawal, may likely compound this competitive disadvantage for U.S. exporters. Some argue it may be difficult for U.S. exporters to regain lost export opportunities in the future once importers establish relationships with suppliers from other countries. Another potential long-term effect of the tariffs is a shift in the U.S. role in international economic policymaking. While some stakeholders question the benefits of the dominant U.S. role in global rules-setting, others argue this has generally been of benefit to the United States, allowing U.S. priorities to feature prominently in existing international trade obligations. There are also concerns over the potential geopolitical aspects of tariff escalation. Some argue that the highly integrated nature of the global economy today acts as a deterrent to military conflict. Conversely, if tariff escalation creates a more fragmented global economy or imposes significant costs on a particular economy, it may lessen this deterrent. Are there examples of U.S. producers benefitting or being harmed by the tariffs? In addition to studies on the potential macroeconomic effects of the tariffs, a variety of anecdotal information on the tariffs' impact on specific businesses can be found in press reports or quarterly or annual company reporting. The President's tariff actions and subsequent retaliatory tariffs are only one of many factors influencing economic conditions for U.S. companies, making it difficult to assess the tariffs' direct effects. In general, this anecdotal information largely conforms to the theoretical effects of the tariffs outlined in this report. Companies stating they have benefitted from the tariffs are producers competing with the imported products subject to the tariffs, while many downstream manufacturers and retailers assert they have been harmed. Many U.S. exporters subject to retaliatory tariffs also argue that these trade policy actions have negatively affected their operations. For some U.S. producers, the effects of the tariffs have been more complex, including companies that are both benefitting from higher domestic prices due to the tariffs while also being harmed by higher input costs. Companies with major overseas operations argue they have been indirectly harmed through lower sales abroad resulting from an economic slowdown in the countries subject to the Administration's tariff actions. The text box below provides selected examples of companies in each of these four broad categories. How are Section 301 tariffs affecting global supply chains? China plays an important role for many U.S. multinational firms that rely on global supply chains to manufacture their products. In some cases, U.S. firms source production of parts and components around the world and use China as a final point of assembly for products (e.g., Apple Corporation's iPhone), which are then largely exported. In other instances, firms import parts and components from China to use them in manufacturing products domestically. The use of global supply chains often enables firms to concentrate more of their activities on higher value-added activities. Such factors enable firms to lower costs (making them more globally competitive) and reduce prices for consumers (increasing their purchasing power), which should boost economic growth. The extensive use of global supply chains also result in U.S. imports from China containing foreign-made intermediates, including from the United States. A study by the Organization for Economic Cooperation and Development (OECD) estimated that 40.2% of the value of China's manufactured gross exports in 2011 came from foreign inputs. Many U.S. firms have argued that imposing increased tariffs on imports from China will disrupt global supply chains and could undermine the competitiveness of U.S. firms. To illustrate in a July 27, 2018, letter to USTR Robert Lighthizer, forty-nine members of the Congressional Semiconductor Caucus stated that while the signers supported the Administration's goals of improving China's practices on intellectual property rights, forced technology transfer, and innovation, they opposed using tariff increases to obtain such results: Tariffs on semiconductors will not impact Chinese companies since they export almost no semiconductors to the U.S. market. Instead these tariffs would harm U.S. companies and innovators. Most U.S. imports of semiconductors from China are designed and manufactured by U.S. firms, largely in the United States, then shipped to China for final assembly, test, and packaging. This step in the semiconductor manufacturing process comprises approximately 10 percent of the final value of the product and does not result in the transfer of valuable IP. Similarly, imports of finished semiconductor tools are essentially non-existent. Rather, imports of relatively low-value/low-IP components are incorporated into the high value-added tools made by the U.S. equipment makers and sold around the world. Are there estimates of economic implications at the state level? The U.S. Chamber of Commerce and the Brookings Institut ion have examined how the retaliatory tariffs could affect state and metropolitan economies by tallying the total exports subject to retaliation by location. The Chamber's website allows users to select a specific state for more information, while Brookings' website includes a downloadable dataset searchable by specific metropolitan area. According to Brookings, although major metropolitan areas Houston, Chicago, Los Angeles, Dallas, Seattle, and Detroit export the largest overall value of products subject to retaliatory tariffs, with over $2 billion of annual exports affected from each metropolitan area, some rural communities have a much larger share of their total exports subject to retaliation as their exports may be concentrated in certain industries. State-level trade data are also accessible directly from the Census Bureau at usatrade.census.gov. Are there programs to aid farmers potentially harmed by the tariffs? The U.S. Department of Agriculture (USDA) is making available about $12 billion in financial assistance to farmers and ranchers affected by the retaliatory tariffs in the form of direct payments, food purchases, and export promotion assistance. USDA expects that about $9.6 billion will be used for direct payments to qualifying agricultural producers of soybeans, corn, cotton, sorghum, wheat, hogs, dairy, fresh sweet cherries, and shelled almonds. Of those funds, more than three-fourths ($7.3 billion) of the payments are likely to go to soybean producers. To be eligible, a producer must have an ownership share in the commodity, be actively engaged in farming, and be in compliance with adjusted gross income restrictions and conservation provisions. Payments are capped on a per-person or per-legal-entity basis. The sign-up period to request assistance ended on February 14, 2019. The Administration has also created a Food Purchase and Distribution Program that is to undertake $1.2 billion in government purchases of excess food supplies. USDA has targeted an initial 29 commodities for purchase and distribution through domestic nutrition assistance programs. Purchasing orders and distribution activities are to be adjusted based on the demand by the recipient food assistance programs geographically. The smallest piece of the trade aid package is an allocation of $200 million to boost the trade promotion efforts at USDA. U.S. trade partners have reportedly raised questions over the overall U.S. aid package at WTO Agriculture Committee meetings and are closely monitoring U.S. compliance with related WTO obligations on subsidies. How will the tariff actions affect the U.S. trade balance? President Trump has repeatedly raised concerns over the size of the U.S. goods trade deficit (i.e., the amount by which total U.S. goods imports exceed total U.S. goods exports), including making trade deficit reduction a stated objective in new U.S. trade agreement negotiations. While tariffs are expected to reduce imports initially, they are unlikely to reduce the overall trade deficit due to at least two indirect effects that counteract the initial reduction in imports. One indirect effect is a potential change in the value of the U.S. dollar relative to foreign currencies. A reduction in imports reduces demand for foreign currency, putting upward pressure on the foreign exchange value of the U.S. dollar, thereby making U.S. exports more expensive abroad and imports less expensive in the United States. Another potential effect of U.S. import tariffs is retaliatory tariffs, which are likely to reduce demand for U.S. exports. Recent empirical research studying tariff adjustments in a panel of countries supports this theoretical framework and finds no significant evidence of tariffs improving a country's trade balance. Economists generally also argue that while tariffs placed on imports from a limited number of trading partners may reduce the bilateral U.S. trade deficit with those specific countries, this is likely to be offset by an increase in the trade deficit or reduction in the trade surplus with other countries, leaving the total U.S. trade deficit largely unchanged. This is because the trade deficit generally reflects a shortfall in national saving relative to investment, which tariffs do not address. The U.S. goods trade deficit grew in 2018. From January to November 2018, the latest month for which trade data are available, the U.S. goods trade deficit totaled $806 billion, increasing from $731 billion for the same period in 2017. In every month except May, the goods trade deficit was larger in 2018 compared to the same month in 2017 ( Figure 12 ). This may reflect broader positive economic conditions: when the U.S. economy grows demand for both domestic and imported goods rises. It may also, in part, be a result of importers front-loading purchases of foreign goods in an attempt to avoid potentially higher tariffs in the future. Meanwhile, a trade-weighted index of the exchange value of the U.S. dollar against the currencies of a broad group of major trading partners increased by about 10% throughout 2018. The strengthening dollar counteracts the effect of the tariffs by making imports less costly in the United States and U.S. exports more costly in foreign markets. Presidential Trade Authorities and Congress What are the steps involved in imposing increased tariffs pursuant to the current authorities? Through Section 201, 232, and 301, Congress has delegated to the President some of its constitutional authority to enact import restrictions, including certain tariff changes. Each of the authorities require an investigation and recommendations of appropriate actions by a key agency; the Department of Commerce and USTR have primary roles in Section 232 and 301 investigations, respectively, while the International Trade Commission (ITC), an independent agency with an equal number of Democratic and Republican commissioners, oversees Section 201 investigations. What legislation has been introduced to alter the President's current authority and how would it do so? Multiple proposals have been introduced in both the 115 th and 116 th Congress to amend the President's trade authorities, particularly with respect to Section 232. The majority of these proposals would expand the role of Congress in determining whether or not to impose tariffs. In the 116 th Congress, debate over congressional and executive powers to regulate tariffs has generated multiple proposals to limit the President's trade authorities, along with other reforms (see Table 3 ). Examples include measures that would 1. Require congressional approval before certain Presidential trade actions would go into effect; 2. For the purposes of Section 232 investigations, explicitly define national security and related imports, and task the independent ITC with administering a product exclusion request process; 3. Transfer primary responsibility for Section 232 investigations to the Secretary of Defense from the Secretary of Commerce; 4. Provide an option for Congress to nullify Section 232 actions, by passing a joint disapproval resolution; and 5. Stall the current Section 232 investigation into auto imports. In contrast to proposals to limit the President's trade authority, the White House is actively supporting a measure introduced by Representative Sean Duffy ( H.R. 764 ), that seeks to expand the President's authorities. H.R. 764 would grant the President additional authority to increase tariff rates to match the rates of foreign trading partners, on a country-by-country and product-by-product basis. In the 115 th Congress, proposals to amend trade authorities varied, though most focused on potential modifications to Section 232. Some proposals sought to require additional consultations with Congress or require congressional approval or disapproval of certain trade actions. Other proposals sought to override or suspend specific trade actions by the Trump Administration. A nonbinding motion calling for a congressional role in Section 232 actions passed the Senate, but no other bills to amend the President's trade authorities passed in the 115 th Congress. Tariff Revenue Questions What additional U.S. revenue has been collected from the tariffs? U.S. Customs and Border Protection (CBP) assesses and collects duties on U.S. imports, including the additional duties imposed as a result of the President's tariff actions. According to information provided by CBP, the following revenue was assessed from the additional duties imposed by the President's tariff actions as of February 21, 2019 (note the tariffs were imposed at different times during 2018 and therefore the collected revenue does not represent a full calendar year): What happens to the revenue collected from the tariffs? The tariffs collected are put in the general fund of the U.S. Treasury and are not allocated to a specific fund, but are available for appropriations. In other more historical cases, revenue from duties on U.S. imports has been dedicated to specific uses. Examples include Section 32 of The Agriculture Adjustment Act provides for a permanent annual fiscal year appropriation to the U.S. Department of Agriculture (USDA) equal to 30% of "the gross receipts from [all] duties collected under the customs laws" during the calendar year preceding the beginning of the fiscal year for which they were appropriated. Section 203 of the Emergency Wetlands Resources Act of 1985 requires that quarterly payments of an amount equal to the amount of all import duties collected on arms and ammunition (HTSUS chapter 93) be used to partially fund a Migratory Bird Conservation Fund (MBCF), administered by the Department of the Interior. Section 3 of the Recreational Boating Safety and Facilities Act of 1980, as amended ( P.L. 96-451 ; 16 U.S.C. § 1606a), requires the Secretary of the Treasury to transfer, "at least quarterly," to the Reforestation Trust Fund (RT) "an amount equal to the sum of the tariffs received" on imports of forest and wood articles classified under specified headings of the HTSUS, subject to a cap of $30 million each fiscal year. The Continued Dumping and Subsidy Offset Act (CDSOA) of 2000, (Title X of P.L. 106-387 ) known as the "Byrd Amendment," amended existing antidumping and countervailing duty (CVD) laws by requiring that duties assessed pursuant to an AD or CVD order were to be deposited by CBP into special accounts and then distributed to "affected parties" (defined as a manufacturer, producer, farmer, rancher, worker representative, or association involved in or in support of an AD or CVD investigation) for certain "qualifying expenditures" (such as manufacturing facilities and equipment), as outlined in the act. In 2003, however, WTO dispute settlement and Appellate Body panels determined that the law violated U.S. obligations under the WTO Antidumping and Subsidies Agreements. Congress repealed CDSOA on February 8, 2006. How does additional tariff revenue compare to the U.S. national debt? On August 5, 2018, President Trump announced that the increased tariffs his Administration has imposed on steel, aluminum, washing machines, solar panels, and a variety of imported Chinese goods will begin to generate sufficient revenue to reduce the federal debt. The U.S. federal debt represents an accumulation of government borrowing over time, including as a result of annual budget deficits (i.e., when federal government outlays exceed revenue). In FY2018, the federal budget deficit was $779 billion and is projected by the Congressional Budget Office (CBO) to total $897 billion in FY2019, thus contributing to an increasing federal debt. The cumulative publicly held federal debt totaled $15.8 trillion at the end of FY2018, and is projected to increase to $16.6 trillion by the end of FY2019. To reduce the federal debt, the President's tariff actions would have to generate enough revenue to turn the projected budget deficit into a surplus, which could then be used to pay down the federal debt. Accounting for the additional tariffs imposed by the Administration to date, CBO projects that customs duties could generate additional revenue of approximately $34 billion in FY2019, or less than 4% of the projected FY2019 budget deficit. This suggests that at current levels, the President's tariff actions may slightly reduce the annual U.S. budget deficit, but will not generate a budget surplus and therefore will not reduce the annual U.S. debt, though they may result in the debt increasing at a slightly slower rate than would otherwise occur. Moreover, dynamic effects of the tariffs would be likely to reduce these revenues over time as price increases resulting from the tariffs are likely to shift consumption patterns toward less expensive alternatives (i.e. goods not subject to the tariffs). If the tariffs have a negative effect on economic growth, as most economists and CBO predict, they could also result in lower tax revenues more broadly as economic activity declines. In recent history, customs duties resulting from tariffs have not been a significant source of U.S. government revenue. In FY2018, individual income taxes generated more than half (50.6%) of U.S. government revenue, while tariffs or custom duties accounted for less than 2% of total receipts. What are the economic implications of raising revenue through tariffs? Taxes create a distortion from market-based signals by altering the price of various economic activities. These altered prices can in turn alter economic outcomes more broadly as market actors make consumption and production decisions in response. Economists generally argue in favor of policies that minimize market distortions as much as possible, especially when they affect production and the allocation of resources. Tariffs or duties are a tax on imports, which raise the price of imports relative to domestic goods, encouraging consumption of domestic goods relative to foreign goods, and thereby potentially shifting production and diverting resources away from relatively efficient economic activities towards less efficient ones. Although there are instances in which economic theory suggests markets may not produce an optimal outcome, economists generally assert that tariffs are not the best tool to address these market failures. Governments, however, must collect revenue in order to fund their services. From an economist's viewpoint, the best source of revenue is one that creates the least distortion of economic activity. Tariffs are generally not viewed as the least distortionary tax. A potential benefit of tariffs as a source of revenue for some countries is the relative simplicity of their collection, which may explain why they remain significant as a share of government revenue in some least developed countries. Economists, however, generally urge developing countries to lessen their reliance on tariffs as a revenue source due to concerns that tariffs may lead to an inefficient allocation of resources. Until the 1910s, custom duties or tariffs were the main source of revenue for the U.S. government; since the creation of the current federal income tax system in 1913, tariff revenue has become an increasingly smaller share of the federal government's total budget receipts, accounting for less than 2% of total receipts in FY2018. In addition to tariffs possibly distorting the allocation of resources, they may also represent a less progressive form of taxation. As with other taxes, the burden of tariffs does not fall uniformly across goods or demographic groups; instead, it falls more heavily on traded goods and the populations that purchase them. Studies generally have found that, in the United States, tariffs harm low- and middle-income households more than high-income households, in large part because lower-income households spend more—as a proportion of their total expenditures—on tradable goods like food and apparel. Relation to WTO and U.S. Trade Agreements How do the Administration's unilateral tariff actions and other countries' retaliatory actions relate to existing commitments at the WTO and in bilateral and regional trade agreements? Through multilateral (WTO) and bilateral and regional trade (FTA) agreements, the United States and its trading partners have committed not to raise tariffs above certain levels with limited exceptions. These exceptions include specific tariffs in response to unfairly traded goods that may cause or threaten to cause material injury, such as imports dumped on U.S. markets at below-production prices (anti-dumping duties) or imports benefitting from government subsidies (countervailing duties) as well as time-limited safeguard actions when a surge in fairly traded imports injures or threatens to injure a domestic industry. U.S. trade agreements also generally include broad exceptions for actions deemed necessary for "essential security interests." The United States argues that its recent tariff actions are allowed under WTO and FTA rules, while U.S. trading partners allege the U.S. actions are inconsistent with these rules and have responded with retaliatory tariffs and initiated dispute settlement actions to resolve their concerns. The United States meanwhile alleges that these retaliatory tariffs are likewise inconsistent with WTO and FTA rules and has similarly initiated WTO dispute settlement procedures in response. What dispute-settlement actions have U.S. trading partners taken? Several countries allege that U.S. actions are inconsistent with WTO rules and have initiated complaints under the WTO dispute settlement system, over tariffs imposed under Section 201 (safeguards), Section 232 (national security), and Section 301 ("unfair" trading practices) ( Table 4 ). The first step in the dispute settlement process is to request consultations, which provides WTO parties the opportunity to discuss the complaint and seek to reach a negotiated resolution without proceeding to litigation. If consultations fail to resolve the dispute (or if a party denies the request for consultations), the complainant country may request adjudication of the dispute by a WTO panel. The panel issues a ruling on whether the offending measure is consistent with the relevant provisions under WTO agreements; panel decisions can be appealed. What dispute-settlement actions has the United States taken? On July 16, 2018, the United States filed its own WTO complaints over the retaliatory tariffs imposed by five countries (Canada, China, the EU, Mexico, and Turkey) in response to U.S. tariffs on steel and aluminum imports under Section 232. In late August, the United States filed a similar case against Russia. The United States has invoked the so-called national security exception in GATT Article XXI in defense of the tariffs, stating that the tariffs are not safeguards as claimed by the other WTO members in their consultation requests. As of the end of January 2019, all of the disputes are in the panel phase ( Table 5 ). Do the Administration's tariff actions potentially affect ongoing or proposed U.S. trade agreement negotiations? The Administration's tariff actions have likely affected U.S. trade agreement negotiations in a number of ways. On one hand, existing and threatened tariffs may have adverse economic implications for certain U.S. trading partners (e.g., new motor vehicle tariffs on the EU and Japan) and may have encouraged those countries to enter negotiations with the United States to remove this threat of new tariffs as part of broader FTA negotiations. The tariffs, however, may have created a more contentious and unpredictable environment for U.S. trade agreement negotiations, since trade agreement partners may be concerned new tariffs could be imposed after they have entered into new agreements with the United States. Perhaps as a result, the Administration has begun negotiating specific language in its trade agreements regarding exemptions from new potential tariffs. For example, the proposed USMCA (renegotiated NAFTA) provides a specific exemption from potential new Section 232 motor vehicle tariffs for a limited amount of auto trade among the parties. Other countries may seek similar assurances in future U.S. FTA negotiations, including the proposed U.S. FTA negotiations with the EU, Japan, and the United Kingdom. Such language is unprecedented in U.S. FTAs. Concerns over the Section 232 steel and aluminum tariffs, which were not addressed in the USCMA, may also affect congressional approval of the renegotiated agreement. Why have some observers raised concerns over the potential impact of the Administration's actions on the global trading system? The United States was a chief architect of the post-World War II global trading system, including the WTO's dispute settlement mechanism. Critics have expressed concerns that the unilateral tariff actions will cause the United States to lose its standing as the predominant global leader of an open and rules-based trading system and chief supporter of more liberalized trade. With regard to the Section 301 actions, China, in particular, may see this shift in U.S. approach as an opportunity to take a more prominent role in setting global trade rules and standards that benefit or promote its interests and that may undermine those of the United States. China's media increasingly touts its economic system as a model for other countries to follow. In addition, U.S. Section 301 tariffs could harm a number of economies that depend on trade with China, either directly or as part of global supply chains, thus damaging relations with the United States. Retaliatory actions may also heighten concerns over the potential strain the Section 232 tariffs place on the international trading system. Many U.S. trading partners view the Section 232 actions as protectionist and in violation of U.S. commitments at the WTO and in U.S. FTAs, while the Trump Administration views the actions within its rights under those same commitments. Others have followed suit with retaliatory actions, which may violate their WTO commitments. If the dispute settlement process in those agreements cannot satisfactorily resolve this conflict, it could lead to further unilateral actions and a tit-for-tat process of increasing retaliation. This potential strain comes at a time when the United States has called for broader reforms of the WTO dispute settlement process, specifically with regard to the appellate body mechanism. Additional Sources of Information What other CRS products provide further information on these issues? What official sources of information are publicly available regarding the U.S. and retaliatory tariff actions? Official sources of information regarding the U.S. tariff actions are publicly available through the government agencies responsible for investigating imports or enforcing tariff laws. The following resources include embedded links to agency documents as well as footnotes with official links. The Department of Commerce (Section 232 Investigations) The Department of Commerce is the agency responsible for investigating Section 232 cases. Commerce's Bureau of Industry and Security (BIS) has published investigation reports and relevant FAQs on its website. Notices and submitted public comments are available in the Federal Register and on Regulations.gov . Final Investigation Reports on Section 232 Investigations (1981-2018) Compilation of BIS documents related to the steel and aluminum investigations and imposed tariffs FAQ on Product Exclusions for Section 232 Steel and Aluminum Tariffs Find Objections, Rebuttals, and Surrebuttals for Section 232 Product Exclusion Requests Commerce has published Federal Register notices announcing investigations, requesting public comment, and outline product exclusion procedures. Commerce has solicited and published public comments and product exclusion requests through Regulations.gov. The following dockets compile comments and related documents: Aluminum (Docket: BIS-2018-0002 ) Steel (Docket: BIS-2018-0006 ) Auto and auto parts (Docket: DOC-2018-0002 ) Uranium (Docket: BIS-2018-0011 ) U.S. International Trade Commission (ITC) (Section 201 Investigations) ITC, the agency responsible for investigating Section 201 cases, has compiled lists of relevant documents concerning the investigations into imports of solar panels and washing machines . These resources include investigation documents, final reports by the Commission, and the primary Federal Register notices. ITC also maintains the U.S. Harmonized Tariff Schedule (HTS), which provides tariff rates for all merchandise imported into the United States. The tariff actions currently imposed under Section 201, Section 232, and Section 301 are noted within Chapter 99 of the HTS, which documents temporary modifications to the tariff schedule. ITC documents on safeguard investigation into solar panels ITC documents on safeguard investigation into washing machinesThe U.S. Harmonized Tariff Schedule (HTS) : Chapter 99 Office of the U.S. Trade Representative (USTR) (Section 301 Investigations) USTR , the agency responsible for investigating Section 301 cases, has compiled relevant documents about the Section 301 tariffs against Chin ese intellectual property practices on its website. The following USTR resources include the official notices, hearing transcripts, final lists of products subject to additional tariffs, and information on product exclusions. Findings of the Investigation into China's Acts, Policy, and Practices (March 22, 2018) Section 301 Investigations and Related Documents Section 301 Hearings into Proposed Tariffs Section 301: How to Request an Exclusion USTR has solicited and published public comments and product exclusion requests on Regulations.gov . The following dockets compile comments on proposed regulations and related documents, by trade action: Stage 1 Tariffs Notice and comments ( Docket: USTR-2018-0005 )Product exclusions ( Docket: USTR-2018-0025 ) Stage 2 Tariffs Notice and comments ( Docket: USTR-2018-0018 )Product exclusions ( Docket: USTR-2018-0032 ) Stage 3 Tariffs Notice and comments ( Docket: USTR-2018-0026 ) The White House The President has announced these tariff actions through proclamation and presidential memorandum. Presidential documents are published in the Federal Register: Presidential proclamations on Section 201 (Donald J. Trump) Presidential proclamations on Section 232 (Donald J. Trump) Presidential documents on Section 301 (Donald J. Trump) Other presidential statements regarding tariff actions are posted on WhiteHouse.gov. Customs and Border Protection (CBP) CBP is the agency responsible for enforcing customs laws and collecting tariff revenue. The CBP website includes guidance on recent tariff actions for importers. Duty on Imports of Steel and Aluminum Articles under Section 232 of the Trade Expansion Act of 1962Section 301 Trade Remedies – Frequently Asked QuestionsQuota Bulletins , which track certain imports that are subject to quotas or quantitative limits.

The Constitution grants Congress the sole authority over the regulation of foreign commerce. Over the past several decades, Congress has authorized the President to adjust tariffs and other trade restrictions in certain circumstances through specific trade laws. Using these delegated authorities under three trade laws, President Trump has imposed increased tariffs, largely in the range of 10% - 25%, on a variety of U.S. imports to address concerns related to national security, injury to competing industries, and China's trade practices on forced technology transfer and intellectual property rights, among other issues. Several U.S. trade partners argue that these tariff actions violate existing U.S. commitments under multilateral and bilateral or regional trade agreements and have imposed tariffs on U.S. exports in retaliation. Congress continues to actively examine and debate these tariffs, and several bills have been introduced either to expand, limit, or revise existing authorities. U.S. Trade Laws Authorizing the President's Tariff Actions The President's recent tariff actions raise a number of significant issues for Congress. These issues include the economic effects of tariffs on firms, farmers, and workers, and the overall U.S. economy, the appropriate use of delegated authorities in line with congressional intent, and the potential implications and impact of these measures for broader U.S. trade policy, particularly with respect to the U.S. role in the global trading system. The products affected by the tariff increases include washing machines, solar products, steel, aluminum, and numerous imports from China. Retaliatory tariffs are affecting several U.S. exports, including agricultural products such as soybeans and pork, motor vehicles, steel, and aluminum. Using 2017 values, U.S. imports subject to the increased tariffs accounted for 12% of annual U.S. imports, while exports subject to retaliatory tariffs accounted for 8% of annual U.S. exports. A pending Section 232 investigation on motor vehicle and parts imports could result in increased tariffs on more than $360 billion of imports, and the President has stated that additional tariffs could be imposed on imports from China absent a negotiated agreement to address certain Chinese trade practices of longstanding concern to the United States. Although the consensus among most economists is that the tariffs are likely to have a negative effect on the U.S. economy overall, they may have both costs and benefits across different market sectors and actors. Import tariffs are effectively a tax on domestic consumption and thus increase costs for U.S. consumers and downstream industries that use products subject to tariffs. Retaliatory tariffs create disadvantages for U.S. exports in foreign markets, and can lead to fewer sales of U.S. products abroad and depressed prices. However, domestic producers who compete with affected imports can benefit by being able to charge higher prices for their goods. The Administration also argues the tariffs may have an indirect benefit if they result in tariff reductions by U.S. trading partners and lead to resolution of U.S. trade concerns affecting key sectors of the U.S. economy. Economic analyses of the tariff actions estimate a range of potential effects, but generally suggest a 0.1%-0.2% reduction in U.S. gross domestic product (GDP) growth annually owing to the actions to date. The economic effects of the President's actions are likely to be central to ongoing congressional debate on legislation to alter the President's tariff authority.

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Background Central governance in Yemen, embodied by the decades-long rule of former President Ali Abdullah Saleh, began to unravel in 2011, when political unrest broke out throughout the Arab world. Popular youth protests in Yemen were gradually supplanted by political elites jockeying to replace then-President Saleh. Ultimately, infighting among various centers of Yemeni political power broke out in the capital, and government authority throughout the country eroded. Soon, militias associated with Al Qaeda in the Arabian Peninsula (AQAP) seized territory in one southern province. Concerned that the political unrest and resulting security vacuum were strengthening terrorist elements, the United States, Saudi Arabia, and other members of the international community attempted to broker a political compromise. A transition plan was brokered, and in 2012 former Vice President Abdu Rabbu Mansour Hadi became president. With the support of the United States, Saudi Arabia, and the United Nations Security Council, President Hadi attempted to reform Yemen's political system. Throughout 2013, key players convened a National Dialogue Conference aimed at reaching broad national consensus on a new political order. However, in January 2014 it ended without agreement. One antigovernment group in particular, the northern Yemeni Houthi movement, sought to use military force to reshape the political order. Within weeks of the National Dialogue Conference concluding, it launched a military offensive against various tribal allies of President Hadi. The Houthi were joined by the forces still loyal to former President Saleh, creating an alliance of convenience that was a formidable opponent to President Hadi and his allies. In 2014, Houthi militants took over the capital of Sanaa (also spelled Sana'a) and violated several power-sharing arrangements. In 2015, Houthi forces advanced southward from the capital all the way to Aden on the Arabian Sea. In March 2015, after President Hadi, who had fled to Saudi Arabia, appealed for international intervention, Saudi Arabia and a hastily assembled international coalition launched a military offensive aimed at restoring Hadi's rule and evicting Houthi fighters from the capital and other major cities. In April 2015, the United Nations Security Council passed Resolution (UNSCR) 2216 demanding that Houthi-Saleh forces end their use of violence and that all Yemeni parties avoid "further unilateral actions that could undermine the political transition in Yemen." The United States agreed to provide limited assistance to the coalition military operations, assistance which has evolved over time in response to conditions in the conflict and in light of congressional scrutiny. In early December 2017, the Houthi-Saleh alliance unraveled, culminating in the killing of former President Saleh on December 4, 2017. Since Saleh's death, the coalition has made military gains, advancing northward along the Red Sea coast toward the port of Hudaydah (also spelled Hodeidah, Hudayda). Nevertheless, Houthi forces remain ensconced in northern Yemen and remain in control of the capital. The war has exacerbated a humanitarian crisis in Yemen that began in 2011; as of January 2019, over half of the population required emergency food assistance. Access restrictions to certain areas of Yemen make it problematic for governments and aid agencies to count the war's casualties. One U.S. and European-funded organization, the Armed Conflict Location & Event Data Project (ACLED), estimates that 60,000 Yemenis have been killed since January 2016. UNHCR estimates that 3.9 million Yemenis were displaced internally as of January 2019. In January 2019, the United Nations Panel of Experts on Yemen released their annual report covering 2018. This report noted that Yemen continues to "slide towards humanitarian and economic catastrophe." Though the actual ground war remains confined to "relatively small areas," the effect of the conflict on the economy, as well as the growing presence of armed groups and deep-rooted corruption, has impacted ordinary Yemenis within both Houthi-held areas and liberated areas. Stockholm Agreement and Hudaydah Cease-Fire On December 6, 2018, the warring parties to the conflict in Yemen convened in Sweden under the auspices of the United Nations to discuss various de-escalation proposals and a possible road map to a comprehensive peace settlement. The talks were the first formal negotiations since 2016. After a week of negotiations, all sides agreed to the Stockholm Agreement, which consists of three components: a cease-fire around the port city of Hudaydah, a prisoner swap, and a statement of understanding that all sides would form a committee to discuss the war-torn city Taiz. Though fighting continues along several fronts, on December 13, 2018, Special Envoy of the United Nations Secretary-General for Yemen Martin Griffiths brokered a cease-fire centered on the besieged Red Sea port city of Hudaydah, Yemen's largest port. As part of the deal, the coalition and the Houthis agreed to redeploy their forces outside Hudaydah city and port. The United Nations agreed to chair a Redeployment Coordination Committee (RCC) to monitor the cease-fire and redeployment. On January 16, the United Nations Security Council (UNSCR) passed UNSCR 2452, which authorized (for a 6-month period) the creation of the United Nations Mission to support the Hudaydah Agreement (UNMHA), of which the RCC was a significant component. For nearly two months, implementation of the Stockholm Agreement stalled. According to U.N. Special Envoy Griffiths, "The initial timelines were rather ambitious….We are dealing with a complex situation on the ground." The Stockholm Agreement did not specify which local actors were to assume responsibility for security in Hudaydah after both parties redeployed. On February 17, the United Nations announced that "The parties reached an agreement on Phase 1 of the mutual redeployment of forces" whereby the Houthis would withdraw from Hudaydah port and the Saudi-led coalition would move out of the eastern outskirts of Hudaydah city. Still, the warring parties have yet to agree on the identities of local police forces to take over security in Hudaydah. As of March 2019, the parties had made "significant progress towards an agreement to implement phase one of the redeployments of the Hudayda agreement." Until a final redeployment is reached, the Houthis remain ensconced in Hudaydah, with barricades, trenches and roadblocks still present throughout the city. The Houthis want local coast guard units to assume control. The coalition claims, however, that the leaders of the local coast guards are loyal to the Houthis, and U.N. observers may have difficulty in verifying the neutrality of security personnel in Hudaydah. U.N. officials have reported to the Security Council that the Houthis fear that a withdrawal from Hudaydah will make their forces vulnerable to attack by the coalition. Meanwhile, in Jordan, several meetings between the Houthis and the Hadi government have taken place over a planned prisoner exchange as called for in the Stockholm Agreement. Although some exchanges of wounded personnel and prisoners have taken place, the talks have not produced a comprehensive agreement to date. Overall, many observers remain skeptical that the cease-fire reflects a broader impulse to end the war, seeing it instead as a means of easing international pressure on the coalition. Since the signing of the Stockholm Agreement, the Saudi-led coalition has conducted airstrikes in Sanaa in retaliation for a Houthi drone attack against a Yemeni military parade. In late January, artillery fire struck a camp for internally displaced people in Yemen's northwestern Hajjah province, killing eight civilians and wounding 30 others. According to reporting by the United Nations, implementation of the Stockholm Agreement has been hindered by an overall lack of trust and a reluctance to make operational concessions outside of a comprehensive political agreement. Recent U.S. Policy In 2019, the Trump Administration has continued to support United Nations-led efforts in addressing the humanitarian situation and working toward a comprehensive peace in Yemen. At the same time, the United States has continued to cooperate with Saudi Arabia and the UAE in countering terrorism and attempting to limit Iran's influence in Yemen. For the Trump Administration, U.S. officials have supported the continued defense of Saudi Arabia against Houthi missile and rocket strikes, while also openly calling on coalition members to use air power judiciously to minimize civilian casualties. After ending U.S. refueling support at the coalition's request in November 2018, the Administration has argued against congressional attempts to block arms sales or to end or condition U.S. assistance, arguing that continued U.S. assistance is more likely to achieve the objectives of limiting civilian casualties and maintaining strategic ties to Gulf partners than a punitive approach. To address congressional concerns over errant coalition airstrikes against Yemeni civilians, on November 11, 2018, the United States halted in-flight refueling support for coalition aircraft at the request of the coalition. A month later, then-U.S. Ambassador-designate to Yemen Christopher Henzel noted in his Senate confirmation hearing that "At our urging, the Saudi-led coalition has incorporated the no-strike list into its target development procedures, stopped the use of cluster munitions, changed its rules of engagement to incorporate U.S. recommendations, and established the Joint Incident Assessment team. The United States will continue to press the coalition and the Republic of Yemen government to minimize civilian casualties and expand urgent humanitarian efforts throughout the country." In early February 2019, CENTCOM Commander General Joseph Votel testified before the Senate Armed Services Committee regarding the U.S. role in assisting Saudi Arabia. General Votel remarked that: The United States will continue to support our regional partners developing processes and procedures to counter ballistic missiles (CBM) and counter unmanned armed aerial systems (C-UAS) to help mitigate threats to civilian populations and critical infrastructure…. We continue to share our own experiences and processes in an effort to improve Saudi Arabia's operational performance and reduce civilian casualties. CENTCOM's security cooperation with Saudi Arabia remains a critical link in our efforts to strengthen partners in the region and meet current and future challenges. The work of U.S. advisors is essential to the success of our mission, and Saudi Arabia underwrites the lion's share of their presence. In February 2019, CNN reported that Saudi Arabia and the UAE had provided U.S. military equipment (armored vehicles) to local Yemeni units fighting the Houthis in possible violation of end-user foreign military sale or direct commercial sale agreements. The coalition has denied these charges, while the U.S. State Department has said that it is "seeking additional information" on the issue. At the February 2019 Ministerial to Promote a Future of Peace and Security in the Middle East in Warsaw, Poland, members of the self-described "quad" (United States, United Kingdom, Saudi Arabia, and the United Arab Emirates) met to coordinate their policy toward the Yemen conflict. The quad emphasized the importance of implementing the Stockholm Agreement, the problematic role Iran plays in arming and financing the Houthis, and the need for additional humanitarian assistance. The foreign ministers comprising the quad also "expressed full support for Saudi Arabia and its legitimate national security concerns and called for an immediate end to such attacks by Houthi forces and their allies." On February 13, 2019, the House passed (248-177) H.J.Res. 37 , a joint resolution "Directing the removal of United States Armed Forces from hostilities in the Republic of Yemen that have not been authorized by Congress." Prior to its passage by the House, the White House issued a Statement of Administration Policy in which the Administration argued that "the premise of the joint resolution is flawed" because the United States has provided only "limited support to member countries of the Saudi-led coalition" and U.S. forces providing such intelligence and logistics support are not engaged in hostilities. As amended and passed by the House, Section 4 of H.J.Res. 37 includes a rule of construction stating that "Nothing in this joint resolution may be construed to influence or disrupt any intelligence, counterintelligence, or investigative activities conducted by, or in conjunction with, the United States Government…" The Senate companion resolution, S.J.Res. 7 , was introduced on January 30, 2019 and passed by the Senate (54-46) on March 13, 2019. As amended, S.J.Res. 7 includes rules of construction stating that "nothing in this joint resolution may be construed to influence or disrupt any intelligence, counterintelligence or investigative activities relating to threats in or emanating from Yemen conducted by, or in conjunction with, the United States Government…" (Section 4) and that "nothing in this joint resolution may be construed as authorizing the use of military force" (Section 7). On February 7, 2019, Ranking Member on the Senate Foreign Relations Committee Senator Robert Menendez introduced S. 398 , the Saudi Arabia Accountability and Yemen Act of 2019. This bill, which was originally introduced in the 115 th Congress, would, among other things, require the end of in-flight refueling for Saudi-led coalition operations in Yemen, suspend certain arms sales to the kingdom, sanction persons blocking humanitarian access in Yemen, and sanction persons supporting the Houthis in Yemen. Iranian Support to the Houthis Although Houthi militia forces most likely do not depend on Iran for all of their armaments, financing, and manpower, many observers agree that Iran and its Lebanese ally Hezbollah have aided Houthi forces with advice, training, and arms shipments. In 2016, one unnamed Hezbollah commander interviewed about his group's support for the Houthis remarked "After we are done with Syria, we will start with Yemen, Hezbollah is already there.... Who do you think fires Tochka missiles into Saudi Arabia? It's not the Houthis in their sandals, it's us." In repeated public statements by high-level Saudi officials, Saudi Arabia has cited Iran's illicit support for the Houthis as proof that Iran is to blame for the Yemen conflict. Reports and allegations of Iranian involvement in Yemen have become more frequent as the war has continued, and from Iran's perspective, aiding the Houthis would seem to be a relatively low-cost way of keeping Saudi Arabia mired in the Yemen conflict. However, Iran had few institutionalized links to the Houthis before the civil conflict broke out in 2015, and questions remain about the degree to which Iran and its allies can control or influence Houthi behavior. At present, Iranian aid to the Houthis does not appear to match the scale of its commitments to proxies in other parts of the Middle East, such as in Syria, Lebanon, and Iraq. Prior to the 2015 conflict, the central government in Yemen had acquired variants of Scud-B missiles from the Soviet Union and North Korea. The Houthis took control of these missiles as part of their seizure of the capital. Since 2016, the Houthis have been firing what they call the "Burkan" short-range ballistic missile (claimed range of 500-620 miles) into Saudi Arabia (the latest version is the Burkan-2H). In November 2017, after the Houthis fired a Burkan-2H deep into Saudi Arabian territory, the Saudi-led coalition and U.S. officials said that the Burkan-2H is an Iran-manufactured Qaim missile. In January 2018, the United Nations Panel of Experts on Yemen concluded that Iran was in noncompliance with UNSCR 2216 for failing to prevent the transfer to Houthi forces of Iranian-made short-range ballistic missiles. On February 26, 2018, Russia vetoed a draft U.N. Security Council resolution that would have expressed U.N. concern that Iran is in noncompliance with the international arms embargo created by UNSCR 2216. In summer 2018, the United Nations Panel of Experts on Yemen provided a confidential report to the United Nations Security Council suggesting that Iran may be continuing to violate the international arms embargo by supplying the Houthis with advanced weaponry. After the U.N. experts visited Saudi Arabia and inspected debris from missiles fired by the Houthis, their report noted that these weapons showed "characteristics similar to weapons systems known to be produced in the Islamic Republic of Iran" and that there was a "high probability" that the missiles were manufactured outside of Yemen, shipped in sections to the country, and reassembled by the Houthis. In May 2018, the U.S. Department of the Treasury's Office of Foreign Assets Control (OFAC) designated five Iranian individuals who have "provided ballistic missile-related technical expertise to Yemen's Houthis, and who have transferred weapons not seen in Yemen prior to the current conflict, on behalf of the Islamic Revolutionary Guard Corps-Qods Force (IRGC-QF)." In testimony to the Senate Select Committee on Intelligence in January 2019, Director of National Intelligence Daniel Coats stated: In Yemen, Iran's support to the Huthis, including supplying ballistic missiles, risks escalating the conflict and poses a serious threat to US partners and interests in the region. Iran continues to provide support that enables Huthi attacks against shipping near the Bab el Mandeb Strait and land-based targets deep inside Saudi Arabia and the UAE, using ballistic missiles and UAVs. The U.N. Panel of Experts on Yemen reported in January 2019 that the panel "has traced the supply to the Houthis of unmanned aerial vehicles and a mixing machine for rocket fuel and found that individuals and entities of Iranian origin have funded the purchase." Saudi Arabia and U.S. Support for the Coalition For Saudi Arabia, according to one prominent analyst, the Houthis embody what Iran seeks to achieve across the Arab world: that is, the cultivation of an armed nonstate, non-Sunni actor who can pressure Iran's adversaries both politically and militarily (akin to Hezbollah in Lebanon). A decade before the current conflict began in 2015, Saudi Arabia supported the central government of Yemen in various military campaigns against a Houthi insurgency which began in 2004. In 2014, when Houthi militants took over the capital and violated several power-sharing arrangements, Saudi leaders expressed increasing alarm about Houthi advances. In March 2015, after President Hadi, who had fled to Saudi Arabia, appealed for international intervention, Saudi Arabia quickly assembled an international coalition and launched a military offensive aimed at restoring Hadi's rule and evicting Houthi fighters from the capital and other major cities. Saudi-led coalition forces began conducting air strikes against Houthi-Saleh forces and imposed strict limits on sea and air traffic to Yemen. From the outset, Saudi leaders sought material and military support from the United States for the campaign. In March 2015, President Obama authorized "the provision of logistical and intelligence support to GCC-led military operations," and the Obama Administration announced that the United States would establish "a Joint Planning Cell with Saudi Arabia to coordinate U.S. military and intelligence support." U.S. CENTCOM personnel were deployed to provide related support, and U.S. mid-air refueling of coalition aircraft began in April 2015 and ended in November 2018. In the years since, the Saudi military and its coalition partners have provided advice and military support to a range of pro-Hadi forces inside Yemen, while waging a persistent air campaign against the Houthis and their allies. Saudi ground forces and Special Forces have conducted limited cross-border operations, and Saudi naval forces limit the entry and exit of vessels from Yemen's ports. Separately, a United Nations Verification and Inspection Mechanism (UNVIM) has operated since May 2016 to assist in validating commercial sea and air traffic in support of the arms embargo imposed by Resolution 2216. According to President Trump's December 2018 letter to Congress consistent with the War Powers Resolution, U.S. Armed Forces, "in a non-combat role," continued to provide military advice and limited information, logistics, and other support to regional forces combatting the Houthi insurgency in Yemen; however, aerial refueling of regional forces' aircraft ended in November 2018. United States forces are present in Saudi Arabia for this purpose. Such support does not involve United States Armed Forces in hostilities with the Houthis for the purposes of the War Powers Resolution. U.S. Counterterrorism Operations in Yemen As the Saudi-led coalition's campaign against the Houthis continues and Yemen fragments, the United States has sustained counterterrorism operations against Al Qaeda in the Arabian Peninsula (AQAP) and various affiliates of the Islamic State. In total, CENTCOM conducted 36 air strikes in Yemen in 2018. According to President Trump's December 2018 letter to Congress consistent with the War Powers Resolution, "a small number of United States military personnel are deployed to Yemen to conduct operations against al-Qa'ida in the Arabian Peninsula (AQAP) and ISIS‑Yemen." In December 2018, General Frank McKenzie testified before the Senate Armed Services Committee stating that "they [AQAP] have an aspiration to attack the United States. They are prevented from generating that only because of the direct pressure that remains on them. So that is a clear, unequivocal national interest of the United States." Some observers contend that AQAP's power inside Yemen has diminished considerably as a result of losses sustained from U.S. counterterrorism operations and of competing Yemeni factions vying for supremacy. According to Gregory D. Johnsen, resident scholar at the Arabia Foundation, "AQAP is weaker now than it has been at any point since it was formed in 2009." In August 2018, U.S. officials claimed that one of the most high-value targets in the AQAP organization, bomb maker Ibrahim al Asiri, had been killed in a U.S. air strike last year. Asiri was a Saudi national who was believed to have created the explosive devices used in the 2009 Christmas Day attempted bombing of Northwest Airlines Flight 253, in a 2009 attack against former Saudi Arabian intelligence chief Mohammed bin Nayef, and in the October 2010 air cargo packages destined for Jewish sites in Chicago. In January 2019, U.S. officials confirmed that Jamal al-Badawi, an al Qaeda operative involved in the October 2000 bombing of the USS Cole in Aden, was killed in a precision strike in Marib governorate on January 1. Al-Badawi had been indicted by a federal grand jury in 2003 for the murder of U.S. nationals and U.S. military personnel. To date, two American soldiers have died in the ongoing U.S. counterterrorism campaign against AQAP and other terrorists inside Yemen. In January 2017, Ryan Owens, a Navy SEAL, died during a counterterrorism raid in which between 4 and 12 Yemeni civilians also were killed, including several children, one of whom was a U.S. citizen. The raid was the Trump Administration's first acknowledged counterterror operation. In August 2017, Emil Rivera-Lopez, a member of the elite 160th Special Operation Aviation Regiment, died when his Black Hawk helicopter crashed off the coast of Yemen during a training exercise. Yemen's Humanitarian Crisis Humanitarian Conditions and Assistance 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 U.N.Office for the Coordination of Humanitarian Affairs (OCHA) estimates that two-thirds of the population is food insecure, one-third are suffering from extreme levels of hunger, and 230 out of Yemen's 333 districts were at risk of famine as of January 2019. In sum, the United Nations notes that humanitarian assistance is "increasingly becoming the only lifeline for millions of Yemenis." As noted above, on February 17, the parties to the conflict began to implement the Stockholm Agreement. The deal calls for main roads to reopen from Hudaydah to Sanaa and Taiz and humanitarian access to the Red Sea Mills grain storage facility, which holds enough grain to provide food for 3.7 million Yemenis for a month. Access to the Mills has been cut off since September 2018. On February 26 in Geneva, the United Nations and the Governments of Sweden and Switzerland hosted the third annual pledging conference for the crisis in Yemen. Saudi Arabia and the UAE each pledged $750 million. For 2019, the United Nations is seeking $4 billion from donors for programs in Yemen. The 2018 humanitarian appeal sought a little over $3 billion, of which donors have provided $2.58 billion to date. The United States, Saudi Arabia, the United Arab Emirates, and Kuwait combined accounted for 66.8% of all contributions to the 2018 appeal. Between FY2018 and FY2019, the United States has provided $720.8 million in emergency humanitarian aid for Yemen. Most of these funds ($498 million) are provided through USAID's Office of Food for Peace to support the World Food Programme in Yemen. Since March 2015, the United States has been the largest contributor of humanitarian aid to Yemen, with more than $1.71 billion in U.S. funding provided since FY2015. The United States provided a total of $566.2 million in humanitarian assistance in FY2018. Funds were provided to international aid organizations from USAID's Office of Foreign Disaster Assistance (OFDA), USAID's Food for Peace (FFP), and the U.S. Department of State's Bureau of Population, Refugees, and Migration (State/PRM). Humanitarian conditions continue to be undermined both by economic disruptions caused by the fracturing of the country's financial system and by access constraints imposed by parties to the conflict. Food Insecurity and the Depreciation of Yemen's Currency Remote regions of northern Yemen deep in Houthi territory are often the most challenging areas in which to deliver food aid. In most other parts of the country, food is available for purchase in the marketplace but prices are unaffordable for wide swaths of the population. According to the Food and Agriculture Organization of the United Nations, "The average cost of the minimum survival food basket—comprised of the minimum items required for a household to survive for one month—remains more than 110 percent higher than prior to the conflict's escalation in March 2015." One cause of inflationary prices is the depreciation of the national currency (rial). Yemen has two competing central banks, one in Sanaa (run by the Houthis) and one in Aden (run by the Hadi government). The Houthis in Sanaa have depleted the original central bank's foreign currency reserves and have been unable to pay public sector salaries. The central bank in Aden has liberally printed money, which has driven down the value of the rial. According to the Economist Intelligence Unit's outlook for 2019, "rapid currency depreciation for most of 2018 significantly increased the price of imports [most Yemeni food is imported], and, despite a rally in the rial in late 2018, is a trend that is likely to continue throughout the forecast period as the Aden-based authorities continue to print money..." In 2018, Saudi Arabia agreed to lend $2 billion with the central bank in Aden to help the Hadi government finance food imports. However, according to one report, as of November 2018, "only a little over $170 million had been authorized for payment." Restrictions on the Flow of Commercial Goods and Humanitarian Aid One of the key aspects of the 2015 United Nations Security Council Resolution (UNSCR) 2216 is that it authorizes member states to prevent the transfer or sale of arms to the Houthis and also allows Yemen's neighbors to inspect cargo suspected of carrying arms to Houthi fighters. In March 2015, the Saudi-led coalition imposed a naval and aerial blockade on Yemen, and ships seeking entry to Yemeni ports required coalition inspection, leading to delays in the off-loading of goods and increased insurance and related shipping costs. Since Yemen relies on foreign imports for as much as 90% of its food supply, disruptions to the importation of food exacerbate already strained humanitarian conditions resulting from war. To expedite the importation of goods while adhering to the arms embargo, the European Union, Netherlands, New Zealand, the United Kingdom, and the United States formed the U.N. Verification and Inspection Mechanism (UNVIM), a U.N.-led operation designed to inspect incoming sea cargo to Yemen for illicit weapons. UNVIM, which began operating in February 2016, can inspect cargo while also ensuring that humanitarian aid is delivered in a timely manner. However, Saudi officials argue that coalition-imposed restrictions and strict inspections of goods and vessels bound for Yemen are still required because of Iranian weapons smuggling to Houthi forces. Saudi officials similarly argue that the delivery of goods to ports and territory under Houthi control creates opportunities for Houthi forces to redirect or otherwise exploit shipments for their material or financial benefit. According to the latest reporting from United Nations Office for the Coordination of Humanitarian Affairs (U.N.OCHA), over the last several months, the volume of cargo discharged at Hudaydah and Saleef ports dropped, and now is 20% less than when the conflict began in 2015. Water, Sanitation, and Hygiene (WASH) Yemen is experiencing the world's largest ongoing cholera outbreak. Since late 2016, there have been more than 1.3 million suspected cholera cases and nearly 2,800 associated deaths. Cholera is a diarrheal infection that is contracted by ingesting food or water contaminated with the bacterium Vibrio cholerae . Yemen's water and sanitation infrastructure have been devastated by the war. Basic municipal services such as garbage collection have deteriorated and, as a result, waste has gone uncollected in many areas, polluting water supplies and contributing to the cholera outbreak. In addition, international human rights organizations have accused the Saudi-led coalition of conducting air strikes that have unlawfully targeted civilian infrastructure, such as water wells, bottling facilities, health facilities, and water treatment plants. Humanitarian organizations working in the WASH sector have improved cholera prevention and reduced the frequency of new cases, but have not eliminated the crisis. According to U.N.OCHA's 2019 Yemen Humanitarian Needs Overview, "Public water and sanitation systems require increased support to provide minimum services and avoid collapse. Some 22 per cent of rural and 46 per cent of urban populations are connected to partially functioning public water networks, and lack of electricity or public revenue creates significant reliance on humanitarian support." As of January 2019, 17.8 million people in Yemen are living without access to safe water and sanitation, and 19.7 million lack access to adequate health care. Where is the Yemen Conflict Heading? While the Stockholm Agreement has the potential to lead to a broader, nation-wide cease-fire, the longer it takes to implement, the greater risk of the agreement's collapse and the prospect for renewed conflict in Hudaydah. Although fighting has continued along several fronts since December 2018, the Stockholm Agreement has provided the Saudi-led coalition with the possibility of gradually extricating itself its intervention in Yemen. If the cease-fire collapses, then the coalition would have to weigh the benefits of trying to evict the Houthis from Hudaydah militarily with the humanitarian costs to the Yemeni people and the reputational damage it would incur within the international community. Even if the United Nations is able to make progress toward a comprehensive peace agreement, Yemen is still beset by multiple political conflicts and violence. In the south, regional secessionists are at odds with what remains of President Hadi's internationally recognized government. In the partially Houthi-besieged city of Taiz, Yemen's third-largest city, rival militias backed by the coalition have engaged in internecine warfare and have been accused by human rights groups of committing war crimes. Many key questions about the future of Yemen remain unanswered. In the context of the current Houthi-Saudi-led coalition conflict, few observers have insight into whether or under what conditions the Houthis might be willing to relinquish their heavy or advanced weaponry used to threaten Saudi Arabia, the United Arab Emirates, and maritime shipping. Iran, now involved in Yemen in new ways, may prove unwilling to sever ties that vex its Saudi adversaries. Political and military compromise between the coalition and the Houthis could bring fighting to an end, but might also entrench an anti-U.S. and anti-Saudi Houthi movement as a leading force in a new order in Yemen. The complexity of Yemen's internal politics and the short-term need to resolve the current conflict have overshadowed domestic and international consideration of what the future of Yemeni governance may be. Overall, the prospects for returning to a unified Yemen appear dim. According to the United Nations Panel of Experts on Yemen, "The authority of the legitimate Government of Yemen has now eroded to the point that it is doubtful whether it will ever be able to reunite Yemen as a single country." While the country's unity is a relatively recent historical phenomenon (dating to 1990), the international community had widely supported the reform of Yemen's political system under a unified government just a few years ago. In 2013, Yemenis from across the political spectrum convened a National Dialogue Conference aimed at reaching broad national consensus on a new political order. However, in January 2014 it ended without agreement, and the Houthis launched a war. The failure of the 2013 National Dialogue Conference aimed at reaching broad national consensus on a new political order continues to violently reverberate throughout Yemen. If some semblance of normalcy is to return to the country, local players will have to return to addressing key issues, such as the power of a central government, the devolution of power to regional authorities, and the composition of national security forces. The longer these issues remain unresolved, the greater the prospect for Yemen's dissolution into competing self-declared autonomous regions.

This report provides information on the ongoing crisis in Yemen. Now in its fifth year, the war in Yemen shows no signs of abating. The war has killed thousands of Yemenis, including combatants as well as civilians, and has significantly damaged the country's infrastructure. The difficulty of accessing certain areas of Yemen has made it problematic for governments and aid agencies to count the war's casualties. One U.S. and European-funded organization, the Armed Conflict Location & Event Data Project (ACLED), estimates that 60,000 Yemenis have been killed since January 2016. Though fighting continues along several fronts, on December 13, 2018, Special Envoy of the United Nations Secretary-General for Yemen Martin Griffiths brokered a cease-fire centered on the besieged Red Sea port city of Hudaydah, Yemen's largest port. As part of the deal, the coalition and the Houthis agreed to redeploy their forces outside Hudaydah city and port. The United Nations agreed to chair a Redeployment Coordination Committee (RCC) to monitor the cease-fire and redeployment. On January 16, the United Nations Security Council (UNSCR) passed UNSCR 2452, which authorized (for a six-month period) the creation of the United Nations Mission to support the Hudaydah Agreement (UNMHA), of which the RCC is a significant component. As of late March 2019, the Stockholm Agreement remains unfulfilled, although U.N. officials claim that the parties have made "significant progress towards an agreement to implement phase one of the redeployments of the Hudayda agreement." Although both the Obama and Trump Administrations have called for a political solution to the conflict, the two sides in Yemen appear to fundamentally disagree over the framework for a potential political solution. The Saudi-led coalition demands that the Houthi militia disarm, relinquish its heavy weaponry (ballistic missiles and rockets), and return control of the capital, Sanaa, to the internationally recognized government of President Abdu Rabbu Mansour Hadi, who is in exile in Saudi Arabia. The coalition asserts that there remains international consensus for these demands, insisting that the conditions laid out in United Nations Security Council Resolution (UNSCR) 2216 (April 2015) should form the basis for a solution to the conflict. The Houthis reject UNSCR 2216 and seem determined to outlast their opponents while consolidating their control over northern Yemen. Since the December 2017 Houthi killing of former President Ali Abdullah Saleh, a former Houthi ally, there is no apparent single Yemeni rival to challenge Houthi rule in northern Yemen. Armed groups, including Islamist extremists, operate in other parts of the country, and rival political movements and trends advance competing visions for the long-term reestablishment of national governance in the country. The reconciliation of Yemeni factions and the redefinition of the country's political system, security sector, and social contract will likely require years of additional diplomatic engagement. 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. Two-thirds of the population is considered food insecure; one-third is suffering from extreme levels of hunger; and the United Nations estimates that 230 out of Yemen's 333 districts are at risk of famine. In sum, the United Nations notes that humanitarian assistance is "increasingly becoming the only lifeline for millions of Yemenis." For additional information on Yemen, including a summary of relevant legislation, please see CRS Report R45046, Congress and the War in Yemen: Oversight and Legislation 2015-2019, by Jeremy M. Sharp and Christopher M. Blanchard.

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Overview of the U.S. Export Control System The United States restricts the export of defense articles; dual-use goods and technology; certain nuclear materials and technology; and items that would assist in the development of nuclear, chemical, and biological weapons or the missile technology used to deliver them. A defense item is defined by regulation as one that "[m]eets the criteria of a defense article or defense service on the U.S. Munitions List" or "[p]rovides the equivalent performance capabilities of a defense article" on that list. Dual-use goods are commodities, software, or technologies that have both civilian and military applications. The United States also controls certain exports in adherence to several multilateral nonproliferation control regimes. In addition, U.S. export controls are used to restrict exports to certain countries on which the United States imposes economic sanctions, such as Cuba, Iran, and Syria. Through the Export Controls Act of 2018 (ECA), the Arms Export Control Act (AECA), the International Emergency Economic Powers Act (IEEPA), and other authorities, Congress has delegated, in the context of broad statutory power, to the executive branch its express constitutional authority to regulate foreign commerce by controlling exports. Various aspects of the U.S. export control system have long been criticized by exporters, nonproliferation advocates, allies, and other stakeholders as being too restrictive, insufficiently restrictive, cumbersome, obsolete, inefficient, or any combination of these descriptions. Some contend that such controls overly restrict U.S. exports and make firms less competitive. Others argue that U.S. defense and foreign policy considerations should trump commercial concerns. In January 2007, the Government Accountability Office (GAO) designated government programs designed to protect critical technologies, including the U.S. export control system, as a "high-risk" area warranting a "strategic reexamination of existing programs to identify needed changes." GAO's report named poor coordination among export control agencies, disagreements over commodity jurisdiction between the Departments of State and Commerce, unnecessary delays and inefficiencies in the license application process, and a lack of systematic evaluative mechanisms to determine the effectiveness of export controls. A 2017 GAO report cited "progress" with regard to improving the export control system, but added that government-wide challenges remain, including the need to adopt a more consistent leadership approach, improve coordination among programs, address weaknesses in individual programs, and implement export control reform . The 2019 version of the GAO report noted improvements in the export control system, but still cited the need for further action. On August 13, 2009, President Barack Obama announced the launch of a comprehensive review of the U.S. export control system; then-Secretary of Defense Robert M. Gates announced key elements of the Administration's agenda for reform in an April 2010 speech, with additional elaborations in subsequent months. Former Secretary Gates proposed a four-pronged approach that would establish a single export control licensing agency for both dual-use, munitions and exports licensed to embargoed destinations; a unified control list; a single enforcement coordination agency; and a single integrated information technology system, which would include a single database of sanctioned and denied parties. This section describes the characteristics of the dual-use, munitions, and nuclear controls. The information contained in this section also appears in chart form in Appendix A . The Dual-Use System Export Controls Act of 2018 The Export Controls Act of 2018 (ECA; P.L. 115-232 , Subtitle B, Part I), which became law on August 13, 2018, provides broad, detailed legislative authority for the President to implement dual-use export controls. The law repeals the Export Administration Act EAA of 1979 (EAA; P.L. 96-72 ), which was the underlying statutory authority for dual-use export controls until it expired in 2001. After the EAA's expiration, the export control system created pursuant to that law was continued by a presidential declaration of a national emergency and the invocation of the International Emergency Economic Powers Act (IEEPA; P.L. 95-223 ). The ECA directs the President to implement the EAA nonproliferation sanctions provisions pursuant to IEEPA. The ECA, which has no expiration date, requires the President to control "the export, reexport, and in-country transfer of items subject to the jurisdiction of the United States, whether by United States persons or by foreign persons," as well as the activities of United States persons, wherever located, relating to specific (A) nuclear explosive devices; (B) missiles; (C) chemical or biological weapons; (D) whole plants for chemical weapons precursors; (E) foreign maritime nuclear projects; and (F) foreign military intelligence services. The ECA requires the Secretary of Commerce to "establish and maintain a list" of controlled items and "foreign persons and end-uses that are determined to be a threat to the national security and foreign policy of the United States"; require export licenses; "prohibit unauthorized exports, reexports, and in-country transfers of controlled items"; and "monitor shipments and other means of transfer." Administration The Bureau of Industry and Security (BIS) in the Department of Commerce administers the export licensing and enforcement functions of the dual-use export control system. The Ronald Reagan Administration detached those functions from the International Trade Administration (ITA) in 1985 in order to separate them from the export promotion functions of that agency within the Department of Commerce. BIS also enforces U.S. antiboycott regulations concerning the Arab League boycott against Israel. Implementing Regulations The ECA is implemented by the Export Administration Regulations (EAR; 15 C.F.R. 730 et seq). As noted above, the EAR were continued under IEEPA's authority when the EAA was expired. The EAR set forth licensing policy for goods and destinations, the applications process used by exporters, and the CCL, which is the list of specific commodities, technologies, and software controlled by the EAR. The CCL has 10 categories nuclear materials, facilities, and equipment; materials, organisms, microorganisms, and toxins; materials processing; electronics; computers; telecommunications and information security; lasers and sensors; navigation and avionics; marine; and propulsion systems, space vehicles, and related equipment. Each of these categories is further divided into functional groups: equipment, assemblies, and components; test, inspection, and production equipment; materials; software; and technology. Each controlled item has an export control classification number (ECCN) based on the above categories and functional groups. Each ECCN is accompanied by a description of the item and the reason for control. In addition to discrete items on the CCL, nearly all U.S.-origin items are "subject to the EAR"; such items may be restricted to a destination based on the end-use or end-user of the product. For example, a commodity that is not on the CCL may be denied if the good is destined for a military end-use or an entity known to be engaged in weapons proliferation. Licensing Policy The EAR set out the licensing policy for dual-use and certain military items; the regulations control items for reasons of national security, foreign policy, or short supply. National security controls are based on a common multilateral control list; however, the designation of countries to which those controls are applied is based on U.S. policy. Foreign policy controls may be unilateral or multilateral in nature. The EAR unilaterally control items for antiterrorism, regional stability, or crime control purposes. Antiterrorism controls proscribe nearly all exports to North Korea and the four countries designated as state sponsors of terrorism by the Secretary of State—Cuba, Iran, Sudan, and Syria. These regulations also impose foreign policy controls on encryption items and on hot section technology, which is "for the development, production, or overhaul of commercial aircraft engines, components, and systems." The EAR include "enhanced controls" on hot section technology and require a license "for exports and reexports to all destinations, except Canada." The U.S. government reviews license applications for such technology "on a case-by-case basis to determine whether the proposed export or reexport is consistent with U.S. national security and foreign policy interests." Foreign policy-based controls are also based on adherence to multilateral nonproliferation control regimes, such as the Nuclear Suppliers' Group, the Australia Group (chemical and biological precursors), and the Missile Technology Control Regime (MTCR). The EAR set out timelines for the consideration of dual-use licenses and the process for resolving interagency disputes. Within nine days of receipt, Commerce must refer the license to other agencies (State, Defense, and Energy, as appropriate), grant the license, deny it, seek additional information, or return it to the applicant. If Commerce refers the license to other agencies, the agency to which it is referred must recommend that the application be approved or denied within 30 days. The EAR provide a dispute resolution process for a dissenting agency to appeal an adverse decision. The entire licensing process, to include the dispute resolution process, is designed to be completed within 90 days. This process is depicted graphically in Appendix B . BIS noted in its Fiscal Year 2017 Budget Submission that its increased responsibility for exports as a result of export control reform has increased the burden on the bureau's licensing and enforcement functions. Enforcement and Penalties For criminal penalties, the ECA sanctions individuals up to $1 million or up to 20 years imprisonment, or both, per violation. This law also provides for civil penalties; for each violation, individuals may be fined up $300,000 "or an amount that is twice the value of the transaction that is the basis of the violation with respect to which the penalty is imposed, whichever is greater." Such penalties may also include revocation of export licenses and prohibitions on the offender's ability to export. Enforcement is carried out by the Office of Export Enforcement (OEE) at BIS. OEE's headquarters is in Washington, DC, and the office has 10 offices outside of Washington, DC. U.S. field offices, as well as export control officers in seven foreign countries. OEE is authorized to carry out investigations domestically and works with DHS to conduct investigations overseas. The office, along with in-country U.S. embassy officials overseas, also conducts prelicense checks and postshipment verifications. Military Export Controls Arms Export Control Act (AECA) The AECA of 1976 (P.L. 90-629) provides the President with the statutory authority to control the export of defense articles and services. The AECA also contains the statutory authority for the Foreign Military Sales (FMS) program, under which the U.S. government sells U.S. defense equipment, services, and training on a government-to-government basis. The law also specifies criteria for Direct Commercial Sales (DCS), whereby eligible foreign governments and international organizations purchase some defense articles and services directly from U.S. firms. The AECA sets out foreign and national policy objectives for international defense cooperation and military export controls. Section 3(a) of the AECA specifies the general criteria for countries or international organizations to be eligible to receive U.S. defense articles and defense services provided under the act. The law also sets express conditions on the uses to which these defense articles may be put. Section 4 of the AECA states that U.S. defense articles and defense services shall be sold to friendly countries "solely" for use in "internal security"; for use in "legitimate self-defense"; to enable the recipient to participate in "regional or collective arrangements or measures consistent with the Charter of the United Nations"; to enable the recipient to participate in "collective measures requested by the United Nations for the purpose of maintaining or restoring international peace and security"; and to enable the foreign military forces "in less developed countries to construct public works and to engage in other activities helpful to the economic and social development of such friendly countries." Congressional Requirements A prominent feature of the AECA is the requirement for congressional consideration of certain foreign defense sales proposed by the President. This procedure includes consideration of proposals to sell major defense equipment and services, or to retransfer such military items to other countries. The procedure is triggered by a formal report to Congress under Section 36 of the AECA. In general, the executive branch, after complying with the terms of the applicable section of U.S. law (usually those contained in the AECA), is free to proceed with the sale unless Congress passes legislation prohibiting or modifying the proposed sale. Under Section 36(b) of the ACEA, 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 or issue an export license for commercial sales 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 Japan, Australia, or New Zealand, Congress must be formally notified 15 calendar days before the Administration can proceed with the sale. However, the prior notice thresholds are higher for Japan, Australia, and 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 nations. Licensing Policy The International Traffic in Arms Regulations (ITAR) set out licensing policy for exports (and temporary imports) of U.S. Munitions List (USML) items. A license is required for the export of nearly all items on the USML. There is a limited license exemption for USML items for Canada because the United States considers Canada to be part of the U.S. defense industrial base. In addition, the United States has treaties with the United Kingdom and Australia to exempt certain defense articles from licensing obligations to approved end-users in those countries; the Senate gave its advice and consent to ratification of these treaties in 2010. Unlike some Commerce Department dual-use controls, licensing requirements are based on the nature of the article and not the end-use or end-user of the item. The United States implements a range of prohibitions on munitions exports to countries unilaterally or based on adherence to United Nations (U.N.) arms embargoes. In addition, any firm engaged in manufacturing, exporting, or brokering any item on the USML must register with the Directorate of Defense Trade Controls (DDTC) at the State Department and pay a yearly fee whether or not the firm seeks to export during the year. Administration Exports of defense goods and services are administered by DDTC, which is a component of the Department of State's Bureau of Political-Military Affairs and consists of four offices: Management, Policy, Licensing, and Compliance. DDTC also processes commodity jurisdiction requests, which determine the regulatory regime to which an item is subject. Critics of the defense trade system had previously decried the delays and backlogs in processing license applications at DDTC. A National Security Presidential Directive (NSPD-56), signed by President Bush on January 22, 2008, directed that the review and adjudication of defense trade licenses submitted under ITAR are to be completed within 60 days, except where six "national security exceptions apply." Previously, except for the congressional notification procedures discussed above, DDTC had no defined timeline for the application process. Enforcement and Penalties The AECA provides for criminal penalties of up to $1 million or 20 years of imprisonment, or both, for each violation. The AECA also authorizes civil penalties of up to $500,000 and debarment from future exports. Civil penalties increase annually pursuant to Section 701 of the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 ( P.L. 114-74 ). DDTC has an enforcement staff and works with the Defense Security Service and the Customs and Border Protection and Immigration and Customs Enforcement (ICE) units at the Department of Homeland Security (DHS). In addition to adjudicating civil cases, DDTC assists DHS and the Department of Justice (DOJ) in pursuing criminal investigations and prosecutions. DDTC also coordinates the Blue Lantern end-use monitoring program, in which in-country U.S. embassy officials conduct prelicense checks and postshipment verifications of items transferred via DCS. The Department of Defense's Defense Security Cooperation Agency manages the department's Golden Sentry program, which performs an analogous function for FMS transfers. Nuclear Controls13 A subset of the above-mentioned dual-use and military controls are controls on nuclear items and technology. Controls on nuclear goods and technology are derived from the Atomic Energy Act of 1954 (P.L. 83-703), as amended, as well as from the ECA and the AECA. Controls on nuclear exports are divided among several agencies, based on the product or service being exported. The Nuclear Regulatory Commission (NRC) regulates exports of nuclear facilities and material. The NRC licensing policy and control list are located at 10 C.F.R. 110. BIS licenses "outside the core" civilian power plant equipment and maintains the Nuclear Referral List as part of the CCL. The Department of Energy authorizes the export of nuclear technology. DDTC exercises licensing authority over nuclear items in defense articles under the ITAR. Defense Technology Security Administration (DTSA) A Department of Defense (DOD) Field Activity under the Under Secretary of Defense for Policy, DTSA coordinates the technical and national security review of direct commercial sales export licenses and commodity jurisdiction requests received from the Departments of Commerce and State. It develops the recommendation of DOD on these referred export licenses or commodity jurisdictions based on input provided by the various DOD departments and agencies and represents DOD in the interagency dispute resolution process. Not all licenses from DDTC or BIS are referred to DTSA; memorandums of understanding govern the types of licenses referred from each agency. DTSA coordinates the DOD position with regard to proposed changes to the ITAR and the EAR. It also represents DOD in the interagency process responsible for compliance with multinational export control regimes. Enforcement of U.S. Export Controls Enforcement of the U.S. export control system is undertaken by the agencies responsible for export licensing, the Department of Homeland Security (DHS), the Department of Justice (DOJ) (National Security Division and the Federal Bureau of Investigation [FBI]), and the Defense Criminal Investigative Service (DCIS). Their activities can be summarized as follows: Offi ce of Export Enforcement (OEE) of the Bureau of Industry and Security (BIS) , Department of Commerce . OEE investigates criminal and administrative violations of the dual-use export control regime. OEE is authorized to conduct domestic investigations and works with ICE on investigations of export control violations overseas. OEE refers civil violations to the Office of Chief Counsel of BIS and criminal violations to DOJ. Office of Defense Trade Compliance (ODTC) in DDTC , Department of State . ODTC primarily administers civil enforcement actions, including charging letters and consent agreements, policies of denial, debarments, transaction exceptions, and reinstatements. ODTC provides agency support to investigations and criminal enforcement actions primarily conducted by ICE and the FBI. Office of Enforcement, Nuclear Regulatory Commission (NRC) . Investigates export control violations of nuclear facilities and material licensed by the NRC's Office of International Programs. The Office of Enforcement refers criminal violations to DOJ. ICE , Department of Homeland Security . As with its predecessor at the U.S. Customs Service, ICE has been the lead agency for criminal export enforcement activities. The Counter-Proliferation Investigations Unit investigates violations of dual-use and munitions export controls, exports to sanctioned countries, and violations of economic embargoes. ICE supplements and provides enforcement capacity to the export licensing agencies (BIS and DDTC) and undertakes investigations based on its own and other agency intelligence. In addition, export controls are enforced at the port of departure by DHS Customs and Border Protection. National Security Division of DOJ . The counterespionage section of this division undertakes criminal prosecutions resulting from investigations conducted by the licensing agencies, ICE, and the FBI. An October 2007 DOJ National Export Enforcement Initiative established task forces between the licensing and enforcement agencies and U.S. Attorney's Offices in 20 cities to coordinate export control prosecutions and has facilitated new counterproliferation coordination among law enforcement agencies, export licensing agencies, and the intelligence community. FBI . The FBI's Weapons of Mass Destruction Directorate receives and analyzes intelligence regarding proliferation networks, provides specialized training on counterproliferation for the National Export Enforcement Initiative, and cooperates with above-mentioned investigative partners and export licensing agencies. DCIS , Department of Defense . DCIS is the criminal investigative arm of the Inspector General of DOD. Among its varied activities, DCIS investigates the transfer of sensitive defense technologies to proscribed nations and criminal elements. Multilateral Control Regimes In addition to U.S. controls, internationally there are four major multilateral control regimes: the Australia Group, the Missile Technology Control Regime (MTCR), the Nuclear Suppliers Group (NSG), and the Wassenaar Arrangement. The Commerce Department observed on December 9, 2010, that "[m]ost items on the CCL are controlled in accordance with the United States' commitments" to four major multilateral export control regimes. In addition to the controls described in the box below, all of these regimes have catch-all controls, which allow for the control of nonlisted items if they are to be used for a military or proliferation-related purpose. The Arms Export Control Act requires the Secretary of State to maintain, as part of the USML, "a list of all items on the MTCR Annex" that are not controlled as a dual-use item. The AECA requires the executive branch to control nuclear-related items, but the law does not explicitly require that these items be the same as those controlled by the NSG. President Obama's Export Control Initiative On August 13, 2009, President Obama announced the launch of a comprehensive review of the U.S. export control system. Then-Defense Secretary Robert M. Gates announced key elements of the Administration's agenda for reform in a speech on April 20, 2010, with additional elaborations in subsequent months. Former Secretary Gates proposed a four-pronged approach that would create a single primary export control licensing agency for both dual-use and munitions exports; adopt a unified control list; establish a single enforcement coordination agency; and create a single integrated information technology system, which would include a single database of sanctioned and denied parties. The Administration's blueprint envisioned that these changes would be implemented in three phases, with the final phase requiring legislative action. Phase I would undertake preparatory work to harmonize the Commerce Control List (CCL) with the U.S. Munitions List (USML). This phase would also develop standardized licensing processes among the control agencies; it would also create an "Enforcement Fusion Center" to synchronize enforcement, along with a single electronic gateway to access the licensing system. Phase II would implement a harmonized licensing system with two identically-structured tiered control lists, potentially allowing for a reduction in the amount of licenses required by the system. This phase would include moving certain items from the USML to the CCL, for which congressional notification would be required; examining unilateral controls on certain items; and undertaking consultations with multilateral control regime partners to add or remove multilateral controls on certain items. Under the proposal, the new export control system would debut in Phase III, which would establish a single licensing agency; merge the two harmonized, tiered control lists, with mechanisms for review and updating; merge the two primary export control enforcement agencies, OEE and ICE; and operationalize a single IT system for licensing and enforcement. Changes in agency structure would require legislation. In a February 2011 speech, then-BIS Assistant Secretary Kevin Wolf elucidated seven principles driving the Administration's export control reform efforts Controls should focus on a small core set of key items that can pose a serious national security or intelligence threat to the United States and its interests; Controls should be fully coordinated with the multilateral export control regimes in order to be effective; Unilateral controls must address an existing legal or foreign policy objective; Control lists must clearly identify which items are controlled and be easily updated as technology emerges, matures, or becomes widely available; Licensing processes must be predictable and timely; Enforcement capabilities must be enhanced to address noncompliance and increase capacity to interdict unapproved transfers; and Controls must address counterterrorism policy and the need to export items that support homeland security priorities. The Four Singularities A Single Licensing Agency In his speech introducing the Administration's reform efforts, then-Secretary Gates described the bureaucratic structure of the U.S. export control system as a "byzantine amalgam of authorities, roles, and missions scattered around different parts of the federal government." As noted above, licensing is divided among the Department of Commerce for dual-use and certain military items, the Department of State for munitions, the Department of the Treasury for certain sanctions, and the Nuclear Regulatory Commission and Department of Energy for certain nuclear materials and technologies. These entities operate under different statutory authorities and enforce different regulations. While there are mechanisms in place for license referrals and to address licensing disagreements, critics have long maintained that the multi-agency structure contributes to institutional disputes among the different agencies responsible for export control licensing. Having one licensing system would also end disputes about commodity jurisdiction over a given item. On June 30, 2010, then-National Security Adviser General Jim Jones announced that the Obama Administration intended to create an independent licensing agency with Cabinet members from existing control agencies serving as a board of directors. While that Administration did not provide specific details, this new agency is expected to take over the licensing functions of BIS, DDTC, and OFAC; this agency would likely house the civil and administrative enforcement functions of BIS and DDTC. The Obama Administration did not propose moving licensing procedures of the NRC for nuclear materials and of the Department of Energy for nuclear-related technology; an Obama Administration official attributed this decision to the relatively small volume of licensing undertaken by these agencies as well as by the small universe of exporters. General Jones argued that a unified licensing structure would end the situation in which no agency knew the total of export licenses granted or denied by the U.S. government. Under current referral processes, dual-use and certain military items licenses are referred by BIS to the Department of Defense, the Department of State (Economic Energy and Business Bureau [EEB], International Security and Non-Proliferation Bureau, and the regional bureaus), and the Department of Energy for review. However, BIS licenses are not referred to DDTC. DDTC refers munitions licenses to DOD and to the above-mentioned bureaus at State, and in some instances to Energy, but not to BIS. Some OFAC licenses are referred only to State's EEB. As a result, situations have arisen whereby licenses requested by the same exporter to the same destination have been approved by one license agency and denied by another. Brian Nilsson, then-Deputy Assistant Secretary of State for Defense Trade Controls, indicated during a February 2016 hearing that that the single information technology system in use by the Departments of Commerce, Energy, and State (see below) has begun to address the lack of agencies' visibility regarding license information. Yet, interagency policy differences may continue to exist because agencies would continue to refer licenses to ensure continued checks and balances. Dual-Nationals An issue concerning dual-nationals may provide an example of the effort that will be necessary to create a unified export control system. The White House announced on March 11, 2010, that it would take action to eliminate "obstacles to exporting to companies employing dual nationals." Specifically, the Obama Administration announced that it would "begin to harmonize" conflicting standards used by the Departments of Commerce and State to determine a foreign person's nationality—a step that these departments must take in order to make certain export control decisions. The Commerce Department, according to a 2010 Government Accountability Office (GAO) report, determines "nationality for release of technology to a foreign national" based on that person's "most recent citizenship or permanent residence." The State Department, however, considered not only a foreign national's current citizenship status, but also their country of birth if it differs from the person's country of citizenship or permanent residency. Even if a foreign entity is approved for a manufacturing license agreement or a technical assistance agreement with a U.S. firm, the State Department must approve the transfer of technical data, defense services, and defense articles to dual nationals and third-party nationals employed by the foreign entity. "If a person's country of birth is prohibited from receiving U.S. arms, as are China, Iran, and North Korea, State [collected] additional information to confirm that the individual has no significant ties to his or her country of birth," according to the GAO. However, the State Department stopped using "country of birth" as of 2015, although the department does "consider all current and former citizenships, in addition to current permanent residency." Both the State Department and private-sector experts argue that these requirements are contentious because, in addition to being administratively burdensome, they are a potential employment discrimination issue in other countries; in order to comply with the regulations, non-U.S. employers may need to limit employment opportunities in potential violation of their countries' employment laws. After publishing a proposed rule on August 11, 2010, the State Department published a final rule on May 16, 2011, amending the ITAR to allow the transfer of defense articles and technical data to dual or third-party nationals who are "bona fide, regular employees, directly employed by the foreign consignee or end-user." Such transfers must take place completely within the physical territory of the country where the end-user is located, where the governmental entity or international organization conducts official business, or where the consignee operates, and be within the scope of an approved export license, other export authorization, or license exemption. The end user or consignee must take a variety of measures designed to prevent the diversion of any exports; the final rule includes a requirement for the end user to screen employees for "substantive contacts with restricted or prohibited countries" listed in the ITAR. The rule, which became effective on August 15, 2011, also explains that, although "nationality does not, in and of itself, prohibit access to defense articles or defense services, an employee that has substantive contacts" with persons from prohibited countries "shall be presumed to raise a risk of diversion," unless the State Department determines otherwise. It is worth noting that, according to the State Department, "most diversions of U.S. Munitions List ... items appear to occur outside the scope of approved licenses, not within foreign companies or organizations providing access to properly screened dual national or third country national employees." The Single Control List The Obama Administration concentrated on rationalizing the control lists to form the basis from which other reforms will flow. The Administration first worked to transform the current USML from a "negative list" characterized by general descriptions of articles and design-intent-based criteria to one resembling the current CCL, a "positive" list of dual-use items that are controlled according to objective criteria or parameters. This is being done through the "bright line" process to determine which items should be controlled as dual-use goods and which should be controlled as munitions. The bright line is being determined at the commodity level, based on technical specification and military needs, and is not an overarching concept or framework. The Obama Administration argued that the bright line is necessary, in part, because of the USML's current reliance on design intent (i.e., whether an item was "specifically designed, modified, or adapted" for military use) and its catch-all controls of parts and components of these items. While the CCL is described as more "positive," it too contains entries containing the term "specially designed" for a specific purpose that may need to be modified to conform to bright line standards. Each category of the USML has been screened by an interagency team led by DOD; proposed rewrites to each USML category, including certain items proposed to be moved to the CCL, have been published as proposed rulemakings. Originally, each of the items on the resulting USML list was to have been assigned to a tier to determine its level of control. The Obama Administration created three tiers applicable to both the CCL and the USML to categorize a different level of control. However, the Administration postponed this process, reportedly because it would have been necessary to decide on the tiers for all USML items prior to publishing any revised USML categories. Deputy Assistant Secretary Nilsson testified that the Obama Administration prioritized revising the categories which have the greatest effect on U.S. military interoperability with allied governments. To date, the executive branch has completed transferring items in the following categories from the USML to the CCL: Category IV (launch vehicles, missiles, rockets, torpedoes, bombs, mines, and other military explosive devices; Category V (explosives and energetic materials, propellants, incendiary agents and their constituents); Category VI (vessels of war and naval equipment); Category VII (tanks and military vehicles); Category VIII (aircraft and associated equipment); Category IX (military training equipment); Category X (protective personal equipment and shelters); Category XI (military electronics); Category XII (fire control, range finder, optical and guidance and control equipment); Category XIII (auxiliary military equipment); Category XIV (toxicological agents, including chemical agents, biological agents, and associated equipment); Category XV(spacecraft and related articles); Category XVI (nuclear weapons related articles); Category XVIII (directed energy weapons); and Category XX (submersible vessels and oceanic equipment). The State Department also created a new USML Category XIX (gas turbine engines). Then-Deputy Assistant Secretary Nilsson stated in September 2017 that items would not be moved from USML Categories I-III (firearms, close assault weapons and combat shotguns, guns and armament, ammunition/ordnance) to the CCL until 2018. The executive branch posted proposed rules concerning movement of items from these categories on May 14, 2018. On February 8, 2019, Representative Norma Torres introduced H.R. 1134 , the Prevent Crime and Terrorism Act of 2019, which would prohibit the President from removing "any item" from "category I, II, or III" of the USML. Similarly, on February 12, 2019, Senator Robert Menendez introduced S. 459 , the Stopping the Traffic in Overseas Proliferation of Ghost Guns Act, which states that "the President may not remove any firearm, or technical information relating to such firearm" from the USML. A final rule on a new "0Y521" classification series became effective on April 12, 2013. This series is used for items that are neither identified under an existing ECCN nor controlled under an existing U.S. or multilateral export control regime, but warrant control for foreign policy reasons or because they could provide a significant military or intelligence advantage. According to the EAR, such items "are typically emerging technologies." BIS has subsequently added new items to this series. Items so classified "must be re-classified under another ECCN within one calendar year from the date they are listed" in the relevant part of the EAR. If they are not reclassified, the items "are designated as EAR99 items unless either the CCL is amended to impose a control on such items under another ECCN or the ECCN 0Y521 classification is extended." BIS may extend this classification "for two one-year periods, provided that the U.S. Government has submitted a proposal to the relevant multilateral regime(s) to obtain multilateral controls over the item." BIS may further extend the classification "only if the Under Secretary for Industry and Security makes a determination that such extension is in the national security or foreign policy interests of the United States." According to the Obama Administration, the USML would contain "only those items that provide at least a significant military or intelligence applicability that warrant the controls the AECA requires." The reconstituted Munitions List may then be aligned with the CCL by adopting its A-E commodity organization structure and adding two additional categories: F and G for ITAR specific controls. As a result of this alignment, each USML category will be divided into seven groups: A—equipment, assemblies, and components; B—test, inspection, and production equipment; C—materials; D—software; E—technology; F—defense services; and G—manufacturing and production authorizations. "600 Series" As a result of the bright line process, the Obama Administration moved some USML items to the CCL. Under Section 38(f) of the AECA, the President may not remove any article from the USML until 30 days after providing notice to the House Foreign Affairs Committee, and the Senate Foreign Relations Committee, including a description of the nature of any subsequent controls on the item. Section 38(f)(6) of the AECA requires that "any major defense equipment" on the 600 series "shall continue to be subject to" several "notification and reporting requirements" of the AECA and the Foreign Assistance Act of 1961 (P.L. 87-195). In order to comply with Section 38(f), the manner in which USML items transferred to the CCL are to be controlled is described in a proposed rulemaking on July 15, 2011, and is part of the "mega rule" issued on April 16, 2013. It involves the creation of a "600 Series" subcategory of Export Control Classification Numbers (ECCNs) for each category on the CCL. This new series is populated by items that are judged not to need the relatively-stricter controls mandated under the USML. Items moved to the CCL in this manner require a license to all destinations except Canada. All items controlled pursuant to multilateral control regimes retain their existing controls. In addition, "600 Series" items will be subject to a general policy of denial to countries subject to a U.S. or U.N. arms embargo. Such items are also subject to the prohibition on Defense Department procurement of "goods and services" on the USML "from any Communist Chinese military company" mandated by the National Defense Authorization Act for Fiscal Year 2006 ( P.L. 109-163 ). The rule also places restrictions on the extent to which certain license exceptions can be applied. End-use items transferred to the 600 Series would be eligible for the recently announced Strategic Trade Authorization (STA) license exception (described below) only after a determination is jointly made by the State, Defense, and Commerce Departments that such an exception should be made available for the item in question. Most parts, components, and accessories transferred under this process would be automatically eligible for an STA license exception for exports to the governments of STA-eligible countries. Items expressly defined as "less significant" would be eligible for a license exception for destinations other than those controlled for antiterrorism reasons. "600 Series" items would also be eligible for other preexisting license exceptions. The U.S. control status of parts and components also is addressed by the 600 Series. Under the EAR, the license requirement is based on the finished product, generally without regard to its parts and components. However, a foreign product containing more than 25% controlled U.S. content (10% controlled U.S. content in the case of a transaction to a country identified as a state sponsor of terrorism) may require a reexport license from the United States. However, for ITAR-controlled items, DDTC has employed a jurisdictional interpretation known as a "see-through" rule, which subjects to ITAR control U.S.-origin parts and components incorporated into end products manufactured overseas. For items migrating to the 600 Series, a 25% rule applies, but no de minimus amount would apply to embargoed destinations. "Specially Designed" To facilitate the transfer of items from the USML to the CCL, the Obama Administration proposed a new definition of "specially designed." As noted above, the Administration sought to move away from the design-intent standard of the USML and the use of the catch-all phrase "specifically designed" for military use to subject parts and components to ITAR jurisdiction. The Obama Administration argued that new definition was necessary because "specifically designed" in the USML did not have the same meaning as the term "specially designed" which appears in the CCL and also in various multilateral control lists. The Administration also argued that removing the term(s) entirely by enumerating each part and component being moved from the USML to the CCL was infeasible. The Obama Administration published its final rule on the definition of "specially designed" on April 16, 2013. Some have dubbed the two-part definition as a "catch and release" approach because the first part may capture an item as specially designed for military use and the second part may release the item from control under the definition if it does not qualify under certain parameters. Under the first part of the regulation, an item qualifies as specially designed if (1) As a result of "development" has properties peculiarly responsible for achieving or exceeding the performance levels, characteristics, or functions in the relevant ECCN or U.S. Munitions List (USML) paragraph; or (2) Is a "part," "component," "accessory," "attachment," or "software" for use in or with a commodity or defense article 'enumerated' or otherwise described on the CCL or the USML. Under the regulation, if neither of these criteria apply to an item, then the item is not specially designed. If one or more of these criteria describes an item, the item is potentially qualified as specially designed and is subject to the following six exclusions. The item is excluded from being specially designed if it (1) Has been identified to be in an ECCN paragraph that does not contain "specially designed" as a control parameter or as an EAR99 item in a commodity jurisdiction (CJ) determination or interagency-cleared commodity classification (CCATS); (2) Is, regardless of 'form' or 'fit,' a fastener ( e.g. , screw, bolt, nut, nut plate, stud, insert, clip, rivet, pin), washer, spacer, insulator, grommet, bushing, spring, wire, solder; (3) Has the same function, performance capabilities, and the same or 'equivalent' form and fit, as a commodity or software used in or with an item that: (i) Is or was in "production" ( i.e. , not in "development"); and (ii) Is either not 'enumerated' on the CCL or USML, or is described in an ECCN controlled only for Anti-Terrorism (AT) reasons; (4) Was or is being developed with "knowledge" that it would be for use in or with commodities or software (i) described in an ECCN and (ii) also commodities or software either not 'enumerated' on the CCL or the USML (e.g., EAR99 commodities or software) or commodities or software described in an ECCN controlled only for Anti-Terrorism (AT) reasons; (5) Was or is being developed as a general purpose commodity or software, i.e., with no "knowledge" for use in or with a particular commodity (e.g., an F/A-18 or HMMWV) or type of commodity (e.g., an aircraft or machine tool); or (6) Was or is being developed with "knowledge" that it would be for use in or with commodities or software described (i) in an ECCN controlled for AT-only reasons and also EAR99 commodities or software; or (ii) exclusively for use in or with EAR99 commodities or software." Under this decision approach, the item is potentially "caught" as specially designed by the first two criteria, but it may be "released" from that definition if any of the six subsequent qualifiers apply. The Commerce regulations apply to the "600 series" of items moved from the USML. The proposed regulation to define specially designed in the ITAR as a replacement for the currently utilized "specifically designed" is similar in nature. In a speech on July 17, 2012, then-BIS Assistant Secretary Kevin Wolf acknowledged that the specially designed concept is "inherently difficult to apply in reality," and that it is "not consistent with the "ultimate goal of creating a truly positive, objective list of controlled items." However, he noted that, concurrent with this approach, BIS also published an advanced notice of proposed rulemaking in June 2012 seeking comments on the feasibility of enumerating or positively identifying each item determined classified as specially designed on the CCL. Strategic Trade Authorization License Exception In 2011, the Obama Administration devised a new license exception known as the Strategic Trade Authorization (STA), which was designed to facilitate transfers to low-risk countries and to promote interoperability to allies in the field. To be eligible, exporters must provide notification to BIS of the transaction and a destination control statement notifying the foreign consignee of the exception's safeguard requirements; exporters must also obtain from the foreign consignee a statement acknowledging the consignee's understanding and willingness to comply with the requirements of the license exception. STA-eligible recipients of U.S. munitions items contained on the CCL are not allowed to reexport such items without a license. Such recipients are also prohibited from reexporting "STA-eligible items to any destination outside the STA-eligible countries." Under the final rulemaking, STA is available to 2 groups consisting of 44 countries. To a group of 36 countries made up of NATO partners and members of all 4 multilateral nonproliferation control regimes, dual-use items controlled for national security (NS), chemical or biological weapons, nuclear nonproliferation, regional stability, crime control, or significant items (hot section jet technology) are eligible for an STA. This includes almost all items on the CCL that are not controlled for statutory reasons. An additional eight countries are eligible for exports, reexports, or transfers controlled for NS-only and that are not designated as STA-excluded. The United States-Israel Strategic Partnership Act of 2014 ( P.L. 113-296 ) requires the President, "consistent with the commitments of the United States under international arrangements," to "take steps" to move Israel from the second list of countries to the first list of countries. However, Israel's STA status does not appear to have changed. An August 3, 2018, Commerce Department rule moved India from the second list of countries to the first list of countries. Dual-use items controlled for missile technology, chemical weapons, short supply, or surreptitious listening are not be eligible for export under an STA. Certain implements of execution and torture, pathogens and toxins, software and technology for "hot-sections" of aero gas-turbine engines, and encryption have also been excluded from the STA. The Single Enforcement Structure The third singularity involves the creation of a streamlined export enforcement system. Under Phase I of the new approach, a single export "fusion center" would be created to "coordinate and de-conflict investigations, serve as a central point of contact for coordinating export control enforcement with Intelligence Community activities, and synchronize overlapping outreach programs." On November 9, 2010, the Obama Administration issued Executive Order 13558, which created the Export Enforcement Coordination Center (EECC). The center officially opened in March 2012 within the Department of Homeland Security and replaced and expanded on the functions of the existing National Export Enforcement Coordination Network in ICE. It consists of a director from the Department of Homeland Security and two deputies appointed from the Departments of Commerce and Justice, with an intelligence community liaison designated by the Director of National Intelligence. The center functions as the primary forum to coordinate export control enforcement efforts among the Departments of State, the Treasury, Commerce, Defense, Justice, Energy, and Homeland Security and the Director of National Intelligence and to resolve potential conflicts in criminal and administrative export control enforcement. The center is also able to screen all license applications. Previously, the OEE at BIS was the only entity that could screen dual-use licenses, whereas ICE could screen licenses from DDTC and OFAC. The unit will also establish government-wide statistical tracking capabilities for criminal and administrative enforcement activities. Also in March 2012, an Information Triage Unit was established in the Department of Commerce to serve as an information gathering and screening unit among law enforcement agencies, the intelligence community, and the export licensing agencies. The unit is designed to serve as a central point to disseminate relevant information for each license application prior to decisionmaking. There may be weaknesses in the EECC's mission execution. "[P]rocedures for coordination between the investigative export control enforcement agencies and the intelligence community have not been finalized," according to a March 2019 GAO report, which adds that the center's "lack of formal coordination" limits its effectiveness and has stalled "its efforts to develop standard operating procedures." Absent such coordination, the center "is limited in its ability to realize its full potential to facilitate enhanced coordination and intelligence sharing." The EECC is not to be confused with the National Export Control Coordinator, housed in the Justice Department, which is "responsible for ensuring full coordination between the Justice Department and the many other US law enforcement, licensing, and intelligence agencies that play a role in export enforcement." The role of the coordinator has been described as the chief prosecutor of export control enforcement with the authority to determine which cases to bring for criminal prosecution. The Donald Trump Administration may request the movement of the BIS Office of Export Enforcement to ICE. Currently, ICE conducts investigations and criminal enforcement for DDTC and OFAC, and by virtue of its authority under the IEEPA, it shares dual-use investigations with OEE. Removal of OEE to ICE will end this overlap of authority. The Obama Administration envisioned that a consolidated licensing agency would continue to have authority over administrative enforcement actions. A Single Information Technology System The fourth singularity is the creation of a single information technology system for administering the export control system. The Departments of Commerce, State, and Defense have begun using the USXPORTS database, originally used by the Department of Defense to track referred license applications. The reform effort envisions that USEXPORTS will become the platform for a proposed single export license application form to be used by State, Commerce, and the Treasury's Office of Foreign Assets Control. The Department of Energy, Immigration and Customs Enforcement, and the Export Coordination Enforcement Center are also to use the database. The Obama Administration's plan called for the adoption of USXPORTS first for internal communications such as license referrals, while exporters would continue to use the existing SNAP-R and D-Trade electronic license filing portals. The Obama Administration indicated that eventually it wanted to facilitate interoperability between the license portals, the internal system, and Customs' Automated Export System (AES), the information system that tracks actual movement of goods. In conjunction with the single IT system, the Obama Administration developed a single license application form. To make this possible, the Administration standardized certain definitions between the different regulations, such as the use of the term "technology" in the EAR as opposed to the term "technical data" used in the ITAR. To assist in compliance with U.S. export regulations, the Obama Administration also compiled a consolidated screening list of over 24,000 entities from existing Commerce, Treasury, and State Department screening lists. The list consolidates the BIS Denied Person List, Unverified List, and Entity List; the Department of State's Nonproliferation Sanctions List; the Directorate of Defense Trade Controls Debarred List; and the Office of Foreign Assets Control Specially Designated Nationals List. Encryption While not announced as part of the four singularities, the Obama Administration proposed reforming encryption controls as one of the first deliverables in the export control reform process. The Administration announced on March 11, 2010, that it would change a filing requirement for exporters of products with encryption capabilities. At the time, exporters of such products were required to file for a technical review by the Commerce Department, a process that, according to the White House announcement, could take "between 30-60 days." The announcement advocated replacing this process with "a more efficient one-time notification-and-ship process," which would ensure that the "U.S. government still receives information it needs for its national security requirements while facilitating U.S. exports and innovation for new products and new technologies." The Commerce Department announced on June 25, 2010, that it was amending the Export Administration Regulations (EAR) as "the first step in the President's effort to reform U.S. encryption export controls." As described by the Commerce Department's Bureau of Industry and Security, the amendment to the EAR includes replacing, for encryption products "of lesser national security concern," the "30-day waiting requirement for a technical review" with a "provision that allows immediate authorization to export and reexport these products" after the exporter submits an electronic encryption registration to BIS; similarly replacing the 30-day requirement for most mass-market encryption products; an "overarching note to exclude particular products that use cryptography from being controlled as 'information security' items"—a measure that implements changes approved by the Wassenaar Arrangement members in December 2009; this regulatory change eliminates controls under the CCL on "[m]any items in which the use of encryption is ancillary to the primary function of the item"; and a provision that makes most encryption technology eligible for export and reexport to nongovernmental end-users in countries other than those of "greater national security concern." According to the June 2010 announcement of the EAR amendment, the United States "will also review other issues related to encryption controls." Decontrolling additional items would require approval by the members of the Wassenaar Arrangement. Appendix A. Basic Export Control Characteristics Appendix B. Dual-Use Export Licensing Process Appendix C. List of Acronyms AECA—Arms Export Control Act AES—Automated Export System BIS—Bureau of Industry and Security, Department of Commerce CBP—Customs and Border Protection, Department of Homeland Security CCL—Commerce Control List CML—Commerce Munitions List CPI—Counter-Proliferation Investigations DCIS—Defense Criminal Investigation Service DDTC—Directorate of Defense Trade Controls, Department of State DHS—Department of Homeland Security DOJ—Department of Justice DTSA—Defense Technology Security Administration EAA—Export Administration Act EAR—Export Administration Regulations ECCN—Export Control Classification Number EECC—Export Enforcement Coordination Center EEB—Economic, Energy, and Business Bureau, Department of State FP—Foreign Policy Controls GAO—Governmental Accountability Office IEEPA—International Emergency Economic Powers Act ICE—Immigration and Customs Enforcement Agency, Department of Homeland Security ISN—International Security and Nonproliferation Bureau, Department of State ITA—International Trade Administration, Department of Commerce ITAR—International Traffic in Arms Regulations MTCR—Missile Technology Control Regime NRC—Nuclear Regulatory Commission NS—National Security Controls NSG—Nuclear Suppliers Group OEE—Office of Export Enforcement ODTC—Office of Defense Trade Compliance, DDTC OFAC—Office of Foreign Assets Control, Department of the Treasury SI—Significant Items Controls SL—Surreptitious Listening Controls SS—Short Supply Controls STA—Strategic Trade Authorization USML—U.S. Munitions List

Difficulty with striking an appropriate balance between national security and export competitiveness has made the subject of export controls controversial for decades. Through the Arms Export Control Act (AECA), the International Emergency Economic Powers Act (IEEPA), the Export Controls Act of 2018 (ECA), and other authorities, the United States restricts the export of defense articles; dual-use goods and technology; certain nuclear materials and technology; and items that would assist in the proliferation of nuclear, chemical, and biological weapons or the missile technology used to deliver them. U.S. export controls are also used to restrict exports to certain countries on which the United States imposes economic sanctions. The ECA legislates dual-use controls. The U.S. export control system is diffused among several different licensing and enforcement agencies. Exports of dual-use goods and technologies—as well as some military items—are licensed by the Department of Commerce, munitions are licensed by the Department of State, and restrictions on exports based on U.S. sanctions are administered by the U.S. Department of the Treasury. Administrative enforcement of export controls is conducted by these agencies, while criminal penalties are issued by units of the Department of Homeland Security and the Department of Justice. Aspects of the U.S. export control system have long been criticized by exporters, nonproliferation advocates, allies, and other stakeholders as being too rigorous, insufficiently rigorous, cumbersome, obsolete, inefficient, or combinations of these descriptions. In August 2009, the Barack Obama Administration launched a comprehensive review of the U.S. export control system. In April 2010, then-Defense Secretary Robert M. Gates proposed an outline of a new system based on four singularities a single export control licensing agency for dual-use, munitions exports, and Treasury-administered embargoes, a unified control list, a single primary enforcement coordination agency, and a single integrated information technology (IT) system. The rationalization of the two control lists was the Obama Administration's focus. The Administration made no specific proposals concerning the single licensing agency, although the Administration implemented some elements of a future single system, such as a consolidated screening list and harmonization of certain licensing policies.

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Introduction In early 2018, the Trump Administration—citing concerns over national security and unfair trade practices—imposed increased tariffs on certain imported products in general and on U.S. imports from China in particular. Several of the affected foreign trading partners responded to the U.S. tariffs with their own retaliatory tariffs targeting various U.S. products, especially agricultural commodities. On July 24, 2018, Secretary of Agriculture Sonny Perdue announced that the U.S. Department of Agriculture (USDA) would be taking several temporary actions to assist farmers in response to trade damage from what the Administration has characterized as "unjustified retaliation." Specifically, USDA would authorize up to $12 billion in financial assistance—referred to as the "trade aid" package—for certain agricultural commodities under Section 5 of the Commodity Credit Corporation (CCC) Charter Act (15 U.S.C. 714c). The Secretary said that most of the funding would go to agricultural commodities most directly affected by the trade retaliation—corn, cotton, soybeans, sorghum, wheat, hogs, and dairy (sweet cherries and almonds were added to this list in September)—but that some funding would also be used for the purchase, distribution, and trade promotion of a variety of affected commodities. The trade-aid package includes a Market Facilitation Program (MFP) of direct payments to affected producers, a Food Purchase and Distribution Program, and an Agricultural Trade Promotion (ATP) program. Payments under the MFP program would be made in two rounds: a first round announced on August 27, 2018, initially valued at $4.7 billion; and an equivalent-valued second round announced on December 17, 2018. Secretary Perdue stated that there would not be further trade-related financial assistance beyond this $12 billion package as producers would be able to adjust their production activities in 2019 to reflect market conditions related to the trade dispute. This report provides background on the trade dispute that triggered the trade-aid package as well as the authority used by USDA to respond to the trade dispute with financial assistance. Then the report describes the three components of the trade-aid package with details on their implementation. Tariffs as the Origin of the Trade Aid Package In March 2018, the Trump Administration began applying a 25% tariff to U.S. steel imports and 10% tariff to U.S. aluminum imports from certain countries, citing national security concerns. In April, in response to alleged unfair trade practices by the Chinese government, the Administration placed additional tariffs on a number of Chinese products that are exported to the United States. China, Canada, Mexico, the European Union, and Turkey subsequently enacted retaliatory tariffs on U.S. food and agricultural products, in addition to other goods, in response to the U.S. actions. The retaliatory tariffs from those countries now apply to more than 800 U.S. food and agricultural products across meats, grains, dairy products, specialty and horticultural crops, seafood, and alcoholic beverages. The export value for the targeted products to the retaliating countries totaled about $26.9 billion in 2017—about 18% of total U.S. agricultural exports. China, which is subject to the largest set of U.S. tariff increases—including both the U.S. steel and aluminum tariffs and the U.S. tariffs in response to unfair trade practices—also has the most expansive list of retaliatory tariffs. All told, China, which was the second-leading export market by value for U.S. food and agriculture products in 2017, has levied retaliatory tariffs on about 800 U.S. food and agricultural products that were worth about $20.6 billion in exports to that country in 2017. Among China's retaliatory tariffs is a 25% tariff on soybeans, its top agricultural product import by value from the United States. China imported about $12 billion worth of U.S. soybeans in 2017, accounting for 57% of the value of all U.S. soybean exports that year. With the higher tariffs in place, China is now purchasing more soybeans from Brazil and elsewhere to meet its demand. China has also targeted other key U.S. products, including sorghum, wheat, pork and pork offal, dairy products, fruits and nuts, seafood, and whiskey. Among other countries, Canada—the leading export market for U.S. agriculture and food products in 2017—has imposed retaliatory tariffs of 10% on about 20 food and agricultural products, mostly processed foods. U.S. exports of those products to Canada in 2017 were valued at $2.6 billion. Mexico, the third-leading export market for U.S. agriculture and food products by value in 2017, has imposed tariffs ranging from 15% to 25% on cheese, pork, and some prepared foods. U.S. exports of those products to Mexico were valued at about $2.5 billion in 2017. The European Union has levied tariffs on a small number of U.S. prepared foods, corn, and rice, which were worth about $1 billion in 2017. Turkey has imposed retaliatory tariffs on U.S. nuts, rice, and some prepared foods, imports of which amounted to some $250 million in 2017. U.S. agriculture and food products have been targeted with increased tariffs by foreign nations for several reasons. First, the United States exports a large amount of agriculture and food products, so many countries have the choice of retaliating against those goods. Second, agricultural commodities are easily substituted from among potential suppliers, so curbing imports from one country would not necessarily limit an importing country's access to the commodity. For example, China has turned primarily to Brazil for more of its soybean imports. Third, given the geographic nature of the production of some agriculture and food products, countries can target certain goods in order to negatively and disproportionately affect the constituents of specific U.S. lawmakers. For example, all of the retaliating countries have imposed retaliatory tariffs on whiskey, some specifically on Bourbon whiskey, which is largely produced in Kentucky, rather than on all distilled beverages or alcohol more generally. Trade Aid Package Authority The primary authority for the trade aid package is the Secretary of Agriculture's discretion to use the general powers of the CCC. The CCC is a wholly government-owned entity that exists solely to finance authorized programs that support U.S. agriculture. It is federally chartered by the CCC Charter Act of 1948 (P.L. 80-806; 15 U.S.C. 714 et seq. ), as amended. Most CCC-funded programs are classified as mandatory spending programs and therefore do not require annual discretionary appropriations in order to operate. The CCC instead borrows from the U.S. Treasury to finance its programs consistent with its permanent, indefinite authority to borrow up to $30 billion. Congress replenishes the CCC borrowing authority by appropriating funding to cover the CCC's net realized losses. Typically, Congress passes laws, such as omnibus farm bills, that specifically direct USDA on how to administer CCC activities and in what amounts to fund them. The underlying authorization for the CCC, however, also provides the Secretary with general powers to take certain actions in support of U.S. agriculture at the discretion of the Secretary. This discretionary use has historically been somewhat intermittent and limited in its scale, but it is the basis of the MFP and ATP announced by the Administration. USDA also has discretionary authority to purchase U.S. agricultural commodities under a provision known as Section 32. The name refers to its authorization in Section 32 of the act of August 24, 1935 (P.L. 74-320; 7 U.S.C. 612c), as amended. Most of Section 32's mandatory funding is transferred to the USDA's child nutrition account, but the Secretary has broad discretion in how to spend the remaining unallocated funding—some of which is used to purchase agricultural commodities. The premise is that removing products from normal marketing channels helps to reduce supply and thereby increase prices and farm income. Purchased commodities are diverted to domestic food assistance programs as discussed below (see " Food Purchase and Distribution Program "). The Administration's trade aid announcement does not specify whether the CCC or Section 32 authority is being used to make the purchases under the announced Food Purchase and Distribution Program. However, the scale of the $1.2 billion program indicates that the CCC is most likely the source since the typical annual amount of funding available in Section 32 for purchases is rarely more than half of this amount. Whether from the CCC or Section 32, the Administration's purchases appear to use distribution channels similar to those under Section 32. Trade Aid Package Implementation On August 27, 2018, Secretary Perdue announced the first round of trade assistance. As part of the August 27 announcement, Secretary Perdue provided details on each of the three trade aid package components, including an initial tranche of $6.1 billion in designated outlays out of a potential $12 billion in total program spending. The MFP was to provide initial estimated direct payments of $4.7 billion to qualifying agricultural producers. A Food Purchase and Distribution Program is to undertake $1.2 billion in government purchases of excess food supplies. The ATP program, funded with an additional $200 million, is to help finance foreign market development for affected agricultural products. On December 17, 2018, Secretary Perdue revised the first round of MFP outlays upward slightly to $4.8 billion, and announced an equivalent $4.8 billion in potential second-round outlays. Market Facilitation Program The MFP provides direct financial assistance to producers of commodities that are significantly impacted by actions of foreign governments resulting in the loss of traditional exports. USDA initially determined that qualifying commodities include corn, upland cotton, extra-long-staple cotton, sorghum, soybeans, wheat, dairy, and hogs. On September 21, 2018, USDA announced that fresh sweet cherries and shelled almonds are also eligible for MFP payments. USDA's Farm Service Agency (FSA) is to administer the MFP by providing payments in two potential tranches. However, producers need only sign up once for the MFP to be eligible for first and second payments. Under the sign-up period, producers can submit MFP applications beginning on the following dates: September 4, 2018, for producers of soybeans, sorghum, corn, wheat, cotton, dairy, and hogs; and September 24, 2018, for producers of shelled almonds and fresh sweet cherries. Eligible producers should apply after their harvest is complete. Initially, producers were given a deadline of January 15, 2019, to complete an application. However, USDA extended the deadline to February 14 due to a partial shutdown of the federal government. The current deadline for producers to certify their 2018 production is May 1, 2019. USDA used 2017 production data to estimate that approximately $9.6 billion would be distributed in MFP payments for corn, cotton, sorghum, soybeans, wheat, dairy, hogs, fresh sweet cherries, and shelled almonds, with over three-fourths ($7.3 billion) of MFP payments provided to soybean producers ( Table 1 ). Who Qualifies for a Payment? U.S. producers of corn, cotton, sorghum, soybeans, wheat, dairy, hogs, fresh sweet cherries, and shelled almonds are eligible for MFP payments at this time. Eligible applicants must have an ownership interest in the commodity and be actively engaged; have an average adjusted gross income for tax years 2014, 2015, and 2016 of less than $900,000 per year; comply with the provisions of the "Highly Erodible Land and Wetland Conservation" regulations, often called the conservation compliance provisions. USDA Determination of MFP Per-Unit Payment Rates USDA determined MFP payments based on its estimated "direct trade damage"—that is, the difference in expected trade value for each affected commodity with and without the retaliatory tariffs ( Table A-3 ). The estimated "trade damage" for each affected commodity was then divided by the crop's production in 2017 to derive a per-unit payment rate. Indirect effects—such as any decline in market prices and resultant "lost value" for many of the affected commodities—are not included in the payment calculation (see Appendix B ). USDA's trade-aid package is thus linking MFP commodity payments only to the trade loss associated with each identified MFP commodity. Neither final trade effect, with or without retaliatory tariffs, is observable because much of the affected agricultural production had yet to be harvested and sold at the time the payment rates were calculated, 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 took into account the availability of substitute supplies from export competitors, and the availability of demand for U.S. agricultural exports from alternate importers. How Will Farm-Level MFP Payments Be Determined? MFP payments are tied directly to a producer's actual level of production of eligible commodities in 2018. A producer's total potential MFP payment for an eligible commodity equals the announced payment rate per unit (see column two of Table 1 ) times the harvested (and certified) production during 2018 or in the case of hogs, the inventory during the period of July 15 to August 15, 2018. During the first payment period (announced by USDA on September 27), MFP payments were set equal to the announced MFP payment rate times 50% of a producer's harvested (and certified) production. The second payment rate (announced on December 17) applied to the remaining 50% of the producer's production. The MFP is separate from and in addition to the current safety net support provided by the Agricultural Risk Coverage (ARC) and Price Loss Coverage (PLC) support programs or crop insurance coverage where revenue insurance protects against low prices, low yields, or a combination of both. Furthermore, by coupling the payments directly to production, those regions of the country where drought or other yield-reducing factors have negatively impacted production during 2018 may receive less aid through MFP than other regions. According to USDA, as of February 7, 2019, $6.4 billion in payments have been made to farmers. FSA offices closed on December 28, 2018, due to a lack of funding under the government shutdown. Producers who have not yet applied for payments or certified their 2018 production must wait for FSA offices to reopen before receiving MFP payments. However, USDA has said that producers that have already applied and certified their 2018 production will continue to receive MFP payments during the government shutdown. MFP Payment Limit USDA announced that MFP payments are capped on a per-person or per-legal-entity basis under three separate payment limits: a combined $125,000 for eligible crops (corn, cotton, sorghum, soybeans, and wheat), a combined $125,000 for livestock (dairy production and hogs), and a combined $125,000 for eligible specialty crops (fresh sweet cherries and shelled almonds). Furthermore, MFP payments do not count against other 2014 farm bill payment limitations. There are no criteria in place to calculate whether losses covered under revenue support programs (e.g., ARC and PLC) of the 2014 farm bill might be duplicated by MFP. As a result, the same program acres that are eligible for ARC or PLC payments may be eligible for MFP payments. WTO Compliance of Trade Retaliation Assistance Payments Due to its potential price tag ($12 billion) and the coupled nature of the MFP payments, there is considerable interest from policymakers and market observers about whether these payments will be fully compliant with World Trade Organization (WTO) commitments. It would appear that, if the United States restricts MFP payments to $12 billion or less, and its other amber box payments adhere to the recent annual average of $4.9 billion since 2010, then total U.S. amber box payments would be below its $19.1 billion limit on trade-distorting farm subsidies at the WTO. However, several economists have suggested there is considerable uncertainty in how much the eventual MFP payments will be. For example, Darci Vetter, former chief U.S. agricultural negotiator at the Office of the U.S. Trade Representative, said that current low agricultural commodity prices cause her to worry that billions of dollars in "additional payments will put us over our [amber box] $19 billion cap," exposing the United States to a potential legal challenge. Joe Glauber, a former USDA chief economist, stated, "I would be very hesitant to say categorically, 'No, we're not going to hit our $19.1 [billion ceiling].'" Industry Response to MFP Payment Allocation While soybean growers and most farm-advocacy groups have generally been supportive of the payments, some commodity groups—most notably associations representing corn, wheat, and milk—contend that the MFP payments are insufficient to fully compensate their industries (see Table A-4 and Appendix B for a comparison of "trade loss" and "market loss"). The National Corn Growers Association claims that recent trade disputes have lowered corn prices by $0.44/bu. for a loss of $6.3 billion on the projected 2018 harvest. Similarly, the National Association of Wheat Growers estimates that a $0.75/bu. price decrease will result in nearly $2.5 billion in lost value, while the National Milk Producers Federation calculates that milk prices are now estimated to be $1.10/cwt. lower than just prior to the trade retaliation, causing over $1.2 billion in losses based on milk futures prices. Many specialty crop groups similarly contend that their interests are not being fully compensated for tariff-related export losses by the USDA trade aid programs. For example, a recent study suggests that, in California alone, specialty crops may suffer trade-related losses of over $3.3 billion this year. Food Purchase and Distribution Program The Administration is allocating about $1.2 billion of its trade aid package to purchasing various agricultural commodities and distributing them through domestic nutrition assistance programs. USDA typically purchases agricultural commodities for domestic distribution in two ways: (1) "entitlement purchases" for the mandated, preplanned needs of a feeding program; and (2) "contingency purchases" (also called "bonus buys") that are usually triggered as a surplus removal mechanism to raise market prices of a commodity without displacing normal demand. The new $1.2 billion of purchases is under the second category of contingency purchases. Contingency purchases are statutorily authorized under the Secretary's discretion to support agriculture by making purchases under the CCC or Section 32 as discussed above. These are mandatory funds and do not need to be appropriated. When USDA purchases commodities, especially for distribution to nutrition assistance programs, the Agricultural Marketing Service (AMS) announces its purchasing intentions with product specifications. Vendors who are approved to sell to USDA may submit offers. The purchased products would be distributed through regular USDA nutrition assistance channels that provide in-kind assistance, such as food banks participating in the Emergency Food Assistance Program, the Commodity Supplemental Food Program, child nutrition programs such as the National School Lunch Program, and the Food Distribution Program on Indian Reservations. However, not all of these programs have the authority to accept contingency/bonus purchases. The Administration's August 27 announcement listed 29 commodities targeted for purchases totaling $1.2 billion ( Table A-1 ). It also mentions two additional commodities (sweet cherries and almonds) that total $175 million, with program details to be determined ( Table A-2 ). The announced purchase values were set for each affected commodity using the same gross trade damage formula that was used to calculate the MFP per-unit payment rate described earlier. The largest purchases that were announced include pork ($559 million), apples ($93 million), dairy ($85 million), and pistachios ($85 million). USDA said that the breadth of commodities and scale of purchases was based on economic analyses of the effect of tariffs. Purchasing orders and distribution activities are to be adjusted based on the demand by the recipient food assistance programs geographically. As of December 17, 2018, USDA had procured some portion of 16 of the 29 commodities included in the program, totaling more than 4,500 truckloads of food. USDA's AMS will continue purchasing commodities for delivery throughout 2019. In FY2017, the AMS purchased $2.2 billion of commodities for distribution for domestic nutrition assistance. Of this total, $735 million was from Section 32 ($270 million in contingency purchases that are most similar to those under the trade aid package and $465 million in entitlement purchases), and $1.5 billion was entitlement purchases from the USDA's Food and Nutrition Service budget. No purchases were made with CCC funds. Thus, the new program of contingency purchases is several times larger than a typical annual amount and a relatively large increase in the amount distributed through nutrition programs. Agricultural Trade Promotion Program The third and smallest element of the trade aid package is the ATP program. The Administration is allocating $200 million of the trade aid package to boost trade promotion efforts of USDA's Foreign Agricultural Service (FAS). The program is to operate in a manner similar to FAS's Market Access Program (MAP) and Foreign Market Development Program (FMDP). These funds are to provide cost-share assistance to eligible U.S. agricultural organizations to promote U.S. food and agricultural goods overseas and develop new markets to help offset the adverse effects of the retaliatory tariffs. The money—which would nearly double the amounts made available annually for the MAP and FMDP trade promotion programs for one year—can be used for such activities as consumer advertising, public relations, point-of-sale demonstrations, participation in trade fairs and exhibits, market research, and technical assistance. Further, ATP money is not limited to certain commodities and is to be available to all sectors of agriculture. While the $200 million for ATP is considerably less than the other programs in the trade aid package, it is a notable increase for USDA's trade promotion programs, which are authorized at $234 million annually. Though all sectors of agriculture can apply for ATP funding through eligible U.S. organizations, it is unclear whether USDA intends to give preference to certain commodities—such as those that are not eligible for other programs under the trade aid package or those most impacted by the tariffs. The application period for ATP closed in November 2018 with more than $600 million in requested activities from more than 70 organizations. On January 31, 2019, USDA's FAS announced the full $200 million in ATP funding awards. Conclusion 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. Using this authority is not without precedent, but the scope and scale of its use for the trade aid package has increased congressional and public interest. USDA has declared this trade aid package to be a temporary, one-time response to foreign tariffs imposed on selected U.S. commodities. 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 begun to question the equity of the distribution of MFP payments due to difficulties in isolating specific market effects and the initial lack of transparency around the formulas for determining MFP payment rates. Now that the formulas are public, several commodity groups question the rationale for determining MFP payments based on "trade damage" rather than the broader "market loss" measure. Some trade economists and market watchers have suggested that the potential effects of the trade aid package and the imposition of tariffs and retaliatory tariffs could be longer lasting because they have created uncertainty about U.S. trade policy behavior and have called into question U.S. reliability as a trading partner. Further, the use of CCC authority to mitigate tariff-related losses may establish a precedent for future situations. Appendix A. Food Purchases in the Trade Aid Package Appendix B. Trade Loss versus Opportunity Cost USDA has elected to base MFP payments strictly on estimated trade loss. In contrast, several commodity groups have calculated the "lost market value" and view it as a better measure of the economic damage from the retaliatory tariffs (see " Industry Response to MFP Payment Allocation "). These two "loss" measures are described here. Trade Loss Trade loss is the value of lost export sales due to a change in foreign demand ( Table A-3 ). With respect to retaliatory tariffs, it is the difference in U.S. agricultural exports with and without the tariffs. It also appears in USDA export forecasts. For example, in May 2018, USDA forecast U.S. agricultural export sales to China for FY2018 of $21.6 billion; by August 2018, USDA had revised its forecast down to $19 billion and initially projected agricultural export sales to China in FY2019 of only $12 billion. Thus, from May to August the U.S. agricultural export outlook to China had declined by $2 billion, while the FY2019 forecast had fallen by as much as $9 billion. Lost Market Value (or the Opportunity Cost of Missed Sales) Lost market value describes the opportunity cost of missed sales associated with a drop in market prices. For example, if soybean prices were $10.00 per bushel in March and $8.00 per bushel in October, the opportunity cost of not selling in March (whether from on-farm stocks or by forward contracting the crop in the field) but instead waiting to sell after harvest in October would be $2.00 per bushel. All physical quantities of a commodity available on the farm—including commodities in storage as well as in the field—are potentially subject to a missed sales opportunity. Furthermore, until the producer actually sells the commodity, the realized market value and true opportunity cost remain unknown. What Is the Correct Cost? If a trade dispute contributes to a drop in the market price of a commodity, then the associated "lost market value" would affect all quantities of the affected commodity, whether exported or used domestically. This appears to be the type of "loss" being measured by most U.S. commodity groups. However, the retaliatory tariffs are only one of a number of factors that influence market prices. In particular, the outlook for record U.S. soybean and near-record corn harvests in 2018 has likely had an important effect on pressuring market prices lower during the May to September period. This production effect should be excluded from any estimate of trade-based market loss. Changes in USDA's monthly price forecasts from May to September may provide an upper-bound estimate of the trade impacts ( Table A-4 ), since this period coincides with the escalating trade conflicts when the retaliatory tariffs were applied. However, they include the production effect and thus likely overstate any trade impact. According to USDA, during the May-September period, farm prices for MFP commodities declined 18% for soybeans, 8% for sorghum, and 8% for corn but rose 2% for wheat and 15% for cotton. At first glance, these price changes seem out of sync with the MFP payment rates. Sorghum could receive a payment rate that is nearly three times as large as its estimated price decline from May to September. In contrast, corn—which has experienced a price decline identical to sorghum—could receive a payment rate that amounts to 3% of the price decline that corn prices experienced over this same period. However, given the number of factors influencing market prices over this period, it may not be possible to establish with confidence what market prices would have been in the absence of the retaliatory tariffs. Any viable estimate would have to be generated from a global economic model featuring all major agricultural commodities that compete for land and other inputs in production; may substitute for each other in alternative uses; and captures the interactions of all relevant market factors such as policy, technology, and expected prices, production, and demand. For example, wheat and cotton are to receive per-unit MFP payment rates while experiencing an increase in farm prices during the May-September period. However, 2018 has been a year of poor international wheat harvests, and it could be that wheat prices might have moved to much higher levels in the absence of retaliatory tariffs.

In early 2018, the Trump Administration—citing concerns over national security and unfair trade practices—imposed increased tariffs on certain imported products in general and on U.S. imports from China in particular. Several of the affected foreign trading partners (including China) responded to the U.S. tariffs with their own retaliatory tariffs targeting various U.S. products, especially agricultural commodities. On July 24, 2018, Secretary of Agriculture Sonny Perdue announced that the U.S. Department of Agriculture (USDA) would be taking several temporary actions to assist farmers in response to trade damage from what the Administration has characterized as "unjustified retaliation." Specifically, the Secretary said that USDA would authorize up to $12 billion in financial assistance—referred to as a trade aid package—for certain agricultural commodities using Section 5 of the Commodity Credit Corporation (CCC) Charter Act (15 U.S.C. 714c). USDA intends for the trade aid package to provide short-term assistance in response to the ongoing trade disputes. However, the Secretary stated that there would not be further trade-related financial assistance beyond this $12 billion package. The aid package includes (1) a Market Facilitation Program (MFP) of direct payments (valued at up to $10 billion) to producers of soybeans, corn, cotton, sorghum, wheat, hogs, and dairy who are most affected by the trade retaliation (sweet cherries and almonds were added to this list in September); (2) a Food Purchase and Distribution Program to partially offset lost export sales of affected commodities ($1.2 billion); and (3) an Agricultural Trade Promotion (ATP) Program to expand foreign markets ($200 million). USDA's Farm Service Agency will administer the MFP by providing payments in two potential tranches: a first round announced on August 27, 2018, initially valued at $4.7 billion; and an equivalent-valued second round announced on December 17, 2018. However, producers need only sign up once for the MFP to be eligible for first and second payments. The sign-up period for soybeans, corn, cotton, sorghum, wheat, hogs, and dairy started September 4, 2018. The sign-up period for fresh sweet cherries and shelled almonds started on September 24. To be eligible, a producer must have an ownership share in the commodity, be actively engaged in farming, and be in compliance with adjusted gross income restrictions and conservation provisions. Eligible producers should apply after their harvest is complete. Initially, producers were given a deadline of January 15, 2019, to complete an application. However, USDA extended the deadline until February 14, 2018, due to the government shutdown. USDA used 2017 production data to estimate that approximately $9.6 billion would be distributed in MFP payments for corn, cotton, sorghum, soybeans, wheat, dairy, hogs, fresh sweet cherries, and shelled almonds, with over three-fourths ($7.3 billion) of MFP payments provided to soybean producers. MFP payments are capped on a per-person or per-legal-entity basis at a combined $125,000 for eligible crop commodities, a combined $125,000 for dairy production and hogs, and, separately, a combined $125,000 for fresh sweet cherries and shelled almonds. In addition to the MFP payments, the Administration announced a Food Purchase and Distribution Program that is to undertake $1.2 billion in government purchases of excess food supplies. USDA has targeted an initial 29 commodities for purchases and distribution through domestic nutrition assistance programs. Purchasing orders and distribution activities are to be adjusted based on the demand by the recipient food assistance programs geographically. The smallest piece of the trade aid package is an allocation of $200 million to the ATP to boost the trade promotion efforts at USDA's Foreign Agricultural Service, including foreign market development for affected agricultural products. On January 31, 2019, USDA awarded $200 million to 57 organizations through ATP. USDA's use of its discretionary authority under the CCC Charter Act to make direct payments without further congressional action has historically been somewhat intermittent and limited in its scale. While the use of this authority is not without precedent, the scope and scale of this trade aid package has increased congressional and public interest. Furthermore, the significant variation in the announced MFP payment rates for affected commodities has elicited questions about equitable treatment among affected commodities. On September 13, USDA released a description of its MFP payment methodology, which is based strictly on the estimated direct trade "damage"—that is, export losses resulting from retaliatory tariffs. Indirect effects—such as the decline in market prices and resultant "lost value" for many of the affected commodities—were not included in the payment calculation.