prompt_front: You are given two reports by the government agency.



Question: Write a one-page summary of the report 1.

Report 1: 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   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  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  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  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  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  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


Report 2:  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  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  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  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  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   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  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  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

ground_truth: The federal government collects various fees from businesses and households. Choosing to raise public funds via user fees, as opposed to other means such as taxes, has important administrative and economic consequences. Many fees stem from "business-like activities," in which the government provides a service or benefit in return for payment. For example, many national parks charge entry fees, which then help fund maintenance projects. Such fees and charges that result from voluntary choices, such as entering a national park, are distinguished from taxes—which stem from the government's sovereign power to compel payments. The Government Accountability Office (GAO) defines a user fee as a "fee assessed to users for goods or services provided by the federal government. User fees generally apply to federal programs or activities that provide special benefits to identifiable recipients above and beyond what is normally available to the public." User fees and charges have several advantages as a means of financing public activities. They are voluntary, they connect the burden of financing activities to those who directly benefit from them, and can help decentralize decisionmaking by bypassing centralized allocation of resources. Some have expressed concerns that user fee arrangements may bypass regular congressional scrutiny and dilute Congress's power of the purse. Collections of fees and charges may also be more sensitive to economic fluctuations, which could complicate financing of programs dependent on those revenue streams. Many user fees or charges are classified as offsetting collections, which are deposited into expenditure accounts. Offsetting collections can be used to offset agency spending and typically require no further congressional approval to use. Other fees and charges are classified as offsetting receipts, which are collected into revenue accounts and typically require congressional authorization to be spent. User fees and charges can be classified as discretionary or mandatory spending, depending on how they are legally authorized. The levels and administration of some fees are specified in detailed statutory text, while other fees are created under broader agency authorities. Certain agencies, such as the Food and Drug Administration (FDA), have increased their reliance on user fees in past decades. Some critics have raised concerns that increased reliance on user fees could shift incentives facing those agencies. Some legislative proposals, such as H.R. 850 introduced in the 115th Congress, would limit or eliminate most exceptions and require most fees and charges to be deposited in the U.S. Treasury General Fund. Congress could fund agencies and activities now funded in whole or in part via user fees directly through the annual appropriations process. Such proposals would mark a departure from past practice. Statutory text governing many fees has evolved over many years and involves substantive policy decisions, often related to the industry or programmatic concerns. A general change in funding from user fees and charges to annual appropriations would likely shift the division of responsibilities between authorizing committees and appropriations committees. Congress may also enhance its oversight of agencies reliant on user fees by requiring more timely and detailed financial reports as well as more precise and systematic explanations of linkages between those fees and associated programs. Congress could also ask for greater transparency in fiscal data. While the Office of Management and Budget (OMB) and the U.S. Treasury Bureau of the Fiscal Service provide extensive data on user fees and charges, it is difficult to conduct governmentwide analyses using publicly available sources. Congress could mandate more detailed and more easily accessed data on user fees and charges. Additional funding may be needed to develop the capacity to issue those data.

prompt_front: You are given two reports by the government agency.



Question: Write a one-page summary of the report 2.

Report 1: T he federal government collects various fees and other charges from businesses and households  Choosing to raise public funds via user fees, as opposed to other means such as taxes, has important administrative and economic consequences  Many fees stem from "business-like activities," in which the government provides a service or benefit in return for payment  For example, many n ational p arks charge entry fees , which then help fund maintenance projects  Some fees are closely tied to regulatory or judicial activities, such as filing or inspection fees, which stem from the federal government's sovereign powers  Other federal fees or charges are intragovernmental transactions that do not involve the public  For example, the Office of Personnel Management (OPM) charges other federal agencies fees to cover the cost of background investigations  For many federal agencies, fees or user charges amount to a minimal portion of budgetary resources  Other regulatory agencies, such as the Securities and Exchange Commission (SEC), the Federal Energy Regulatory Commission (FERC), the Patent and Trademark Office (PTO), and the Federal Trade Commission (FTC), are wholly or partially funded by user fees and other nontax receipts  User fees from the public accounted for $331 billion in FY2017, about a tenth of total federal receipts ( $3 32 trillion )  Fees and charges generally result from voluntary choices, such as entering a national park  By contrast, the collection of taxes ultimately relies on the government's sovereign power to compel payments  Fees may not be compulsory, but not paying them may make it impossible to carry out many activities legally  For instance, without paying passport application fees and obtaining a passport, people cannot fly to other countries  Nor can businesses issue securities without paying federal filing fees  The statutory basis for each particular fee or user charge varies in specificity and in the degree of discretion granted to the executive branch  For example, authorizing legislation might specify in detail how certain fees are imposed and how proceeds are used  In other cases, federal agencies rely on broader authorities to impose user fees  User fees have several advantages as a means of financing public activities  They are voluntary, they connect the burden of financing activities to those who directly benefit from them, and they can help decentralize decisionmaking by bypassing centralized allocation of resources  At times, proposals to raise fees may encounter less political resistance than proposals to raise an equivalent sum via taxes  On the other hand, the flow of user fees and charges may reflect fluctuations in economic conditions, which may complicate the financing of government operations  Some are also concerned that funding arrangements may bypass regular congressional scrutiny and dilute Congress's power of the purse  The Government Accountability Office (GAO) defines a user fee as a fee assessed to users for goods or services provided by the federal government  User fees generally apply to federal programs or activities that provide special benefits to identifiable recipients above and beyond what is normally available to the public  The Office of Management and Budget (OMB) defines the term user charge to include transactions not normally considered fees, such as land or asset sales  OMB's budget preparation documents state that user charges include not only proceeds from selling postage stamps, electricity, and Medicare Part B premiums, but also sales of assets and natural resources, among other categories  The federal government, which operates on a modified cash accounting basis, does not recognize in its budgetary accounts the loss of asset values when it sells assets or natural resources, as a private firm would using typical business accounting methods  For instance, if the government were to sell oil at a price of $60 per barrel that it bought at $120 per barrel, only the current revenues would be reflected in budget accounts  A private firm would normally adjust its balance sheet to reflect a loss  OMB designates whether each account receives collections associated with user charges, and that information is contained within OMB's MAX budget data system  OMB has not released data on those designations  The Budget Appendix that OMB issues annually, while not including information on that designation, does present detailed subaccount-level data that often indicate whether a federal program's budgetary resources rely on fee income  The format of the Budget Appendix, however, makes it an impractical source of data for government-wide research  As far as CRS can determine, a comprehensive and authoritative list of federal fees is not publicly available  Budget and financial documents from OMB and the U S  Treasury, however, do provide detailed information on offsetting collections and offsetting receipts—the budget categories that typically contain user fees and other charges—as well as information on budgetary accounts  In some cases, account descriptions clearly indicate an association with one or more fees  In other cases, however, whether or not an account receives fees is unclear  For example, an account might be labeled as miscellaneous receipts, or as fines, fees, and penalties  User fees classified as offsetting collections, which go into expenditure accounts, generally can be used without further congressional action  Offsetting collections, as the term suggests, typically count as offsets to spending when accounts are scored to check compliance with various budgetary controls  Scorekeeping is the process of measuring the budgetary effects of legislation  For example, the Budget Control Act of 2011 ( P L  112-25 ) imposed caps on specified categories of discretionary budget authority  When evaluating compliance with those caps, scorekeepers (CBO, OMB, and the b udget c ommittees) subtract offsetting collections from budget authority totals  User fees or charges are collected into the U S  Treasury General Fund or into special fund accounts  Offsetting receipts, which go into receipt accounts, typically require approval through appropriations acts  User fees can be classified as discretionary or mandatory spending, depending on how those fees are authorized  Some payments to the federal government, such as electromagnetic spectrum auction proceeds or offshore continental shelf oil and gas leases that are classified as undistributed offsetting receipts, do not offset spending of any agency, but are recorded as reducing the federal deficit  OMB provides a discussion of budget concepts related to offsetting receipts and offsetting collections, which include the bulk of user fees and charges in terms of dollar amounts, in the President's annual budget submission  More detailed supplementary tables that summarize collections of offsetting receipts and offsetting collections are also provided online  The U S  Treasury's Bureau of the Fiscal Service issues its annual Combined Statement that reports budget data for all federal agencies at an account level as well as detailed summaries of receipts, including user fees  The Monthly Treasury Statement and a quarterly statement of offsetting receipts provide data on an ongoing basis  As the Treasury's role and responsibilities differ from those of OMB, totals from Treasury sources may not coincide with data issued by OMB due to various budgetary reporting adjustments  GAO has analyzed the administration of various user fees and has set out some principles for the design of those fees   User fees, as noted above, can tie benefits enjoyed by households or firms—such as passports, access to national parks, or approvals to raise investment funds from the public—to payments that can help defray public costs of providing them  An economist's rule of thumb known as the benefit principle, which suggests linking the fiscal burden of publicly provided benefits to those who enjoy those benefits, can promote fairness and efficiency  For example, many would contend that those with the opportunity to travel abroad should shoulder more of the costs of reviewing passport applications and issuing documents than those who do not  Moreover, if fees are set at levels that match the incremental cost of providing benefits, then when an agency is called to expand its work—such as an uptick in demand for passports, park visits, or company registrations—then those fees could fund the needed extra resources  Matching fees to incremental costs, however, is difficult where demand is irregular or unpredictable  OMB guidelines on user fees outline aims similar to the benefit principle, mandating that federal agencies ensure that each service, sale, or use of Government goods or resources provided by an agency to specific recipients be self-sustaining; promote efficient allocation of the Nation's resources by establishing charges for special benefits provided to the recipient that are at least as great as costs to the Government of providing the special benefits; and allow the private sector to compete with the Government without disadvantage in supplying comparable services, resources, or goods where appropriate  OMB mandates that agencies review user fees every other year  OMB also encourages agencies seeking new authority to assess fees to "seek to remove restraints on user charges " In some cases, federal agencies and regulated industries negotiate over user fee levels and the improvements in federal regulatory operations supported in large part by those fees  For instance, pharmaceutical companies negotiate with the Food and Drug Administration (FDA) over fees charged to review drug applications  Over time, the scope of FDA activities supported in part by fees has expanded  Some contend that the FDA's increasing reliance on user fees has tilted the agency's priorities toward industry interests and away from consumer protection responsibilities  One 2005 analysis of the FDA drug review process found that approval times decreased after legislation expanded the agency's reliance on user fees, while it found no statistically significant evidence of a decrease in one proxy measure of drug safety  Federal agencies such as the Federal Energy Regulatory Commission (FERC) and the Nuclear Regulatory Commission (NRC) are largely supported from amounts paid by covered industries  The costs and benefits associated with many goods and services mainly involve buyers and sellers  For example, buying a stamp allows a correspondent to mail a letter, which leads the postal service to incur roughly similar costs  Others—at least to a first approximation—are not affected  For other goods, market or market-like transactions may impose costs or convey benefits on third parties  When prices paid by buyers or received by sellers do not reflect spillover costs or benefits to others, economic theory suggests levels of transactions will be inefficient, in the sense that alternative economic arrangements could make all participants—at least potentially—better off  The benefit principle is in some ways similar to the concept of Pigou taxation—that taxing goods linked to negative spillovers, such as pollution, can enhance economic efficiency by diminishing those spillovers  More generally, spillovers are costs borne or benefits enjoyed by one party due to activities of another party where no voluntary exchange or market transaction occurs  Conversely, subsidizing goods or services that provide beneficial spillovers can also increase economic efficiency  For instance, some justify federal tax subsidies to home ownership on the grounds that homeowners generate positive spillovers in their neighborhoods  Charges aimed at limiting negative spillovers are known as Pigou taxes, after the English economist who first articulated the concept  Pigou taxation provides a more narrowly based efficiency rationale for user fees that would limit negative spillovers  Moreover, administering an excise tax imposed on Pigou tax grounds—which would involve a private vendor collecting and remitting tax revenues—differs from user fees and charges collected directly by a government  Nonetheless, the same logic that raising the end-user price of goods linked to negative spillovers can enhance economic efficiency can be applied to the design of user fees  For instance, federal policymakers might choose to charge pharmaceutical companies application fees lower than the full cost of associated approval processes because introducing new drugs onto the market may have wider positive social benefits  The economic suitability of the benefit principle depends on whether the publicly provided benefit has meaningful spillover effects  For example, benefits generated by governments such as national defense or support for basic research are widely shared and thus, arguably, are appropriately supported by general taxation  By contrast, while the broader economy benefits from the ability of firms to raise capital in transparent and competitive markets, the chief beneficiary of having a security offering approved is the issuing firm  Similarly, a family visiting a federal park presumably benefits more than another family that stayed at home  Financing more of park maintenance through general taxation would thus involve an implicit subsidy from nonusers to users, something that reliance on user fees would mitigate  In other cases, the linkage between fees and benefits is not apparent  For example, a 2009 law ( Travel Promotion Act of 2009 , TPA; P L  111-145 ) imposed a $10 fee on most international air travelers from visa-waiver countries to fund tourism marketing initiatives   An exact match between the level of user fees and publicly provided benefits may be hard or impossible to determine in many situations  While public corporations operating on a largely commercial basis, such as the Tennessee Valley Authority, may set prices and fees much as a private firm would, many of the federal government's activities are within the public sector because past policymakers considered them to be closely associated with inherently governmental functions—such as providing security—or as services that the private sector would have had trouble providing, such as basic research  The U S  Postal Service sets rates to cover nearly all of its costs according to a 2006 statutory framework   Subsidized rates for certain classes of mail users, such as the blind, reflect adaptation of pricing schemes to broader social priorities  The proper boundaries between public, private, and nonprofit sectors, of course, is an ongoing concern of policymakers  In many cases, it is difficult to design fees, charges, or taxes that directly influence activities generating negative spillovers  For instance, cars and trucks generate air pollution as well as wear and tear on roadways  Excise taxes on gasoline and other fuels—if set at levels that approximate the costs of pollution and road wear—can motivate drivers to use roads less often when the total costs of driving, including pollution, road wear, and other costs, exceed the benefits of driving  Thus, excise taxes can be a way of using the price mechanism to induce individuals to make decisions that lead to more economically efficient outcomes  Setting excise taxes at levels that reflect all costs to third parties may involve complex estimates  For instance, while higher fuel usage implies greater use of roads and more production of air pollutants, several other factors complicate that linkage  Heavier vehicles may cause disproportionate damage to roads  Vehicles vary widely in fuel efficiency and in the volume of pollutants generated  In addition, driving also imposes congestion costs on other drivers, and those costs vary by location and time of day  One recent analysis estimated that fuel excise taxes addressed less than a third of the air-pollution-related efficiency losses  While excise taxes are a public finance instrument that is distinct from user fees and charges, similar complications may be encountered  In some cases, adopting new fiscal instruments—such as using road charges or tolls—may prove more effective tools in increasing efficiency  In the case of transportation policy, increased economic efficiency, depending on how consumers and policymakers respond, might manifest itself in some combination of higher after-tax incomes, greater provision of publicly provided goods, cleaner air, and less-congested highways  Changes in the design of some user fees or charges might also yield analogous efficiency improvements  Some observers have raised concerns that federal agencies that rely more heavily on user fees may put greater weight on the interests of those paying fees rather than the broader public interest  For instance, the U S  Patent and Trademark Office charges application and examination fees to those seeking to obtain a patent  Certainly, the applicant would be a central beneficiary of a patent, if granted, although many others—including other inventors, business competitors, and consumers—might also be significantly harmed or benefited  Some contend that the Patent Office's reliance on fees motivates it to approve invalid patents   Tying patent fees narrowly to the benefits obtained by the applicant, while overlooking wider spillover effects, might then result in poor decisions  Of course, nonfinancial policy instruments, such as applicable laws, regulations, or congressional oversight, may affect outcomes more directly  Administrative concerns may also play a role  In some cases, where the costs of collecting fees are high relative to the costs of providing public services, imposing user fees may be a suboptimal choice of funding  For instance, federal courts collect more in PACER fees (which provide access to court documents ) than is needed to maintain the underlying computer system , with excess fees being earmarked for other court improvements  Some argue that funding that system and other court improvements with general revenues would allow broader access to court filings and related public documents, which one proposal ( H R  6714 introduced in the 115 th Congress ) would have implemented  Charging access fees above incremental costs—which for electronic documents may be minimal—can limit access to public information  Eliminating PACER user fees , however, may require Congress to shift that fiscal burden elsewhere  Other policy concerns also may play a role  Ability to pay among households varies widely; a national park entrance fee that one family regarded as trivial might deter another family  Policymakers may also wish to express preferences for identifiable groups, such as the elderly, children, or veterans  The classification of fees, charges, taxes, and even negative loan subsidy amounts hinges on budget concepts outlined above along with scorekeeping rules and precedents  In some cases, the distinctions made to categorize a given receipt might seem arbitrary to some  For example, the Travel Promotion Act fees imposed on most international air travelers convey n o special benefit on them, but are not categorized a s tax es   Refundable biofuel tax credits are counted as negative taxes in budget documents rather than as subsidy outlays  Those distinctions, however, can affect the tax treatment of those receipts  For instance, a firm can generally deduct an excise tax from its gross revenues, but typically cannot deduct a fee  Some governments have instituted user fees to fill shortfalls in tax revenues  The economic burden of higher fees or charges might be less obvious and therefore subject to less resistance than broad-based taxes  For example, policymakers in several states have sought to avoid increases in general taxes by increasing fee revenues  That strategy may have two downsides  First, more narrowly focused fees set at higher levels could cause greater economic distortions than smaller taxes applied to a broader base  Second, more narrowly based fees might be less stable in economic downturns  To the extent that fees diverge from the incremental costs of publicly provided services, sudden fiscal adjustments might be required  If benefits from federal operations are distributed narrowly enough to justify financing them via user fees or charges, one might ask whether those activities should be carried out by the private sector  State and local governments and the federal government have privatized many services previously provided by government  Foreign governments have also privatized provision of goods and services once delivered by the public sector  Some activities, however, may involve inherently governmental responsibilities that would be difficult to devolve to the private sector  A 1997 GAO report noted that rigorous evaluations of cost savings of privatization initiatives at the state and local government level were not common  GAO also noted that privatization increased the need for oversight and evaluation, although some local officials deemed that the "weakest link" in privatization initiatives  Others note that while privatization may yield efficiency gains, it may also lead to policy or operational failure  Conflicts between executive branch agencies, which often have sought greater flexibility to use funds to respond to public priorities as they see them, and Congress, which has sought to defend its fiscal prerogatives and ability to set federal policy priorities, are long-standing  In 1849, Congress sought to bolster its powers of the purse by passing the Miscellaneous Receipts Act , which required all government revenues, aside from postal sales, to be deposited into the U S  Treasury "at as early a day as practicable, without any abatement or deduction on account of salary, fees, costs, charges, expenses, or claim of any description whatever…" Over time, Congress set out exceptions to the modern version of the Miscellaneous Receipts Act that let agencies charge user fees, accept gifts, and collect and retain fines and penalties within specified limits or as detailed in appropriations laws  Some legislative proposals, such as H R  850 (115 th Congress) , would eliminate most exceptions and require most fees and charges to be deposited in the U S  Treasury General Fund  Congress could fund agencies and activities directly through annual appropriations  Funding through lump-sum appropriations, as opposed to via user fees, however, might change incentives facing decisionmakers and could affect federal operations and programmatic outcomes  Congress could constrain agency discretion by requiring more user fee proceeds be either subject to annual appropriations or deposited in the U S  Treasury General Fund, although that may limit agencies' capacity to respond to new public demands and other changing conditions, as the Government Accountability Office (GAO) has noted   Some inspectors general and congressional committees have also called for tighter, more efficient, and more consistent financial management of user fee funds  During the mid-1980s, Congress, with GAO support, conducted a comprehensive review of so-called "backdoor spending"—an informal term for budget authority provided in laws other than appropriations acts—including spending supported by user fees, which was updated in 1996   A narrower follow-up in 2017 covering five agencies concluded that "all entities GAO examined have policies and procedures to manage and report on their permanent funding authorities," but that "some, however, could improve practices to manage funds and report information that facilitates oversight " Sweeping changes to the budgetary treatment of user fees, however, could add new pressures on the congressional appropriations process  Proposals to require that most fees be collected into the Treasury General Fund and that activities previously supported by those fees be funded by annual appropriations could create new demands on appropriations committees  Such proposals could also affect the division of responsibilities among authorizing committees and appropriations committees  Statutory texts governing many fees, including those noted above, have evolved over many years and involve substantive policy decisions, often related to industry or programmatic concerns  Congress may also enhance its oversight of agencies reliant on user fees by requiring more timely and detailed financial reports as well as more precise and systematic explanations of linkages between those fees and associated programs  OMB and Treasury issue extensive information on user fees and charges  Nonetheless, the format and level of detail of published data make it difficult to address some government-wide policy questions regarding user fees and charges  Congress could modify laws governing the President's budget submission (31 U S C  1105) to require OMB to release data that it collects on which budget accounts receive material amounts of user fee and user charge revenues  That could allow Congress to track and analyze user fees and charges more easily  In particular, it would also provide a means to distinguish discretionary and mandatory fees and charges, which could be useful in understanding the effects or constraints imposed by budget enforcement measures  That might provide Congress with a clearer view of its fiscal options when considering budgetary measures  Mandating that OMB or other agencies provide more data would probably require additional budgetary resources to cover costs of new personnel and capabilities  Congress can promote economic efficiency and an equitable sharing of public burdens by choosing appropriate means of financing federal operations  User fees and charges, as noted above, can help tie the costs of supporting specific federal operations with those who benefit from them  Even if closely regulated industries may find federal requirements, inspections, or approval processes burdensome, they also presumably benefit from the increased demand for their products that carry the imprimatur of explicit or implicit federal approval  Federal regulation and inspection operations, however, also serve broader interests of consumers, taxpayers, and related industries  To the extent that inherently governmental responsibilities motivate federal operations, the argument for using general revenues may be stronger  If benefits of federal actions are more narrowly distributed, the case for financing operations with user fees or charges may become stronger  Of course, the structure and administration of federal inspection and regulation plays a central role in enhancing efficiency and minimizing burdens borne relative to benefits enjoyed 


Report 2: The combination of growing supplies of liquefied natural gas (LNG) and new requirements for less polluting fuels in the international maritime shipping industry has heightened interest in LNG as a maritime fuel  For decades, LNG tanker ships have been capable of burning boil-off gas from their LNG cargoes as a secondary fuel  However, using LNG as a primary fuel is a relatively new endeavor; the first LNG-powered vessel—a Norwegian ferry—began service in 2000  Several aspects of LNG use in shipping may be of congressional interest  LNG as an engine, or "bunker," fuel potentially could help the United States reduce harmful air emissions, it could create a new market for domestic natural gas, and it could create economic opportunities in domestic shipbuilding  However, U S  ports would need specialized vessels and land-based infrastructure for LNG "bunkering" (vessel refueling) as well as appropriate regulatory oversight of the associated shipping and fueling operations  The storage, delivery, and use of LNG in shipping also has safety implications  These and other aspects of LNG bunkering may become legislative or oversight issues for Congress  One bill in the 115 th Congress, the Waterway LNG Parity Act of 2017 ( S  505 ), would have imposed excise taxes on LNG used by marine vessels on inland waterways  This report discusses impending International Maritime Organization (IMO) standards limiting the maximum sulfur content in shipping fuels, the market conditions in which LNG may compete to become a common bunker fuel for vessel operators, and the current status of LNG bunkering globally and in the United States  A broader discussion of oil market implications is outside the scope of this report  The IMO is the United Nations organization that negotiates standards for international shipping  Its standards limiting sulfur emissions from ships, adopted in 2008, have led vessel operators to consider alternatives to petroleum-based fuels to power their ships  In 1973, the IMO adopted the International Convention for the Prevention of Pollution from Ships (MARPOL)  Annex VI of the convention, which came into force in 2005, deals with air pollution from ships  The annex established limits on nitrogen oxide (NO x ) emissions and set a 4 5% limit on the allowable sulfur content in vessel fuels  In 2008, the IMO announced a timeline to reduce the maximum sulfur content in vessel fuels from 4 5% to 0 5% by January 1, 2020  Annex VI requires vessel operators to either use fuels containing less than 0 5% sulfur or install exhaust gas-cleaning systems ("scrubbers") to limit a vessel's sulfur oxide (SO x ) emissions to a level equivalent to the required sulfur limit  MARPOL is implemented in the United States through the Act to Prevent Pollution from Ships ()  The United States effectively ratified MARPOL Annex VI in 2008 when President Bush signed the Maritime Pollution Prevention Act ( P L  110-280 )  The act requires that the U S  Coast Guard and the Environmental Protection Agency (EPA) jointly enforce the Annex VI emissions standards  MARPOL's Annex VI requirements are codified at 40 C F R  §1043  They apply to U S -flagged ships wherever located and to foreign-flagged ships operating in U S  waters  In addition to its global sulfur standards, MARPOL Annex VI provides for the establishment of Emissions Control Areas (ECAs), which are waters close to coastlines where more stringent emissions controls may be imposed  The North American ECA limits the sulfur content of bunker fuel to 0 1% of total fuel weight, an even lower bar than that set by the IMO 2020 standards  This standard is enforced by Coast Guard and EPA in waters up to 200 miles from shore  Currently, most ships operating in the North American ECA meet the emissions requirements by switching to low-sulfur fuels once they enter ECA waters  The European Union also has an ECA with a 0 1% limit on sulfur in bunker fuels, and the Chinese government is considering putting the same standard in place  The IMO 2020 emissions requirement applies to vessels of 400 gross tons and over, which is estimated to cover about 110,000 vessels worldwide  However, analysts indicate that many of the smaller vessels in this group already burn low-sulfur fuel  Accounting for these smaller vessels, one estimate is that about 55,000 vessels currently burn high-sulfur fuel  Ship owners have two main options for meeting the emission requirements with existing engines: burn low-sulfur conventional fuel (or biofuels) or install scrubbers to clean their exhaust gases  Alternatively, ship owners may opt to install new LNG-fueled engines to comply with the IMO standard  The simplest option for vessel owners to comply with the IMO sulfur standards, and the one that appears most popular, is switching to low-sulfur fuel oils or distillate fuels  Although switching to low-sulfur fuels would increase fuel costs compared to conventional, high-sulfur fuels, it would require little or no upfront capital cost and would allow ocean carriers to use existing infrastructure to bunker ships at ports  Anticipating widespread adoption of this approach, many analysts predict that the implementation of the IMO 2020 regulations will drive up demand for low-sulfur fuel and, therefore, significantly increase its price above current levels  Such a trend could also reduce demand for high-sulfur fuels, increasing the price spread between low- and high-sulfur bunkers fuels  Switching to lower-sulfur fuel could increase fuel cost across the industry by up to $60 billion in 2020 for full compliance with the IMO standards  Moreover, while it may allow vessels to meet the existing IMO sulfur standards, low-sulfur fuel does not necessarily support compliance with potential future IMO emissions standards, especially with respect to greenhouse gases (GHGs) such as carbon dioxide (CO 2 ) discussed later in this report  Scrubbers are systems which remove sulfur from a vessel's engine exhaust emissions  A ship with a scrubber would be capable of meeting the IMO 2020 standard while using conventional high-sulfur fuel  Retrofitting a scrubber on an existing engine can cost several million dollars, however, before factoring in the lost revenue from taking the ship out of service for a month for the installation  Therefore, while using a scrubber will allow a ship to continue using (currently) cheaper high-sulfur fuel, it may take years to recover the initial investment  For example, one industry study estimates that, in the case of a typical tanker, a scrubber installation could cost $4 2 million with a payback time of approximately 4 8 years  Furthermore, scrubbers installed to capture sulfur emissions might have to be further refitted or replaced to comply with any future IMO standards for GHG emissions  The rate of scrubber adoption could affect the financial impacts of installing them in terms of fuel costs  Scrubbers ultimately offset some or all of their initial costs because they allow vessel operators to continue using relatively inexpensive high-sulfur fuel  However, the return on investment for scrubbers depends on the relative prices of high- and low-sulfur bunker fuels  The demand—and therefore, prices—for low-sulfur and high-sulfur fuels will be affected by how many vessels use the respective fuels under the IMO standards that take effect in 2020  For example, limited scrubber adoption could result in more vessels demanding more low-sulfur fuel oil, creating upward pressure on low-sulfur fuel prices  Under such a scenario, scrubbers would provide greater fuel cost savings for vessels that installed them  Alternatively, high-sulfur fuel could become more costly due to refinery production cutbacks (because shippers will not be allowed to burn it without scrubbers)  In this case, the economic benefits of scrubbers would be diminished  Given the uncertain fuel supply and demand dynamics, it is difficult for vessel operators to know how big the market distortions from scrubber installation could be or how many other operators may choose to install scrubbers  As of September 2018, there were approximately 660 ships retrofitted with scrubbers and over 600 ships under construction with plans to install scrubbers  By 2020, projecting additional construction orders, some analysts predict about 2,000 vessels could have scrubbers installed  However, even with higher demand for the technology, the ability of vessel owners to install scrubbers is constrained; analysts estimate that current maximum capacity for installing scrubbers is be between 300 to 500 ships per year  Another option for ship owners to comply with the IMO 2020 sulfur standards is to switch to engines that burn LNG as a bunker fuel  LNG-fueled vessels emit only trace amounts of sulfur oxides in their exhaust gases—well below even the 0 1% fuel-equivalent threshold in some of the ECA zones—so they would be fully compliant with the IMO standards  As a secondary benefit, using LNG as an engine fuel also would reduce particulate matter (PM) emissions relative to both high- and low-sulfur marine fuel oils  Furthermore, LNG vessels have the potential to emit less CO 2 than vessels running on conventional, petroleum-based fuels  However, LNG vessels would have the potential to result in more fugitive emissions of methane, another GHG, because methane is the primary component of natural gas, further discussed below  Installing an LNG-fueled engine can add around $5 million to the cost of a new ship  Retrofitting existing ships appears to be less desirable because of the extra space required for the larger fuel tanks (new ships can be designed with the larger fuel tanks)  The costs of retraining crews to work with LNG engines could also factor into a vessel operator's decision about switching to LNG  However, apart from their lower emissions, LNG-fueled engines may offset their capital costs with fuel cost advantages over engines burning petroleum-derived fuels  These savings would depend on the price spread between natural gas and fuel oil—which has been volatile in recent years  The likelihood that switching to LNG will produce long-term fuel costs savings relative to conventional fuels is, therefore, a critical consideration for many vessel owners  The 1920 Merchant Marine Act (known colloquially as the Jones Act) requires that vessels engaged in U S  domestic transport be built domestically  Many newly built domestic ships receive a federal loan guarantee under the Maritime Administration's so-called "Title XI" program  In 2014, the program was modified to include the use of "alternative energy technologies" to power ships as part of the relevant criteria in evaluating a loan application  The Maritime Administration counts LNG-fueled engines as an "alternative energy technology" and may be more likely to approve loan applications for ships with LNG-capable engines  Since the North American ECA was established in 2015, Jones Act coastal ship operators have taken steps to transition their fleets to use cleaner burning fuels, including LNG  The three Jones Act operators that ship dry goods to Alaska, Hawaii, and Puerto Rico have taken delivery or have ordered LNG-fueled and LNG-capable vessels from U S  shipyards in Philadelphia, PA, and Brownsville, TX  Harvey Gulf International has put into service five LNG-powered offshore supply vessels that service offshore oil rigs  Some Jones Act tanker operators that have recently built or ordered vessels have chosen to install LNG-ready engines while other operators have chosen to install scrubbers on their existing fleet  Ship engines and scrubbers for the Jones Act fleet do not have to be manufactured in the United States because they are not considered an integral part of the hull or superstructure of a ship  Seagoing barges, known as articulated tug barges, are also a significant portion of the domestic coastal fleet, especially for moving liquid cargoes  However, these vessels traditionally have burned lower-sulfur fuels and thus the ECA has not prompted fleet conversions  IMO fuel requirements do not apply to river barges operating on the nation's inland waterway system, although this fleet potentially could be a market for LNG as fuel  Bunkering vessels (small tankers with hoses for refueling ships) in U S  waters must also be Jones Act compliant  Barges are the predominant method for bunkering ships in U S  ports  An LNG bunkering vessel for the Port of Jacksonville—the first Jones Act-compliant LNG bunkering vessel to enter service in the United States—was built in 2017 by Conrad Shipyards in Orange, TX  Recent energy sector trends suggest that LNG may be cheaper in the long-run than petroleum-based, low-sulfur fuels  However, these price movements are correlated to some extent  Many existing long-term LNG contracts link LNG prices to oil prices (although such contract terms are on the decline), even in the spot market  Starting in 2008, the advent of shale natural gas production dramatically decreased natural gas prices in the United States  Natural gas spot prices in the United States at the Henry Hub—the largest U S  trading hub for natural gas—averaged around $3/MMBtu (million British Thermal Units) in 2018, about a quarter of the peak in average price a decade before, just prior to the shale gas boom ( Figure 1 )  Liquefying natural gas into LNG adds around $2/MMBtu to the production cost  Including additional producer charges and service costs would bring the total cost of LNG available at a U S  port (based on the 2018 average price in Figure 1 ) to approximately $6/MMBtu  Shipping of LNG from the United States to Asia or Europe adds from $1 to $2/MMBtu, so, based on the 2018 average cost in Figure 1 , LNG delivered to a port overseas would cost on the order of $7 to $8/MMbtu under long-term contracts, depending upon timing and location  Higher or lower prices could occur for specific long-term contracts and in the LNG spot market (i e , for individual cargoes), based on the location and the supply and demand balance at the time  In general, the U S  market will have the lowest-priced LNG  Northern Asia will have the highest LNG prices due to the region's comparative lack of pipeline gas supplies and its distance from LNG suppliers  Figure 2 compares LNG spot market prices in the Japan LNG market—the highest-priced LNG market—to spot prices for two common petroleum-based bunker fuels, low-sulfur gas oil and high-sulfur fuel oil  As the figure shows, over the last five years, Japan LNG generally has been cheaper than low-sulfur fuel and more expensive than high-sulfur fuel on an energy-equivalent basis (i e , per MMbtu)  However, Japan LNG and high-sulfur fuel prices converged in 2018  As the figure shows, spot prices for LNG deliveries to the Japan market fell below $6/MMBtu in 2016 from a high above $16/MMBtu in 2013  Likewise, low-sulfur gas oil prices have doubled, and high-sulfur fuel oil prices have tripled, since 2016  The volatility of the bunker fuel markets and the global LNG market lead to considerable unpredictability about the relative prices among fuels going forward  LNG may become increasingly price-competitive versus low-sulfur fuel as the 2020 IMO sulfur standards take effect  As discussed above, many analysts predict prices for low-sulfur gas oil, which are already higher than those for high-sulfur fuel oil, to increase significantly after 2020 due to a standards-driven rise in demand  Although fuel prices as shown in Figure 2 indicate favorable economics for LNG versus low-sulfur fuel, if prices for high-sulfur fuel oils collapse as some expect after the 2020 IMO regulations enter into force, it is possible that LNG could lose its price advantage over residual fuel oils  Likewise, the price spread between low-sulfur gasoil and high-sulfur fuel oil would increase, incentivizing more carriers to install scrubbers to capitalize on the savings in fuel costs by continuing to burn high-sulfur fuel  An additional complication is the variability of LNG prices by region  Many shipping lines are global operators seeking low-priced fuel worldwide, but unlike the global oil market, natural gas markets are regional  Because the price of LNG can vary significantly by region, the relative economics of LNG versus other bunker fuels would also vary by region  Another uncertainty in the market for LNG bunkering is the discrepancy between the spot price for traded LNG and the price for LNG sold as bunker fuel in ports  Added costs associated with marketing, storing and transporting LNG in bunkering operations (discussed below) would likely require ports to charge a rate for LNG bunker fuel above spot market prices  These additional overhead costs are likely to vary among ports  Before factoring in any effect of IMO standards on fuel prices, and assuming a favorable LNG-fuel oil price spread, it still could take years for the savings generated by using LNG to pay back the capital costs of switching fuels  Through May 2018, there were 122 LNG-powered vessels in operation and another 135 ordered or under construction  Many of the first LNG vessels delivered and ordered were Norwegian-flagged vessels, as the Norwegian government has subsidized LNG-fueled vessels with a "NO x Fund " The fund provides LNG-operated ships with an exemption from the country's tax on NO x emissions  As an alternative to committing to LNG as a fuel, some vessel owners may hedge their bets by opting to install "LNG-ready" engines, which can burn low-sulfur fuel oil currently, but are designed to make future LNG conversion easier  The number of LNG ships that may be in operation by 2030 is difficult to predict  First, as noted above, growth in LNG powered vessels is likely to be driven primarily by new builds rather than retrofits  However, the shipping industry has experienced nearly a decade of vessel overcapacity and slow growth  Weak growth in the shipping industry could result in slower growth in vessel orders overall and, therefore, fewer orders for LNG-powered vessels  Of new vessels ordered, or set to be delivered, in 2018 or after, 13 5% (by tonnage) are LNG-fueled—up from 1 4% in 2010  If this trend continues, demand for LNG from the shipping industry could still be relatively high, even if overall growth in the shipping industry remains slow  Because LNG bunkering infrastructure among global ports is currently limited, vessels that use large amounts of fuel and travel predictable routes—along which LNG is available—are the most suitable for LNG fuel  For this reason, cruise ships, vehicle ferries, and container ships initially may be the most likely vessel types to adopt LNG as bunker fuel  Order books have reflected this assessment: one quarter of all cruise ships on order by tonnage at the end of 2017 were LNG-powered  Likewise, a major container ship line, CMA CGM, recently announced that it was ordering nine extra-large container ships powered by LNG  The carrier stated that the fuel tanks will displace space for "just a few containers" and said it intends to refuel these ships just once on their round trip voyages between Asia and Europe  Conversely, LNG fuel adoption may be less likely for oil tankers  Half the global oil tanker fleet operates on the shipping spot market (also known as the "tramp" market), meaning that ship owners enter into contracts with cargo owners only for a single voyage  In this kind of trade, many oil tankers lack a consistent route  Having to limit spot contracts only to ports that may bunker LNG could reduce the arbitrage opportunities of tankers  Dry bulk cargo vessels (carrying grain, coal, and other commodities) also typically operate in the tramp market  LNG-powered vessels have lower direct exhaust emissions than comparable vessels using petroleum-derived fuels  However, the lifecycle—or "well-to-wake"—GHG emissions (especially of methane) and of volatile organic compound emissions from natural gas production, transportation, and liquefaction complicates the comparison  One study in 2015 concluded, "performing a ['well-to-wake'] GHG study on LNG used as a marine fuel is more complex than previously thought  Further studies are needed     to investigate this subject " A 2016 study found that the relative GHG emissions benefits of LNG versus conventional fuel oil on a "well-to-wake" basis was highly dependent upon fugitive methane emissions in the LNG supply chain  A 2017 study funded by NGVA Europe, an association which promotes the use of natural gas in vehicles and ships, concluded that LNG as a bunker fuel provides a 21% well-to-wake reduction in GHG emissions compared to convention fuel oil  Evaluating such studies is beyond the scope of this report, although they indicate uncertainty about environmental benefits of LNG fuel, which may require further examination  Despite concerns over lifecycle emissions from the natural gas supply chain, in the short term, ships that pair LNG engines with newer vessel designs could reduce onboard GHG emissions  However, whether these GHG emission reductions would be sufficient to meet the future standards could become another issue for ship owners  The IMO has set a provisional goal of reducing GHG emissions from ships by 50% by 2050  Depending upon the state of engine technology, LNG-fueled ships might become less viable if GHG limits were to be established well before 2050  Concerns about such GHG limits might lead to a decrease in orders of LNG-powered ships over time  Commercial vessels have a typical lifespan of over 20 years, so firms ordering new ships have to take into account compliance with potential standards issued decades in the future  If renewable fuels, such as biodiesel, become more available and cheaper in the coming decades, renewable fuel-powered ships may take over part of the market that LNG-powered ships could occupy  A key requirement for ocean carriers to adopt LNG as an engine fuel is the availability of LNG bunkering facilities  Because LNG is extremely cold (-260 °F) and volatile, LNG bunkering requires specialized infrastructure for supply, storage, and fuel delivery to vessels  Depending upon the specific circumstances, LNG bunkering could require transporting LNG to a port from an offsite liquefaction facility for temporary storage at the port, or building an LNG liquefaction terminal on site  Alternatively, LNG could be delivered from offsite facilities directly to vessels in port via truck or supply vessel ( Figure 3 )  Truck-to-vessel LNG bunkering, in particular, provides some fueling capabilities without large upfront capital investments  LNG tanker trucks could also bring LNG to a storage tank built on site at the port, which could then bunker the LNG to arriving ships via pipeline  Supplying LNG using tanker trucks in this way may face capacity limitations due to truck size, road limitations, or other logistical constraints, but it has been demonstrated as a viable approach to LNG bunkering at smaller scales  The predominant method of bunkering today with high-sulfur fuel is vessel to vessel, either by a tank barge or smaller tanker  The type of infrastructure needed to temporarily store (if needed) and deliver LNG within a given port would depend on the size and location of the port, as well as the types of vessels expected to bunker LNG  Truck to ship bunkering is best suited for supporting smaller and mid-sized vessels, such as ferries or offshore supply vessels (OSVs) that support offshore oil platforms  Liquefaction facilities built on site can provide the greatest capacity of any LNG bunkering option, for example, to provide fuel for large vessels in transoceanic trade  However, constructing small-scale liquefaction facilities to produce and deliver LNG on site requires considerable planning and significant capital investment, in one case on the order of $70 million for a mid-sized port  Each LNG bunkering option in Figure 3 may be a viable means to begin LNG bunkering service in a given port  However, ports may face practical constraints as bunkering increases in scale  For example, a container port of significant size typically has multiple terminals, so even with an on-site liquefaction facility, it may need additional infrastructure or supply vessels for moving LNG to other port locations where a cargo ship might be berthed  There may also be port capacity and timing constraints upon the movement of LNG bunkering barges trying to refuel multiple large vessels in various locations around a crowded port  To date, the LNG bunkering operations already in place or in development are comparatively small, but scale constraints could become a factor as LNG bunkering grows and might require additional bunkering-related port investments  Early adoption of LNG bunkering occurred in Europe, where the first sulfur ECAs were created in 2006 and 2007  Through Directive 2014/94/EU, the European Union requires that a core network of marine ports be able to provide LNG bunkering by December 2025 and that a core network of inland ports provide LNG bunkering by 2030  This mandate has been promoted, in part, with European Commission funds to support LNG bunkering infrastructure development  In addition, the European Maritime Safety Agency published regulatory guidance for LNG bunkering in 2018  Over 40 European coastal ports have LNG bunkering capability currently in operation—primarily at locations on the North Sea and the Baltic Sea, and in Spain, France, and Turkey  These locations include major port cities such as Rotterdam, Barcelona, Marseilles, and London  Another 50 LNG bunkering facilities at European ports are in development  LNG bunkering is also advancing in Asia, led by Singapore, the world's largest bunkering port  Singapore has agreed to provide $4 5 million to subsidize the construction of two LNG bunkering vessels  The Port of Singapore plans to source imported LNG at the adjacent Jurong Island LNG terminal, loading it into the bunkering vessels for ship-to-ship fueling of vessels in port  Singapore also has signed a memorandum of understanding with 10 other partners—including a Japanese Ministry and the Chinese Port of Ningbo-Zhoushan—to create a focus group aimed at promoting the adoption of LNG bunkering at ports around the world  In Japan, one consortium is implementing plans to begin vessel-to-vessel LNG bunkering at the Port of Keihin in Tokyo Bay by 2020  Japan's NYK line, a large ship owner, recently announced that it had reached an agreement with three Japanese utilities to add LNG bunkering to ports in Western Japan  Asian countries, together with Australia and the United Arab Emirates, currently have around 10 coastal ports offering LNG bunkering, with another 15 projects in development  Some LNG bunkering operations in Europe and Asia are associated with existing LNG marine terminals, which already have LNG storage and port infrastructure in place  However, many smaller operations—including most of the projects in development—employ trucking, dedicated bunkering vessels, on-site liquefaction, and other means to extend LNG availability beyond the ports with major LNG terminals  LNG bunkering is not so advanced in South America, although with nine operating LNG marine terminals (one for export), and another six in development, South America also could support significant LNG bunkering operations in the near future  LNG bunkering in the United States currently takes place in two locations—Jacksonville, FL, and Port Fourchon, LA—with a third bunkering facility under development in Tacoma, WA  The LNG facilities in these ports serve the relatively small U S -flag domestic market  Bunkering of LNG-fueled cruise ships also is planned for Port Canaveral, FL  However, ports in North America have significant potential to expand the nation's LNG bunkering capability  Jacksonville is the largest LNG bunkering operation at a U S  port  One bunkering facility at the port, developed by JAX LNG, initially began truck-to-ship refueling operations in 2016 for two LNG-capable container ships  (The LNG is sourced from a liquefaction plant in Macon, GA  ) In August 2018, upon delivery of the Clean Jacksonville bunker barge, the facility began to replace truck-to-ship bunkering with ship-to-ship bunkering  In the future, the barge plans to source LNG from a new, small-scale liquefaction plant which JAX LNG is currently constructing at the port  A second facility at Jacksonville's port, operated by Eagle LNG, provides LNG bunkering sourced from a liquefaction plant in West Jacksonville  Eagle LNG also is constructing an on-site liquefaction and vessel bunkering facility in another part of the port, expected to begin service in 2019  Taken together, the JAX LNG and Eagle LNG facilities is expected to establish Jacksonville as a significant LNG-bunkering location with the capability to serve not only the domestic fleet but larger international vessels as well  In 2015, Harvey Gulf International Marine (Harvey) began LNG bunkering operations in the Gulf of Mexico to fuel its small fleet of LNG-powered offshore supply vessels serving offshore oil rigs  Harvey has since constructed a $25 million facility at its existing terminal in Port Fourchon to store and bunker LNG sourced from liquefaction plants in Alabama and Texas  The facility can provide truck-to-ship bunkering services for LNG-fueled offshore supply vessels, tank barges, and other vessels  A Harvey subsidiary has ordered two LNG bunkering barges to enable ship-to-ship fueling in the future  Puget Sound Energy has proposed an LNG liquefaction and bunkering facility at the Port of Tacoma, WA  Vessels traveling between Washington and Alaska typically spend the entire journey within the 200-mile North America ECA  Consequently, vessel owners operating along these routes have been interested in LNG as bunker fuel  TOTE Maritime, for example, a ship owner involved in trade between Alaska and the lower 48 states, has begun the process of retrofitting the engines of two of its container ships to be LNG-compatible  The proposed Tacoma LNG facility would be capable of producing up to 500,000 gallons of LNG per day and would include an 8 million gallon storage tank  The facility would serve the dual purposes of providing fuel for LNG-powered vessels and providing peak-period natural gas supplies for the local gas utility system  Its total construction cost reportedly is expected to be $310 million  Community and environmental concerns have slowed the progress of the proposal, which is still under regulatory review  Puget Sound Energy originally planned to put the LNG facility into service in late 2019; however, permitting issues appear likely to delay its opening until 2020 or later—if it is eventually approved  Q-LNG Transport, a company 30% owned by Harvey, has placed orders for two LNG bunkering barges to provide ship-to-ship LNG fueling as well as "ship-to-shore transfers to small scale marine distribution infrastructure in the U S  Gulf of Mexico and abroad " Q-LNG's first barge initially is expected to provide fuel to new LNG-fueled cruise ships based in Port Canaveral (and, potentially, Miami), while service from its second barge is still uncommitted  Initial plans are for the LNG to be sourced from the Elba Island LNG import/export terminal near Savannah, GA—approximately 230 nautical miles away—although the company may seek to develop an on-site LNG storage facility in the future  As noted above, U S  LNG bunkering activities thus far have been limited to a handful of vessels in domestic trade and tourism  LNG bunkering for the much larger fleet of foreign-flag ships carrying U S  imports and exports is still to be developed  As in Europe and Asia, domestic ports located near major LNG import or export terminals may serve as anchors for expanded LNG bunkering operations  Figure 4 shows existing LNG import and export terminals in North America  LNG can be liquefied from pipeline natural gas (or imported natural gas) and stored in large quantities at these facilities  The LNG can then be bunkered on site or transported to bunkering facilities elsewhere in the region by truck, rail, or barge  As discussed above, the distance between Port Canaveral and Elba Island in Q-LNG's bunker sourcing plan is 230 nautical miles  Taking this distance as a measure of how far away LNG can be sourced and barged economically, it is possible to extrapolate which U S  ports are within reach of a potential supply of LNG for vessel bunkering  Table 1 lists the top 20 U S  container shipment ports in the United States and their proximity to existing LNG import/export terminals  Of these top 20 ports, 12 are less than 230 nautical miles from an operating LNG terminal  Distances between LNG terminals and the other East Coast ports are not much greater, suggesting that LNG for vessel bunkering could be within reach of every U S  port along the Eastern Seaboard and in the Gulf of Mexico  On the West Coast, the ports of Los Angeles and Long Beach—the two largest U S  ports—are relatively close to the Costa Azul LNG import terminal in Ensenada, MX  Seattle and Tacoma are far from Ensenada, but would be served by the proposed Tacoma LNG bunkering project, if constructed  LNG bunkering for Seattle and Tacoma alternatively could be sourced from an existing LNG port facility around 100 nautical miles north in Vancouver, BC, which is expanding to provide LNG bunkering services to international carriers  Alaska's existing LNG export terminal currently is inactive, but potentially could supply LNG bunker fuel in the Pacific Northwest as well  Although existing LNG import or export terminals in North America could supply LNG for regional bunkering operations, such activities would require additional investment for infrastructure such as LNG transfer facilities and bunker barges  CRS is not aware of any public announcements among the LNG terminals above to develop bunkering operations  However, at least one LNG terminal owner, Cheniere Energy, which operates LNG terminals in Louisiana and Texas, identifies vessel bunkering as one source of future LNG demand growth worldwide  The IMO adopted safety standards for ships using natural gas as a bunker fuel in 2015  The standards, which took effect in 2017, apply to all new ships and conversions of ships (except LNG tankers, which have their own standards)  The IMO standards address engine design, LNG storage tanks, distribution systems, and electrical systems  They also establish new training requirements for crews handling LNG and other low flashpoint fuels  As is the case for the sulfur standards, the IMO LNG safety standards apply to all IMO member nations, including the United States  In addition, a number of U S  federal agencies, especially the Coast Guard and the Federal Energy Regulatory Commission, have jurisdiction over specific aspects of domestic LNG storage infrastructure and bunkering operations  The Coast Guard has the most prominent role in LNG bunkering, given its general authority over port operations and waterborne shipping  In 2015, the Coast Guard issued two guidelines for the handling of LNG fuel and for waterfront facilities conducting bunkering operations  In 2017, the Coast Guard issued additional guidelines to Captains of the Port, the local Coast Guard officials responsible for port areas, for conducting safe LNG bunkering simultaneously with other port operations  The guidelines advise on quantitative risk assessment of facilities bunkering LNG, which allows Captains of the Port to assess the risks posed to crews and facilities  The Federal Energy Regulatory Commission (FERC) plays a role in LNG bunkering due to its jurisdiction over the siting of LNG import and export terminals under the Natural Gas Act of 1938  Specifically, FERC asserts approval authority over the place of entry and exit, siting, construction, and operation of new LNG terminals as well as modifications or extensions of existing LNG terminals  Notwithstanding this siting authority, FERC reportedly does not intend to assert jurisdiction over the permitting of LNG bunkering facilities, but it may require amendment of permits it has issued for LNG import or export terminals to account for bunkering operations added afterwards  In addition to the Coast Guard and FERC, other federal agencies may have jurisdiction over specific aspects of LNG bunkering operations in U S  ports under a range of statutory authorities  For example, the Pipeline and Hazardous Materials Safety Administration within the Department of Transportation regulates the safety of natural gas pipelines and certain associated LNG storage facilities (e g , peak-shaving plants)  LNG facilities also may need to comply with the Occupational Safety and Health Administration's regulations for Process Safety Management of Highly Hazardous Chemicals  Other federal agencies, including the Environmental Protection Agency, the U S  Army Corps of Engineers, and the Transportation Security Administration, may regulate other aspects of LNG bunkering projects  CRS is not aware of new regulations to date among these agencies specifically addressing LNG bunkering  World production of LNG has been rising rapidly over the last few years, driven by growth in the natural gas sector in new regions—especially Australia and the United States  According to one industry analysis ( Figure 5 ), global LNG supply is expected to increase from 300 to 400 million metric tons per annum (MMtpa) from 2017 to 2021 based on new LNG liquefaction projects already operating or under development  An additional 150 MMtpa appears likely to come online after that  Collectively, LNG supply from these new liquefaction projects could exceed projections of demand, which would put downward pressure on LNG prices  While increases in the global supply of LNG do not necessarily translate directly into an increase in LNG available for bunkering, such increases could provide options for LNG bunkering in more ports  Estimating potential demand for LNG in the maritime sector is complicated and uncertain  One study of future LNG demand for bunkering, specifically, projects that LNG-powered vessels in operation and under construction as of June 2018 will require between 1 2 and 3 0 MMt of LNG per year  The study's review of several LNG consumption forecasts in the maritime sector shows a consensus projection between 20 to 30 MMt per year by 2030  This level of demand growth implies an increase in LNG-powered vessel construction from the current rate of around 120 ships per year to between 400 and 600 new builds per year  If these levels were reached, they could create a significant new market for LNG suppliers  Assuming a Henry Hub spot market price of $4/MMBtu in 2030, the annual market for LNG in shipping could be worth $2 9 billion to $5 8 billion, before accounting for liquefaction and transportation charges  Some studies have projected the LNG bunkering market to be even larger and to grow more quickly  However, key variables—such as the prices of Henry Hub natural gas and crude oil, the number of new vessel orders, and the future costs of emissions technology—are notoriously hard to predict with accuracy  Thus, it is not assured that natural gas consumption in the maritime sector will absorb more than a small amount of the global liquefaction capacity in development  The IMO sulfur standards apply to ship owners globally, as does the development of new LNG supply and bunkering infrastructure  In addition to these factors, domestic LNG bunkering also may be influenced by considerations more specific to the United States  These considerations include growth of the U S  natural gas supply, domestic shipbuilding opportunities, and LNG safety and security  Because of its leading role in global natural gas production, the United States has a particular interest in any new source of natural gas demand  According to the Energy Information Administration, the United States has been the world's top producer of natural gas since 2009, when it surpassed Russia  In 2017, increases in production outstripped increases in domestic gas consumption, leading to the United States becoming a net exporter of natural gas for the first time in nearly 60 years  As discussed above, North America (primarily the United States) is expected to add the most new LNG production capacity through 2030 when including projects that are operating, under construction, and likely (according to investment analysts)  Past increases in U S  LNG exports were driven by greater throughput at the Sabine Pass LNG export terminal—the only operating U S  LNG export terminal in 2017  In March 2018, the Cove Point terminal in Maryland became the second operating U S  LNG export terminal  Four additional projects under construction or commissioning are set to nearly triple U S  liquefaction by the end of 2019  This increase in liquefaction capacity likely will motivate LNG producers to secure new buyers  Figure 6 shows estimated LNG prices for various locations around the world as of October 2018  As the figure shows, LNG prices are substantially lower in North America than in Asia, Europe, and South America  Even after adding $1 00 to $2 00/MMBtu to transport the LNG to overseas ports, LNG produced in the United States is globally competitive at these prices  If LNG from the new liquefaction capacity coming online can be produced and delivered with similar economics, the cost advantage may create an opportunity for U S  LNG in bunker supply  There are over 400 petroleum fuel bunkering ports in the world, but 60% of bunkering in recent years has happened in six countries: Singapore, the United States, China, the United Arab Emirates, South Korea, and the Netherlands  Of these countries, only the United States is a significant LNG producer  Therefore, the United States could be a favorable source of LNG for domestic bunkering and for bunkering at the other major ports  While the LNG industry historically has had a good safety record, there are unique safety risks associated with LNG in vessel operations  Leakage of LNG during LNG shipping or bunkering can pose several hazards  LNG is stored at temperatures below -162 °C (-260 °F), far below the -20°C at which the carbon steels typically used in shipbuilding become brittle  Consequently, extreme care must be taken to ensure that LNG does not drip or spill onto ship hulls or decking because it could lead to brittle fracture, seriously damaging a ship or bunkering barge  LNG spilled onto water can pose a more serious hazard as it will rapidly and continuously vaporize into natural gas, which could ignite  The resulting "pool fire" would spread as the LNG spill expands away from its source and continues evaporating  A pool fire is intense, far hotter and burning far more rapidly than oil or gasoline fires, and it cannot be extinguished; all the LNG must be consumed before it goes out  Because an LNG pool fire is so hot, its thermal radiation may injure people and damage vessels or property a considerable distance from the fire itself  Many experts agree that a large pool fire, especially on water, is the most serious LNG hazard  Leaks of boil-off gas (the small amount of LNG that vaporizes in storage) can also release natural gas into a port area and cause fires or explosions  Major releases of LNG from large LNG carriers would be most dangerous within 500 meters of the spill and would pose some risk at distances up to 1,600 meters from the spill  While a bunkering barge or a vessel using LNG for fuel contains far less LNG than large LNG carriers, LNG spills in bunkering operations could still be a significant concern  Risks associated with bunkering LNG are complicated in ports seeking to engage in "simultaneous operations" during the bunkering process  Simultaneous operations entail loading and unloading cargo and personnel from a ship, maintenance, and other logistical operations performed while a ship is bunkering  Accidents that occur during such operations (for example, the operation of heavy machinery near pipes transporting LNG) can result in a spill of LNG which can threaten workers positioned near the site of operations  LNG tankers, bunkering vessels, and land-based facilities could be vulnerable to terrorism  Bunkering tanks or vessels might be physically attacked to destroy the LNG they hold—and vessels might be commandeered for use as weapons against port or coastal targets  Potential terrorist attacks on LNG terminals or tankers in the United States have long been a key concern of the public and policymakers in the context of large scale LNG imports or exports because such attacks could cause catastrophic fires in ports and nearby populated areas  For example, a 2007 report by the Government Accountability Office stated that, "the ship-based supply chain for energy commodities," specifically including LNG, "remains threatened and vulnerable, and appropriate security throughout the chain is essential to ensure safe and efficient delivery " Affected communities and federal officials continue to express concern about the security risks of LNG  The potential risks from terrorism to LNG bunkering infrastructure may be different than those of larger LNG import or export operations due to smaller quantities of LNG involved, but the risks may become more widespread if LNG bunkering operations are established in more locations  The Maritime Transportation Security Act (MTSA, P L  107-295 ) and the International Ship and Port Facility Security Code give the Coast Guard far-ranging authority over the security of hazardous materials in maritime shipping  The Coast Guard has developed port security plans addressing how to deploy federal, state, and local resources to prevent terrorist attacks  Under the MTSA, the Coast Guard has assessed the overall vulnerability of marine vessels, their potential to transport terrorists or terror materials, and their use as potential weapons  The Coast Guard has employed these assessments to augment port security as necessary and to develop maritime security standards for LNG port facilities  The IMO's overall framework for controlling vessels emissions (MARPOL Annex VI) has been in place since 2005  While the United States, as an IMO member, is subject to the IMO's 2020 sulfur standards, the international standards apply equally to all parties and all vessels  The impacts of sulfur standards on bunker fuel have been an important consideration, but IMO member nations have agreed to the standards independent of any particular energy policies  Moreover, MARPOL Annex VI preceded the U S  shale gas boom, so commitment to that initial IMO framework could not have anticipated United States' current role as a dominant energy producer  Any changes within the international shipping fleet to install sulfur scrubbers, fuel engines with LNG, or switch to other low sulfur fuels, are being driven primarily by market forces in fuel supply, shipbuilding, and shipping—not by any particular push to favor one fuel over another  Nonetheless, given its particular status, the question arises whether the standards may create an economic opportunity for the United States, in energy or otherwise  More specifically, could international adoption of LNG as a bunker fuel create an important new market for U S  natural gas producers, shipbuilders, or infrastructure developers? As discussed above, depending upon the adoption of LNG bunkering in the global fleet, the LNG bunker fuel market could grow to several billion dollars by 2030  If U S  LNG producers were to supply a significant share of this market—on the strength of comparatively low LNG production costs—LNG bunkering could increase demand for U S  natural gas production, transportation, and liquefaction  Opportunities in LNG-related shipbuilding might be more limited, as most of this occurs overseas, with the exception of Jones Act vessels  In the latter case, demand for domestically-constructed LNG bunkering barges could be one significant area of economic growth  Engineering and construction firms could benefit from new opportunities to develop new port infrastructure for LNG storage and transfer  While likely limited in number, such port facilities could be complex, high value projects costing tens or hundreds of millions of dollars to complete  Such projects could create jobs in engineering, construction, and operation, which could be important to local communities  Although LNG bunkering could present the United States with new economic opportunities, it may pose challenges as well  Rising demand for LNG in the maritime sector could increase natural gas prices for domestic consumers  In addition to being the world's largest natural gas producer, as of 2018, the United States is also the world's largest producer of crude oil and the second largest bunkering hub  Consequently, while vessel conversion to LNG bunkering may increase demand for U S -produced natural gas, it could be partially offset by reduced demand for U S -produced crude oil or refined products  Exactly how changing demand in one sector could affect the other is unclear  Furthermore, while LNG can reduce pollutant emissions from vessels, emissions and environmental impacts from increased natural gas production and transportation could increase overall emissions  Much of the net environmental impact depends upon practices in the natural gas industry, which are the subject of ongoing study and debate  Although new LNG bunkering infrastructure can create jobs, as the Tacoma LNG projects shows, the construction of such port facilities can be controversial for reasons of safety, security, and environmental impact  Overarching the considerations above is uncertainty about how the global shipping fleet will adapt to the IMO sulfur standards over time  This uncertainty complicates decisions related to both private investment and public policy  LNG-fueled ships still account for only a fraction of the U S  and global fleets, and it may take several decades for significant benefits of LNG-powered vessels to be realized  It is also possible that alternative ship fuels, including biofuels, electric engines, and hybrid engines, will become more economically viable in coming years  Given the uncertainty surrounding the future of LNG as a ship fuel, it is hard to predict the potential benefits or costs that LNG bunkering may provide to the United States  Until now, the private sector has added LNG-fueled vessels to fleets in the United States in a piecemeal manner under existing federal statutes and regulation  Congress could encourage the growth of LNG bunkering by various means, such as providing tax incentives to support the construction of LNG bunkering facilities and vessels, addressing any statutory or regulatory barriers to bunkering facility siting or operations, and providing funding for technical support to domestic carriers seeking to adopt LNG technology  Alternatively, Congress could seek to encourage competing bunker fuel options, such as biofuels, by incentivizing them in similar ways  In addition, Congress could also affect growth in LNG bunkering through policies affecting the LNG industry or domestic shipping industry as a whole  Changes in federal regulation related to natural gas production, or changes to the Jones Act, for example, while not directed at LNG bunkering, could nonetheless affect its economics  Therefore, evaluating the potential implications on LNG bunkering of broader energy, environmental, or economic objectives may become an additional consideration in congressional oversight and legislative initiatives  If LNG bunkering expands significantly in U S  ports, Congress also may examine the adequacy of existing measures to ensure the safety and security of LNG vessels, storage, and related facilities 

ground_truth: The combination of growing liquefied natural gas (LNG) supplies and new requirements for less polluting fuels in the maritime shipping industry has heightened interest in LNG as a maritime fuel. The use of LNG as an engine ("bunker") fuel in shipping is also drawing attention from federal agencies and is beginning to emerge as an issue of interest in Congress. In 2008, the International Maritime Organization (IMO) announced a timeline to reduce the maximum sulfur content in vessel fuels to 0.5% by January 1, 2020. Annex VI of the International Convention for the Prevention of Pollution from Ships requires vessels to either use fuels containing less than 0.5% sulfur or install exhaust-cleaning systems ("scrubbers") to limit a vessel's airborne emissions of sulfur oxides to an equivalent level. An option for vessel operators to meet the IMO 2020 standards is to install LNG-fueled engines, which emit only trace amounts of sulfur. Adopting LNG engines requires more investment than installing scrubbers, but LNG-fueled engines may offset their capital costs with operating cost advantages over conventional fuels. Savings would depend on the price spread between LNG and fuel oil. Recent trends suggest that LNG may be cheaper in the long run than conventional fuels. LNG bunkering requires specialized infrastructure for supply, storage, and delivery to vessels. To date, the number of ports worldwide that have developed such infrastructure is limited, although growth in this area has accelerated. Early adoption of LNG bunkering is occurring in Europe where the European Union requires a core network of ports to provide LNG bunkering by 2030. LNG bunkering is also advancing in Asia, led by Singapore, the world's largest bunkering port. Asian countries, together with Australia and the United Arab Emirates, have about 10 coastal ports offering LNG bunkering, with another 15 projects in development. LNG bunkering in the United States currently takes place in Jacksonville, FL, and Port Fourchon, LA—with a third facility under development in Tacoma, WA. Bunkering of LNG-fueled cruise ships using barges also is planned for Port Canaveral, FL. The relative locations of other U.S. ports and operating LNG terminals suggest that LNG bunkering could be within reach of every port along the Eastern Seaboard and in the Gulf of Mexico. On the West Coast, the ports of Los Angeles and Long Beach, CA, are near the Costa Azul LNG terminal in Ensenada, MX. Seattle and Tacoma are adjacent to the proposed Tacoma LNG project. Since 2015, Jones Act coastal ship operators have taken steps to transition their fleets to use cleaner burning fuels, including LNG. Shippers of dry goods to Alaska, Hawaii, and Puerto Rico have taken delivery or have ordered LNG-fueled and LNG-capable vessels from U.S. shipyards in Philadelphia, PA, and Brownsville, TX. Another company operates five LNG-powered offshore supply vessels built in Gulfport, MS. Depending upon LNG conversions, the global LNG bunker fuel market could grow to several billion dollars by 2030. If U.S. LNG producers were to supply a significant share of this market—on the strength of comparatively low LNG production costs—LNG bunkering could increase demand for U.S. natural gas production, transportation, and liquefaction. Opportunities in LNG-related shipbuilding might be more limited, as most shipbuilding occurs overseas, although domestically-constructed LNG bunkering barges could be one area of economic growth. Finally, engineering and construction firms could benefit from new opportunities to develop port infrastructure for LNG storage and transfer. However, while vessel conversion to LNG fuel may increase demand for U.S.-produced natural gas, it partially could be offset by reduced demand for U.S.-produced crude oil or refined products. Furthermore, while LNG can reduce direct emissions from vessels, fugitive emissions and environmental impacts from natural gas production and transportation could reduce overall emissions benefits. While the LNG industry has experienced few accidents, the Coast Guard has been developing new standards to address unique safety and security risks associated with LNG in vessel operations. The overarching consideration about LNG bunkering in the United States is uncertainty about how the global shipping fleet will adapt to the IMO sulfur standards over time. This uncertainty complicates decisions related to both private investment and public policy. Although Congress has limited ability to influence global shipping, it could influence the growth of LNG bunkering through the tax code and regulation, or through policies affecting the LNG industry or domestic shipping industry as a whole. Evaluating the potential implications of LNG bunkering within the context of broader energy and environmental policies may become an additional consideration for Congress. If LNG bunkering expands significantly, Congress also may examine the adequacy of existing measures to ensure the safety and security of LNG vessels, storage, and related facilities.