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



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

Report 1: 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 


Report 2: Executive branch agencies are required to take various steps regarding improper payments under IPIA, as amended by IPERA and IPERIA, and related OMB guidance  The steps include the following: 1  reviewing all programs and activities and identifying those that may be susceptible to significant improper payments (commonly referred to as a risk assessment), 2  developing improper payment estimates for those programs and activities that the agency identified as being susceptible to significant improper payments, 3  analyzing the root causes of improper payments and developing corrective actions to reduce them for those programs and activities that the agency identified as being susceptible to significant improper payments, and 4  reporting on the results of addressing the foregoing requirements  Figure 1 lays out these steps, as well as the major components of developing an improper payment estimate  IPERA also directs executive branch agencies’ inspectors general to annually determine and report on whether their respective agencies complied with six criteria listed in the law  On an annual basis, agencies are required to develop improper payment estimates for programs that they consider susceptible to significant improper payments  This generally involves selecting a sample of program payments (or other items, such as invoices) and reviewing them in order to determine whether the relevant payments were proper  OMB guidance for developing improper payment estimates focuses on the statistical nature of the estimates and provides agencies with flexibility in developing their estimates  IPIA, as amended, provides the definition of “improper payment” with IPERIA further instructing OMB to issue guidance requiring agencies to include in the estimate all improper payments, regardless of whether those payments have been or are being recovered  OMB incorporated this requirement into Appendix C to Circular No  A-123, Requirements for Effective Estimation and Remediation of Improper Payments  In accordance with these relevant laws and OMB guidance, agencies must apply “improper payment” in the context of their programs when developing improper payment estimates  The 10 programs we reviewed serve a variety of purposes and are administered by various agencies across the federal government  Table 2 summarizes each of these programs  IPIA, as amended, requires agencies to develop statistically valid improper payment estimates or estimates that are otherwise appropriate using a methodology approved by the Director of OMB  The six agencies we reviewed reported using either statistically valid or alternative sampling approaches for the 10 selected programs, and some agencies reported additionally incorporating actual improper payment amounts into their estimates, as shown in table 3  If an agency is unable to produce a statistically valid improper payment estimate, it can use an alternative approach if approved by OMB  For example, the Department of Education (Education) reported using an alternative methodology for the Direct Loan program after conducting a cost-benefit analysis comparing use of a statistical and an alternative methodology  Similarly, the Department of Health and Human Services (HHS) reported using an alternative methodology for Medicaid to better manage resources needed to conduct the required reviews  In addition to their statistical approaches, two agencies reported incorporating actual improper payment amounts into the estimates for 2 of the programs we reviewed  Officials at the Department of Defense (DOD) stated that the agency calculates its Military Pay improper payment estimate by adding the amount of debts due to DOD entered into its financial system based on overpayments (i e , debts due to DOD by a recipient of an overpayment) identified during the fiscal year to a projected estimate of improper payments  Officials at the Office of Personnel Management (OPM) stated that the agency calculates its Retirement program improper payment estimate by adding the amount of debts due to OPM entered into its financial system based on overpayments (i e , debts due to OPM by a recipient of an overpayment) identified during the fiscal year to a projected estimate of underpayments  To implement their sampling approaches, agencies select a sample of data to test from a larger, specified population of data  For the six agencies we reviewed, data sampled varied by program and include payments, claims, tax returns, and pay accounts  For example, according to their policies and procedures DOD samples invoices related to payments made from 12 financial systems for Defense Finance and Accounting Service Commercial Pay, HHS samples medical claims for Medicare Fee-for-Service, and DOD samples pay accounts for Military Pay  Agencies subject specific data populations to sampling, which may not include all payments made for a program  Reasons for sampling exclusions varied across programs, as shown by the examples in table 4  Some of the selected agencies reported sampling multiple sets of data  For example, for its Direct Loan improper payment estimate, Education officials stated that the agency reviews Program Review Reports to identify improper payments in originations and also samples loan consolidation and refund payments  According to agency officials, Direct Loan origination, consolidation, and refund transactions carry different risks of improper payment  To estimate improper payments for fiscal year 2017, the six agencies we reviewed reported sampling and testing data that varied in age from calendar year 2013 to fiscal year 2017  Figure 2 shows the range of data used  OMB guidance states that to the extent possible, data used for estimating improper payments should coincide with the fiscal year being reported, but agencies may use a different 12-month reporting period with approval from OMB  OMB staff acknowledged there are costs and benefits to sampling newer or older data  OMB staff stated that although they review agencies’ sampling and estimation plans, they defer to the agencies regarding the appropriateness of the age of data used to estimate improper payments  OMB staff stated that they approve the timeframe of the data used in alternative methodologies as part of the approval of the methodology overall, whereas OMB silence provides tacit approval (i e , no communication to the agency) for statistically valid methodologies  After agencies determine what subsets of data and types of transactions to review, they generally test the data and calculate their improper payment estimates  Testing processes varied among the 10 programs, with some of the six agencies using processes designed specifically to estimate improper payments and others leveraging existing processes designed for other purposes  Some of the selected agencies reported using multiple testing processes and combining the results to develop a program’s improper payment estimate  For example, according to their policies and procedures the Direct Loan estimate comprises three component estimates for loan originations, consolidations, and refunds and the Medicaid estimate includes fee-for-service, managed care, and eligibility components  Table 5 summarizes the processes used by the six agencies we reviewed  Although agencies’ testing processes varied, most included steps to address aspects of eligibility of beneficiaries, goods, or services—a key component of determining the appropriateness of a payment—in their programs  For example, according to their policies and procedures for Medicare Fee-for-Service, reviewers examine the medical necessity, compliance with documentation requirements, and coding of services provided, among other things; for the Earned Income Tax Credit (EITC), auditors examine whether the taxpayer properly reported income and whether the taxpayer meets eligibility criteria, including income and qualifying child requirements, and auditors examine, among other things, whether the taxpayer is subject to a disallowance period on receiving EITC; for Medicaid, reviewers examine fee-for-service claims and managed care payments to determine the eligibility status of the beneficiary and the provider, as well as support for the medical necessity of fee-for- service claims, among other things; for Old-Age, Survivors, and Disability Insurance (OASDI), reviewers examine factors to support the beneficiary’s eligibility, including, among other things, citizenship, relationship (in the case of survivor benefits), and receipt of other government benefits; and although Education’s Direct Loan program reviews can vary in scope, they may include, among other things, steps to verify educational institution eligibility (such as licensing and accreditation) and student eligibility (such as enrollment status and satisfactory academic progress)  In contrast, per their policies and procedures, eligibility is not tested for DOD’s Military Pay or the overpayment component of OPM’s Retirement estimate  DOD Military Pay  DOD reported using the results of monthly payment reviews to calculate a projected improper payment amount for Military Pay  However, DOD’s policies and procedures do not require a review of servicemember eligibility for special pay or allowances as part of these monthly reviews  DOD’s Standard Operating Procedures (SOP) direct reviewers to recalculate payments to servicemembers solely based on the pay account data included in DOD systems (i e , to verify that components of servicemember pay were calculated appropriately)  DOD’s SOP does not direct reviewers to verify that servicemembers were eligible for special pay or allowances by verifying the information included in the pay account (such as pay grade) with supporting documentation  According to DOD officials, reviewers may investigate potential inconsistencies in pay account data identified during their reviews—which may include eligibility issues—but this process is not consistently performed or documented  According to DOD officials, an example of a potential inconsistency is when a servicemember receives jump pay (a hazard pay for parachute jumps) but is located at a site where no jump activity occurred  According to DOD officials, to help compensate for the limitations of its monthly reviews, DOD calculates the final reported Military Pay improper payment estimate by adding actual debts due to DOD (related to overpayments) identified during the year to the projected estimate of the monthly reviews  DOD identifies the actual overpayments through various methods, including other postpayment reviews and servicemember self- reporting  Standards for Internal Control in the Federal Government states that management should identify, analyze, and respond to risks related to achieving the defined objectives  DOD has acknowledged internal control deficiencies related to the Military Pay program, which—if addressed in improper payment testing—could have an impact on the program’s improper payment rate  However, these deficiencies were identified through other internal control reviews not related to estimating improper payments  For the purposes of estimating improper payments, DOD has not fully assessed the risks in its Military Pay program and evaluated whether its approach for estimating improper payments effectively addresses these risks  As a result, DOD’s process for estimating Military Pay improper payments may not reflect significant risks of improper payment in the program, specifically whether servicemembers are eligible for the special pay or allowances they receive, calling into question the improper payment estimate and its usefulness for developing effective corrective actions  OPM Retirement  OPM relies on its existing Quality Assurance (QA) process to estimate Retirement underpayments  The QA process is designed to determine whether new Retirement claims (i e , claims paid for the first time) have been adjudicated correctly  Therefore, only new Retirement claims are sampled and tested for accuracy  OPM applies historical results of QA testing to older claims; however, these historical results do not reflect any different risks of underpayment that the older claims may face  Although OPM’s QA process also produces an estimate of overpayments, the agency’s policies and procedures instead use actual debts due to OPM (related to overpayments) that were identified during the fiscal year as its overpayment amount (i e , the overpayment amount does not reflect any testing of Retirement payments to verify eligibility or accuracy)  These actual overpayments represent amounts that have been identified through various means, such as inspector general fraud referrals  OPM officials stated that the agency uses actual amounts because the QA estimate may overstate overpayments  However, the fiscal year 2016 QA overpayment estimate was lower than the actual amount of debts identified as due to OPM  Standards for Internal Control in the Federal Government states that management should identify, analyze, and respond to risks related to achieving the defined objectives  OPM has not fully assessed the risks of improper payments in its Retirement program—particularly related to the risk of underpayments in older claims and the risk of overpayments— and evaluated whether its approach for estimating improper payments effectively addresses these risks  As a result, OPM’s processes for estimating Retirement improper payments may not reflect significant risks of improper payment in the program, calling into question the improper payment estimate and its usefulness for developing effective corrective actions  OMB guidance  OMB issues guidance for agencies to implement various requirements of the improper payment laws  Specifically, OMB is required by IPERIA to issue guidance to set standards for agencies to follow in determining the underlying validity of sampled payments to ensure that amounts being billed, paid, or obligated for payment are proper  Although existing OMB guidance addresses requirements for sampling, it does not address how agencies test to identify improper payments, such as using a risk-based approach to help ensure that key risks of improper payments, like eligibility, are addressed through testing processes  Without such guidance, there is increased risk that agencies’ processes may not address key risks of improper payments in their programs—for example, the cases of DOD Military Pay and OPM Retirement described above—calling into question the improper payment estimates for such programs and their usefulness for developing effective corrective actions  According to OMB guidance, when an agency’s review is unable to determine whether a payment was proper because of insufficient or lack of documentation, the payment must be considered an improper payment  Among the six agencies and 10 programs we reviewed, treatment of insufficient documentation varied by program, as did the classification of these issues for root cause reporting in the AFRs  HHS’s programs were the only ones we reviewed that reported improper payments in the insufficient documentation root cause category for fiscal years 2016 or 2017, as shown in table 6  Some agencies stated that they report insufficient documentation in other root cause categories that they consider more appropriate  For example, Education officials stated that for the Direct Loan program, payments that lack sufficient supporting documentation may be placed in the “Administrative or Process Error Made by Other Party” root cause category  In these cases, a third party—such as a loan servicer—is unable to provide sufficient documentation supporting that the sampled payment was proper  OMB guidance states that in cases where the agency believes that more than one root cause category might be suitable, the agency should determine which category it believes to be the most appropriate  Additionally, some agencies stated that the “insufficient documentation” category was not always relevant when they recreated sampled cases to estimate a program’s improper payments  For example, according to officials, to complete an OASDI stewardship review of a sampled case, a Social Security Administration (SSA) quality reviewer reviews the documentation related to the original determination and then independently re-develops all factors of the payment and interviews the associated beneficiary  According to agency officials, insufficient documentation would not apply as all improper payments identified in the stewardship sample are supported by documentation and payment has been verified in all reviewed cases  As noted previously, the processes for estimating DOD Military Pay and OPM Retirement improper payments were limited, and these limitations may have an impact on the agencies’ ability to identify improper payments related to insufficient documentation  Treatment of cases of nonresponse  Some agencies contact outside entities—such as payees or beneficiaries—as part of their improper payment testing processes  Among the six agencies we reviewed, treatment of cases of nonresponse differed  For example: SSA officials stated that in cases where quality reviewers do not receive responses from OASDI beneficiaries they contact, they exclude the cases from review (unless the reviewer identifies an improper payment in the initial review that is completed prior to reaching out to the beneficiary)  For EITC improper payment estimation purposes, the Internal Revenue Service (IRS) stated that the agency does not consider the sampled payment associated with a nonresponse case to be proper or improper  It sets the sampling weight of nonresponse cases to zero and adjusts the sampling weights of respondents upward to account for the nonresponse cases  IRS’s methodology assumes nonresponse and response cases have an equal likelihood of improper payment  For Medicare Fee-for-Service and Medicaid, HHS’s policies and procedures consider payments associated with nonresponse cases to be improper  OMB guidance states that when an agency’s review is unable to discern whether a payment was proper as a result of insufficient or lack of documentation, this payment must be considered an improper payment  However, it does not specifically address the appropriate treatment of nonresponse cases for improper payment estimation purposes  As a result, without clearer guidance there is increased risk that agencies’ improper payment estimates may be understated and that estimates for similar programs may not be comparable  When agencies identify improper payments, they must determine the amount of the payment that was improperly made  The six agencies we reviewed generally reported using the definition of improper payment in relevant laws and OMB guidance to determine the amount of improper payments identified  OMB guidance provides agencies with instructions on how to calculate the amount of improper payments  However, when developing its improper payment estimate for EITC, IRS subtracted overpayments that were paid out and later recovered  By subtracting recovered overpayments, IRS excluded them from the EITC improper payment estimate  For 2013—the tax year used to produce the fiscal year 2017 improper payment estimate—IRS estimated that $1 2 billion in EITC overpayments would be recovered  IPERIA directed OMB to provide guidance that requires agencies to include all improper payments in their improper payment estimates, regardless of whether they have been or are being recovered  Although the OMB guidance was revised in October 2014 to implement this requirement, IRS has not updated its estimation methodology for EITC  By not updating its guidance and continuing to remove EITC overpayments that may be subsequently recovered, IRS is understating its improper payment estimate and potentially limits its ability to address these types of improper payments before they occur  Improper payments are a long-standing, significant problem in the federal government  Estimation of improper payments is key to understanding the extent of the problem and to developing effective corrective actions to address it  Among the six agencies we reviewed, processes to estimate improper payments in their programs varied, and certain differences in these processes may affect the quality of the resulting estimates and consequently these agencies’ efforts to reduce improper payments  Specifically, policies and procedures for DOD’s Military Pay and OPM’s Retirement programs’ improper payment estimation methodologies do not address certain key risks, like eligibility, in part because these agencies have not fully assessed their processes  Further, although OMB guidance addresses requirements for sampling, it does not address how agencies test to identify improper payments  Without such assessments and guidance, there is increased risk that agencies’ processes may not address key risks of improper payments in their programs, calling into question the improper payment estimates for such programs and their usefulness for developing effective corrective actions  Additionally, for agencies we reviewed that contact outside entities as part of their improper payment estimation processes, the treatment of cases of nonresponse varied  OMB guidance does not specifically address the appropriate treatment of nonresponse cases for improper payment estimation purposes  Without clearer guidance there is increased risk that agencies’ improper payment estimates may be understated and that estimates for similar programs may not be comparable  Finally, although IPERIA directed OMB to provide guidance that requires agencies to include all improper payments in their improper payment estimates, regardless of whether they have been or are being recovered, IRS has not updated its processes to reflect the change  By not updating its guidance and continuing to remove EITC overpayments that may be subsequently recovered, IRS is understating its improper payment estimate and potentially limits its ability to address these types of improper payments before they occur  We are making two recommendations to the Director of OMB that have government-wide implications and specific recommendations to DOD, OPM, and IRS regarding their programs included in this review  The Director of OMB should develop guidance on how agencies test to identify improper payments, such as using a risk-based approach to help ensure that key risks of improper payments, such as eligibility, are addressed through testing processes  (Recommendation 1) The Director of OMB should develop guidance clarifying the appropriate treatment of nonresponse cases during improper payment testing  (Recommendation 2) The Under Secretary of Defense (Comptroller) should assess the processes for estimating Military Pay improper payments to determine whether they effectively address key risks of improper payments— including eligibility for different types of pay and allowances—and take steps to update the processes to incorporate key risks that are not currently addressed  (Recommendation 3) The Director of OPM should assess the processes to estimate Retirement improper payments to determine whether they effectively address key risks of improper payments—including eligibility and whether older claims face different risks of improper payments than new claims—and take steps to update the processes to incorporate key risks that are not currently addressed  (Recommendation 4) The Commissioner of IRS should update IRS’s improper payment estimation methodology to not exclude recovered overpayments from its EITC improper payment estimate  (Recommendation 5) We provided a draft of this report for comment to OMB, DOD, Education, HHS, Treasury, OPM, SSA, and USDA  OMB provided oral comments, which are summarized below  OPM, DOD, and IRS provided written comments, which are reproduced in appendixes II through IV, respectively  Education, HHS, SSA, and USDA did not provide written comments on the draft report  In addition, HHS, IRS, OMB, OPM, and SSA provided technical comments, which we have incorporated, as appropriate  In oral comments provided on April 30, 2018, a Senior Policy Advisor in OMB’s Office of Federal Financial Management stated that OMB partially agreed with our first recommendation and agreed with our second recommendation  Regarding the first recommendation, the Senior Policy Advisor stated that OMB should not have to develop more specific guidance as each program and activity has its own risks  Instead, inspectors general are better equipped and positioned to review the sampling and estimation plans as part of their annual IPERA compliance audits and that agencies, their statisticians, and inspectors general should work out the best testing procedures for their agencies  OMB could provide suggestions during OMB’s annual town hall meeting related to improper payments for areas that inspectors general may consider  Although we agree that programs and activities may face different risks of improper payment, we continue to believe that guidance from OMB on how agencies test to identify improper payments—such as directing agencies to take a risk-based approach in developing their testing procedures—could help ensure that agencies address the specific risks they identify when developing improper payment estimates  Further, such guidance could also help ensure that testing processes are designed to address an agency’s identified risks before the estimate is developed, whereas an inspector general’s review—as well as related recommendations for improvement—would generally occur after the agency’s improper payment estimate had been developed and reported  Regarding the second recommendation, the Senior Policy Advisor noted that OMB plans to update its guidance to direct agencies to treat nonresponse cases as improper payments and to include a new category for tracking such cases  In its written comments, OPM partially concurred with our recommendation to assess the processes to estimate Retirement improper payments to determine whether they effectively address the key risks of improper payments  OPM agreed to conduct an audit of older claims to determine if they face different risks than new claims  However, OPM did not agree with the part of the recommendation to assess the risk of improper payments related to eligibility in the estimation process  OPM stated that eligibility is determined before annuity or survivor benefits are fully adjudicated  However, the objective of an improper payment estimate is to determine whether payments were made properly  To do so, an agency should determine whether the payee was eligible for the payment that was made, among other things  As such, we continue to believe that the recommendation—including the assessment of the risk of improper payments related to eligibility—is warranted  In their written comments, DOD and IRS both agreed with our recommendations directed to them and described the steps they plan to take to implement them  We are sending copies of this report to the appropriate congressional committees; the Secretaries of Agriculture, Defense, Education, Health and Human Services, and the Treasury; the Director of the Office of Personnel Management; the Administrator of the Social Security Administration; the Director of the Office of Management and Budget; and other interested parties  In addition, the report is available at no charge on the GAO website at http://www gao gov  If you or your staff have any questions about this report, please contact me at (202) 512-2623 or davisbh@gao gov  Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report  GAO staff who made key contributions to this report are listed in appendix V  Table 7 lists the fiscal year 2017 improper payment estimates by agency and program, as reported by agencies in their fiscal year 2017 agency financial reports and compiled on the Office of Management and Budget’s payment integrity website, paymentaccuracy gov  In addition to the contact named above, Phillip McIntyre (Assistant Director), James M  Healy (Auditor in Charge), Daniel Flavin, and Fabiola Torres made key contributions to this report 

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.

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



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

Report 1: The issue of executive discretion has been at the center of constitutional debates in liberal democracies throughout the twentieth century  How to balance a commitment to the rule of law with the exigencies of modern political and economic crises has engaged legislators and scholars in the United States and around the world  The United States Constitution is silent on questions of emergency power  As such, over the past two centuries, Congress and the President have answered those questions in varied and often ad hoc ways  In the eighteenth and nineteenth centuries, the answer was often for the President to act without congressional approval in a time of crisis, knowingly risking impeachment and personal civil liability  Congress claimed primacy over emergency action and would decide subsequently to either ratify the President's actions or indemnify the President for any civil liability  By the twentieth century, a new pattern had begun to emerge  Instead of retroactively judging an executive's extraordinary actions in a time of emergency, Congress created statutory bases permitting the President to declare a state of emergency and make use of extraordinary delegated powers  The expanding delegation of emergency powers to the executive and the increase of governing via emergency power by the executive has been a common trajectory among twentieth-century liberal democracies  As innovation has quickened the pace of social change and global crises, some legislatures have felt compelled to delegate to the executive, who traditional political theorists assumed could operate with greater "dispatch" than deliberate, future-oriented legislatures  Whether such actions subvert the rule of law or are a standard feature of healthy modern constitutional orders has been a subject of extensive debate  The International Emergency Economic Powers Act (IEEPA) is one such example of a twentieth-century delegation of emergency authority  One of 123 emergency statutes under the umbrella of the National Emergencies Act (NEA), IEEPA grants the President extensive power to regulate a variety of economic transactions during a state of emergency  Congress enacted IEEPA in 1977 to rein in the expansive emergency economic powers that it had been delegated to the President under the Trading with the Enemy Act (TWEA)  Nevertheless, some scholars argue that judicial and legislative actions subsequent to IEEPA's enactment have made it, like TWEA, a source of expansive and unchecked executive authority in the economic realm  Others, however, argue that Presidents often use IEEPA to implement the will of Congress either as directed by law or as encouraged by congressional activity  Until recently, there has been little congressional discussion of modifying either IEEPA or its umbrella statute, the NEA  Recent presidential actions, however, have drawn attention to presidential emergency powers under the NEA of which IEEPA is the most frequently used  Should Congress consider changing IEEPA, there are two issues that Congress may wish to address  The first pertains to how Congress has delegated its authority under IEEPA and its umbrella statute, the NEA  The second pertains to choices made in the Export Control Reform Act of 2018  The First World War (1914-1918) saw an unprecedented degree of economic mobilization  The executive departments of European governments began to regulate their economies with or without the support of their legislatures  The United States, in contrast, was in a privileged position relative to its allies in Europe  Separated by an ocean from Germany and Austria-Hungary, the United States was never under substantial threat of invasion  Rather than relying on the inherent powers of the presidency, or acting unconstitutionally and waiting for congressional ratification, President Wilson sought explicit pre-authorization for expansive new powers to meet the global crisis  Between 1916 and the end of 1917, Congress passed 22 statutes empowering the President to take control of private property for public use during the war  These statutes gave the President broad authority to control railroads, shipyards, cars, telegraph and telephone systems, water systems, and many other sectors of the American economy  TWEA was one of those 22 statutes  It granted to the executive an extraordinary degree of control over international trade, investment, migration, and communications between the United States and its enemies  TWEA defined "enemy" broadly and included "any individual, partnership, or other body of individuals [including corporations], of any nationality, resident within the territory     of any nation with which the United States is at war, or resident outside of the United States and doing business within such a territory     " The first four sections of the act granted the President extensive powers to limit trading or communication with, or transporting enemies (or their allies) of the United States  These sections also empowered the President to censor foreign communications and place extensive restrictions on enemy insurance or reinsurance companies  It was Section 5(b) of TWEA, however, that would form one of the central bases of presidential emergency economic power in the twentieth century  Section 5(b), as originally enacted, states: That the President may investigate, regulate, or prohibit, under such rules and regulations as he may prescribe, by means of licenses or otherwise, any transactions in foreign exchange, export or earmarkings of gold or silver coin or bullion or currency, transfers of credit in any form (other than credits relating solely to transactions to be executed wholly within the United States), and transfers of evidences of indebtedness or of the ownership of property between the United States and any foreign country, whether enemy, ally of enemy or otherwise, or between residents of one or more foreign countries, by any person within the United States; and he may require any such person engaged in any such transaction to furnish, under oath, complete information relative thereto, including the production of any books of account, contracts, letters or other papers, in connection therewith in the custody or control of such person, either before or after such transaction is completed  The statute gave the President exceptional control over private international economic transactions in times of war  While Congress terminated many of the war powers in 1921, TWEA was specifically exempted because the U S  Government had yet to dispose of a large amount of alien property in its custody  The Great Depression, a massive global economic downturn that began in 1929, presented a challenge to liberal democracies in Europe and the Americas  To deal with the complexities presented by the crisis, nearly all such democracies began delegating discretionary authority to their executives to a degree that had only previously been done in times of war  The U S  Congress responded, in part, by dramatically expanding the scope of TWEA, delegating to the President the power to declare states of emergency in peacetime and assume expansive domestic economic powers  Such a delegation was made possible by analogizing economic crises to war  In public speeches about the crisis, President Franklin D  Roosevelt asserted that the Depression was to be "attacked," "fought against," "mobilized for," and "combatted" by "great arm[ies] of people " The economic mobilization of the First World War had blurred the lines between the executive's military and economic powers  As the Depression was likened to "armed strife" and declared to be "an emergency more serious than war" by a Justice of the Supreme Court, it became routine to use emergency economic legislation enacted in wartime as the basis for extraordinary economic authority in peacetime  As the Depression entered its third year, the newly-elected President Roosevelt sought from Congress "broad Executive power to wage a war against the emergency, as great as the power that would be given to me if we were in fact invaded by a foreign foe " In his first act as President, Roosevelt proclaimed a bank holiday, suspending all transactions at all banking institutions located in the United States and its territories for four days  In his proclamation, Roosevelt claimed to have authority to declare the holiday under Section 5(b) of TWEA  However, because the United States was not in a state of war and the suspended transactions were primarily domestic, the President's authority to issue such an order was dubious  Despite the tenuous legality, Congress ratified Roosevelt's actions by passing the Emergency Banking Relief Act three days after his proclamation  The act amended Section 5(b) of TWEA to read: During time of war or during any other period of national emergency declared by the President , the President may, through any agency that he may designate, or otherwise, investigate, regulate, or prohibit     This amendment gave the President the authority to declare that a national emergency existed and assume extensive controls over the national economy previously only available in times of war  By 1934, Roosevelt had used these extensive new powers to regulate "Every transaction in foreign exchange, transfer of credit between any banking institution within the United States and any banking institution outside of the United States " With America's entry into the Second World War in 1941, Congress again amended TWEA to grant the President extensive powers over the disposition of private property, adding the so-called "vesting" power, which authorized the permanent seizure of property  Now in its most expansive form, TWEA authorized the President to declare a national emergency and, in so doing, to regulate foreign exchange, domestic banking, possession of precious metals, and property in which any foreign country or foreign national had an interest  The Second World War ended in 1945  Following the conflict, the allied powers constructed institutions and signed agreements designed to keep the peace and to liberalize world trade  However, the United States did not immediately resume a peacetime posture with respect to emergency powers  Instead, the onset of the Cold War rationalized the continued use of TWEA and other emergency powers outside the context of a declared war  Over the next several decades, Presidents declared four national emergencies under Section 5(b) of TWEA and assumed expansive authority over economic transactions in the postwar period  During the Cold War, economic sanctions became an increasingly popular foreign policy and national security tool, and TWEA was a prominent source of presidential authority to use the tool  In 1950, President Harry S  Truman declared a national emergency, citing TWEA, to impose economic sanctions on North Korea and China  Subsequent Presidents referenced that national emergency as authority for imposing sanctions on Vietnam, Cuba, and Cambodia  Truman likewise used Section 5(b) of TWEA to maintain regulations on foreign exchange, transfers of credit, and the export of coin and currency that had been in place since the early 1930s  Presidents Richard M  Nixon and Gerald R  Ford invoked TWEA to continue export controls established under the Export Administration Act when the act expired  TWEA was also a prominent instrument of postwar presidential monetary policy  Presidents Dwight D  Eisenhower and John F  Kennedy used TWEA and the national emergency declared by President Roosevelt in 1933 to maintain and modify regulations controlling the hoarding and export of gold  In 1968, President Lyndon B  Johnson explicitly used Truman's 1950 declaration of emergency under Section 5(b) of TWEA to limit direct foreign investment by U S  companies in an effort to strengthen the balance of payments position of the United States after the devaluation of the pound sterling by the United Kingdom  In 1971, after President Nixon ended the convertibility of the U S  dollar to gold, effectively ending the postwar monetary order, he made use of Section 5(b) of TWEA to declare a state of emergency and place a 10% ad valorem supplemental duty on all dutiable goods entering the United States  The reliance by the executive on the powers granted by Section 5(b) of TWEA meant that postwar sanctions regimes and significant parts of U S  international monetary policy relied on continued states of emergency for their operation  By the mid-1970s, in the wake of U S  military involvement in Vietnam, revelations of domestic spying, assassinations of foreign political leaders, the Watergate break-in, and other related abuses of power, Congress increasingly focused on checking the executive branch  The Senate formed a bipartisan special committee chaired by Senators Frank Church and Charles Mathias to reevaluate the expansive delegations of emergency authority to the President  The special committee issued a report surveying the President's emergency powers in which it asserted that the United States had technically "been in a state of national emergency since March 9, 1933" and that there were four distinct declarations of national emergency in effect  The report also noted that the United States had "on the books at least 470 significant emergency statutes without time limitations delegating to the Executive extensive discretionary powers, ordinarily exercised by the Legislature, which affect the lives of American citizens in a host of all-encompassing ways " In the course of its investigations, Senator Mathias, committee co-chair, noted, "A majority of the people of the United States have lived all of their lives under emergency government " Senator Church, the other co-chair, said the central question before the committee was "whether it [was] possible for a democratic government such as ours to exist under its present Constitution and system of three separate branches equal in power under a continued state of emergency " Among the more controversial statutes highlighted by the committee was TWEA  In 1977, during the House markup of a bill revising TWEA, Representative Jonathan Bingham, Chairperson of the House International Relations Committee's Subcommittee on Economic Policy, described TWEA as conferring "on the President what could have been dictatorial powers that he could have used without any restraint by Congress " According to the Department of Justice, TWEA granted the President four major groups of powers in a time of war or other national emergency: (a) Regulatory powers with respect to foreign exchange, banking transfers, coin, bullion, currency, and securities; (b) Regulatory powers with respect to "any property in which any foreign country or a national thereof has any interest"; (c) The power to vest "any property or interest of any foreign country or national thereof"; and (d) The powers to hold, use, administer, liquidate, sell, or otherwise deal with "such interest or property" in the interest of and for the benefit of the United States  The House report on the reform legislation called TWEA "essentially an unlimited grant of authority for the President to exercise, at his discretion, broad powers in both the domestic and international economic arena, without congressional review " The criticisms of TWEA centered on the following: (a) It required no consultation or reports to Congress with regard to the use of powers or the declaration of a national emergency  (b) It set no time limits on a state of emergency, no mechanism for congressional review, and no way for Congress to terminate it  (c) It stated no limits on the scope of TWEA's economic powers and the circumstances under which such authority could be used  (d) The actions taken under the authority of TWEA were rarely related to the circumstances in which the national emergency was declared  In testimony before the House Committee on International Relations, Professor Harold G  Maier summed up the development and the main criticisms of TWEA: Section 5(b)'s effect is no longer confined to "emergency situations" in the sense of existing imminent danger  The continuing retroactive approval, either explicit or implicit, by Congress of broad executive interpretations of the scope of powers which it confers has converted the section into a general grant of legislative authority to the President…" Congress's reforms to emergency powers under TWEA came in two acts  First, Congress enacted the National Emergencies Act (NEA) in 1976  The NEA provided for the termination of all existing emergencies in 1978, except those making use of Section 5(b) of TWEA, and placed new restrictions on the manner of declaring and the duration of new states of emergency, including: Requiring the President to immediately transmit to Congress of the declaration of national emergency  Requiring a biannual review whereby "each House of Congress shall meet to consider a vote on a concurrent [now joint, see below] resolution to determine whether that emergency shall be terminated " Authorizing Congress to terminate the national emergency through a privileged concurrent [now joint] resolution  Second, Congress tackled the thornier question of TWEA  Because the authorities granted by TWEA were heavily entwined with postwar international monetary policy and the use of sanctions in U S  foreign policy, unwinding it was a difficult undertaking  The exclusion of Section 5(b) reflected congressional interest in preserving existing regulations regarding foreign assets, foreign funds, and exports of strategic goods  Similarly, establishing a means to continue existing uses of TWEA reflected congressional interest in "improving future use rather than remedying past abuses " The subcommittee charged with reforming TWEA spent more than a year preparing reports, including the first complete legislative history of TWEA, a tome that ran nearly 700 pages  In the resulting legislation, Congress did three things  First, Congress amended TWEA so that it was, as originally intended, only applicable "during a time of war " Second, Congress expanded the Export Administration Act to include powers that previously were authorized by reference to Section 5(b) of TWEA  Finally, Congress wrote the International Emergency Economic Powers Act (IEEPA) to confer "upon the President a new set of authorities for use in time of national emergency which are both more limited in scope than those of section 5(b) and subject to procedural limitations, including those of the [NEA] " The Report of the House Committee on International Relations summed up the nature of an "emergency" in their "new approach" to international emergency economic powers: [G]iven the breadth of the authorities, and their availability at the President's discretion upon a declaration of a national emergency, their exercise should be subject to various substantive restrictions  The main one stems from a recognition that emergencies are by their nature rare and brief, and are not to be equated with normal ongoing problems  A national emergency should be declared and emergency authorities employed only with respect to a specific set of circumstances which constitute a real emergency, and for no other purpose  The emergency should be terminated in a timely manner when the factual state of emergency is over and not continued in effect for use in other circumstances  A state of national emergency should not be a normal state of affairs  IEEPA, as currently amended, empowers the president to: (A) investigate, regulate, or prohibit: (i) any transactions in foreign exchange, (ii) transfers of credit or payments between, by, through, or to any banking institution, to the extent that such transfers or payments involve any interest of any foreign country or national thereof, (iii) the importing or exporting of currencies or securities; and (B) investigate, block during the pendency of an investigation, regulate, direct and compel, nullify, void, prevent or prohibit, any acquisition, holding, withholding, use, transfer, withdrawal, transportation, importation or exportation of, or dealing in, or exercising any right, power, or privilege with respect to, or transactions involving, any property in which any foreign country or a national thereof has any interest by any person, or with respect to any property, subject to the jurisdiction of the United States  (C) when the United States is engaged in armed hostilities or has been attacked by a foreign country or foreign nationals, confiscate any property, subject to the jurisdiction of the United States, of any foreign person, foreign organization, or foreign country that he determines has planned, authorized, aided, or engaged in such hostilities or attacks against the United States; and all right, title, and interest in any property so confiscated shall vest, when, as, and upon the terms directed by the President, in such agency or person as the President may designate from time to time, and upon such terms and conditions as the President may prescribe, such interest or property shall be held, used, administered, liquidated, sold, or otherwise dealt with in the interest of and for the benefit of the United States, and such designated agency or person may perform any and all acts incident to the accomplishment or furtherance of these purposes  These powers may be exercised "to deal with any unusual and extraordinary threat, which has its source in whole or substantial part outside the United States, to the national security, foreign policy, or economy of the United States, if the President declares a national emergency with respect to such threat " Presidents may invoke IEEPA under the procedures set forth in the NEA  When declaring a national emergency, the NEA requires that the President "immediately" transmit the proclamation declaring the emergency to Congress and publish it in the Federal Register   The President must also specify the provisions of law that he or she intends to use  In addition to the requirements of the NEA, IEEPA provides several further restrictions  Preliminarily, IEEPA requires that the President consult with Congress "in every possible instance" before exercising any of the authorities granted under IEEPA  Once the President declares a national emergency invoking IEEPA, he or she must immediately transmit a report to Congress specifying: (1) the circumstances which necessitate such exercise of authority; (2) why the President believes those circumstances constitute an unusual and extraordinary threat, which has its source in whole or substantial part outside the United States, to the national security, foreign policy, or economy of the United States; (3) the authorities to be exercised and the actions to be taken in the exercise of those authorities to deal with those circumstances; (4) why the President believes such actions are necessary to deal with those circumstances; and (5) any foreign countries with respect to which such actions are to be taken and why such actions are to be taken with respect to those countries  The President subsequently is to report on the actions taken under the IEEPA at least once in every succeeding six-month interval that the authorities are exercised  As per the NEA, the emergency may be terminated by the President, by a privileged joint resolution of Congress, or automatically if the President does not publish in the Federal Register and transmit to Congress a notice stating that such emergency is to continue in effect after such anniversary  Congress has amended IEEPA eight times ( Table 1 )  Five of the eight amendments have altered civil and criminal penalties for violations of orders issued under the statute  Other amendments excluded certain informational materials and expanded IEEPA's scope following the terrorist attacks of September 11, 2001  Congress also amended the NEA in response to a ruling by the Supreme Court to require a joint rather than a concurrent resolution to terminate a national emergency  As originally enacted, IEEPA protected the rights of U S  persons to participate in the exchange of "any postal, telegraphic, telephonic, or other personal communication, which does not involve a transfer of anything of value" with a foreign person otherwise subject to sanctions  Amendments in 1988 and 1994 updated this list of protected rights to include the exchange of published information in a variety of formats  The act currently protects the exchange of "information or informational materials, including but not limited to, publications, films, posters, phonograph records, photographs, microfilms, microfiche, tapes, compact disks, CD ROMs, artworks, and news wire feeds," provided such exchange is not otherwise controlled for national security or foreign policy reasons related to weapons proliferation or international terrorism  Unlike the Trading with the Enemy Act (TWEA), IEEPA did not allow the President to vest assets as originally acted  In 2001, at the request of George W  Bush Administration, Congress amended IEEPA as part of the USA PATRIOT Act to return to the President the authority to vest frozen assets, but only under certain circumstances:     the President may     when the United States is engaged in armed hostilities or has been attacked by a foreign country or foreign nationals, confiscate any property, subject to the jurisdiction of the United States, of any foreign person, foreign organization, or foreign country that [the President] determines has planned, authorized, aided, or engaged in such hostilities or attacks against the United States; and all right, title, and interest in any property so confiscated shall vest, when, as, and upon the terms directed by the President, in such agency or person as the President may designate from time to time, and upon such terms and conditions as the President may prescribe, such interest or property shall be held, used, administered, liquidated, sold, or otherwise dealt with in the interest of and for the benefit of the United States, and such designated agency or person may perform any and all acts incident to the accomplishment or furtherance of these purposes  Speaking about the efforts of intelligence and law enforcement agencies to identify and disrupt the flow of terrorist finances, Attorney General John Ashcroft told Congress: At present the President's powers are limited to freezing assets and blocking transactions with terrorist organizations  We need the capacity for more than a freeze  We must be able to seize  Doing business with terrorist organization must be a losing proposition  Terrorist financiers must pay a price for their support of terrorism, which kills innocent Americans  Consistent with the President's [issuance of E O  13224 ] and his statements [of September 24, 2001], our proposal gives law enforcement the ability to seize the terrorists' assets  Further, criminal liability is imposed on those who knowingly engage in financial transactions, money-laundering involving the proceeds of terrorist acts  The House Judiciary Committee report explaining the amendments described its purpose as follows: Section 203 of the International Emergency Economic Powers Act (50 U S C  § 1702) grants to the President the power to exercise certain authorities relating to commerce with foreign nations upon his determination that there exists an unusual and extraordinary threat to the United States  Under this authority, the President may, among other things, freeze certain foreign assets within the jurisdiction of the United States  A separate law, the Trading With the Enemy Act, authorizes the President to take title to enemy assets when Congress has declared war  Section 159 of this bill amends section 203 of the International Emergency Economic Powers Act to provide the President with authority similar to what he currently has under the Trading With the Enemy Act in circumstances where there has been an armed attack on the United States, or where Congress has enacted a law authorizing the President to use armed force against a foreign country, foreign organization, or foreign national  The proceeds of any foreign assets to which the President takes title under this authority must be placed in a segregated account can only be used in accordance with a statute authorizing the expenditure of such proceeds  Section 159 also makes a number of clarifying and technical changes to section 203 of the International Emergency Economic Powers Act, most of which will not change the way that provision currently is implemented  The government has apparently never employed the vesting power to seize Al Qaeda assets within the United States  Instead, the government has sought to confiscate them through forfeiture procedures  The first, and to date, apparently only, use of this power under IEEPA occurred on March 20, 2003  On that date, in Executive Order 13290, President George W  Bush ordered the blocked "property of the Government of Iraq and its agencies, instrumentalities, or controlled entities" to be vested "in the Department of the Treasury     [to] be used to assist the Iraqi people and to assist in the reconstruction of Iraq " However, the President's order excluded from confiscation Iraq's diplomatic and consular property, as well as assets that had, prior to March 20, 2003, been ordered attached in satisfaction of judgments against Iraq rendered pursuant to the terrorist suit provision of the Foreign Sovereign Immunities Act and § 201 of the Terrorism Risk Insurance Act (which reportedly totaled about $300 million)   A subsequent executive order blocked the property of former Iraqi officials and their families, vesting title of such blocked funds in the Department of the Treasury for transfer to the Development Fund for Iraq (DFI) to be "used to meet the humanitarian needs of the Iraqi people, for the economic reconstruction and repair of Iraq's infrastructure, for the continued disarmament of Iraq, for the cost of Iraqi civilian administration, and for other purposes benefitting of the Iraqi people " The DFI was established by UN Security Council Resolution 1483, which required member states to freeze all assets of the former Iraqi government and of Saddam Hussein, senior officials of his regime and their family members, and transfer such assets to the DFI, which was then administered by the United States  Most of the vested assets were used by the Coalition Provision Authority (CPA) for reconstruction projects and ministry operations  The USA PATRIOT Act made three other amendments to Section 203 of IEEPA  After the power to investigate, it added the power to block assets during the pendency of an investigation  It clarified that the type of interest in property subject to IEEPA is an "interest by any person, or with respect to any property, subject to the jurisdiction of the United States " It also added subsection (c), which provides: In any judicial review of a determination made under this section, if the determination was based on classified information (as defined in section 1(a) of the Classified Information Procedures Act) such information may be submitted to the reviewing court ex parte and in camera  This subsection does not confer or imply any right to judicial review  As described in the House Judiciary Committee report, these provisions were meant to clarify and codify existing practices  Like TWEA prior to its amendment in 1977, the President and Congress together have often turned to IEEPA to impose economic sanctions in furtherance of U S  foreign policy and national security objectives  While initially enacted to rein in presidential emergency authority, presidential emergency use of IEEPA has expanded in scale, scope, and frequency since the statute's enactment  The House report on IEEPA stated, "emergencies are by their nature rare and brief, and are not to be equated with normal, ongoing problems " National emergencies invoking IEEPA, however, have increased in frequency and length since its enactment  Since 1977, Presidents have invoked IEEPA in 54 declarations of national emergency  On average, these emergencies last nearly a decade  Most emergencies have been geographically specific, targeting a specific country or government  However, since 1990, Presidents have declared non-geographically-specific emergencies in response to issues like weapons proliferation, global terrorism, and malicious cyber-enabled activities  The erosion of geographic limitations has been accompanied by an expansion in the nature of the targets of sanctions issued under IEEPA authority  Originally, IEEPA was used to target foreign governments; however, Presidents have increasingly targeted groups and individuals  While Presidents usually make use of IEEPA as an emergency power, Congress has also directed the use of IEEPA or expressed its approval of presidential emergency use in several statutes  IEEPA is the most frequently cited emergency authority when the President invokes NEA authorities to declare a national emergency  ( Figure 1 )  Rather than referencing the same set of emergencies, as had been the case with TWEA, IEEPA has required the President to declare a national emergency for each independent use  As a result, the number of national emergencies declared under the terms of the NEA has proliferated over the past four decades  Presidents declared only four national emergencies under the auspices of TWEA in the four decades prior to IEEPA's enactment  In contrast, Presidents have invoked IEEPA in 54 of the 61 declarations of national emergency issued under the National Emergen cies Act  As of March 1, 2019, there were 32 ongoing national emergencies; all but three involved IEEPA  Each year since 1990, Presidents have issued roughly 4 5 executive orders citing IEEPA and declared 1 5 new national emergencies citing IEEPA  ( Figure 2 )  On average, emergencies invoking IEEPA last nearly a decade  The longest emergency was also the first  President Jimmy Carter, in response to the Iranian hostage crisis of 1979, declared the first national emergency under the provisions of the National Emergencies Act and invoked IEEPA  Six successive Presidents have renewed that emergency annually for nearly forty years  As of March 1, 2019, that emergency is still in effect, largely to provide a legal basis for resolving matters of ownership of the Shah's disputed assets  That initial emergency aside, the length of emergencies invoking IEEPA has increased each decade  The average length of an emergency invoking IEEPA declared in the 1980s was four years  That average extended to 10 years for emergencies declared in the 1990s and 11 years for emergencies declared in the 2000s ( Figure 3 )  As such, the number of ongoing national emergencies has grown nearly continuously since the enactment of IEEPA and the NEA ( Figure 4 )  Between January 1, 1979, and January 1, 2019, there were on average 14 ongoing national emergencies each year, 13 of which invoked IEEPA  In most cases, the declared emergencies citing IEEPA have been geographically specific ( Figure 5 )  For example, in the first use of IEEPA, President Jimmy Carter issued an executive order that both declared a national emergency with respect to the "situation in Iran" and "blocked all property and interests in property of the Government of Iran [   ] " Five months later, President Carter issued a second order dramatically expanding the scope of the first EO and effectively blocked the transfer of all goods, money, or credit destined for Iran by anyone subject to the jurisdiction of the United States  A further order expanded the coverage to block imports to the United States from Iran  Together, these orders touched upon virtually all economic contacts between any place or legal person subject to the jurisdiction of the United States and the territory and government of Iran  Many of the executive orders invoking IEEPA have followed this pattern of limiting the scope to a specific territory, government, or its nationals  Executive Order 12513, for example, prohibited "imports into the United States of goods and services of Nicaraguan origin" and "exports from the United States of goods to or destined for Nicaragua " The order likewise prohibited Nicaraguan air carriers and vessels of Nicaraguan registry from entering U S  ports  Executive Order 12532 prohibited various transactions with the "Government of South Africa or to entities owned or controlled by that Government " While the majority (38) of national emergencies invoking IEEPA have been geographically specific, ten have lacked explicit geographic limitations  President George H W  Bush declared the first geographically nonspecific emergency in response to the threat posed by the proliferation of chemical and biological weapons  Similarly, President George W  Bush declared a national emergency in response to the threat posed by "persons who commit, threaten to commit, or support terrorism " President Barack Obama declared emergencies to respond to the threats of "transnational criminal organizations" and "persons engaging in malicious cyber-enabled activities " Without explicit geographic limitations, these orders have included provisions that are global in scope  These geographically nonspecific emergencies have increased in frequency over the past 40 years—three of the ten have been declared since 2015  In addition to the erosion of geographic limitations, the stated motivations for declaring national emergencies have expanded in scope as well  Initially, stated rationales for declarations of national emergency citing IEEPA were short and often referenced either a specific geography or the specific actions of a government  Presidents found that circumstances like "the situation in Iran," or the "policies and actions of the Government of Nicaragua," constituted "unusual and extraordinary threat[s] to the national security and foreign policy of the United States" and would therefore declare a national emergency  The stated rationales have, however, expanded over time in both the length and subject matter  Presidents have increasingly declared national emergencies, in part, to respond to human and civil rights abuses, slavery, denial of religious freedom, political repression, public corruption, and the undermining of democratic processes  While the first reference to human rights violations as a rationale for a declaration of national emergency came in 1985, most of such references have come in the past twenty years  Table A-2   Presidents have also expanded the nature of the targets of IEEPA sanctions  Originally, the targets of sanctions issued under IEEPA were foreign governments  The first use of IEEPA targeted "Iranian Government Property " Use of IEEPA quickly expanded to target geographically defined regions  Nevertheless, Presidents have also increasingly targeted groups, such as political parties or terrorist organizations, and individuals, such as supporters of terrorism or suspected narcotics traffickers  The first instances of orders directed at groups or persons were limited to foreign groups or persons  For example, in Executive Order 12978, President Bill Clinton targeted specific "foreign persons" and "persons determined [   ] to be owned or controlled by, or to act for or on behalf of" such foreign persons  An excerpt is included below: Except to the extent provided in section 203(b) of IEEPA (50 U S C  1702(b)) and in regulations, orders, directives, or licenses that may be issued pursuant to this order, and notwithstanding any contract entered into or any license or permit granted prior to the effective date, I hereby order blocked all property and interests in property that are or hereafter come within the United States, or that are or hereafter come within the possession or control of United States persons, of: (a) the foreign persons listed in the Annex to this order; (b)  foreign persons determined by the Secretary of the Treasury, in consultation with the Attorney General and the Secretary of State: (i) to play a significant role in international narcotics trafficking centered in Colombia; or (ii) materially to assist in, or provide financial or technological support for or goods or services in support of, the narcotics trafficking activities of persons designated in or pursuant to this order; and (c) persons determined by the Secretary of the Treasury, in consultation with the Attorney General and the Secretary of State, to be owned or controlled by, or to act for or on behalf of, persons designated in or pursuant to this order  However, in 2001, President George W  Bush issued Executive Order 13219 to target "persons who threaten international stabilization efforts in the Western Balkans " While the order was similar to that of Executive Order 12978, it removed the qualifier "foreign " As such, persons in the United States, including U S  citizens, could be targets of the order  The following is an excerpt of the order: Except to the extent provided in section 203(b)(1), (3), and (4) of IEEPA (50 U S C  1702(b)(1), (3), and (4)), the Trade Sanctions Reform and Export Enhancement Act of 2000 (title IX, P L  106-387 ), and in regulations, orders, directives, or licenses that may hereafter be issued pursuant to this order, and notwithstanding any contract entered into or any license or permit granted prior to the effective date, all property and interests in property of: (i)  the persons listed in the Annex to this order; and (ii)  persons designated by the Secretary of the Treasury, in consultation with the Secretary of State, because they are found: (A) to have committed, or to pose a significant risk of committing, acts of violence    Several subsequent invocations of IEEPA have similarly not been limited to foreign targets  In sum, presidential emergency use of IEEPA was directed at foreign states initially, with targets that were delimited by geography or nationality  Since the 1990s, however, Presidents have expanded the scope of their declarations to include individual persons, regardless of nationality or geographic location, who are engaged in specific activities  While IEEPA is often categorized as an emergency statute, Congress has used IEEPA outside of the context of national emergencies  When Congress legislates sanctions, it often authorizes or directs the President to use IEEPA authorities to impose those sanctions  In the Nicaragua Human Rights and Anticorruption Act of 2018, the most recent example, Congress directed the President to exercise "all powers granted to the President [by IEEPA] to the extent necessary to block and prohibit [certain transactions] " Penalties for violations by a person of a measure imposed by the President under the Act would be, likewise, determined by reference to IEEPA  The trend has been long-term  Congress first directed the President to make use of IEEPA authorities in 1986 as part of an effort to assist Haiti in the recovery of assets illegally diverted by its former government  That statute provided: The President shall exercise the authorities granted by section 203 of the International Emergency Economic Powers Act [50 USC 1702] to assist the Government of Haiti in its efforts to recover, through legal proceedings, assets which the Government of Haiti alleges were stolen by former president-for-life Jean Claude Duvalier and other individuals associated with the Duvalier regime  This subsection shall be deemed to satisfy the requirements of section 202 of that Act  [50 USC 1701] In directing the President to use IEEPA, Congress waived the requirement that he declare a national emergency (and none was declared)  Subsequent legislation has followed this general pattern, with slight variations in language and specificity  The following is an example of current legislative language that has appeared in several recent statutes: (a) IN GENERAL —The President shall impose the sanctions described in subsection (b) with respect to—     (b) SANCTIONS DESCRIBED — (1) IN GENERAL —The sanctions described in this subsection are the following: (A) ASSET BLOCKING —The exercise of all powers granted to the President by the International Emergency Economic Powers Act (50 U S C  1701 et seq ) to the extent necessary to block and prohibit all transactions in all property and interests in property of a person determined by the President to be subject to subsection (a) if such property and interests in property are in the United States, come within the United States, or are or come within the possession or control of a United States person      (2) PENALTIES —A person that violates, attempts to violate, conspires to violate, or causes a violation of paragraph (1)(A) or any regulation, license, or order issued to carry out paragraph (1)(A) shall be subject to the penalties set forth in subsections (b) and (c) of section 206 of the International Emergency Economic Powers Act (50 U S C  1705) to the same extent as a person that commits an unlawful act described in subsection (a) of that section  Congress has also expressed, retroactively, its approval of unilateral presidential invocations of IEEPA in the context of a national emergency  In the Countering Iran's Destabilizing Activities Act of 2017, for example, Congress declared, "It is the sense of Congress that the Secretary of the Treasury and the Secretary of State should continue to implement Executive Order No  13382 " Presidents, however, have also used IEEPA to preempt or modify parallel congressional activity  On September 9, 1985, President Reagan, finding "that the policies and actions of the Government of South Africa constitute an unusual and extraordinary threat to the foreign policy and economy of the United States," declared a national emergency and limited transactions with South Africa  The President declared the emergency despite the fact that legislation limiting transactions with South Africa was quickly making its way through Congress  In remarks about the declaration, President Reagan stated that he had been opposed to the bill contemplated by Congress because unspecified provisions "would have harmed the very people [the U S  was] trying to help " Nevertheless, members of the press at the time (and at least one scholar since) noted that the limitations imposed by the Executive Order and the provisions in legislation then winding its way through Congress were "substantially similar " In general, IEEPA has served as an integral part of the postwar international sanctions regime  The President, either through a declaration of emergency or via statutory direction, has used IEEPA to limit economic transactions in support of administrative and congressional national security and foreign policy goals  Much of the action taken pursuant to IEEPA has involved blocking transactions and freezing assets  Once the President declares that a national emergency exists, he may use the authority in Section 203 of IEEPA (Grants of Authorities; 50 U S C  § 1702) to investigate, regulate, or prohibit foreign exchange transactions, transfers of credit, transfers of securities, payments, and may take specified actions relating to property in which a foreign country or person has interest—freezing assets, blocking property and interests in property, prohibiting U S  persons from entering into transactions related to frozen assets and blocked property, and in some instances denying entry into the United States  Pursuant to Section 203, Presidents have prohibited transactions with and blocked property of those designated as engaging in malicious cyber-enabled activities, including "interfering with or undermining election processes or institutions" [Executive Order 13694 of April 1, 2015, as amended; 50 U S


Report 2: C  § 1701 note  See also Executive Order 13848 of September 12, 2018; 83 F R  46843 ]; prohibited transactions with and blocked property of those designated as illicit narcotics traffickers including foreign drug kingpins; prohibited transactions with and blocked property of those designated as engaging in human rights abuses or significant corruption; prohibited transactions related to illicit trade in rough diamonds; prohibited transactions with and blocked property of those designated as Transnational Criminal Organizations; prohibited transactions with "those who disrupt the Middle East peace process;" prohibited transactions related to overflights with certain nations; instituted and maintained maritime restrictions; prohibited transactions related to weapons of mass destruction, in coordination with export controls authorized by the Arms Export Control Act and the Export Administration Act of 1979, and in furtherance of efforts to deter the weapons programs of specific countries (i e , Iran, North Korea); prohibited transactions those designated as "persons who commit, threaten to commit, or support terrorism;" maintained the dual-use export control system at times when its then-underlying authority, the Export Administration Act authority had lapsed; blocked property of and transactions with those designated as engaged in cyber activities that compromise critical infrastructures including election processes or the private sector's trade secrets; blocked property of and prohibited transactions with those designated as responsible for serious human rights abuse or engaged in corruption; blocked certain property of and transactions with foreign nationals of specific countries those designated as engaged in activities that constitute an extraordinary threat  No President has used IEEPA to place tariffs on imported products from a specific country or on products imported to the United States in general  However, IEEPA's similarity to TWEA, coupled with its relatively frequent use to ban imports and exports, suggests that such an action could happen  In addition, no President has used IEEPA to enact a policy that was primarily domestic in effect  Some scholars argue, however, that the interconnectedness of the global economy means it would probably be permissible to use IEEPA to take an action that was primarily domestic in effect  The ultimate disposition of assets frozen under IEEPA may serve as an important part of the leverage economic sanctions provide to influence the behavior of foreign actors  The President and Congress have each at times determined the fate of blocked assets to further foreign policy goals  Presidents have used frozen assets as a bargaining tool during foreign policy crises and to bring a resolution to such crises, at times by unfreezing the assets, returning them to the sanctioned entity or channeling them to a follow-on government  The following are some examples of how Presidents have made use of blocked assets to resolve foreign policy issues  President Carter invoked authority under IEEPA to impose trade sanctions against Iran, freezing Iranian assets in the United States, in response to the hostage crisis in 1979  On January 19, 1981, the United States and Iran entered into a series of executive agreements brokered by Algeria under which the hostages were freed, a portion of the blocked assets ($5 1 billion) was used to repay outstanding U S  bank loans to Iran, another part ($2 8 billion) was returned directly to Iran, another $1 billion was transferred into a security account in the Hague to pay other U S  claims against Iran as arbitrated by the Iran-U S  Claims Tribunal (IUSCT), and an additional $2 billion remained blocked pending further agreement with Iran or decision of the Tribunal  The United States also undertook to freeze the assets of the former Shah's estate along with those of the Shah's close relatives pending litigation in U S  courts to ascertain Iran's right to their return  Iran's litigation was unsuccessful, and none of the contested assets were returned to Iran  Presidents have also been able to channel frozen assets to opposition governments in cases where the United States continued to recognize a previous government that had been removed by coup d'état or otherwise replaced as the legitimate government of a country  For example, after Panamanian President Eric Arturo Delvalle tried to dismiss de facto military ruler General Manuel Noriega from his post as head of the Panamanian Defense Forces, which resulted in Delvalle's own dismissal by the Panamanian Legislative Assembly, President Reagan recognized Delvalle as the legitimate head of government and instituted economic sanctions against the Noriega regime  The Department of State advised U S  banks not to disburse funds to the Noriega regime, and Delvalle was able to obtain court orders permitting him access to the funds  President Reagan issued Executive Order 12635, which blocked all property and interests in payments of the government of Panama, and the Department of the Treasury issued regulations requiring companies who owed money to Panama to pay those funds into an escrow account established at the Federal Reserve Bank of New York, which also held payments owed by the United States for the operation of the Panama Canal Commission  Some of the funds in the escrow account were used to pay the operating expenses of the Delvalle government  After the U S  invasion of Panama, President George H W  Bush lifted economic sanctions and used some of the frozen funds to repay debts owed by Panama to foreign creditors, with remaining funds returned to the successor government  In a similar more recent case, the Trump Administration's recognition of Venezuelan opposition leader Juan Guaidó as Venezuela's interim president permitted Guaidó access to Venezuelan government assets held at the United States Federal Reserve and other insured United States financial institutions  President Barrack Obama initially froze Venezuelan government assets in 2015, pursuant to IEEPA and the Venezuela Defense of Human Rights and Civil Society Act of 2014  After official recognition of Guaidó, the Trump Administration imposed new sanctions under IEEPA to freeze the assets of the main Venezuelan state-owned oil company, Petróleos de Venezuela (Pdvsa), which could both significantly reduce funds available to the regime of Nicolas Maduro and channel them to Guaidó  There is also precedent for using frozen foreign assets for purposes authorized by the U N  Security Council  After the first war with Iraq, President George H W  Bush ordered the transfer of frozen Iraqi assets derived from the sale of Iraqi petroleum held by U S  banks to be transferred to a holding account in the Federal Reserve Bank of New York to fulfill "the rights and obligations of the United States under U N  Security Council Resolution No  778 " The President cited a section of the United Nations Participation Act (UNPA), as well as IEEPA, as authority to take the action  The transferred funds were used to provide humanitarian relief and to finance the United Nations Compensation Commission, which was established to adjudicate claims against Iraq arising from the invasion  Other Iraqi assets remained frozen and accumulated interest until they were vested in 2003 (see below)  In some cases, the United States has ended sanctions and returned frozen assets to successor governments  In the case of the former Yugoslavia, for example, in 2003, $237 6 million in frozen funds belonging to the Central Bank of the Socialist Federal Republic of Yugoslavia were transferred to the central banks of the successor states  In the case of Afghanistan, $217 million in frozen funds belonging to the Taliban were released to the Afghan Interim Authority in January 2002  The executive branch has traditionally resisted congressional efforts to vest foreign assets to pay U S  claimants without first obtaining a settlement agreement with the country in question  Congress has overcome such resistance in the case of foreign governments that have been designated as "State Supporters of Terrorism " U S  nationals who are victims of state-supported terrorism involving designated states have been able to sue those countries for damages under an exception to the Foreign Sovereign Immunities Act (FSIA) since 1996  To facilitate the payment of judgments under the exception, Congress passed Section 117 of the Treasury and General Government Appropriations Act, 1999, which further amended the FSIA by allowing attachment and execution against state property with respect to which financial transactions are prohibited or regulated under Section 5(b) TWEA, Section 620(a) of the Foreign Assistance Act (authorizing the trade embargo against Cuba), or Sections 202 and 203 of IEEPA, or any orders, licenses or other authority issued under these statutes  Because of the Clinton Administration's continuing objections, however, Section 117 also gave the President authority to "waive the requirements of this section in the interest of national security," an authority President Clinton promptly exercised in signing the statute into law  The Section 117 waiver authority protecting blocked foreign government assets from attachment to satisfy terrorism judgments has continued in effect ever since, prompting Congress to take other actions to make frozen assets available to judgment holders  Congress enacted §2002 of the Victims of Trafficking and Violence Protection Act of 2000 (VTVPA) to mandate the payment from frozen Cuban assets of compensatory damages awarded against Cuba under the FSIA terrorism exception on or prior to July 20, 2000  The Department of the Treasury subsequently vested $96 7 million in funds generated from long-distance telephone services between the United States and Cuba in order to compensate claimants in Alejandre v  Republic of Cuba , the lawsuit based on the1996 downing of two unarmed U S  civilian airplanes by the Cuban air force  Another payment of more than $7 million was made using vested Cuban assets to a Florida woman who had won a lawsuit against Cuba based on her marriage to a Cuban spy  As unpaid judgments against designated state sponsors of terrorism continued to mount, Congress enacted the Terrorism Risk Insurance Act (TRIA)  Section 201 of TRIA overrode long-standing objections by the executive branch to make the frozen assets of terrorist states available to satisfy judgments for compensatory damages against such states (and organizations and persons) as follows: Notwithstanding any other provision of law, and except as provided in subsection (b), in every case in which a person has obtained a judgment against a terrorist party on a claim based upon an act of terrorism, or for which a terrorist party is not immune under section 1605(a)(7) of title 28, United States Code, the blocked assets of that terrorist party (including the blocked assets of any agency or instrumentality of that terrorist party) shall be subject to execution or attachment in aid of execution in order to satisfy such judgment to the extent of any compensatory damages for which such terrorist party has been adjudged liable  Subsection (b) of Section 201 provided waiver authority "in the national security interest," but only with respect to frozen foreign government "property subject to the Vienna Convention on Diplomatic Relations or the Vienna Convention on Consular Relations " When Congress amended the FSIA in 2008 to revamp the terrorism exception, it provided that judgments entered under the new exception could be satisfied out of the property of a foreign state notwithstanding the fact that the property in question is regulated by the United States government pursuant to TWEA or IEEPA  Congress has also directed that the proceeds from certain sanctions violations be paid into a fund for providing compensation to the former hostages of Iran and terrorist state judgment creditors  To fund the program, Congress designated that certain real property and bank accounts owned by Iran and forfeited to the United States could go into the United States Victims of State Sponsored Terrorism Fund, along with the sum of $1,025,000,000, representing the amount paid to the United States pursuant to the June 27, 2014, plea agreement and settlement between the United States and BNP Paribas for sanctions violations  The fund is replenished through criminal penalties and forfeitures for violations of IEEPA or TWEA-based regulations, or any related civil or criminal conspiracy, scheme, or other federal offense related to doing business or acting on behalf of a state sponsor of terrorism  Half of all civil penalties and forfeitures relating to the same offenses are also deposited into the fund  A number of lawsuits seeking to overturn actions taken pursuant to IEEPA have made their way through the judicial system, including challenges to the breadth of congressionally delegated authority and assertions of violations of constitutional rights  As demonstrated below, most of these challenges have failed  The few challenges that succeeded did not seriously undermine the overarching statutory scheme for sanctions  The breadth of presidential power under IEEPA is illustrated by the Supreme Court's 1981 opinion in Dames & Moore v  Regan   In Dames & Moore , petitioners had challenged President Carter's executive order establishing regulations to further compliance with the terms of the Algiers Accords, which the President had entered into to end the hostage crisis with Iran  Under these agreements, the United States was obligated (1) to terminate all legal proceedings in U S  courts involving claims of U S  nationals against Iran, (2) to nullify all attachments and judgments, and (3) to resolve outstanding claims exclusively through binding arbitration in the Iran-U S  Claims Tribunal (IUSCT)  The President, through executive orders, revoked all licenses that permitted the exercise of "any right, power, or privilege" with regard to Iranian funds, nullified all non-Iranian interests in assets acquired after a previous blocking order, and required banks holding Iranian assets to transfer them to the Federal Reserve Bank of New York to be held or transferred as directed by the Secretary of the Treasury  Dames and Moore had sued Iran for breach of contract to recover compensation for work performed  The district court had entered summary judgment in favor of Dames and Moore and issued an order attaching certain Iranian assets for satisfaction of any judgment that might result, but stayed the case pending appeal  The executive orders and regulations implementing the Algiers Accords resulted in the nullification of this prejudgment attachment and the dismissal of the case against Iran, directing that it be filed at the IUSCT  In response, Dames and Moore sued the government  The plaintiffs claimed that the President and the Secretary of the Treasury exceeded their statutory and constitutional powers to the extent they adversely affected Dames and Moore's judgment against Iran, the execution of that judgment, the prejudgment attachments, and the plaintiff's ability to continue to litigate against the Iranian banks  The government defended its actions, relying largely on IEEPA, which provided explicit support for most of the measures taken—nullification of the prejudgment attachment and transfer of the property to Iran—but could not be read to authorize actions affecting the suspension of claims in U S  courts  Justice Rehnquist wrote for the majority: Although we have declined to conclude that the IEEPA…directly authorizes the President's suspension of claims for the reasons noted, we cannot ignore the general tenor of Congress' legislation in this area in trying to determine whether the President is acting alone or at least with the acceptance of Congress  As we have noted, Congress cannot anticipate and legislate with regard to every possible action the President may find it necessary to take or every possible situation in which he might act  Such failure of Congress specifically to delegate authority does not, "especially       in the areas of foreign policy and national security," imply "congressional disapproval" of action taken by the Executive  On the contrary, the enactment of legislation closely related to the question of the President's authority in a particular case which evinces legislative intent to accord the President broad discretion may be considered to "invite" "measures on independent presidential responsibility " At least this is so where there is no contrary indication of legislative intent and when, as here, there is a history of congressional acquiescence in conduct of the sort engaged in by the President  The Court remarked that Congress's implicit approval of the long-standing presidential practice of settling international claims by executive agreement was critical to its holding that the challenged actions were not in conflict with acts of Congress  For support, the Court cited to Justice Frankfurter's concurrence in Youngstown Sheet and Tube Co  v  Sawyer stating that "a systematic, unbroken, executive practice, long pursued to the knowledge of the Congress and never before questioned … may be treated as a gloss on 'Executive Power' vested in the President by § 1 of Art  II " Consequently, it may be argued that Congress's exclusion of certain express powers in IEEPA do not necessarily preclude the President from exercising them, at least where a court finds sufficient precedent exists  Lower courts have examined IEEPA under a number of other constitutional doctrines  Courts have reviewed whether Congress violated the non-delegation principle of separation of powers by delegating too much power to the President to legislate, in particular by creating new crimes  These challenges have generally failed  As the U S  Court of Appeals for the Second Circuit explained while evaluating IEEPA, delegations of congressional authority are constitutional so long as Congress provides through a legislative act an "intelligible principle" governing the exercise of the delegated authority  Even if the standards are higher for delegations of authority to define criminal offenses, the court held, IEEPA provides sufficient guidance  The court stated: The IEEPA "meaningfully constrains the [President's] discretion," by requiring that "[t]he authorities granted to the President     may only be exercised to deal with an unusual and extraordinary threat with respect to which a national emergency has been declared " And the authorities delegated are defined and limited  The Second Circuit found it significant that "IEEPA relates to foreign affairs—an area in which the President has greater discretion," bolstering its view that IEEPA does not violate the non-delegation doctrine  The U S  Court of Appeals for the Eleventh Circuit considered whether Section 207(b) of IEEPA is an unconstitutional legislative veto  That provision states: The authorities described in subsection (a)(1) may not continue to be exercised under this section if the national emergency is terminated by the Congress by concurrent resolution pursuant to section 202 of the National Emergencies Act [50 U S C  § 1622] and if the Congress specifies in such concurrent resolution that such authorities may not continue to be exercised under this section  In U S  v  Romero-Fernandez , two defendants convicted of violating the terms of an executive order issued under IEEPA argued on appeal that IEEPA was unconstitutional, in part, because of the above provision  The Eleventh Circuit accepted that the provision was an unconstitutional legislative veto (as conceded by the government) based on INS v  Chadha , in which the Supreme Court held that Congress cannot void the exercise of power by the executive branch through concurrent resolution, but can act only through bicameral passage followed by presentment of the law to the President  The Eleventh Circuit nevertheless upheld the defendants' convictions for violations of IEEPA regulations, holding that the legislative veto provision was severable from the rest of the statute  Courts have also addressed whether certain actions taken pursuant to IEEPA have effected an uncompensated taking of property rights in violation of the Fifth Amendment  The Fifth Amendment's Takings Clause prohibits "private property [from being] taken for public use, without just compensation " The Fifth Amendment's prohibitions apply as well to regulatory takings, in which the government does not physically take property but instead imposes restrictions on the right of enjoyment that decreases the value of the property or right therein  The Supreme Court has held that the nullification of prejudgment attachments pursuant to regulations issued under IEEPA was not an uncompensated taking, suggesting that the reason for this position was the contingent nature of the licenses that had authorized the attachments  The Court also suggested that the broader purpose of the statute supported the view that there was no uncompensated taking: This Court has previously recognized that the congressional purpose in authorizing blocking orders is "to put control of foreign assets in the hands of the President    " Such orders permit the President to maintain the foreign assets at his disposal for use in negotiating the resolution of a declared national emergency  The frozen assets serve as a "bargaining chip" to be used by the President when dealing with a hostile country  Accordingly, it is difficult to accept petitioner's argument because the practical effect of it is to allow individual claimants throughout the country to minimize or wholly eliminate this "bargaining chip" through attachments, garnishments, or similar encumbrances on property  Neither the purpose the statute was enacted to serve nor its plain language supports such a result  Similarly, a lower court held that the extinguishment of contractual rights due to sanctions enacted pursuant to IEEPA does not amount to a regulatory taking requiring compensation under the Fifth Amendment  Even though the plaintiff suffered "obvious economic loss" due to the sanctions regulations, that factor alone was not enough to sustain plaintiff's claim of a compensable taking  The court quoted long-standing Supreme Court precedent to support its finding: A new tariff, an embargo, a draft, or a war may inevitably bring upon individuals great losses; may, indeed, render valuable property almost valueless  They may destroy the worth of contracts  But whoever supposed that, because of this, a tariff could not be changed, or a non-intercourse act, or an embargo be enacted, or a war be declared?      [W]as it ever imagined this was taking private property without compensation or without due process of law? Accordingly, it seems unlikely that entities whose business interests are harmed by the imposition of sanctions pursuant to IEEPA will be entitled to compensation from the government for their losses  Persons whose assets have been directly blocked by the U S  Department of the Treasury Office of Foreign Assets Control (OFAC) pursuant to IEEPA have likewise found little success challenging the loss of the use of their assets as uncompensated takings  Many courts have recognized that a temporary blocking of assets does not constitute a taking because it is a temporary action that does not vest title in the United States  This conclusion is apparently so even if the blocking of assets necessitates the closing altogether of a business enterprise  In some circumstances, however, a court may analyze at least the initial blocking of assets under a Fourth Amendment standard for seizure  One court found a blocking to be unreasonable under a Fourth Amendment standard where there was no reason that OFAC could not have first obtained a judicial warrant  Some persons whose assets have been blocked have asserted that their right to due process has been violated  The Due Process Clause of the Fifth Amendment provides that no person shall be deprived of life, liberty, or property, without due process of law  Where one company protested that the blocking of its assets without a pre-deprivation hearing violated its right to due process, a district court found that a temporary deprivation of property does not necessarily give rise to a right to notice and an opportunity to be heard  A second district court stated that the exigencies of national security and foreign policy considerations that are implicated in IEEPA cases have meant that OFAC historically has not provided pre-deprivation notice in sanctions programs  A third district court stated that OFAC's failure to provide a charitable foundation with notice or a hearing prior to its designation as a terrorist organization and blocking of its assets did not violate its right to procedural due process, because the OFAC designation and blocking order serve the important governmental interest of combating terrorism by curtailing the flow of terrorist financing  That same court also held that prompt action by the government was necessary to protect against the transfer of assets subject to the blocking order  In Al Haramain Islamic Foundation v  U S  Department of Treasury , the U S  Court of Appeals for the Ninth Circuit considered whether OFAC's use of classified information without any disclosure of its content in its decision to freeze the assets of a charitable organization, and its failure to provide adequate notice and a meaningful opportunity to respond, violated the organization's right to procedural due process  The court applied the balancing test set forth by the Supreme Court in its landmark administrative law case Mathews v  Eldridge to resolve these questions  Under the Eldridge test, to determine if an individual has received constitutional due process, courts must weigh: (1) [the person's or entity's] private property interest, (2) the risk of an erroneous deprivation of such interest through the procedures used, as well as the value of additional safeguards, and (3) the Government's interest in maintaining its procedures, including the burdens of additional procedural requirements " While weighing the interests and risks at issue in Al Haramain , the Ninth Circuit found the organization's property interest to be significant: By design, a designation by OFAC completely shutters all domestic operations of an entity  All assets are frozen  No person or organization may conduct any business whatsoever with the entity, other than a very narrow category of actions such as legal defense  Civil penalties attach even for unwitting violations  Criminal penalties, including up to 20 years' imprisonment, attach for willful violations  For domestic organizations such as AHIF–Oregon, a designation means that it conducts no business at all  The designation is indefinite  Although an entity can seek administrative reconsideration and limited judicial relief, those remedies take considerable time, as evidenced by OFAC's long administrative delay in this case and the ordinary delays inherent in our judicial system  In sum, designation is not a mere inconvenience or burden on certain property interests; designation indefinitely renders a domestic organization financially defunct  Nevertheless, the court found "the government's interest in national security [could not] be understated " In evaluating the government's interest in maintaining its procedures, the Ninth Circuit explained that the Constitution requires that the government "take reasonable measures to ensure basic fairness to the private party and that the government follow procedures reasonably designed to protect against erroneous deprivation of the private party's interests " While the Ninth Circuit had previously held that the use of undisclosed information in a case involving the exclusion of certain longtime resident aliens should be considered presumptively unconstitutional, the court found that the presumption had been overcome in this case  The Ninth Circuit noted that all federal courts that have considered the argument that OFAC may not use undisclosed classified information in making its determinations have rejected it  Although the court found that OFAC's failure to provide even an unclassified summary of the information at issue was a violation of the organization's due process rights, the court deemed the error harmless because it would not likely have affected the outcome of the case  In the same case, the Ninth Circuit also considered the organization's argument that it had been denied adequate notice and an opportunity to be heard  Specifically, the organization asserted that OFAC had refused to disclose its reasons for investigating and designating the organization, leaving it unable to respond adequately to OFAC's unknown suspicions  Because OFAC had provided the organization with only one document to support its designation over the four-year period between the freezing of its assets and the redesignation of the organization as a specially designated global terrorist (SDGT), the court agreed that the organization had been deprived of due process rights  However, the court found that this error too was harmless  Some courts have considered whether asset blocking or penalties imposed pursuant to regulations promulgated under IEEPA have violated the subjects' First Amendment rights to free association, free speech, or religion  Challenges on these grounds have typically failed  Courts have held that there is no First Amendment right to support terrorists  The U S  Court of Appeals for the District of Columbia Circuit distinguished advocacy from financial support and held that the blocking of assets affected only the ability to provide financial support, but did not implicate the organization's freedom of association  Similarly, a district court interpreted relevant case law to hold that government actions prohibiting charitable contributions are subject to intermediate scrutiny rather than strict scrutiny, a higher standard that applies to political contributions  With respect to a free speech challenge brought by a charitable organization whose assets were temporarily blocked during the pendency of an investigation, a district court explained that "when 'speech' and 'nonspeech' elements are combined in the same course of conduct, a sufficiently important government interest in regulating the nonspeech element can justify incidental limitations on First Amendment freedoms " Accordingly, the district court applied the following test to determine whether the designations and blocking actions were lawful  Citing the Supreme Court's opinion in United States v  O'Brien , the court stated that a government regulation is sufficiently justified if: it is within the constitutional power of the government; it furthers an important or substantial governmental interest; the governmental interest is unrelated to the suppression of free expression; and the incidental restriction on alleged First Amendment freedoms is no greater than is essential to the furtherance of that interest  The court found the government's actions to fall within the bounds of this test: First, the President clearly had the power to issue the Executive Order  Second, the Executive Order promotes an important and substantial government interest—that of preventing terrorist attacks  Third, the government's action is unrelated to the suppression of free expression; it prohibits the provision of financial and other support to terrorists  Fourth, the incidental restrictions on First Amendment freedoms are no greater than necessary  However, with respect to an organization that was not itself designated as an SDGT but wished to conduct coordinated advocacy with another organization that was so designated, one appellate court found that an OFAC regulation barring such coordinated advocacy based on its content was subject to strict scrutiny  Accordingly, the court rejected the government's reliance on the Supreme Court's decision in Holder v  Humanitarian Law Project to find that the regulation impermissibly implicated the organization's right to free speech  Accordingly, there may be some circumstances where the First Amendment protects speech coordinated with (but not on behalf of) an organization designated as an SDGT  Until the recent enactment of the Export Control Reform Act of 2018, export of dual use goods and services was regulated pursuant to the authority of the Export Administration Act (EAA), which was subject to periodic expiry and reauthorization  President Reagan was the first President to use IEEPA as a vehicle for continuing the enforcement of the EAA's export controls  After Congress did not extend the expired EAA, President Reagan issued Executive Order 12444 in 1983, finding that "unrestricted access of foreign parties to United States commercial goods, technology, and technical data and the existence of certain boycott practices of foreign nations constitute, in light of the expiration of the Export Administration Act of 1979, an unusual and extraordinary threat to the national security " Although the EAA had been reauthorized for short periods since its initial expiration in 1983, every subsequent President utilized the authorities granted under IEEPA to maintain the existing system of export controls during periods of lapse  Figure 1   In the latest iteration, President George W  Bush issued Executive Order 13222 in 2001, finding the existence of a national emergency with respect to the expiration of the EAA and directing—pursuant to the authorities allocated under IEEPA—that "the provisions for administration of the [EAA] shall be carried out under this order so as to continue in full force and effect…the export control system heretofore maintained " Presidents Obama and Trump annually extended the 2001 executive order  Courts have generally treated this arrangement as authorized by Congress, although certain provisions of the EAA in effect under IEEPA have led to challenges  The determining factor appears to be whether IEEPA itself provides the President the authority to carry out the challenged action  In one case, the U S  Court of Appeals for the Fifth Circuit upheld a conviction for an attempt to violate the regulations even though the EAA had expired and did not expressly criminalize such attempts  The circuit court rejected the defendants' argument that the President had exceeded his delegated authority under the EEA by "enlarging" the crimes punishable under the regulations  Nevertheless, a district court held that the conspiracy provisions of the EAA regulations were rendered inoperative by the lapse of the EAA and "could not be repromulgated by executive order under the general powers that IEEPA vests in the President " The district court found that, even if Congress intended to preserve the operation of the EAA through IEEPA, that intent was limited by the scope of the statutes' substantive coverage at the time of IEEPA's enactment, when no conspiracy provision existed in either statute  The U S  Court of Appeals for the D C  Circuit upheld the application of the EAA as a statute permitting the government to withhold information under exemption 3 of the Freedom of Information Act (FOIA), which exempts from disclosure information exempted from disclosure by statute, even though the EAA had expired  Referring to legislative history it interpreted as congressional approval of the use of IEEPA to continue the EAA provisions during periods of lapse, the court stated: Although the legislative history does not refer to the EAA's confidentiality provision, it does evince Congress's intent to authorize the President to preserve the operation of the export regulations promulgated under the EAA  Moreover, it is significant for purposes of determining legislative intent that Congress acted with the knowledge that the EAA's export regulations had long provided for confidentiality and that the President's ongoing practice of extending the EAA by executive order had always included these confidentiality protections  The D C  Circuit distinguished this holding in a later case involving appellate jurisdiction over a decision by the Department of Commerce to apply sanctions for a company's violation of the EAA regulations  Pursuant to the regulations and under the direction of the Commerce Department, the company sought judicial review directly in the D C  Circuit  The D C  Circuit, however, concluded that it lacked jurisdiction: This court would have jurisdiction pursuant to the President's order only if the President has the authority to confer jurisdiction—an authority that, if it exists, must derive from either the Executive's inherent power under the Constitution or a permissible delegation of power from Congress  The former is unavailing, as the Constitution vests the power to confer jurisdiction in Congress alone  Whether the executive order can provide the basis of our jurisdiction, then, turns on whether the President can confer jurisdiction on this court under the auspices of IEEPA…  We conclude that the President lacks that power  Nothing in the text of IEEPA delegates to the President the authority to grant jurisdiction to any federal court  Consequently, the appeal of the agency decision was determined to belong in the district court according to the default rule under the Administrative Procedure Act (APA)  Congress may wish to address a number of issues with respect to IEEPA; two are addressed here  The first pertains to how Congress has delegated its authority under IEEPA and its umbrella statute, the NEA  The second pertains to choices made in the Export Control Reform Act of 2018  Although the stated aim of the drafters of the NEA and IEEPA was to restrain the use of emergency powers, the use of such powers has expanded by several measures  Presidents declare national emergencies and renew them for years or even decades  The limitation of IEEPA to transactions involving some foreign interest was intended to limit IEEPA's domestic application  However, globalization has eroded that limit, as few transactions today do not involve some foreign interest  Many of the other criticisms of TWEA that IEEPA was supposed to address—consultation, time limits, congressional review, scope of power, and logical relationship to the emergency declared—are criticisms that scholars levy against IEEPA today  In general, three common criticisms are levied by scholars with respect to the structure of the NEA and IEEPA that may be of interest to Congress  First, the NEA and IEEPA do not define the phrases "national emergency" and "unusual and extraordinary threat" and Presidents have interpreted these terms broadly  Second, the scope of presidential authority under IEEPA has become less constrained in a highly globalized era  Third, owing to rulings by the Supreme Court and amendments to the NEA, Congress would likely have to have a two-thirds majority rather than a simple majority to terminate a national emergency  Despite these criticisms, Congress has not acted to terminate or otherwise express displeasure with an emergency declaration invoking IEEPA  This absence of any explicit statement of disapproval, coupled with explicit statements of approval in some instances, may indicate congressional approval of presidential use of IEEPA thus far  Arguably, then, IEEPA could be seen as an effective tool for carrying out the will of Congress  Neither the NEA nor IEEPA define what constitutes a "national emergency " IEEPA conditions its invocation in a declaration on its necessity for dealing with an "unusual and extraordinary threat … to the national security, foreign policy, or economy of the United States " In the markup of IEEPA in the House, Fred Bergsten, then-Assistant Secretary for International Affairs in the Department of the Treasury, praised the requirement that a national emergency for the purposes of IEEPA be "based on an unusual and extraordinary threat" because such language "emphasizes that such powers should be available only in true emergencies " Because "unusual" and "extraordinary" are also undefined, the usual and ordinary invocation of the statute seems to conflict with those statutory conditions  If Congress wanted to refine the meaning of "national emergency" or "unusual and extraordinary threat," it could do so through statute  Additionally, Congress could consider requiring some sort of factual finding by a court prior to, or shortly after, the exercise of any authority, such as under the First Militia Act of 1792 or the Foreign Intelligence Surveillance Act  However, Congress may consider that the ambiguity in the existing statute provides the executive with the flexibility necessary to address national emergencies with the requisite dispatch  While IEEPA nominally applies only to foreign transactions, the breadth of the phrase, "any interest of any foreign country or a national thereof" has left a great deal of room for executive discretion  The interconnectedness of the modern global economy has left few major transactions in which a foreign interest is not involved  As a result, at least one scholar has concluded, "the exemption of purely domestic transactions from the President's transaction controls seems to be a limitation without substance " Presidents have used IEEPA since the 1980s to control exports by maintaining the dual-use export control system, enshrined in the Export Administration Regulations (EAR) in times when its underlying authorization, the Export Administration Act (EAA), periodically expired  During those times when Congress did not reauthorize the EAA, Presidents have declared emergencies to maintain the dual-use export control system  The current emergency has been ongoing since 2001  While Presidents have used IEEPA to implement trade restrictions against adversaries, it has not been used as a general way to impose tariffs  However, as noted above, President Nixon used TWEA to impose a 10% ad valorem tariff on goods entering the United States to avoid a balance of payments crisis after he ended the convertibility of the U S  dollar to gold  Although the use of TWEA in this instance was criticized at the time, it does not appear that the subsequent reforms resulting in the enactment of IEEPA would prevent the President from imposing tariffs or other restrictions on trade  However, the availability of diverse other authorities for addressing trade, including for national security purposes, makes the use of IEEPA for this purpose unlikely  The scope of powers over individual targets is also extensive  Under IEEPA, the President has the power to prohibit all financial transactions with individuals designated by Executive Order  Such power allows the President to block all the assets of a U S  citizen or permanent resident  Such uses of IEEPA may reflect the will of Congress or they may represent a grant of authority that may have gone beyond what Congress originally intended  The heart of the curtailment of presidential power by the NEA and IEEPA was the provision that Congress could terminate a state of emergency declared pursuant to the NEA with a concurrent resolution  When the "legislative veto" was struck down by the Supreme Court (see above), it left Congress with a steeper climb—presumably requiring passage of a veto-proof joint resolution—to terminate a national emergency declared under the NEA  Two such resolutions have ever been introduced and neither declarations of emergency involved IEEPA  The lack of congressional action here could be the result of the necessity of obtaining a veto-proof majority or it could be that the use of IEEPA has so far reflected the will of Congress  If Congress wanted to assert more authority over the use of IEEPA, it could amend the NEA or IEEPA to include a "sunset provision," terminating any national emergency after a certain number of days  At least one scholar has recommended such an amendment  Alternatively, Congress could amend IEEPA to provide for a review mechanism that would give Congress an active role  In the Senate during the 115 th Congress, for example, Senator Mike Lee introduced the Global Trade Accountability Act of 2017 required the President to report to Congress on any proposed trade action (including the use of IEEPA), including a description of the proposal together with a list of items to be affected, an economic impact study of the proposal including potential retaliation  Congress, using expedited procedures, would need to approve the President's action through a joint resolution within a 60-day period  The legislation would have provided for a temporary one-time unilateral trade action for a 90-day period  Similarly, in the 116 th Congress, Senator Lee introduced S  764 , a bill to provide for congressional approval of national emergency declarations, and for other purposes, which would amend the NEA to require an act of Congress within 30 days to allow a national emergency to continue  Another approach would establish a means for Congress to pass a resolution of disapproval if IEEPA authorities are invoked  An example of this approach is the Trade Authority Protection Act (H R  5760)  After the submission of similar reporting requirement to S  177 (above), Congress could, under Congressional Review Act (CRA)-style procedures, pass a joint resolution of disapproval  Congress does have the authority to pass a joint resolution under IEEPA, as noted above, but the use of CRA procedures would allow for certain expedited consideration  Alternatively, Congress could use any of these mechanisms to amend the current disapproval resolution process in IEEPA or the NEA itself  In testimony before the House Committee on International Relations in 1977, Professor Harold G  Maier summed up the main criticisms of TWEA: Section 5(b)'s effect is no longer confined to "emergency situations" in the sense of existing imminent danger  The continuing retroactive approval, either explicit or implicit, by Congress of broad executive interpretations of the scope of powers which it confers has converted the section into a general grant of legislative authority to the President…" Like TWEA before it, IEEPA sits at the center of the modern U S  sanction regime  Like TWEA before it, Congress has often approved explicitly of the President's use of IEEPA  In several circumstances, Congress has directed the President to impose a variety of sanctions under IEEPA and waived the requirement of an emergency declaration  Even when Congress has not given explicit approval, no Member of Congress has ever introduced a resolution to terminate a national emergency citing IEEPA  The NEA requires that both houses of Congress meet every six months to consider a vote on a joint resolution on terminating an emergency  Neither house has ever met to do so  In response to concerns over the scale and scope of the emergency economic powers granted by IEEPA, supporters of the status quo would argue that Congress has implicitly and explicitly expressed approval of the statute and its use  In 2018, Congress passed the Export Control Reform Act (ECRA)  The legislation repealed the expired Export Administration Act of 1979, the regulations of which had been continued by reference to IEEPA since 2001  The ECRA became the new statutory authority for Export Administration Regulations  Nevertheless, several export controls addressed in the Export Administration Act of 1979 were not updated in the Export Control Reform Act of 2018; instead, Congress chose to require the President to continue to use IEEPA to continue to implement the three sections of the Export Administration Act of 1979 that were not repealed  Going forward, Congress may wish to revisit these provisions, which all relate to deterring the proliferation of weapons of mass destruction  Appendix A  NEA and IEEPA Use

ground_truth: Improper payments—which include payments that should not have been made or were made in an incorrect amount—are a long-standing, significant problem in the federal government, estimated at almost $141 billion for fiscal year 2017. Executive branch agencies are required to annually estimate improper payments for certain programs. Estimation of improper payments is key to understanding the extent of the problem and to developing effective corrective actions. Relevant laws and guidance provide agencies flexibility in developing estimates. This report describes agencies' processes to estimate improper payments in selected programs for fiscal year 2017 and the extent to which certain differences in these processes can affect the usefulness of the resulting estimates. GAO selected 10 programs across six agencies with the largest reported program outlays in fiscal years 2015 and 2016. For these programs, GAO reviewed relevant laws and guidance, analyzed agencies' policies and procedures, and interviewed officials at relevant agencies and OMB staff. The six agencies GAO reviewed reported taking various approaches related to key components of estimating improper payments—shown in the figure below—for 10 selected programs, which collectively reported outlays of over $2.5 trillion for fiscal year 2017. Sample selection. Eight of the 10 programs GAO reviewed reported using statistically valid approaches, and the remaining 2 reported using alternative methodologies approved by the Office of Management and Budget (OMB). The sampled data elements varied, including payments, medical claims, and tax returns. The age of the data used to develop fiscal year 2017 improper payment estimates also varied, ranging from calendar year 2013 to fiscal year 2017. Identification of improper payments. Some of the six agencies reported using processes designed specifically to estimate improper payments, whereas others reported leveraging existing reviews. These agencies' policies and procedures include a review of aspects of eligibility, except for those related to the Department of Defense's (DOD) Military Pay and the Office of Personnel Management's (OPM) Retirement overpayments. DOD and OPM have not fully assessed whether their estimation processes effectively consider key program risks. OMB guidance does not specifically address how agencies are to test to identify improper payments, such as using a risk-based approach to help ensure that key risks of improper payments are addressed. The six agencies also varied in the treatment of insufficient documentation, both in identifying and in reporting the root causes of improper payments. For the agencies that contact entities outside the agency to estimate improper payments, the treatment of nonresponse differed, with one agency including nonresponses as improper payments and another generally excluding the nonresponse cases from review. Although OMB guidance states that agencies should treat cases of insufficient documentation as improper payments, it does not specifically address the treatment of nonresponse cases. Calculation of the improper payment estimate. The six agencies generally reported using law and OMB guidance to calculate improper payment estimates for the selected programs, except for the Earned Income Tax Credit (EITC). The Internal Revenue Service (IRS) removed overpayments that were recovered when developing its estimate. OMB guidance requires agencies to include recovered amounts in their estimates. Removing these overpayments understates the EITC improper payment estimate and may limit IRS's ability to develop corrective actions to prevent improper payments. GAO recommends that OMB develop guidance on treatment of nonresponse cases and testing to identify improper payments, that DOD and OPM assess their estimation processes, and that IRS revise its methodology to not exclude recovered payments from its estimate. All of the agencies either agreed or partially agreed with the specific recommendations to them. GAO believes that the actions are warranted, as discussed in the report.