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Nonprofit organizations that meet the criteria in Internal Revenue Code § 501(c)(3) qualify to be exempt from the federal income tax. The organization may be formed as a corporation, trust, or unincorporated association. Organizations are formed under state law, and the specific requirements vary by state. In general, a state's secretary of state will be able to provide information on how to form an organization. In order to be eligible for tax-exempt status, the organization must meet the requirements in IRC § 501(c)(3). Section 501(c)(3) reads: Corporations, and any community chest, fund, or foundation, organized and operated exclusively for religious, charitable, scientific, testing for public safety, literary, or educational purposes, or to foster national or international amateur sports competition (but only if no part of its activities involve the provision of athletic facilities or equipment), or for the prevention of cruelty to children or animals, no part of the net earnings of which inures to the benefit of any private shareholder or individual, no substantial part of the activities of which is carrying on propaganda, or otherwise attempting, to influence legislation (except as otherwise provided in subsection (h)) , and which does not participate in, or intervene in (including the publishing or distributing of statements), any political campaign on behalf of (or in opposition to) any candidate for public office. Thus, there are basically four requirements: The organization must be operated and organized for at least one of the listed exempt purposes. This means that no more than an insubstantial amount of the organization's activities may be for nonexempt purposes, and the organization must serve a public, as opposed to private, interest. The organization's earnings may not be used to benefit any person having a personal and private interest in the organization's activities. No more than an insubstantial amount of the organization's activities may be lobbying. The organization may not participate in any political campaign activity. Organizations that meet these qualifications must generally apply to the Internal Revenue Service (IRS) for recognition of their § 501(c)(3) status. Some religious organizations, such as churches, do not have to seek recognition from the IRS of their tax-exempt status. Additionally, organizations, other than private foundations, with normally no more than $5,000 in annual gross receipts do not have to apply for recognition. An organization should try to file the application soon after its formation. If the application is filed within 27 months of the organization's formation, the exemption will generally be effective back to the date of formation. The IRS may grant an extension depending on the circumstances. If the organization does not file its application in a timely manner, it will generally not be treated as an exempt organization for the period between its formation and the postmark date on the application. An organization seeking § 501(c)(3) status must file an application (Form 1023) that shows it meets the organizational and operational requirements. The application asks questions concerning a variety of areas related to the organization's activities. The organization's operations must be described and organizing documents, such as articles of incorporation or association, must be included. There are detailed questions about the compensation of and dealings with directors and highly-compensated employees, and the organization must complete financial statements. Additionally, the application must include the organization's Employer Identification Number (EIN), which may be obtained online or by telephone, and, if applicable, a power of attorney authorization, among other documents. The IRS may require additional information. As part of the application, organizations must pay a user fee. The fee is $300 for organizations with average annual gross receipts of not more than $10,000 and $750 for all other organizations. A new organization should use its expected average receipts to determine which fee is appropriate. On the application, the organization will need to tell the IRS that it is either a public charity or a private foundation. In general, private foundations receive contributions from limited sources and do not directly provide charitable services. Due to fear of abuse, private foundations are subject to stricter regulation than public charities. An organization is a private foundation unless it shows the IRS that it meets the requirements to be a public charity. Some organizations, such as churches, schools, and hospitals, automatically qualify to be public charities. Other organizations will be classified as public charities if they can show the IRS that they receive substantial public support. An advance ruling allows a new organization to be treated as a public charity even though it is unable to show the IRS that it receives sufficient public support. The intent is to allow an organization to have five years in which to develop operations to obtain the necessary level of support. An organization can request an advance ruling on Form 1023. The organization should be able to show that it reasonably expects to be publicly supported during the advance ruling period. If the IRS grants the request, the organization will be treated as a public charity for five years and then must prove to the IRS that it receives substantial public support for the treatment to continue. Applications are sent to IRS Exempt Organization (EO) Determinations. EO Determinations determines whether the organization meets the exemption requirements by looking at the statutory language, IRS regulations, and such sources as IRS revenue rulings. EO Determinations may ask an organization for further information. Difficult cases, e.g., where there is no precedent or technical advice is needed, are referred to IRS Headquarters. An organization may request a referral to this office for an issue requiring technical advice. If the IRS approves the application, a favorable determination letter is sent to the organization. As discussed above, if the application for § 501(c)(3) status was filed in a timely manner, the exemption will generally be effective back to the date of the organization's formation. The exemption will not be effective back to formation if the IRS requires the organization to make changes in its structure or operations in order to receive the exemption or if the application was not timely filed. In both cases, the effective date of the exemption will be provided in the determination letter. Once the exemption has been approved, the organization may generally continue to rely on its § 501(c)(3) status unless there is a material change in the organization's purpose or activities that is inconsistent with the exemption requirements. Additionally, events outside of the organization's control may affect its status, including new laws, treaties, court decisions, or regulations. If the IRS issues an adverse determination, then the organization may protest the decision to the IRS Appeals Office or, if appropriate, IRS Headquarters. Once the organization has exhausted its administrative appeals, it may, subject to numerous requirements, file an appeal in the federal courts. The IRS expects to respond to an exemption application within four months of the application's receipt. In 2002, the IRS estimated the average review was 91 days. A common reason for delays is that the organization's application has incomplete information. The IRS has internal procedures that allow for expedited review of an application when: an organization has a pending grant and the failure to secure the grant may have an adverse impact on the organization's ability to continue operations, an organization is intended to provide relief to disaster victims, the determination process was delayed due to the fault of the IRS, or EO Determinations management determines that expedited review is warranted for a situation not listed above. An organization must request expedited review in its application. The management at EO Determinations decides whether the application will be given priority treatment. An example of the IRS using an expedited review procedure occurred after September 11, 2001. On September 18, 2001, the IRS announced it would give priority treatment to applications of charities formed to respond to the events of September 11. The IRS estimated that the average review of these applications was seven days. The IRS also used the expedited review procedure after Hurricane Katrina for organizations seeking § 501(c)(3) status to provide relief to the victims.

Charities and other entities seeking tax-exempt status as § 501(c)(3) organizations generally must apply to the Internal Revenue Service. This report provides an overview of the application process.

The Results Act is the centerpiece of a statutory framework to improve federal agencies’ management activities. The Results Act was designed to shift the focus of attention of federal agencies from the amount of money they spend, or the size of their workloads, to the results achieved by their programs. Agencies are expected to base goals on their results-oriented missions, develop strategies for achieving their goals, and measure actual performance against the goals. The Results Act requires agencies to consult with the Congress in developing their strategic plans. This consultation gives the Congress the opportunity to help ensure that the agencies’ missions and goals are focused on results, are consistent with the programs’ authorizing laws, and are reasonable in light of fiscal constraints. The products of these consultations are to be clearer guidance to agencies on their missions and goals, which should lead to better information to help the Congress choose among programs, consider alternative ways to achieve results, and assess how well agencies are achieving them. The Results Act required SBA and other executive agencies to complete their first strategic plans and submit them to the Congress and OMB by September 30, 1997. The act also requires that agencies submit their first annual performance plans, which set out measurable goals that define what will be accomplished during a fiscal year, to the Congress after the President submits his fiscal year 1999 budget to the Congress. OMB requested that agencies integrate, to the extent possible, their annual performance plans into their fiscal year 1999 budget submissions. OMB, in turn, is required to include a governmentwide performance plan in the President’s fiscal year 1999 budget submission to the Congress. SBA’s September 30, 1997, strategic plan is an improvement over the March 5, 1997, version of the plan. The September plan includes the two required elements that were lacking in the March version. First, the September plan includes a section on how program evaluations were used to develop the plan and mentions some specific evaluations that SBA plans in the future, such as those for business information centers. Second, it includes a section entitled “Linkages to Annual Performance Plans” that recognizes the need to link (1) the strategic goals in the plan to annual performance goals and (2) SBA’s annual budget submissions to annual performance goals. In addition, the five goals in the September plan—which are to (1) increase opportunities for small business success, (2) transform SBA into a 21st century, leading edge financial institution, (3) help businesses and families recover from disasters, (4) lead small business participation in welfare-to-work, and (5) serve as the voice of America’s small businesses—are, as a group, more clearly linked to SBA’s statutory mission than the goals in the March version of the plan. Also, the inclusion of date-specific performance objectives to help measure performance makes the strategic goals and objectives in the September plan more amenable to a future assessment of SBA’s progress. For example, Under the goal of increasing opportunities for small business success, one of SBA’s performance objectives is as follows: “By the year 2000, SBA will help increase the share of federal procurement dollars awarded to small firms to at least 23 percent.” Under the goal of transforming SBA into a 21st century, leading edge financial institution, one of SBA’s performance objectives is as follows: “By the year 2000, SBA will expand the Chief Financial Officer (CFO) annual financial audit to include a separate opinion on whether SBA’s internal control structure meets Committee of Sponsoring Organizations (COSO) of the Treadway Commission standards for financial reporting. By the year 2002, SBA will receive an unqualified opinion on its internal control structure for financial reporting.” SBA also improved its strategic plan by more clearly and explicitly linking the strategies in the September plan to the specific objectives that they are intended to achieve. Also, some of the strategies are more detailed and more clearly indicate how they will enable SBA to accomplish its goals and objectives. For example, under the objective of “implementing effective oversight” of lenders and other resource partners, SBA’s strategies include (1) establishing loan program credit, service, and mission standards to measure lenders’ performance and (2) developing a scoring system, based on objective criteria, that measures and determines whose performance is consistent with the laws and regulations governing SBA programs. Furthermore, certain strategies recognize the crosscutting nature of some activities; for example, a strategy for achieving SBA’s strategic goal to “help businesses and families recover from disasters” is to combine SBA’s home loss verification with that of the Federal Emergency Management Agency’s home inspections. We also observed certain other changes which we believe have improved SBA’s strategic plan: The mission statement in SBA’s September plan appears to incorporate observations we made in our July report: It is concise and reflects SBA’s key statutory authorities of aiding, counseling, and assisting small businesses and of providing disaster assistance to families and businesses. In general, the September plan does a better job of recognizing that SBA’s success in achieving certain goals and objectives in its plan is dependent on the actions of others. For example, one of the strategies under the objective “expanding small business procurement opportunities” calls for SBA to “work with other federal agencies to set higher small business procurement goals and assist these agencies in meeting those goals.” SBA significantly improved its September plan by more clearly and explicitly linking performance measures to the specific objectives that they are intended to assess. Performance measures are directly linked to 11 of the 14 performance objectives in the plan. An exception is SBA’s fifth goal of serving as a voice for America’s small business, where the performance measures are listed as a group at the end of the discussion of the goal’s three objectives. While SBA’s September 30, 1997, strategic plan is an improvement over the March 1997 version that we reviewed, we believe that further revisions to the plan as SBA continues to implement the Results Act and build on current efforts would enable SBA’s plan to better meet the purposes of the Results Act. As noted earlier, while the five goals in the September plan are more clearly linked to SBA’s statutory mission, the relationship of one goal—leading small businesses’ participation in the welfare-to-work effort—to SBA’s mission is unclear. While the performance objective for this goal places emphasis on helping small businesses meet their workforce needs, the subsequent discussion implies a focus on helping welfare recipients find employment; for example, the plan states that “SBA’s goal is to help 200,000 work-ready individuals make the transition from welfare to work . . . .” It is not clear in the plan why SBA is focusing on welfare recipients and not on other categories of potential employees to help meet small businesses’ workforce needs. Under the Results Act, strategy sections in the strategic plans are to briefly describe items, such as the human, capital, information, or other resources needed to achieve goals and objectives. The strategy sections in SBA’s September plan lack such a discussion. At the same time, the plan recognizes the need for information on resources needed to achieve the goals and objectives, and states that accountable program managers will develop an annual business plan that contains a set of program activities, milestones, and resources for each objective and strategy in the plan. The Results Act requires that strategic plans include a schedule of future program evaluations. SBA’s plan mentions certain program evaluations planned by SBA for future fiscal years; for example, the plan states that in fiscal 1998, SBA will (1) assess the results of counseling services provided by two pilot Women Business Centers and (2) conduct an assessment of the effectiveness and efficiency of existing United States Export Assistance Centers. The plan also states that SBA will continue its goal monitoring of field and headquarters offices. However, the September plan does not contain schedules of future comprehensive program evaluations for SBA’s major programs, such as the 7(a) loan program, which is SBA’s largest small business lending program, and the 8(a) business development program, which supports the establishment and growth of small firms by providing them with access to federal procurement opportunities. In addition, while SBA acknowledges in the September plan that it needs a more systematic approach for using program evaluations for measuring progress toward achieving its goals and objectives, the plan does not outline how SBA will develop and implement such an approach. It should be noted that the IG’s plan references future audits and evaluations that the IG plans to conduct as part of its effort to improve SBA’s management. Under OMB’s Circular A-11, strategic plans are to briefly describe key external factors and how each factor may influence achievement of the goals and objectives. A section added to the September plan identifies four external factors—the state of the economy, continued congressional and stakeholder support, public-private cooperation, and interagency coordination—that could affect the achievement of the plan’s goals. However, with the exception of the “interagency coordination” factor, the plan does not link these factors to particular goals or describe how each could affect achievement of the plan’s goals and objectives. Also, the plan does not articulate strategies that SBA would take to mitigate the effects of these factors. The added section also discusses how SBA’s programs and activities interact with other federal agencies’ programs and activities. While SBA states that it will work with other federal agencies to coordinate its activities, the section does not provide evidence that SBA coordinated with the other agencies in the plan’s development. The September plan, while recognizing the need for reliable information to measure progress toward the plan’s goals and objectives, notes that SBA currently does not collect or report many of the measures that it will require to assess performance. The plan would benefit from brief descriptions of how SBA plans to collect the data to measure progress toward its goals and objectives. Similarly, a section in the September plan discusses SBA’s efforts to improve internal controls and to obtain an unqualified opinion on its internal control structure for financial reporting by the year 2002. While this section implies that SBA will address management problems identified by GAO and others, such as SBA’s failure to reconcile certain fund balances with those of the Department of Treasury and the problem of overvalued or nonexistent collateral on liquidated 7(a) loans, specific strategies to address the identified management problems are not described. Unlike the March version that we reviewed, SBA’s September plan includes, as appendices, separate strategic plans for SBA’s Office of Inspector General (IG) and Office of Advocacy. In the March version of the plan, the IG material was presented under one of the plan’s seven goals, while the Office of Advocacy material did not appear at all. Generally, the goals and objectives in the IG and Advocacy plans appear consistent with, and may contribute to the achievement of, the goals and objectives in SBA’s plan, but the relationship is not explicit. SBA’s plan makes little mention of the IG and Advocacy plans and does not indicate if or how the IG and Advocacy activities are intended to help SBA achieve the agency’s strategic goals. Similarly, the IG and Advocacy plans do not make reference to the goals and objectives in the SBA plan. These plans could be more useful to decisionmakers if their relationships were clearer. In summary, SBA has made progress in its strategic planning efforts, based in part on its consultation with the Congress. As I noted earlier, SBA’s September 1997 strategic plan includes several improvements that make it more responsive to the requirements of the Results Act. However, as is the case with many other agencies, SBA’s development of a plan that conforms to the requirements of the Results Act and to OMB’s guidance is an evolving process. As my testimony notes, there are still several areas where improvements need to be made to SBA’s strategic plan in order to meet the purposes of the Results Act. This concludes my statement. I would be pleased to respond to any questions you or members of the Committee may have. The first copy of each GAO report and testimony is free. Additional copies are $2 each. Orders should be sent to the following address, accompanied by a check or money order made out to the Superintendent of Documents, when necessary. VISA and MasterCard credit cards are accepted, also. Orders for 100 or more copies to be mailed to a single address are discounted 25 percent. U.S. General Accounting Office P.O. Box 37050 Washington, DC 20013 Room 1100 700 4th St. NW (corner of 4th and G Sts. NW) U.S. General Accounting Office Washington, DC Orders may also be placed by calling (202) 512-6000 or by using fax number (202) 512-6061, or TDD (202) 512-2537. Each day, GAO issues a list of newly available reports and testimony. To receive facsimile copies of the daily list or any list from the past 30 days, please call (202) 512-6000 using a touchtone phone. A recorded menu will provide information on how to obtain these lists.

GAO discussed the September 30, 1997 strategic plan developed by the Small Business Administration (SBA), pursuant to the Government Performance and Results Act. GAO noted that: (1) SBA's plan represents an improvement over its March 1997 version; (2) the plan contains the six elements required by the Results Act; (3) the strategic goals, as a group, are more clearly linked to SBA's mission and are more amenable to measurement; (4) the strategies and performance measures are more clearly linked to the objectives that they are intended to achieve and measure; (5) other improvements in the plan encompass a mission statement that now includes the disaster loan program for families and more accurately reflects SBA's statutory authorities and a better recognition that SBA's success in achieving certain goals and objectives in the plan is dependent on the actions of others; (6) an additional section discusses how SBA's programs and activities interact with those of other federal agencies; (7) the plan could be further improved to better meet the purposes of the Results Act; (8) the relationship of one of the plan's goals, leading small business participation in the welfare-to-work effort, to SBA's mission is unclear; (9) the plan does not discuss the human, capital, and other resources needed by SBA to carry out the strategies identified in the plan; (10) the plan does not include comprehensive schedules of future program evaluations for major SBA programs; (11) the plan does not consistently link identified external factors to the particular goal or goals they could affect or describe how how each factor could affect the achievement of the goal; (12) in a departure from its March version, SBA's plan includes as appendices separate strategic plans for SBA's Office of Inspector General and Office of Advocacy; and (13) the relationship between the goals and objectives in the plans included in the appendices and those in SBA's plan is not explicit.

DLA Troop Support's Clothing and Textile Directorate (C&T) supplies more than 8,000 different items ranging from uniforms and body armor to tents and canteens. Many C&T products, such as uniforms, are unique to the military. The Directorate collaborates with military service customers and private vendors to design and test uniforms. C&T also identifies, tests, and approves commercial items for military use, including sweatshirts, gloves, and blankets, and supplies special purpose clothing, wet weather clothing, chemical suits, and field packs. DOD offers the following guidance on the management of military uniform procurement: Section 850 of the National Defense Authorization Act for Fiscal Year 1998 ( P.L. 105-85 ) requires that any notice of agency requirements or notice of an agency solicitation for contracts be provided through a single, government-wide point of entry. The Federal Business Opportunities (FedBizOpps) site is the electronic, government-wide entry point for information on all federal government contracts over $25,000; DOD Instruction 4160.1-R, DOD Supply Chain: Materiel Management Regulation, which describes the process of materiel management within the DOD supply chain system; and DOD Instruction 4140.63, Management of DOD Clothing and Textiles (Class II), which outlines the authority, policy, and responsibilities for the management of the DOD clothing and textiles, and directs the establishment of the Joint Clothing and Textiles Governance Board. In addition, military uniforms are procured in accordance with the provisions of the Federal Acquisition Regulation (FAR), DLA's own internal regulations, the Berry Amendment, and the Buy American Act (BAA). The Berry Amendment (Title 10 U.S.C. 2533a), which dates from the eve of World War II, was established for a narrowly defined purpose: to ensure that U.S. troops wore military uniforms wholly produced in the United States and that U.S. troops were fed food products wholly produced in the United States. There are exceptions to the Berry Amendment that waive the domestic source restrictions. One such exception allows DOD to purchase specialty metals and chemical warfare protective clothing from countries where the United States has entered into reciprocal procurement memoranda of understanding (MOUs). A Deputy Secretary of Defense's memorandum of May 1, 2001, stated that the Under Secretary of Defense for Acquisition, Technology, and Logistics and the Secretaries of the military services have the authority to determine that certain items under the Berry Amendment are not available domestically in quantities or qualities that meet military requirements. Such decisions are called "domestic nonavailability determinations" or DNADs. This authority may not be re-delegated. Use of DNADs requires an analysis of the alternatives and certification of the process. Military uniforms are generally procured through competitive contracts. C&T maintains access to a variety of supplies and uniform-related products. C&T specialists may also procure textiles and materials directly from the textile industry, and then provide textiles and materials to the contractors. The materials may be used to manufacture additional uniforms and related products, often achieving higher quality and substantial savings over purchased, finished generic products. According to a GAO report on DOD's ground combat uniforms, DLA managed eight uniforms for the military services as of 2010. Vendors and customers may review current solicitations in FedBizOpps, the online source for all federal government procurement opportunities. DLA has established an automated system to provide contractors with the ability to conduct detailed searches for solicitations and contract awards. DLA Troop Support's Clothing & Textiles supply chain has established a 24-hour, 7-day-a-week Customer Contact Center as the point for all customer inquiries. Prospective bidders should obtain specifications prior to submitting an offer. According to DFARS Parts 204, 212, and 252, contractors must first register in the Central Contractor Registration (CCR) prior to the administration of contract awards, basic ordering agreements, or blanket purchase agreements, unless the award results from a solicitation issued on or before June 1, 1998. DLA has stated on its website that price is not always the sole determination in contract awards, as described here. Many of our acquisitions (most notably our negotiated acquisitions) involve a review of a contractor's technical capability; corporate experience; quality; past performance and surge capability (as well as price). This methodology is used because it makes good business sense and ensures reliable contractors with proven performance records will deliver quality products at the lowest possible costs. This concept, known as Best Value, is defined as any competitive negotiated acquisition where the contracting officer uses discriminating factors, in addition to price, in the evaluation of proposals and award of a contract. Within DLA Troop Support, this would encompass virtually all our awards with the exception of low price, technically acceptable source selection and sealed bidding. Section 352 of 113-66, the NDAA for FY2014, requires all military services to adopt and field a joint combat camouflage uniform by October 1, 2018. The provision appears below. (a) Establishment of Policy- It is the policy of the United States that the Secretary of Defense shall eliminate the development and fielding of Armed Force-specific combat and camouflage utility uniforms and families of uniforms in order to adopt and field a common combat and camouflage utility uniform or family of uniforms for specific combat environments to be used by all members of the Armed Forces. (b) Prohibition- Except as provided in subsection (c), after the date of the enactment of this Act, the Secretary of a military department may not adopt any new camouflage pattern design or uniform fabric for any combat or camouflage utility uniform or family of uniforms for use by an Armed Force, unless— (1) the new design or fabric is a combat or camouflage utility uniform or family of uniforms that will be adopted by all Armed Forces; (2) the Secretary adopts a uniform already in use by another Armed Force; or (3) the Secretary of Defense grants an exception based on unique circumstances or operational requirements. (c) Exceptions- Nothing in subsection (b) shall be construed as— (1) prohibiting the development of combat and camouflage utility uniforms and families of uniforms for use by personnel assigned to or operating in support of the unified combatant command for special operations forces described in section 167 of title 10, United States Code; (2) prohibiting engineering modifications to existing uniforms that improve the performance of combat and camouflage utility uniforms, including power harnessing or generating textiles, fire resistant fabrics, and anti-vector, anti-microbial, and anti-bacterial treatments; \(3) prohibiting the Secretary of a military department from fielding ancillary uniform items, including headwear, footwear, body armor, and any other such items as determined by the Secretary; (4) prohibiting the Secretary of a military department from issuing vehicle crew uniforms; (5) prohibiting cosmetic service-specific uniform modifications to include insignia, pocket orientation, closure devices, inserts, and undergarments; or (6) prohibiting the continued fielding or use of pre-existing service-specific or operation-specific combat uniforms as long as the uniforms continue to meet operational requirements. (d) Registration required- The Secretary of a military department shall formally register with the Joint Clothing and Textiles Governance Board all uniforms in use by an Armed Force under the jurisdiction of the Secretary and all such uniforms planned for use by such an Armed Force. (e) Limitation on Restriction- The Secretary of a military department may not prevent the Secretary of another military department from authorizing the use of any combat or camouflage utility uniform or family of uniforms. (f) Guidance Required- (1) IN GENERAL- Not later than 60 days after the date of the enactment of this Act, the Secretary of Defense shall issue guidance to implement this section. (2) CONTENT- At a minimum, the guidance required by paragraph (1) shall require the Secretary of each of the military departments— (A) in cooperation with the commanders of the combatant commands, including the unified combatant command for special operations forces, to establish, by not later than 180 days after the date of the enactment of this Act, joint criteria for combat and camouflage utility uniforms and families of uniforms, which shall be included in all new requirements documents for such uniforms; (B) to continually work together to assess and develop new technologies that could be incorporated into future combat and camouflage utility uniforms and families of uniforms to improve war fighter survivability; (C) to ensure that new combat and camouflage utility uniforms and families of uniforms meet the geographic and operational requirements of the commanders of the combatant commands; and (D) to ensure that all new combat and camouflage utility uniforms and families of uniforms achieve interoperability with all components of individual war fighter systems, including body armor, organizational clothing and individual equipment, and other individual protective systems. (g) Repeal of Policy- Section 352 of the National Defense Authorization Act for Fiscal Year 2010 ( P.L. 111-84 , 123 Stat. 2262; 10 U.S.C. 771 note) is repealed. Section 352 of P.L. 111-84 , the NDAA for FY2010, contained several provisions of importance to the procurement of military uniforms. Section 352 (a) established the U.S. policy on ground combat and camouflage uniforms; Section 352(b) required the Comptroller General to perform an assessment of the current military uniforms in use and report to Congress; Section 352(c) required the Comptroller General to perform an assessment of military ground combat uniforms and camouflage utility uniforms and submit a report to within 180 days of the bills enactment; and Section 352(d) required the military service heads to develop joint requirements for camouflage uniforms. In the report to Congress, GAO made the following observations, as described here. Although the Army, Air Force, and Marine Corps stated that they have established certain requirements for combat clothing, performance standards were mixed and not specific to the combat environment. The effectiveness of the camouflage was not one of the operational criteria used to measure performance. Military service officials stated that the ground combat uniforms, protective gear, and body armor were interoperable; however, there were no criteria to regularly test the interoperability and thus officials were reliant on feedback from the users to gauge interoperability. Production and procurement costs for ground combat uniforms account for about 95% of the costs of ground combat uniforms. GAO reports that DOD officials stated that " ... supporting a variety of uniforms in any combat theater of operations does not place additional logistics requirements on the distribution system; rather, the additional logistical requirements are primarily found in storage costs in the United States." Military service officials reported that it is unlikely that the services would choose to wear the same ground camouflage uniform because the uniform is a service-specific measure of pride, individuality and uniqueness. Reportedly, the Marine Corps System Command officials stated that Title 10 United States Code (U.S.C.) 771 prohibits a member of one military service from wearing the uniform or a distinctive part of the uniform belonging to a different military service. Officials from the military services and the U.S. Central Command reportedly do not collect data that would permit an assessment of the risks associated with wearing different uniforms during combat operations. Maintaining flexibility in determining uniform selection is important and based on operational needs. GAO revisited the military uniform issue in 2012 to determine the extent to which DOD had issued guidance to provide a consistent decision process to ensure that new camouflage uniforms met operational requirements and, also, to determine the extent to which the military services have used a joint approach to develop appropriate criteria, ensure equivalent protection, and manage uniform costs. GAO concluded that DOD had not met the statutory requirement to develop joint criteria, nor had the services sought opportunities to reduce clothing costs and collaborate on uniform inventory costs. Section 839 of P.L. 113-66 would have required that the initial military footwear issued to enlisted military personnel be procured in accordance with the provisions of the Berry Amendment, 10 U.S.C. 2533a. The provision appears below. (a) Requirement- Section 418 of title 37, United States Code, is amended by adding at the end the following new subsection: (d)(1) In the case of athletic footwear needed by members of the Army, Navy, Air Force, or Marine Corps upon their initial entry into the armed forces, the Secretary of Defense shall furnish such footwear directly to the members instead of providing a cash allowance to the members for the purchase of such footwear. (2) In procuring athletic footwear to comply with paragraph (1), the Secretary of Defense shall comply with the requirements of section 2533a of title 10, without regard to the applicability of any simplified acquisition threshold under chapter 137 of title 10 (or any other provision of law). (3) This subsection does not prohibit the provision of a cash allowance to a member described in paragraph (1) for the purchase of athletic footwear if such footwear— (A) is medically required to meet unique physiological needs of the member; and (B) cannot be met with athletic footwear that complies with the requirements of this subsection.'. (b) Certification- The amendment made by subsection (a) shall not take effect until the Secretary of Defense certifies that there are at least two sources that can provide athletic footwear to the Department of Defense that is 100 percent compliant with section 2533a of title 10, United States Code.

Military uniforms are procured through the Defense Logistics Agency (DLA), an agency of the Department of Defense (DOD). DLA is DOD's largest combat support agency, providing worldwide logistics support for the United States military services, civilian agencies, and foreign countries. With headquarters in Fort Belvoir, VA, DLA operates three supply centers: DLA Aviation, DLA Land and Maritime, and DLA Troop Support. Military uniforms are procured through DLA Troop Support in Philadelphia, PA. DLA Troop Support is responsible for procuring nearly all of the food, clothing, and medical supplies used by the military, including about 90% of the construction material used by troops in the field, and repair parts for aircraft, combat vehicles, and other weapons system platforms. According to DLA Troop Support's website, "Each year, DLA Troop Support supplies and manages over $13.4 billion worth of food, clothing and textiles, pharmaceuticals, medical supplies, and construction and equipment supplies in support of America's warfighters worldwide and their eligible dependents." Within DLA Troop Support, the Clothing and Textile (C&T) Directorate supplies more than 8,000 different items ranging from uniforms to footwear and equipment. According to DLA Troop Support, in FY2012, C&T sales of clothing, textiles, and equipment to military personnel worldwide surpassed $1.9 billion. Legislative initiatives that affect the procurement of military uniforms were enacted in several bills, among them: Section 822 of P.L. 112-81, the NDAA for FY2012; Section 821 of P.L. 111-383, the Ike Skelton NDAA for FY2011; and Section 352 of P.L. 111-84, the NDAA for FY2010. Section 352 of P.L. 113-66 requires all military services to use a joint combat camouflage uniform, while Section 839 of H.R. 1960, the proposed House-version of the NDAA for FY2014, would have, if enacted, required that the initial military footwear issued to enlisted military personnel conform to the provisions of the Berry Amendment, 10 U.S.C. 2533a.

RS21582 -- North Korean Crisis: Possible Military Options July 29, 2003 The Korean peninsula lies at a nexus of military, economic, and political concerns with global implications. From North Korea'sperspective, it is surrounded by world powers: to the west and north are China and Russia, to the East is Japan, andto the South isSouth Korea and military forces of the United States. Since the Korean War began in 1950, the North Koreandictatorship haspresented continuous military and economic challenges to its neighbors. Recent challenges have included a specterof economiccollapse and a threat to develop a nuclear arsenal. North Korea, with a population of 22 million, maintains a large military force of over 1 million active soldiers and 4.7 millionreservists. Its force structure includes some 20 army corps with armor, mechanized infantry, and infantry units;notable enhancementsinclude 88,000 special purpose forces and a range of artillery, rocket, and missile forces (some reportedly capableof deliveringchemical and biological agents) (1) . Naval forcesinclude some 300 patrol and coastal combatants, 26 submarines, and 66inshore/coastal submarines for inserting special forces. Air forces deploy over 500 Russian fighter and attackaircraft and some 300utility helicopters. Detracting from the potency of this large force are the age and obsolescence of many combatsystems and lowtraining hours afforded to their crews. Many draftees may reflect weakness stemming from ten years of malnutrition. Directly facing the North Korean threat is South Korea with some 48 million people. It has 686,000 personnel on active military dutyand can muster 4.5 million reservists. The South Korean Army is organized into some 10 corps, with equipmentgenerally better thanthat found to the North -- for example, half of its tanks are comparable to the U.S. Abrams tank. Its fleet of over350 helicoptersincludes U.S. AH-1 Cobras, CH-47 Chinooks, and UH-60 Blackhawks. The Navy deploys 26 submarines, 39principal surfacecombatants, 84 patrol and coastal combatants, and a 2-division force of 28,000 Marines. The Air Force flies over530 combat aircraft, including the F-16C/D. The South Korean level of training is considered generally higher than that of North Korea. Integral to the defense of South Korea is the direct presence of some 37,000 U.S. military personnel. Major units are two brigades ofthe 2d Infantry Division, combat and support units of the Eighth Army (including Patriot missile batteries), and U.S.Air Force unitsdeploying 90 combat aircraft. Dedicated reinforcement and supporting forces are considerable, including a newStryker Brigade (2) and a corps headquarters in Fort Lewis, Washington and the 25th Infantry Division in Hawaii. Powerful Air Force, Marine Corps, andNavy forces (totaling 48,000 personnel) are nearby in Japan, including the Seventh Fleet. Availability of additionalArmy forces inthe near term, however, would be limited by ongoing commitments in Iraq, Afghanistan, the Balkans, and otherplaces. (3) A unique strength of the defense of South Korea resides in the command arrangements, both joint and combined. A U.S. officer,General Leon J. LaPorte, as Commander of the Combined Forces Command, would command all allied forces inSouth Korea duringwartime, as well as all U.S. forces. A South Korean general would be the ground component commander and haveoperationalcontrol of U.S. ground forces assigned to him by General LaPorte. Higher headquarters integrate both U.S. andSouth Koreanintelligence and operational planning, an area of frequent testing and exercise. Major military action on the Korean Peninsula could create a challenge exceeding that recently met by the United States and its alliesin Iraq. Some 80% of the peninsula, about the size of Utah, is covered by rugged hills and mountains. (4) The winters are bitterly cold,while the summers are hot and humid with periodic torrential rains and flooding. Much of the North Korean forceis protected by asystem of underground caves and tunnels. About two-thirds of the North Korean force is forward deployed alongthe DemilitarizedZone (DMZ), the northern boundary of South Korea. Complicating military defensive planning is the location ofSeoul, the capital ofSouth Korea. Seoul, a metropolis of some 10 million people, sits astride the major trafficable corridor betweenNorth and SouthKorea, as close as 25 miles to the DMZ. In a surprise attack, the North could inflict artillery and missile devastationupon Seoul --referred to by the North as a "sea of fire" (5) -- andpossibly reach the city with a coordinated ground and special operations attack. Should resort to force be deemed necessary, there are several military actions that the United States could contemplate to achievepolicy objectives on the Korean Peninsula. North Korea, unfortunately, has a history of unpredictable, and oftenviolent, reactions toeven slight provocations. Therefore, even the most modest U.S. military action risks escalation to higher levels ofconflict and mostanalysts agree that no military option should be chosen without full recognition of such danger. Also, acombination of options couldbe chosen or even anticipated to ensue. U.S. allies and other nations in Northeast Asia are aware of these dangersand the UnitedStates would likely undertake some form of consultation with them -- their active or passive cooperation could beneeded. Some suggest that, in light of potentially large casualties, proceeding without South Korean agreement "would be immoralas well asill-advised." (6) Status Quo. Current U.S. policy involves maintaining a stable military situationwhile diplomacy proceeds to solve the North Korean nuclear crisis. South Korea and the United States maintainstrong defenses alongthe DMZ. Periodic military exercises elicit complaints from North Korean officials, but, over time, they generallyseem accustomedto and respect the existing military situation. (7) Somehave suggested withdrawal or drawdown of U.S. forces, but other analystsbelieve this could, in a time of tensions, send unintended messages to North Korea or even to one or more of itspowerful neighbors. Ongoing studies and negotiations propose to relocate U.S. ground forces and headquarters, primarily by movingthe U.S. 2d InfantryDivision from the north to the south of Seoul. (8) Sucha move would give U.S. forces greater flexibility to maneuver and make themless vulnerable to a surprise attack -- essentially lessening the "tripwire" effect of having U.S. forces close to theDMZ. Whethersuch an action will make the military situation more or less stable could be argued either way, (9) but the overall effect should notunduly change the military status quo on the Korean Peninsula. Improve Defensive Posture. Recognizing that the current situation is unusuallytense, the United States and South Korea could adopt a policy of temporarily increasing military preparedness todeter a NorthKorean military strike, (10) improve allied odds todefeat such a strike, or reinforce diplomatic firmness. The least provocative actionmight be to add more robust intelligence and warning activities, both those based in South Korea and those usingspace assets andadjoining air and sea access. Other options include: upgrading and testing alternate command headquarters,including thoseunderground, as well as information and communications networks; adding more air and missile defense assets toprotect additionalkey government and military facilities in South Korea and Japan; and, strengthening unit reception plans andfacilities forreinforcements. In so far as the North Korean crisis is recognized as a priority military challenge to the UnitedStates, the measuresabove are, in some cases, underway, according to recent press reports. (11) Although possible, it is unlikely that North Korea wouldattack solely in response to such gradual, defensive measures. It might, however, feel greater pressure to either reacha diplomaticsolution or expend more resources on its own military establishment. Calling up South Korean reservists or moving additional U.S. combat forces into the Peninsula might also be considered. Unlessdone in response to overtly hostile North Korean actions or intentions, such actions would most likely be construedas a seriousprovocation or possibly a prelude to an allied attack. North Korean sensitivity is illustrated by statements of concerneven whentemporary U.S. buildups and exercises are held in Okinawa. (12) Military Enforcement of Sanctions. Should North Korea attempt to export weapons of mass destruction, longer range missiles, or the materials to create such things, interception on the highseas or in the air bymilitary forces might be considered. (13) U.S. andinternational policy objectives would be to enforce nonproliferation goals and,perhaps secondarily, to restrict hard currency gains from such transactions. Such a "blockade," "quarantine," or"containment," to beeffective, would require large, dedicated U.S. Navy and Air Force participation, and at least some Coast Guardassets. It wouldrequire the cooperation of other nations and international organizations, not least being a commitment from Chinaand Russia toactively seal their land, sea, and air borders from penetration by North Korean conveyances and those of theircustomers. Risks for such an operation are that innocent trade and other activities of many nations could be inconvenienced; North Korea mightcircumvent even sophisticated intelligence and interception operations; and, since a blockade is considered an actof war, North Koreamight respond with military action. (14) Preemptive Strike on Nuclear Facilities. The Administration's National SecurityStrategy reserves the option for the President to order a preemptive strike to forestall a weapons of mass destructionattack against theUnited States, its military forces, or its allies. (15) In this case, the possession of nuclear weapons and ballistic missiles could threaten,now or in the short term, U.S. forces and allied populations in South Korea and Japan. In the longer term, a fewobservers areconcerned that North Korea could threaten more distant targets, to include parts of the U.S. homeland. (16) There is also the possibilitythat North Korean nuclear materials and weapons could be exported to third parties -- terrorist groups or rogue states-- that mightwish to harm the United States. In any event, a policy option would be to destroy identified weapons and materialsand associatedproduction facilities in North Korea; it would be complicated by the North Korean's ability to hide or protect suchtargets, oftendeeply underground. The United States has the ability to deliver both conventional and nuclear weapons against some underground targets, and is studying "robust nuclear earth penetrators." (17) Some targetscould presumably also be neutralized with special forces operations. A risk with apreemptive strike option is that all identified targets, if they do exist, might not be accurately located and that somemay be deeply oreffectively protected against U.S. weapons. (18) Surviving capabilities might be used in retaliatory strikes, possibly creating calamitiesthat U.S. policy was trying to prevent. U.S. strikes would undoubtedly be considered acts of war, and North Koreacould attempt tolaunch selective or massive conventional attacks against South Korea in response. (19) It is, therefore, unlikely that South Korea wouldsupport a preemptive strike option under most circumstances. Preemptive War. Initiating general war with North Korea is an unlikely option forthe United States, as South Korea would be unwilling to sustain the resultant, huge costs on its population withoutextremeprovocation. In theory, however, two policy objectives might be met. First, should regime change in North Koreabecome a prioritypolicy objective, a military march to Pyongyang might be the only sure means available. Second, should a majorNorth Korean attacksouth appear imminent, the policy of preemptive attack might offer advantages: the initial allied targeting andassaults could reduceNorth Korean capabilities to destroy Seoul, WMD could be destroyed or captured, and allied commanders wouldbe able to executetheir plan with nonattritted forces -- a particular advantage if the United States followed a doctrine of rapid, joint,and coordinatedattacks throughout the depth of North Korea. In considering a war option, certain assumptions and risks would need to be assessed. First, international support for the war wouldbe desirable, given U.S. reliance on global communications and transport; China's reaction would be key -- at theminimum it wouldhave to be neutral. Next, it would be difficult to mask attack preparations by U.S. and South Korean forces. NorthKorea couldlaunch its own preemptive attack, possibly creating some of the adverse consequences U.S. policy was trying tocircumvent. Also,timing is a problem -- due to heavy commitments in Iraq and many other places, the U.S. Army is currently stretchedvery thin, andwould find it difficult to contribute the major ground forces needed. (20) To sustain such an operation, it is likely that many ArmyNational Guard and Army Reserve units not already on active duty would have to be mobilized, as well asconsiderable numbers ofindividual reservists to fill out units and replace casualties. It is likely that much of any post-war occupation ofNorth Korea requiredcould be accomplished by South Korea. Finally, American public acceptance of a more difficult and protracted war than it might expect based on recent, quick U.S. militaryvictories in Southwest Asia and the Balkans may be a requisite. In addition to geographic problems highlightedabove and a largerenemy force that has possibly learned through observation how the United States fights, the North Korean soldiermay not surrendereasily. The Korean War of 1950-1953 is a cautionary example: one U.S. veteran of that conflict said, "I'd ratherfight the Chinese anyday than the North Koreans, who were more tenacious, more fanatical, and more disciplined." (21) Others would point out that today'sNorth Korean soldier is physically weaker, may resent state oppression, is severely outclassed in weaponry andexperience withmodern warfare -- and the current limits of his tenacity are not known. Should a military option be deemednecessary, the Executivewould be expected to consult with appropriate congressional bodies.

North Korea has confronted the United States with its decision, failing other securityaccommodations, to pursue production of nuclear weapons. The Bush Administration has stated that, although thesituation isunacceptable, it will pursue its resolution through diplomatic means. Military means, however, could be consideredat some point andbecome a serious issue for Congress. This short report discusses the geography and military balance on the KoreanPeninsula,presents the range of military options that might be applied there to specific U.S. political objectives, and assessespossibleconsequences. Military options discussed are: status quo, improved defensive posture, enforce sanctions,preemptive strike againstnuclear facilities, and preemptive war. Also see CRS Issue Brief IB98045 on U.S.-Korean relations and CRS Issue Brief IB91141 onNorth Korea's nuclear weapons. This report will be updated if major changes occur.

All six projects serve adults who are economically disadvantaged, with a range of reasons why they have been unable to get and keep a job that would allow them to become self-sufficient. Many participants lack a high school diploma or have limited basic skills or English proficiency; have few, if any, marketable job skills; have a history of substance abuse; or have been victims of domestic violence. The projects we visited had impressive results. Three of the sites had placement rates above 90 percent—two placed virtually all those who completed their training. The other three projects placed two-thirds or more of those who completed the program. The sites differ in their funding sources, skills training approaches, and client focus. For example: We visited two sites that are primarily federally funded and target clients eligible under the Job Training Partnership Act (JTPA) and Job Opportunities and Basic Skills (JOBS) program. These sites are Arapahoe County Employment and Training in Aurora, Colorado, which is a suburb of Denver, and The Private Industry Council (TPIC) in Portland, Oregon. Both of these sites assess clients and then follow a case management approach, linking clients with vocational training available through community colleges or vocational-technical schools. The Encore! program in Port Charlotte, Florida, serves single parents, displaced homemakers, and single pregnant women. Encore!’s 6-week workshop and year-round support prepare participants for skill training. It is primarily funded by a federal grant under the Perkins Act and is strongly linked with the Charlotte Vocational Technical Center (Vo-Tech). The Center for Employment Training (CET) in Reno, Nevada, focuses on three specific service-related occupations and serves mainly Hispanic farmworkers. Participants may receive subsidized training from sources such as Pell grants, JTPA state funds, and the JTPA Farmworker Program, as well as grants from the city of Reno. Focus: HOPE, in Detroit, Michigan, also serves inner-city minorities but emphasizes development of manufacturing-related skills. Its primary funding source in 1994 was a state economic development grant. STRIVE (Support and Training Results in Valuable Employment), in New York City’s East Harlem, primarily serves inner-city minorities and focuses on developing in clients a proper work attitude needed for successful employment rather than on providing occupational skills training. STRIVE is privately funded through a grant from the Clark Foundation, which requires a two-for-one dollar match from other sources, such as local employers. Projects also differ in other ways, such as the way project staff interact with clients—customizing their approach to what they believe to be the needs of their participants. For example, STRIVE’s approach is strict, confrontational, and “no-nonsense” with the East Harlem men and women in their program. In contrast, Encore! takes a more nurturing approach, attempting to build the self-esteem of the women, many of them victims of mental or physical abuse, who participate in the program in rural Florida. One important feature of these projects’ common strategy is ensuring that clients are committed to participating in training and getting a job. Each project tries to secure client commitment before enrollment and continues to encourage that commitment throughout training. Project staff at several sites believed that the voluntary nature of their projects is an important factor in fostering strong client commitment. Just walking through the door, however, does not mean that a client is committed to the program. Further measures to encourage, develop, and require this commitment are essential. All the projects use some of these measures. Some of the things that projects do to ensure commitment are (1) making sure clients know what to expect, so they are making an informed choice when they enter; (2) creating opportunities for clients to screen themselves out if they are not fully committed; and (3) requiring clients to actively demonstrate the seriousness of their commitment. To give clients detailed information about project expectations, projects use orientation sessions, assessment workshops, and one-on-one interviews with project staff. Project officials say that they do this to minimize any misunderstandings that could lead to client attrition. Officials at both STRIVE and Arapahoe told us that they do not want to spend scarce dollars on individuals who are not committed to completing their program and moving toward full-time employment; they believe that it is important to target their efforts to those most willing to take full advantage of the project’s help. For example, at STRIVE’s preprogram orientation session, staff members give potential clients a realistic program preview. STRIVE staff explain their strict requirements for staying in the program: attending every day—on time, displaying an attitude open to change and criticism, and completing all homework assignments. At the end of the session, STRIVE staff tell potential clients to take the weekend to think about whether they are serious about obtaining employment and, if so, to return on Monday to begin training. STRIVE staff told us that typically 10 percent of those who attend the orientation do not return on Monday. Both CET and Focus: HOPE provide specific opportunities for clients to screen themselves out. They both allow potential clients to try out their training program at no charge to ensure the program is suitable for them. Focus: HOPE reserves the right not to accept potential clients on the basis of their attitude, but it does not routinely do this. Instead, staff will provisionally accept the client into one of the training programs, but put that client on notice that his or her attitude will be monitored. All six projects require clients to actively demonstrate the seriousness of their commitment to both training and employment. For example, all projects require clients to sign an agreement of commitment outlining the client’s responsibilities while in training and all projects monitor attendance throughout a client’s enrollment. In addition, some project officials believed that requiring clients to contribute to training is important to encouraging commitment. Focus: HOPE requires participants—even those receiving cash subsidies—to pay a small weekly fee for their training, typically $10 a week. A Focus: HOPE administrator explained that project officials believe that students are more committed when they are “paying customers,” and that this small payment discourages potential participants who are not seriously committed to training. All the projects emphasize removing employment barriers as a key to successful outcomes. They define a barrier as anything that precludes a client from participating in and completing training, as well as anything that could potentially limit a client’s ability to obtain and maintain a job. For example, if a client lacks appropriate basic skills, then providing basic skills training can allow him or her to build those skills and enter an occupational training program. Similarly, if a client does not have adequate transportation, she or he will not be able to get to the training program. Because all the projects have attendance requirements, a lack of adequate child care would likely affect the ability of a client who is a parent to successfully complete training. Moreover, if a client is living in a domestic abuse situation, it may be difficult for that client to focus on learning a new skill or search for a job. The projects use a comprehensive assessment process to identify the particular barriers each client faces. This assessment can take many forms, including orientation sessions, workshops, one-on-one interviews, interactions with project staff, or a combination of these. For example, at TPIC’s assessment workshop, clients complete a five-page barrier/needs checklist on a wide variety of issues, including food, housing, clothing, transportation, financial matters, health, and social/support issues. At the end of this workshop, clients must develop a personal statement and a self-sufficiency plan that the client and case manager use as a guide for addressing barriers and for helping the client throughout training. Encore! and Arapahoe have similar processes for identifying and addressing barriers that clients face. Rather than relying on a formal workshop or orientation process, CET identifies clients’ needs through one-on-one interviews with program staff when a client enters the program. Throughout the training period, instructors, the job developer, and other project staff work to provide support services and address the client’s ongoing needs. All the projects arrange for clients to get the services they need to address barriers, but—because of the wide range of individual client needs—none provides all possible services on-site. For example, although all six projects recognize the importance of basic skills training, they arrange for this training in different ways. Arapahoe contracts out for basic skills training for clients, while CET, Encore!, and Focus: HOPE provide this service on-site and TPIC and STRIVE refer clients out to community resources. Only Focus: HOPE provides on-site child care; however, all five other projects help clients obtain financial assistance to pay for child care services or refer clients to other resources. Because some of the projects attract many clients who have similar needs, these projects provide certain services on-site to better tailor their services to that specific population. For example, because it serves Hispanic migrant farmworkers with limited English proficiency, CET provides an on-site English-as-a-second-language program. Likewise, because a major barrier for many of Encore!’s clients is low self-esteem resulting from mental and/or physical abuse, Encore! designed its 6-week workshop to build self-esteem and address the barriers that these women face so that they are then ready to enter occupational training. Each project we visited emphasizes employability skills training. Because so many of their clients have not had successful work experiences, they often do not have the basic knowledge others might take for granted about how to function in the workplace. They need to learn what behaviors are important and how to demonstrate them successfully. These include getting to work regularly and on time; dressing appropriately; working well with others; accepting constructive feedback; resolving conflicts appropriately; and, in general, being a reliable, responsible, self-disciplined employee. Each project coaches students in employability skills through on-site workshops or one-on-one sessions. For example, CET provides a human development program that addresses such issues as life skills, communication strategies, and good work habits. Similarly, Arapahoe helps each client develop employment readiness competencies through a workshop or one-on-one with client case managers. Some of the projects also develop employability skills within the context of occupational skills training, with specific rules about punctuality, attendance, and, in some cases, appropriate clothing consistent with the occupation for which clients are training. STRIVE concentrates almost exclusively on employability skills and, in particular, attitudinal training. This project has a very low tolerance for behaviors such as being even a few minutes late for class, not completing homework assignments, not dressing appropriately for the business world, and not exhibiting the appropriate attitude. We observed staff dismissing clients from the program for a violation of any of these elements, telling them they may enroll in another offering of the program when they are ready to change their behavior. Program staff work hard to rid clients of their attitude problems and “victim mentality”—that is, believing that things are beyond their control—and instill in them a responsibility for themselves, as well as make them understand the consequences of their actions in the workplace. All the projects have strong links with the local labor market. Five of the six projects provide occupational skills training, using information from the local labor market to guide their selection of training options to offer clients. These projects focus on occupations that the local labor market will support. Project staff strive to ensure that the training they provide will lead to self-sufficiency—jobs with good earnings potential as well as benefits. In addition, all but one of the six projects use their links to local employers to assist clients with job placement. While their approaches to occupational training and job placement differ, the common thread among the projects is their ability to interpret the needs of local employers and provide them with workers who fit their requirements. All five projects that provide occupational training are selective in the training options that they offer clients, focusing on occupational areas that are in demand locally. For example, CET and Focus: HOPE have chosen to limit their training to one or a few very specific occupational areas that they know the local labor market can support. Focus: HOPE takes advantage of the strong automotive manufacturing base in the Detroit area by offering training in a single occupation serving the automotive industry—machining. With this single occupational focus, Focus: HOPE concentrates primarily on meeting the needs of the automotive industry and the local firms that supply automotive parts. Students are instructed by skilled craftspeople; many senior instructors at Focus: HOPE are retirees who are passing on the knowledge they acquired during their careers. The machines used in training are carefully chosen to represent those that are available in local machine shops—both state-of-the-art and older, less technically sophisticated equipment. Job developers sometimes visit potential work sites, paying close attention to the equipment in use. This information is then used to ensure a good match between client and employer. While offering a wide range of training options, Vo-Tech, which trains Encore! participants, is linked to the local labor market, in part by its craft advisory committees. These committees involve 160 businesses in determining course offerings and curricula. Vo-Tech recently discontinued its bank teller program shortly after a series of local bank mergers decreased demand for this skill. It began offering an electronics program when that industry started expansion in the Port Charlotte area. Vo-Tech also annually surveys local employers for feedback on its graduates’ skills and abilities, using the feedback to make changes to its programs. When feedback from local employers in one occupation indicated that Vo-Tech graduates were unable to pass state licensing exams, the school terminated the instructors and hired new staff. All the projects assist clients in their job search. Five of the six projects had job developers or placement personnel who work to understand the needs of local employers and provide them with workers who fit their requirements. For example, at Focus: HOPE the job developers sometimes visit local employers to discuss their required skill needs. Virtually all graduates of Focus: HOPE are hired into machinist jobs in local firms. The placement staff that works with Encore! graduates noted that there are more positions to fill than clients to fill them. They believe that because of their close ties with the community and the relevance of their training program they have established a reputation of producing well-trained graduates. This reputation leads employers to trust their referrals. Mr. Chairman, that concludes my prepared statement. At this time I will be happy to answer any questions you or other members of the Subcommittee may have. For information on this testimony, please call Sigurd R. Nilsen, Assistant Director, at (202) 512-7003; Sarah L. Glavin, Senior Economist, at (202) 512-7180; Denise D. Hunter, Senior Evaluator, at (617) 565-7536; or Betty S. Clark, Senior Evaluator, at (617) 565-7524. Other major contributors included Benjamin Jordan and Dianne Murphy Blank. 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Pursuant to a congressional request, GAO discussed the merits of 6 highly successful employment training programs for economically disadvantaged adults. GAO found that the programs: (1) serve adults with little high school education, limited basic skills and English language proficiency, few marketable job skills, and past histories of substance abuse and domestic violence; (2) have a fairly successful placement rate, with three of the programs placing 90 percent of their clientele; (3) ensure that the clients are committed to training and getting a good job, and as a result, require them to sign an agreement of commitment outlining their responsibilities; (4) provide child care, transportation, and basic skills training to enable clients to complete program training and acquire employment; (5) improve their clients employability through on-site workshops and one-on-one sessions; (6) have strong links with the local labor market and use information from the local market to guide training options; and (7) aim to provide their clients with training that will lead to higher earnings, good benefits, and overall self-sufficiency.

Over the years, research has consistently shown that children with health insurance coverage have better access to health care services and a regular health care provider, which in turn results in better health outcomes. According to the Annual Social and Economic Supplement to the Current Population Survey (CPS, often called the March Supplement), in 2010, 90.0% of children had health insurance and 10.0% were uninsured. Similarly, in 2009, 10.2% of children were uninsured. While overall 10.0% of children are uninsured, the uninsured rate among children varies in different segments of the population. For example, older children are more likely to be uninsured compared with younger children, and Hispanic children have twice the uninsured rate compared with non-Hispanic children. State factors, such as eligibility levels for public programs (e.g., Medicaid) and a state's health insurance market, also affect the health insurance status of children. The CPS data show that the uninsured rate among children across the states ranges from 17.3% in Texas to 3.2% in Massachusetts. Children who have health insurance have either private insurance, public coverage, or both. Private insurance includes employer-sponsored insurance and nongroup insurance (insurance purchased in the individual market); public coverage includes Medicaid, the State Children's Health Insurance Program (CHIP), and any other means-tested public programs, as well as Medicare and military health care (e.g., TRICARE and Veterans Administration [VA] Health Care). Children may have more than one source of coverage, and those coverage types could be different. For example, a child could have employer-sponsored insurance, a type of private insurance, and Medicaid, a type of public coverage. In 2010, 59.9% of children had private insurance and 37.2% had public coverage. Sources of health insurance coverage vary according to a child's demographic and family characteristics. For example, in 2010, children living in families with incomes below 100% of the federal poverty level (FPL) were more likely to have public coverage and less likely to have private insurance compared with children living in families with higher incomes. This report presents estimates of health insurance coverage of children under age 19 in the United States. Table 1 and Table 2 show children's health insurance coverage by selected demographic and family characteristics at the national level. Table 3 shows state-level estimates of private insurance, public coverage, and the uninsured rate, and Figure 1 is a map showing uninsured rates across states. Figure 2 examines the population of uninsured children at the national level. Figure 3 examines national trends in children's health insurance status from 2000 to 2010. The estimates in this report are based on data from the Annual Social and Economic Supplement to the Current Population Survey (CPS). The CPS is a monthly survey conducted by the U.S. Census Bureau and is representative of the civilian, noninstitutionalized population of the United States. The CPS is used primarily to collect employment data, but it also collects information on health insurance status, income, and poverty. Approximately 100,000 addresses constitute the sample households to be interviewed. The CPS sample is designed to represent the nation, states, and other specified geographies (e.g., regions). All estimates in this report at the national level are created using the most recent annual CPS data (representing data from 2010), as well as historical annual data from previous years. All estimates in this report at the state level are created using three-year averages of the three most recent years of CPS data (representing data from 2010, 2009, and 2008). The U.S. Census Bureau recommends using three-year averages of CPS data to examine state-level estimates because of the survey's small sample sizes in many states. Insurance status differs according to children's demographic characteristics (age, race, ethnicity, and citizenship status). A child's likelihood of being uninsured varies by these demographic characteristics. For example, older children are more likely to be uninsured compared with younger children. As shown in Table 1 , while 11.8% of children aged 13 to 18 years were without insurance, 9.1% of children under six years old lacked any source of health insurance. Further, insurance status varies among children of different races, with children who report their race as only black being the most likely to be uninsured, and children who report two or more races the least likely to be uninsured. Hispanics are twice as likely to be uninsured compared with non-Hispanic children, and non-citizen children are almost four times more likely to be uninsured compared with citizen children. For those children who have insurance, the source of coverage also varies by demographic characteristics, as discussed below. As age increases, children are more likely to have private insurance and less likely to have public coverage. Slightly over half (54.3%) of children under age six had private insurance, and 43.8% had public coverage. In comparison, nearly two-thirds of children aged 13 to 18 had private insurance and under one-third (30.2%) had public coverage. The higher rate of private coverage among older children does not off-set the lower rate of public coverage; children aged 13 to 18 are more likely to be uninsured compared with children under age six and children aged 6 to 12. Examining differences in race show that children who report their race as black alone are less likely to have private insurance, and more likely to have public coverage. Children who report their race as white alone or "other alone" (Asian alone, Native American alone, Native Hawaiian/Other Pacific Islander alone, or some other race alone) have similar rates of coverage. In both categories, nearly two-thirds of children have private insurance, and about one-third have public coverage. Among children who report two or more races, over half (55.7%) have private insurance and 46.3% have public coverage. The only available ethnicity breakdown in the CPS is Hispanic, non-Hispanic, and the question is asked independently of race (i.e., a child who is Hispanic could report any race). Looking at ethnicity, two-thirds of non-Hispanic children have private insurance compared with 37.9% of Hispanic children; however, only one-third of non-Hispanic children have public coverage, whereas 50.9% of Hispanic children have public coverage. Similar percentages of non-citizen children have private insurance (35.5%), public coverage (33.4%), and are uninsured (34.9%). In contrast, 60.6% of citizen children have private insurance, and 37.3% have public coverage. Compared with citizen children, non-citizen children are almost four times more likely to be uninsured . Whether or not children have insurance is also affected by family characteristics. Table 2 shows health insurance coverage of children by family characteristics at the national level in 2010. Generally, as family income increases, the percentage of uninsured children decreases—the uninsured rate for children in families with income below 100% FPL is over four times the rate for children in families with income equal to or greater than 400% FPL. Looking at family composition, children who live in families with two parents have the lowest uninsured rate (8.1%), followed by children who live with a single mother (10.9%) and children who live with a single father (16.0%). A quarter of children who do not live with a parent are uninsured. Family characteristics can also affect the source of coverage among children with health insurance, as discussed below. For example, whether a child qualifies for a program such as Medicaid is in part dependent on family income. As family income increases, the rate of private insurance increases, the rate of public coverage decreases, and the uninsured rate decreases. For example, 16.3% of children in families with income below 100% FPL had private insurance, compared with 92.1% of children in families with income equal to or greater than 400% FPL. The rates of public coverage ranged from 72.7% among children in families with income below 100% FPL to 10.4% among children in families with income equal to or greater than 400% FPL. Among children who live with two parents, 71.1% have private insurance, compared with 47.1% of those who live with a single father and 38.4% of those who live with a single mother. A smaller percentage of children who live with two parents have public coverage compared with children who live either with a single father or a single mother. Overall, children who live with at least one parent are more likely to have private insurance and less likely to have public coverage compared with children who are not living with a parent. Nationwide, health insurance coverage of children is related to children's demographic characteristics and family characteristics. Regional and state variation in coverage of children is likely also affected by these characteristics. Geographic variation may be also affected by a state's health insurance market and by state policies, such as eligibility criteria for a state's Medicaid program or its CHIP. Figure 1 shows a map of the uninsured by state, and Table 3 show state-level estimates of health insurance coverage of children. The estimates presented are an average of three years of CPS data, representing data collected in 2008-2010. The U.S. Census Bureau recommends using a three-year average when using the CPS to compare coverage across states because of the survey's small sample size in some states. Figure 1 shows how the uninsured rates compare across states. The four states with the highest uninsured rates, 15.0% or higher, are Texas, Nevada, Florida, and Arizona. The four states with the lowest uninsured rates, less than 5.0%, are Massachusetts, Hawaii, New Hampshire, and Vermont. Generally, states with the lowest uninsured rates for children are located in the Midwest and Northeast; states with the highest uninsured rates are located in the South and West. Table 3 provides estimates of private insurance, public coverage, and the uninsured for children, with percentage rankings by state. The five states with the highest percentage of children covered by private insurance were New Hampshire (80.1%), Utah (76.8%), Connecticut (74.8%), North Dakota (74.3%), and Wisconsin (74.0%). The five states with the highest percentage of children covered by public coverage were the District of Columbia (50.6%), Mississippi (47.7%), Arkansas (47.4%), New Mexico (44.8%), and Vermont (43.9%). As noted in the preceding discussion, health insurance coverage of children is likely influenced by children's demographic and family characteristics as well as state-specific factors (e.g., eligibility criteria for programs such as Medicaid). Figure 2 shows the characteristics of children who are uninsured and characteristics of all children at the national level in 2010. Figure 2 illustrates that some characteristics of uninsured children are different from the characteristics of the total population of children ("all children"). Compared with all children, children who lack health insurance are more likely to be Hispanic, non-citizens, live in families with low income, and not live with a parent. Hispanic children represent 23.1% of all children, but they represent nearly 40% of uninsured children. Non-citizen children represent 2.7% of all children, and 9.7% of uninsured children. Children living in families with income below 100% FPL represent 21.9% of all children, and 35.2% of uninsured children. In contrast, children living in families with income equal to or greater than 400% FPL represent 27.3% of all children and 9.7% of uninsured children. Children not living with at least one parent represent 4.3% of all children and 10.9% of uninsured children. Examining children's health insurance coverage over time is one way to assess how economic conditions and program changes (i.e., changes to CHIP eligibility) affect children's coverage. Figure 3 shows national-level estimates of children who were uninsured and who had private insurance and public coverage between 2000 and 2010. The percentage of children who were uninsured fluctuated slightly during the period, between 2000 and 2010, decreasing 1.1 percentage points, from 11.1% to 10.0%. The slight fluctuations of the percentage of children who were uninsured were likely affected by the larger changes in the percentage of children who had private health insurance and those who had public coverage over the time period. In 2000, 71.2% of children had private health insurance, but by 2010, the percentage dropped to 59.9%, a nearly 16% decline in private health insurance coverage for children. Over that same period, the percentage of children with public coverage increased from 23.7% in 2000 to 37.2% in 2010, a 57% increase in public coverage for children. Periods of economic recessions, as denoted by the gray bars in Figure 3 , may provide additional insight into changes in children's health insurance coverage during those periods.

In 2010, 90% of children had health insurance coverage in the United States, and 10% of children were uninsured. Among children with coverage, private health insurance, including employer-sponsored insurance and nongroup insurance, was the predominant source of coverage, followed by public coverage, including Medicaid and other means-tested public programs (e.g., the State Children's Health Insurance Program—CHIP), as well as Medicare and military health care. These estimates, and the estimates detailed in this report, are from the U.S. Census Bureau's Annual Social and Economic Supplement to the Current Population Survey (CPS, commonly known as the March Supplement). The CPS is representative of the civilian, noninstitutionalized population of the United States. National-level estimates in this report are created using the most recent CPS data, representing data from 2010, as well as historical data from previous years. State-level estimates are created using a three-year average of CPS data (representing data from 2008 to 2010), which provide reliable state estimates. The national-level estimates provide only a limited understanding of the health insurance coverage of children under age 19. To better understand this population, the report provides an analysis of the variation in coverage by selected demographic and family characteristics, including age, race, ethnicity, citizenship status, poverty status, and family composition. For example, in 2010, non-citizen children, Hispanic children, and children not living with at least one parent/guardian were more likely to be uninsured compared with other children. Another important factor affecting uninsurance rates among children is the variation across states. During the 2008-2010 period, the percentage of uninsured children ranged from a high of 17.3% in Texas to a low of 3.2% in Massachusetts. Not only does coverage vary by states, but the source of insurance coverage also varies by states. The percentage of children covered by private health insurance ranged from 80.1% in New Hampshire to 46.9% in Mississippi, and the percentage of children covered by public coverage ranged from 50.6% in the District of Columbia to 18.3% in Utah. Finally, examining changes in coverage and source of coverage over time provides additional insight into insurance and sources of coverage for children. Between 2000 and 2010, the uninsured rate among children decreased by about 1 percentage point, while the percentage of children with private insurance decreased by more than 11 percentage points and the percentage with public coverage increased by 13.5 percentage points. As Congress focuses on allocating limited resources to programs such as Medicaid and CHIP, a deeper understanding of the characteristics of uninsured children may prove useful to inform this discussion.

Although allocation of water resources is generally a matter of state law, the federal government may also allocate water rights. Under the Supreme Court's 1908 Winters v. United States decision, when Congress creates an Indian reservation, the water necessary to fulfill the reservation's purposes is reserved implicitly. Although this doctrine appears to be fairly straightforward, the scarcity of sufficient water in more arid parts of the country has resulted in contentious debate over the requirements of Winters and its impact on competing water rights. Because federal reserved water rights under the Winters doctrine often have not been quantified but are generally senior to other water rights, the rights of more junior water users can be affected significantly, when these federal rights are exercised. This report provides background on Indian reserved water rights under Winters . It analyzes the scope of these rights, including the water sources that may be used to fulfill the rights and the quantification standards courts commonly use to clarify the rights. The report also examines the effect of the McCarran Amendment, through which Congress authorized state courts to adjudicate Indian reserved water rights. In Winters , the Supreme Court examined tribal rights to water associated with the Fort Belknap Reservation located in what would later become Montana. The Fort Belknap Reservation was created by an agreement in 1888 between tribal parties and the U.S. government. At the time, the government had a policy seeking to transform Native Americans from "a nomadic and uncivilized people … to become a pastoral and civilized people" by providing them lands to develop for such purposes. By 1905, the area experienced water shortages that ultimately resulted in the Winters lawsuit being filed to enforce tribal rights to water against non-Indian water users who had been diverting water from the region. In announcing its decision, the Court explained that the lands provided under the agreement for the purpose of developing an agrarian society "were arid and, without irrigation, were practically valueless." The Court also noted that ambiguities in the agreement, such as the status of the water rights related to the land, are to be "resolved from the standpoint of the Indians," as a rule of interpretation. The Court held that: The power of the Government to reserve the waters and exempt them from appropriation under the state laws is not denied, and could not be. That the Government did reserve them we have decided, and for a use which would be necessarily continued through the years. The Court has continued to recognize the principle derived from Winters in both Indian and non-Indian contexts. In 1976, the Court noted that it "has long held that when the Federal Government withdraws its land from the public domain and reserves it for a federal purpose, the Government, by implication, reserves appurtenant water then unappropriated to the extent needed to accomplish the purpose of the reservation." Under the Winter s doctrine, the priority and extent of Indian reserved water rights is affected by the purposes of the Indian reservation, the date when the Indian reservation was created, the quantification of water sufficient to accomplish those purposes, and the sources of water that may be used to fulfill the particular water rights. Although the federal government may act under a number of constitutional authorities to regulate water, in most instances it has deferred to the states. States either adhere to a riparian or prior appropriation system of water allocation. In a riparian system, landowners adjacent to a waterway share a common right to use the water, with a limitation of reasonableness. In times of water shortages, all riparian rights holders must share the burden of the shortage proportionally. Other states, typically the drier western states, use a prior appropriation system of water rights. Under prior appropriation, water users who make beneficial use of a water supply, regardless of their location relative to it, obtain a right to that water under a seniority system that reflects the order in which the right was obtained. The date that the user put the water to beneficial use is known as the priority date. Some states incorporate elements of both the riparian and appropriation doctrines. Because riparian rights' holders must share the burden of any water shortage proportionally, Indian reserved water rights generally do not have a noticeable impact in riparian jurisdictions. In prior appropriation systems, recognition of a tribe's water rights is often times more contentious because, in times of shortage, junior users may receive none of their allocations after a tribe with senior takes its share under the Winters doctrine. Tribes often have seniority because the laws, treaties, executive orders, and other legal agreements that created the Indian reservations (and thus the priority date for purposes of seniority) predate other settlement of the area. Allocation of scarce water is further complicated by the fact that a tribe's reserved water rights under the Winters doctrine are not lost if the tribe does not maintain continuous use of the rights. As a result, junior rights holders may be unaware that a tribe has senior reserved rights, leaving the junior rights holder with little or no allocated water in some instances. Tribes may also acquire water rights under state law. That is, if water is available under the state water allocation system and a tribe requires water beyond what it receives under its federal reserved water rights, it may seek to acquire state water rights to supplement its federal reserved rights. Under Winters , the reserved water rights are tied to the purpose (and in some cases, purposes) of the reservation, as embodied in the particular law, treaty, agreement, or executive order that created the reservation. It is unclear, however, whether the primary purpose standard the Supreme Court adopted when applying Winters in non-Indian reserved water rights cases governs Indian reserved water rights. Under the primary purpose standard, reserved water rights may be applied only for the primary purposes of reservations, not for secondary purposes. In Cappaert , the Supreme Court held that water rights are limited to the "amount of water necessary to fulfill the purpose of the reservation, no more." In United States v. New Mexico , the Supreme Court further clarified that the test is whether "the purposes of the reservation would be entirely defeated" without that water. Lower courts generally define Indian reservation purposes broadly, which reflects the reasoning in Winters that Indian reservations were created in order to transform and sustain a new lifestyle for the tribe. In one case, the Arizona Supreme Court refused to limit Indian reserved rights to only the primary purpose of a reservation. The court noted the importance of providing the Indians with "a permanent home and abiding place," as well as the need for "broader interpretation [of the purposes of Indian reserved rights] in order to further the federal goal of Indian self-sufficiency." The court emphasized the need for a broad interpretation of the purposes of the reservation, recognizing that it is difficult to ascertain "the true reasons for which Indian reservations were created." Similarly, the U.S. Court of Appeals for the Ninth Circuit interpreted the primary purpose of a reservation to encompass a number of related purposes. It found that the primary purpose of a reservation was to create a homeland for the tribe, which included water rights that could be used not only for irrigation but also for fishing. Other courts have rejected such broad interpretations, noting the inherent risks in placing no limits on the water rights associated with a reservation and accordingly limiting water rights only to purposes that were specifically contemplated when the reservation was created. Although state law generally restricts changes in water use from the originally designated purpose of the water right, Indian reserved water rights are not subject to such restrictions. As discussed later in this report, courts quantify the amount of Indian reserved water rights based on the purposes of the reservation. Once quantified, some decisions have allowed Indian reserved water rights to be used for purposes other than those considered in the quantification of the right. Other courts, however, have refused to allow tribes to change their water use from the purpose contemplated when the reservation was created. For example, the Wyoming Supreme Court refused to permit tribes to apply their reserved rights to instream flows. Finding the water to fulfill a water right is often the most controversial element of water rights claims, particularly in times of shortage. The question of which water sources may be used to fulfill reserved rights is not clearly resolved. Although Indian reserved rights generally attach to whatever water sources may be within or adjacent to the reserved lands, it is generally understood that reserved rights do not necessarily require that the water source be encompassed within the reserved lands. Rather, courts have allowed tribes to draw water from various sources as necessary to fulfill the reservation purpose, limiting the potential sources only to the extent that the waters must be unappropriated at the time the reservation was created. In other words, an Indian reserved water right cannot trump senior rights that existed at the time of reservation. One question on which courts have disagreed is whether the reserved water right may draw from groundwater, or if it is limited to surface water. In In re Big Horn , the Wyoming Supreme Court rejected applying the Winters doctrine to groundwater. While acknowledging that groundwater and surface water sources are often connected, the court held that there was no precedent for applying the Winters doctrine to groundwater. On the other hand, the Arizona Supreme Court has held that reserved rights may include claims to groundwater, if the groundwater is necessary to fulfill the purpose of the reservation. Finding that the government's reservation must have contemplated water "from whatever particular sources each reservation had at hand," the court explained that the "significant question for the purpose of the reserved rights doctrine is not whether the water runs above or below the ground but whether it is necessary to accomplish the purpose of the reservation." Although the court recognized that many possible water sources could be used to fulfill reserved rights claims, it also noted that groundwater should only be claimed if other sources were insufficient to accomplish the purpose of the reservation. When degradation of water quality would undermine the water's use for reservation purposes, courts have recognized water quality as another element of Indian reserved water rights. Federal courts have ruled that reserved water rights holders can seek legal protection from water quality degradation by other water users. Specifically in United States v. Gila Valley Irrigation District , the Ninth Circuit approved a district court's finding that a reserved water right was impaired when other users' actions increased the salinity of water used by a tribe for irrigation of agricultural crops. While the Supreme Court recognized Indian reserved water rights in Winters , it only provided that the extent of such rights were those necessary to fulfill the purpose of the reservation. Quantification of reserved rights was left for later judicial interpretation. In 1963, the Supreme Court approved a special master's decision on Indian reserved water rights that used a quantification standard based on agricultural water requirements in Arizona v. California . Faced with a choice between a subjective standard favored by states seeking flexibility and an objective standard that would fix the amount of water reserved, the special master in the interstate water dispute endorsed the latter, using what is known as the practicably irrigable acreage standard (PIA). The PIA reflects the agricultural purposes of creating reservations under the Winters doctrine, basing the quantification of reserved water rights on the amount of lands that can be feasibly and reasonably irrigated. In reviewing the special master's decision, the Supreme Court rejected a proposed quantification "measured by the Indians' 'reasonably foreseeable needs,' which, the Court pointed out, means by the number of Indians." The Court explained that such a basis was unworkable as it could only be guessed. The Court held that "the only feasible and fair way by which reserved water for the reservations can be measured is irrigable acreage." The Court's reasoning in Arizona emphasized the importance of the water right to the land reservation. Finding it "impossible" that Congress and the Executive branch would reserve land that was mostly desert without providing water as well, the Court noted that "water from the river would be essential to the life of the Indian people and to the animals they hunted and the crops they raised." The Court's approval of the special master's decision, however, did not require adoption of the PIA standard as a matter of law and other courts have interpreted quantification of Winters rights differently. The Wyoming Supreme Court has applied the PIA using a two-part test to determine which lands would qualify for purposes of quantification of the water right. Under the test, those lands include 1) those physically capable of sustained irrigation and 2) those which are irrigable at a reasonable cost. The U.S. Supreme Court reviewed the decision but because the Court was evenly divided in its decision, no definitive ruling was issued. Rather, without a majority of the Court agreeing on an outcome for the case, the Wyoming Supreme Court's opinion was affirmed. The PIA standard has not been applied by all courts, however. The Arizona Supreme Court rejected the standard because it had the potential to treat tribes inequitably based on their geographic location; because it imposed an agricultural lifestyle that was not necessarily productive in the current times; and because it posed a risk that accounting for every potentially irrigable acre would in some cases result in "an overabundance of water." The court explained that creating "a permanent homeland requires water for multiple uses, which may or may not include agriculture." The court further explained that "the PIA standard, however, forces tribes to prove economic feasibility for a kind of enterprise that, judging from the evidence of both federal and private willingness to invest money, is simply no longer economically feasible in the West." The court instead offered a number of potential factors for consideration in the quantification: 1) the tribe's history of and cultural need for water; 2) the nature of the land and associated resources of the reservation; 3) the tribe's economic status and the proposed economic development to the extent that they involve a need for water; 4) historic reliance of the tribe on water for the proposed purpose; and 5) the tribe's current and projected population. Indian reserved water rights are subject to adjudication by federal and state courts. Federal courts have historically been authorized via federal question jurisdiction to determine Indian reserved water rights under the Winters doctrine. In 1952, however, Congress enacted an appropriations rider known as the McCarran Amendment that waived federal sovereign immunity in specified forms of water adjudications. Although the language does not explicitly mention Indian water rights, the McCarran Amendment gives consent to join the federal government in state lawsuits regarding adjudication of water rights in river systems and the administration of those rights. The Supreme Court has held that the McCarran Amendment allows state courts to adjudicate Indian reserved water rights. As a result, the McCarran Amendment has had a significant effect on Indian water law. As evidenced in the varying outcomes of decisions related to the scope and quantification of Indian reserved water rights, the states have not interpreted the requirements of Winters uniformly, adding to the complexity of determining a tribe's reserved water rights. The grant of state jurisdiction over the adjudication of Indian reserved water rights has resulted in a contentious debate over the appropriate forum for such claims. The Court has explained that Congress' enactment of the McCarran Amendment indicated a policy supporting "the availability of comprehensive state systems for adjudication of water rights" and noted that concurrent federal proceedings may lead to duplicative and possibly contradictory judgments. However, concerns exist regarding the expansion of jurisdiction over federal water rights to state courts. Tribes have long considered state courts to be hostile, and the prospect of having those same courts adjudicate Indian reserved water rights has been one of the primary motivations for pursuing negotiated settlements. Also, some have questioned the ability of state trial courts to adjudicate Indian water law issues, which often involve complicated federal legal issues.

Although the federal government has authority to regulate water, it typically defers to the states to allocate water resources within the state. The federal government maintains certain federal water rights, though, which exist separate from state law. In particular, federal reserved water rights often arise in questions of water allocation related to federal lands, including Indian reservations. Indian reserved water rights were first recognized by the U.S. Supreme Court in Winters v. United States in 1908. Under the Winters doctrine, when Congress reserves land (i.e., for an Indian reservation), Congress also reserves water sufficient to fulfill the purpose of the reservation. As the need for water grows with the development of new industries and growing populations, the tension arising from the allocation of scarce water resources highlights the difficulties that often surround reserved water rights, particularly in the western states. Western states generally follow some form of the prior appropriation system of water allocation. The prior appropriation system allocates water to users based on the order in which water rights were properly acquired. Because Indian reserved water rights date back to the government's reservation of the land for the Indians, these water rights often pre-date other water users' claims. Although the prior appropriation system's reliance on seniority provides a degree of certainty to water allocation, Indian reserved water rights may not have been quantified at the time of reservation. Because Winters did not dictate a formula to determine the quantity of water reserved, courts apply different standards to quantify tribal reserved water rights. As a result, other water users may not know whether, or the extent to which, Indian reserved water rights have priority. Because of these uncertainties, Indian reserved water rights are often litigated or negotiated in settlements and related legislation. This report will examine the creation of Indian reserved water rights under the Winters doctrine. It will analyze the scope of the doctrine, including the purposes for which the water right may be claimed and the sources from which the water may be drawn. It will also discuss various quantification standards that courts have used in attempting to clarify Indian reserved water rights. Finally, it will examine the effect of the McCarran Amendment, through which Congress extended jurisdiction to state courts to hear disputes involving Indian reserved water rights.

The United States Supreme Court in City of Ontario v. Quon overturned a federal appellate court decision which had held that officials in the City of Ontario, California engaged in an unconstitutional search and seizure when they acquired and read the contents of messages sent to and from a city police officer's city-provided pager. "Though the case touches issues of far-reaching significance, the Court conclude[d] it can be resolved by settled principles determining when a search is reasonable." The City of Ontario assigned Sergeant Jeff Quon and several other SWAT team members two-way text messaging pagers in 2001. The City's contract with the service provider, Arch Wireless Operating Co., Inc., set a limit of 25,000 characters for each pager. Arch Wireless assessed addition charges for use beyond the 25,000 character limit. Although it had no written policy on use of the pagers as such, the City did have a written policy concerning computer, Internet and e-mail practices. Under the policy the use of City equipment was limited to official business; it also informed employees that use would be monitored and that "users should have no expectation of privacy or confidentiality when using these resources." Officers were told that the e-mail policy applied to use of the pagers. When the City began to incur charges because the 25,000 character limit on pager use had been exceeded, its initial reaction was to assume the excess was attributable to personal use. Rather than try and sort out official from unofficial use, the lieutenant with administrative responsibility over pager use told individual officers that they would have to pay for the excess charges assessed against their pagers. On several occasions, Sergeant Quon was told he had exceeded his monthly limit, and he paid the charges for the excess use. Thereafter, the Chief of Police became concerned and asked Arch Wireless to supply the City with transcripts of the messages sent from, and received by, pagers that had exceeded the monthly 25,000 character limit. After examining the contents of the messages sent to and from Sergeant Quon's pager, the City determined that some were highly personal messages between Sergeant Quon and either his wife (who was also a police officer) or his girl friend (who was a police dispatcher). Sergeant Quon, Jerilyn Quon (his wife), April Florio (his girl friend), and Steve Trujillo (his fellow SWAT team officer) sued Arch Wireless, the City, and the Chief of Policy, alleging, among other things, violations of the federal Stored Communications Act (SCA) and of the Fourth Amendment. Under the Fourth Amendment, "The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no Warrants shall issue, but upon probable cause, supported by Oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized." The district court's analysis of Quon's Fourth Amendment challenge began with the Supreme Court's decision in O'Connor v. Ortega . There, the Justices of the Supreme Court had all agreed that Dr. Ortega, a physician in a public hospital, had a reasonable expectation of privacy of his office, and that the Fourth Amendment applied notwithstanding his government employment. There the consensus ended. A majority of the Court felt the lower court had used the wrong standard to assess whether hospital officials had unreasonably searched Dr. Ortega's office, but they did not agree among themselves on what that the standard should be. Articulating the standard subsequently followed in the lower federal courts and joined by three other members of the Court, Justice O'Connor observed that in "the case of searches conducted by a public employer," the test must begin with a "balanc[ing of] the invasion of the employees' legitimate expectations of privacy against the government's need for supervision, control, and the efficient operation of the workplace." In that context, the otherwise applicable warrant requirement might be dispensed with, since "requiring an employer to obtain a warrant whenever the employer wished to enter an employee's office, desk, or file cabinets for a work-related purpose would seriously disrupt the routine conduct of business and would be unduly burdensome." As for the ordinarily applicable probable cause requirement, the 'special needs, beyond the normal need for law enforcement make the . . . probable cause requirement impracticable'. . . [P]ublic intrusions on the constitutionally protected privacy interests of government employees for noninvestigatory, work-related purposes, as well as for investigations of work-related misconduct, should be judged by the standards of reasonableness under all the circumstances. Under this reasonableness standard, both the inception and the scope of the intrusion must be reasonable." The four dissenting Justices agreed Dr. Ortega had a reasonable expectation of privacy in his office, desk, and files, but they saw no "special need" sufficient to dispense with the ordinary warrant and probable cause requirements. The ninth Justice, Justice Scalia, felt that government employment gave rise to a special needs analysis. He disagreed with the standard announced in the Justice O'Connor's plurality opinion, but agreed that the case should be returned to the lower courts for a special needs assessment of Fourth Amendment reasonableness. Subsequent lower federal appellate courts adopted the standard of the O 'Connor plurality in public employee cases, see e.g ., The Supreme Court has held that the Fourth Amendment applies to "searches and seizures by government employers or supervisors of the private property of their employees." O'Connor v. Ortega , 480 U.S. 709 (1987). With respect to the scope of Fourth Amendment rights in the workplace, however, the Court added that "[t]he operational realities of the workplace ... may make some employees' expectations of privacy unreasonable." Id . at 717 . Practices and procedures of a particular office or legitimate regulations may reduce the expectation of privacy that government employees enjoy in their workplace. Id. The circumstances of a particular case matter a great deal, and each Fourth Amendment claim in this context has to be examined on its own. "Given the great variety of work environments in the public sector, the question whether an employee has a reasonable expectation of privacy must be addressed on a case-by-case basis." Id. at 718. Once an employee demonstrates a reasonable expectation of privacy, he must then demonstrate that the search was unreasonable. "[P]ublic employer intrusions on the constitutionally protected privacy interests of government employees for non-investigatory, work-related purposes, as well as for investigations of work-related misconduct, should be judged by the standard of reasonableness under all the circumstances." This standard has two requirements: First, the search must have been "justified at its inception," and second, it must have been "reasonably related in scope to the circumstances which justified the interference in the first place." Id. at 726. In a number of special needs cases decided after O 'Connor , however, the Supreme Court made it clear that a search need not be the least intrusive possible in order to considered reasonable in scope. The police officers sued alleging violations of the Stored Communications Act as well as violations of the Fourth Amendment. The district court found no violation of the Stored Communications Act. As for Quon's Fourth Amendment allegations, it held that while the officers had a reasonable expectation of privacy in their text messages, the City's intrusion was reasonable in its inception and scope. Finally, the court concluded that had there been a Fourth Amendment violation, the Chief of Police would not have been entitled to qualified immunity. The court of appeals found little in the district court opinion with which it could agree. The officers did have a reasonable expectation of privacy, but the search had been unreasonable both with respect to Sergeant Quon and to those who participated in his pager conversations. The Chief of Police, however, was entitled to qualified immunity. Moreover, the Stored Communications Act had been violated. The Stored Communications Act (SCA) permits providers of remote computing service to disclose the content of stored communications to subscribers, e.g., the City, without the consent of the participants in the communication. Those who provide electronic communications services , in contrast, enjoy no such prerogative. Since Arch Wireless provided electronic communications services under its pager contract, when it "knowingly turned over the text-messaging transcripts to the City, which was a 'subscriber,' not an addressee or intended recipient of such communication, it violated the SCA." The court felt the officers might have a reasonable expectation of privacy in their pager messages in the same way they might have a reasonable expectation of privacy in the content of their mail or e-mail. The lieutenant in charge of use of the pagers asserted that he would not audit pager use and separate personal from official use, as long as officers paid for exceeding their character limit. Thus, on a number of occasions when Sergeant Quon had exceeded his limit, he paid for the overuse, and his account had gone unaudited. "Under these circumstances," the court declared, "Quon had a reasonable expectation of privacy in the text messages archived on Arch Wireless's server." That expectation might still have been required to yield in the face of a City purpose reasonable in its inception and scope, but the court decided that was not the case. The Ortega plurality opinion had said a search was reasonable in scope when its methods were "reasonably related to the objectives of the search and not excessively intrusive in light of" the purpose for the search. The Quon purpose – ensuring that officers would not have to pay for work-related expenses – was reasonable. The court concluded that in view of its purpose, the scope of the search – reading all of the text messages to see if any were private – was excessively intrusive, and hence unreasonable when there were less intrusive means at hand. The Quon court's decision was both criticized and defended in conjunction with the Ninth Circuit's decision not to reconsider the decision en banc. Judge Ikuta and several of his colleagues argued that the panel decision erred both in its determination that the officers had a justifiable expectation of privacy in their text messages and that the scope of the department's search was unreasonable. From their perspective, the officers could have no such expectation of privacy in messages transmitted on City-owned equipment whose use they had been told was for official business only, and whose use could, and likely would, be monitored and reviewed. They also called the panel to task for the line it drew between "excessively intrusive searches" (which are unreasonable) and "least intrusive means" of conducting a search (which reasonableness does not require). They point out that the "Supreme Court has repeatedly rejected a 'least intrusive means' analysis for purposes of determining the reasonableness of a search in a 'special needs' context." The author of the panel decision responded that the officers had a reasonable expectation of privacy based on the "policy – formal or informal – that [the Department] established and enforced." He further asserted that the panel had not endorsed a "least intrusive means" requirement, but had instead "mentioned other ways the OPD could have verified the efficacy of the 25,000-character limit merely to illustrate . . . that the search was 'excessively intrusive' under [ O 'Connor ], when measured against the purpose of the search. . . ." The debate in the Ninth Circuit appears to have been limited to the application of O 'Connor . The panel found that the Stored Communications Act outlawed handing over the transcripts of the officer's pager messages to the City. The judges who dissented from the denial of rehearing raised no objection to that finding. Neither side apparently paused to consider whether the protection of the Stored Communications Act enhanced the Sergeant Quon's reasonable expectation of privacy. Nor did either side comment upon the panel's fleeting and somewhat cryptic resolution of the Fourth Amendment claims of the others who participated in Sergeant Quon's pager conversations. Rather than continue with an O 'Connor official work-place analysis, the panel used the standards employed to assess the Fourth Amendment implications of searches and seizures in an electronic context: We see no meaningful difference between the e-mails at issue in Forrester and the text messages at issue here. Both are sent from user to user via a service provider that stores the messages on its servers. Similarly, as in Forrester , we also see no meaningful distinction between text messages and letters. As with letters and e-mails, it is not reasonable to expect privacy in the information used to 'address' a text message, such as the dialing of a phone number to send a message. However, users do have a reasonable expectation of privacy in the content of their text messages vis-a-vis the service provider. [Because Jeff Quon's reasonable expectation of privacy hinges on the OPD's informal policy regarding his use of the ODP-issued pagers, see infra pages 909-10, this conclusion affects only the rights of Trujillo, Florio, and Jerilyn Quon]. . . . Had Jeff Quon voluntarily permitted the Department to review his text messages, the remaining Appellants would have no claims. Nevertheless, the OPD surreptitiously reviewed messages that all parties reasonably believed were free from third-party review. As a matter of law, Trujillo, Florio, and Jerilyn Quon had a reasonable expectation that the department would not review their messages absent consent form either a sender or recipient of the text messages. Quon v. Arch W i reless Operating Co., Inc ., 529 F.3d at 905-906 (footnote 6 of the court's opinion in brackets). The Supreme Court agreed unanimously that the City search was reasonable and that the contrary Ninth Circuit determination should be overturned. The Court began its analysis by assuming, without deciding, that "[f]irst, Quon had a reasonable expectation of privacy in the text messages sent on the pager provided to him by the City; second, petitioners' review of the transcript constituted a search within the meaning of the Fourth Amendment; and third, the principles applicable to a government employer's search of an employee's physical office apply with at least the same force when the employer intrudes on the employee's privacy in the electronic sphere." Because the City had a legitimate work-related reason to conduct its search, the Court concluded that it was reasonable under either the O'Connor standard – that of Justice Scalia (a search that would be considered reasonable in a private-employer context) or that of the O'Connor plurality (a work-related purpose for a search not excessive in scope). The Court felt no obligation to address any separate claims the officers who had communicated with Sergeant Quon might have, because they had rested their claims on the reasonableness of the search of his communications. The Court left for another day two thorny issues it might have reached. The first involves the standard used to decide the extent to which public employees and those who communicate with them enjoy Fourth Amendment protection in the public work place – i.e., endorsement of the O'Connor plurality test, the Scalia test, or a third test for when government employees have a Fourth Amendment reasonable expectation of work place privacy. The expectation of privacy test of the O 'Connor plurality, previously used by the lower federal courts, is difficult to apply. Although the Court declined to endorse it, it did not replace it. The second issue involves when a communication – wire, oral, or electronic – should be understood to have been searched or seized for Fourth Amendment purposes, and how Fourth Amendment principles applicable to tangible property should be applied to such communications.

In City of Ontario v. Quon, the Supreme Court held that officials had acted reasonably when they reviewed transcripts of messages sent to and from Sergeant Quon's city-issued pager in order to determine whether service limits on the pager's use should be increased. The Court assumed, without deciding, that Quon had a reasonable expectation of privacy for Fourth Amendment purposes, but found that the search of the transcripts was reasonable. In O'Connor v. Ortega, the Court had earlier split over the question of what test should be used to assess the reasonableness of a search of a public employee's work space. A plurality favored one test (work-related purpose for a search not excessively intrusive in scope); Justice Scalia another (search that would be considered reasonable in a private-employer context). In Quon, the Court declined to resolve the issue, but concluded that the search at issue was reasonable under either test.

Under House rules and precedents, opportunities to speak on the House floor about pending legislation are restricted and highly structured. Every time a legislator is recognized on the floor to speak, his or her time is limited. Furthermore, when debating legislation, Members generally must confine their comments to the subject of the measure. Members also must observe long-standing principles of decorum and courtesy in debate, including avoiding personal remarks about fellow Members. Members direct their comments to the presiding officer, therefore referring to each other in the third person as "the gentleman/woman" from the state represented. They address the presiding officer as "Mr./Madam Speaker" during procedures in the House proper, and as "Mr./Madam Chairman" while in the "Committee of the Whole." It is not in order for a legislator directly to address the "television audience" or the galleries. The manner in which time is obtained, restricted, and distributed in the House depends on the procedures the House is using to consider a measure, as well as the terms of any special order of the House governing the consideration of the measure. There are two different methods by which time to speak on legislation is distributed on the House floor. Time for debate is either "controlled," or it is not. Under controlled time, a Member is granted a block of time from a Member, called a "manager," who determines for each side which Members may speak, for how long, and in what order. If time is not controlled, then a Member gains time to speak by seeking recognition from the chair, and the length of time the Member can speak is usually limited to five minutes. Most of the time when Members are debating legislation, time is equally divided and controlled by two managers. For example, the House passes bills that enjoy widespread support through the suspension of the rules procedure, which allows for a total of 40 minutes of debate. Under that procedure, two managers, generally the chair and ranking member of the committee or subcommittee of jurisdiction (or their designees) each control 20 minutes of which they then yield portions to Members, usually on their side of the aisle. Time for debate of special rules, which set the terms for consideration of most major legislation, is also controlled time; the first (and usually only) hour for debate is granted to the Rules Committee chair (or his or her designee) who in turn customarily yields half of that time to the ranking member of the committee (or his or her designee) for purposes of debate only. Each side then yields portions of the 30 minutes to other Members. In addition, when the House resolves into the Committee of the Whole to consider a bill, the first stage is usually a period for general debate, and this is also controlled time. The chair(s) and ranking member(s) of the committee(s) of jurisdiction typically serve as managers; if multiple committees have jurisdiction, then managers from each committee control a portion of the time. Those designated to control the time often begin discussing the measure by yielding to themselves a set number of minutes or, more often, by stating I yield myself such time as I may consume. The manager is then recognized and holds the floor until all of his or her available time expires or until the manager concludes by saying I reserve the balance of my time. The presiding officer will then recognize the other floor manager, who also generally begins by granting time to himself or herself for an opening statement. Floor managers then yield portions of the time they control to Members who let them know in advance they wish to debate the measure. Each floor manager usually, but not necessarily, yields to Members on his or her side of the aisle. Managers do not refer to other Members by name and instead designate them by state. For example, the manager might say I yield two minutes to the gentleman from California. If a manager yields a portion of time to another Member, the manager may not take the time back. Once the time is yielded, it belongs to the Member who is speaking until he or she finishes and "yields back" his or her time, or until the presiding officer announces that the time has expired. At that point, the presiding officer will look again to the manager, who could yield time to another Member, or reserve the balance of the time. By reserving the time, a floor manager gives the other floor manager a chance to speak or distribute time. Generally, the chair alternates recognition between managers from each side. Time is kept by the clerks sitting at the House dais, and managers often ask how much time remains available. In response, the presiding officer will announce how much time the majority and minority floor managers have left. It is not uncommon for the managers to discuss with each other how the remaining time will be distributed. For example, one manager might ask the other how many more Members on his side are waiting to speak. House precedents determine which manager has the right to speak last in debate, or "to close." In most cases, when time is controlled, the floor manager who is the proponent of the question has the right to close. An exception to this general guideline is controlled debate on an amendment, when the majority floor manager on the bill, not the proponent of the amendment, has the right to close. Toward the conclusion of the time for debate, the floor manager with the right to close will likely reserve the balance of his or her time until all the time of the other manager has been consumed or until the other manager yields back the balance of his or her time. Debate ends when all time has expired or all time has been yielded back. If the managers determine through discussion that no more Members wish to speak on either side, then they might, in turn, yield back their remaining time by stating I yield back the balance of my time. If a Member is not the floor manager but wishes to speak, the Member informs the floor manager on his or her side. Sometimes, particularly when many Members wish to address the House on major legislation, Members (or their staff) contact the expected floor manager (or the staff of the primary committee of jurisdiction) in advance of the debate. In this way, Members can gain information about when they might be recognized to speak, and for how long. In response to a request for time, the floor manager might yield a portion of time to the Member. The Presiding Officer will then formally recognize that Member, by stating The gentleman from ________ is recognized. The Member who has been yielded time can then begin speaking, generally after thanking the presiding officer (for the recognition) and the manager (for yielding the time). When the block of time the Member has been yielded is completely used, the chair will announce that the time yielded to the Member has expired. If the Member wishes to continue speaking, he or she can look to the floor manager and request additional time. The floor manager might choose to yield to the speaker an additional portion of time if any of the manager's time remains uncommitted. There is a difference between a manager yielding a specified portion of time, such as two minutes, to another Member and a Member who is not a manager "yielding to" another Member. When a manager yields time to a Member, the presiding officer recognizes that Member for that amount of time. The manager can then be seated; he or she has effectively given the floor to the Member who has been yielded time. Under the modern practice of the House, only managers may yield portions of time to other Members. In contrast, any Member who has been recognized in debate may "yield to" another Member for a question or comment. When one Member yields to another, the yielding Member retains the floor and should remain standing. Any time consumed by the Member yielded to is charged against the portion of time yielded originally by the manager to the Member who has been recognized. For this reason, Members ask permission to use another Member's time. If a Member wants to interrupt another Member to ask a question or respond to something that was said, he or she can ask the presiding officer Will the gentleman (or gentlewoman) yield? The Member speaking can decline to yield. Or, the Member can respond I yield to the gentleman (or gentlewoman). The time being consumed belongs to the Member who yielded. Therefore, the Member who was yielded to cannot yield to a third Member. If another Member wants to join the discussion between the yielding Member and the Member who was yielded to, he or she would have to seek permission to interrupt from the yielding Member. These practices of yielding permit Members to engage in a colloquy, with one Member yielding to one or more Members in turn so that they may exchange information or debate an issue. Furthermore, the Member who has yielded to another Member can take the time back. Generally, this is done by interrupting the Member who had been yielded to by saying Reclaiming my time.... The following example illustrates the difference between yielding a portion of time and yielding to another Member. During general debate, Representative A, as floor manager, might yield five minutes to Representative B, another majority-party member of the committee. Representative B then may begin speaking. If at some point during the five minutes another Member, Representative C, rises while Representative B is speaking and asks "will the gentleman (or gentlewoman) yield?," then Representative B can either yield or decline to yield. If Representative B yields, then any time used by Representative C is charged against the five minutes originally granted to Representative B. Representative C cannot yield to yet another Member, Representative D, because Representative B holds the floor. Representative D would have to ask Representative B to yield. Although Representative B cannot limit the time of Representative C by yielding only a set period of time, at any point Representative B can reclaim his or her time. In some procedural circumstances, debate time is not controlled by floor managers. Instead, Members gain time to speak by seeking recognition directly from the presiding officer. Most prominently, time for debating amendments can take place in the Committee of the Whole under what is known as the "five minute rule." Certain types of special rules, especially those referred to as open rules or modified open rules, normally allow for amendments under the five-minute rule. Time is also not controlled during the five minutes of debate permitted to each side on a motion to recommit a bill or joint resolution (under Rule XIX, clause 2), and in a few other less common circumstances. Clause 5(a) of House Rule XVIII states in part A Member, Delegate, or Resident Commissioner who offers an amendment shall be allowed five minutes to explain it, after which the Member, Delegate, or Resident Commissioner who shall first obtain the floor shall be allowed five minutes to speak in opposition to it. Accordingly, if a Member offers an amendment, the presiding officer will recognize him or her for five minutes. Another Member (sometimes the floor manager defending the version of the bill reported by the committee of jurisdiction) can then be recognized for five minutes to speak against the amendment by standing and stating I rise in opposition to the amendment. Because time under the five-minute rule is not controlled, there is no Member acting as a manager and allocating portions of time. Instead, any Member may seek recognition from the chair of the Committee of the Whole to speak for five minutes. The presiding officer recognizes Members from the committee with jurisdiction over the bill first, in order of seniority, alternating recognition from side to side. A Member need not consume the full five minutes, but time cannot be reserved. When a Member's five minutes on an amendment expires, the Member sometimes asks unanimous consent to extend his or her time by a specified number of additional minutes, up to five minutes. A Member may be recognized only once under the five minute rule on a given amendment. Although the 5-minute rule technically permits only 10 minutes of debate for each amendment, 5 in favor and 5 against the amendment, Members secure additional time through the use of "pro forma" amendments. Pro forma amendments are amendments to strike one or more words of the text under consideration, and they are offered solely for the purpose of gaining recognition to speak for five minutes. In other words, no change to the text under consideration is substantively proposed; the proponent is not actually suggesting a word or words be stricken. After the proponent and the opponent of an amendment have spoken for their allotted five minutes, another Member who wishes to speak may rise and state I move to strike the last word. The chair then recognizes that Member for five minutes, technically to speak on the pro forma amendment, but in fact to continue debate on the pending substantive amendment. Any number of pro forma amendments can be offered, but because of a general prohibition against offering the same amendment twice, Members sometimes choose to say instead I move to strike the requisite number of words. Pro forma amendments can also be made when no amendment is pending if Members wish to discuss the measure itself. Pro forma amendments, however, are not always in order. If a measure is being considered under a special rule from the Committee on Rules that prohibits most or all amendments, or that permits only specified amendments, then pro forma amendments are not in order unless the special rule explicitly states otherwise. A special rule could also limit the total number of pro forma amendments, and it could provide that only floor managers can offer them. In addition, unanimous consent agreements may restrict the offering of pro forma amendments. When time is not controlled, Members cannot yield portions of their time to other Members. They can, however, remain standing and yield to other Members for questions or comments, and the time consumed by the other Members is deducted from the time of the yielding Member. A Member recognized under the five-minute rule also cannot yield to another Member for the purposes of offering an amendment. The Member who wishes to offer an amendment would need to seek recognition for that purpose later from the presiding officer.

House rules and precedents structure Members' opportunities to speak on the floor about pending legislation. Under some circumstances, Members arrange to speak on legislation by communicating with the leaders of the committee that reported the bill. Sometimes the arrangements can be made on the floor during the debate, and at other times they are made prior to floor consideration. The committee leaders from both sides of the aisle manage the consideration of a bill on the floor, under what is known as controlled time, by allocating the debate time among several Members. In certain other procedural circumstances, most often when the House is amending legislation under an "open" special rule, legislators instead seek recognition to speak, usually for up to five minutes, directly from the presiding officer. A Member who has been recognized can yield to another during debate but continues to hold the floor; the time used by the Member yielded to is taken from the time allocated to the Member holding the floor.

Under U.S. immigration law, foreign nationals are legally admitted into the United States as immigrants to live permanently or as nonimmigrants to stay on a temporary basis. The terms "immigrant" and "nonimmigrant" are not used in the Internal Revenue Code (IRC). Instead, a foreign national, whether in the United States as an immigrant, nonimmigrant or unauthorized (illegal) alien, is classified as a resident or nonresident alien for federal tax purposes. For federal tax purposes, alien individuals are classified as resident or nonresident aliens. The classification has important consequences for determining whether income is subject to U.S. taxation, what is the appropriate tax rate, and whether an individual is covered by a tax treaty. In general, an individual is a nonresident alien unless he or she meets the qualifications under either residency test: Green card test: the individual is a lawful permanent resident of the United States at any time during the current year, or Substantial presence test: the individual is present in the United States for at least 31 days during the current year and at least 183 days during the current year and previous two years. For computing the 183 days, a formula is used that counts all the qualifying days in the current year, 1/3 of the qualifying days in the immediate preceding year, and 1/6 of the qualifying days in the second preceding year. There are several situations in which an individual may be classified as a nonresident alien even though he or she meets the substantial presence test. For example, an individual will be treated as a nonresident alien if he or she has a closer connection to a foreign country than to the United States, maintains a tax home in the foreign country, and is in the United States for fewer than 183 days during the year. Another example is that an individual in the United States under an F-, J-, M-, or Q-visa may be treated as a nonresident alien if he or she has substantially complied with visa requirements. Other individuals that may be treated as nonresident aliens even if they meet the substantial presence test include employees of foreign governments and international organizations, regular commuters from Canada or Mexico, aliens who are unable to the leave the United States because of a medical condition, foreign vessel crew members, aliens in transit through the United States, and athletes participating in charitable sporting events. A residency definition in an income tax treaty will override these residency rules. If an individual is defined as a resident of a foreign country under a treaty, then he or she is a nonresident alien for purposes of determining his or her U.S. tax liability regardless of whether the "green card" or "substantial presence" test is met. The Internal Revenue Code (IRC) does not have a special classification for individuals who are in the United States without authorization (commonly referred to as "illegal aliens"). Instead, the Code treats these individuals in the same manner as other foreign nationals—they are subject to federal taxes and classified for tax purposes as either resident or nonresident aliens. An unauthorized individual who has been in the United States long enough to qualify under the "substantial presence" test is classified as a resident alien; otherwise, the individual is classified as a nonresident alien. This classification is for tax purposes only and does not affect the individual's immigration status. While most taxpayers file tax returns using their Social Security number (SSN) as an identifier, individuals who are ineligible to receive an SSN file their returns using an individual taxpayer identification number (ITIN). Thus, unauthorized aliens who file tax returns will generally use an ITIN. One consequence of this is that they will be ineligible to claim the earned income tax credit (EITC) since the IRC requires that taxpayers claiming the EITC provide SSNs for themselves, their spouses (if filing a joint return), and their qualifying children. A similar rule applied to the temporary refundable tax credit ("recovery rebate") provided under the Economic Stimulus Act of 2008. Furthermore, in the 112 th Congress, legislation has been introduced that would impose, with some differences, an SSN requirement for claiming the additional child tax credit, any part of the child tax credit, or any credit or refund (e.g., H.R. 1196 ). Two of these bills— H.R. 3630 and H.R. 5652 —have been passed by the House; however, H.R. 3630 was enacted into law ( P.L. 112-96 ) without the SSN provision. The mechanism of using an SSN requirement for restricting the eligibility of unauthorized aliens to claim tax credits may be imprecise. There remains the possibility that attempts to claim a credit could be made by resident aliens who legally received SSNs but are currently not legally present in the United States, in addition to unauthorized aliens using fraudulent SSNs. At the same time, the SSN requirement may deny the credits to families that do not include any unauthorized aliens but have at least one member without an SSN. For example, after it came to light that overseas military members with foreign spouses would be ineligible for the 2008 recovery rebate, Congress exempted military members from the SSN requirement. Resident aliens are generally subject to the same federal income tax laws as citizens of the United States. Like U.S. citizens, resident aliens are subject to tax on all income earned in the United States and abroad. Resident aliens file a tax return using the Form 1040 series, may claim deductions and credits, and are taxed at the same graduated rates as U.S. citizens. They are also subject to income tax withholding. Nonresident aliens are taxed on income from sources within the United States but generally not on income from foreign sources. Sections 861, 862, 863, 864, and 865 of the Internal Revenue Code define income that is from sources within and outside the United States. Compensation for services performed in the United States is U.S. source income. A nonresident alien's U.S. source income is taxed at different rates depending on whether it is "effectively connected" with a trade or business in the United States. An individual must generally be engaged in a trade or business in the United States to have "effectively connected" income. The term generally includes compensation for the performance of personal services in the United States. Nonresident aliens with F-, J-, M-, or Q-visas are considered to be engaged in a trade or business in the United States. Income that is effectively connected with a trade or business in the United States is generally taxed by the same rules and at the same graduated rates as the income of U.S. citizens and resident aliens. In general, income that is not effectively connected may not be reduced by deductions and is subject to tax at a flat rate of 30%. Nonresident aliens file a return using the Form 1040NR series and are subject to the same collection procedures as U.S. citizens and resident aliens. Furthermore, they are generally subject to withholding on personal service compensation and non-effectively connected income. There are limited circumstances in which a nonresident alien's U.S. source income is not subject to U.S. taxation. For example, some interest income that is not connected with a U.S. trade or business (e.g., portfolio interest) is exempt from U.S. tax. Another example is that compensation for services performed in the United States is not subject to U.S. tax if the services are for a foreign employer or office, the alien is in the United States for not more than 90 days during the tax year, and the compensation does not exceed $3000. A nonresident alien with an F-, J-, or Q-visa is not taxed on compensation received from a foreign employer. Employees of foreign governments and international organizations and crew members of foreign vessels and aircraft may qualify to exempt their compensation from tax. Additionally, income may be exempt from U.S. tax under a treaty (see below). Aliens leaving the United States usually must obtain a certificate of compliance ("sailing permit") from the IRS that shows he or she "has complied with all the obligations imposed upon him by the income tax laws." The IRS may subject aliens who attempt to leave without one to examination at the point of departure and require payment of any taxes whose collection would be jeopardized by the departure. Tax treaties provide benefits to nonresident aliens and, in certain situations, resident aliens. Benefits vary by treaty. Typical provisions include the reduction of the 30% flat rate applied to non-effectively connected U.S. source income and the exemption of gain from the sale of personal property. Treaties often exempt personal service compensation from taxation if a nonresident alien is in the United States for less than a stated period of time (e.g., 90, 180, or 183 days) or the compensation is less than a specified amount (generally between $3,000 and $10,000) and paid by a foreign employer. Treaty provisions may also exempt the compensation of specific groups of employees (e.g., students, teachers, athletes, and employees of foreign governments). The United States has income tax treaties with Armenia, Australia, Austria, Azerbaijan, Bangladesh, Barbados, Belarus, Belgium, Bulgaria, Canada, China, Cyprus, Czech Republic, Denmark, Egypt, Estonia, Finland, France, Georgia, Germany, Greece, Hungary, Iceland, India, Indonesia, Ireland, Israel, Italy, Jamaica, Japan, Kazakhstan, Kyrgyzstan, Latvia, Lithuania, Luxembourg, Malta, Mexico, Moldova, Morocco, the Netherlands, New Zealand, Norway, Pakistan, Philippines, Poland, Portugal, Romania, Russia, Slovak Republic, Slovenia, South Africa, South Korea, Spain, Sri Lanka, Sweden, Switzerland, Tajikistan, Thailand, Trinidad, Tunisia, Turkey, Turkmenistan, Ukraine, the United Kingdom, Uzbekistan, and Venezuela. Resident aliens are subject to Social Security and Medicare taxes on wages (FICA taxes) and on self-employment income (SECA taxes) in the same manner as U.S. citizens. In general, nonresident aliens are subject to FICA taxes on compensation from work within the United States under the rules applicable to U.S. citizens and resident aliens, but are not subject to SECA taxes. A list of exempted services in IRC §3121(b) is generally applicable to all who work in the United States. Examples include services performed by foreign workers temporarily admitted to the United States to perform agricultural labor and services performed by employees of foreign governments and qualifying international organizations. Also exempted are services performed by individuals with F-, J-, M-, or Q-visas that meet the purpose of admittance and services performed in Guam by H-2 visa holders who are residents of the Philippines. The United States has entered into totalization agreements with numerous countries that have social security programs. The intent of these agreements is to provide individuals who work in two countries with the opportunity to qualify for social security benefits in one country and to avoid double coverage and taxation. With respect to the issue of double coverage and taxation, agreements generally provide that individuals are only covered by the social security program (and therefore only subject to the program's taxes) in the country where they are working, although individuals who are covered in their home country and temporarily assigned by their employer to work in the other country are exempt from coverage in that country. A self-employed individual generally is covered and pays social security taxes in the country where he or she resides. The United States has entered into totalization agreements with Australia, Austria, Belgium, Canada, Chile, Czech Republic, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Japan, Luxembourg, the Netherlands, Norway, Poland, Portugal, Spain, South Korea, Sweden, Switzerland, and the United Kingdom. In 2004, the United States signed an agreement with Mexico, which has been controversial. It has not yet been transmitted to Congress. The Consolidated Appropriations Act, 2012 prohibits the Social Security Commissioner or Social Security Administration (SSA) from using any of the funds appropriated by the act to pay compensation to SSA employees to administer Social Security benefit payments under any U.S.-Mexico totalization agreement that would not otherwise be payable. Other legislation has been introduced, the Loophole Elimination and Verification Enforcement Act (or LEAVE Act), that would state it is the sense of the House that the U.S.-Mexico totalization agreement "is inappropriate public policy and should not take effect." Another bill introduced in the 112 th Congress would address a constitutional issue with the existing totalization agreement process. Under current law, once an agreement is transmitted to Congress, it becomes effective at the end of the period during which at least one house has been in session 60 days, unless either house adopts a resolution of disapproval. This is a legislative veto, and the Supreme Court held such vetoes to be unconstitutional. The Social Security Totalization Agreement Reform Act of 2011 (or STAR Act) would, among other things, address the legislative veto problem by implementing a new approval process.

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

HCFA used a test methodology that was comparable with processes followed by other public insurers who have successfully tested and implemented such commercial systems. Other public insurers—such as the military’s TRICARE, Veterans Affairs’ CHAMPVA, and the Kansas and Mississippi Medicaid offices—each used four key steps to test their claims-auditing systems prior to implementation. Specifically, they (1) performed detailed comparisons of their payment policies with systems’ edits to determine where conflicts existed, (2) modified the commercial systems’ edits to comply with their payment policies, (3) integrated the systems into their claims payment systems, and (4) conducted operational tests to ensure that the integrated systems processed claims properly. This is a comprehensive approach that requires significant time to complete. For example, TRICARE took about 18 months for two sites and allowed about 2 years for its remaining nine sites. HCFA’s approach was similar. From contract award on September 30, 1996, through its conclusion 15 months later at the end of December 1997, both HCFA and contractor staff made significant progress in integrating the test commercial system and evaluating its potential for Medicare use nationwide. HCFA used both a policy evaluation team and a technical team to concentrate separately on these aspects of the test. A detailed comparison of the commercial system’s payment policies with those of Medicare identified conflicting edits—inconsistencies that in some cases would increase and in others decrease the amount of the Medicare payments. For example, the commercial system would pay for the higher cost procedure of those deemed mutually exclusive, while Medicare dictates paying for the lower cost procedure. (A mutually exclusive procedure would be, for instance, the same patient’s receiving both an open and a closed treatment for a fracture.) Conversely, the commercial claims-auditing system would deny certain payments for assistant surgeons, while Medicare allows them. These and all other identified conflicts were provided to the vendor, who modified the system’s edits to make them consistent with HCFA policy. The technical team carried out three critical tasks. First, it developed the design specifications and related computer code necessary for integrating the commercial system into the Medicare claims-processing software. Second, it integrated the claims-auditing system into the system that processes Medicare part B claims. Finally, the team conducted numerous tests of the integrated system to determine its effect both on processing speed and accuracy. HCFA management was kept apprised of the status of the test through regular progress reports and frequent contact with the project management team. HCFA found that the edits in this commercial system could save Medicare up to $465 million annually by identifying inappropriate claims. Specifically, HCFA’s analysis showed that the system’s mutually exclusive and incidental procedure edits would save about $205 million, and the diagnosis-to-procedure edits could save about $260 million. HCFA’s analysis was based on a national sample of paid claims already processed by Medicare part B and audited for inappropriate coding with HCFA’s internal software. We reviewed the reports of HCFA’s estimated savings, but did not independently verify the national sample from which these savings were derived. However, the magnitude of savings—$682 million, including the savings derived from HCFA’s internal software, which HCFA reported at $217 million for 1996—is in line with our 1995 estimate that about $600 million in annual savings are possible. On November 25, 1997, HCFA officials notified the Administrator of the successful test of the commercial system. This was a far different conclusion than the one reported by HCFA 2 months earlier, while testing was ongoing. At a September 29, 1997, hearing before this subcommittee, a senior HCFA official stated that the agency was testing the commercial system as a stand-alone system against Medicare’s claims-processing system. He testified that “for the month of August, our system, the CCI system achieves savings of $422,000 more than the system would have achieved if that would have been what we were using. We were outperforming a product.” However, as we testified at that same hearing, the test needed to compare the commercial system as a supplement to the existing one, rather than as a replacement. Before HCFA completed its test it did compare the commercial system as a supplement. This comparison showed that commercial systems offer the potential for substantial Medicare savings. Despite the successful outcome of the test, two early management decisions, if left unchanged, would have significantly delayed national implementation of claims-auditing software in the Medicare program. First, the use of the test system was limited to its single Iowa location, thereby requiring another contract for nationwide implementation. Second, HCFA’s initial plan following the test was to proceed with developing its own edits, rather than to acquire those available through commercial systems. This plan would not only have required additional time before implementation, but could well have resulted in a system less comprehensive in its capacity to flag suspect claims than what is available commercially. I would now like to provide some details surrounding both of these decisions. HCFA’s contract limited the use of the test system to its Iowa site and did not include a provision for implementation throughout the Medicare program if the test proved successful. As a result, additional time will now be needed to award another contract to implement the test system’s claims-auditing software or any other approach nationwide. According to a HCFA contracting official, it could take as much as a year to award another contract using “full and open” competition—the method normally used for such implementation. This entails preparing for and issuing a request for proposals, evaluating the resulting bids, and awarding the contract. HCFA’s estimated savings of up to $465 million per year demonstrates the costs associated with delays in implementing such payment controls nationwide. Along with additional time and lost savings from the lack of early nationwide implementation, awarding a new contract could result in additional expense to either develop new edits or for substantial rework to adapt the new system’s edits to HCFA’s payment policies if a contractor other than the one performing the original test wins the competition. If another contractor were to become involved, much of the work HCFA performed during the test period would have to be redone. Specifically, another company’s claims-auditing edits would have to be evaluated for potential conflict with agency payment policy. Other options were open to HCFA from the beginning. For example, HCFA could have followed the approach used by TRICARE, whose contract provided for a phased, 3-year implementation at its 11 processing sites following successful testing. According to HCFA’s Administrator, the agency is doing what it can to avoid any delays resulting from the limited test contract. The Administrator said HCFA is evaluating legal options to determine if other contracting avenues are available, options that would allow expedited national implementation of commercial claims-auditing software. In reporting the test results, HCFA representatives recommended that the HCFA Administrator award a contract to develop HCFA-owned claims-auditing edits to supplement the correct coding initiative, rather than acquire these edits commercially. They provided the following rationale: First, this approach could cost substantially less than commercial edits because HCFA would have the option of changing contractors for edit updates, it would not have to pay annual licensing fees, and the developmental cost would be much less than purchasing the capability commercially. Second, according to HCFA officials, this approach would result in HCFA-owned claims-auditing edits, which are in the public domain and consequently allow HCFA to disclose its policies and coding combinations to providers, as it currently does with the correct coding initiative edits. Officials also explained that if a commercial vendor bid, won, and agreed to allow its claims-auditing edits to enter the public domain, HCFA would allow the vendor to start with its existing edits, which should shorten development time. We found serious flaws in this approach—in terms of cost, overall effectiveness, and underlying assumptions. First, upgrading the edits by moving from the initial contract developer to one unfamiliar with them would not be easy or inexpensive; it is a major task, facilitated by a thorough clinical knowledge of the existing edits. Second, the annual licensing fees that HCFA would avoid with its own edits would be offset to some degree by the need to pay a contractor with the clinical expertise to keep the edits current. Third, while the commercial software could cost more than developing HCFA-owned edits, this increased cost has already been more than justified by HCFA’s test results demonstrating that commercial edits provide significantly more Medicare savings. Finally, the cost of delay is significant: HCFA has realized no savings from such commercial software over the past 6 years. Moreover, we found that HCFA’s plan to fully disclose its edits to the medical community is not required by federal law and is not followed by other public insurers; it could also result in limiting the number of potential contractors with an interest in bidding. In May 1995 HHS’ Office of General Counsel informed HCFA that no federal law or regulation precludes it from protecting the proprietary nature of the edits and the related computer logic used in commercial claims-auditing systems. Further, HCFA’s Deputy Director of the Provider Purchasing and Administration Group stated that the agency has no explicit Medicare policy requiring it to disclose to providers the specific edits used to audit their claims. Rather than disclosing the edits, other public insurers, such as CHAMPVA and TRICARE, notified providers that they were implementing the system, and supplied examples of categories of edits that would be used to check for such disparities as mutually exclusive claims. Finally, while it is true that development time would likely be shortened if a commercial claims-auditing vendor were awarded the contract and used its existing edits as a starting point, it is doubtful that such vendors would bid on the contract if resulting edits were to be in the public domain. This response was confirmed to us by an executive of a company that has already developed a claims-auditing system; he said he would not enter into such a contractual agreement if HCFA insisted on making the edits public because this would result in the loss of the proprietary rights to his company’s claims-auditing edits. HCFA’s plan to develop its own edits was also inconsistent with Office of Management and Budget (OMB) policy in acquiring information resources. HCFA has not demonstrated the cost-effectiveness of its plan to develop edits internally. In fact, a prime example showing otherwise is HCFA’s own estimate that every year it delays implementing claims-auditing edits of the caliber of those used in the commercial test system in Iowa, about $465 million in savings could be lost. Developing comprehensive HCFA-owned claims-auditing edits could take years, during which time hundreds of millions of dollars could be lost annually due to incorrectly coded claims. To illustrate: HCFA began developing its database of edits in 1991 and has continued to improve it over the past 6 years. While HCFA reported that its correct coding initiative identified $217 million in savings in 1996 (in the mutually exclusive and incidental procedure categories), this database did not identify an additional $205 million in those categories identified by the test edits, nor does it address the diagnosis-to-procedure category, where the test edits identified an additional $260 million in possible savings. HCFA has no assurance that its own edits would be as effective as those available commercially. This past March, after considering our findings and other factors, the HCFA Administrator said that the agency’s plans had changed. She said that HCFA plans to begin immediately to acquire and implement commercial claims-auditing software in as expedited a manner as possible. We are encouraged that after a slow start, HCFA now plans to move quickly to take advantage of the comprehensive claims-auditing capability that is available, and we are looking forward to seeing HCFA’s milestones for expeditiously implementing this capability. Typically, such milestones would include dates for awarding a contract for the commercial claims-auditing edits, initiating and completing implementation at the first Medicare site, and implementing the edits at the remaining Medicare processing sites. Mr. Chairman, this concludes my statement. I would be happy to respond to any questions that you or other members of the Subcommittee may have at this time. The first copy of each GAO report and testimony is free. Additional copies are $2 each. Orders should be sent to the following address, accompanied by a check or money order made out to the Superintendent of Documents, when necessary. VISA and MasterCard credit cards are accepted, also. 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Pursuant to a congressional request, GAO discussed: (1) the Health Care Financing Administration's (HCFA) progress in testing and acquiring a commercial system for identifying inappropriate Medicare bills; (2) how HCFA tested this commercial system; (3) HCFA's initial management decisions and their consequences; and (4) HCFA's plans for immediate implementation. GAO noted that: (1) from contract award on September 30, 1996, through its conclusion at the end of December 1997, both HCFA and contractor staff made significant progress in integrating the test commercial system and evaluating its potential for Medicare use nationwide; (2) HCFA used both a policy evaluation team and a technical team to concentrate separately on aspects of the test; (3) a detailed comparison of the commercial system's payment policies with those of Medicare identified conflicting edits--inconsistencies that in some cases would increase and in others decrease the amount of the Medicare payments; (4) the technical team: (a) developed the design specifications and related computer code necessary for integrating the commercial system into Medicare claims-processing software; (b) integrated the claims-auditing system into the system that processes Medicare part B claims; and (c) conducted numerous tests of the integrated system to determine its effect both on processing speed and accuracy; (5) HCFA management was kept apprised of the status of the test through regular reports and frequent contact with the project management team; (6) HCFA's contract limited the use of the test system to its Iowa site and did not include a provision for implementation throughout the Medicare program if the test proved successful; (7) additional time will be needed to award another contract to implement the test system's claims-auditing software; (8) HCFA representatives recommended that the HCFA Administrator award a contract to develop HCFA-owned claims-auditing edits to supplement the correct coding initiative, rather than acquire these edits commercially; (9) GAO found serious flaws in terms of cost, overall effectiveness, and underlying assumptions; (10) HCFA's plan to develop its own edits was also inconsistent with Office of Management and Budget policy in acquiring information resources; (11) HCFA has not demonstrated the cost-effectiveness of its plan to develop edits internally; (12) HCFA plans to begin immediately to acquire and implement commercial claims-auditing software in as expedient a manner as possible; and (13) HCFA now plans to move quickly to take advantage of the comprehensive claims-auditing capability that is available.

Federal contracting began declining in the late 1980s as the Cold War drew to a close and defense spending decreased. This decline in federal contracting continued for most of the 1990s, reaching a low of about $187 billion in fiscal year 1999. Spending subsequently increased to about $204 billion in fiscal year 2000. As figure 1 shows, between fiscal year 1990 and fiscal year 2000, purchases of supplies and equipment fell by about $25 billion, while purchases of services increased by $17 billion, or about 24 percent. Consequently, purchases for services now account for about 43 percent of federal contracting expenses—the largest single spending category. The growth in services has largely been driven by the government's increased purchases of two types of services: information technology services, which increased from $3.7 billion in fiscal year 1990 to about $13.4 billion in fiscal year 2000; and professional, administrative, and management support services, which rose from $12.3 billion in fiscal year 1990 to $21.1 billion in fiscal year 2000. The increase in the use of service contracts coincided with a 21-percent decrease in the federal workforce, which fell from about 2.25 million employees as of September 1990 to 1.78 million employees as of September 2000. As federal spending and employment patterns were changing, changes were also occurring in the way that federal agencies buy services. Specifically, there has been a trend toward agencies purchasing professional services using contracts awarded and managed by other agencies. For example, in 1996, the General Services Administration (GSA) began offering information technology services under its Federal Supply Schedule program, and it now offers services ranging from professional engineering to laboratory testing and analysis to temporary clerical and professional support services. The use of the schedule program to acquire services has increased significantly over the past several years. Other governmentwide contracts have also come into use in recent years. The Federal Acquisition Streamlining Act of 1994 authorized federal agencies to enter into multiple award, task- and delivery-order contracts for goods and services. These contracts provide agencies with a great deal of flexibility in buying goods or services while minimizing the burden on government contracting personnel to negotiate and administer contracts. The Clinger-Cohen Act of 1996 authorized the use of multiagency contracts and what have become known as governmentwide agency contracts to facilitate purchases of information technology-related products and services such as network maintenance and technical support, systems engineering, and integration services. While we have seen the environment change considerably, what we have not seen is a significant improvement in federal agencies' management of service contracts. Put simply, the poor management of service contracts undermines the government's ability to obtain good value for the money spent. This contributed to our decision to designate contract management a high-risk area for the Departments of Defense and Energy, the two largest purchasers within the federal government. Improving contract management is also among the management challenges faced by other agencies. Compounding these problems are the agencies' past inattention to strategic human capital management. As you may know, in January 2001, we designated strategic human capital management a governmentwide high-risk area. Our work, as well as work by other oversight agencies, continues to identify examples of long-standing problems in service contracting, including poor planning, inadequately defined requirements, insufficient price evaluation, and lax oversight of contractor performance. For example, We found that the Department of Defense's (DOD) broadly defined work descriptions for information technology services orders placed against several governmentwide contracts prevented establishing firm prices for the work. Work descriptions defined services broadly because the orders covered several years of effort, and officials were uncertain what support they would need in future years. The 22 orders we reviewed—with a total value of $553 million—typically provided for reimbursing the contractors' costs, leaving the government bearing most of the risk of cost growth. Further, although competition helps agencies ensure they obtain the best value under contracts, a majority of these orders were awarded without competing proposals having been received. The DOD Inspector General found problems with each of the more than 100 contract actions—with a total value of $6.7 billion—for professional, administrative, and management support services it reviewed. For example, contracting officials typically did not use experience from prior acquisitions of the same services to help define requirements more clearly. In one case, officials continued to award cost reimbursement contracts— and accepted the risk of cost overruns—despite 39 years of experience purchasing the same services from the same contractor. Further, officials typically did not prepare well-supported independent cost estimates to help them assess whether the costs contractors proposed were reasonable. Finally, the Inspector General found that oversight of contractor performance was inadequate in a majority of cases, and in some cases DOD officials could not show that they had actually reviewed the contractors' work. We found that DOD personnel sought competing quotes from multiple contractors on only a handful of orders for information technology services placed against GSA's federal supply schedule contracts. On 17 orders—valued at $60.5 million—contracting officers generally compared the labor rates offered by their preferred contractor with labor rates of various other contractors' supply schedule contracts instead of seeking competing quotes. This limited analysis did not provide a meaningful basis for assessing whether a contractor would provide high-quality, cost- effective services because it did not evaluate the proposed number of labor hours and mix of labor skill categories. Therefore, contracting officers' ability to ensure that DOD got the best services at the best prices was significantly undermined. The Inspector General at the Department of Transportation found that on an $875-million contract for technical support services, the Federal Aviation Administration did not develop reliable cost estimates or use these estimates to assess whether costs the contractor proposed were reasonable. Further, the agency generally did not gather data to evaluate the quality of contractor performance nor ensure that contractor personnel had the education and experience required for the jobs they were being paid to perform. The Inspector General at the Department of Energy reported on a $218-million contract for security services at its Oak Ridge operations.This contract was intended to consolidate security services under a single contractor and to reduce costs by reducing staffing and eliminating duplicative management structures. Oak Ridge officials, however, did not define what security-related work the new contractor would perform and did not analyze staffing levels or propose cost reduction measures to promote efficient contractor performance. Consequently, the number of security personnel actually increased from 640 prior to the consolidation to 744 afterwards, while Oak Ridge incurred an estimated $7.5 million in avoidable costs instead of achieving an anticipated $5 million in savings. While these examples highlight the need for federal agencies to improve their management of service contracts, their capacity to do so is at risk because of past inattention to strategic human capital management. We are concerned that federal agencies' human capital problems are eroding the ability of many agencies—and threaten the ability of others—to perform their missions economically, efficiently, and effectively. For example, we found that the initial rounds of downsizing were set in motion without considering the longer term effects on agencies' performance capacity. Additionally, a number of individual agencies drastically reduced or froze their hiring efforts for extended periods. Consequently, following a decade of downsizing and curtailed investments in human capital, federal agencies currently face skills, knowledge, and experience imbalances that, without corrective action, could worsen given the number of current federal civilian workers that are eligible to retire through 2005. I would like to use DOD's experience to illustrate this problem. As we recently testified, DOD's approach to civilian workforce reduction was not oriented toward shaping the makeup of the force. Rather, DOD relied primarily on voluntary turnover and retirements, freezes on hiring authority, and its authority to offer early retirements and "buy-outs" to achieve reductions. As a result, DOD's current workforce is not balanced and therefore risks the orderly transfer of institutional knowledge. According to DOD's Acquisition 2005 Task Force, 11 consecutive years of downsizing produced serious imbalances in the skills and experience of the highly talented and specialized civilian acquisition workforce, putting DOD on the verge of a retirement-driven talent drain. DOD's leadership had anticipated that using streamlined acquisition procedures would improve the efficiency of contracting operations and help offset the effects of workforce downsizing. However, the DOD Inspector General reported that the efficiency gains from using streamlined procedures had not kept pace with acquisition workforce reductions. The Inspector General reported that while the workforce had been reduced by half, DOD's contracting workload had increased by about 12 percent and that senior personnel at 14 acquisition organizations believed that workforce reductions led to problems such as less contractor oversight. While I have discussed DOD's problems at length, we believe our concerns are equally valid regarding the broader civilian agency contracting community. For example, our analysis of personnel data maintained by the Office of Personnel Management (OPM) shows that while DOD downsized its workforce to a greater extent than the civilian agencies during the 1990s, both DOD and the civilian agencies will have about 27 percent of their current contracting officers eligible to retire through the end of fiscal year 2005. Consequently, without appropriate workforce planning, federal agencies could lose a significant portion of their contracting knowledge base. Congress and the administration are taking steps to address some of these contract management and human capital challenges, in particular by emphasizing the increased use of performance-based service contracts and by stressing the importance of integrating strategic human capital management into agency planning. Performance-based contracts describe desired outcomes rather than direct work processes. According to the Office of Federal Procurement Policy, the use of performance-based contracts should result in lower prices and improved performance, among other benefits. To encourage their use, in April 2000, the Procurement Executives Council—a senior level coordinating body comprised of officials from more than 20 federal departments and agencies—established a goal that 50 percent of service contracts will be performance-based by fiscal year 2005. The goal of increasing the use of performance-based contracts was reaffirmed in a March 9, 2001, memorandum issued by the Office of Management and Budget (OMB). Further, as required by last year's defense authorization act, the Federal Acquisition Regulation was revised on May 2, 2001, to establish a preference for using performance-based contracting when acquiring services. While we support the use of performance-based approaches, it should be recognized that performance-based contracting is not a new concept. The Office of Federal Procurement Policy issued a policy letter in April 1991 that directed using performance-based contracting to the maximum extent practicable. However, this approach was not widely adopted by federal agencies, and the Procurement Executives Council's interim goal of having 10 percent of service contracts awarded in fiscal year 2001 be performance-based is indicative of the current level of performance-based contracting in the government. Consequently, the extent to which agencies provide the necessary training, guidance, and tools to their workforce, and establish metrics to monitor the results of the contracts awarded using performance-based approaches, will affect whether this effort achieves its intended results. With regard to human capital management, it is clear that both OPM and OMB have substantial roles to play. OPM has begun stressing to agencies the importance of integrating strategic human capital management into agency planning and has focused more attention on developing tools to help agencies. For example, it has developed a workforce planning model and has launched a website to facilitate information sharing about workforce planning issues. OMB has played a more limited role; however, OMB's role in setting governmentwide management priorities and defining resource allocations will be critical to inducing agencies to integrate strategic human capital into their core business processes. Toward that end, OMB's current guidance to agencies on preparing their strategic and annual performance plans states that the plans should set goals in such areas as recruitment, retention, and training, among others. Earlier this month, OMB instructed agencies to submit a workforce analysis to it by June 29, 2001. The analysis is to include summary information on the demographics of the agencies' permanent, seasonal, and temporary workforce; projected attrition and retirements; an evaluation of workforce skills; expected changes in the agency's work; recruitment, training, and retention strategies being implemented; and barriers to maintaining a high- quality and diverse workforce. The information developed may prove useful in identifying human capital areas needing greater attention. Over the past decade, federal spending patterns changed, the federal workforce declined, and new contracting vehicles and techniques were introduced. Consequently, the current environment in which the government acquires services is significantly different than the one it operated under in 1990. However, the government's long-standing difficulties with managing service contracts have not changed, and it is clear that agencies are not doing all they can to ensure that they are acquiring services that meet their needs in a cost-effective manner. The increasing significance of contracting for services has prompted—and rightfully so—a renewed emphasis by Congress and the executive agencies to resolve long-standing problems with service contracts. To do so, the government must face the twin challenges of improving its acquisition of services while simultaneously addressing human capital issues. One cannot be done without the other. Expanding the use of performance-based contracting approaches and emphasizing strategic human capital planning are welcomed and positive steps, but sustained leadership and commitment will be required to ensure that these efforts mitigate the risks the government currently faces when contracting for services. Mr. Chairman, this concludes my prepared statement. I will be happy to respond to any questions you or other Members of the Subcommittee may have. For further information, please contact David E. Cooper at (202) 512-4841. Individuals making key contributions to this testimony included Don Bumgardner, Ralph Dawn, Tim DiNapoli, Julia Kennon, Gordon Lusby, Monty Peters, Ron Schwenn, and John Van Schaik.

Federal agencies spend billions of tax dollars each year to buy services--from clerical support to information technology assistance to the management of national laboratories. The federal government spent more than $87 billion in services--a 24 percent increase in real terms from fiscal year 1990. Some service procurements are not being done efficiently, putting taxpayer dollars at risk. In particular, agencies are not clearly defining their requirements, fully considering alternative solutions, performing vigorous price analyses, and adequately overseeing contractor performance. This testimony (1) describes service contracting trends and the changing acquisition environment, (2) discusses the challenges confronting the government in acquiring services, and (3) highlights some efforts underway to address these challenges. GAO found that purchases of services now account for about 43 percent of federal contracting expenses--the largest single spending category. The growth of services has been driven largely by the government's increased purchases of information technology services and professional, administrative, and management support services. Poor contract management has undermined the government's ability to obtain good value for the money and continues to be a major problem for the two biggest service purchasers-the Departments of Defense and Energy. Performance-based service contracts and the integration of strategic human capital management into agency planning are two ways to address some of the contract management and human capital challenges.

Following a yearlong study, the Commercial Activities Panel in April 2002 reported its findings on competitive sourcing in the federal government. The report lays out 10 sourcing principles and several recommendations, which provide a roadmap for improving sourcing decisions across the federal government. Overall, the new Circular is generally consistent with these principles and recommendations. The Commercial Activities Panel held 11 meetings, including three public hearings in Washington, D.C.; Indianapolis, Indiana; and San Antonio, Texas. In these hearings, the Panel heard repeatedly about the importance of competition and its central role in fostering economy, efficiency, and continuous performance improvement. Panel members heard first-hand about the current process—primarily the cost comparison process conducted under OMB Circular A-76—as well as alternatives to that process. Panel staff conducted extensive additional research, review, and analysis to supplement and evaluate the public comments. Recognizing that its mission was complex and controversial, the Panel agreed that a supermajority of two-thirds of the Panel members would have to vote for any finding or recommendation in order for it to be adopted. Importantly, the Panel unanimously agreed upon a set of 10 principles it believed should guide all administrative and legislative actions in competitive sourcing. The Panel itself used these principles to assess the government’s existing sourcing system and to develop additional recommendations. A supermajority of the Panel agreed on a package of additional recommendations. Chief among these was a recommendation that public- private competitions be conducted using the framework of the Federal Acquisition Regulation (FAR). Although a minority of the Panel did not support the package of additional recommendations, some of these Panel members indicated that they supported one or more elements of the package, such as the recommendation to encourage high-performing organizations (HPO) throughout the government. Importantly, there was a good faith effort to maximize agreement and minimize differences among Panel members. In fact, changes were made to the Panel’s report and recommendations even when it was clear that some Panel members seeking changes were highly unlikely to vote for the supplemental package of recommendations. As a result, on the basis of Panel meetings and my personal discussions with Panel members at the end of our deliberative process, I believe the major differences among Panel members were few in number and philosophical in nature. Specifically, disagreement centered primarily on (1) the recommendation related to the role of cost in the new FAR-type process, and (2) the number of times the Congress should be required to act on the new FAR-type process, including whether the Congress should authorize a pilot program to test that process for a specific time period. As I noted previously, the new A-76 Circular is generally consistent with the Commercial Activities Panel’s sourcing principles and recommendations and, as such, provides an improved foundation for competitive sourcing decisions in the federal government. In particular, the new Circular permits: greater reliance on procedures contained in the FAR, which should result in a more transparent, simpler, and consistently applied competitive process, and source selection decisions based on tradeoffs between technical factors and cost. The new Circular also suggests potential use of alternatives to the competitive sourcing process, such as public-private and public-public partnerships and high-performing organizations. It is not, however, specific as to how and when these alternatives might be used. If effectively implemented, the new Circular should result in increased savings, improved performance, and greater accountability, regardless of the service provider selected. However, this competitive sourcing initiative is a major change in the way government agencies operate, and successful implementation of the Circular’s provisions will require that adequate support be made available to federal agencies and employees, especially if the time frames called for in the new Circular are to be achieved. Implementing the new Circular A-76 will likely be challenging for many agencies. GAO’s past work on the competitive sourcing program at the Department of Defense (DOD)— as well as agencies’ efforts governmentwide to improve acquisition, human capital, and information technology management—has identified practices that have either advanced these efforts or hindered them. The lessons learned from these experiences—especially those that demonstrate best competitive sourcing practices—could prove invaluable to agencies as they implement the provisions in the new Circular. A major challenge agencies will face will be meeting a 12-month limit for completing the standard competition process in the new Circular. This provision is intended to respond to complaints from all sides about the length of time taken to conduct A-76 cost comparisons—complaints that the Panel repeatedly heard in the course of its review. OMB’s new Circular states that standard competitions shall not exceed 12 months from public announcement (start date) to performance decision (end date). Under certain conditions, there may be extensions of no more than 6 months. The new Circular also states that agencies shall complete certain preliminary planning steps before a public announcement. We welcome efforts to reduce the time required to complete these studies. Even so, our studies of DOD competitive sourcing activities have found that competitions can take much longer than the time frames outlined in the new Circular. Specifically, DOD’s most recent data indicate that competitions take on average 25 months. It is not, however, clear how much of this time was needed for any planning that may now be outside the revised Circular’s time frame. In commenting on OMB’s November 2002 draft proposal, we recommended that the time frame be extended to perhaps 15 to 18 months overall, and that OMB ensure that agencies provide sufficient resources to comply with A-76. In any case, we believe additional financial and technical support and incentives will be needed for agencies as they attempt to meet these ambitious time frames. Another provision in the new Circular that may affect the timeliness of the process is the “phased evaluation” approach—one of four approaches for making sourcing selections. Under this approach, an agency evaluates technical merit and cost in two separate phases. In the first phase, offerors may propose alternate performance standards. If the agency decides that a proposed alternate standard is desirable, it incorporates the standard into the solicitation. All offerors may then submit revised proposals in response to the new standard. In the second phase, the agency selects the offeror who meets these new standards and offers the lowest cost. While not in conflict with the principles or recommendations of the Commercial Activities Panel, the approach, if used, may prove burdensome in implementation, given the additional step involved in the solicitation. DOD has been at the forefront of federal agencies in using the A-76 process. We have tracked DOD’s progress in implementing its A-76 program since the mid-to-late-1990s and have identified a number of challenges that hold important lessons that civilian agencies should consider as they implement their own competitive sourcing initiatives. Notably: competitions took longer than initially projected, costs and resources required for the competitions were selecting and grouping functions to compete was problematic, and determining and maintaining reliable estimates of savings was difficult. DOD’s experience and our work identifying best practices suggest that several key areas will need sustained attention and communication by senior leadership as agencies plan and implement their competitive sourcing initiatives. Basing goals and decisions on sound analysis and integrating sourcing with other management initiatives. Sourcing goals and targets should contribute to mission requirements and improved performance and be based on considered research and sound analysis of past activities. Agencies should consider how competitive sourcing relates to strategic management of human capital, improved financial performance, expanded reliance on electronic government, and budget and performance integration, consistent with the President’s Management Agenda. Capturing and sharing knowledge. The competition process is ultimately about promoting innovation and creating more economical, efficient, and effective organizations. Capturing and disseminating information on lessons learned and providing sufficient guidance on how to implement policies will be essential if this is to occur. Without effectively sharing lessons learned and sufficient guidance, agencies will be challenged to implement certain A-76 requirements. For example, calculating savings that accrue from A-76 competitions, as required by the new Circular, will be difficult or may be done inconsistently across agencies without additional guidance, which will contribute to uncertainties over savings. Building and maintaining agency capacity. Conducting competitions as fairly, effectively, and efficiently as possible requires sufficient agency capacity—that is, a skilled workforce and adequate infrastructure and funding. Agencies will need to build and maintain capacity to manage competitions, to prepare the in-house most-effective organization (MEO), and to oversee the work—regardless of whether the private sector or the MEO is selected. Building this capacity will likely be a challenge, particularly for agencies that have not been heavily invested in competitive sourcing previously. An additional challenge facing agencies in managing this effort will be doing so while addressing high- risk areas, such as human capital and contract management. In this regard, GAO has listed contract management at the National Aeronautics and Space Administration, the Department of Housing and Urban Development, and the Department of Energy as an area of high risk. With a likely increase in the number of public-private competitions and the requirement to hold accountable whichever sector wins, agencies will need to ensure that they have an acquisition workforce sufficient in numbers and abilities to administer and oversee these arrangements effectively. We recently initiated work to look at how agencies are implementing their competitive sourcing programs. Our prior work on acquisition, human capital, and information technology management—in particular, our work on DOD’s efforts to implement competitive sourcing—provides a strong knowledge base from which to assess agencies’ implementation of this initiative. Finally, an important issue for implementation of the new Circular A-76 is the right of in-house competitors to appeal sourcing decisions in favor of the private sector. The Panel heard frequent complaints from federal employees and their representatives about the inequality of protest rights. While both the public and the private sectors had the right under the earlier Circular to file appeals to agency appeal boards, only the private sector had the right, if dissatisfied with the ruling of the agency appeal board, to file a bid protest at GAO or in court. Under the previous version of the Circular, both GAO and the Court of Appeals for the Federal Circuit held that federal employees and their unions were not “interested parties” with the standing to challenge the results of A-76 cost comparisons. The Panel recommended that, in the context of improving to the federal government’s process for making sourcing decisions, a way be found to level the playing field by allowing in-house entities to file a protest at GAO, as private-sector competitors have been allowed to do. The Panel also viewed the protest process as one method of ensuring accountability to assure federal workers, the private sector, and the taxpayer that the competition process is working properly. The new Circular provides a right to “contest” a standard A-76 competition decision using procedures contained in the FAR for protests within the contracting agencies. The new Circular thus abolishes the A-76 appeal board process and instead relies on the FAR-based agency-level protest process. An important legal question is whether the shift from the cost comparisons under the prior Circular to the FAR-like public-private competitions under the new one means that the in-house MEO should be eligible to file a bid protest at GAO. If the MEO is allowed to protest, there is a second question: Who will speak for the MEO and protest in its name? To ensure that our legal analysis of these questions benefits from input from everyone with a stake in this important area, GAO posted a notice in the Federal Register on June 13, seeking public comment on these and several related questions. Responses are due by July 16, and we intend to review them carefully before reaching our legal conclusion. While the new Circular provides an improved foundation for competitive sourcing decisions, implementing this initiative will undoubtedly be a significant challenge for many federal agencies. The success of the competitive sourcing program will ultimately be measured by the results achieved in terms of providing value to the taxpayer, not the size of the in- house or contractor workforce or the number of positions competed to meet arbitrary quotas. Successful implementation will require adequate technical and financial resources, as well as sustained commitment by senior leadership to establish fact-based goals, make effective decisions, achieve continuous improvement based on lessons learned, and provide ongoing communication to ensure federal workers know and believe that they will be viewed and treated as valuable assets. - - - - - Mr. Chairman, this concludes my statement. I will be happy to answer any questions you or other Members of the Committee may have. This is a work of the U.S. government and is not subject to copyright protection in the United States. It may be reproduced and distributed in its entirety without further permission from GAO. However, because this work may contain copyrighted images or other material, permission from the copyright holder may be necessary if you wish to reproduce this material separately.

In May 2003, the Office of Management and Budget (OMB) issued a new Circular A-76--which sets forth the government's competitive sourcing process. Determining whether to obtain services in-house or through commercial contracts is an important economic and strategic decision for agencies, and the use of A-76 is expected to grow throughout the federal government. In the past, however, the A-76 process has been difficult to implement, and the impact on the morale of the federal workforce has been profound. Moreover, there have been concerns in both the public and private sectors about the timeliness and fairness of the process and the extent to which there is a "level playing field" for conducting public-private competitions. It was against this backdrop that the Congress enacted legislation mandating a study of the government's competitive sourcing process, which was carried out by the Commercial Activities Panel, which was chaired by the Comptroller General of the United States. This testimony focuses on how the new Circular addresses the Panel's recommendations with regard to providing a better foundation for competitive sourcing decisions, and the challenges agencies may face in implementing the new A-76. Overall, the new Circular is consistent with the principles and recommendations that the Commercial Activities Panel reported in April 2002, and should provide an improved foundation for competitive sourcing decisions in the federal government. In particular, the new Circular permits greater reliance on procedures in the Federal Acquisition Regulation--which should result in a more transparent and consistently applied competitive process--as well as source selection decisions based on tradeoffs between technical factors and cost. The new Circular also suggests potential use of alternatives to the competitive sourcing process, such as public-private and public-public partnerships and high-performing organizations. The new Circular should result in increased savings, improved performance, and greater accountability. However, this initiative is a major change in the way the government operates, and implementing the new Circular A-76 will likely be challenging for many agencies. A major challenge agencies will face will be meeting a 12-month limit for completing the standard competition process. This provision aims to respond to complaints about the length of time taken to conduct A-76 cost comparisons. However, GAO studies of competitive sourcing at the Department of Defense (DOD) have found that competitions can take much longer than 12 months. Other provisions in the new Circular may also prove burdensome in implementation. Lessons learned by DOD and other agencies as they initiate efforts to improve acquisition, human capital, and information technology management could prove invaluable as agencies implement the new A-76 provisions--especially those that demonstrate best competitive sourcing practices. Successful implementation of the Circular's provisions will also likely require additional financial and technical support and incentives.

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

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

Most federal offshore oil and gas production leases contain royalty provisions that require the lessee to pay a certain percentage of revenue on the value of oil and natural gas production to the federal government as the lessor. In 1995, Congress passed the Deep Water Royalty Relief Act (DWRRA), which provides an incentive for exploration of oil and natural gas reserves in "deep water," which might otherwise be uneconomic, by providing that a certain initial volume of production from deep water wells would be exempt from royalty obligations. Section 302 of the DWRRA provides a mechanism by which holders of existing leases can apply for royalty relief, which is to be granted by the Secretary of the Interior if the lease would otherwise be uneconomic. However, Section 302 also provides that these lessees will not be eligible for royalty relief if the price of oil or natural gas exceeds a certain threshold level. While Section 302 of the DWRRA addresses royalty relief for holders of leases in existence at the time of the enactment of the act, Sections 303 and 304 address post-enactment lease sales. Section 303 amends the bidding system to allow Interior to offer leases going forward with royalty relief at the discretion of the Department, while Section 304 carves out an exception to that royalty payment requirement for deep water leases that were entered into within five years of the date of enactment of the DWRRA. Pursuant to Section 304, the standard royalty requirement is to be suspended for lessees holding these leases until a certain volume of oil or natural gas is produced by the lessee. The volumetric limitation on royalty relief varies based on the water depth of the leased tract. Once the volumetric threshold is exceeded, a lessee may be required to make royalty payments. Section 304 sets a statutory minimum for the volumetric threshold for royalty relief—the Secretary of the Interior is authorized to grant a higher volumetric threshold at his or her discretion. In 1998 and 1999, MMS issued deepwater offshore leases that were eligible for royalty suspension but did not include a price-based limitation on that eligibility. As a result, holders of these 1998 and 1999 deepwater leases have no obligations to make royalty payments up to the suspension volumes, regardless of the market price of oil or natural gas; the leases do not contain a price threshold on royalty relief. On August 4, 2007, the House passed H.R. 3221 . Included in this omnibus energy bill is the proposed Royalty Relief for American Consumers Act of 2007. One section of this proposed act bars the Secretary of the Interior from issuing any new leases to holders of "covered leases" unless said leaseholders either renegotiate their "covered leases" to include price thresholds or pay a "conservation of resources" fee as established in the proposed act. The statute defines a "covered lease" as "a lease for oil or gas production in the Gulf of Mexico that is ... issued by the Department of the Interior under Section 304 of the Outer Continental Shelf Deep Water Royalty Relief Act ... and ... not subject to limitations on royalty relief based on market prices that are equal to or less than the price thresholds" described in the DWRRA. Any holder of a "covered lease" is forced to decide between three options: (1) the lessee can keep the lease under its current terms (i.e., without a price threshold) and lose the right to bid on future offshore lease sales in the Gulf of Mexico; (2) the lessee can pay a newly created "conservation of resources" fee, as established elsewhere in the proposed act; or (3) the lessee can renegotiate the covered lease to include royalty relief price thresholds. Many observers interpret the proposed act as a legislative attempt to correct the perceived oversight in the 1998-1999 leases that lack price thresholds. Around the same time that the perceived oversight in the 1998 and 1999 leases described above was brought to the public's attention, Kerr-McGee Oil & Gas Corp. (Kerr-McGee) initiated litigation that challenged the authority of the Department of the Interior (DOI) to impose price thresholds on leases sold between 1996 and 2000 (i.e., the effective period of section 304 of the DWRRA). According to Kerr-McGee, section 304 of the DWRRA, which addresses lease sales during the five-year period between 1996 and 2000, barred the inclusion of royalty relief price thresholds to these leases, and therefore the collection of royalties resulting from the imposition of price thresholds contradicted section 304 of the DWRRA. Kerr-McGee brought its claim in the U.S. District Court for the Western District of Louisiana after the DOI issued an Order directing Kerr-McGee to pay royalties on oil and natural gas produced in 2003 and 2004 under eight leases operated by Kerr-McGee under the DWRRA. On October 30, 2007, the court issued a ruling that essentially confirmed Kerr-McGee's position and found that an Order issued by the DOI directing Kerr-McGee to pay royalties based on a price threshold was in error. The court based its ruling on a decision issued by the U.S. Court of Appeals for the Fifth Circuit in 2004 that interpreted the relevant sections of the DWRRA. According to the court: The Fifth Circuit interpreted Sections 303 and 304 of the DWRRA as they pertain to new production requirements for Mandatory Royalty Relief leases. Section 303 added a new bidding system that gave the Interior the authority to lease any water depth in any location with royalty relief fashioned according to the Interior's discretion. The [Fifth Circuit] found that this power, however, was tempered by the next section, where Congress replaced the Interior's discretion to fashion royalty relief with a fixed royalty suspension scheme based on volume and water depth. Thus, the royalty relief for Mandatory Royalty Relief leases is automatic and unconditional. Based on the Fifth Circuit's previous ruling, the district court found that Section 304 mandates royalty relief up to a certain minimum volume of production, regardless of the market price of oil or natural gas. Therefore, the court concluded that the DOI had "exceeded its Congressional authority" when it sought to collect royalties on Kerr-McGee's oil and gas production that did not exceed these volumetric minimums, regardless of whether the oil and gas produced could be sold at prices in excess of the price thresholds for royalty relief that had been included in the lease terms. Since the Kerr-McGee ruling was issued on October 30, 2007, there has been extensive congressional interest in the impact of the ruling on the proposed Royalty Relief for American Consumers Act of 2007, as described above. Specifically, there is confusion as to how the ruling might affect the restrictions that section 7504 seeks to impose on holders of "covered leases." As discussed above, section 7504 requires that persons who hold "covered leases" either: (1) renegotiate their leases to include price thresholds; (2) pay a "conservation of resources" fee as set forth in the section; or (3) forfeit eligibility for future oil or gas production leases in the Gulf of Mexico. Section 7504 and the legislative efforts that preceded it have generally been described as efforts to remedy a perceived "error" or "oversight" in the 1998 and 1999 deep water leases by forcing renegotiation of those leases to include royalty relief price thresholds, or by using the "conservation of resources" fee structure to recover from these leaseholders amounts that had previously been calculated to be roughly the same amount as would be owed if price thresholds had been in place. The recent ruling by the U.S. District Court for the Western District of Louisiana, if upheld, would effectively eliminate the distinction between the 1998 and 1999 deep water leases, which do not include price thresholds, and the 1996, 1997 and 2000 deep water leases, which contain price thresholds that are not enforceable because they are in violation of congressional intent in enacting section 304 of the DWRRA. If none of the leases issued pursuant to section 304 of the DWRRA contains royalty relief provisions that are subject to price thresholds, then it appears that all of these leases ( i.e. , all deep water leases issued between 1996 and 2000) would be "covered leases" as that term is defined in the proposed act. As noted above, section 7504(d)(1) defines a "covered lease" as "a lease for oil or gas production in the Gulf of Mexico that is ... issued by the Department of the Interior under Section 304 of the Outer Continental Shelf Deep Water Royalty Relief Act ... and ... not subject to limitations on royalty relief based on market prices that are equal to or less than the price thresholds" described in the DWRRA. It is important to note that the definition of "covered leases" is not restricted to leases without price thresholds in their terms, or any other definition that would be contingent upon the language in the leases. If this were the case, then only the 1998 and 1999 leases would be "covered leases," because the 1996, 1997 and 2000 leases contain price threshold language. However, the definition of "covered leases" in section 7504(d)(1) encompasses any lease that is not "subject to limitations on royalty relief" based on oil or natural gas market prices. Thus, if the Western District of Louisiana decision is affirmed on appeal, then it appears that none of the leases issued between 1996 and 2000 would be "subject to limitations on royalty relief based on market price," and thus all of these leases may be "covered leases" under the proposed act. As a result, any entity that holds a deep water lease issued between 1996 and 2000 may be ineligible for future oil or natural gas production leases in the Gulf of Mexico pursuant to section 7504(a) of the proposed act until that entity either renegotiates the lease in question or pays a "conservation of resources" fee. If Congress does wish to encourage recovery of royalties on all leases issued pursuant to section 304 of the DWRRA between 1996 and 2000 that are limited by both price and volumetric thresholds, it could likely do so by passage of the proposed Royalty Relief for American Consumers Act of 2007 as it is currently worded in sections 7501-7505 of H.R. 3221 . This option could affect most companies operating in the deep water OCS area. If Congress wishes to restrict the scope of the proposed act to the 1998 and 1999 leases that did not contain price thresholds, it might consider amending the definition of a "covered lease" accordingly.

On October 30, 2007, the U.S. District Court for the Western District of Louisiana issued a ruling in Kerr-McGee Oil & Gas Corp. v. Allred that rebuffed efforts of the U.S. Department of the Interior (DOI) to collect royalties from offshore oil and gas production leases based on so-called "price thresholds" for previously granted royalty relief. There has been considerable interest in the impact of this ruling on ongoing congressional efforts related to certain "missing" royalty payment requirements in leases issued by the Minerals Management Service (MMS) of the DOI in 1998 and 1999, including the proposed Royalty Relief for American Consumers Act of 2007, as found at sections 7501-7505 of H.R. 3221. The House of Representatives passed H.R. 3221 on August 4, 2007. This report (1) provides background on the Outer Continental Shelf Deep Water Royalty Relief Act (DWRRA), pursuant to which royalty-free leases, including the controversial 1998 and 1999 leases, were issued; (2) summarizes relevant portions of the proposed Royalty Relief for American Consumers Act, which attempts to encourage the renegotiation of the controversial 1998 and 1999 leases; (3) summarizes the recent ruling in the Kerr-McGee matter; and (4) analyzes the potential impact of that recent ruling on the proposed Royalty Relief for American Consumers Act and any similar legislative efforts. This analysis is restricted to a discussion of the potential impact of the recent ruling on section 7504 of H.R. 3221, which would place restrictions on holders of leases that lack price thresholds. It does not address section 7503 of H.R. 3221, which seeks to "clarify the authority" of the Secretary of the Interior to include price thresholds on royalty relief in offshore leases pursuant to section 304 of the DWRRA.

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

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

In October 1998, the EPA Administrator announced plans to create an office with responsibility for information management, policy, and technology. This announcement came after many previous efforts by EPA to improve information management and after a long history of concerns that we, the EPA Inspector General, and others have expressed about the agency’s information management activities. Such concerns involve the accuracy and completeness of EPA’s environmental data, the fragmentation of the data across many incompatible databases, and the need for improved measures of program outcomes and environmental quality. The EPA Administrator described the new office as being responsible for improving the quality of information used within EPA and provided to the public and for developing and implementing the goals, standards, and accountability systems needed to bring about these improvements. To this end, the information office would (1) ensure that the quality of data collected and used by EPA is known and appropriate for its intended uses, (2) reduce the burden of the states and regulated industries to collect and report data, (3) fill significant data gaps, and (4) provide the public with integrated information and statistics on issues related to the environment and public health. The office would also have the authority to implement standards and policies for information resources management and be responsible for purchasing and operating information technology and systems. Under a general framework for the new office that has been approved by the EPA Administrator, EPA officials have been working for the past several months to develop recommendations for organizing existing EPA personnel and resources into the central information office. Nonetheless, EPA has not yet developed an information plan that identifies the office’s goals, objectives, and outcomes. Although agency officials acknowledge the importance of developing such a plan, they have not established any milestones for doing so. While EPA has made progress in determining the organizational structure of the office, final decisions have not been made and EPA has not yet identified the employees and the resources that will be needed. Setting up the organizational structure prior to developing an information plan runs the risk that the organization will not contain the resources or structure needed to accomplish its goals. Although EPA has articulated both a vision as well as key goals for its new information office, it has not yet developed an information plan to show how the agency intends to achieve its vision and goals. Given the many important and complex issues on information management, policy, and technology that face the new office, it will be extremely important for EPA to establish a clear set of priorities and resources needed to accomplish them. Such information is also essential for EPA to develop realistic budgetary estimates for the office. EPA has indicated that it intends to develop an information plan for the agency that will provide a better mechanism to effectively and efficiently plan its information and technology investments on a multiyear basis. This plan will be coordinated with EPA ‘s agencywide strategic plan, prepared under the Government Performance and Results Act. EPA intends for the plan to reflect the results of its initiative to improve coordination among the agency’s major activities relating to information on environment and program outcomes. It has not yet, however, developed any milestones or target dates for initiating or completing either the plan or the coordination initiative. In early December 1998, the EPA Administrator approved a broad framework for the new information office and set a goal of completing the reorganization during the summer of 1999. Under the framework approved by the EPA Administrator, the new office will have three organizational units responsible for (1) information policy and collection, (2) information technology and services, and (3) information analysis and access, respectively. In addition, three smaller units will provide support in areas such as data quality and strategic planning. A transition team of EPA staff has been tasked with developing recommendations for the new office’s mission and priorities as well as its detailed organizational and reporting structure. In developing these recommendations, the transition team has consulted with the states, regulated industries, and other stakeholders to exchange views regarding the vision, goals, priorities, and initial projects for the office. One of the transition team’s key responsibilities is to make recommendations concerning which EPA units should move into the information office and in which of the three major organizational units they should go. To date, the transition team has not finalized its recommendations on these issues or on how the new office will operate and the staff it will need. Even though EPA has not yet determined which staff will be moved to the central information office, the transition team’s director told us that it is expected that the office will have about 350 employees. She said that the staffing needs of the office will be met by moving existing employees in EPA units affected by the reorganization. The director said that, once the transition team recommends which EPA units will become part of the central office, the agency will determine which staff will be assigned to the office. She added that staffing decisions will be completed by July 1999 and the office will begin functioning sometime in August 1999. The funding needs of the new office were not specified in EPA’s fiscal year 2000 budget request to the Congress because the agency did not have sufficient information on them when the request was submitted in February 1999. The director of the transition team told us that in June 1999 the agency will identify the anticipated resources that will transfer to the new office from various parts of EPA. The agency plans to prepare the fiscal year 2000 operating plan for the office in October 1999, when EPA has a better idea of the resources needed to accomplish the responsibilities that the office will be tasked with during its first year of operation. The transition team’s director told us that decisions on budget allocations are particularly difficult to make at the present time due to the sensitive nature of notifying managers of EPA’s various components that they may lose funds and staff to the new office. Furthermore, EPA will soon need to prepare its budget for fiscal year 2001. According to EPA officials, the Office of the Chief Financial Officer will coordinate a planning strategy this spring that will lead to the fiscal year 2001 annual performance plan and proposed budget, which will be submitted to the Office of Management and Budget by September 1999. The idea of a centralized information office within EPA has been met with enthusiasm in many corners—not only by state regulators, but also by representatives of regulated industries, environmental advocacy groups, and others. Although the establishment of this office is seen as an important step in improving how EPA collects, manages, and disseminates information, the office will face many challenges, some of which have thwarted previous efforts by EPA to improve its information management activities. On the basis of our prior and ongoing work, we believe that the agency must address these challenges for the reorganization to significantly improve EPA’s information management activities. Among the most important of these challenges are (1) obtaining sufficient resources and expertise to address the complex information management issues facing the agency; (2) overcoming problems associated with EPA’s decentralized organizational structure, such as the lack of agencywide information dissemination policies; (3) balancing the demand for more data with calls from the states and regulated industries to reduce reporting burdens; and (4) working effectively with EPA’s counterparts in state government. The new organizational structure will offer EPA an opportunity to better coordinate and prioritize its information initiatives. The EPA Administrator and the senior-level officials charged with creating the new office have expressed their intentions to make fundamental improvements in how the agency uses information to carry out its mission to protect human health and the environment. They likewise recognize that the reorganization will raise a variety of complex information policy and technology issues. To address the significant challenges facing EPA, the new office will need significant resources and expertise. EPA anticipates that the new office will substantially improve the agency’s information management activities, rather than merely centralize existing efforts to address information management issues. Senior EPA officials responsible for creating the new office anticipate that the information office will need “purse strings control” over the agency’s resources for information management expenditures in order to implement its policies, data standards, procedures, and other decisions agencywide. For example, one official told us that the new office should be given veto authority over the development or modernization of data systems throughout EPA. To date, the focus of efforts to create the office has been on what the agency sees as the more pressing task of determining which organizational components and staff members should be transferred into the new office. While such decisions are clearly important, EPA also needs to determine whether its current information management resources, including staff expertise, are sufficient to enable the new office to achieve its goals. EPA will need to provide the new office with sufficient authority to overcome organizational obstacles to adopt agencywide information policies and procedures. As we reported last September, EPA has not yet developed policies and procedures to govern key aspects of its projects to disseminate information, nor has it developed standards to assess the data’s accuracy and mechanisms to determine and correct errors. Because EPA does not have agencywide polices regarding the dissemination of information, program offices have been making their own, sometimes conflicting decisions about the types of information to be released and the extent of explanations needed about how data should be interpreted. Likewise, although the agency has a quality assurance program, there is not yet a common understanding across the agency of what data quality means and how EPA and its state partners can most effectively ensure that the data used for decision-making and/or disseminated to the public is of high quality. To address such issues, EPA plans to create a Quality Board of senior managers within the new office in the summer of 1999. Although EPA acknowledges its need for agencywide policies governing information collection, management, and dissemination, it continues to operate in a decentralized fashion that heightens the difficulty of developing and implementing agencywide procedures. EPA’s offices have been given the responsibility and authority to develop and manage their own data systems for the nearly 30 years since the agency’s creation. Given this history, overcoming the potential resistance to centralized policies may be a serious challenge to the new information office. EPA and its state partners in implementing environmental programs have collected a wealth of environmental data under various statutory and regulatory authorities. However, important gaps in the data exist. For example, EPA has limited data that are based on (1) the monitoring of environmental conditions and (2) the exposures of humans to toxic pollutants. Furthermore, the human health and ecological effects of many pollutants are not well understood. EPA also needs comprehensive information on environmental conditions and their changes over time to identify problem areas that are emerging or that need additional regulatory action or other attention. In contrast to the need for more and better data is a call from states and regulated industries to reduce data management and reporting burdens. EPA has recently initiated some efforts in this regard. For example, an EPA/state information management workgroup looking into this issue has proposed an approach to assess environmental information and data reporting requirements based on the value of the information compared to the cost of collecting, managing, and reporting it. EPA has announced that in the coming months, its regional offices and the states will be exploring possibilities for reducing paperwork requirements for EPA’s programs, testing specific initiatives in consultation with EPA’s program offices, and establishing a clearinghouse of successful initiatives and pilot projects. However, overall reductions in reporting burdens have proved difficult to achieve. For example, in March 1996, we reported that while EPA was pursuing a paperwork reduction of 20 million hours, its overall paperwork burden was actually increasing because of changes in programs and other factors. The states and regulated industries have indicated that they will look to EPA’s new office to reduce the burden of reporting requirements. Although both EPA and the states have recognized the value in fostering a strong partnership concerning information management, they also recognize that this will be a challenging task both in terms of policy and technical issues. For example, the states vary significantly in terms of the data they need to manage their environmental programs, and such differences have complicated the efforts of EPA and the states to develop common standards to facilitate data sharing. The task is even more challenging given that EPA’s various information systems do not use common data standards. For example, an individual facility is not identified by the same code in different systems. Given that EPA depends on state regulatory agencies to collect much of the data it needs and to help ensure the quality of that data, EPA recognizes the need to work in a close partnership with the states on a wide variety of information management activities, including the creation of its new information office. Some partnerships have already been created. For example, EPA and the states are reviewing reporting burdens to identify areas in which the burden can be reduced or eliminated. Under another EPA initiative, the agency is working with states to create data standards so that environmental information from various EPA and state databases can be more readily shared. Representatives of state environmental agencies and the Environmental Council of the States have expressed their ideas and concerns about the role of EPA’s new information office and have frequently reminded EPA that they expect to share with EPA the responsibility for setting that office’s goals, priorities, and strategies. According to a Council official, the states have had more input to the development of the new EPA office than they typically have had in other major policy issues and the states view this change as an improvement in their relationship with EPA. Collecting and managing the data that EPA requires to manage its programs have been major long-term challenges for the agency. The EPA Administrator’s recent decision to create a central information office to make fundamental agencywide improvements in data management activities is a step in the right direction. However, creating such an organization from disparate parts of the agency is a complex process and substantially improving and integrating EPA’s information systems will be difficult and likely require several years. To fully achieve EPA’s goals will require high priority within the agency, including the long-term appropriate resources and commitment of senior management. The first copy of each GAO report and testimony is free. Additional copies are $2 each. Orders should be sent to the following address, accompanied by a check or money order made out to the Superintendent of Documents, when necessary. VISA and MasterCard credit cards are accepted, also. Orders for 100 or more copies to be mailed to a single address are discounted 25 percent. U.S. General Accounting Office P.O. Box 37050 Washington, DC 20013 Room 1100 700 4th St. NW (corner of 4th and G Sts. 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Pursuant to a congressional request, GAO discussed the Environmental Protection Agency's (EPA) information management initiatives, focusing on the: (1) status of EPA's efforts to create a central office responsible for information management, policy, and technology issues; and (2) major challenges that the new office needs to address in order to achieve success in collecting, using, and disseminating environmental information. GAO noted that: (1) EPA estimates that its central information office will be operational by the end of August 1999 and will have a staff of about 350 employees; (2) the office will address a broad range of information policy and technology issues, such as improving the accuracy of EPA's data, protecting the security of information that EPA disseminates over the Internet, developing better measures to assess environmental conditions, and reducing information collection and reporting burdens; (3) EPA recognizes the importance of developing an information plan showing the goals of the new office and the means by which they will be achieved but has not yet established milestones or target dates for completing such a plan; (4) although EPA has made progress in determining the organizational structure for the new office, it has not yet finalized decisions on the office's authorities, responsibilities, and budgetary needs; (5) the agency has not performed an analysis to determine the types and the skills of employees that will be needed to carry out the office's functions; (6) EPA officials told GAO that decisions on the office's authorities, responsibilities, budget, and staff will be made before the office is established in August 1999; (7) on the basis of GAO's prior and ongoing reviews of EPA's information management problems, GAO believes that the success of the new office depends on the agency's addressing several key challenges as it develops an information plan, budget, and organizational structure for that office; and (8) most importantly, EPA needs to: (a) provide the office with the resources and the expertise necessary to solve the complex information management, policy, and technology problems facing the agency; (b) empower the office to overcome organizational challenges to adopting agencywide information policies and procedures; (c) balance the agency's need for data on health, the environment, and program outcomes with the call from the states and regulated industries to reduce their reporting burdens; and (d) work closely with its state partners to design and implement improved information management systems.

CT uses ionizing radiation and computers to produce cross-sectional images of internal organs and body structures. MRI uses powerful magnets, radio waves, and computers to create cross-sectional images of internal body tissues. NM uses radioactive materials in conjunction with an imaging modality to produce images that show both structure and function within the body. During an NM service, such as a PET scan, a patient is administered a small amount of radioactive substance, called a radiopharmaceutical or radiotracer, which is subsequently tracked by a radiation detector outside the body to render time-lapse images of the radioactive material as it moves through the body. Imaging equipment that uses ionizing radiation—such as CT and NM—poses greater potential short- and long-term health risks to patients than other imaging modalities, such as ultrasound. This is because ionizing radiation has enough energy to potentially damage DNA and thus increase a person’s lifetime risk of developing cancer. In addition, exposure to very high doses of this radiation can cause short-term injuries, such as burns or hair loss. To become accredited, ADI suppliers must select a CMS-designated accrediting organization, pay the organization an accreditation fee, and demonstrate that they meet the organization’s standards. As we noted in our May 2013 report, the accrediting organization fees vary. For example, as of January 2013, ACR’s accreditation fees ranged from $1,800 to $2,400 per unit of imaging equipment, while IAC’s fees ranged from $2,600 to $3,800 per application. While the specific standards used by accrediting organizations vary, MIPPA requires all accrediting organizations to have standards in five areas: (1) qualifications of medical personnel who are not physicians and who furnish the technical component of ADI services, (2) qualifications and responsibilities of medical directors and supervising physicians, (3) procedures to ensure that equipment used in furnishing the technical component of ADI services meets performance specifications, (4) procedures to ensure the safety of beneficiaries and staff, and (5) establishment and maintenance of a quality-assurance and quality control program. To demonstrate that they meet their chosen accrediting organization’s standards, ADI suppliers must submit an online application as well as required documents, which could include information on qualifications of personnel or a sample of patient images. MIPPA requires CMS to oversee the accrediting organizations and authorizes CMS to modify the list of selected accrediting organizations, if necessary. Federal regulations specify that CMS may conduct “validation audits” of accredited ADI suppliers and provide for the withdrawal of CMS approval of an accrediting organization at any time if CMS determines that the organization no longer adequately ensures that ADI suppliers meet or exceed Medicare requirements. CMS also has requirements for accrediting organizations. For example, accrediting organizations are responsible for using mid-cycle audit procedures, such as unannounced site visits, to ensure that accredited suppliers maintain compliance with MIPPA’s requirements for the duration of the 3-year accreditation cycle. According to CMS officials, five full-time staff are budgeted to oversee and develop standards for the ADI accreditation requirement.report was issued in May 2013, CMS has begun to gather input from stakeholders on the development of national standards for the accreditation of ADI suppliers, which it intends to develop by the end of 2014. Medicare payment for the technical component of ADI services is intended to cover the cost of the equipment, supplies, and nonphysician staff and is generally significantly higher than the payment for the professional component. The payment for the professional component is intended to cover the physician’s time in interpreting the image and writing a report on the findings. Medicare reimburses providers through different payment systems depending on where an ADI service is performed. When an ADI service is performed in an office setting such as a physician’s office or IDTF, both the professional and technical component are billed under the Medicare physician fee schedule. Alternatively, when the ADI service is performed in an institutional setting, the physician can only bill the Medicare physician fee schedule for the professional component, while the payment for the technical component is covered under a different Medicare payment system, according to the setting in which the service is provided. For example, the technical component of an ADI service provided in a hospital outpatient department is paid under the hospital outpatient prospective payment system (OPPS). The use of imaging services grew rapidly during the decade starting in 2000—MedPAC reported that cumulative growth between 2000 and 2009 totaled 85 percent—although the rate of growth has declined in recent Growth in imaging utilization and expenditures—including those years.for ADI services—prompted action from Congress, CMS, and private payers. Congress has enacted legislation to help ensure appropriate Medicare payment for ADI services; in some cases, this legislation has had the effect of reducing Medicare payment for the technical component of certain imaging services, such as the following: The Deficit Reduction Act of 2005 required that, beginning January 1, 2007, Medicare payment for certain imaging services under the physician fee schedule not exceed the amount Medicare pays under the OPPS. The Patient Protection and Affordable Care Act (PPACA), as amended by the Health Care and Education Reconciliation Act of 2010 (HCERA) and the American Tax Relief Act of 2012 (ATRA), reduced payment for the technical component of ADI services by adjusting assumptions, known as utilization rates, related to the rate at which certain imaging equipment is used. These changes had the effect of reducing payments for the technical component of ADI services beginning in January 2011, with additional reductions scheduled to take effect in 2014. CMS implemented additional changes to Medicare payment policy to help ensure appropriate payment for ADI services, which had the effect of reducing Medicare payment for certain imaging services. In January 2006 CMS began applying a multiple procedure payment reduction (MPPR) policy to the technical component of certain CT and MRI services, which reduces payments for these services when they are furnished together by Beginning in the same physician, to the same patient, on the same day.January 2012, CMS expanded the MPPR by reducing payments for the lower-priced professional component of certain CT and MRI services by 25 percent when two or more services are furnished by the same physician to the same patient, in the same session, on the same day. Private payers have also implemented policies designed to help control imaging utilization and expenditures. One such policy is the use of prior authorization, which can involve requirements that physician orders of imaging services meet certain guidelines in order to qualify for payment. Further, best practice guidelines, such as ACR’s Appropriateness Criteria, as well as efforts to educate physicians and patients about radiation exposure associated with imaging, have been used to promote the appropriate use of imaging services. We found that the number of ADI services provided to Medicare beneficiaries in the office setting—an indicator of access to those services—began declining before and continued declining after the accreditation requirement went into effect on January 1, 2012 (see fig. 1). In particular, the rate of decline from 2009 to 2010 was similar to the rate from 2011 to 2012 for the CT; MRI; and NM, including PET, services in our analysis. These results suggest that the overall decline was driven, at least in part, by factors other than accreditation. For example, the number of CT services per 1,000 FFS beneficiaries declined by 9 percent between 2009 and 2010, 4 percent between 2010 and 2011, and 9 percent between 2011 and 2012. The percentage decline in the number of ADI services provided in the office setting was generally similar in both urban and rural areas during the period we studied, although we found that substantially more services were provided in urban areas than in rural areas (see fig. 2). The number of ADI services per 1,000 FFS beneficiaries provided in urban areas declined by 7 percent between 2011 and 2012, while the number of services provided in rural areas declined by 8 percent. In addition, 148 services were provided per 1,000 FFS beneficiaries in urban areas in 2012, as compared to 81 services per 1,000 beneficiaries in rural areas. One reason the use of ADI services in the office setting was relatively low in rural areas was that a smaller percentage of ADI services in these areas were provided in the office setting. Specifically, in 2012, about 14 percent of ADI services in rural areas were provided in the office setting, compared to 23 percent of ADI services in urban areas. See appendix I for trends in the number of urban and rural ADI services by modality. The effect of accreditation on access—as illustrated by our analysis of the trends in ADI services in the office setting—is unclear in the context of recent policy and payment changes as well as other factors affecting the use of imaging services. In particular, the decline in ADI services occurred amid the implementation in recent years of public and private policies to slow rapid increases in imaging utilization and spending. Factors, including public and private policies, that may have played a role in the decline in ADI service utilization include the following: Medicare payment reductions. Reductions in Medicare payment may have contributed to the decline in ADI services between 2009 and 2012 as reduced fees may affect physicians’ willingness to For example, provide imaging services for Medicare beneficiaries.PPACA and ATRA reduced payment for the technical component of ADI services by adjusting assumptions related to the rate at which certain imaging equipment is used. In addition, CMS implemented a 25 percent payment reduction for the professional component of certain CT and MRI services under the MPPR, effective January 1, 2012—the same date the accreditation requirement went into effect. Prior authorization. Studies have suggested that increased use of prior authorization policies among private payers in recent years has contributed to a decrease in ADI services provided to privately insured individuals. These policies may have had a spillover effect on Medicare, thus contributing to the decline in ADI services provided to Medicare beneficiaries from 2009 to 2012. Radiation awareness. Studies have suggested that increased physician and patient awareness of the risks associated with radiation exposure may have led to a decline in CT and NM services provided to Medicare beneficiaries. Of the remaining two suppliers, one indicated that it was unsure whether accreditation has affected the number of services it provides, while the other indicated that accreditation may have led to a slight increase in the number of services it provides. accreditation process. According to the representatives, IAC and ACR requested that CMS provide a provisional accreditation period for new suppliers that would allow them to obtain reimbursement for applicable ADI services while they undergo the accreditation process. According to CMS, it does not have the authority under MIPPA to provide provisional accreditation, as the statute only allows accredited suppliers to be paid for the technical component of ADI services beginning on January 1, 2012. We provided a draft of this report for review to the Department of Health and Human Services, and the agency stated that it had no comments. We are sending copies of this report to the Secretary of Health and Human Services and appropriate congressional committees. The report will also be 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) 512-7114 or cosgrovej@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 major contributions to this report are listed in appendix II. In addition to the contact named above, Phyllis Thorburn, Assistant Director; William Black, Assistant Director; Priyanka Sethi Bansal; William A. Crafton; Richard Lipinski; Beth Morrison; Jennifer Whitworth; and Rachael Wojnowicz made key contributions to this report.

The Medicare Improvements for Patients and Providers Act of 2008 (MIPPA) required that beginning January 1, 2012, suppliers that produce the images for Medicare-covered ADI services in office settings, such as physician offices, be accredited by an organization approved by CMS. MIPPA mandated that GAO issue two reports on the effect of the accreditation requirement. The first report, issued in 2013, assessed CMS's standards for the accreditation of ADI suppliers and its oversight of the accreditation requirement. In this report, GAO examined the effect the accreditation requirement may have had on beneficiary access to ADI services provided in the office setting. To do this, GAO examined trends in the use of the three ADI modalities—CT; MRI; and NM, including PET—provided to Medicare beneficiaries from 2009 through 2012 that were subject to the ADI accreditation requirement. GAO also interviewed CMS officials, representatives of the Intersocietal Accreditation Commission and the American College of Radiology—the two CMS-approved accrediting organizations that accounted for about 99 percent of all accredited suppliers as of January 2013; and 19 accredited ADI suppliers that reflected a range of geographic areas, imaging services provided, and accrediting organizations used. In addition, GAO reviewed relevant literature to understand the context of any observed changes in ADI services throughout the period studied. GAO found that the number of advanced diagnostic imaging (ADI) services provided to Medicare beneficiaries in the office setting—an indicator of access to those services—began declining before and continued declining after the accreditation requirement went into effect on January 1, 2012. In particular, the rate of decline from 2009 to 2010 was similar to the rate from 2011 to 2012 for magnetic resonance imaging (MRI); computed tomography (CT); and nuclear medicine (NM), including positron emission tomography (PET) services. These results suggest that the overall decline was driven, at least in part, by factors other than accreditation. The percentage decline in the number of ADI services provided in the office setting was generally similar in both urban and rural areas during the period GAO studied. The effect of accreditation on access is unclear in the context of recent policy and payment changes implemented by Medicare and private payers. For example, the Centers for Medicare & Medicaid Services (CMS) reduced Medicare payment for certain CT and MRI services, which could have contributed to the decline in the number of these services. Officials from CMS, representatives from the accrediting organizations, and accredited ADI suppliers GAO interviewed suggested that any effect of the accreditation requirement on access was likely limited. The Department of Health and Human Services stated that it had no comments on a draft of this report.

VA prioritizes all proposed capital projects using six major-decision criteria (see table 1), which focus on addressing needs that (1) can demand quick solutions, such as the need to replace an expiring lease that cannot be renewed, and (2) often change, such as demands for veterans’ access to care options. As such, according to VA officials, leasing is often VA’s preferred alternative for major medical facilities because project implementation times are often shorter than the time for constructing a federally-owned facility and leasing can provide flexibility to relocate in the future to meet changes in VA’s needs. VA cited a shorter project time frame and flexibility to relocate in all 51 of its prospectuses for major medical facilities’ leases submitted to Congress since fiscal year 2015. For example, in the fiscal year 2015 submission, VA cited a shorter implementation time frame and flexibility to relocate as justifications for a new lease in Johnson County, Kansas, to address growing demand and overcrowding at the Kansas City Veterans Medical Center and to reduce the drive time for a high concentration of veterans in the area to within VA’s 30-minute drive-time target. VA also generally identified leasing as the lowest cost alternative in its prospectuses, but in some cases preferred leasing for the two previously cited reasons when other options may have been less costly. For example, in fiscal year 2015, VA proposed a new lease in Lafayette, Louisiana, to replace a facility that the VA determined was too small and estimated leased space would have a total life-cycle cost of approximately $259 million, compared to $201 million for construction of a new federally-owned facility. According to VA, an owned facility would require a longer time frame to open than a leased facility and limit VA’s flexibility to adapt to potential changes in the veterans population, demand for services, new technologies, or health care delivery. Leasing may offer VA greater efficiencies and flexibilities when major medical-facility projects are compared to construction. Specifically, VA’s use of GSA delegated leasing authority to execute its major medical facility leases requires that VA’s lease terms not exceed 20 years. This period provides some of the flexibility that VA values in terms of relocating to facilities that align with VA’s changing needs. Construction of federally- owned facilities may not offer this flexibility given the challenges that we have previously identified with renovating and disposing of some federal properties, including VA’s, due to issues such as competing stakeholder interests that can make renovating or closing facilities difficult. Further, construction of a federally-owned facility requires a full upfront funding commitment that can be difficult to secure in the current budgetary environment. VA officials added that although VA’s major medical facility lease projects also generally require a lessor to construct a new facility to VA’s specifications, leasing tends to have a shorter project timeframe because it does not require VA to acquire the land on which the facility will be constructed, which can require additional time and resources. Although VA has justified leasing its major medical facilities to its department leadership and congressional decision makers based on the flexibility that leasing offers compared to other alternatives, VA has not provided these stakeholders with information on the extent to which it has benefited from that flexibility, nor does VA regularly assess information that would help it do so. In particular, while VA regularly cited future “flexibility,” such as ability to move when needs change, as a justification for the leases included in its annual capital plans, the benefits that VA has experienced from this flexibility with major medical facility leases are not presented to VA stakeholders responsible for selecting projects to present to Congress or to congressional decision makers. VA officials told us that VA’s data systems do not provide VA staff responsible for planning new leases with information on the use of flexibilities with existing major medical facilities’ leases, such as how far VA has moved from a previously occupied medical facility and why it has moved to new leased locations. We and OMB have previously identified the importance of assessing the results of capital decisions and incorporating lessons learned from those assessments into capital decisions. Without transparency on the actual benefits VA has experienced from leasing its major medical facilities, VA and congressional decision-makers may lack information to make informed decisions about the need for VA’s major medical facility leases. Further, greater transparency could help decision- makers and taxpayers understand the value of leasing in cases in which VA proposes leasing major medical facilities when other alternatives, such as construction of a federally-owned facility, may have a lower cost. In our issued report, we recommended that the Secretary of Veterans Affairs annually assess how VA has benefited from flexibilities afforded by leasing its major medical facilities and use information from these assessments in its annual capital plans in order to enhance transparency and allow for more informed decision making related to VA’s major medical facility leases. VA agreed with our recommendation, noting that assessing and explaining the benefits and flexibilities of leasing major medical facilities could improve transparency. VA agreed to add this information to future annual budget submissions. VA’s cost-estimating procedures for major medical facilities’ leases generally align with 9 of the 12 best practice steps for cost-estimating that we have previously identified, and recent changes may improve the quality of VA’s cost-estimating process for these leases. (See fig. 1.) For a cost-estimating process to support the creation of reliable cost estimates, it should substantially or fully meet each of the four characteristics in GAO’s Cost Guide—comprehensive, well-documented, accurate, and credible—based on the extent to which the procedures incorporate the underlying best practice steps for each characteristic. We found that VA’s cost-estimating procedures for major medical leases fully met the comprehensive characteristic, substantially met the well- documented characteristic, and partially met the accurate and credible characteristics. Our finding that VA’s cost-estimating process partially met the characteristics for producing reliable cost estimates is based on the following: Comprehensive: VA’s cost-estimating process fully met the comprehensive characteristic because its procedures include both the best practice steps of developing an estimating plan and determining the estimating structure. Well-documented: VA’s process substantially met the well- documented characteristic because its procedures incorporate a large number of related best-practice steps, such as defining the estimate’s purpose and presenting the estimate for approval. Accurate: VA’s process partially met the accurate characteristic because the procedures incorporate some elements of the two associated best practice steps. Specifically, VA’s process includes the best practice step of developing a point estimate and comparing it to an independent estimate, which is based on the market rental rate determined by a market survey that VA conducts and the cost of specific improvements required for VA’s intended medical purposes. VA applies several standard and variable adjustments to the market rental rate to determine the rental portion of the estimated first-year lease cost to include in the VA’s prospectuses to Congress. (See Table 2.) This best practice step normally includes comparing the estimate to an independent cost estimate, which VA does not obtain. Because of the standardized nature of the adjustments to the rent rate and pricing for improvements for major-medical facilities’ lease cost estimates, obtaining an independent cost estimate for these inputs would likely yield little new information; accordingly, we consider the rating for this best practice step to be substantially met. The procedures also include updating the estimate, another best practice step supporting this characteristic, but VA does not update it with actual costs as the best practice step requires. Estimates are updated during the development process to calculate whether actual costs are likely to rise more than 10 percent above the prospectus-estimated cost. For leases executed under GSA authority, the estimated maximum cost provided in a prospectus may be increased for construction or alterations but may not exceed 10 percent. After leases are executed VA does not update the estimate with actual costs. Updating the estimate with actual costs is a best practice step because it enables a “lessons learned” analysis, which can strengthen estimates going forward. Credible: VA’s process partially met the credible characteristic because VA’s procedures incorporate some elements of the three associated best practice steps. For example, the best practice step of conducting a sensitivity analysis on the lease’s cost estimate is not directly included in VA’s procedures, but some procedures do address uncertainty and risk. A sensitivity analysis reveals how to assess the potential variability in the estimate by calculating how the estimate is affected by a change in any single underlying assumption. These calculations identify the cost elements that represent the most risk to an estimate. Instead, VA officials said that VA applies an annual escalation rate to adjust for increases in market rental rate and inflationary increases in the cost for tenant improvements over time, two key assumptions supporting the estimate that could cause actual first-year lease costs to fluctuate from the prospectus estimated costs. We found that VA’s use of an escalation rate often did not fully account for variation in lease costs. Specifically, our review of cost data provided by VA for 18 of the 23 most recently completed major medical-facility leases activated by the end of fiscal year 2015 shows that actual costs for 15 of the 18 leases varied substantially from adjusted prospectus costs, including 7 leases that were more than 15 percent above VA’s adjusted estimates and 8 that were more than 15 percent below the VA’s adjusted estimates. For example, actual first-year lease costs increased about 26 percent over the adjusted estimate for VA’s San Francisco, California, medical facility’s lease and decreased about 44 percent for the VA’s Montgomery, Alabama, facility. VA recently issued a new standard design guide to increase the reliability of its prospectus estimates for major medical facilities and plans to conduct a “lessons learned” study that could further improve how VA estimates its costs. The standard design guide, issued in January 2016, covers the different types of outpatient clinic facilities and provides guidance on VA activities, such as site selection, and delineates minimum federal-facility requirements for security, sustainability, and seismic standards. VA officials told us that the new guide was developed to reduce the risk of facility changes and consequent cost changes for lease projects, and that moving forward all authorized major medical facility leases would use this guide. Reducing the potential for design changes— which we have previously found to be a main driver of increases in facility costs—after a prospectus is submitted may enable VA to better estimate facility costs. Second, VA officials told us that the department is planning a “lessons-learned” review that would involve updating data used for planning major medical facilities’ leases with actual cost data after the facility is accepted. This type of review can improve cost- estimating processes over time by exposing the precise reasons why actual costs differed from the estimate, such as faulty project ground rules and assumptions, and previously unrecognized risks. The new design guide and the lessons-learned study are in the early stages, and their success will depend on how quickly and successfully VA implements them. In conclusion, the recent changes in VA’s leasing program show promise for improving cost estimates for VA’s major medical facility leases. In particular, VA’s new guidance could introduce more discipline into the process and VA’s “lessons learned” study could identify factors that lead to cost variance from what is proposed to Congress. Further, VA’s commitment to assess and provide information to Congress on the benefits and flexibilities of leasing major medical facilities could provide much needed transparency to VA’s decisions to pursue leasing versus other alternatives. We will continue to monitor how VA proceeds with these changes. Chairman Barletta, Ranking Member Carson, and Members of the Subcommittee, this completes my prepared statement. I would be pleased to respond to any questions that you may have at this time. If you or your staff members have any questions concerning this testimony, please contact Rebecca Shea, (202) 512-2834; shear@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this statement. GAO staff who made key contributions include Heather MacLeod, Assistant Director; Jennifer Echard, Delwen Jones, James Leonard, and Crystal Wesco. This is a work of the U.S. government and is not subject to copyright protection in the United States. The published product may be reproduced and distributed in its entirety without further permission from GAO. However, because this work may contain copyrighted images or other material, permission from the copyright holder may be necessary if you wish to reproduce this material separately.

VA operates the largest health care network in the United States, with over 2,700 health care sites, including hospitals and outpatient facilities. However, many facilities are outdated, and VA estimates that its capital needs will require up to $63 billion over the next 10 years. In recent years, VA has increasingly leased its facilities, including major medical facilities. This testimony discusses (1) the factors that account for VA’s decisions to lease major medical facilities and (2) the extent to which VA’s cost-estimating process for leasing these facilities reflects best practices. This testimony is based on GAO’s June 2016 report (GAO-16-619). For that report, GAO analyzed agency documents, VA data on major medical facilities’ leases, compared VA’s cost-estimating procedures to best practices in GAO’s Cost Guide, and interviewed VA officials. VA’s cost-estimating procedures for leasing major medical facilities generally align with GAO’s 12 cost-estimating best practice steps and recent changes in VA’s approach may improve the quality of VA’s estimates. GAO’s review of cost data for these leases since 2006 found that actual costs often varied more than 15 percent above or below the estimates included in VA’s proposals for these leases, often due to project design changes. In 2016, VA introduced a design guide for leased medical facilities that delineates VA and federal requirements, such as security and sustainability standards, that may reduce the risk that a project, and its cost, change from what the VA proposed. VA also initiated a lessons-learned effort to evaluate the factors that contribute to differences between actual lease costs and those included in proposals. The success of these steps will depend on how quickly and effectively VA implements them. In its June 2016 report, GAO recommended that VA assess the benefits of leasing major medical facilities and use the information in VA’s annual capital plans. VA concurred with GAO’s recommendation.

Established in 1965, Head Start is a federally funded early childhood development program that served over 900,000 children at a cost of $6.8 billion in 2004. Head Start offers low-income children a broad range of services, including educational, medical, dental, mental health, nutritional, and social services. Children enrolled in Head Start are generally between the ages of 3 and 5 and come from varying ethnic and racial backgrounds. Head Start is administered by HSB within ACF. HSB awards Head Start grants directly to local grantees. Grantees may develop or adopt their own curricula and practices within federal guidelines. Grantees may contract with other organizations—called delegate agencies—to run all or part of their local Head Start programs. Each grantee or delegate agency may have one or more centers, each containing one or more classrooms. In this report, the term “grantee” is used to refer to both grantees and delegate agencies. Figure 1 provides information on the numbers of Head Start grantees, delegate agencies, centers and classrooms. Since the inception of Head Start, questions have been raised about the effectiveness of the program. In 1998, we reported that Head Start lacked objective information on performance of individual grantees and Congress enacted legislation requiring HSB to establish specific educational standards applicable to all Head Start programs and allowed development of local assessments to measure whether the standards are met. HSB implemented this legislation by developing the Child Outcomes Framework to guide Head Start grantees in their ongoing assessment of the progress of children. The Framework covers a broad range of child skill and development areas and incorporates each of the legislatively mandated goals, such as that children “use and understand an increasingly complex and varied vocabulary” and “identify at least 10 letters of the alphabet.” Since 2000, HSB has required every Head Start grantee to include each of the areas in the Framework in the child assessments that each grantee adopts and implements. The eight broad areas included in the Framework are language development, literacy, mathematics, science, creative arts, social and emotional development, approaches to learning, and physical health and development. Grantees are permitted to determine how to assess children’s progress in these areas. These assessments are to align with the grantee’s curriculum; as a result the specific assessments vary across the grantees. The assessments occur 3 times each year and generally involve observing the children during normal classroom activities. The results of the assessments are used for the purposes of individual program improvement and instructional support and are not aggregated across grantees or systematically shared with federal officials. The NRS, prompted by the April 2002 announcement of President Bush’s Good Start, Grow Smart initiative, builds on the 1998 legislation by requiring all Head Start programs to implement the same assessment, twice a year, to all 4- and 5-year-old Head Start participants who will attend kindergarten the following year. When President Bush announced this initiative in April 2002, it called for full implementation in fall 2003; as a result the NRS was developed and preparations for implementation occurred within an 18-month period. See figure 2. Shortly after the President announced this initiative, HSB hired a contractor to assist it in developing and implementing the NRS. The contractor, working closely with HSB, was responsible for the design and field testing of the NRS, including developing training materials to support national implementation of the reporting system by grantees. HSB also worked with the Technical Work Group and others throughout implementation of the NRS. The Technical Work Group includes 16 experts in such areas as child development, educational testing, and bilingual education. They advised HSB on the selection of assessments, the appropriateness of the assessments in addressing the mandated indicators, the technical merit of the assessments, and the overall design of the NRS. While the Technical Work Group members offered advice, the group members were not always in agreement with each other and HSB was not obligated to act on any of the advice it received. A list of the Technical Work Group members and their professional affiliations is included in appendix I. Through focus groups, teleconferences, and various correspondences, HSB officials communicated to Head Start grantees the purpose of the NRS and their plans for administering the assessment. Focus groups and discussions were held with various interested parties, including Head Start managers and directors and experts from universities and the public sector, on issues ranging from strengths and limitations of various assessment tools to strategies for assessing non-English speaking children. HSB also received input through a 60-day public comment period, from mid-April to June 2003. Another contractor developed a Computer-Based Reporting System (CBRS) for the NRS. Local Head Start staff use the CBRS to enter descriptive information about their grantees, centers, classrooms, teachers, and children, as shown in table 1, as well as to keep track of which children have been assessed. HSB analyzes the descriptive information from the CBRS in conjunction with the child assessment data to develop reports on the progress of specific subgroups of children. For example, HSB can report separately on the average scores of children enrolled in part-day programs and those enrolled in full-day programs. HSB, with assistance from the contractors, worked to ensure local staff received adequate training on administering the assessment and using the CBRS, and provided guidance on how to obtain consent from parents. Training and certification of all assessors was required so that all assessors would administer the NRS in the same way. Two-and-a-half day training sessions were held at eight sites throughout the U.S. and Puerto Rico during July and August 2003. Roughly 2,800 individuals completed the training, of which 484 were certified in both English and Spanish. In turn, these certified trainers held training sessions locally to train and certify additional staff who would be able to administer assessments. The development of educational tests is a science in itself, to which university departments, professional organizations, and private companies are devoted. Among the most important concepts in test development are validity and reliability. Validity refers to whether the test results mean what they are expected to mean and whether evidence supports the intended interpretations of test scores for a particular purpose. Reliability refers to whether or not a test yields consistent results. Validity and reliability are not properties of tests; rather, they are characteristics of the results obtained using the tests. For example, even if a test designed for 4th graders were shown to produce meaningful measures of their understanding of geometry, this wouldn’t necessarily mean that it would do so when administered to 2nd or 6th graders or with a change in directions allowing use of a compass and ruler. Test developers typically implement “pilot” tests that represent the actual testing population and conditions and they use data from the pilot to evaluate the reliability and validity of a test. This process generally takes more than 1 year, especially if the test is designed to measure changes in performance. In the remainder of the report, we will discuss how the focus of the NRS was determined and the assessment was developed, HSB’s response to problems in initial implementation as well as some implementation issues that remain unaddressed, and the extent to which the assessment meets the professional and technical standards to support specific purposes identified by HSB. The NRS assesses vocabulary, letter recognition, simple math skills, and screens for understanding of spoken English. As initially conceived by HSB, the NRS was to gauge the progress of Head Start children in 13 congressionally mandated indicators of learning. However, time constraints and technical matters precluded HSB from assessing children on all of the indicators and led HSB to consider, and eventually adopt, portions of other assessments for use in the NRS. The 18 months from announcing the Good Start, Grow Smart initiative, of which the NRS is a part, to implementing the assessment was not enough time for HSB to develop a completely new assessment. Therefore, HSB, with the advice of its contractor and the Technical Work Group, chose to borrow material from existing assessments. Concerns raised by Technical Work Group members and the contractor about the length and complexity of the assessment and the technical adequacy of individual components eventually led to limiting the areas assessed in the NRS, from 13 skills to 6. The six legislatively mandated skills that HSB targeted included whether children in Head Start: use increasingly complex and varied spoken vocabulary; understand increasingly complex and varied vocabulary; identify at least 10 letters of the alphabet; know numbers and simple math operations, such as addition and subtraction; for non-English speaking children, demonstrate progress in listening to and understanding English; and for non-English speaking children, show progress in speaking English. In April and May of 2003 an assessment that included 5 components covering the 6 skills was field tested with 36 Head Start programs to examine the basic adequacy of the NRS, as well as the method for training assessors, and the use of the CBRS. The field test also included a Spanish version of the NRS. Based on the field test, one component–-phonological awareness, or one’s ability to hear, identify, and manipulate sounds–-was eliminated. While this component examined an area that experts have linked to prevention of reading difficulties, the test used to assess it was problematic. HSB moved forward with the other components of the NRS. The four components of the NRS each measure one or more of the six legislatively-mandated indicators. The four components that comprise the NRS are from the following tests: Oral Language Development Scale (OLDS) of the Pre-Language Assessment Scale 2000 (Pre-LAS 2000), Third Edition of the Peabody Picture Vocabulary Test (PPVT-III), Head Start Quality Research Centers (QRC) letter-naming exercise, and Early Childhood Longitudinal Study of a kindergarten cohort (ECLS-K) math assessment. Some or all of each test was previously used for other studies, and the PPVT and letter naming were previously used in studies of Head Start children. Three of the four tests were modified from their original version, as shown in table 2. Figures 3 and 4 are examples from the letter naming and early math skills components of the NRS. Figure 5 is an example of the type of item used in the vocabulary (PPVT) component of the NRS. Here are some letters of the alphabet. GESTURE WITH A CIRCULAR MOTION AT LETTERS AND SAY: Point to all the letters that you know and tell me the name of each one. Go slowly and show me which letter you’re naming. INDICATE ONLY CORRECTLY NAMED LETTERS ON ANSWER SHEET. WHEN CHILD STOPS NAMING LETTERS, SAY: Look carefully at all of them. Do you know any more? KEEP ASKING UNTIL CHILD DOESN’T KNOW ANY MORE.

In September 2003, the Head Start Bureau, in the Department of Health and Human Services (HHS) Administration for Children and Families (ACF), implemented the National Reporting System (NRS), the first nationwide skills test of over 400,000 4- and 5-year-old children. The NRS is intended to provide information on how well Head Start grantees are helping children progress. Given the importance of the NRS, this report examines: what information the NRS is designed to provide; how the Head Start Bureau has responded to concerns raised by grantees and experts during the first year of implementation; and whether the NRS provides the Head Start Bureau with quality information. The Head Start Bureau developed the NRS to gauge the extent to which Head Start grantees help children progress in specific skill areas, including understanding spoken English, recognizing letters, vocabulary, and early math. Due to time constraints and technical matters, the Head Start Bureau adapted portions of other assessments for use in the NRS. Head Start Bureau officials have responded to some concerns raised during the first year of NRS implementation, but other issues remain. For example, the Head Start Bureau has modified training materials and is exploring the feasibility of sampling. However, it is not monitoring whether grantees are inappropriately changing instruction to emphasize areas covered in the NRS. Head Start Bureau officials have said NRS results will eventually be used for program improvement, targeting training and technical assistance, and program accountability; however, the Head Start Bureau has not stated how NRS results will be used to realize these purposes. Currently, results from the first year of the NRS are of limited value for accountability purposes because the Head Start Bureau has not shown that the NRS meets professional standards for such uses, namely that (1) the NRS provides reliable information on children's progress during the Head Start program year, especially for Spanish-speaking children, and (2) its results are valid measures of the learning that takes place. The NRS also may not provide sufficient information to target technical assistance to the Head Start centers and classrooms that need it most.

Under the Employee Retirement Income Security Act of 1974 (ERISA), a single-employer defined benefit pension plan may be terminated at the employer's discretion. If a plan's assets are sufficient to meet its benefit liabilities, this process is called a "standard termination." The plan administrator initiates a standard termination by giving written notice to affected parties, reporting information about the plan's assets and benefit liabilities to the Pension Benefit Guaranty Corporation (PBGC), and informing the participants and beneficiaries of the benefits due them. The PBGC then looks at the information to determine whether the criteria for a standard termination have been met. If the PBGC approves the termination, the next step is for the plan administrator to distribute the plan's assets to its participants and beneficiaries in order to provide the benefits due them. ERISA § 4041(b)(3) requires that these distributions be done through the purchase of annuities from a commercial insurer or by other means that fully provide the benefits and are permissible under the plan's terms and PBGC regulations. If any assets remain after the distribution, they may be given back to the employer sponsoring the plan so long as all liabilities to participants and beneficiaries have been satisfied and the reversion is permissible by law and under the plan terms. ERISA requires that a plan fiduciary act "solely in the interest of the participants and beneficiaries" and "for the exclusive purpose" of providing benefits and defraying reasonable administrative expenses. A fiduciary must act "with the care, skill, prudence, and diligence" of a prudent person "acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims." Under ERISA, a "fiduciary" includes anyone who "exercises any discretionary authority or discretionary control respecting management of [a] plan or exercises any authority or control respecting management or disposition of its assets" or "has any discretionary authority or discretionary responsibility in the administration of such plan." These activities do not include plan design or business decisions, which include decisions to adopt, modify, or terminate a pension plan. However, the implementation of the decision to terminate a plan is a decision that implicates a fiduciary responsibility to the plan participants and beneficiaries. There are two basic issues in Beck regarding whether the defendant employer breached ERISA's fiduciary duty requirements. The first issue is whether ERISA permits a merger as a means of plan termination. This is a key question because the employer could not have breached any fiduciary duty it may have owed under ERISA if it could not have legally chosen to terminate the plan by merger. In addition, if ERISA does not permit a plan to terminate by merger, the employer may not have had access to the reversion. No section in ERISA explicitly provides that a standard termination may occur by merging the terminating plan with a multiemployer plan. Furthermore, the ERISA section that addresses plan mergers between single-employer and multiemployer plans, ERISA § 4232, does not speak to single-employer plan terminations. Thus, the question raised by Beck is whether ERISA § 4041(b)(3), which provides that plan assets must be distributed in a standard termination in the form of annuities, or by means that "in accordance with the provisions of the plan and any applicable regulations, otherwise fully provide all benefit liabilities under the plan," permits the distribution to occur through a plan merger. The second issue is whether the decision to choose the merger option is a discretionary administrative decision subject to ERISA's fiduciary obligations or is a plan design or business decision not subject to such obligations. Prior to Beck , it does not appear that any court had addressed whether the decision to terminate a plan by merger implicates ERISA's fiduciary duty standards. However, several federal courts of appeals have held outside the scope of plan terminations that no fiduciary duty arises when a plan sponsor chooses to merge a pension plan with another plan. In 2000, Crown Vantage, Inc. and Crown Paper Co. (collectively referred to as "Crown") filed for Chapter 11 bankruptcy. At that time, Crown was the sponsor and plan administrator for 17 pension plans covering its hourly workers, 12 of which were overfunded. In the bankruptcy proceedings, the PBGC filed proofs of claims for the liabilities it would assume under ERISA's plan insurance termination program if it was forced to take over the company's pension plans. Because the liabilities were worth millions of dollars, the bankruptcy court saw the PBGC's claims as problematic for the Chapter 11 plan confirmation. In 2001, Crown's board of directors decided to look at the possibility of terminating the plans under a standard termination. As part of this effort, they sought bids for annuities that would be used to make the final distribution of benefits to plan participants and beneficiaries. A few months later, PACE International Union, which was the union for Crown's hourly workers, suggested that Crown's plans merge with the PACE Industrial Union Management Pension Fund (PIUMPF), a multiemployer pension plan for PACE union members. PACE thought the merger would be beneficial for Crown's workers because PIUMPF would provide additional benefits and an established dispute resolution program. In the following months, attorneys from Crown and PACE discussed the merger and exchanged a draft merger agreement. Crown's board was informed of the merger proposal and agreed to compare the options of purchasing annuities and merging once it received the final annuity bids. Shortly thereafter, Crown's board met to look at the final annuity bids, which were set to expire the next day, and learned that the PBGC had agreed to release its claims if Crown purchased the annuities. The board then decided to buy the annuities in order to terminate the 12 overfunded plans. Because the plans were overfunded, there was an estimated $5 million reversion to Crown. The other five plans became the responsibility of a prior plan sponsor's successor. PACE and two plan participants then sought a preliminary injunction to prevent Crown from terminating the plans. They alleged that Crown had violated its fiduciary duty under ERISA by failing to adequately consider the merger proposal. The bankruptcy court held in favor of PACE, finding that (1) the decision of whether to purchase annuities or merge the plans was a fiduciary decision, and that (2) Crown had breached its fiduciary obligations to plan participants and beneficiaries in failing to adequately consider PACE's merger proposal. The U.S. District Court for the Northern District of California affirmed the bankruptcy court's decision in relevant part. The Ninth Circuit, in affirming the decision of the district court, found that merger into a multiemployer plan can be a means of terminating a pension plan under ERISA. It also held that the Crown directors had breached their fiduciary duty. In evaluating the merits of the breach of fiduciary duty claim, the court noted that Crown did not have a duty to use the fund's assets to the "beneficiaries' optimum benefit" and that a reversion, under certain circumstances, is acceptable. However, the court pointed to the findings of the bankruptcy court and held that there was evidence indicating that Crown was focused on an "improper set of interests." The court agreed with the lower court's findings that Crown breached its fiduciary duty by failing to prioritize the participant's interests and also by failing to make an investigation of the plan's investment options. In reversing the decision of the lower court, the Supreme Court did not focus on whether Crown's decision to purchase an annuity instead of merging the pension plans was a fiduciary decision. Instead, the Supreme Court found that Crown did not breach its fiduciary duty in failing to consider PACE's merger proposal, because merger is not a permissible form of plan termination under ERISA. In its decision, the Supreme Court looked at the language of Section 4041(b)(3) of ERISA, under which plan assets must be distributed in a standard termination in the form of annuities, or by means that "in accordance with the provisions of the plan and any applicable regulations, otherwise fully provide all benefit liabilities under the plan." PACE had argued that mergers could fall within this "otherwise" language, as the merger of assets into the multiemployer plan could fulfill plan benefit obligations. The Court however, sided with the PBGC's interpretation of the section, that merger should be viewed as "an alternative to (rather than an example of) plan termination." The Court also pointed out that Congress had not expressly provided for merger as a means of plan termination. In support of its position, the Court provided three ways in which ERISA treats merger and termination differently. First, the Court explained that if a plan terminates through the purchase of annuities, ERISA ceases to apply to both the employer and the remaining plan assets. A merger on the other hand "represents a continuation , rather than a cessation of the ERISA regime." The Court pointed out that had the plans been merged into the larger multiemployer plan, that Crown could still be subject to ERISA's requirements if it employed plan participants. Second, in a standard termination, ERISA allows an employer to recover surplus amounts not necessary to pay plan liabilities. Had Crown merged the plan, it would not have been able to take back those assets, due to ERISA's anti-inurement provision, which prohibits employers from obtaining a reversion "in the absence of termination." The Court found that it was reasonable for the PBGC to refuse to recognize a termination mechanism that did not allow for the receipt of these funds, as authorized by law. Third, the Court pointed to the structure of ERISA as evidence that merger was not to be included as a permissible means of termination. The Court explained that provisions dealing with merger are contained in a different set of statutory sections that maintain different rules and procedures. While PACE had argued that a company could, theoretically, follow both the rules for merger and termination, the Court found this reasoning flawed. Accordingly, the Court held that merger is not a permissible method of terminating a single-employer defined benefit plan. The Beck case has been considered a narrow decision, in part because, as commentators have pointed out, the facts of the case, a determination of whether to terminate a plan through merger, is a "unique situation." In addition, while the lower courts addressed whether the decision to purchase annuities or merge the plans was a fiduciary decision, the court acknowledged this issue, but focused on an "antecedent question," namely, whether merger is a permissible form of plan termination under ERISA. Thus, questions may still remain as to the scope of fiduciary duty following a decision to terminate a pension plan. It has also been noted that the Beck case did not foreclose the possibility that pension plans can be terminated in ways other than an annuity or a lump-sum payment.

The Beck v. PACE International Union case concerned the decision by an employer in bankruptcy proceedings to terminate its pension plans. The employer, which was both plan sponsor and administrator, had the option of terminating the plans by buying annuities for plan participants and beneficiaries or by merging the plans with a multiemployer plan. It chose the annuity option. At issue in Beck was whether the employer breached the fiduciary duty owed under the Employee Retirement Income Security Act (ERISA) to plan participants and beneficiaries by failing to adequately consider the merger proposal. The Supreme Court found that the employer did not breach its fiduciary duty in failing to consider PACE's merger proposal, because merger is not a permissible form of plan termination under ERISA. This report discusses the Beck case and will be updated as events warrant.

SBA’s need to monitor activities of lenders that help deliver its programs has increased significantly in recent years. One reason is that the reported volume of loans processed by lenders almost doubled between 1992 and 1997, from about $24 billion to about $46 billion. A second reason is that SBA shifted to lenders the responsibility for key loan origination, servicing, and liquidation functions during this same time period. In 1993, SBA district offices reviewed the creditworthiness of about 84 percent of lenders’ requests for loan guarantees, with the remainder being processed under a preferred lender program. At that time, SBA also serviced and liquidated all loans that went into default. By 1997, preferred lenders processed about 52 percent of the loans and, starting in 1998, lenders became responsible for servicing and liquidating all loans they make under the 7(a) program, which constitutes about 80 percent of SBA’s loan portfolio. To improve its ability to monitor lenders’ loan servicing and liquidation actions, SBA asked for $18 million in its fiscal year 1998 budget request. According to SBA, these funds were to be used for (1) recruiting expertise in lender oversight, (2) establishing financial performance goals for private-sector partners, (3) creating a database for lender and portfolio management, and (4) developing an information system for timely and accurate reporting to agency management. “perform and complete the planning needed to serve as the basis for funding the development and implementation of the computerized loan monitoring system, including— (1) fully defining the system requirement using on-line, automated capabilities to the extent feasible; (2) identifying all data inputs and outputs necessary for timely report generation; (3) benchmark loan monitoring business processes and systems against comparable industry processes and, if appropriate, simplify or redefine work processes based on these benchmarks; (4) determine data quality standards and control systems for ensuring information accuracy; (5) identify an acquisition strategy and work increments to completion; (6) analyze the benefits and costs of alternatives and use to demonstrate the advantage of the final project; (7) ensure that the proposed information system is consistent with the agency’s information architecture; and (8) estimate the cost to system completion, identifying the essential cost element.” The act also required SBA, within 6 months of enactment, to submit a report to the Congress and to us on its progress in carrying out these mandated actions. As required, SBA submitted its report on June 2, 1998. We were required by the act to evaluate and report on SBA’s compliance with the act within 28 days of receipt of SBA’s report. On June 30, 1998, we reported that SBA had formed a team for the loan monitoring system in December 1997, but it had not yet completed any of the eight mandated actions. We noted that SBA’s report included a project plan, laying out its approach for addressing these actions. Work on the first of the required planning actions was begun in May 1998 and, according to the project plan, SBA will complete work on the last of the eight mandated actions in August 1999. In conducting our review, we analyzed SBA’s systems development and related information resources management policies and procedures, reviewed SBA’s activities to prepare for undertaking the required planning actions, and reviewed and analyzed SBA’s June 2, 1998, report to the Congress on its progress in carrying out the eight required actions that was issued pursuant to the Small Business Reauthorization Act of 1997. Our work was performed from December 1997 through June 1998, in accordance with generally accepted government auditing standards. SBA’s project plan provides information in many key areas to explain how it intends to complete the mandated actions. The plan delineates the project’s goals and objectives, resource requirements, quality standards and control systems, assumptions, methodologies, work breakdown structure with a timetable for completion of tasks, and estimated costs. SBA established four goals for the loan monitoring system project: Have high-quality, timely data necessary to perform roles such as the management of risk, collection of fees from recipients, and reporting to internal and external entities. Enforce uniform practices for loan making and reporting that will result in equal access by all eligible small businesses. Have business processes that support a streamlined workforce, use appropriate work flows, use best practices of both the government and private sectors, and include the ability to cope with both upward and downward changes in demand and resource availability. Have a computer infrastructure that supports efficient and user friendly information exchanges within SBA and among SBA and external entities, and that can enhance SBA’s program delivery and its ability to carry out its oversight functions. According to the project plan, SBA’s strategy for achieving these goals is to build on “best industry practices,” reengineer inefficient business processes, and implement contemporary technologies. In support of these goals, SBA also established objectives for the loan monitoring system; they include the following functionality: on-line update by lenders of disbursements, payments, unilateral servicing actions, and requests for SBA approvals, as necessary; waiting-to-be-processed queues for action by service center personnel; electronic (digital) signatures to identify and verify who takes and electronic notification of actions via external e-mail or lender notification on-line exception reporting to notify SBA of potential problems, such as “neglected” loans, poor credit analysis, and slow lender servicing or reporting; data analysis tools for management information, such as lender and loan trend identification, and end-user query and reporting; a centralized electronic file to replace on-site paper loan folders; integrated interactive voice response allowing borrowers and lenders to receive status data; on-line electronic collateral file with a centralized storage site for paper centralized, automated generation of uniform commercial code filing expanded use of auto-dial for collections; and sophisticated industry models to analyze and manage credit risk and portfolio performance. SBA included estimates of the personnel resources that it would need to execute the project plan. It estimated that 18 staff would be needed for the first phase of the project, which addresses the completion of the mandated actions, and that an additional three staff would be needed for the development phase. The project plan also describes the types of skills needed—such as programming, systems architecture, and database administration—to manage and execute the project. To address the quality standards and controls to be used for the loan monitoring system project, the plan includes work elements to establish systems development standards and procedures and process change control procedures. The plan also describes the quality control process that SBA plans to use to identify compliance with standards, and defines how the compliance findings will be reported. The plan recognizes that the project includes a number of assumptions that may affect its success. It identifies seven key assumptions that SBA made but will need to validate during the project. For example, SBA assumed that the agency’s information technology architecture will be completed before it is needed to support this project, and that agreements with benchmarking partners will be timely and structured to meet SBA’s needs. The project plan also cites the methodologies that SBA plans to use or is considering for key areas of the project. These include methodologies for project planning and management, benchmarking, reengineering, systems development, software acquisition, risk management, and development of an information technology architecture. In some areas, such as software acquisition, SBA is comparing its current methodologies with industry best practices to select the methodologies that will be used for the project. In other areas, such as benchmarking, SBA did not have a methodology; it has now either selected a new methodology or is in the process of selecting one for these areas. Included in the project plan is a work breakdown structure that lists the work elements from the start of the project through completion. These elements include the individual steps necessary to complete the mandated actions and the steps planned for the subsequent system design, development or acquisition, and implementation. The work elements for completing the mandated actions are sequenced, beginning with benchmarking and ending with the identification of an acquisition strategy to support a make-or-buy decision. The project plan recognizes that the project will not have enough information to fully evaluate the make or buy issue until it has completed benchmarking, business process reengineering, requirements gathering and analysis, and benefits and costs analyses. According to the project plan, SBA estimates that the loan monitoring system will cost about $20 million to complete. In addition to the automated system, this estimate includes the costs of staffing; developing training; developing lender performance standards; establishing subsidy rate analysis processes; and making infrastructure improvements, such as buying communications hardware and software. The project plan specifies that SBA will refine the cost estimates after the systems requirements have been defined and the alternatives analyzed. While developing the project plan is a good start, SBA must still successfully execute it to complete the eight mandated actions. In executing the plan, SBA will face formidable technical and management challenges and risks, including establishing software project management capability while undertaking its largest information technology project ever; using methodologies and practices for the first time while conducting a large, complex project; and implementing the loan monitoring system project without having an information technology architecture in place. SBA recognizes the need to establish defined processes for software project management and use them on this project. Research by the Software Engineering Institute has shown that defined and repeatable processes for managing software acquisition or development are critical to an organization’s ability to consistently deliver high-quality information systems on time and within budget. These critical management processes include project planning, requirements management, software project tracking and oversight, software quality assurance, software configuration management, and change control management. If SBA cannot implement disciplined software development and acquisition processes for this project, it risks building or buying a system that does not effectively meet its requirements, is delivered late or over budget, or does not perform as specified. The loan monitoring system project team will be using, for the first time, methodologies it has selected for benchmarking, business process reengineering, information technology architecture development, project management, and systems development. Each of these methodologies is complex and will require staff with the necessary skills and abilities for rigorous implementation. The staff currently on the project management team will need to develop the skills and abilities to use the new methodologies as they execute this large undertaking. SBA may also need to hire staff with the necessary skills and abilities to use the new methodologies, and hire contractors with the necessary expertise to support the project team. Successfully learning and employing several new methodologies simultaneously will present a considerable technical and management challenge. If the team is not up to the task, the project may not achieve its intended results. SBA plans to work concurrently on an information technology architecture and the loan monitoring system as separate projects. The act requires SBA to ensure that the loan monitoring system is consistent with the architecture. An information technology architecture provides a comprehensive “construction plan” or “blueprint” that systematically details the breadth and depth of an organization’s mission-based mode of operation. An architecture provides details first in logical terms, such as defining business functions, providing high-level descriptions of information systems and their interrelationships, and specifying information flows; and second in technical terms, such as specifying hardware, software, data, communications, security, and performance characteristics. By enforcing an information technology architecture to guide and constrain a modernization program, an agency can preclude inconsistent systems design and development decisions, and the resulting suboptimal performance and added cost. SBA has started developing an information technology architecture by documenting its current computing environment. It plans to continue developing the architecture while the loan monitoring system project is underway. As stated earlier, SBA assumes that the information technology architecture will be completed before it is needed to support this project. If both logical and technical components of the architecture are not completed as scheduled, the loan monitoring system project will likely be delayed and plans may need to be revised because, as required by the act, the plans must be consistent with the information technology architecture. In conclusion, the extent to which SBA meets these challenges and manages these risks will determine how well business processes and systems requirements are defined, and the quality of support for decision-making on the purchase or development of the needed system. Because this system is a critical part of SBA’s modernization, its senior officials must closely monitor progress in implementing the project plan and ensure that appropriate steps are taken to mitigate the significant risks involved. SBA should complete all of the eight actions mandated by the Small Business Reauthorization Act of 1997 before buying hardware or systems. In particular, SBA should ensure that (1) the project has the active participation and support of senior program managers and staff, (2) a disciplined software development and acquisition processes is implemented for this project, (3) project staff are adequately trained and supported by contractors with expertise in the methodologies used for this project, and (4) the information architecture is adequately developed and used to guide the requirements for the loan monitoring system. Mr. Chairman, this concludes my statement. 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GAO discussed the Small Business Administration's (SBA) activities to complete planning for its loan monitoring system, as required by the Small Business Reauthorization Act of 1997, focusing on SBA's project plan for completing the mandated actions. GAO noted that: (1) SBA's project plan provides information in many key areas to explain how it intends to complete the mandated actions; (2) the plan delineates the project's goals and objectives, resource requirements, quality standards and control systems, assumptions, methodologies, work breakdown structure with a timetable for completion of tasks, and estimated costs; (3) according to the project plan, SBA's strategy for achieving these goals is to build on best industry practices, reengineer inefficient business processes, and implement contemporary technologies; (4) in support of these goals, SBA also established objectives for the loan monitoring system; (5) SBA included estimates of the personnel resources that it would need to execute the project plan; (6) it estimated that 18 staff would be needed for the first phase of the project, which addresses the completion of the mandated actions, and that an additional three staff would be needed for the development phase; (7) to address the quality standards and controls to be used for the loan monitoring system project, the plan includes work elements to establish systems development standards and procedures and process change control procedures; (8) the plan recognizes that the project includes a number of assumptions that may affect its success; (9) it identifies seven key assumptions that SBA made but will need to validate during the project; (10) the project plan also cites the methodologies that SBA plans to use or is considering for key areas of the project; (11) according to the project plan, SBA estimates that the loan monitoring system will cost about $20 million to complete; (12) while developing the project plan is a good start, SBA must still successfully execute it to complete the eight mandated actions; (13) in executing the plan, SBA will face formidable technical and management challenges and risks; (14) SBA recognizes the need to establish defined processes for software project management, and use them on this project; (15) the loan monitoring system project will be using, for the first time, methodologies it has selected for benchmarking, business process reengineering, information technology architecture development, project management, and systems development; (16) SBA plans to work concurrently on an information technology architecture and the loan monitoring system as separate projects; and (17) the extent to which SBA meets these challenges and manages these risks will determine how well business processes and systems requirements are defined, and the quality of support for decisionmaking on the purchase or development of the needed system.

Problems for patients associated with dramatic increases in the cost of prescription medications have generated a great deal of interest among the media, interest groups, and legislators alike. Although no broad consensus exists regarding the causes of—and thus solutions to—the rapid increase in many pharmaceutical prices, policymakers have explored a number of options, including the recycling of unadulterated surplus drugs. Currently, many health care institutions, especially long-term care facilities (LTCFs), routinely dispose of medications that otherwise have a useful life. This practice typically occurs when drugs are dispensed to patients but remain unused because the patient switches medication, is discharged, or dies. Studies have estimated that more than one billion dollars worth of drugs are discarded each year in the United States. One way to counter this costly practice is to recycle the unused medications. However, the ability to implement recycling programs may be constrained by federal and/or state law. Current regulation of pharmaceuticals and those who dispense them consists of a complex system of federal and state laws. There are three federal laws discussed below that may impede the practice of recycling medications. At the state level, state controlled substances laws, pharmacy laws, and other rules promulgated by state boards of pharmacy govern practices relating to the manufacture, distribution, and possession of medicines. Nevertheless, state legislatures that have implemented drug recycling programs appear to tailor them to conform to existing regulations. State laws vary greatly regarding who may return and accept the medications, which medications may be recycled, and the procedures in place to safeguard against adulteration or unlawful possession of the medications. Federal laws regulating pharmaceuticals pose potential obstacles to the implementation of drug recycling programs. Specifically, many of the medications covered by recycling programs are considered controlled substances and thus are subject to the requirements of the Controlled Substances Act (CSA). Furthermore, most, if not all, of the drugs in question also require a prescription in order to be dispensed, and therefore are regulated by the Federal Food, Drug, and Cosmetics Act (FFDCA) —thus adding another layer of federal statutory regulations. Additionally, programs to recycle medications may also encounter logistical problems relating to billing under the Health Insurance Accountability and Portability Act (HIPAA). One potential impediment to drug recycling programs is the CSA. Enacted in 1970 with the main objectives of combating drug abuse and controlling traffic in controlled substances, the CSA created a regulatory regime criminalizing the unauthorized manufacture, distribution, dispensation, and possession of the substances covered by the act. Enforced by the federal Drug Enforcement Agency (DEA), the CSA establishes civil as well as criminal sanctions for its violation. The CSA is relevant to drug recycling programs because most, if not all, of the costly medications the programs seek to recycle are considered controlled substances under the CSA. Practitioners who dispense or administer controlled substances listed on Schedules II through V, including substances that may not require a prescription, must register with the DEA. Entities that apply for federal registration to handle controlled substances and those so registered must provide effective controls and procedures to guard against theft and diversion of controlled substances in accordance with security requirements. These requirements vary depending on the type of activity and the substances. However, unlike hospitals and pharmacies, most long-term care facilities (LTCFs) are not registrants. Due to the stringent safety standards imposed on registrants, registration may not be feasible or cost-effective for many facilities to implement. Because of the prohibition against handling or possessing controlled substances without DEA registration, the CSA seems to preclude LTCFs—or any entity not registered with the DEA—from effectively participating in a drug recycling program. As a result, the DEA distribution system, which is designed to prevent diversion by establishing a closed distribution loop among registrants for purposes of tracking all entities that handle controlled substances prior to dispensing, often prevents LTCFs from returning such drugs to pharmacy stock and forces them to destroy any unused controlled substances. An alternative to recycling programs that LTCFs may wish to pursue is the installation of automated dispensing systems (ADS). Similar to a vending machine, an ADS is stocked with drugs by a pharmacy, which controls the device remotely and programs it to dispense drugs on a single-dose basis. The DEA recently promulgated a rule to allow this practice as a way to "mitigate the problem of excess stocks and disposal." Using this system, the drugs are not deemed to be dispensed until provided by the ADS, so any unused drugs remain in pharmacy stock. Recycling programs must also comply with statutes that regulate the safety and efficacy of prescription drugs. Federally, this regulation occurs under the FFDCA. One of the purposes of the FFDCA is to ensure drug safety by prohibiting the introduction of adulterated or misbranded foods, drugs, or cosmetics into interstate commerce. Therefore, programs to recycle unused prescription drugs may encounter barriers if such recycling could lead to drug adulteration or misbranding. The federal Food and Drug Administration's (FDA) policy guidance reflects these concerns. In guidance that dates back to 1980, the agency states, "[a] pharmacist should not return drug products to his stock once they have been out of his possession. It could be a dangerous practice for pharmacists to accept and return to stock the unused portions of prescriptions that are returned by patrons, because he would no longer have any assurance of the strength, quality, purity, or identity of the articles." However, the FDA has no specific regulations regarding drug recycling programs and leaves these programs to the discretion of the state so long as state legislation does not offend applicable regulations relating to the safety and efficacy of prescription medications. A smaller administrative obstacle to the effective implementation of drug recycling programs is the billing requirements under HIPAA. This law requires electronic transactions for operations conducted by pharmacies—the entities that are responsible for accepting unused medications in many recycling programs. Every transaction that occurs within a pharmacy must be part of the HIPAA Transactions Code Set. However, there is currently no code for returning an unused drug to stock for credit. Without this code, such transactions cannot be properly documented and accounted for, posing an obstacle for pharmacists and doctors who would participate in drug recycling programs. In recent years, several states have attempted to combat waste associated with discarding unused medications by creating drug recycling programs. These programs aren't "as simple as returning 'leftovers.'" Rather, most state legislation typically specifies who may return the unused medication, who may accept the medication, what types of medications may be returned, and to whom the medications may be redistributed. This section provides examples of current practices regarding such recycling programs. Most laws specify who may return, who may accept, and/or who may receive unused medications. Some states allow patients to donate, while others restrict the practice to pharmacies, doctors and wholesale distribution centers. Iowa, which falls in the former category, allows any person to donate unused medications. In contrast, California law allows donations only from drug manufacturers, licensed health care facilities, and pharmacies. Some states do not place restrictions on the drugs included in their recycling program, while others specify the types they will accept. For example, Nebraska restricts its drug repository program to cancer drugs. Wisconsin began its recycling program as a cancer drug repository, but later expanded it to include prescription drugs and supplies for all other chronic diseases such as diabetes. States also impose restrictions to ensure that the medications are safe. Safety requirements are fairly uniform across most states. They typically require that medications be in their original, unopened sealed packaging or in single unit doses that are individually contained in unopened, tamper-evident packaging. Most states also prohibit the return of medications that will expire within six months or appear to be adulterated or misbranded in any way. Despite the precautions states have attempted to build into their recycling programs, some people remain unconvinced that these programs are completely safe. Critics argue that insufficient safety controls may lead to adulterated, dangerous medicines, and drugs that land in the wrong hands. They also argue that the actual process of repackaging medications can pose safety hazards. Nevertheless, states seem intent on continuing to tailor their legislation in order to conform to existing law, while simultaneously acting as laboratories to test new cost-effective measures.

In recent years, the rising costs of prescription drugs have motivated various policymakers to implement cost-saving measures. In some cases, states have pursued programs to collect and redistribute unused medications that would otherwise be discarded. However, the ability to implement these so-called drug recycling programs may be constrained by federal or state law or both. For example, medications classified as controlled substances are regulated by the Controlled Substances Act (CSA). Furthermore, drugs that require prescriptions, as many controlled substances do, are regulated by the Federal Food, Drug, and Cosmetics Act (FFDCA). Additionally, programs may encounter logistical problems related to billing under the Health Insurance Portability and Accountability Act (HIPAA), which is not designed to accommodate drug recycling. Despite these hurdles, states have begun to implement drug recycling programs. Although the details of the laws vary among states, most contain strict rules to ensure the safety of the medications. This report provides an overview of the federal laws that may affect state drug recycling programs, as well as examples of these state programs.

Bulgaria is a parliamentary democracy that has held generally free and fair elections since the overthrow of the Communist regime in 1989. Bulgaria held its most recent parliamentary elections on June 25, 2005. The winner of the vote was a coalition led by the left-of-center Bulgarian Socialist Party (BSP), which received 82 seats in the 240-seat National Assembly, Bulgaria's unicameral parliament. The National Movement for Stability and Progress (NMSP), a centrist group, finished second with 63 seats. The Movement for Rights and Freedoms (MRF), representing the country's ethnic Turkish minority, won 34 seats. Ataka (Attack!), a group that mixes far-right xenophobia with leftist economic populism, won a surprising 21 seats. Three center-right groups won the remaining seats: the Union of Democratic Forces (20); Democrats for a Strong Bulgaria (17); and the Bulgarian National Union Coalition (13). In an effort to boost turnout, the government introduced a lottery in which voters could win televisions, cars, and other prizes. Nevertheless, turnout was only 55%, the lowest since the end of communism. All parties pledged to exclude Ataka from the government. Nevertheless, analysts were concerned about the group's electoral success, which shows significant public dissatisfaction with Bulgaria's political class. Experts note that it has been a common phenomenon in Central and Eastern Europe that when a former Communist Party (such as the BSP) moves to the center, often as part of European integration efforts, its place in the political spectrum is often taken over by populist and nationalist groups. The process of forming a new government proved difficult, in part because of the scattered distribution of the vote and personal animosity among party leaders, including within the center-right portion of the political spectrum. The stalemate was finally resolved on August 15, when the parliament approved a new coalition government. It is composed of the BSP, MRF, and NMSP, with BSP leader Sergei Stanishev as Prime Minister. Critics claim that Stanishev is a relatively weak leader and that real power rests in the hands of party barons, particularly in the BSP and MRF. This situation, they say, has hindered reform implementation and the fight against corruption. Despite the defection of some NMSP deputies to the opposition in 2007, the government retains a majority and appears determined to stay in power until 2009, when new elections must be held. A new party, Citizens for the European Development of Bulgaria (CEDB), is not currently represented in parliament, but could win a large number of seats in new elections. The CEDB, led by Sofia mayor Boiko Borisov, espouses pro-EU and pro-law-and-order policies. The current coalition could face a serious challenge if a number of small center-right parties in the current parliament can form an alliance with the CEDB. President Georgi Purvanov, backed by the BSP, won re-election in 2006. Although Purvanov is one of Bulgaria's most popular political figures, most political power is held by the Prime Minister and government; the Bulgarian presidency is relatively weak. Bulgaria is one of the poorest countries in Europe. According to the World Bank, its per capita income is only 56% of that of the eight central and eastern European countries that joined the EU in 2004. As in many other transition countries, Sofia and other urban areas are more prosperous than rural ones, which have suffered an exodus of young people. Bulgaria is also battling a rapidly shrinking and aging population, due partly to a low birth rate and partly to the emigration of large numbers of young Bulgarians to better-paying jobs in Western Europe. Mistakes and fitful reforms made by previous governments, culminating in disastrous policies pursued by a previous BSP government in 1995-1996, were serious setbacks. However, Bulgaria's economic situation has improved substantially since 1997, when the country's currency was pegged to the euro under a currency board arrangement, which gives the Bulgarian central bank little discretion in setting monetary policy. From 1998 through 2005, Bulgaria has had an average economic growth rate of more than 5% per year. Gross Domestic Product (GDP) grew by just under 6% in the first three-quarters of 2007. Unemployment has fallen from 18.1% in 2000 to 7.8% in 2007. Bulgaria ran a government budget surplus of 3.5% of GDP in 2007. The central bank is working to restrain rapidly expanding commercial bank lending in order to maintain stable growth. However, inflation remains high; average consumer price inflation was 8.4% in 2007. Persistent inflation is likely to delay Bulgaria's efforts to adopt the euro as its currency for a few years, at least. Due to strong import demand, Bulgaria had a large current account deficit of 20% of GDP in 2007. On the other hand, Bulgaria has seen a surge of foreign direct investment (FDI) in recent years. FDI amounted to $8.4 billion in 2007, or nearly 20% of GDP. Bulgaria is attractive to investors because it can supply not only cheap labor, but qualified experts in such fields as computer science. Organized crime and corruption are very serious problems in Bulgaria. Powerful organized crime kingpins continue to operate in Bulgaria with relative impunity, and dozens have died in contract killings and gang shootouts in the past few years. Organized crime groups are involved in such activities as trafficking in persons, drugs and weapons, money laundering, counterfeiting, optical disc piracy, and credit card fraud. High-level corruption is also a critical issue. Powerful politicians are perceived as operating their ministries as corrupt fiefdoms with relative impunity. One of Bulgaria's biggest challenges is long-delayed judicial reform. The Bulgarian system remains weak, corrupt, and sometimes politicized. Experts believe that Bulgaria must also overhaul its education and health care systems. Bulgaria's foreign policy in recent years has focused on joining NATO and the European Union. Bulgaria joined NATO in April 2004, in part due to strong U.S. support. Bulgaria has deployed over 400 troops to Afghanistan as part of the NATO-led International Security Assistance Force (ISAF). They are stationed in Kabul and in the southern Afghan city of Kandahar. Bulgaria is considering providing training to Afghan security forces. Bulgaria has deployed 42 soldiers to KFOR, the NATO-led peacekeeping force in Kosovo, as well as to SFOR, the former NATO-led peacekeeping force in Bosnia. SFOR has been replaced by an EU-led force, in which Bulgaria is also participating, with 152 soldiers. Bulgaria has supported extending membership invitations to Albania, Croatia, and Macedonia at the NATO summit in Bucharest on April 2-4, 2008. Bulgarian officials say the move would strengthen peace and stability in the region. Bulgarian officials say that military modernization has proceeded slowly in part because of the costs of participating in overseas deployments. In April 2005, Gen. Nikola Kolev, Chief of General Staff of the Bulgarian army, said that it will take at least 10 years for Bulgaria to achieve full integration in the Alliance, citing in particular the need for new equipment. He said that Bulgaria was focusing on preparing at least one mechanized brigade for use in the full range of NATO's missions, as well as several smaller, specialized units, totaling over 5,000 men in all. Some observers have expressed concern that some of the Soviet-trained officers holding senior positions in the Bulgarian military and intelligence services may continue to have links with Russian intelligence agencies. In 2004, several senior Bulgarian nominees to NATO posts were denied NATO security clearances. Bulgaria joined the EU in January 2007, but under stringent conditions. It must provide regular reports to the EU Commission on its progress toward specific benchmarks in several areas, including the fight against organized crime and corruption, and judiciary reform. The EU may apply sanctions (suspending judicial cooperation, for example) against Bulgaria if the benchmarks are not met. In February 2008, the European Commission released a report on Bulgaria's progress. It recognized progress in judicial reform and fighting corruption on Bulgaria's borders, but noted shortcomings in such areas as corruption in local government, healthcare, and education. The report particularly stressed the need to make stronger efforts in fighting high-level corruption and organized crime. No sanctions have been taken against Bulgaria yet, but the EU has suspended funding for some projects in Bulgaria, due to irregularities in how the money has been spent, including corruption concerns. Russia and Bulgaria have traditionally had good relations, due to longstanding historical and personal ties. However, some analysts have expressed concern about Russia's dominance in Bulgaria's energy sector. Bulgaria is almost entirely dependent on Russia for its oil and natural gas needs. Russian firms own major oil refineries, a key commercial natural gas distribution company, and many retail gasoline stations in Bulgaria. As in other countries in Central Europe, some analysts are concerned that Russia could use this control and its links with some politicians (particularly in the BSP) and business leaders to manipulate the country. Bulgarian-Russian energy relations became closer in January 2008, when President Putin won Bulgaria's support for Russia's South Stream natural gas pipeline. Bulgaria's position on the Black Sea may make it an important transit point for oil and natural gas supplies from Russia and the Caspian Sea region to Western Europe. Routes through Bulgaria would avoid Turkey's crowded Bosporus and Dardanelles straits. South Stream, which would run though Bulgaria and the Balkans to western Europe, may increase Europe's dependence on Russian energy by reducing the prospects for the U.S.- and EU-sponsored Nabucco project. Nabucco is intended to supply Central Asian gas to Europe without transiting Russia. Russian and Bulgarian leaders also signed agreements on a proposed oil pipeline from the Bulgarian city of Burgas to the Greek port at Alexandropoulos on the Aegean Sea and on building two Russian nuclear reactors in Bulgaria. The United States and Bulgaria have excellent bilateral relations. In April 2006, the United States signed a Defense Cooperation Agreement with Sofia on use of military bases in Bulgaria. (Even before the agreement, the United States was already using Bulgarian bases for joint exercises with Bulgarian and other troops, as well as for U.S. forces in transit to Iraq and Afghanistan.) The Bulgarian government eagerly sought such bases, viewing them as an economic stimulus and as useful in cementing strategic bonds with the United States. The bases involved include the Bezmer and Graf Ignatievo air bases and the Novo Selo training range. About 2,500 U.S. troops are expected to be deployed to the relatively spartan facilities at the bases at any one time, each group staying for only a few months. In February 2008, the United States signed additional agreements needed to implement the 2006 accord, including on customs procedures, taxes, and other issues. Bases in Bulgaria are likely to be less expensive than bases in Western Europe and subject to fewer constraints on training and exercises. Bulgaria is also closer geographically to the Middle East than Western Europe. At the same time, Bulgaria's infrastructure is inferior to that of countries such as Germany. Bulgaria contributed 450 troops to U.S.-led coalition forces in Iraq, despite the deployment's unpopularity among Bulgarians, according to opinion polls. Bulgaria suffered casualties in Iraq: 13 soldiers have died. In March 2005, a Bulgarian soldier was killed in a friendly-fire incident involving U.S. troops. In May 2005, with the parliamentary elections looming, the Bulgarian parliament voted to withdraw the Bulgarian contingent by the end of the year. Although the 450-man infantry battalion was indeed withdrawn at the end of 2005, Bulgaria sent a 150-man unit to guard a refugee camp north of Baghdad in March 2006. Bulgaria is also helping to train Iraqi security force members in Bulgaria. The State Department's 2007 Trafficking in Persons report said that Bulgaria is a "transit country and to a lesser extent, a source country" for human trafficking. It is a "Tier 2" country, meaning that it does not fully comply with the minimum standards for the elimination of trafficking, but is making significant efforts to do so. The report said that Bulgaria improved its victim assistance infrastructure and continued to demonstrate increased law enforcement efforts. However, Bulgaria's National Anti-Trafficking Commission could not effectively monitor and improve national and local efforts due to inadequate staffing, according to the report. In FY2006, Bulgaria received $35 million in U.S. total aid. FY2006 was the last year that Bulgaria received assistance under the SEED program to promote political and economic reform, because of Bulgaria's pending admission to the EU. In FY2007, Bulgaria received $11 million in U.S. aid, including $9.6 million in Foreign Military Financing (FMF) and $1.4 million in IMET military training funding to bring Bulgaria's military closer to NATO standards. Bulgaria will receive an estimated $8.5 million in U.S. aid in FY2008. Of the amount, $6.6 million is in FMF, $1.6 million is in IMET, and $0.3 million in funding to destroy excess small arms and ammunition stocks. For FY2009, the Administration requested $11 million in aid for Bulgaria. This total includes $9 million in FMF and $1.6 million in IMET. Another $0.4 million is aimed at helping Bulgaria destroy small arms and ammunition stocks.

This short report provides information on Bulgaria's current political and economic situation, and foreign policy. It also discusses U.S. policy toward Bulgaria. This report will be updated as warranted.

The Dayton peace agreement, reached in November 1995 with U.S. leadership, ended a brutal three and one-half year ethnic and territorial conflict in Bosnia-Herzegovina that erupted after the dissolution of the state of Yugoslavia. The Dayton agreement outlined a common state of Bosnia and Herzegovina comprised of two entities, the Bosniak (Muslim)-Croat Federation and the Republika Srpska (RS), under the authority of an international representative and a NATO-led peacekeeping presence. Central Bosnian governmental institutions include a three-member presidency, Prime Minister and Council of Ministers, and bicameral state Parliament. Under the Dayton constitution, central governing powers were kept weak, with many governing functions remaining at the Federation and RS entity level, which have their own governments and parliaments. Below the entity level are cantons and municipalities in the Federation and municipalities only in the RS. At the international level, Dayton mandated an Office of the High Representative (OHR) to oversee international activities in Bosnia and bear authority to impose decisions and remove officials. As the security situation improved, NATO gradually reduced its presence in Bosnia and turned over peacekeeping duties to the European Union (EU) in December 2004. Most observers agree that Dayton was a great achievement in that it ended the war and laid the foundation for consolidating peace. However, many also believe that the Dayton agreement, as a document derived from compromises and reflecting wartime circumstances, cannot by itself insure Bosnia's future as a functioning democratic state. In particular, Bosnia's multi-layered and ethnically-defined governing structures have presented significant challenges to its efforts to integrate into the European Union and NATO. Political differences among Bosnia's leaders and vested interests in the status quo continue to hinder efforts to strengthen Bosnia's central governing institutions and administrative capacity. The pull of Euro-Atlantic integration has fostered a degree of cooperation on this front, but political consensus across ethnic lines on key governing arrangements is still elusive. Over the years, the Bush Administration has assisted Bosnia's development as a functioning democratic state, supported its Euro-Atlantic aspirations, and encouraged Bosnia's leaders to consolidate state structures. U.S. and international officials have underscored the regional importance of progress in Bosnia, and have decried the divisive nationalist rhetoric that has dominated Bosnian politics over the past year or so. They reject initiatives by opposing Bosnian politicians that seek to undermine Bosnia's territorial integrity, such as calls for the RS to secede or for the entity structure to be eliminated. Some Members of the 110 th Congress retain an interest in Bosnia's progress since Dayton, its path toward NATO membership and EU integration, as well as its record of cooperation on war crimes issues. For FY2009, the Administration has requested over $37 million in bilateral foreign assistance to Bosnia, an increase from FY2008 levels (estimated $33.3 million) that reflects U.S. concern about Bosnia's recent uneven progress in reforms. In recent years, the Bush Administration and the EU have sought to promote further constitutional reform to improve the governing effectiveness of Bosnia's political institutions and overcome some of the dysfunctional aspects of the post-Dayton legacy. In March 2005, the Council of Europe's Venice Commission concluded that Bosnia's current constitutional arrangements were neither efficient nor rational, and that state-level institutions needed to become far more effective for Bosnia to move closer to EU integration. Several political and economic reforms have been reached over the years, often with extensive input from and pressure by the international community. For example, the Bosnian parties agreed in early 2005 to comprehensive defense and security reforms on merging the formerly rival forces into an integrated army controlled by the central government. Additional landmark agreements on intelligence and information services, state prosecution offices and justice ministry, and border and customs services, among others, further expanded central state competencies and institutions. Bosnia's economy has also achieved significant growth in recent years, although unemployment still exceeded 40% in 2007. At a Washington meeting in November 2005 to commemorate the 10 th anniversary of the Dayton accords, Bosnia's leaders signed a "Commitment to Pursue Constitutional Reform," pledging them to embark on a process of constitutional reform to create stronger and more efficient democratic institutions. Some envisioned reforms included creating a single presidency instead of the current tri-partite presidency, strengthening the Prime Minister's office, and strengthening the Bosnian parliament. Negotiations on a reform package continued through early 2006, with the intention to complete them in time for scheduled general elections in October. In March 2006, seven Bosnian parties agreed to a package of constitutional reforms, and the tri-partite Bosnian presidency likewise adopted it. Despite this broad consensus, the measure failed in Bosnia's lower house of parliament on April 24, missing the required two-thirds majority by two votes. Some Bosnian Croat and opposition Muslim deputies opposed the bill. Its failure was widely viewed as a major setback to the state consolidation process. After the vote, several parties reiterated their commitment to continue negotiations toward reaching a consensus on constitutional reforms, which many recognize to be essential for eventual integration with the European Union. Subsequent political realities, however, have severely diminished prospects for constitutional reform in the near term. On October 1, Bosnia held elections for the three-member Bosnian presidency, the Bosnian parliamentary assembly, the parliaments of the two entities, the RS presidency, and the Federation's cantonal assembly. Overall turnout was 55% and the conduct and administration of the electoral process were generally praised. While the hold on power of the wartime nationalist parties was weakened, the relatively hardline positions of the victorious parties pointed to significant new challenges to building national consensus across ethnic lines on key issues. For example, the Party for BiH (headed by former Prime Minister Haris Silajdzic), has promoted the dismantling of the entity structure in favor of greater state centralization. Conversely, Milorad Dodik, the leader of Alliance of Independent Social Democrats in the RS, has promoted greater federalism, and has on occasion threatened to call for a referendum on independence for the RS. Ethnic Croat parties are generally supportive of greater rights for the country's ethnic Croat community. After several months of negotiations, a new seven-party coalition government was formed in February 2007, headed by Bosnia's first ethnic Serb Prime Minister, Nikola Spiric. Bosnia's new leading politicians retained much of their hardline and uncompromising positions throughout 2007, contributing to a deteriorating political environment and provoking intermittent political crises. Some speculated that the international High Representative would use his authority to remove Silajdzic and Dodik from power. Bosnia Prime Minister Spiric actually did resign late in the year in protest of the High Representative's decision to streamline central Bosnian decision-making processes, but was later reinstated. Above all, the issue of police reform and restructuring took over as a proxy for the earlier (and still ongoing) debate over constitutional reforms, and became tied up with Bosnia's efforts to secure an association agreement with the EU (see below). Police reforms have been a particularly thorny area of security sector reform because they relate to the power relationship between the entities and the central government. The governing parties reached a major milestone in this area in October-November 2007 by agreeing on a set of principles and action plan on police reforms that appeared to meet EU conditions on police consolidation; further progress, however, would still take several additional months. Despite this sign of compromise, Bosnia's leaders have been challenged in 2008 to implement their commitments on the police as well as search for areas of consensus in revived efforts to achieve constitutional reforms. International officials have decried the increased nationalist rhetoric and "destructive tendencies" of leading politicians in Bosnia. Inter-ethnic tensions threatened to spike after Kosovo declared independence from Serbia in February 2008. U.S. recognition of Kosovo prompted several protest rallies in Banja Luka in the RS. RS President Milorad Dodik appears to have stepped back from earlier hints about calling for the RS to secede from Bosnia, but has rigorously defended the continued existence and prerogatives of the RS entity. Leaders from all three major Bosnian communities may cater to nationalist sentiments in the run-up to local elections scheduled for October 2008. Along with the other western Balkan states, Bosnia and Herzegovina seeks eventual full membership in the European Union and NATO. Both institutions have committed to the region's full integration, once various conditions have been met. For a variety of reasons, Bosnia has encountered a greater degree of difficulty in meeting some of the conditions compared to other western Balkan countries. At its June 2003 Thessaloniki summit, the EU committed to integrate all of the countries of the western Balkans and created new instruments to foster closer ties to the EU, including the Stabilization and Association Agreement (SAA), the first step toward eventual EU accession. Numerous hurdles slowed Bosnia's progress in negotiating and concluding a SAA. Progress in defense and security sector reforms, including the latest breakthrough commitments on police reforms, paved the way for the EU to "initial" a SAA with Bosnia in December 2007. Bosnia's governing institutions finally approved a compromise agreement in April 2008 on new police laws to establish greater coordinating mechanisms for, rather than the unification of, the country's police forces. Brussels viewed this more limited achievement as sufficient to meet SAA conditions. Bosnia signed the SAA agreement in Brussels on June 16, the last country in the western Balkans to do so. On several occasions, the EU has recommitted to the vision of full EU membership for all of the western Balkan states; many observers, however, have been concerned about growing "enlargement fatigue" among EU member states. Beyond the defense and police reform issue, the EU has also prioritized the need for further reforms in Bosnia's public administration and public broadcasting. Bosnia's level of cooperation with the international war crimes tribunal has also been of concern. While the RS has dramatically improved its cooperation with The Hague in recent years, the ongoing ability of wartime Bosnian Serb leaders Radovan Karadzic and Ratko Mladic to elude capture has kept international attention on this issue. For several years, Bosnia lagged behind some other western Balkan states in forming closer relations with NATO. NATO leaders at the November 2006 Riga summit invited Bosnia, Serbia, and Montenegro to join its Partnership for Peace (PfP) program, despite still incomplete cooperation with The Hague war crimes tribunal. At its Bucharest summit on April 2-4, 2008, NATO took several actions related to enlargement, including inviting Albania and Croatia to join the alliance. NATO also agreed to begin with Montenegro and Bosnia-Herzegovina an Intensified Dialogue, a possible step closer to a Membership Action Plan. A small, residual NATO presence in Sarajevo has provided the Bosnian government with advice and assistance on defense reform issues, and is also engaged in efforts to capture and detain remaining war criminals. The international community has long played a dominant role in postwar Bosnian affairs. The international community's role has been in a state of transition for some time, moving toward shifting greater responsibility for governance and security to Bosnian authorities. Both the Office of the High Representative, which wielded extensive political authority for many years, and the international security presence have evolved considerably since the end of the war. Successive High Representatives have frequently exercised considerable executive power, under the so-called "Bonn powers" authority, to push difficult reforms forward and even remove obstructionist leaders. An earlier High Representative, Lord Paddy Ashdown, freely wielded his powers during his tenure, making binding decisions and taking action against or removing officials thought to support Radovan Karadzic. While an effective mechanism, the High Representative's office came under increasing criticism for allegedly stymieing Bosnia's political development. Ashdown's successor, German politician Christian Schwartz-Schilling, emphasized a more "hands off" approach, but did not stay in the post for long; he was succeeded in July 2007 by the current High Representative, Slovak diplomat Miroslav Lajcak. In June 2006, the Peace Implementation Council (PIC), which oversees the OHR, decided to "immediately begin preparations to close" (OHR) by June 30, 2007, in "the interest of all for Bosnia to take full responsibility for its own affairs." Instead, the Office of the EU Special Representative was to be enhanced but without the OHR's Bonn powers. Behind the rationale of the planned OHR closure was the belief the EU accession process could provide sufficient impetus for Bosnia's political leaders to carry out sustainable reforms. Critics have been concerned that Bosnia's prospects for EU membership remain distant and may not provide enough of an incentive for competing political leaders to pursue reforms. Perhaps in recognition of Bosnia's stalled progress, the PIC decided in late February 2007 to extend the OHR until mid-2008, without reducing its powers. The PIC meeting on February 26-27, 2008, indefinitely extended the mandate for the High Representative "to help counter destructive tendencies." At the end of 2004, NATO concluded its SFOR mission in Bosnia and turned over peacekeeping duties to a European Union military force, EUFOR, to ensure continued compliance with Dayton and contribute to a secure environment in Bosnia. Initially at a strength of over 6,000 multinational troops, EUFOR was reconfigured in 2007 and reduced to about 2,500 troops backed up by over-the-horizon reserves (its strength in mid-2008 was about 2,100). NATO maintains a small headquarters presence in Sarajevo that provides assistance to the Bosnian government and undertakes counter-terrorism and intelligence operations and missions to detain indicted war criminals. On November 21, 2007, the U.N. Security Council extended the authorization for the EU and NATO presence in Bosnia for another year (Resolution 1785). The EU also took over the U.N. police monitoring and advisory mission in Bosnia in 2003. The EU Police Mission (EUPM) in Bosnia currently comprises about 150 international police officers and its mandate runs through 2009 (as requested by the Bosnian presidency). The mission of the EUPM is to assist Bosnia achieve a sustainable, professional, and multi-ethnic police service. A major focus of EUPM activity has been on combating organized crime and corruption.

Over 12 years since the Dayton accords ended the 1992-1995 Bosnian war, Bosnia's future is still somewhat in question. Despite the country's numerous postwar achievements, political and ethnic divisions remain strong, with many of Bosnia's political leaders maintaining sharply polarized views on institutional and constitutional reforms, especially those concerning the Dayton-mandated entities (the Bosniak-Croat Federation and the Republika Srpska) and the central Bosnian government. In general, the Bosniak (or Muslim) parties have emphasized a stronger central government, while the Bosnian Serb and Bosnian Croat communities favor more decentralization. (Bosnia's population includes 48% Bosniaks (Muslims), 37.1% Serbs, and 14.3% Croats (2000 estimate) [CIA, The World Factbook , 2008]). Nevertheless, Bosnia recently achieved new milestones in its path toward full integration with NATO and the European Union (EU). An international High Representative continues to provide hands-on diplomatic guidance, and an EU-led military force remains deployed to provide for a secure environment in Bosnia; both international missions derive from the Dayton agreement and neither has a set end-date. This report provides an overview of prominent current issues in Bosnia that may be of interest to Members of the 110 th Congress. It may be updated as events warrant.

The Federal Election Campaign Act (FECA) regulates contributions and expenditures for federal election campaigns. The term "hard money," which is not statutorily defined, typically refers to funds raised and spent in accordance with the limitations, prohibitions, and reporting requirements of FECA. Unlike soft money, which will be discussed in the next section, hard money may be used "in connection with" or "for the purpose of influencing" federal elections. Under FECA, hard money restrictions apply to contributions from and expenditures by any "person," as defined to include "an individual, partnership, committee, association, corporation, labor organization, or any other organization or group of persons," but not including the federal government. FECA provides that a "person" is limited to contributing no more than $2,000 per candidate, per election (adjusted for inflation to $2,300 for the 2007-2008 election cycle); $25,000 per year to a national committee of a political party (adjusted for inflation to $28,500 for the 2007-2008 election cycle); and $5,000 per year to PACs (limits on contributions by and to PACs are not adjusted for inflation). FECA further provides that an "individual" is subject to an aggregate limit on all contributions per two-year election cycle (encompassing all contributions to federally registered candidates, parties, and PACs): $95,000 per two-year election cycle, with sub-limits: (a) $37,500 to all candidates and (b) $57,500 to all PACs and parties (no more than $37,500 of which is to state and local parties and PACs). As indexed for inflation, the 2007-2008 election cycle limit is $108,200, with sub-limits: (a) $42,700 to all candidates and (b) $65,500 to all PACs and parties (no more than $42,700 of which is to state and local parties and PACs). In interpreting such statutory provisions, the Federal Election Commission (FEC) has consistently found that the act's definition of "person" includes unincorporated Indian tribes, thereby subjecting tribes to the $2,300 per candidate per election limit, the $28,500 per year limit to a national party, and the $5,000 per year limit to PACs. On May 15, 2000, however, the FEC found that whereas an unincorporated Indian tribe is considered a "person" under FECA, it is not considered an "individual" and therefore is not subject to the aggregate election-cycle limit. As a result of that ruling, it appears that an Indian tribe, by making, for example, an unlimited number of $2,300, $28,500, and $5,000 contributions, could significantly exceed the $108,200 aggregate election-cycle limit applicable to "individuals." FECA also prohibits corporations, labor unions, and national banks from using their treasury funds to make contributions and expenditures in connection with federal elections. Such entities may, however, participate in financing federal elections by establishing separate segregated funds, also known as political action committees (PACs), which are permitted to raise voluntary contributions for use in federal elections. PAC contributions are subject to limitations under FECA, as are contributions from individual citizens and political parties. Generally, as most Indian tribes are unincorporated, they are not subject to the FECA ban on the use of corporate treasury funds for contributions and expenditures in connection with federal elections. Accordingly, most tribes may make contributions in federal elections directly from their tribal funds, without establishing a PAC. This appears to facilitate the ability of Indian tribes to make federal election contributions. That is, while current law limits contributions to a PAC to $5,000 per year from any source, a tribe may acquire a large amount of funds for use in federal elections more directly (i.e., from its own tribal funds, including, for example, income from tribal enterprises, so long as those enterprises are neither incorporated nor government contractors). In one key respect, the FEC treats Indian tribes differently than PACs. Although a 1978 FEC ruling had required Indian tribes making contributions to comply with the periodic reporting requirements of FECA, this requirement was explicitly superceded by a 1995 agency ruling. Although contributions from tribes must be reported by recipients, one must view the FEC filings of candidates, PACs, and parties in order to track the funds given by an Indian tribe, as well as the IRS filings by section 527 political organizations. PoliticalMoneyLine found that some $25 million was donated for 2000-20005 federal elections by 212 federally recognized Indian tribes, and that the reporting was made under almost 2,000 different variations of their names. Thus, the ability to track the flow of election-related money from Indian tribes is more difficult than it is for other large entities. Several observations may be made about the ability of Indian tribes to spend money in federal elections compared with that of other interest groups, which typically operate through PACs. Like other interest groups, Indian tribes are subject to no aggregate limit on their total federal election contributions (only individual citizens are subject to this limit). Unlike an interest group PAC, however, an Indian tribe may have a more readily available pool of funds that could be used in federal elections, that is, its own tribal funds, as opposed to a fund solely comprised of contributions that are subject to limitations and source restrictions. This advantage, however, may be somewhat offset by the $5,000 per candidate, per election limit applicable to a PAC, which typically qualifies as a "multicandidate committee," compared with the $2,300 per candidate, per election limit applicable to all other persons, including Indian tribes. (In one apparent anomaly in FECA, a multicandidate committee may only contribute $15,000 per year to the national committee of a political party, whereas any other person, including an Indian tribe, may contribute $25,000, or $28,500 in the 2007-2008 election cycle, adjusted for inflation.) While "soft money" is not expressly defined in federal election law and regulation, strictly speaking, it refers to funds that are not regulated by FECA (i.e., hard money). It may refer to corporate and labor treasury funds that cannot legally be used in connection with federal elections, but can be used for other specified purposes. Sometimes referred to as nonfederal funds, prior to the enactment of the Bipartisan Campaign Reform Act (BCRA) of 2002 ( P.L. 107-155 ; March 27, 2002), "soft money" often referred to non-FECA funds raised by the national committees of the two major political parties. BCRA put an end to this practice by prohibiting national parties from raising funds not subject to FECA, whether from individual citizens, corporations, labor unions, or Indian tribes. Even after the enactment of BCRA, however, spending on issue advocacy communications remains a prominent soft money activity. Issue advocacy communications are generally paid for by a group, such as a for-profit or nonprofit corporation or labor union, for advertisements (typically broadcast on radio or television) that could be interpreted to favor or disfavor certain candidates, while also serving to inform the public about a policy issue. Prior to BCRA, issue advocacy communications were generally unregulated by FECA. Therefore, Indian tribes (like corporations, labor unions, and individuals) could spend unlimited amounts of money on such communications. With the enactment of BCRA, certain issue ads are now regulated. BCRA created a new term in federal election law, "electioneering communication," which describes a political ad that "refers" to a clearly identified federal candidate, is broadcast within 30 days of a primary or 60 days of a general election, and if for House and Senate elections, is "targeted to the relevant electorate," (i.e., is received by 50,000 or more persons in the state or district where the respective House or Senate election is occurring). BCRA prohibits the financing of such communications with union or certain corporate funds. Furthermore, for permissible "electioneering communications," federal election law requires disclosure of disbursements over $10,000 for such communications, including identification of each donor of $1,000 or more. Therefore, while corporations and labor unions are prohibited from engaging in "electioneering communications," it appears that most Indian tribes, as unincorporated entities, may continue to finance such communications, subject to the disclosure requirements.

Under the Federal Election Campaign Act (FECA), Indian tribes are subject to contribution limits applicable to "persons," as defined by the act. For the 2008 election cycle, these limits include $2,300 per election to a candidate, $28,500 per year to a political party's national committee, and $5,000 per year to a political action committee (PAC). The Federal Election Commission (FEC) has found, however, that FECA's $108,200 election cycle aggregate limit applicable to "individuals," as defined by the act, does not apply to Indian tribes (similar to FECA's treatment of other interest groups that operate through PACs and are also not subject to an aggregate limit). In addition, as most Indian tribes are unincorporated, they are not subject to the FECA ban on use of corporate treasury funds for contributions and expenditures in connection with federal elections. Hence, unlike corporations, most Indian tribes are not required to establish PACs in order to participate in federal elections. As the result of an FEC ruling, unlike PACs, Indian tribes are also not required to disclose the amounts and recipients of any contributions they make. With regard to unregulated soft money, Indian tribes may spend unlimited amounts of money on issue advocacy communications. The Bipartisan Campaign Reform Act (BCRA) of 2002 made several significant changes to FECA, including increasing certain contribution limits from their previous levels. BCRA also prohibited any "person," which includes Indian tribes, from making soft money donations to political parties. While FECA prohibits corporations and unions from paying for broadcast issue advertisements that refer to federal candidates within 30 days of a primary or 60 days of a general election, labeled by BCRA as "electioneering communications," unincorporated Indian tribes are not subject to such a prohibition. However, if an Indian tribe sponsors an electioneering communication, regardless of its incorporation status, it is subject to disclosure requirements, including the identification of disbursements and donors over certain dollar amounts.

Senate Rule XXVI establishes specific requirements for Senate committee procedures. In addition, each Senate committee is required to adopt rules, which may "not be inconsistent with the Rules of the Senate." Senate committees also operate according to additional established practices that are not necessarily reflected in their adopted rules. The requirement that each committee must adopt its own set of rules dates to the 1970 Legislative Reorganization Act (P.L. 91-510). That law built on the 1946 Legislative Reorganization Act (P.L. 79-601), which set out some requirements to which most Senate committees must adhere. Under the provisions of the 1970 law (now incorporated into Senate Rule XXVI, paragraph 2), Senate committees must adopt their rules and generally have them printed in the Congressional Record not later than March 1 of the first year of a Congress. Typically, the Senate also publishes a compilation of the rules of all the committees each Congress, and some individual committees also publish their rules as committee prints. Committee rules govern actions taken in committee proceedings only, and they are enforced in relation thereto by the committee's members in a similar way that rules enforcement occurs on the Senate floor. There is generally no means by which the Senate can enforce committee rules at a later point on the floor. So long as the committee met the requirement of Senate Rule XXVI that a physical majority be present for reporting a measure or matter, no point of order lies against the measure or matter on the floor on the grounds that the committee earlier acted in violation of other procedural requirements. Beyond the requirements of Senate rules and a committee's own formal rules, many committees have traditions or practices they follow that can affect their procedures. (One committee, for example, does not allow Senators to offer second-degree amendments during committee markups, though this restriction is not contained in either the Senate or the committee's rules.) An accounting of any such informal practices that committees might observe is not provided below. This report first provides a brief overview of Senate rules as they pertain to committees. The report then provides four tables that summarize each committee's rules in regard to meeting day, hearing and meeting notice requirements, and scheduling of witnesses ( Table 1 ); hearing quorum, business quorum, and amendment filing requirements ( Table 2 ); proxy voting, polling, and nominations ( Table 3 ); and investigations and subpoenas ( Table 4 ). Table 4 also identifies selected unique provisions some committees have included in their rules. The tables, however, represent only a portion of each committee's rules. Provisions of the rules that are substantially similar to or essentially restatements of the Senate's standing rules are not included. Although there is some latitude for committees to set their own rules, the standing rules of the Senate set out specific requirements that each committee must follow. The provisions listed below are taken from Rule XXVI of the Standing Rules of the Senate. (Some committees reiterate these rules in their own rules, but even for those committees that do not, these restrictions apply.) This is not an exhaustive explanation of Senate rules and their impact on committees. Rather, this summary is intended to provide a background against which to understand each committee's individual rules that govern key committee activities. Rules. Each committee must adopt rules; those rules must generally be published in the Congressional Record not later than March 1 of the first year of each Congress. If a committee adopts an amendment to its rules later in the Congress, that change becomes effective only when it is published in the Record (Rule XXVI, paragraph 2). Meetings. Committees and subcommittees are authorized to meet and hold hearings when the Senate is in session and when it has recessed or adjourned. A committee may not meet on any day (1) after the Senate has been in session for two hours, or (2) after 2 p.m. when the Senate is in session. Each committee must designate a regular day on which to meet weekly, biweekly, or monthly. (This requirement does not apply to the Appropriations Committee.) A committee is to announce the date, place, and subject of each hearing at least one week in advance, though any committee may waive this requirement for "good cause" (Rule XXVI, paragraph 5(a); Rule XXVI, paragraph 3). Special meeting. Three members of a committee may make a written request to the chair to call a special meeting. The chair then has three calendar days in which to schedule the meeting, which is to take place within the next seven calendar days. If the chair fails to do so, a majority of the committee members can file a written motion to hold the meeting at a certain date and hour (Rule XXVI, paragraph 3). Open meetings. Unless closed for reasons specified in Senate rules (such as a need to protect national security information), committee and subcommittee meetings, including hearings, are open to the public. When a committee or subcommittee schedules or cancels a meeting, it is required to provide that information—including the time, place, and purpose of the meeting—for inclusion in the Senate's computerized schedule information system. Any hearing that is open to the public may also be open to radio and television broadcasting at the committee's discretion. Committees and subcommittees may adopt rules to govern how the media may broadcast the event. A vote by the committee in open session is required to close a meeting (Rule XXVI, paragraph 5(b)). Quorums. Committees may set a quorum for doing business so long as it is not less than one-third of the membership. A majority of a committee must be physically present when the committee votes to order the reporting of any measure, matter, or recommendation. Agreeing to a motion to order a measure or matter reported requires the support of a majority of the members who are present. Proxies cannot be used to constitute a quorum (Rule XXVI paragraph 7(a)(1)). Meeting r ecord . All committees must make public a video, transcript, or audio recording of each open hearing of the committee within 21 days of the hearing. These shall be made available to the public "through the Internet" (Rule XXVI, paragraph 5(2)(A)). Proxy voting. A committee may adopt rules permitting proxy voting. A committee may not permit a proxy vote to be cast unless the absent Senator has been notified about the question to be decided and has requested that his or her vote be cast by proxy. A committee may prohibit the use of proxy votes on votes to report. However, even if a committee allows proxies to be cast on a motion to report, proxies cannot make the difference in ordering a measure reported, though they can prevent it (Rule XXVI, paragraph 7(a)(3)). Investigations and subpoenas. Each standing committee (and its subcommittees) is empowered to investigate matters within its jurisdiction and issue subpoenas for persons and papers (Rule XXVI, paragraph 1). Witnesses selected by the minority. During hearings on any measure or matter, the minority shall be allowed to select witnesses to testify on at least one day when the chair receives such a request from a majority of the minority party members. This provision does not apply to the Appropriations Committee (Rule XXVI, paragraph 4(d)). Reporting. A Senate committee may report original bills and resolutions in addition to those that have been referred to it. As stated above in the quorum requirement, a majority of the committee must be physically present for a measure or matter to be reported, and a majority of those present is required to order a measure or matter favorably reported. A Senate committee is not required to issue a written report to accompany a measure or matter it reports. If the committee does write such a report, Senate rules specify a series of required elements that must be included in the report (Rule XXVI, paragraph 7(a)(3); Rule XXVI, paragraph 10(c)). Table 1 summarizes each's committee's rules in three areas: meeting day(s), notice requirements for meetings and hearings, and witness selection provisions. Many committees repeat or otherwise incorporate the provisions of Senate Rule XXVI, paragraph 4(a), which, as noted above, requires a week's notice of any hearing (except for the Appropriations and Budget committees) "unless the committee determines that there is good cause to begin such hearing at an earlier date." Provisions in committee rules are identified and explained in this column only to the extent that they provide additional hearing notice requirements, specifically provide the "good cause" authority to certain members (e.g., chair or ranking minority member), or apply the one week notice to meetings other than hearings (such as markups). Similarly, as noted in the report, Senate Rule XXVI, paragraph 4(d) (sometimes referred to as the "minority witness rule"), provides for the calling of additional witnesses in some circumstances (except for the Appropriations Committee). Some committees restate this rule in their own rules. Only committee rule provisions that go further in specifically addressing the selection of witnesses or a right to testify are identified in this column. Table 2 focuses on each's committee's rules on hearing quorums, business quorums, and requirements to file amendments prior to a committee markup. In regard to a business quorum, committees generally consider "conduct of business" to include actions (such as debating and voting on amendments) that allow the committee to proceed on measures up to the point of reporting. Some committees require that a member of the minority party be present for the conduct of business; such provisions are noted below. As noted earlier, Senate Rule XXVI, paragraph 7(a), requires a majority of the committee to be physically present (and a majority of those present to agree) to report out a measure or matter; this is often referred to as a "reporting quorum." The rule allows Senate committees to set lower quorum requirements, though not less than a third of membership for other business besides hearings. Some committees restate the Senate requirement in their own committee rules, but even those committees that do not are bound by the reporting quorum requirement. Table 2 does not identify committee rules that simply restate the reporting quorum requirement unless the committee has added additional requirements to its provisions (e.g., that a reporting quorum must include a member of each party). Though no Senate rules govern the practice, several committees require, in their committee rules, that Senators file with the committee any first-degree amendments they may offer during a committee markup before the committee meets. Such a provision allows the chair and ranking member of the committee to see what kinds of issues may come up at the markup and may also allow them to negotiate agreements with amendment sponsors before the formal markup session begins. Some committees distribute such filed amendments in advance of the markup to allow committee members a chance to examine them. It also provides an opportunity to Senators to draft second-degree amendments to possible first-degree amendments before the markup begins. Table 3 summarizes each's committee's rules on proxy voting, committee polling, and nominations. Since Senate rules require a majority of a committee to be physically present for a vote to report a measure or matter, a committee vote to report an item of business may not rely on the votes cast on behalf of absent Senators (that is, votes by proxy). Some committees effectively restate this requirement in their committee rules by either stating that proxies do not count toward reporting or referencing the proxy provisions of Senate Rule XXVI. However, committees may still allow (or preclude) proxy votes on a motion to report (as well as on other questions so long as members are informed of the issue and request a proxy vote). Table 3 identifies committees that explicitly allow or disallow proxy votes on a motion to report (even though such votes cannot, under Senate rules, count toward the presence of a "reporting quorum" or make the difference in successfully reporting a measure or matter). "Polling" is a method of assessing the position of the committee on a matter without the committee physically coming together. As such, it cannot be used to report out measures or matters, because Senate rules require a physical majority to be present to report a measure or matter. Polling may be used, however, by committees that allow it for internal housekeeping matters before the committee, such as questions concerning staffing or how the committee ought to proceed on a measure or matter. Senate Rule XXVI does not contain provisions specific to committee consideration of presidential nominations. Some committees, however, set out timetables in their rules for action or have other provisions specific to action on nominations. Some committees also provide in their rules that nominees must provide certain information to the committee. Such provisions are not detailed in this table except to the extent that the committee establishes a timetable for action that is connected to such submissions. This column of the table also identifies any committee provisions on whether nominees testify under oath. Table 4 describes selected key committee rules in relation to investigations and subpoenas. Note that some Senate committees do not have specific rules providing processes for committee investigations, and many also do not set out procedures for issuing subpoenas. The lack of any investigation or subpoena provisions does not mean the committees cannot conduct investigations or issue subpoenas; rather, the process for doing so is not specified in the committee's written rules. Some committees have provisions that are generally not included in other committee rules. Selected notable examples (that do not fit into other categories in other tables) are summarized in the last column of Table 4 .

Senate Rule XXVI establishes specific requirements for certain Senate committee procedures. In addition, each Senate committee is required to adopt rules to govern its own proceedings. These rules may "not be inconsistent with the Rules of the Senate." Senate committees may also operate according to additional established practices that are not necessarily reflected in their adopted rules but are not specifically addressed by Senate rules. In sum, Senate committees are allowed some latitude to establish tailored procedures to govern certain activities, which can result in significant variation in the way different committees operate. This report first provides a brief overview of Senate rules as they pertain to committee actions. The report then provides tables that summarize selected, key features of each committee's rules in regard to meeting day, hearing and meeting notice requirements, scheduling of witnesses, hearing quorum, business quorum, amendment filing requirements, proxy voting, polling, nominations, investigations, and subpoenas. In addition, the report looks at selected unique provisions some committees have included in their rules in the miscellaneous category. The tables represent only a portion of each committee's rules, and provisions of the rules that are substantially similar to or essentially restatements of the Senate's Standing Rules are not included. This report will be not be updated further during the 115th Congress.

American tradition has long maintained a distinct separation between military force and civil law enforcement. Nevertheless, federal troops were commonly used to enforce civil law during the years immediately after the Civil War, particularly in the states of the former Confederacy. The Posse Comitatus Act of 1878 (18 U.S.C. §1385) was written to ensure that this practice would come to an end. Though the act codified an American tradition of separating military from civilian affairs, Congress has occasionally authorized the President to deploy military force to enforce, or assist in the enforcement, of various laws. For example, Congress has vested the Coast Guard, a federal armed force, with a broad range of law enforcement responsibilities. Congress has also passed statutes enabling the employment of military force in law enforcement support under specific circumstances, such as permitting the President to call out the armed forces in times of insurrection and domestic violence, or authorizing the armed forces to share information and equipment with civilian law enforcement agencies. One important example of congressional direction in the use of the armed forces to support law enforcement was seen in the enactment of the National Defense Authorization Act, Fiscal Year 1989. Title XI of the act tasked the Department of Defense (DOD) to assume a prominent role in detecting and monitoring illegal drug production and trafficking. DOD became "the single lead agency of the Federal Government for the detection and monitoring of aerial and maritime transit of illegal drugs into the United States," and the integrator of an effective system of command, control, communications, and intelligence assets dedicated to drug interdiction. The act also placed Coast Guard law enforcement detachments aboard "every appropriate surface naval vessel at sea in a drug-interdiction area" and made "available any equipment (including associated supplies or spare parts), base facility, or research facility of the Department of Defense to any Federal, State or local law enforcement official for law enforcement purposes." Finally, it authorized additional DOD funding to the National Guard for drug interdiction and enforcement operations. The following year, in the National Defense Authorization Act for Fiscal Years 1990 and 1991, Congress created a pathway for DOD to directly transfer to federal and state agencies equipment (so-called "personal property") that was excess to the needs of the department and suitable for use in counter-drug activities. Under Section 1208, the Secretary of Defense could transfer defense equipment, including small arms and ammunition, from existing defense stocks without cost to the receiving agency. In transferring such property, the Secretary of Defense was required to consult with the Attorney General and the Director of National Drug Control Policy (the federal government's so-called "drug czar"). The act included a sunset provision that would have terminated this authority on September 30, 1992. This termination date was extended to September 30, 1997 by the enactment of Section 1044 of the National Defense Authorization Act for Fiscal Year 1993. As the revised termination date approached, the 104 th Congress considered making its authority permanent. The House version of the National Defense Authorization Act for Fiscal Year 1997 contained language ( H.R. 3230 , Section 103) that would have expanded eligibility for property transfers to all law enforcement while retaining a priority for counter-narcotics activities. The Senate's amendment of the bill contained no similar provision. In conference, the Senate receded, but with an amendment that extended priority in property transfer to both counter-narcotics and counter-terrorism activity. The amendment also ensured that DOD would incur no cost beyond management of the program in transferring this excess equipment to these law enforcement agencies. The language was enacted as Section 1033 and is codified under Title 10, Section 2576a, of the United States Code (10 U.S.C. §2576a). The program is administered by the Law Enforcement Support Office (LESO) of the Defense Logistics Agency (DLA), located at DLA Disposition Services Headquarters in Battle Creek, Michigan. Though participating agencies initiate requests for material, the Defense Logistics Agency (DLA) retains the final authority to determine the type, quantity, and location of excess military property suitable for transfer and use in law enforcement activities. General categories of equipment offered for transfer include office furniture, household goods (e.g., kitchen equipment), exercise equipment, portable electric generators, tents, and general law enforcement supplies (e.g., handcuffs, riot shields, holsters, binoculars, and digital cameras). Heavy equipment, such as cranes, and various types of land vehicles are available. Watercraft, aircraft, and weapons are also eligible for transfer. Miscellaneous other property includes tool kits, first aid kits, blankets and bedding, lawn maintenance supplies, combat boots, and office equipment (computers, printers, fax machines, etc.). Law enforcement agencies wishing to take part in the 1033 Program apply to the LESO through their state's 1033 Program coordinator (see below). Once their participation has been approved by the state coordinator and the LESO, the law enforcement agencies appoint officials to visit their local DLA Disposition Services Site, where they screen property and place requests for specific items. The forms are then forwarded to the state coordinator for review; once approved, the LESO makes the final determination of whether or not the property will be transferred. Law enforcement agencies that receive approval for property transfers must cover all transportation costs. According to the LESO, 11,000 law enforcement agencies are registered nationwide and 8,000 are currently using property provided through the program. Each state participating in the program must set up a business relationship with DLA through the execution of a Memorandum of Agreement (MOA). Each participating state's governor is required to appoint a state coordinator to ensure that the program is used correctly by the participating law enforcement agencies. The state coordinators are expected to keep property accountability records, investigate any alleged misuse of property, and, in certain cases, report violations of the MOA to DLA. The LESO may suspend the participation of a state that cannot properly account for the property entrusted to it, and state coordinators may suspend the participation of any law enforcement agency thought to abuse the program. The chief of police or equivalent senior official of the receiving law enforcement organization is held responsible for all 1033 Program controlled property. Additionally, DLA has a compliance review program. The program's objective is to have the Law Enforcement Support program staff visit each state coordinator and assist him or her in ensuring that property accountability records are properly maintained, minimizing the potential for fraud, waste and abuse. Some of the equipment offered to law enforcement through the program, such as weapons or tactical vehicles, possesses significant military capabilities. By law, these items cannot be released to the general public and ownership is never transferred to law enforcement agencies – rather, they are considered to be on loan. This equipment is closely tracked by both the LESO and the relevant state coordinator and it must be returned to a DLA Disposition Services Site when no longer needed for law enforcement purposes. Property not considered to be uniquely military, such as office equipment or first aid kits, is considered controlled property for the first year that it is held by the agency and must be accounted for in the same manner as all other 1033 Program property. At the end of the year, title is transferred to the law enforcement agency and the property is removed from the audited inventory. The statute does not require any regular reports to Congress on the 1033 Program. More information regarding the 1033 Program is available through the LESO website ( http://www.dispositionservices.dla.mil/leso/pages/default.aspx ). A number of states maintain their own law enforcement support offices that post program information tailored to their own jurisdictions (e.g., Ohio's Law Enforcement Support Office at http://ohioleso.ohio.gov/ ). Appendix A. Text of Section 1208 of the National Defense Authorization Act for 1990 ( P.L. 101-189 ) SEC. 1208. TRANSFER OF EXCESS PERSONAL PROPERTY (a) TRANSFER AUTHORIZED- (1) Notwithstanding any other provision of law and subject to subsection (b), the Secretary of Defense may transfer to Federal and State agencies personal property of the Department of Defense, including small arms and ammunition, that the Secretary determines is-- (A) suitable for use by such agencies in counter-drug activities; and (B) excess to the needs of the Department of Defense. (2) Personal property transferred under this section may be transferred without cost to the recipient agency. (3) The Secretary shall carry out this section in consultation with the Attorney General and the Director of National Drug Control Policy. (b) CONDITIONS FOR TRANSFER- The Secretary may transfer personal property under this section only if-- (1) the property is drawn from existing stocks of the Department of Defense; and (2) the transfer is made without the expenditure of any funds available to the Department of Defense for the procurement of defense equipment. (c) APPLICATION- The authority of the Secretary to transfer personal property under this section shall expire on September 30, 1992. Appendix B. Text of 10 U.S.C. §2576a, "Excess Personal Property: Sale or Donation For Law Enforcement Activities" §2576a. Excess personal property: sale or donation for law enforcement activities (a) Transfer authorized. (1) Notwithstanding any other provision of law and subject to subsection (b), the Secretary of Defense may transfer to Federal and State agencies personal property of the Department of Defense, including small arms and ammunition, that the Secretary determines is-- (A) suitable for use by the agencies in law enforcement activities, including counter-drug and counter-terrorism activities; and (B) excess to the needs of the Department of Defense. (2) The Secretary shall carry out this section in consultation with the Attorney General and the Director of National Drug Control Policy. (b) Conditions for transfer. The Secretary of Defense may transfer personal property under this section only if-- (1) the property is drawn from existing stocks of the Department of Defense; (2) the recipient accepts the property on an as-is, where-is basis; (3) the transfer is made without the expenditure of any funds available to the Department of Defense for the procurement of defense equipment; and (4) all costs incurred subsequent to the transfer of the property are borne or reimbursed by the recipient. (c) Consideration. Subject to subsection (b)(4), the Secretary may transfer personal property under this section without charge to the recipient agency. (d) Preference for certain transfers. In considering applications for the transfer of personal property under this section, the Secretary shall give a preference to those applications indicating that the transferred property will be used in the counter-drug or counter-terrorism activities of the recipient agency.

The United States has traditionally kept military action and civil law enforcement apart, codifying that separation in the Posse Comitatus Act of 1878. On the other hand, Congress has occasionally authorized the Department of Defense (DOD) to undertake actions specifically intended to enhance the effectiveness of domestic law enforcement through direct or material support. One such effort is the so-called "1033 Program," named for the section of the National Defense Authorization Act (NDAA) of 1997 that granted permanent authority to the Secretary of Defense to transfer defense material to federal and state agencies for use in law enforcement, particularly those associated with counter-drug and counter-terrorism activities. The 1997 act was preceded by 1988 legislation that expanded DOD's role in the interdiction of illicit drug trafficking. That was soon followed by temporary authority to transfer excess defense material, including small arms and ammunition, from excess DOD stocks to law enforcement agencies for use in counter-drug activities. This could be done at no cost to the receiving agency. The 1997 NDAA expanded that authority to include counter-terrorism activities and made it permanent. It is codified as 10 U.S.C. §2576a. The 1033 Program is administered by the Law Enforcement Support Office (LESO) of the Defense Logistics Agency (DLA). Under it, local and state law enforcement agencies may apply to DLA to participate. DLA requires the governor of the state to execute a Memorandum of Agreement (MOA) and appoint a state 1033 Program coordinator, who is responsible for ensuring that the program is properly administered within the state and that appropriate property records are maintained. Approved agencies may request material from DLA through their state coordinators. The LESO retains final approval authority over the types and quantities of material transferred from DOD excess stocks to the agencies. Any material requiring demilitarization before being released to the public must be returned to DLA when no longer needed by the receiving law enforcement agency. LESO states that 11,000 agencies nationwide are currently registered and that 8,000 of them use material provided through the 1033 Program.

Congress recently completed action on the Bush Administration's FY2004 supplemental budgetrequest to fund continuing military operations and reconstruction in Iraq and Afghanistan. (1) A majorissue in the congressional debate on this, and other such supplementals of the past, is whethermilitary and peacekeeping operations should be funded with supplemental requests or via the regulardefense appropriations process. Some Members of Congress have urged the President to include thecosts of current and future operations in Iraq and Afghanistan in the Department of Defense's(DOD's) regular appropriations, arguing that these are now ongoing operations that should beplanned for and funded in the annual defense budget. Others prefer supplementals due to theunpredictability of military and peacekeeping circumstances in Iraq and Afghanistan. Thisunpredictability, they argue, makes it extremely difficult to estimate the costs of either type ofoperation in advance. This report examines 46 cases since FY1990 in which Congress approved funding for combat or peacekeeping operations using regular appropriations, supplemental appropriations, or acombination of the two. Table 1 shows that since 1990, Congress generally has funded combatoperations with supplemental appropriations. In initial post-combat peacekeeping operations,however, Congress has tended to rely on a combination of supplemental and regular appropriations. As peacekeeping operations have become ongoing, Congress has switched to using regularappropriations. Examining the funding patterns for combat operations in the First Gulf War, Somalia, Haiti,Kosovo, Afghanistan, and Operation Iraqi Freedom shows they were all funded initially withsupplemental appropriations. In each case, the President requested supplemental funding shortlyafter operations were underway, and Congress approved the requests within months. The only exception to this pattern is Bosnia, where United States' involvement began in 1993 with a humanitarian airlift. DOD funded this airlift using resources previously appropriated byCongress in FY1993 regular appropriations. (2) InFY1995, when the United States first launchedairstrikes in support of U.N. peacekeepers, DOD used a combination of supplemental appropriationsand FY1995 regular appropriations to fund combat operations. Thus, although supplementalappropriations were not used to fund the United States' initial involvement in Bosnia, Congress didturn to supplemental appropriations to fund combat and later peacekeeping operations after the initialhumanitarian airlift. Table 1 suggests that in the past decade, Congress generally has funded combat operations withsupplemental appropriations and ongoing peacekeeping operations with regular appropriations. Eachoperation, however, has gone through an interim period of initial post-combat peacekeeping in whichCongress has used different combinations of supplemental and regular appropriations. Congress funded combat operations in Haiti and Kosovo with supplemental appropriations in FY1994 and FY1999, respectively. In both cases, Congress also used supplemental appropriationsto fund initial post-combat peacekeeping. In Haiti, Congress funded peacekeeping through theremainder of FY1994 and all of FY1995 with supplemental appropriations, and switched to regularappropriations in FY1996. Similarly, Congress funded FY1999 post-combat peacekeeping inKosovo with supplemental appropriations, and continued to fund peacekeeping in Kosovo withsupplemental appropriations in FY2000. In FY2001, however, Congress switched to using regularappropriations to fund operations in Kosovo. Regular appropriations have also been used in FY2002and FY2003 as peacekeeping has remained ongoing. FY1995 combat operations in Bosnia were funded mostly with supplemental appropriations, and since FY1999 ongoing peacekeeping operations have been funded with regular appropriations. From FY1995 to FY1998, however, a mixture of supplemental and regular appropriations was usedto fund peacekeeping operations. In FY1995 and FY1996, this mixture consisted of supplementalfunding and the use of previously appropriated funds. In FY1997 and FY1998, both supplementaland regular appropriations were used. Funding for the First Gulf War and the "No-Fly" zones established in Southwest Asia after the war underwent a transition from supplemental to regular appropriations, but it was over the courseof 11 years. The long duration of the operations and the use of some regular appropriations to fundcombat during the First Gulf War distinguish these operations from Bosnia, Kosovo, and Haiti. Operation Desert Shield for the First Gulf War was initially funded with supplemental appropriations that were included in the FY1991 continuing resolution. The next funding forOperation Desert Shield, consisting of $1 billion, was included in the FY1991 regular DefenseAppropriations Act from amounts contributed by allies. This use of regular appropriations early inthe Gulf War was contrary to the use of supplemental appropriations to fund combat operations inBosnia, Kosovo, Haiti, Afghanistan, and Operation Iraqi Freedom. However, it may reflectcongressional use of the funding vehicle that was immediately available to cover the initial costs ofthe operation. The next and largest appropriations for the First Gulf War were included in theFY1991 Desert Shield/Desert Storm supplemental, which was signed into law on March 22, 1991. The size of this supplemental appropriation ($42.6 billion) suggests that the $1 billion included inFY1991 regular appropriations was indeed an exception, rather than a significant change, to thepractice of funding combat operations with supplemental appropriations. The "No-Fly" zones (Southwest Asia operations) following the First Gulf War were funded at least partially with supplemental appropriations for 7 years, the longest use of supplementalappropriations in any of the cases examined. Unlike Kosovo and Haiti, the "No-Fly" zones did notprogress directly from supplemental to regular appropriations as they became ongoing operations. Instead, they were funded partially with supplemental appropriations in FY1992 and FY1993 andfully with supplemental appropriations in FY1994 and FY1995. In FY1996, Congress used regularappropriations to fund the "No-Fly" zones. At this point, rather than continuing to use regularappropriations, Congress returned to a combination of regular and supplemental appropriations fromFY1997 through FY1999. In FY2000 and FY2001, regular appropriations were used again. Thus, although Desert Shield/Desert Storm and the "No-Fly" zones began with supplemental appropriations and ended with regular appropriations, the 7-year interim between those pointsdiffered from the interim between combat operations and ongoing peacekeeping operations inBosnia, Kosovo, and Haiti. Not only was this interim longer in the case of the "No-Fly" zones, butit also provided two instances where Congress returned to either partial or full supplemental fundingafter having used only regular appropriations during the prior fiscal year. According to the President, the United States concluded major military operations inAfghanistan in December, 2001 and in Iraq on May 1, 2003. (3) Except for funds appropriated forAfghanistan in the FY2003 Consolidated Appropriations Resolution, both operations have beenfunded to date using supplemental appropriations, including the recently enacted FY2004supplemental. Although the President has declared the end of major combat in both operations, lowintensity conflict is still prevalent, making it unclear whether Iraq and Afghanistan can yet bereferred to as ongoing peacekeeping operations. Going forward, Congress might designate a pointat which an operation becomes ongoing, and thus merits funding in the regular appropriationsprocess. Table 1: Methods of Funding for Wars and Contingency Operations, First Persian Gulf War to Operation Iraqi Freedom Notes: Please note that certain operations,such as Operation Desert Shield, were funded more thanonce in the same fiscal year. An asterisk indicates that DOD covered some of the cost by using existing resources thatwere originally programmed for other purposes. Sources: This table was conceived of and partially assembled by [author name scrubbed] and Nina Serafino of CRS, using the cited public laws and corresponding congressional reports. Formore specific cost information on Bosnia and Southwest Asia, see CRS Report 98-823(pdf) F, Military Contingency Funding for Bosnia, Southwest Asia, and Other Operations: Questionsand Answers by Nina Serafino. For more specific information on funding for Kosovo, see CRS Report RS20161(pdf) , Kosovo Military Operations: Costs and Congressional Action on Funding ,by [author name scrubbed]. Specific information on Persian Gulf War funding can be found in CRS Issue Brief IB91019, Persian Gulf War: U.S. Costs and Allied Financial Contributions , by[author name scrubbed] and [author name scrubbed].

Congress recently completed action on the Bush Administration's FY2004 supplemental budget request to fund continuing military operations and reconstruction in Iraq and Afghanistan. It wassigned into law, P.L. 108-106 , on November 6, 2003. A major issue in the congressional debate onthis, and other such supplementals of the past, is whether military and peacekeeping operationsshould be funded with supplemental requests or via the regular defense appropriations process. Some Members of Congress have urged the President to include the costs of current and futureoperations in Iraq and Afghanistan in the Department of Defense's (DOD's) regular appropriations,arguing that these are now ongoing operations that should be planned for and funded in the annualdefense budget. Others prefer supplementals due to the unpredictability of military andpeacekeeping circumstances in Iraq and Afghanistan. This unpredictability, they argue, makes itextremely difficult to estimate the costs of either type of operation in advance. This report examines 46 cases since FY1990 in which Congress approved funding for combat or peacekeeping operations using regular appropriations, supplemental appropriations, or acombination of the two. The report shows that since 1990, Congress generally has funded combatoperations with supplemental appropriations. In initial stages of post-combat peacekeepingoperations, however, Congress has tended to rely on a combination of supplemental and regularappropriations. As peacekeeping operations have become ongoing, Congress has switched to usingregular appropriations.

Medicaid is a means-tested entitlement program that finances the delivery of primary and acute medical services as well as long-term services and supports. Medicaid is jointly funded by the federal government and the states. Participation in Medicaid is voluntary for states, though all states, the District of Columbia, and the territories choose to participate. Each state designs and administers its own version of Medicaid under broad federal rules. While states that choose to participate in Medicaid must comply with all federal mandated requirements, state variability is the rule rather than the exception in terms of eligibility levels, covered services, and how those services are reimbursed and delivered. The federal government pays a share of each state's Medicaid expenditures. This report describes the federal medical assistance percentage (FMAP) calculation used to reimburse states for most Medicaid expenditures, and it lists the statutory exceptions to the regular FMAP rate. The federal government's share of most Medicaid service costs is determined by the FMAP rate, which varies by state and is determined by a formula set in statute. The FMAP rate is used to reimburse states for the federal share of most Medicaid expenditures, but exceptions to the regular FMAP rate have been made for certain states, situations, populations, providers, and services. The FMAP rate is also used in determining the phased-down state contribution ("clawback") for Medicare Part D, the federal share of certain child support enforcement collections, Temporary Assistance for Needy Families (TANF) contingency funds, a portion of the Child Care and Development Fund (CCDF), and foster care and adoption assistance under Title IV-E of the Social Security Act. An enhanced FMAP (E-FMAP) rate is provided for both services and administration under the State Children's Health Insurance Program (CHIP), subject to the availability of funds from a state's federal allotment for CHIP. The E-FMAP rate is calculated by reducing the state share under the regular FMAP rate by 30%. The FMAP formula compares each state's per capita income relative to U.S. per capita income. The formula provides higher reimbursement to states with lower incomes (with a statutory maximum of 83%) and lower reimbursement to states with higher incomes (with a statutory minimum of 50%). The formula for a given state is: FMAP state = 1 - ((Per capita income state ) 2 /(Per capita income U.S. ) 2 * 0.45) The use of the 0.45 factor in the formula is designed to ensure that a state with per capita income equal to the U.S. average receives an FMAP rate of 55% (i.e., state share of 45%). In addition, the formula's squaring of income provides higher FMAP rates to states with below-average incomes (and vice versa, subject to the 50% minimum). The Department of Health & Human Services (HHS) usually publishes FMAP rates for an upcoming fiscal year in the Federal Register during the preceding November. This time lag between announcement and implementation provides an opportunity for states to adjust to FMAP rate changes. The per capita income amounts used to calculate FMAP rates for a given fiscal year are several years old by the time the FMAP rates take effect because, as specified in Section 1905(b) of the Social Security Act, the per capita income amounts used in the FMAP formula are equal to the average of the three most recent calendar years of data available from the Department of Commerce. In its FY2019 FMAP calculations, HHS used state per capita personal income data for 2014, 2015, and 2016 that became available from the Department of Commerce's Bureau of Economic Analysis (BEA) in September 2017. The use of a three-year average helps to moderate fluctuations in a state's FMAP rate over time. BEA revises its most recent estimates of state per capita personal income on an annual basis to incorporate revised and newly available source data on population and income. It also undertakes a comprehensive data revision—reflecting methodological and other changes—every few years that may result in upward and downward revisions to each of the component parts of personal income. These components include the following: earnings (wages and salaries, employer contributions for employee pension and insurance funds, and proprietors' income); dividends, interest, and rent; and personal current transfer receipts (e.g., government social benefits such as Social Security, Medicare, Medicaid, state unemployment insurance). As a result of these annual and comprehensive revisions, it is often the case that the value of a state's per capita personal income for a given year will change over time. For example, the 2014 state per capita personal income data published by BEA in September 2013 (used in the calculation of FY2017 FMAP rates) differed from the 2014 state per capita personal income data published in September 2017 (used in the calculation of FY2019 FMAP rates). It should be noted that the definition of personal income used by BEA is not the same as the definition used for personal income tax purposes. Among other differences, BEA's personal income excludes capital gains (or losses) and includes transfer receipts (e.g., government social benefits), while income for tax purposes includes capital gains (or losses) and excludes most of these transfers. Several factors affect states' FMAP rates. The first is the nature of the state economy and, to the extent possible, a state's ability to respond to economic changes (i.e., downturns or upturns). The impact on a particular state of a national economic downturn or upturn will be related to the structure of the state economy and its business sectors. For example, a national decline in automobile sales, while having an impact on all state economies, will have a larger impact in states that manufacture automobiles as production is reduced and workers are laid off. Second, the FMAP formula relies on per capita personal income in relation to the U.S. average per capita personal income . The national economy is basically the sum of all state economies. As a result, the national response to an economic change is the sum of the state responses to economic change. If more states (or larger states) experience an economic decline, the national economy reflects this decline to some extent. However, the national decline will be lower than some states' declines because the total decline has been offset by states with small decreases or even increases (i.e., states with growing economies). The U.S. per capita personal income, because of this balancing of positive and negative, has only a small percentage change each year. Since the FMAP formula compares state changes in per capita personal income (which can have large changes each year) to the U.S. per capita personal income, this comparison can result in significant state FMAP rate changes. In addition to annual revisions of per capita personal income data, comprehensive revisions undertaken every four to five years may also influence regular FMAP rates (e.g., because of changes in the definition of personal income). The impact on FMAP rates will depend on whether the changes are broad (affecting all states) or more selective (affecting only certain states or industries). Regular FMAP rates for FY2019 (the federal fiscal year that begins on October 1, 2018) were calculated and published November 21, 2017, in the Federal Register . In the Appendix A to this report, Table A-1 shows regular FMAP rates for each of the 50 states and the District of Columbia for FY2014 through FY2019. Figure 1 shows the state distribution of regular FMAP rates for FY2019. Fourteen states are to have the statutory minimum FMAP rate of 50.00%, and Mississippi is to have the highest FMAP rate of 76.39%. As shown in Figure 2 , from FY2018 to FY2019, the regular FMAP rates for 36 states is to change, whereas the regular FMAP rates for the remaining 15 states (including the District of Columbia) is to remain the same. For most of the states experiencing an FMAP rate change from FY2018 to FY2019, the change is to be less than one percentage point. The regular FMAP rate for 14 states is to increase by as much as one percentage point, and the FMAP rate for 12 states is to decrease by as much as one percentage point. For states that are to experience an FMAP rate change greater than one percentage point from FY2018 to FY2019, nine states are to experience an FMAP rate increase of greater than one percentage point. Oklahoma is to have the largest FMAP rate increase of 3.81 percentage points, with the FMAP rate increasing from 58.57% to 62.38% Oregon is the only state that is to experience an FMAP rate decrease of greater than one percentage point, with the FMAP rate decreasing 1.06 percentage points from 63.62% to 62.56%. The District of Columbia's FY2019 FMAP rate was not calculated according to the regular FMAP formula because the FMAP rate for the District of Columbia has been set in statute at 70% since 1998 for the purposes of Title XIX and XXI of the Social Security Act. However, for other purposes, the percentage for the District of Columbia is 50%, unless otherwise specified by law. Although FMAP rates are generally determined by the formula described above, exceptions to the regular FMAP rate have been made for certain states, situations, populations, providers, and services. Table 1 lists current exceptions to the FMAP in Medicaid statute and regulations. Past FMAP exceptions are listed in Table B-1 . Some of these exceptions were included in the Social Security Amendments of 1965 (P.L. 89-97), which is the law that enacted the Medicaid program. Other exceptions have been added over the years. The Patient Protection and Affordable Care Act (ACA; P.L. 111-148 , as amended) added a number of exceptions to the FMAP for "newly eligible" individuals, "expansion states," disaster-affected states, specified preventive services and immunizations, smoking cessation services for pregnant women, specified home and community-based services, health home services for certain people with chronic conditions, and home- and community-based attendant services and supports. The FMAP rate is used to reimburse states for the federal share of most Medicaid expenditures. In FY2019, 13 states are to have the statutory minimum FMAP rate of 50%, and Mississippi is to have the highest FMAP rate of 76.39%. From FY2018 to FY2019, the regular FMAP rates for 36 states is to change, while the regular FMAP rates for the remaining 15 states (including the District of Columbia) is to remain the same. Exceptions to the regular FMAP rate have been made for certain states, situations, populations, providers, and services. The ACA added a number of exceptions to the FMAP for "newly eligible" individuals, "expansion states," disaster-affected states, specified preventive services and immunizations, smoking cessation services for pregnant women, specified home and community-based services, health home services for certain people with chronic conditions, and home and community-based attendant services and supports. The federal share of Medicaid expenditures used to be about 57% in a typical year, which meant the state share was about 43%. However, with the exceptions to the FMAP added by the ACA (mainly the "newly eligible" matching rate), the federal share of Medicaid expenditures has increased. In FY2014, the federal share of Medicaid expenditures was 61% on average, and it is estimated to have increased to 63% for FY2015 and FY2016. The average federal share is expected to decrease to 61% by FY2020 as the "newly eligible" matching rate phases down to 90%. Appendix A. FMAP Rates for Medicaid, by State Table A-1 shows regular FY2014-FY2019 FMAP rates calculated according to the formula described in the text of the report (see " How FMAP Rates Are Calculated "). In FY2019, FMAP rates range from 50% (14 states) to 76% (Mississippi). From FY2018 to FY2019, regular FMAP rates are to decrease for 13 states, increase for 23 states, and remain the same for 15 states (including the District of Columbia). Most of the states (14 states) for which the FMAP rates do not change have the statutory minimum FMAP rate of 50%, and the FMAP rate for the District of Columbia is statutorily set at 70%. Appendix B. Past FMAP Rate Exceptions Although FMAP rates are generally determined by the statutory formula described above, Table 1 lists current exceptions that have been added to the Medicaid statute and regulations over the years, and Table B-1 lists past FMAP exceptions.

Medicaid is a means-tested entitlement program that finances the delivery of primary and acute medical services as well as long-term services and supports. Medicaid is jointly funded by the federal government and the states. The federal government's share of most Medicaid expenditures is called the federal medical assistance percentage (FMAP). The remainder is referred to as the state share. Generally determined annually, the FMAP formula is designed so that the federal government pays a larger portion of Medicaid costs in states with lower per capita incomes relative to the national average (and vice versa for states with higher per capita incomes). FMAP rates have a statutory minimum of 50% and a statutory maximum of 83%. For FY2019, regular FMAP rates range from 50.00% to 76.39%. The FMAP rate is used to reimburse states for the federal share of most Medicaid expenditures, but exceptions to the regular FMAP rate have been made for certain states, situations, populations, providers, and services. This report describes the FMAP calculation used to reimburse states for most Medicaid expenditures, and it lists the statutory exceptions to the regular FMAP rate.

This report provides a side-by-side comparison of three bills and two proposals— H.R. 6566 , H.R. 6670 , H.R. 6709 , H.R. 6899 (the House Leadership Proposal), and the Senate Draft Proposal—which address oil and gas development in the outer continental shelf (OCS). None of the bills has passed its respective chamber. The text below provides background on the issues. The side-by-side table gives a description of selected sections of the bills. President Bush announced on June 18, 2008, that he would like to open areas of the Outer Continental Shelf (OCS) for oil and gas development currently under presidential and congressional moratoria (discussed in more detail below). The President stated that he would lift the executive branch moratoria only after Congress did so legislatively. But, on July 14, 2008, President Bush reversed his position and lifted the executive ban on the OCS imposed in 1990 by President George H.W. Bush. Senator John McCain, among others, has called on Congress to lift the offshore drilling moratoria as well. Further, the Administration proposes to begin planning its next five-year leasing program that would, if approved, be implemented as early as 2010—two years ahead of schedule. The proposed new five-year program would supersede the current five-year leasing program from 2007-2012. The Administration argues that a new five-year lease program beginning in 2010 would allow any newly opened OCS areas (if the congressional moratoria is lifted this year) to be offered in a lease sale sooner than if they remained on their current schedule. Since the President lifted the executive ban, members of Congress have introduced legislation that would lift the congressional prohibition (in part or completely) against leasing and development of oil and natural gas in the OCS. The legislation section of this report summarizes several of those bills, including the House Leadership proposal ( H.R. 6899 ). Many in Congress, however, oppose lifting the offshore ban. They argue that there are still several million acres leased onshore and offshore but not yet producing and that production from these lands could increase U.S. oil supply. On September 16, 2008, the House passed H.R. 6899 by a vote of 236-189 and defeated an alternative bill, H.R. 6709 , by a vote of 191-226. How much oil could be brought into production in the short-term (from non-producing leased lands or those under the moratoria) and its impact on price is uncertain. An attempt to lift the offshore moratoria with an amendment to the FY2009 Interior, Environment, and Related Agencies Appropriations bill during the House subcommittee markup was defeated by a vote of 6-9. Meanwhile, on June 26, 2008, under suspension of the rules (which requires a two-thirds majority for passage), the House defeated a measure ( H.R. 6251 ) that would have increased rental fees on non-producing oil and gas leases, and denied new federal leases to those not diligently developing the leases they have. Oil and gas leasing has been prohibited on much of the outer continental shelf (OCS) since the 1980s. Congress has enacted OCS leasing moratoria for each of fiscal years 1982-2006 in the annual Interior and Related Agencies Appropriations bill (now the Interior and Environment and Related Agencies Appropriations bill), allowing leasing only in the Gulf of Mexico (except near Florida) and parts of Alaska. President George H.W. Bush in 1990 issued a presidential directive ordering the Department of the Interior (DOI) not to conduct offshore leasing or preleasing activity in areas covered by the annual legislative moratoria until 2000. In 1998, President Clinton extended the offshore leasing prohibition until 2012. Proponents of the moratoria contend that offshore drilling would pose unacceptable environmental risks and threaten coastal tourism industries, whereas supporters of expanded offshore leasing counter that more domestic oil and gas production is vital for the nation's energy security. The Outer Continental Shelf Lands Act of 1953 (OCSLA), as amended, provides for the leasing of OCS lands in a manner that protects the environment and returns revenues to the federal government in the form of bonus bids, rents, and royalties. OCSLA requires the Secretary of the Interior to submit five-year leasing programs that specify the time, location, and size of the areas to be offered. Each five-year leasing program entails a lengthy multistep process that includes environmental impact statements. After a public comment period, a final proposed plan is submitted to the President and Congress. The latest plan went into effect July 1, 2002. Public hearings for the 2007-2012 leasing program are underway. States and interest groups are filing comments on future lease sale areas for the 2007-2012 leasing program. States with energy development off their shores in federal waters have been seeking a larger portion of the federal revenues generated in those areas. They particularly want more assistance for coastal areas that may be most affected by onshore and near-shore activities that support offshore energy development. Proponents of these proposals look to the rates at which funds are given to jurisdictions where onshore energy development occurs on federal lands within those jurisdictions. Coastal destruction has received more attention in Louisiana—especially hard-hit by hurricanes in 2005—where many square miles of wetlands have been lost to the ocean each year. Widespread energy-related development is thought to contribute to coastal losses. Currently, the affected states receive some revenue directly from offshore oil and gas leases in federal waters under section 8(g) of OCSLA and under the Gulf of Mexico Energy Security Act of 2006. P.L. 109-432 . This is in contrast to the 50% share of direct revenues to states that have onshore federal leases within their boundaries. Opponents point out the budget implications that would result from such a loss of federal revenues.

This report provides a side-by-side comparison of three bills and two proposals, each of which addresses oil and gas development in the outer continental shelf (OCS). None of the bills has passed its respective chamber. One of the proposals, H.R. 6899, the "Comprehensive American Energy Security and Taxpayer Protection Act," is expected to come to the House floor the week of September 15, 2008. The moratoria on oil and gas leasing in much of the OCS has become a major issue in Congress and also in the Presidential campaign. This report describes the background of OCS leasing and the various positions taken by proponents and opponents of leasing. It then compares the provisions of three bills that have been introduced with reported summaries of the House proposal and the Senate proposal, the "New Energy Reform Act of 2008." On September 16, 2008, the House passed H.R. 6899 by a vote of 236-189 and defeated an alternative bill, H.R. 6709, by a vote of 191-226.

More than 20 federal entities conduct water-related research and development and collect and disseminate water information and data. Whether coordination of federally funded water research would produce greater benefits for the nation is the policy question at the center of H.R. 1145 , the National Water Research and Development Initiative Act of 2009. According to a 2004 report by the National Research Council, Confronting the Nation's Water Problems: The Role of Research , real levels of total federal spending on water research have remained constant at $700 million annually (in 2000 dollars) since the mid-1970s. The report notes, however, that water research funding has not paralleled the growth in federal budget outlays or in gross domestic product. Also, the topical balance of the federal research portfolio has shifted to a greater focus on water quality and away from research on water supply augmentation and conservation and social science topics (e.g., water demand, water law, and institutional topics). While other legislation addresses changing specific water research programs and activities at individual agencies, H.R. 1145 would require coordination of the federal water research that is spread across more than 20 federal entities. H.R. 1145 would formally establish a federal interagency committee to coordinate federal water research. The interagency committee, with input from an advisory committee, would develop a four-year plan for priority federal research topics, and the President would annually report to Congress on progress on the plan. The bill also would establish a National Water Initiative Coordination Office that would function as a clearinghouse for technical and programmatic information, support the interagency committee, and disseminate the findings and recommendations of the interagency committee. The bill would essentially codify the Subcommittee on Water Availability and Quality (SWAQ), which was not created by statute, that has been operating since 2003. For more information on SWAQ, which is located within the White House Office of Science and Technology Policy (OSTP), see the later section of this report on " Water Research Coordination and Strategy ." As the primary federal science agency for water resource information, the U.S. Geological Survey (USGS) monitors the quantity and quality of water in rivers and aquifers, assesses the sources and fate of contaminants in aquatic systems, develops tools to improve the application of hydrologic information, and disseminates products of its efforts to the public. The National Weather Service in the Department of Commerce and the Natural Resource Conservation Service in the U.S. Department of Agriculture (USDA) combine their data with USGS data to forecast water supplies and floods. Many other federal agencies collect water data and conduct monitoring in support of their own missions and projects. For example, as part of its reservoir operations in support of its navigation and flood damage reduction missions in many basins, the U.S. Army Corps of Engineers (Corps) in the Department of Defense collects runoff data and monitors water quality and other environmental health parameters in order to comply with federal environmental statutes. Technological advances, events, and climate change also are increasing the role of some agencies, which previously were less engaged, in performing and using water resources research. For example, data produced by the National Aeronautics and Space Administration (NASA) is increasingly informing analyses of domestic and international water resources. Similarly, National Oceanic and Atmospheric Administration (NOAA) data and modeling is increasingly used in the analyses of potential water resource implications of a changing climate. For water quantity technology research and development activities, programs of the Department of the Interior's Bureau of Reclamation support much of the federal desalination and water reuse research, while the Corps performs more infrastructure and engineering research. The Department of Energy and its labs conduct research that also has water applications, such as innovative desalination and membrane technologies. Water quantity management and control research is also conducted by USDA agencies, and smaller amounts through the National Science Foundation (NSF), USGS, and NOAA. The U.S Environmental Protection Agency (EPA), agencies in the USDA, and the USGS conduct much of the federal research related to water quality. The National Science Foundation (NSF) and the USGS through its Water Resource Research Institutes in each state support a wide array of technical water quality, quantity, and social science research. Because of the integrative nature of ecosystem restoration research, many federal agencies support it, including Reclamation, the Corps, USGS, EPA, USDA agencies, and the NSF. According to the aforementioned 2004 NRC report, funding for "water supply augmentation and conservation" research and "water quantity management and control" research by federal agencies totaled, respectively, $14.5 million and $45.6 million in FY2000. In the past, the federal government has invested more in these areas; most notably, in the late 1960s, federal research in water supply augmentation, particularly research on desalination, was funded annually at approximately $120 million (in 2000 dollars). While water supply research declined over time, other research areas have increased in prominence; for example, federal research funding for water quality management and protection totaled $191.2 million in FY2000. According to the 2004 NRC report, "the topical balance of the federal water resources research portfolio has changed ... such that the present balance appears to be inconsistent with current national priorities." The report continues: Research on social science topics such as water demand, water law, and other institutional topics, as well as on water supply augmentation and conservation, now garners a significantly smaller proportion of total water research funding than it did 30 years ago.... [I]t becomes clear that significant new investment must be made in water use and institutional research topics if the national water agenda is to be addressed adequately. (p. 9) H.R. 1145 lists research outcomes to target in the proposed four-year plan. As passed by the House, the bill lists 25 research outcomes. These encompass data and evaluation goals (e.g., a water census, use assessment, regional assessment, rural assessment, energy-water assessment); classes of technologies (e.g., water monitoring, treatment and efficiency to increase supplies, information technologies); science improvements (e.g., hydrologic prediction, ecosystem services and needs); and social sciences analyses and conflict resolution development. In trying to achieve the research outcomes listed in H.R. 1145 , implementation of the plan that the bill envisions could be seen as limiting agencies' discretion in how to prioritize research funding in their mission areas and reducing the agencies' flexibility to respond to evolving research needs. Whether or not reduced discretion is desirable depends on stakeholders' perspectives and opinions on the current makeup of the federal research portfolio. Groups that support the existing level of research on topics not addressed in the research outcomes in H.R. 1145 may be concerned that if additional water research funds are not forthcoming, then enactment and implementation of H.R. 1145 may reduce research on these topics. A counter-argument is that by establishing priorities for the federal water research portfolio, limited federal funds would be focused on achieving broader national priorities. In addition to supporting a shift in the federal water research portfolio, the NRC report stated: "Coordination of the water resources research enterprise is needed to make deliberative judgments about the allocation of funds and scope of research, to minimize duplication where appropriate, to present Congress and the public with a coherent strategy for federal investment, and to facilitate the large-scale multiagency research efforts" (p. 11). Starting in 2003, the Subcommittee on Water Availability and Quality revived a dormant role of coordinating water research for the National Science and Technology Council (NSTC). SWAQ began operating within the Office of Science and Technology Policy (OSTP) as part of the NSTC. SWQ has functioned as a forum for federal agencies to share information on their respective research and data programs. (See the Appendix for the membership of SWAQ.) H.R. 1145 would codify SWAQ into a formal interagency committee, with an OSTP chair. A September 2007 report by SWAQ, A Strategy for Fed e ral Science and Technology to Support Water Availability and Quality in the United States , stated: "Given the importance of sound water management to the Nation's well-being, it is appropriate for the Federal government to play a significant role in providing information to all on the status of water resources and to provide the needed research and technology that can be used by all to make informed water management decisions" (p. 7). H.R. 1145 attempts to coordinate federal water research in order for the federal government to more effectively perform the role described in the SWAQ report. While the NRC stated the benefits of a coordinated research program, a concern is that the increased focus on the outcomes identified in the bill might result in a shift away from other research areas that are central in the roles of some agencies. For example, much of the EPA's research is in support of its regulatory role; that is, it has performed little treatment technology research and development in recent years. Some stakeholders may be concerned that, unless additional funds are made available for water research, enactment of H.R. 1145 may result in a shift in research funding away from regulatory-focused research, toward more technology research and development. The broadening of the desired outcomes in H.R. 1145 during House Science Committee markup to include water quality provisions reflects that concern and also interest in furthering water quality research. Whether some of the bill's provisions as passed by the House call for research, programs, and studies that may partially duplicate current efforts is another concern. For example, H.R. 1145 would require the EPA to establish a wastewater and stormwater reuse technology demonstration program; the Bureau of Reclamation has an ongoing research and demonstration program of some wastewater reuse technologies. H.R. 1145 would not increase the authorized funding levels for federal research activities. Instead, it is focused on improving coordination in setting agency research agendas, increasing transparency in water research budgeting, and reporting on progress toward the research outcomes specified in the bill. Some stakeholders may question whether additional transparency and information alone (without increased funding) would result in significant changes to the status quo. Membership in SWAQ has represented the following departments, agencies, and offices: Department of Agriculture Agricultural Research Service Cooperative State Research, Education, and Extension Service Economic Research Service Forest Service Natural Resources Conservation Service Department of Commerce National Oceanic and Atmospheric Administration, Office of Atmospheric Research National Oceanic and Atmospheric Administration, National Weather Service Department of Defense U.S. Army Corps of Engineers Department of the Interior Bureau of Reclamation Fish and Wildlife Service National Park Service U.S. Geological Survey Department of Energy Office of Energy Efficiency and Renewable Energy Office of Science Department of State Environmental Protection Agency Office of Research and Development Office of Water National Aeronautics and Space Administration National Science Foundation Tennessee Valley Authority Executive O ffice of the President Office of Management and Budget Office of Science and Technology Policy

H.R. 1145, the National Water Research and Development Initiative Act of 2009, would formally establish a federal interagency committee to coordinate federal water research. Federal water research currently averages roughly $700 million annually. The proposed interagency committee, with input from an advisory committee, would develop a four-year plan for priority federal research topics, then require the President to annually report to Congress on progress in achieving the plan's research outcomes. A version of the committee, the Subcommittee on Water Availability and Quality (SWAQ), which was not created by statute, has been operating since 2003 within the White House Office of Science and Technology Policy (OSTP) as part of the National Science and Technology Council (NSTC). The bill also would establish a National Water Initiative Coordination Office that would function as a clearinghouse for technical and programmatic information, support the interagency committee, and disseminate the findings and recommendations of the interagency committee. As passed by the House, H.R. 1145 would authorize $10 million over five years for improving coordination of water resources research and related outreach activities with the public and research institutions. The bill is focused on improving coordination in the establishment of agency research agendas, increasing the transparency of water research budgeting, and reporting on progress toward research outcomes specified in the bill. H.R. 1145 would not increase the authorized funding levels for performing federal research activities. Water research is conducted in numerous federal agencies because water plays many different roles in the economy, public health, and ecosystems. Many of the issues facing the nation's water resources are cross-cutting, such as climate change and the energy-water nexus (e.g., the role of water in producing fuels and electricity). Drivers for improved coordination include an interest in more effectively addressing these complicated water topics, as well as interest in avoiding duplication, facilitating exchange of results, and having a more focused research strategy. Technological advances, events, and climate change also are increasing the role of some agencies, which previously were less engaged, in performing and using water resources research. A concern with more coordination is that, if enacted, the bill may result in a shift in research funding away from some current research topics. Specifically, some stakeholders may be concerned that, unless additional funds are made available for water research, the focus on technology and water supply in H.R. 1145 may move research funds away from water quality and research supporting agencies' regulatory roles. During the House Science Committee markup, research outcomes for the plan were added that address water quality topics. Another concern is whether some of the bill's provisions as passed by the House call for research, programs, or studies that may partially duplicate current research. Whether a more effective portfolio of water research can be achieved through the transparency and information pursued in H.R. 1145 (without increased research and demonstration funding) remains uncertain.

Intellectual property has a broad range—anywhere from inventions, to technological enhancements, to methods of doing business, to computer programs, to literary and musical works and architectural drawings. Government-sponsored research has an equally broad range—from research in mathematical and physical sciences, computer and information sciences, biological and environmental sciences, and medical sciences, to research supporting military programs of the Department of Defense (DOD) and the atomic energy defense activity of the Department of Energy. The objective of some of this research, for example, cancer research, is to gain more comprehensive knowledge or understanding of the subject under study, without specific application. According to the National Science Foundation, about 3 percent of DOD’s R&D funding and 41 percent of R&D funding by other agencies goes toward this type of study. Other research is directed at either gaining knowledge to meet a specific need or to develop specific materials, devices, or systems—such as a weapon system or the International Space Station. About 97 percent of DOD’s R&D dollars and 55 percent of R&D dollars from other agencies supports applied research. The primary vehicles for funding research efforts are grants, cooperative agreements, and contracts. Today, our focus is largely on intellectual property rights that the government acquires through research done under contracts, which primarily fund applied research. As illustrated in the figure below, the R&D landscape has changed considerably over the past several decades. While the federal government had once been the main provider of the nation’s R&D funds, accounting for 54 percent in 1953 and as much as 67 percent in 1964, as of 2000, its share amounted to 26 percent, or about $70 billion, according to the National Science Foundation. Patents, trademarks, copyrights, and trade secrets protect intellectual property. Only the federal government issues patents and registers copyrights, while trademarks may also be registered by states that have their own registration laws. State law governs trade secrets. Anyone who uses the intellectual property of another without proper authorization is said to have ‘infringed’ the property. Traditionally, an intellectual property owner’s remedy for such unauthorized use would be a lawsuit for injunctive or monetary relief. Prior to 1980, the government generally retained title to any inventions created under federal research grants and contracts, although the specific policies varied among agencies. Over time, this policy increasingly became a source of dissatisfaction. First, there was a general belief that the results of government-owned research were not being made available to those who could use them. Second, advances attributable to university-based research funded by the government were not pursued because the universities had little incentive to seek use for inventions to which the government held title. Finally, the maze of rules and regulations and the lack of a uniform policy for government-owned inventions often frustrated those who did seek to use the research. The Bayh-Dole Act was passed in 1980 to address these concerns by creating a uniform patent policy for inventions resulting from federally sponsored research and development agreements. The act applied to small businesses, universities, and other nonprofit organizations and generally gave them the right to retain title to and profit from their inventions, provided they adhered to certain requirements. The government retained nonexclusive, nontransferable, irrevocable, paid-up (royalty-free) licenses to use the inventions. A presidential memorandum issued to the executive branch agencies on February 18, 1983, extended the Bayh-Dole Act to large businesses. It extended the patent policy of Bayh-Dole to any invention made in the performance of federally funded research and development contracts, grants, and cooperative agreements to the extent permitted by law. On April 10, 1987, the president issued Executive Order 12591, which, among other things, required executive agencies to promote commercialization in accordance with the 1983 presidential memorandum. Below are highlights of requirements related to the Bayh-Dole Act and Executive Order 12591. In addition to the traditional categories of intellectual property protections, government procurement regulations provide a layer of rights and obligations known as “data rights.” These regulations describe the rights that the government may obtain to two types of data, computer software and technical data, delivered or produced under a government contract. These rights may include permission to use, reproduce, disclose, modify, adapt, or disseminate the technical data. A key feature of the DOD framework for data rights, and one implicit in the civilian agency framework, is that the extent of the government’s rights is related to the degree of funding the government is providing. In some cases, the government may decide that it is in its best interest to forgo rights to technical data. For example, if the government wants to minimize its costs of having supercomputers developed exclusively for government use, it could waive its rights in order to spur commercial development. At the same time, situations arise where the government has a strong interest in obtaining and retaining data rights—either unlimited rights or government-purpose rights. These include long-term projects, such as cleanup at nuclear weapon sites, where the government may want to avoid disrupting the program if a change in contractors occurs. These also include projects that affect safety and security. For example, the Transportation Security Administration recently purchased the data rights for an explosives detection system manufactured by one company. The agency believed data rights were necessary in order to expand production of these machines and meet the congressionally mandated deadline for creating an explosives detection capability at airports. We contacted multiple agencies responsible for $191 billion or 88 percent of federal procurements in fiscal year 2001. At these agencies, we met with those officials responsible for procurement, management and oversight of contractor-derived intellectual property. We also analyzed agency and industry studies as well as agency guidance and requirements. In addition, we met with representatives from (1) commercial enterprises that either contract with the government or develop technologies of interest to the government as well as (2) associations representing commercial firms doing business with the government. Both industry and agency officials covered by our review had concerns about the effectiveness and the efficiency of successfully negotiating contracts with intellectual property issues. These concerns include a lack of good planning and expertise within the government and industry’s apprehensions over certain government rights to data and inventions as well as the government’s ability to protect proprietary data. Industry officials were particularly concerned about the span of rights the government wants over technical data. Industry officials asserted that rather than making a careful assessment of its needs, some contracting officers wanted to operate in a “comfort zone” by asking for unlimited rights to data, even when the research built on existing company technology. This was disconcerting to potential contractors because it meant that the government could give data to anyone it chose, including potential competitors. Some companies mentioned specific instances in which they delayed or declined participation in government contracts. These situations occurred when companies believed their core technologies would be at risk and the benefits from working with the government did not outweigh the risk of losing their rights to these technologies. Most agency officials said that intellectual property issues were at times hotly contested and could become the subject of intense negotiations. While agency officials indicated that problems related to intellectual property rights may have limited access to particular companies, they did not raise or cite specific instances where the agency was unable to acquire needed technology. In some situations, agencies exerted flexibility to overcome particular concerns and keep industry engaged in research efforts. DOD officials viewed intellectual property requirements and the manner in which these requirements are implemented as significantly affecting their ability to attract leading technology firms to DOD research and development activities. This concerns DOD, which believes it needs to engage leading firms in joint research efforts in order to promote development of commercial technologies that meet military needs. Last, agency officials, particularly DOD officials, voiced concerns about having access to technical data necessary to support and maintain systems over their useful life as well as the ability to procure some systems competitively, especially smaller systems. These officials stated that if they did not obtain sufficient data rights, they could not use competitive approaches to acquire support functions or additional units. We have reported on the difficulties that occurred when appropriate data rights were not obtained. In one instance, when the Army tried to procure data rights later in the system’s life cycle, the manufacturer’s price for the data was $100 million—almost as much as the entire program cost ($120 million) from 1996 through 2001. We have recommended, among other things, that DOD place greater emphasis on obtaining priced options for the purchase of technical data at the time proposals for new weapon systems are being considered—when the government’s negotiating leverage is the greatest. Agency officials we spoke with generally agreed that some actions could be taken to address concerns about limited awareness of flexibilities and expertise without any legislative changes. Specifically, agencies could promote greater use of the flexibilities already available to them. DOD, for example, is advocating greater use of its “other transaction authority.” This authority enables DOD to enter into agreements that are generally not subject to the federal laws and regulations governing standard contracts, grants, and cooperative agreements. By using this authority, where appropriate, DOD can increase its flexibility in negotiating intellectual property provisions and attract commercial firms that traditionally did not perform research for the government. A second example of agency flexibility to address industry concerns over the allocation of rights under the Bayh-Dole Act is a form of waiver, known as a determination of exceptional circumstances. This waiver has been used, for example, to work out intellectual property rights between pharmaceutical companies and universities or other firms. In these cases, pharmaceutical companies provide compounds that NIH tests to identify whether these compounds are effective in treating additional diseases or ailments. Universities and other commercial firms perform these tests. The exceptional circumstances determination allows the pharmaceutical companies to retain the intellectual property rights to any discoveries coming out of these tests, rather than the performer of the tests. An NIH official explained that a determination of exceptional circumstances could be made in these cases because the program would not exist in the absence of such a determination. Agencies could also strengthen advance planning on data requirements. For example, attention needs to be paid to what types of maintenance or support strategies will be pursued and what data rights are needed to support alternative strategies. Also, consideration could be given to obtaining priced options for the purchase of data rights that may be needed later.

Improperly defined intellectual property rights in a government contract can result in the loss of an entity's critical assets or limit the development of applications critical to public health or safety. Conversely, successful contracts can spur economic development, innovation, and growth, and dramatically improve the quality of delivered goods and services. Contracting for intellectual property rights is difficult. The stakes are high, and negotiating positions are frequently ill-defined. Moreover, the concerns raised must be tempered with the understanding that government contracting can be challenging even without the complexities of intellectual property rights. Further, contractors often have reasons for not wanting to contract with the government, including concerns over profitability, capacity, accounting and administrative requirements, and opportunity costs. Within the commercial sector, companies identified a number of specific intellectual property concerns that affected their willingness to contract with the government. These included perceived poor definitions of what technical data is needed by the government, issues with the government's ability to protect proprietary data adequately, and unwillingness on the part of government officials to exercise the flexibilities available concerning intellectual property rights. Some of these concerns were on perception rather than experience, but, according to company officials, they nevertheless influence decisions not to seek contracts or collaborate with federal government entities. Agency officials shared many of these concerns. Poor upfront planning and limited experience/expertise among the federal contracting workforce were cited as impediments. Although agency officials indicated that intellectual property rights problems may have limited access to particular companies, they did not cite specific instances where the agency was unable to acquire needed technology. Agency officials said that improved training and awareness of the flexibility already in place as well as a better definition of data needs on individual contracts would improve the situation.

Campaign-related activity by entities commonly referred to as 527 groups or 527s has increased over the past several election cycles. These groups are a subset of the political organizations that qualify for tax-exempt status under Section 527 of the Internal Revenue Code (IRC). Beginning in earnest in the late 1990s, 527 groups have funded broadcast communications that discuss the position of federal candidates on public policy issues, but carefully avoid expressly advocating for or against a candidate. Although these "issue advocacy" communications are widely viewed as intending to influence elections, some argue that they are not regulated—and cannot be constitutionally regulated—by the Federal Election Campaign Act (FECA) due to an interpretation of the Supreme Court's campaign finance law jurisprudence only permitting regulation of communications expressly advocating for the election or defeat of a clearly identified candidate. It was also in the late 1990s that the Internal Revenue Service (IRS) issued several private rulings indicating that some issue advocacy activities qualify as "exempt function" activities under IRC § 527, thereby permitting these groups to qualify for § 527 status. As a result, 527 groups have been able to utilize this "regulatory gap" between the IRC and FECA: while their issue advocacy and campaign activities are sufficient to qualify for § 527 tax-exempt treatment, arguably, they are not sufficiently election-related to trigger regulation under FECA. By the 2000 election cycle, as the campaign activity of 527s continued to grow, they were often referred to as "stealth PACs" because they were not reporting to the Federal Election Commission (FEC), and only had contact with the IRS if they had to file a tax return. In response, Congress amended IRC § 527 in 2000 and 2002 to generally require that most § 527 political organizations report information to the IRS, the FEC, or a state. Section 527 political organizations that are not FEC-regulated political committees are generally required to report to the IRS their existence within 24 hours of formation and periodically disclose information on contributors who have given at least $200 during the year and expenditures made to persons who have received at least $500 during the year, in addition to annual information and tax return requirements. There are exceptions for small organizations, state and local candidate political committees, and state and local political party committees, among others. Following enactment of the Bipartisan Campaign Reform Act of 2002 (BCRA), which amended FECA and eliminated the flow of unregulated money to political parties, the prominence of 527 groups continued to increase. As unregulated political party soft money was no longer available, there was greater reliance on 527 groups to help candidates compete in increasingly expensive election campaigns. FECA regulates "political committees," which it defines to include "any committee, club, association, or other group of persons which receives contributions aggregating in excess of $1,000 during a calendar year or which makes expenditures aggregating in excess of $1,000 during a calendar year." In addition, FECA defines both "contribution" and "expenditure" as monies or anything of value "for the purpose of influencing any election for Federal office." Under FECA, a registered political committee is required to raise and spend funds subject to FECA contribution limits, source restrictions, and disclosure requirements. IRC § 527 provides beneficial tax treatment to qualifying "political organizations." These are any organization, including a party, committee, association, or fund, that is organized and operated primarily to directly or indirectly accept contributions and/or make expenditures for an "exempt function." An "exempt function" is the "influencing or attempting to influence the selection, nomination, election, or appointment of any individual to any Federal, State, or local public office or office in a political organization, or the election of Presidential or Vice-Presidential electors.... " It is immediately apparent that the IRC definition of "political organization" is broader than that of FECA's definition of "political committee" because it includes organizations intending to influence state and local campaigns and non-elective offices. With respect to federal election activities, the two terms, based purely on their statutory definitions, nonetheless appear to encompass the same types of groups. However, there is a disconnect between them that stems from the Supreme Court's campaign finance jurisprudence establishing the constitutional limitations on Congress's ability to regulate election activity. In order to preserve FECA's regulation of contributions and expenditures against invalidation for constitutional vagueness, the Supreme Court in its 1976 landmark decision, Buckley v. Valeo, construed the terms "contribution" and "expenditure" to encompass only funds donated for or spent for express advocacy (that is, voter communications using explicit phrases and words such as "vote for," "vote against," "elect," and "defeat"). Likewise, the Court construed the term "political committee" to include only "organizations that are under the control of a candidate or the major purpose of which is the nomination or election of a candidate." In so doing, the Buckley Court established the "major purpose test," which determines whether or not an organization, if it raises more than $1,000 in "contributions" or makes more than $1,000 in "expenditures," is subject to regulation under FECA as a "political committee." Neither FECA nor the Supreme Court, however, has yet defined precisely how to ascertain the major purpose of an organization. Indeed, how the major purpose test works, and to what groups it applies, are at the heart of a debate concerning the circumstances under which non-party organizations and non-candidate committees can constitutionally be considered FECA-regulated "political committees." Some observers proffer that it is relevant to examine an organization's activities beyond express advocacy to ascertain its major purpose, while others maintain that Supreme Court precedent still limits FECA regulation through the designation of "political committee" status to only those organizations engaging in express advocacy. These same constitutional concerns do not arise under the IRC. In other words, the "express advocacy" and "major purpose" tests developed under the Supreme Court's campaign finance jurisprudence do not apply in determining whether an entity is a § 527 political organization under the tax laws. Thus, an "exempt function" does not necessarily involve explicitly advocating for or against a candidate. In 2004, after considering but not adopting several approaches for classifying 527 groups as political committees under FECA, the FEC adopted a regulation relevant to political committees. The rule provides that political groups are regulated under FECA based on whether they conduct fundraising with solicitations that include appeals to "support or oppose" the election of a federal candidate. Funds or anything of value collected as a result of such solicitations are considered a contribution under FECA. Therefore, any organization with $1,000 or more in such contributions is subject to FECA regulation. Notably, it was reported that the FEC acknowledged that the new rule failed to address the key question of, if and when, based on their solicitation messages, nonparty groups—such as 527s—are required to register with the FEC as political committees. In 2007, the FEC issued a "Supplemental Explanation and Justification" to more fully explain the basis for its 2004 rule and the reasons it declined to revise the regulatory definition of "political committee" in such a manner to specifically regulate 527 groups. According to the FEC, § 527 status is insufficient evidence alone to determine whether an organization is a political committee under FECA. It found that an organization's § 527 status does not necessarily satisfy FECA and the Supreme Court's contribution, expenditure, and major purpose requirements. In addition, the FEC determined that the IRS's requirements for granting tax exemptions under § 527 are based on "a different and broader set of criteria" than is used by the FEC in determining political committee status. Pursuant to FECA and Supreme Court precedent, the FEC stated that it will continue to determine political committee status based on whether an organization received contributions or made expenditures over $1,000 in a calendar year and whether the organization's "major purpose" was campaign activity. To that end, the FEC noted that it will consider whether any of the organization's solicitations resulted in contributions "because the solicitations indicated that any portion of the funds received would be used to support or oppose the election of a clearly identified Federal candidate," and will analyze whether any of the organization's expenditures for communications, made independently of a candidate, "constituted express advocacy" under its regulations. The FEC concluded that its case-by-case enforcement actions and guidance—provided through publicly available advisory opinions and filings in civil enforcement cases—constitute a "very effective mechanism for regulating organizations that should be registered as political committees under FECA, regardless of that organization's tax status." In its first significant 527 enforcement action, in late 2006, the FEC imposed civil penalties totaling approximately $630,000 on three 527 organizations that had been active during the 2004 election cycle: MoveOn.org Voter Fund, the League of Conservation Voters 527, and the Swiftboat Veterans and POWs for Truth, finding that they were required to register and be regulated as political committees under FECA. Proponents of 527 regulation criticized the ruling as "too little, too late," while the anti-regulatory community argued that the FEC enforcement action was an unconstitutional infringement on First Amendment rights of speech and association. Because of this tension, this may be an area of law that is ripe for litigation. In the 110 th Congress, the 527 Reform Act of 2007 ( H.R. 420 and S. 463 ) would have amended FECA to define "political committee" to include any committee, club, association, or group of persons that has given notice to the IRS of its status as a § 527 political organization. Exceptions would have existed for organizations that are not required to give the IRS such notification (i.e., small organizations, and state and local candidate and party committees); are exclusively for paying certain office-related expenses or expenses of qualifying newsletter funds; consist solely of state or local candidates or officeholders so long as the organization refers only to non-federal candidates or applicable state or local issues in all of its voter drive activities and does not refer to a federal candidate or a political party in any such activities; or whose election or nomination activities relate exclusively to elections where no federal candidate is on the ballot, to non-federal elections or non-elected offices, or state or local ballot issues. No exception would exist for an organization that spends more than $1,000 for either (1) public communications that promote, support, attack, or oppose a clearly identified federal candidate within one year of the general election in which that candidate is seeking office or (2) voter drive efforts unless the effort meets strict criteria ensuring the group and its efforts are involved in non-federal election activities. In addition, the act would have established allocation and funding rules for certain expenses relating to federal and non-federal activities by political committees. It expressly provided that no section of the act would affect FEC regulations, the definition of political organization, or the determination as to whether a tax-exempt IRC § 501(c) organization is a political committee. If an action is brought for declaratory or injunctive relief to challenge its constitutionality, the act would have provided for the action to be heard by a three-judge court convened by the U.S. District Court for the District of Columbia, with direct appeal to the U.S. Supreme Court; would have provided for expedited judicial review; and would have allowed any Member of Congress to bring or intervene in such a case. If the 527 Reform Act had been enacted, it is likely that its constitutionality would have been challenged. By requiring most 527s to register with the FEC as "political committees," such groups would have been required to use only federally regulated hard money contributions to fund advertisements that promote or attack federal candidates, without regard to whether the communications expressly advocate election or defeat of a clearly identified candidate. As some interpret Supreme Court precedent to limit regulation through the designation of "political committee" status to only those organizations engaging in express advocacy, it is likely that litigation would have occurred. Legislation regulating 527 organizations has not yet been introduced in the 111 th Congress.

During recent election cycles, there has been controversy regarding the increased campaign-related activity of 527 groups and to what extent they are regulated under federal law. The controversy stems from the intersection between the Federal Election Campaign Act (FECA), which regulates "political committees," and Section 527 of the Internal Revenue Code (IRC), which provides tax-exempt status to "political organizations." Some groups that qualify for beneficial tax treatment as "political organizations" seemingly intend to influence federal elections in ways that may place them outside the FECA definition of "political committee." This report refers to this subset of Section 527 political organizations as 527 groups or 527s. Considerable debate has been generated about the extent to which FECA currently regulates 527 groups as "political committees" and the constitutional parameters of such regulation. In the 110th Congress, the 527 Reform Act of 2007 (H.R. 420 and S. 463) would have amended FECA to generally treat all Section 527 political organizations active in federal elections as "political committees." Similar legislation has not yet been introduced in the 111th Congress.

CMS’s quality bonus payment demonstration includes several key changes from the quality bonus system established by PPACA. Specifically, PPACA required CMS to provide quality bonus payments to MA plans that achieve 4, 4.5, or 5 stars on a 5-star quality rating system developed by CMS. In contrast, the demonstration significantly increases the number of plans eligible for a bonus, enlarges the size of payments for some plans, and accelerates payment phase-in. In announcing the demonstration, CMS stated that the demonstration’s research goal is to test whether scaling bonus payments to the number of stars MA plans receive under the quality rating system leads to larger and faster annual quality improvement for plans at various star rating levels compared with what would have occurred under PPACA. In March 2012, we reported that CMS’s Office of the Actuary (OACT) estimated that the demonstration would cost $8.35 billion over 10 years— an amount that is at least seven times larger than that of any other Medicare demonstration conducted since 1995 and greater than the combined budgetary effect of all those demonstrations. The cost is largely for quality bonus payments more generous than those prescribed in PPACA. Plans are required to use these payments to provide their enrollees enhanced benefits, lower premiums, or reduced cost-sharing.We also found that the additional Medicare spending will mainly benefit average-performing plans—those receiving 3 and 3.5-star ratings—and that about 90 percent of MA enrollees in 2012 and 2013 would be in plans eligible for a bonus payment. As we noted in our report, while a reduction in MA payments was projected to occur as a result of PPACA’s payment reforms, OACT estimated that the demonstration would offset more than 70 percent of these payment reductions projected for 2012 alone and more than one-third of the reductions for 2012 through 2014. Our March 2012 report also identified several shortcomings of the demonstration’s design that preclude a credible evaluation of its effectiveness in achieving CMS’s stated research goal. Notably, the bonus payments are based largely on plan performance that predates the demonstration. In particular, all of the performance data used to determine the 2012 bonus payments and nearly all of the data used to determine the 2013 bonus payments were collected before the demonstration’s final specifications were published. In addition, under the demonstration’s design, the bonus percentages are not continuously scaled. For example, in 2014, plans with 4, 4.5, and 5 stars will all receive the same bonus percentage. Finally, since all plans may participate in the demonstration, there is no adequate comparison group for determining whether the demonstration’s bonus structure provided better incentives for improving quality than PPACA’s bonus structure. We therefore concluded that it is unlikely that the demonstration will produce meaningful results. Given the findings from our program review of the demonstration’s features, we recommended in our March 2012 report that the Secretary of Health and Human Services (HHS), who heads the agency of which CMS is a part, cancel the demonstration and allow the MA quality bonus payment system authorized by PPACA to take effect. We further recommended that if that bonus payment system does not adequately promote quality improvement, HHS should determine ways to modify it, which could include conducting an appropriately designed demonstration. HHS did not agree. It stated that, in contrast to PPACA, the demonstration establishes immediate incentives for quality improvement throughout the range of quality ratings. Regarding their proposed evaluation of the demonstration, HHS did not consider the timing of data collection to be a problem and said that the comparison group it would use would enable them to determine the demonstration’s impact. We continue to believe that, given the problems we cited, the demonstration should be canceled. In addition to our March 2012 report, we sent a letter on July 11, 2012, to HHS regarding CMS’s authority to conduct the demonstration. In our letter, we stated that CMS had not established that the demonstration met the criteria set forth in the Social Security Amendments of 1967, as amended—the statute under which CMS is conducting the demonstration. Specifically, the statute authorizes the Secretary to conduct demonstration projects to determine whether changes in payment methods would increase the efficiency and economy of Medicare services through the creation of additional incentives, without adversely affecting quality. However, features of the demonstration, particularly those regarding the timing of data collection for plan star ratings, call into question whether the demonstration includes additional incentives to increase the efficiency and economy of Medicare services and raise concerns about the agency’s ability to determine whether the payment changes under the demonstration result in increased efficiency and economy compared to the payment methods in place under PPACA. In 2003, Congress authorized the establishment of three types of MA coordinated care plans for individuals with special needs: dual-eligible special needs plans (D-SNP), which are exclusively for beneficiaries eligible for both Medicare and Medicaid; institutional special needs plans for individuals in nursing homes, and chronic condition special needs plans for individuals with severe or disabling chronic conditions. Of the three types of SNPs, D-SNPs are by far the most common, accounting for about 80 percent of SNP enrollment as of September 2012. The approximately 9 million dual-eligible beneficiaries are particularly costly to both Medicare and Medicaid in part because they are more likely than other Medicare beneficiaries to be disabled, report poor health status, and have limitations in activities of daily living. Furthermore, their care must be coordinated across Medicare and Medicaid, and each program has its own set of covered services and requirements. In September 2012, we reported that the 2012 D-SNP contracts with state Medicaid agencies that we reviewed varied considerably in their provisions for integration of benefits. Two-thirds of the 124 contracts between D-SNPs and state Medicaid agencies that were submitted to CMS for 2012 did not expressly provide for the integration of any benefits. To carry out the requirement in the Medicare Improvements for Patients and Providers Act of 2008 that each D-SNP contract provide or arrange CMS guidance required that, at a for Medicaid benefits to be provided,minimum, contracts list the Medicaid benefits that dual-eligible beneficiaries could receive directly from the state Medicaid agency or the state’s Medicaid managed care contractor(s). Like other MA plans, D-SNPs must cover all the benefits of fee-for- service, with the exception of hospice, and may offer supplemental benefits, such as vision and dental care. In addition, they must develop a model of care that describes their approach to caring for their enrollees. The model of care describes how the plan will address 11 elements, including tracking measureable goals, performing health risk assessments, providing care management for the most vulnerable beneficiaries, and measuring plan performance and outcomes; and D-SNPs must offer the benefits that allow them to actualize these elements. In our September 2012 report, we examined the supplemental benefits offered by D-SNPs and found that D-SNPs provided fewer supplemental benefits than other MA plans. However, the individual services covered under vision and dental benefits were generally more comprehensive than in other MA plans. Despite offering these supplemental benefits somewhat less often than other MA plans, D-SNPs allocated a larger percentage of their rebates—additional Medicare payments received by many plans—to these benefits than other MA plans. They were able to do so largely because they allocated a smaller percentage of rebates to reducing cost-sharing. We could not report on the extent to which benefits specific to D-SNPs and described in the model of care were actually provided to beneficiaries because CMS did not collect the information. For the 15 models of care we reviewed, most did not report—and were not required by CMS to report—the number of beneficiaries who received a risk assessment, for example, or the number or proportion of beneficiaries who would be targeted as “most vulnerable.” However, of the models of care we reviewed, past completion rates for risk assessment varied widely among the 4 plans that provided this information. None of the models of care we reviewed reported the number of beneficiaries that were expected to receive add-on services, such as social support services, that were intended for the most-vulnerable beneficiaries. We found that plans do not use standardized performance measures in their models of care, limiting the amount of comparable information available to CMS. Although the D-SNPs are required to report how they intend to evaluate their performance and measure outcomes, CMS does not stipulate the use of standard outcome or performance measures, making it difficult to use any data it might collect to compare D-SNPs’ effectiveness or evaluate how well they have done in meeting their goals. Furthermore, without standard measures, it would not be possible for CMS to fully evaluate the relative performance of D-SNPs. We concluded that there was little evidence available on how well D-SNPs are meeting their goals of helping dual-eligible beneficiaries to navigate two different health care systems and receive services that meet their individual needs. Consequently, we recommended in our September 2012 report that CMS require D-SNPs to state explicitly in their models of care the extent of services they expect to provide, require D-SNPs to collect and report to CMS standard performance and outcome measures, systematically analyze these data and make the results routinely available to the public, and conduct an evaluation of the extent to which D-SNPs have provided sufficient and appropriate care to their enrollees. HHS agreed with our recommendations and in its comments on a draft of our report, said that it plans to obtain more information from D-SNPs. CMS is embarking on a new demonstration in up to 26 states with as many as 2 million beneficiaries to financially realign Medicare and Medicaid services so as to serve dual-eligible beneficiaries more effectively. CMS has approved one state demonstration— Massachusetts—and continues to work with other states. If CMS systematically evaluates D-SNP performance, it can use information from the evaluation to inform the implementation and reporting requirements of this major new initiative. In contrast to MA plans, which have a financial incentive to control their costs, a small number of Medicare private health plans—called cost plans—are paid on the basis of their reasonable costs incurred delivering Medicare-covered services. Medicare cost plans also differ structurally from MA plans in several ways. For example, cost plans, unlike MA plans, allow beneficiaries to disenroll at any time. Despite their enrollment only totaling under 3 percent of Medicare private health plan enrollment, industry representatives stated that cost plans fill a unique niche by providing a Medicare private health plan option in rural and other areas that traditionally have had few or no MA plans. Under current law, new cost contracts are not being entered into and contracts with existing cost plans cannot be extended or renewed after January 1, 2013 if sufficient MA competition exists in the service area. Additionally, in general, organizations that offer cost plans and MA plans in the same area must close their cost plan to new enrollment. plan offerings by eliminating potentially duplicative plans and those with low enrollment. As part of our 2009 report on cost plans we also described the concerns of officials from Medicare cost plans about converting to MA plans. We found that the most-common concerns cited by these officials from organizations that offered Medicare cost plans were potential future changes to MA payments that may then necessitate closing the plan, difficulty assuming financial risk given their small enrollment, and potential disruption to beneficiaries during the transition. For future contacts regarding this testimony, please call James Cosgrove at (202) 512-7114 or cosgrovej@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this statement. Other individuals who made key contributions include Phyllis Thorburn, Assistant Director; Alison Binkowski; Krister Friday; Gregory Giusto; and Eric Wedum. This is a work of the U.S. government and is not subject to copyright protection in the United States. The published product may be reproduced and distributed in its entirety without further permission from GAO. However, because this work may contain copyrighted images or other material, permission from the copyright holder may be necessary if you wish to reproduce this material separately.

As of August 2012, approximately 13.6 million Medicare beneficiaries were enrolled in MA plans or Medicare cost plans—two private health plan alternatives to the original Medicare fee-for-service program. This testimony discusses work GAO has done that may help inform the Congress as it examines the status of the MA program and the private health plans that serve Medicare beneficiaries. It is based on key background and findings from three previously issued GAO reports on (1) the MA quality bonus payment demonstration, (2) D-SNPs, and (3) Medicare cost plans. This information on cost plans was updated, based on information supplied by CMS, to reflect the status of cost plans in March 2012. In March 2012, GAO issued a report on the Centers for Medicare & Medicaid Services’ (CMS) Medicare Advantage (MA) quality bonus payment demonstration—a demonstration CMS initiated rather than implementing the quality bonus program established under the Patient Protection and Affordable Care Act (PPACA). Compared to the PPACA quality bonus program, CMS’s demonstration increases the number of plans eligible for a bonus, enlarges the size of payments for some plans, and accelerates payment phase-in. CMS stated that the demonstration’s research goal is to test whether scaling bonus payments to quality scores MA plans receive increases the speed and degree of annual quality improvements for plans compared with what would have occurred under PPACA. GAO reported that CMS’s Office of the Actuary estimated that the demonstration would cost $8.35 billion over 10 years—an amount greater than the combined budgetary impact of all Medicare demonstrations conducted since 1995. In addition, GAO also found several shortcomings of the demonstration design that preclude a credible evaluation of its effectiveness in achieving CMS’s stated research goal. In July 2012, GAO sent a letter to the Secretary of Health and Human Services (HHS), the head of the agency of which CMS is a part, stating that CMS had not established that its demonstration met the criteria in the Social Security Act of 1967, as amended, under which the demonstration is being performed. In September 2012, GAO issued a report on Medicare dual-eligible special needs plans (D-SNP), a type of MA plan exclusively for beneficiaries that are eligible for Medicare and Medicaid. Dual-eligible beneficiaries are costly to Medicare and Medicaid in part because they are more likely than other beneficiaries to be disabled, report poor health status, and have limitations in activities of daily living. GAO found that two-thirds of 2012 D-SNP contracts with state Medicaid agencies that it reviewed did not expressly provide for the integration of Medicare and Medicaid benefits. Additionally, GAO found that compared to other MA plans, D-SNPs provided fewer, but more comprehensive supplemental benefits, such as vision, and were less likely to use rebates—additional Medicare payments received by many MA plans—for reducing beneficiary cost-sharing. GAO could not report on the extent to which benefits specific to D-SNPs were actually provided to beneficiaries because CMS did not collect the information. GAO also found that plans did not use standardized performance measures, limiting the amount of comparable information available to CMS. In December 2009, GAO issued a report on Medicare cost plans, which, unlike MA plans, are paid based on their reasonable costs incurred delivering Medicare-covered services and allow beneficiaries to disenroll at any time. GAO found that the approximately 288,000 Medicare beneficiaries enrolled in cost plans as of June 2009 had multiple MA options available to them. GAO updated this work using March 2012 data and found that enrollment in cost plans had increased to approximately 392,000 and that 99 percent of Medicare beneficiaries enrolled in cost plans had at least one MA option available to them, although generally fewer options than in 2009. In a March 2012 report on the MA quality bonus payment demonstration, GAO recommended that HHS cancel the MA quality bonus demonstration. HHS did not concur with this recommendation. In a September 2012 report on D-SNPs, GAO recommended that D-SNPs improve their reporting of services provided to beneficiaries and that this information be made public. HHS agreed with these recommendations.

RS21948 -- The Director of National Intelligence and Intelligence Analysis Updated February 11, 2005 The fundamental responsibility of intelligence services is to provide information to support policymakers and military commanders. In reviewing theperformance of the U.S. Intelligence Community prior to the terrorist attacks of September 11, 2001, the 9/11Commission, the National Commissionon Terrorist Attacks Upon the United States, concluded that greater coordination of the nation's intelligence effortis required to enhance thecollection and analysis of information. Specifically, the 9/11 Commission recommended that a new position ofNational Intelligence Director (NID)be established to ensure greater inter-agency coordination. A number of legislative proposals were introduced in2004 to establish such an officeseparate from the Director of the Central Intelligence Agency (CIA). (1) The NID was envisioned by the 9/11 Commission as having a number of budgetary and managerial responsibilities. (2) In addition, the occupant of theposition would "retain the present DCI's role as the principal intelligence adviser to the president." (3) The Commission also envisioned that the NIDwho would "be confirmed by the Senate and would testify before Congress, would have a relatively small staff ofseveral hundred people, taking theplace of the existing community management offices housed at the CIA." (4) The Commission adds, however, that "We hope the president will cometo look directly to the directors of the national intelligence centers [the National Counterterrorism Center, and othercenters focusing on WMDproliferation, international crime and narcotics, and China/East Asia] to provide all-source analysis in their areasof responsibility, balancing theadvice of these intelligence chiefs against the contrasting viewpoints that may be offered by department heads atState, Defense, Homeland Security,Justice, and other agencies." (5) There is some debate whether the 9/11 Commission envisioned the NID as having the responsibility for coordinating national intelligence estimatesand other community products. The Director of Central Intelligence (DCI) has been responsible for providingintelligence to the President, to theheads of departments and agencies of the Executive Branch, the Chairman of the Joint Chiefs of Staff and seniormilitary commanders, and "whereappropriate" the Senate and House of Representatives and the committees thereof. The statute provides that "suchnational intelligence should betimely, objective, independent of political considerations, and based upon all sources available to the intelligencecommunity." (6) Draft legislation inthe fall of 2004 did include the assignment of responsibilities for preparing national intelligence estimates to theDNI. On December 17, 2004, the President approved the Intelligence Reform and Terrorism Prevention Act of 2004 (hereafter the "Intelligence ReformAct")( P.L. 108-458 ). The Act incorporated many of the proposals of the 9/11 Commission, including theestablishment of a Director of NationalIntelligence (DNI) separate from the Director of the CIA. Although most of the debates prior to passage of thelegislation addressed the DNI'sresponsibilities for managing the intelligence budget, the Act also made a number of changes affecting thepreparation of analytical products forconsumers at the highest levels of government. The DNI will serve as head of the Intelligence Community and asthe principal adviser to thePresident and the National Security Council, and the Homeland Security Council for intelligence matters relatedto the national security. (7) Under the new legislation, the Office of the DNI will include the National Intelligence Council (NIC), composed of senior analysts within theIntelligence Community and substantive experts from the public and private sector. (8) The members of the NIC "shall constitute the seniorintelligence advisers fo the Intelligence Community for purposes of representing the views of the [I]ntelligence[C]ommunity within the United StatesGovernment." The members of the NIC are to be appointed by, report to, and serve at the pleasure of the DNI. The Intelligence Reform Act, provides that the DNI, when appointed, will be responsible for NIEs and other analytical products prepared under theauspices of the NIC. The three statutory responsibilities of the NIC have been to: produce national intelligence estimates for the Government, included, whenever the Council considers appropriate, alternativeviews held by elements of the intelligence community; evaluate community-wide collection and production of intelligence by the intelligence community and the requirements andresources of such collection and production; and otherwise assist the [DNI] in carrying out responsibilities established in law. (9) The DCI historically, and the DNI in the future, has a unique responsibility for the quality of intelligence analysis for consumers at all levels ofgovernment. While a number of agencies produce analytical products, the most authoritative intelligence productsof the U.S. IntelligenceCommunity are published under the authority of the DCI and potentially the DNI. NIEs are the primary, but not thesole, form in which theIntelligence Community forwards its judgments to senior officials, and they are the only one prescribed in statute. NIEs are produced at the NIC'sinitiative or in response to requests from senior policymakers. NIEs are sometimes highly controversial. They are designed to set forth the best objective judgments of the Intelligence Community, but theyoccasionally are more closely related to policy rationales than some analysts would prefer. An NIE produced inOctober 2002 on Iraq's ContinuingPrograms for Weapons of Mass Destruction has been much criticized; a more recent NIE on prospects for Iraq hasbeen the source of significantmedia attention. (10) Although the importance of particular NIEs to specific policy decisions may be debatable, (11) the NIE process provides a formal opportunity fortheIntelligence Community's input to policy deliberations. Arguably, it is the responsibility of policymakers to seekthe input of the IntelligenceCommunity, but most observers would argue that the DNI should not be reticent in presenting intelligenceinformation and judgments on majorpolicy issues when difficult decisions are under consideration. The most recent chairman of the NIC is Ambassador Robert L. Hutchings, who had previously served in the State Department and in academicinstitutions. (12) In addition, there are senioranalysts, known as National Intelligence Officers (NIOs), for Africa, East Asia, Economics and GlobalIssues, Europe, Intelligence Assurance, Latin America, Military Issues, Near East and South Asia, Russia andEurasia, Transnational Threats,Warning, and Weapons of Mass Destruction and Proliferation. The NIOs, who do not receive Senate confirmation,come from a variety ofgovernment agencies, inside and outside the Intelligence Community, and from the private sector. National Intelligence Officers supervise the production of NIEs and other community-wide products. Typically, an analyst in one agency isdesignated by the relevant NIO to prepare a draft analytical product; the draft then is reviewed by relevant analyststhroughout the Community. Subsequently, if approved by the leadership of the Intelligence Community (the National Foreign Intelligence Board)and the DCI, the draft has beencirculated to policymakers in the Executive Branch and, on occasion, to Members of Congress. NIEs set forth thebest information and judgments ofthe Intelligence Community and are usually directed at significant issues that may require policy decisions. The NIOs have worked for the DCI in his capacity as head of the Intelligence Community rather than in his capacity as director of the CIA. (In thefuture they will report to the DNI.) Thus, NIEs and related analytical products have not been CIA products; theyhave represented the consolidatedviews of the Intelligence Community (with alternative views held by elements of the Intelligence Community noted,in accordance with the statutorymandate (13) ). It may be reasonably assumed that the NIC will continue to depend heavily on the resources of the CIA. The CIA contains the most extensiveanalytical capability across the board on all subjects that might concern national policymakers, as well asconsiderable capability to support militarycommanders and mid-level desk officers. The CIA was originally designed to be "central," without obligations tosupport departmental objectives ashas been considered to be the case with the intelligence arms of the military services and the State Department. Insome areas, however, otheragencies have more extensive capabilities and can make an equal or greater contribution to NIEs and other productsdesigned to express thejudgments of the entire Intelligence Community. Some critics, moreover, charge that CIA on occasion developsan agency "position" that tends todiscourage alternate perspectives. (14) On many topics, there are inevitably different perspectives, and according to many observers, policymakers are best served by rigorous presentationsof alternative positions. (15) At the same time,however, some NIEs reflect an effort to craft language that all agencies can agree on and thus to avoidairing differences that might draw agencies into policy arguments between and among government departments. Agency managers understand thattoo close involvement in a policy argument by intelligence analysts can make their analyses unwelcome across theboard. In addition, they wellunderstand that analysis is an uncertain science and art and that even the best analysts can miss developments thatloom large in retrospect and leavetheir agencies open to harsh criticism or retribution. Concern is often expressed about the extent to which intelligence products can become "politicized," i.e., be drafted to support or undermine certainpolicy options. A charge of politicization is difficult to prove and is often dependent upon a reader's subjectiveviewpoint. Most observers believethat analysts make a conscientious effort to avoid policy advocacy, but note that they are fully aware of policydisputes and may have their own viewsthat may, subconsciously or otherwise, influence their products. There is, according to some observers, a tendencyto avoid making intelligencejudgments that directly conflict with policy options that have been chosen. Observers caution that placingintelligence analysis at the center of policydisputes can undermine the effectiveness of the analytical contribution; they suggest that intelligence can best serveby informing policy debates, butanalysts cannot be expected to provide definitive judgments that will resolve disputes that may involve a myriadof different factors, some farremoved from intelligence questions. In addition, observers note that it should be recognized that policymakingsometimes involves makingjudgments based on incomplete intelligence or on a willingness to accept risks and uncertainties beyond the ken ofanalysts. Analysis can have asubjective quality to some degree and can be undermined by unreasonable expectations. The Intelligence Reform Act provides several provisions designed to ensure that analysis is well-prepared and not politicized. In addition to havingauthority to establish an Office of Inspector General, the DNI is to assign an individual or entity to ensure thatagencies conduct alternative analysesof information and conclusions in intelligence products (section 1017). The DNI is also to assign an individual orentity to ensure that intelligenceproducts are "timely, objective, independent of political considerations, based on all sources of availableintelligence, and employ the standards ofproper analytic tradecraft" (section 1019). Another section requires that the DNI assign an individual to addressanalysts' concerns about "real orperceived problems of analytic tradecraft or politicization, biased reporting, or lack of objectivity in intelligenceanalysis" (section 1020). Left uncertain are responsibilities for preparing the written brief on current intelligence that is prepared daily for the President and a very few othersenior officials. The President's Daily Brief (PDB), along with the Senior Executive Intelligence Brief (SEIB) thathas a somewhat widerdistribution, have been prepared by CIA's Directorate of Intelligence (DI) and are considered that directorate's"flagship products." Nonetheless,should the DNI be responsible for daily substantive briefings at the White House rather than the CIA Director, itmight be considered appropriate thatthe DNI staff draft the PDB and the SEIB, based on input from the CIA and other agencies. The number of analystswho actually prepare thePBD/SEIB is not large, but their work reflects ongoing analysis in the CIA and other parts of the IntelligenceCommunity. Some might argue,moreover, that close and important links between CIA desk-level analysts and the PDB would be jeopardized shouldthe briefs be prepared outside ofthe CIA. In addition, there are myriads of other analytical products: reports, memoranda, briefings, etc. that are prepared on a routine basis. The IntelligenceReform Act does not transfer extensive analytical efforts to the NID; leaving such duties to existing agencies; theNIC will be responsible forassessments that set forth the judgments of the Intelligence Community as a whole. The Intelligence Reform Act provides that the DNI will assume responsibilities for managing the NIC. The DNI will be support by the NIC staff(probably numbering less than 100 positions). This gives the DNI the capability to oversee the preparation of NIEsand to ensure that the views of allagencies have been taken into consideration in inter-agency assessments. A major change will be the fact that theNIOs and their staff will work forone person (the DNI) while CIA analysts will report to a separate Director of the CIA. Congress may ultimatelyassess whether these changes, as theyare implemented, have improved the efforts of the Intelligence Community and its analytical products. The future responsibility for the production and presentation of the PDB/SEIBs is uncertain. They are currently prepared by CIA's Directorate ofIntelligence, and that responsibility could be continued. On the other hand, if the DNI, rather than the CIA Director,is to conduct the daily briefingfor the President and senior White House officials, it might be argued that the DNI and the DNI's immediate staffshould have responsibility for thedocument that provides the basis for the daily briefings.

The 9/11 Commission made a number of recommendations to improve the quality ofintelligenceanalysis. A key recommendation was the establishment of a Director of National Intelligence (DNI) position tomanage the national intelligenceeffort and serve as the principal intelligence adviser to the President -- along with a separate director of the CentralIntelligence Agency. Subsequently, the Intelligence Reform and Terrorism Prevention Act of 2004, P.L. 108-458, made the DNI theprincipal adviser to the President onintelligence and made the DNI responsible for coordinating community-wide intelligence estimates. Some observersnote that separating the DNIfrom the analytical offices may complicate the overall analytical effort. This report will be updated as newinformation becomes available.

The broad-gauged trade agreements entered into by the United States in the 1990s—the North American Free Trade Agreement (NAFTA), the World Trade Organization (WTO) Agreement, and the multilateral trade agreements that a country must accept as a condition of WTO membership—were negotiated by the President and submitted to Congress under the terms of the Omnibus Trade and Competitiveness Act of 1988 (OTCA) and the Trade Act of 1974. The OTCA provided the President with authority to negotiate and enter into tariff and nontariff trade barrier (NTB) agreements until June 1, 1993, authority that was later extended to April 15, 1994, in order to complete the General Agreement on Tariffs and Trade (GATT) Uruguay Round. The OTCA also provided that NTB agreements negotiated under the statute could not enter into force for the United States unless, among other things, the agreements were submitted to Congress along with an implementing bill and the bill was enacted into law. Such legislation was entitled to so-called fast track or expedited consideration. The law, Section 151(a), defines "implementing bill" as a bill that contains, inter alia, a provision approving the trade agreement or agreements and, if changes to existing laws are needed, provisions "necessary or appropriate to implement such trade agreement or agreements ... either repealing or amending existing laws or providing new statutory authority." It is the provision approving the agreement or agreements, once enacted, that makes the Uruguay Round agreements, as well as the NAFTA, other free trade agreements and earlier GATT-related agreements, congressional-executive agreements. The trade agreement authorities and requirements embodied in the OTCA reflect a congressional approach to international trade policy that evolved over a number of years. As early as 1890, Congress delegated tariff bargaining authority to the President and authorized him to suspend existing duty-free treatment on particular items by proclamation. The Supreme Court subsequently held that the authorizing statute, Section 3 of the Tariff Act of 1890 did not unconstitutionally delegate either legislative or treaty-making authority to the President. In the Reciprocal Trade Agreements Act of 1934, as amended and extended, Congress authorized the President, for limited periods, to enter into reciprocal tariff agreements with foreign countries and, within a designated range, to proclaim tariffs needed to implement these agreements without subsequent congressional approval. This authority was used to enter into numerous reciprocal trade agreements, to proclaim new tariffs as a result, and to enter into the General Agreement on Tariffs and Trade (GATT). The President's modification of tariffs under this statute was likewise held to be valid under the Treaty Clause, federal courts having acknowledged that not all international undertakings of the United States are concluded as treaties and that congressional-executive trade agreements could find a constitutional basis in the joint exercise of Congress's tariff and commerce authorities and the President's foreign affairs power. As GATT parties began to negotiate more extensively to eliminate nontariff trade barriers in a number of areas, Congress enacted legislation that would both provide the President with negotiating credibility and ensure that Congress carried out its constitutional responsibilities regarding legislative implementation of the agreements. Since NTB agreements could address a variety of regulatory matters (e.g., subsidies, government procurement, product standards), these agreements might require more elaborate changes in federal law than tariff agreements, which for the most part could be implemented through a pre-authorized presidential proclamation reducing tariffs on particular items. In contrast, if legislation were needed to implement NTB agreements, Congress could choose not to vote on such legislation or could add amendments that might be viewed as inconsistent with agreement obligations. At the same time, overly broad delegations of authority to the President to implement NTB agreements or legislative vetoes of executive implementing actions might not comport with constitutional requirements regarding the passage of legislation. In the Trade Act of 1974, Congress provided the President with new authority to negotiate multilateral trade agreements for a limited period of time, allowing him to proclaim certain tariff reductions and modifications but requiring him to submit NTB agreements to Congress, which would vote on their approval and on legislation necessary or appropriate to implement them. Because of the complexities of multilateral negotiation, Congress sought to provide the President with a sound negotiating posture by providing that it would consider trade agreement implementing legislation submitted under the terms of the statute (including requirements that the President notify and consult with Congress) within a prescribed period of time and without amendment. To this end, Section 151 of the act sets out procedural rules according an introduced bill expedited consideration and ensuring a final floor vote. The fast-track procedure in the 1974 act was first used with respect to the GATT Tokyo Round Agreements, which were approved and implemented in 1979. Temporary statutory authority for bilateral free trade agreements (FTAs) was added in the Trade and Tariff Act of 1984 and was again provided for in the OTCA. Congress approved bilateral FTAs with Israel and Canada, the NAFTA, and the GATT Uruguay Round agreements under one or the other of these authorities. The FTA with Jordan was statutorily implemented in 2001, though not under a fast-track authorizing statute and without an express approval provision. The Bipartisan Trade Promotion Authority Act of 2002 (BTPAA), contained in Title XXI of the Trade Act of 2002, granted renewed trade negotiating authority to the President. Although the authority expired during the 110 th Congress, implementing bills for trade agreements entered into before July 1, 2007, remained eligible for expedited legislative consideration. Eligibility continued because only the agreement needed to be entered into before July 1, 2007, for its implementing legislation to qualify for consideration on an expedited basis. The 2002 act did not require that implementing legislation for any such agreement be submitted to Congress by a given date. Agreements that had been entered into before July 1, 2007, but that had not been approved by that date, included U.S. free trade agreements with Colombia, Korea, and Panama. Congress approved the three agreements in October 2011 under the expedited BTPAA procedures. Agreements with Chile, Singapore, Australia, Morocco, Bahrain, Oman, the Dominican Republic-Central America-United States FTA (DR-CAFTA), and Peru had been approved earlier under this process. Additionally, the United States Trade Representative (USTR), on behalf of the President, notified the House and Senate by letter in December 2009 that the President intended to enter into negotiations aimed at a regional, Asia-Pacific trade agreement, called the Trans-Pacific Partnership (TPP). Notwithstanding the expiration of BTPAA authorities, the USTR stated in a December 2009 Federal Register notice that "USTR is observing the relevant procedures of the Bipartisan Trade Promotion Authority Act of 2002 (19 U.S.C. 3804), which apply to agreements entered into before July 1, 2007, with respect to notifying and consulting with Congress regarding the TPP trade agreement negotiations." These include the President's written notice to Congress of the President's intent to enter into trade agreement negotiations with one or more countries at least 90 days before the President initiates any such negotiations. Notably, discussions to reinstate TPA through legislation have recently gained attention. In March 2013, the Acting U.S. Trade Representative, Demetrios Marantis, stated that the Obama Administration will work with Congress to enact new TPA legislation. Along with the United States, TPP negotiating parties include Australia, Brunei, Chile, Malaysia, New Zealand, Peru, Singapore, and Vietnam, with Mexico and Canada having recently joined the talks. Japan has expressed its intent to join the negotiations. Were Congress to enact trade negotiating authority with expedited legislative procedures in the future, it would have the option of including ongoing TPP negotiations within the scope of the statute. Congress took this approach in the BTPAA with respect to ongoing FTA negotiations with Singapore and Chile and other trade negotiations under way at the time. The question whether trade agreements could constitutionally be entered into as congressional-executive agreements rather than treaties emerged during consideration of Uruguay Round implementing legislation. The question originally was posed because of the perceived effect of the agreements on states. The issue also arose in a judicial challenge to the NAFTA, in which it was alleged that the failure to use the treaty process rendered the agreement and its implementing legislation unconstitutional. In Made in the USA Foundation v. United States , an Alabama federal district court held in July 1999 that "the President had the authority to negotiate and conclude NAFTA pursuant to his executive authority and pursuant to the authority granted to him by Congress in accordance with the terms of the Omnibus Trade and Competitiveness Act of 1988 ... and section 151 of the Trade Act of 1974 ... and as further approved by the [NAFTA] Implementation Act." In the court's view, the Foreign Commerce Clause, combined with the Necessary and Proper Clause and the President's Article II foreign relations power, provided a constitutionally sufficient basis for the agreement. The court preliminarily held that institutional, but not individual plaintiffs, had standing to sue, and that the political question doctrine did not bar it from ruling on the merits. On appeal, the U.S. Court of Appeals for the Eleventh Circuit (Eleventh Circuit), while agreeing that appellants had standing, held that the issue of whether an international commercial agreement such as the NAFTA is a treaty that must be approved by two-thirds of the Senate was a nonjusticiable political question. The court dismissed the appeal and remanded to the district court with instructions to vacate. The Supreme Court denied certiorari in the case. Under the political question doctrine, a court will decline to rule on the merits if it finds that the underlying matter is committed to the discretion and expertise of the legislative and executive branches. In the case at hand, the Eleventh Circuit applied a tripartite inquiry that it said was suggested by Justice Lewis Powell in Goldwate r v. C arter , a distillation of criteria for determining justiciability originally identified in Bak er v. C arr . The three questions posed by the court were the following: "(i) Does the issue involve resolution of questions committed by the text of the Constitution to a coordinate branch of government? (ii) Would resolution of the question demand that a court move beyond judicial expertise? (iii) Do prudential considerations counsel against judicial intervention?" Regarding the first question, the court stated that "with respect to commercial agreements, we find that the Constitution's clear assignment of authority to the political branches of the Government over our nation's foreign affairs counsels against an intrusive role for this court in overseeing the actions of the President and Congress in this matter." The court also pointed to the "vast" express constitutional grants of power conferred upon the political branches in foreign affairs and commerce, and the Supreme Court's long-standing recognition of the power of the political branches, to conclude "agreements that do not constitute treaties in the constitutional sense." Regarding the second question, the court concluded that a ruling on the merits would require it to consider areas beyond its expertise, noting, inter alia, that the Treaty Clause did not set forth circumstances under which Clause procedures must be followed when approving international commercial agreements, and that having to determine the "significance" of an international agreement as the key factor in determining whether it should be a treaty or not would "unavoidably thrust [the court] into making policy judgments of the sort unsuited for the judicial branch." Addressing the third question, the court cited, inter alia, the need for the nation to speak with uniformity in the area of foreign affairs and commerce, and the fact that a judicial order declaring the NAFTA invalid "could have a profoundly negative effect on this nation's economy and its ability to deal with other foreign powers," noting that such an order "would not only affect the validity of NAFTA, but would potentially undermine every other major international commercial agreement made over the past half-century."

U.S. trade agreements such as the North American Free Trade Agreement (NAFTA), World Trade Organization agreements, and bilateral free trade agreements (FTAs) have been approved by majority vote of each house rather than by two-thirds vote of the Senate—that is, they have been treated as congressional-executive agreements rather than as treaties. The congressional-executive agreement has been the vehicle for implementing Congress's long-standing policy of seeking trade benefits for the United States through reciprocal trade negotiations. In a succession of statutes, Congress has authorized the President to negotiate and enter into tariff and nontariff barrier (NTB) agreements for limited periods, while permitting NTB and free trade agreements negotiated under this authority to enter into force for the United States only if they are approved by both houses in a bill enacted into public law and other statutory conditions are met; implementing bills are also accorded expedited consideration under the scheme. This negotiating authority and expedited procedures are commonly known as Trade Promotion Authority (TPA). Congress most recently granted the President temporary trade negotiating authority utilizing this approach in the Bipartisan Trade Promotion Authority Act of 2002 (BTPAA), contained in Title XXI of the Trade Act of 2002, P.L. 107-210. Although the authority expired during the 110th Congress, agreements entered into before July 1, 2007, remained eligible for congressional consideration under the expedited procedure. The President had entered into free trade agreements with Colombia, Korea, and Panama before this date, each of which awaited congressional approval at the time. In October 2011, Congress approved the three pending agreements, making a total of 11 free trade agreements approved under the BTPAA process. In addition, the United States Trade Representative (USTR), on behalf of the President, notified the House and Senate in December 2009 by letter that the President intended to enter into negotiations aimed at a regional, Asia-Pacific trade agreement, called the Trans-Pacific Partnership (TPP). Notwithstanding the expiration of BTPAA authorities, the USTR stated that the Obama Administration would be observing the relevant procedures of the act with respect to notifying and consulting with Congress regarding these negotiations. Notably, discussions to reinstate TPA through legislation have recently gained attention. In March 2013, the Acting U.S. Trade Representative, Demetrios Marantis, stated that the Obama Administration will work with Congress to enact new TPA legislation.

Section 202 of the Social Security Act states that benefits are paid through the month before the month in which a beneficiary dies. Thus, no benefits are paid for the month of death. This rule has been in the law since 1939. The rule does not apply to Medicare, which provides benefits up to the date of death. Social Security benefits are paid on a monthly basis. The check (or direct bank deposit) for each month's benefit is issued in the following month. For example, the check that an individual receives in February is the benefit payable for January. This is referred to as a retrospective payment system. If a beneficiary dies late in the month, family members or the executor of the estate may not notify the Social Security Administration (SSA) in time to stop the payment. Subsequently, they are informed that the check must be returned to the government. Members of Congress are asked often to support legislation that would provide a full or partial benefit payment for the month of death. The following section presents common arguments for and against paying Social Security benefits for the month of death. Critics of the current policy argue that withholding benefits for the month of death does not make sense. They maintain that a person's bills do not stop at the beginning of the month in which they die. Moreover, the deceased beneficiary's family members or estate have to pay funeral and burial expenses. The unfairness of the policy is often illustrated with a comparison of the individual who dies on the last day of the month and receives no benefit for that month, and the individual who dies at 12:05 a.m. the next day and receives a full benefit for the preceding month. Critics complain that the current policy is cruel in that it adversely affects individuals who are already distressed by the death of a family member. They find the circumstances in which a check must be returned to the government to be the most incomprehensible. Persons who are affected often ask questions such as Do you mean my father (or mother) had to live each day of their final month to get a benefit for that month? Why are family members placed at a disadvantage when a beneficiary dies at the end of the month after having incurred living expenses throughout most of the month? How could the government have established such a policy? Critics contend that the public views the policy as an anomaly—as a mistake in the design of the Social Security system. If the policy was intended to reduce the cost of the system, they see it as a "poor" device to do so. They argue that the policy discredits the system by creating the impression that it is arbitrary, unbending, and thoughtlessly bureaucratic. They maintain that benefits should be paid at least for the part of the month that the beneficiary was alive. Supporters of the current policy argue that paying benefits for the month of death would be costly. SSA estimates that paying full benefits for the month of death would cost $1.6 billion annually. Alternatively, paying 50% of the benefit if the beneficiary dies in the first half of the month, and a full benefit if the beneficiary dies in the second half of the month, would cost an estimated $1.2 billion annually. Pro-rating the benefit based on the number of days the beneficiary was alive during the final month would cost an estimated $800 million annually. SSA also estimated the increase in benefit payments under a proposal in which (1) a full benefit for the month of death would be payable to a surviving spouse (the surviving spouse would not be required to have been living with the beneficiary when the death occurred or to be entitled to benefits), or (2) if there is no surviving spouse, a pro-rated benefit based on the number of days the beneficiary was alive during the final month would be payable. SSA estimated that the proposal would increase benefit payments by $13.2 billion over 10 years (2004-2013). Supporters of the current policy also point out that the system pays benefits to an individual beginning with his or her first month of entitlement, regardless of when entitlement began during the month, and that this provides rough balance in the system for not paying benefits for the month of death. Moreover, survivor benefits are payable to eligible family members beginning with the deceased beneficiary's month of death, regardless of when the death occurred during the month. In addition, the spouse who was living with the worker, or a spouse or child eligible for survivor benefits, may receive a Social Security lump-sum death payment of $255. They contend that there is little appreciation for the administrative difficulties (and potential costs) involved in determining who should receive the deceased beneficiary's benefit for the month of death. Because SSA cannot simply mail a check to the deceased beneficiary, SSA would have to determine who should receive the payment. Given that more than 2 million beneficiaries die each year, this would require a labor-intensive process, similar to the taking of regular benefit applications. Each case would have to be investigated, and if there are multiple family members, the payment may have to be split. Careful attention would have to be given to determining the proper payee(s) in each case.

Social Security benefits are not paid for the month in which a beneficiary dies. In most cases, the check that an individual receives in a given month represents payment for the preceding month. In other words, by design, the check (or direct bank deposit) arrives after the month for which it applies. In cases where a beneficiary dies late in the month, the Social Security Administration often is not notified of the death in time to stop the payment. When family members are informed that the check must be returned, they often complain that the policy is unfair and creates a financial hardship because the deceased beneficiary incurred expenses for part (or even most) of the month. Over the years, legislation has been introduced that would provide a full benefit for the month of death or a pro-rated benefit based on the proportion of the month that the beneficiary was alive. Supporters of such legislation argue that withholding benefits for the month of death does not make sense given that a person's bills do not stop at the beginning of the month in which they die. They argue that the public views the policy as anomalous in a system designed to provide monthly income to retirees, the disabled, and survivors of deceased workers. Critics of such legislation argue that paying full benefits for the month of death would cost an estimated $1.6 billion annually (excluding administrative costs). They point out that a deceased beneficiary's spouse and children can collect survivor benefits for the month of death, regardless of when the death occurred; that survivors may be entitled to a $255 lump-sum death payment; and that those seeking to have benefits paid for the month of death have little appreciation for the administrative difficulties involved in determining who should get the more than 2 million final benefit checks issued each year.

Our preliminary analysis of NSF data indicates that for fiscal years 2000 through 2016, indirect costs on NSF awards ranged from 16 percent to 24 percent of the total annual amounts the agency awarded, though the percentage generally has increased since 2010. In fiscal year 2016, for example, NSF awards included approximately $1.3 billion budgeted for indirect costs, or about 22 percent of the total $5.8 billion that NSF awarded. Figure 1 illustrates annual funding for indirect costs over the 17- year period. NSF officials told us that variation in indirect costs from year to year can be due to a variety of factors such as (1) differences in the types of organizations awarded, (2) the types of activities supported by the individual awards—research vs. individuals or students vs. infrastructure, (3) the type of research activity, and (4) the disciplinary field of awards. As part of our ongoing review, we plan to conduct further analysis of these factors. The indirect costs on individual awards varied more widely than the year- to-year variations for each award. Most NSF awards included indirect costs in their budgets—for example, about 90 percent of the 12,013 awards that NSF made in fiscal year 2016 included indirect costs. Our preliminary analysis of those awards indicated that the proportion of funding for indirect costs ranged from less than 1 percent to 59 percent of the total award. Our preliminary analysis also indicates that average indirect costs budgeted on awards varied across types of awardees. NSF’s data categorized awardees as federal; industry; small business; university; or other, a category that includes nonprofits and individual researchers. Figure 2 illustrates our preliminary analysis on the average percentage of total awards budgeted for indirect costs in fiscal year 2016, by type of awardee. As shown in the figure, our preliminary analysis indicates that university awardees had the highest average indirect costs—about 27 percent of the total amount of awards—and federal awardees had the lowest average indirect costs—about 8 percent of the total amount of awards. According to NSF officials, certain types of projects, such as those carried out at universities, typically involve more indirect costs than others. The officials said that this is because, for example, of universities’ expense of maintaining scientific research facilities, which may be included as an indirect cost in awards. Because universities receive the bulk of NSF’s award funding and have relatively high indirect costs, our preliminary analysis of NSF data indicates that universities accounted for about 91 percent of the approximately $1.3 billion budgeted for indirect costs in fiscal year 2016. As previously noted, NSF does not set the indirect cost rate for the universities to which it makes awards, as those rates are set by HHS or DOD. Our analysis also showed that awards to organizations for which NSF had cognizance (e.g., nonprofits, professional societies, museums, and operators of large shared-use facilities) had lower average budgeted indirect costs than awards to organizations for which other federal agencies had cognizance. As shown in figure 3, our preliminary analysis of NSF data indicates that, on average, NSF budgeted about 23 percent of award amounts for indirect costs on awards to organizations for which NSF did not have indirect cost cognizance and about 11 percent for indirect costs on awards to organizations for which NSF had cognizance. Our preliminary observations show that in fiscal year 2016, NSF made most of its awards to organizations for which it did not have cognizance. Our preliminary observations show that among the approximately 110 organizations for which NSF has cognizance, negotiated indirect cost rates can vary because of the type of work being funded by awards and the ways in which different organizations account for their costs. For example, salaries for administrative or clerical staff may be included as either an indirect or direct cost, as long as they are consistently treated across an organization’s awards. Our preliminary analysis of the rate agreement case files for nine organizations in a nongeneralizable sample of files we reviewed showed the rates ranged from 5.5 percent to 59.8 percent. An organization may choose to budget indirect costs for an award at a level close to its negotiated indirect cost rate for the organization, or it may choose to budget the costs differently. For example, one of the organizations in our sample had a negotiated indirect cost rate of 51 percent in fiscal year 2016. In that year, the organization received one NSF award for $535,277 that budgeted $180,772 for indirect costs (or about 34 percent of the award)—a calculated indirect cost rate on the award of about 51 percent. Another organization in our sample had a negotiated indirect cost rate of 5.5 percent in 2016, and one of its NSF awards in fiscal year 2016, for $1,541,633, did not budget for any indirect costs. We based our preliminary analyses of indirect costs on data from the budgets of NSF awards—the only available NSF data on indirect costs. According to NSF officials, prospective awardees are required to provide direct and indirect costs in their proposed budgets using the organization’s negotiated indirect cost rate. After an award is made, NSF does not require awardees to report information about indirect costs when requesting reimbursements for work done on their awards for projects. Specifically, NSF’s Award Cash Management $ervice—NSF’s online approach to award payments and post-award financial processes—does not collect data about indirect costs, although NSF is permitted to do so by OMB guidance. According to NSF officials, doing so would unnecessarily increase the reporting burden on awardees. Our preliminary review of NSF’s guidance for setting indirect cost rates and a nongeneralizable sample of nine indirect cost rate files indicates that NSF has issued internal guidance that includes procedures for staff to conduct timely and uniform reviews of indirect cost rate proposals, collect data, set rates, and issue letters to formalize indirect cost rate agreements. However, we also found that NSF staff did not consistently apply the guidance. The guidance also includes tools and templates for staff to use to consistently set rates and procedures for updating the agency’s tracking system for indirect cost rate proposals. However, in our preliminary analysis of NSF guidance, we found that (1) NSF staff did not consistently follow guidance for updating the tracking system, (2) the guidance did not include specific procedures for how supervisors are to document their review of staff workpapers, and (3) NSF had not updated the guidance to include procedures for implementing new provisions issued under the Uniform Guidance. In 2008, NSF created a database to track indirect cost rate proposals and developed guidance for updating the tracking database with proposal information. However, our preliminary analysis of reports from the tracking database indicates that NSF staff have not consistently followed the guidance for updating the tracking database with current data about the awardees for which NSF has cognizance and the status of indirect cost rate proposals. For example, in our preliminary analysis, we identified eight awardees for which NSF was no longer the cognizant agency but that still appeared in the tracking database on a list of agencies from which proposals were overdue. Cognizance for these awardees had been transferred to other agencies from 2009 through 2014. In addition, we identified 46 instances in which NSF staff had not followed the guidance to update the tracking database to reflect the current status of awardees’ proposals, including instances in which the tracking database was missing either the received date or both the received and closed dates. In addition, while NSF’s guidance describes procedures that staff are to follow for setting indirect cost rates, it only includes broad procedures for supervisory review—NSF’s primary quality control process for setting indirect cost rates. The guidance does not describe specific steps that supervisors need to take when reviewing the work performed by staff when setting indirect cost rates, nor does it include how supervisors should annotate the results of their reviews in the workpapers. In our preliminary review of a nongeneralizable sample of nine NSF rate files, we did not find any documentation that a supervisor had reviewed the work performed by staff, such as verifying that staff had checked the accuracy of the total amount of awards over which an awardee’s indirect costs were distributed. Such reviews are meant to provide reasonable assurance that only allowable, allocable, and reasonable indirect costs have been proposed and that such costs have been appropriately allocated to federally funded awards. Moreover, our preliminary observations on NSF’s guidance indicates that it does not include procedures for implementing certain aspects of OMB’s Uniform Guidance, which became effective for grants awarded on or after December 26, 2014. For example, a new provision under the Uniform Guidance allows research organizations that currently have a negotiated indirect cost rate to apply for a onetime extension of that rate for a period of up to 4 years; however, NSF guidance does not specify criteria for NSF staff to determine the circumstances under which an awardee could be given an extension. In closing, I would note that we are continuing our ongoing work to examine NSF’s data on indirect costs for its awards over time and its implementation of its guidance for setting indirect cost rates for organizations over which it has cognizance. NSF awards billions of dollars to organizations each year and, given the constrained budget environment, it is essential that NSF ensures efficient and effective use of federal science funding. We look forward to continuing our work to determine whether NSF actions may be warranted to promote this objective. We plan to issue a report in fall 2017. Chairwoman Comstock, Chairman LaHood, Ranking Members Lipinski and Beyer, and Members of the Subcommittees, this completes my prepared statement. I would be pleased to respond to any questions that you may have at this time. If you or your staff members have any questions concerning this testimony, please contact me at (202) 512-3841 or neumannj@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this statement. Other individuals who made key contributions to this testimony include Joseph Cook, Assistant Director; Kim McGatlin, Assistant Director; Rathi Bose; Ellen Fried; Ruben Gzirian; Terrance Horner, Jr.; David Messman; Lillian Slodkowski; Kathryn Smith; and Sara Sullivan. This is a work of the U.S. government and is not subject to copyright protection in the United States. The published product may be reproduced and distributed in its entirety without further permission from GAO. However, because this work may contain copyrighted images or other material, permission from the copyright holder may be necessary if you wish to reproduce this material separately.

NSF awards billions of dollars to institutions of higher education (universities), K-12 school systems, industry, science associations, and other research organizations to promote scientific progress by supporting research and education. NSF reimburses awardees for direct and indirect costs incurred for most awards. Direct costs, such as salaries and equipment, can be attributed to a specific project that receives an NSF award. Indirect costs are not directly attributable to a specific project but are necessary for the general operation of an awardee organization, such as the costs of operating and maintaining facilities. For certain organizations, NSF also negotiates indirect cost rate agreements, which are then used for calculating reimbursements for indirect costs. Indirect cost rate negotiations and reimbursements are to be made in accordance with federal guidance and regulation and NSF policy. This testimony reflects GAO's preliminary observations from its ongoing review that examines (1) what is known about NSF's indirect costs for its awards over time, and (2) the extent to which NSF has implemented guidance for setting indirect cost rates for organizations. GAO reviewed relevant regulation, guidance, and agency documents; analyzed budget data, a nongeneralizable sample of nine indirect cost rate files from fiscal year 2016 selected based on award funding; and interviewed NSF officials. GAO's preliminary analysis of National Science Foundation (NSF) data indicates that for fiscal years 2000 through 2016, indirect costs on NSF awards ranged from 16 percent to 24 percent of the total annual amounts awarded, though the percentage generally has increased since 2010 (see fig.). NSF officials stated that variation in indirect costs from year to year can be due to a variety of reasons, such as the types of organizations awarded and the disciplinary field of awards. GAO's observations are based on data from planned budgets on individual NSF awards, rather than actual indirect cost expenditures, because NSF does not require awardees to report indirect costs separately from direct costs in their reimbursement requests. According to NSF officials, collecting such information would unnecessarily increase the reporting burden on awardees. NSF has issued guidance for negotiating indirect cost rate agreements that includes procedures for staff to conduct timely and uniform reviews of indirect cost rate proposals. GAO's preliminary review of NSF's guidance and a sample of nine indirect cost rate files found that (1) NSF staff did not consistently follow guidance for updating the agency's tracking database with current data about some awardees, (2) the guidance did not include specific procedures for how supervisors are to document their review of staff workpapers, and (3) NSF had not updated the guidance to include procedures for implementing certain aspects of Office of Management and Budget guidance that became effective for grants awarded on or after December 26, 2014, such as the circumstances in which NSF can provide an awardee with an extension of indirect cost rates. GAO is not making any recommendations in this testimony but will consider making recommendations, as appropriate, as it finalizes its work.

The Multinational Species Conservation Fund (MSCF; 16 U.S.C. §4246) supports international conservation efforts benefitting several species of animals. The MSCF has five sub-funds, which provide grants for activities to conserve tigers, rhinoceroses, Asian and African elephants, marine turtles, and great apes (gorillas, chimpanzees, bonobos, orangutans, and various species of gibbons). Each of the funds receives appropriations from Congress through the U.S. Fish and Wildlife Service (FWS). This support is often in conjunction with efforts under the Convention on International Trade in Endangered Species (CITES) and local efforts in the countries in which these animals reside. MSCF provides funding in the form of technical and cost-sharing grants to groups conducting conservation activities in the species' home range countries. The grants address habitat conservation, improve law enforcement, and provide technical assistance for conserving the specified species. The conservation efforts funded by the MSCF funds also benefit from funding and in-kind support provided by partners and collaborators. Congress and constituents have shown interest in conserving iconic endangered species in foreign countries, such as elephants and tigers. Congress has appropriated funds to address wildlife trafficking and to conserve foreign endangered species and their habitats, and it is considering other forms of funding to augment this support. One form of existing support is funds generated through semipostal stamps, which are first-class stamps that are sold with a surcharge over their postage value. The additional charge is recognized by the stamp purchaser as a voluntary contribution to a designated cause (for more information, see " Overview of Semipostal Stamps ," below). To boost funds for conservation programs under MSCF, Congress authorized the creation and distribution of the Multinational Species Conservation Funds Semipostal Stamp (MSCF stamp) under the Multinational Species Conservation Funds Semipostal Stamp Act of 2010 ( P.L. 111-241 ). This law requires the U.S. Postal Service (USPS) to issue and sell the MSCF stamp. A portion of the proceeds (11 cents, less USPS's administrative costs) from the stamp are transferred to the U.S. Fish and Wildlife Service (FWS), which equally distributes the stamp-generated funds among the five MSCF sub-funds (see Figure 1 ). The other portion of the revenue goes to the Postal Service Fund, which is a revolving fund in the U.S. Treasury that consists largely of revenues generated from the sale of postal products and services. USPS introduced the MSCF stamp, entitled "Save Vanishing Species," in September 2011. The stamp depicts an Amur tiger, a design approved by the Postmaster General, who has the final authority to decide the design for semipostal stamps. Congress initially provided for the MSCF stamp to be available to the public for at least two years. Congress extended the mandated sale of the MSCF stamp by an additional four years through the Multinational Species Conservation Funds Semipostal Stamp Reauthorization Act of 2013 ( P.L. 113-165 ). Authorization for the MSCF stamp is set to expire in September 2017. This expiration does not preclude USPS from continuing to issue and sell the stamp, should it choose to do so. As of November 2016, more than 36.6 million MSCF stamps had sold, generating more than $3.9 million for conservation. According to FWS, funds from the stamps have supported 84 conservation projects in 33 countries. Projects and programs funded by stamp sales address antipoaching activities, capacity building for conserving species, community engagement and outreach, habitat restoration, and activities to raise public awareness of the illegal wildlife trade, among other things. In addition, federal grants from MSCF receive matching funds from nonfederal conservation supporters. FWS has noted that the funds from stamp sales have leveraged more than double their value in funds for conservation. For example, from FY2012 to FY2016, $3.1 million of funds generated from stamps leveraged $12.5 million in additional funds from nonfederal stakeholders for conservation projects. The MSCF stamp's efficacy in generating funds for international conservation made reauthorizing the stamp a priority for addressing wildlife trafficking, as the Presidential Taskforce on Wildlife Trafficking created by the Obama Administration in 2014 noted. Funds generated by MSCF stamp sales have supported efforts to decrease wildlife trafficking. For example, FWS used MSCF stamp funds to support a program that rehabilitates trafficked tigers for return to the wild in Indonesia. Semipostal stamps are first-class letter stamps that are sold with a surcharge over their postage value. The additional charge is recognized by the stamp purchaser as a voluntary contribution to a designated cause. For example, a first-class stamp may be purchased for 49 cents, but a first-class semipostal stamp costs 60 cents. USPS sells a semipostal stamp and then transfers a portion of the proceeds (less USPS's administrative costs) to the U.S. Treasury, which allocates funding to the federal agency designated to administer the funds. The agency then expends or distributes the funds for the statutorily designated purpose. Congress first authorized the issuance of semipostal stamps in 1997. The first semipostal stamp sold in the United States was the Breast Cancer Research stamp in 1997, which was created by the Stamp Out Breast Cancer Act ( P.L. 105-41 ). This act authorized the USPS to issue a first-class stamp at a price up to 25% higher than the standard first-class stamp price. The law required USPS to deliver 70% of the additional proceeds to the National Institutes of Health and 30% to the Department of Defense to fund breast cancer research, less USPS's administrative costs. After the success of the Breast Cancer Research stamp, Congress enacted the Semipostal Authorization Act ( P.L. 106-253 ) in 2000. The act gave USPS broad authority to issue and sell semipostal stamps for causes that USPS considers to be in the "national public interest and appropriate." The law specified that funds raised must go only to federal agencies supporting the cause, and it gave discretion to USPS for the selection and depiction of future semipostal stamps. The authority for USPS to issue semipostal stamps expires 10 years after the issuance of the first stamp. This 10-year sunset provision has not started, because USPS has not issued any semipostal stamps through its own authority. All current semipostal stamps have been mandated separately in enacted legislation. However, USPS recently revised its semipostal regulations (39 C.F.R. 551) and has begun the process of developing and issuing its first discretionary semipostal stamp. Recent changes to the USPS semipostal program could affect the MSCF stamp. In 2016, the USPS amended its regulations and began the process of developing and issuing its own semipostal stamps. The Semipostal Authorization Act of 2000 ( P.L. 106-253 ) provided USPS with authority to issue semipostals for a 10-year period beginning on the date on which semipostals are first made available to the public. Under the original regulations implementing the Semipostal Stamp Program, USPS stated that it would not exercise its authority to issue semipostal stamps under 39 U.S.C. §416 until after the sales period of the Breast Cancer Research Stamp is concluded. A rule issued by USPS in April 2016 retracts the restriction on the start of the discretionary Semipostal Stamp Program. The amended regulations state that USPS will issue one discretionary semipostal stamp at a time, five in total, to be sold for a period of no more than two years each. Public proposals for the first discretionary semipostal were due in July 2016. The final decision regarding the subject of the discretionary semipostal stamps belongs to the Postmaster General; as of February 28, 2017, a decision on what semipostals to issue had not been made. If the MSCF stamp is not reauthorized in 2017, USPS could discontinue the MSCF stamp and focus on other semipostal stamps per its plan in the amended regulations. Several bills introduced in the 115 th Congress address the MSCF stamp and other semipostal stamps. Some bills would reauthorize the issuance of the MSCF stamp for an additional four years (e.g., S. 480 and H.R. 1247 ). Further, H.R. 1247 would require an MSCF semipostal stamp depicting an African elephant in addition to an Amur tiger. Other bills would require USPS to issue semipostal stamps supporting other causes, such as the Peace Corps ( H.R. 332 ), efforts to combat invasive species ( H.R. 1837 ), agricultural conservation programs ( H.R. 581 ), and the families of fallen service members ( H.R. 1147 ). H.R. 128 would take away the general authority of USPS to issue semipostal stamps. Under the bill, USPS could issue semipostals as long as the stamps were mandated by Congress. Overall, many people view semipostal stamps as an easy and inexpensive way to raise both funds from the public and awareness for a given organization or cause. (See Table 1 .) Supporters of the MSCF stamp also contend the following points: Some contend that the MSCF stamp has a great deal of support and leverages additional funds for conservation. They note that funds generated and leveraged by the sale of the stamp have provided a boost to conservation and antipoaching efforts for species targeted by the MSCF. Further, they assert that semipostal stamps have the potential to generate greater amounts of funding, as evidenced by the success of the Breast Cancer Research Stamp. According to some, the MSCF stamp provides the public with an opportunity to participate in financing conservation and anti-wildlife trafficking efforts for MSCF species. Some contend that, apart from raising funds for conservation, MSCF stamps can be used to raise public awareness of wildlife trafficking. In addition, some contend that MSCF stamps created in collaboration with efforts in other countries could increase public awareness about wildlife trafficking and conservation on an international scale. Some potential detracting points associated with the issuance of the MSCF stamp and other semipostal stamps include the following: In the past, USPS expressed limited interest in selling semipostal stamps. During a Senate hearing in 2000, a USPS representative noted that USPS did not favor the issuance of further semipostal stamps after the Breast Cancer Research Stamp. USPS stated that fundraising was a diversion from the service's core mission and that the philatelic community opposed semipostals on the grounds that they dilute the quality of the stamp program. USPS further noted that choosing among the many worthy causes eager for semipostal revenue would be difficult and requested that Congress help make decisions on what semipostal stamps should be created in the future. Given USPS's stated intention in 2016 to issue semipostal stamps under its general authority, the service's position may have changed. Further, if USPS issues more types of semipostal stamps, it is unclear whether the increased competition will decrease sales of the MSCF stamp. Some might suggest that causes other than the MSCF could receive wider attention and therefore should be prioritized over the MSCF for semipostal stamp programs. The success of semipostal stamps varies widely. The Breast Cancer Research Stamp has generated several million dollars a year for its cause, but two other semipostal stamps—the "Heroes of 2001" and "Stop Family Violence" semipostal stamps—generated significantly less funding (see Table 1 ). It is difficult to predict which causes would benefit most from the sale of semipostals. Some might contend that future MSCF stamps may not generate sufficient funds to support their existence. No analysis has clarified the precise factors that affect the sales of any particular semipostal. Factors that could affect the success of semipostal sales, such as the MSCF stamp, may include advertising, competition with other semipostal stamps, and popularity of the cause represented by the semipostal stamp. Some might be concerned that the range of eligible uses for funds generated by MSCF stamp is limited to a small set of species. They might suggest creating specific or alternative guidelines so that the funds raised address broader international conversation efforts.

The Multinational Species Conservation Fund (MSCF) supports international conservation efforts benefitting several species of animals, often in conjunction with efforts under the Convention on International Trade in Endangered Species (CITES). MSCF receives annual appropriations under the U.S. Fish and Wildlife Service (FWS) to fund five grant programs for conserving tigers, rhinoceroses, Asian and African elephants, marine turtles, and great apes (gorillas, chimpanzees, bonobos, orangutans, and various species of gibbons). To provide a convenient way for the public to contribute to these activities and to boost funds for these conservation programs, Congress authorized the Multinational Species Conservation Funds Semipostal Stamp Act of 2010 (P.L. 111-241). With the MSCF semipostal stamp (MSCF stamp) program set to expire in 2017, Congress is considering whether to reauthorize the MSCF stamp through pending legislation (e.g., S. 480 and H.R. 1247). Semipostal stamps are postage stamps that are sold with a surcharge above the normal price for a 1-ounce first-class letter stamp. For example, the current price for a first-class stamp is 49 cents, whereas a first-class semipostal stamp costs 60 cents. The additional charge is recognized by the stamp purchaser as a voluntary contribution to a designated cause. Since 1997, Congress has authorized the U.S. Postal Service (USPS) to sell four different semipostal stamps, including the MSCF stamp. The MSCF stamp, entitled "Save Vanishing Species," was first issued by USPS on September 22, 2011. A portion of the stamp's sale proceeds is transferred to the U.S. Fish and Wildlife Service, which administers the MSCF and provides grants to international organizations to help protect the species listed above. As of November 2016, proceeds from MSCF stamp sales had generated more than $3.9 million for the MSCF. Many view semipostal stamps as an easy and inexpensive way to raise funds and awareness for a given organization or cause. Some contend that the MSCF stamp provides a significant amount of funding for MSCF conservation programs and raises awareness about the conservation of certain international threatened and endangered species. Others argue that semipostal stamps detract from the mission of the USPS and divert consumers away from other stamps the USPS has to offer. Additionally, some contend that other causes could benefit more than the MSCF from a semipostal stamp program.

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

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

With the growth in the nation’s highway and aviation systems in the previous decades, intercity passenger rail service lost its competitive edge. Highways have enabled cars to be competitive with conventional passenger trains (those operating up to 90 miles per hour), while airplanes can carry passengers over longer distances at higher speeds than can trains. The Rail Passenger Service Act of 1970 created Amtrak to provide intercity passenger rail service because existing railroads found such service unprofitable. Like other major national intercity passenger rail systems in the world, Amtrak has received substantial government support—nearly $24 billion for capital and operating needs through fiscal year 2001. Amtrak operates a 22,000-mile passenger rail system, primarily over tracks owned by freight railroads. (See fig. 1.) Amtrak owns 650 miles of track, primarily in the Northeast Corridor, which runs between Boston and Washington, D.C. About 70 percent of Amtrak’s service is provided by conventional trains; the remainder is provided by high-speed trains. It offers high-speed service (up to 150 miles per hour) on the Northeast Corridor. About 22 million passengers in 45 states rode Amtrak’s trains in 2000 (about 60,000 passengers each day), a small share of the commercial intercity travel market. In comparison, in 1999, domestic airlines carried about 1.6 million passengers per day, and intercity buses carried about 983,000 people per day (latest data available). Proponents see high-speed rail systems (with speeds over 90 miles per hour) as a promising means for making trains more competitive with these other modes of transportation. They see introduction of high-speed rail in various areas of the country as a cost-effective means of increasing transportation capacity (the ability to carry more travelers) and relieving air and highway congestion, among other things. The Federal Railroad Administration defines high-speed rail transportation as intercity passenger service that is time-competitive with airplanes or automobiles on a door-to-door basis for trips ranging from about 100 to 500 miles. The agency chose a market-based definition, rather than a speed-based definition, because it recognizes that opportunities for successful high- speed rail projects differ markedly among different pairs of cities. High-speed trains can operate on tracks owned by freight railroads that have been upgraded to accommodate higher speeds or on dedicated rights of way. The greater the passenger train’s speed, the more likely it is to require a dedicated right-of-way for both safety and operating reasons. Ten corridors (not including Amtrak’s Northeast Corridor) have been designated as high-speed rail corridors either through legislation or by the Department of Transportation. (See fig. 2.) Designated corridors may be eligible for federal funds through several Department of Transportation programs. According to the Department, the designation also serves as a catalyst for sustained state, local, and public interest in corridor development. The 10 federally designated corridors are generally in various early stages of planning. Amtrak’s Northeast Corridor is in operation and supports high-speed service up to 150 miles per hour. Amtrak’s future is uncertain, in part, because it has made limited progress toward achieving operational self-sufficiency, as required by the Amtrak Reform and Accountability Act of 1997. The act prohibits Amtrak from using federal funds for operating expenses, except for an amount equal to excess Railroad Retirement Tax Act payments, after 2002. If the Amtrak Reform Council (an independent council established by the act) finds that Amtrak will not achieve operational self-sufficiency, the act requires that the railroad submit to the Congress a liquidation plan and the Council submit to the Congress a plan for a restructured national intercity passenger rail system. Amtrak has made little progress in reducing its need for federal operating assistance—i.e., closing its “budget gap”—in order to reach operational self-sufficiency. In fiscal year 2000, Amtrak closed its budget gap by only $5 million, achieving very little of its planned $114 million reduction. Results for the first 8 months of fiscal year 2001 (October 2000 through May 2001) are not encouraging: Amtrak’s revenues increased by about $83 million (6 percent) over the same period in 2000, but its cash expenses increased by about $120 million (7 percent). Overall, in the last 6 years (fiscal years 1995 through 2000), Amtrak has reduced its budget gap by only $83 million. By the end of 2002, about 17 months from now, Amtrak will need to achieve about $281 million in additional financial improvements to reach operational self-sufficiency. Although Amtrak has undertaken a number of actions to reach and sustain operational self- sufficiency by the end of 2002, we believe that it is unlikely that it will be able to do so. Intercity passenger rail systems, like other intercity transportation systems, are expensive. The level of federal financial assistance that would be required to maintain and expand the nation’s intercity passenger rail network far exceeds the amounts that have been provided in recent years. In February, Amtrak’s capital and finance plans called for $30 billion (in constant 2000 dollars) in federal capital support from 2001 through 2020 (an average of $1.5 billion each year, with $955 million in fiscal year 2002) to upgrade its operations and to invest as seed money in high-speed rail corridors. The proposed amount is nearly $10 billion more than the $20.4 billion (in 2000 dollars) that Amtrak has received in federal operating and capital support over the past 20 years (1982 through 2001). The amount is also nearly three times the annual amount that the Congress provided Amtrak in recent years (e.g., $571 million for 2000 and $521 million for 2001 that could be used for both capital and operating expenses). Additionally, fully developing high-speed rail corridors would require substantial amounts of federal capital assistance. Overall cost figures are unknown because corridor initiatives are in various stages of planning. However, the capital costs to fully develop the federally designated high- speed rail corridors and the Northeast Corridor could be $50 billion to $70 billion over 20 years, according to a preliminary Amtrak estimate. The federal government could be expected to provide much of these funds. However, estimates of the costs and the financial viability of high-speed rail systems can be subject to much uncertainty, especially when they are in the early stages of planning. Some of the federal funding (as much as $12 billion) for high-speed rail projects could be provided if the High-Speed Rail Investment Act of 2001 (H.R. 2329) is enacted. (A similar bill, S. 250, was introduced in the Senate.) Amtrak views the bill as an important first step in providing seed money and helping build partnerships with states, localities, and freight railroads critical to the development of high-speed passenger rail in the United States. According to Amtrak and Federal Railroad Administration officials, several federally designated corridors could be ready for infrastructure investment in the next year or so. We agree that the bill offers the potential to facilitate the development of high-speed rail systems outside the Northeast Corridor. However, issues remain to be addressed if corridors are to realize the benefits that proponents see for them, including how to complete projects where costs grow beyond the bond funds made available for them. Further, in applying the bill’s public benefit criteria, the Secretary and others will have to address issues raised by a project that, by itself, is insufficient to provide high-speed rail service on a corridor (or a portion of the corridor). In these situations, one approach could be to require applicants for bond funding to demonstrate that other resources could reasonably be expected to be available to initiate such service or that the project would result in a “useful asset” even if no other funding is provided. There is growing interest in and enthusiasm for intercity passenger rail by states, particularly for high-speed rail systems. Proponents see opportunities for increasing ridership—such as a quadrupling of riders on corridors other than the Northeast Corridor (from 10 million to 40 million passengers annually) by 2020. Proponents see a number of public benefits—such as reduced congestion, improved air quality, increased travel capacity, and greater travel choices—from further developing and expanding such systems. According to the Federal Railroad Administration, 34 states are participating in the development of high- speed rail corridors and these states have invested more than $1 billion for improvements of local rail lines for this purpose. As the Congress moves forward to define the role of intercity passenger rail in our nation’s transportation framework, it needs realistic appraisals of the level, nature, and distribution of public benefits that can be expected to accrue. A public benefit cited to support the expansion of high-speed passenger rail service is its potential to help relieve congestion in air travel and on our nation’s highways. Such service might have some impact on congestion if it were targeted to areas where roads are at or near their design capacity, for example. As more traffic uses these roads, travel time increases sharply and the delays are felt by all travelers. Expectations for the extent to which intercity passenger rail can reduce congestion must be realistic. For example, in 1995, we reported that each passenger train along the busy Los Angeles-San Diego corridor kept about 129 cars off the highway (about 2,240 cars each day)—a small number relative to the total volume. Intercity passenger rail cannot be expected to ease congestion at airports when long distance travel is involved because rail travel is not time- competitive with air travel. For example, the scheduled travel time for the approximately 700-mile distance between Washington, D.C., and Chicago is about 2 hours for air and about 18 hours for conventional Amtrak passenger trains. High-speed rail proponents believe that one potential for high-speed rail is to replace shorter intercity air service, thus freeing up airport capacity for longer-distance travel. High-speed rail may work best for relatively short trips (of several hundred miles or less) where it connects densely populated cities with substantial travel between the cities. Amtrak’s Metroliner service, which travels up to 125 miles per hour between New York City and Washington, D.C., is an example. The Metroliner is one of only two Amtrak routes that made an operating profit in 2000. Notably, the Federal Railroad Administration is supporting the development of high-speed rail corridors that are competitive in travel time with air and highway travel. Another advantage cited for intercity passenger rail is that it is energy- efficient, thus improving air quality. For example, the Congressional Research Service reported that Amtrak is much more energy-efficient than air travel. However, it also found that Amtrak is much less energy- efficient than intercity bus transportation and about equal in energy efficiency as automobiles for trips longer than 75 miles. Our 1995 analysis of the Los Angeles-San Diego corridor found that the increase in emissions from added automobiles, intercity buses, and aircraft would be very small if existing diesel-powered trains were discontinued. Another cited advantage is that an investment in intercity passenger rail can do more to increase transportation capacity than a similar expenditure in another mode. For example, Amtrak recently suggested that a dollar invested in intercity rail can increase capacity 5 to 10 times more than a dollar invested in new highways, depending on location. However, a 1999 study of the costs of providing high-speed rail, highway, and air service in a particular corridor reached different conclusions. This study found that the investment costs (per passenger-kilometer traveled) of providing highway and high-speed rail service between San Francisco and Los Angeles were about the same, but both were substantially higher than the cost of providing air service for the same route. When considering increasing transportation capacity, federal, state, and other decisionmakers will need to understand the extent to which travelers are using existing capacity and are likely to use the increased capacity in various modes. If new capacity is underutilized (e.g., because it is not cost competitive or convenient), then the expected benefit will not be fully realized. Another benefit ascribed to expanding intercity passenger rail is increasing travel choices—as an alternative to air, automobile, or bus travel. For example, the Federal Railroad Administration estimates that the development of the designated high-speed rail corridors could ultimately give about 150 million Americans (representing slightly over half of the nation’s current population) access to one of these rail networks. Yet travel choice entails more than physical access. To offer travel choice, rail must be competitive with other travel modes: it must take travelers where they want to go; be available at convenient times of the day; be competitive in terms of price and travel time; and meet travelers’ expectations for safety, reliability, and comfort. For example, travelers may view a rail system more favorably if it offers multiple trips— rather than one or two round trips—each day and if it arrives and departs at convenient hours. The Congress is facing critical decisions about the future of Amtrak and intercity passenger rail because operating a national intercity passenger rail system as currently structured without substantial federal operating support is very unlikely. Thus, the goal of a national system much like Amtrak’s current system and the goal of operational self-sufficiency appear to be incompatible. In fact, Amtrak was created because other railroads were unable to profitably provide passenger service. In addition, Amtrak needs more capital funding than has been historically provided in order to operate a safe, reliable system that can attract and retain customers. Developing high-speed rail systems is also costly, requiring additional tens of billions of dollars. If intercity passenger rail is to have a future in the nation’s transportation system, the Congress needs to be provided with realistic assessments of the expected public benefits and resulting costs of these investments as compared with investments in other modes of transportation. Such analyses would provide sound bases for congressional action in defining the national goals that will be pursued, the extent that Amtrak and other intercity passenger rail systems can contribute to meeting these goals, state and federal roles, and whether federal and state funds would likely be available to sustain such systems over the long term. Mr. Chairman, this concludes our testimony. We would be pleased to answer any questions you or Members of the Subcommittee might have.

Congress faces critical decisions about the future of the National Railroad Passenger Corporation (Amtrak) and intercity passenger rail. In GAO's view, the goal of a national system, much like Amtrak's current system, and the goal of operational self-sufficiency appear to be incompatible. In fact, Amtrak was created because other railroads were unable to profitably provide passenger service. In addition, Amtrak needs more capital funding than has been historically provided in order to operate a safe, reliable system that can attract and retain customers. Developing a high-speed rail system is also costly, requiring additional tens of billions of dollars. If intercity passenger rail is to have a future in the nation's transportation system, Congress needs realistic assessments of the expected public benefits and the resulting costs of these investments as compared with investments in other modes of transportation. Such analyses would provide sound bases for congressional action in defining the national goals that will be pursued, the extent that Amtrak and other intercity passenger rail systems can contribute to meeting these goals, and whether federal and state money would be available to sustain such systems over the long term.

The Department of Defense defines overseas presence as the right mix of permanently stationed forces, rotationally deployed forces, temporarily deployed forces, and infrastructure required to conduct the full range of military operations. Historically, these forces have been concentrated in three regions—Asia-Pacific, Europe, and Southwest Asia. Forces in Europe include the major elements of two Army divisions; six Air Force wings, which include fighter/attack, refueling, and transport aircraft; one Navy aircraft carrier battle group; and one Marine Corps amphibious group. Prepositioned items include Army stockpiles of equipment for three heavy brigades, equipment and supplies for the lead unit of a Marine Corps expeditionary unit, and six Air Force air base support sets. The Mobility Requirements Study 2005, issued in January 2001, determined the number and mix of mobility systems needed to support the national defense strategy at the time, which required the military to fight and win two nearly simultaneous major wars. This mix includes both airplanes and ships owned by Defense as well as volunteer and chartered civilian airplanes and ships that participate in the Department’s mobility programs. The study investigated mobility requirements stateside as well as between theaters and within individual theaters of war. The analysis determined requirements for the three components of mobility (airlift, sealift, and ground transportation) and assumed that most forces and prepositioned equipment currently stationed overseas, including those in Europe, would remain at the levels planned, at the time of the study, for fiscal year 2005. The study also modeled the en-route airbases needed to support the movement of forces and equipment. The study did not model any scenarios without forward-deployed U.S. troops and equipment in Europe. The study did conclude, however, that the mobility force structure planned for fiscal year 2005 was sufficient to fight and win one major theater war and that a second nearly simultaneous war could be won by shifting air and sealift mobility assets from one theater to the other. During the time of our study, the Department of Defense was conducting the Quadrennial Defense Review, a congressionally mandated review of national defense strategy, which is to analyze, among other things, force structure and military infrastructure. The review’s report, issued on September 30, 2001, stated that the mix of new threats and missions requires the Department to reevaluate the Mobility Requirements Study 2005 in detail and adjust the results as necessary. According to a Department official, this reevaluation includes the en-route basing system, the use of civilian aircraft, and the mobility requirement for the new national defense strategy. A U.S. forward presence in Europe reduces mobility requirements, mobility costs, war-fighting risk, and time required for deployment to operations in Europe or Southwest Asia. A reduction in any of the four elements of forward presence in Europe would have an adverse effect on mobility requirements, costs, and risk, according to Defense officials. Central Command officials have told us that the U.S presence in Europe, particularly the en-route system of airbases and the Air Force assets, would be critical to the success of their operations in Southwest Asia.European Command officials also told us that the U.S. presence allows the Commander to manage the missions assigned to the Command more easily, such as the small-scale contingencies in Bosnia and Kosovo. Many officials generally agreed that some elements have a greater relative impact on mobility requirements than others. DOD officials suggested a relative ranking of U.S. military presence in Europe starting with the en- route system of airbases as having the greatest impact on mobility, followed by prepositioned equipment, Air Force aircraft and personnel, and finally Army combat forces. The Department of Defense maintains a system of en-route airbases in Europe and the Pacific to support long-range airlift operations. These bases provide the basic services, such as parking facilities, maintenance capabilities, equipment to load and unload cargo if needed, and refueling capabilities for airlift aircraft as they move on to their final destinations. Six airbases in Europe are part of this en-route system (see fig. 1). Officials from the commands agreed that the en-route system is critical to operations in Europe and Southwest Asia. The en-route airbase system in Europe gives transport aircraft the ability to fly from the U.S. to Europe and continue from Europe into Southwest Asia in the early phase of a conflict, a range of about 3,500 nautical miles, which is about the distance a C-17 can fly without refueling. Defense officials believe that the system has a significant impact on their ability to move troops and equipment into any location around the world. For example, the loss of Howard Air Force Base in Panama made it more difficult for the United States to move forces quickly and easily into Central and South America. According to Defense officials, if the en-route airbase system in Europe did not exist, it would have to be created before combat forces and equipment can arrive from the United States and move through on their way to an operation in Europe or Southwest Asia. This effort would require using airlift to open airbases along the way, instead of using the same airlift to carry troops and equipment. Without the system, the Department would require more air refueling capability, as well as more airlift. The Mobility Requirements Study 2005 concluded that en-route system capacity is significantly less than requirements but that planned improvements would largely eliminate the shortfall by 2005. Defense transportation officials attribute the shortfall to the shrinkage in U.S. overseas presence and increased reliance on the remaining bases. They believe that the shortfall would cause forces and equipment to arrive in the war theater later than planned, increasing the risk of operations not being executed as planned and the risk of higher casualties. We recently issued a report on the en-route system. This report discussed the system’s shortfall in capacity, the reasons for the shortfall and costs associated with improvements, and the lack of basic information and a coherent management structure to ensure that the operations of the system can be carried out efficiently and effectively. We are continuing to study the system’s planned modernization. According to U.S. Transportation Command officials, the en-route system will continue to be evaluated in the context of the new defense strategy. They stated that they anticipate airlift requirements will be at least as demanding, and possibly more demanding in the new strategy. The services have both land-based and sea-based equipment and munitions prepositioned in Europe. Land-based prepositioned items consist of equipment and supply sets for three Army brigades, one Army artillery battalion, and one Marine expeditionary unit, in addition to six Air Force air base support sets and other Air Force equipment. The Army’s three brigade sets, two in central Europe and one in Italy, include 348 Abrams tanks and 240 Bradley fighting vehicles. In Norway, the Army has equipment for an artillery battalion, which includes 18 self-propelled howitzers, and the Marine Corps stores equipment and 30-day supplies for a Marine expeditionary brigade. Air Force air base support sets— temporary shelters for early-arriving air base personnel—are stored at a site in Luxembourg, with the other equipment stored in sites around Europe. There are also ships afloat in the Mediterranean Sea, which carry equipment and munitions for the Marine Corps and the Air Force (see fig. 2). Prepositioned equipment in Europe greatly reduces the amount of time needed to deploy to a conflict in Europe than if the same forces and equipment have to be moved from the United States using air and sealift. For example, officials stated that the Army has established a brigade set of equipment in Bosnia for rotating troops to use when they deploy to that mission instead of bringing their own. Using this prepositioned equipment saves about $5.5 million in transportation costs if the unit is coming from the United States and about $2.5 million if the unit is based in Europe. Furthermore, an earlier mobility study pointed out that prepositioned equipment is a more attractive option because it might be less expensive than purchasing more airlift aircraft. The Mobility Requirements Study 2005 assumed both afloat and land- based prepositioned equipment would be in place and fully stocked in 2005 and did not model any scenarios without it. Land-based prepositioned equipment in Europe is not used to support the two major theater war strategy. However, some prepositioned equipment can be used as reserve during a major conflict or in small-scale contingencies. In fact, from the start of the mission in Bosnia in December 1995 to June 1998, the Army lent over 7,900 pieces of prepositioned equipment to units in Bosnia. The equipment included, among others, Abrams tanks, Bradley fighting vehicles, and armored personnel carriers. Officials did cite some drawbacks to having large quantities of equipment and weapons prepositioned in specific places. First, it is always difficult to plan conflicts in advance, and there is always the danger that the equipment may be in the wrong place or that two conflicts break out at the same time. Other risks are that prepositioned equipment can be a tempting target for enemies and that the Department might need more flexibility to quickly move to other geographical regions than prepositioning allows. The Air Force has almost 33,000 personnel in Europe assigned to six wings, which include three fighter wings, a refueling wing, an airlift wing, and a multi-mission wing (see fig. 3). These forces can accomplish all the traditional Air Force missions, both conventional and nuclear. The units include 167 fighter/attack aircraft, 36 transport aircraft, and 15 refueling aircraft. Air Force aircraft deployed in Europe allow forces to move more quickly to small-scale contingencies and reduce the burden on airlift and sealift. For example, F-15 pilots from Aviano Airbase in Italy conducted combat missions during the first day of the air campaign in Kosovo. Also, the 31st Fighter Wing based at Aviano is providing the aircraft to support the mission to monitor, control, and police air space over Bosnia. Central Command officials stated that combat and transport aircraft are important to have in Europe and are critical to ensuring the command’s ability to execute its operational plan for a major theater war in Southwest Asia. As stated above, the Mobility Requirements Study 2005 modeled the forward-deployed forces in Europe as they were planned for fiscal year 2005. The exception is the assumption that those forces currently enforcing the “no-fly” zones in Northern and Southern Iraq would no longer be assigned to those missions and therefore would no longer be forward deployed in Europe. This would mean that there would be fewer Air Force personnel and equipment stationed in Europe and a greater mobility requirement for U.S. Central Command to execute their operational plan if a conflict were to arise in Southwest Asia. There are about 69,400 soldiers based in Europe who are assigned to three infantry and three armored brigades, an aviation brigade, and numerous support units (see fig. 4). Some officials we spoke with stated that, of the four elements of forward presence, Army combat and support troops would be the easiest to move, if they were not forward deployed in Europe. In the event of a conflict in Europe or Southwest Asia, 95 percent of ground troops would move by commercial airlift. These troops would then fall in on prepositioned equipment or meet up with their unit equipment, which would move by sealift. According to the Mobility Requirements Study 2005, there is sufficient sealift, except for special purpose sealift, which is used to move watercraft that cannot self-deploy, to handle the requirements of a two major theater war strategy. This would leave the Defense-owned transport aircraft to carry other critical items. But having Army personnel and equipment stationed in Europe allows the Commander, U.S. European Command, to deploy troops faster and easier to a conflict in his theater. For example, forward-deployed troops from Europe were among the first units deployed in both the Bosnia and Kosovo operations because they had to travel a much shorter distance from home station to the theater than troops based in the continental United States. According to a former commander-in-chief of the European Command, the 1st Armored Division’s deployment to Bosnia from its bases in Germany reduced the number of days required for full deployment and cost significantly less than deployment would have by a similarly equipped unit based stateside using strategic airlift and sealift. Also, European-based units deploy to Bosnia and Kosovo primarily by rail and road transportation, and are therefore less costly to move than forces requiring air transportation. War fighting risk is another factor to be considered. If personnel, weapons, and equipment have to be moved to a conflict in Europe or Southwest Asia from the United States, they would take longer or require more airlift capacity than the same units coming from Europe, which would increase risk. For example, the Patriot missile battalion in Europe would need the airlift capacity of 59 C-17 cargo aircraft to move to the area of operations under the Central Command. But the same battalion, coming from the United States, would require twice the airlift capacity to arrive within the same timeframe, according to Defense officials. If that capacity were not available, it would take longer to arrive, which would increase the war fighting risk. Again, the Mobility Requirements Study 2005 modeled the Army forces in Europe as they were planned, at the time of the study, for fiscal year 2005. In written comments on a draft of this report, DOD generally concurred with the information in our report. DOD’s comments are reprinted in appendix I. DOD also provided technical comments, which we incorporated as appropriate. To determine the impact of U.S. forward presence in Europe on mobility, we reviewed the Mobility Requirements Study 2005 and other Defense mobility studies. We obtained briefings, reviewed documents, and interviewed officials at the Office of the Secretary of Defense, the Joint Chiefs of Staff, the military services, the Central Command, the European Command, the U.S. Transportation Command, the Special Operations Command, the Joint Forces Command, and the Air Mobility Command. We also obtained information and held discussions with officials at U.S. Army, Europe, and U.S. Air Forces, Europe, headquarters. We conducted our review from May 2001 through August 2001 in accordance with generally accepted government auditing standards. We are sending copies of this report to the appropriate congressional committees, the Honorable Donald H. Rumsfeld, Secretary of Defense, and The Honorable Mitchell E. Daniels, Jr., Director, Office of Management and Budget. Copies will also be made available to others upon request. Please contact me at (757) 552-8100 if you or your staffs have any questions concerning this report. Major contributors to this report are listed in appendix II. In addition to those named above, Lawrence E. Dixon, Patricia Lentini, Alan Goldberg, and Stefano Petrucci made key contributions to this report.

The United States maintains 100,000 military personnel in Europe to provide rapid response in the event of a military crisis and help shape the international environment. These forward-deployed forces and equipment also facilitate the movement of U.S. forces to an area of operations. DOD has not quantified the impact of a forward presence in Europe on mobility requirements. However, Defense officials believe that, without forward-deployed forces and equipment in Europe, mobility requirements and costs would be considerably higher and deployment times longer, increasing war-fighting risk. The U.S. en-route system of airbases is critical to operations in Europe and Southwest Asia. U.S. prepositioned weapons and equipment in Europe facilitate military operations in nearby areas. Air Force aircraft and personnel deployed in Europe allow forces to move more quickly to small-scale contingencies in the area and reduce the airlift and sealift burden on U.S.-based units. As with the Air Force, Army combat and support units stationed in Europe allow forces to move more quickly and at less cost to small-scale contingencies in the area.

Federal agencies rely on both their general contracting authorities and the special authorities of the Small Business Act when contracting with small businesses. The general contracting authorities—the Armed Services Procurement Act (ASPA) of 1947 and the Federal Property and Administrative Services Act (FPASA) of 1949—grant defense and civilian agencies, respectively, broad authority to contract with any responsible firm, including small businesses. However, ASPA and FPASA do not authorize agencies to set aside contracts for small businesses, or conduct procurements in which only small businesses, or specific types of small businesses, may compete. Only the Small Business Act does this, authorizing agencies to set aside part or all of certain procurements for 1. small businesses; 2. women-owned small businesses; 3. service-disabled veteran-owned small businesses (SDVOSBs); 4. small businesses located in Historically Underutilized Business Zones (HUBZones) (HUBZone small businesses); and 5. small businesses owned and controlled by socially and economically disadvantaged individuals participating in the Small Business Administration's (SBA's) Minority Small Business and Capital Ownership Development Program (commonly known as the 8(a) Program) (8(a) firms). Although ASPA and FPASA do not authorize set-asides for small businesses, agencies may still "favor" small businesses in certain procurements conducted under their authority by using small-business status as an evaluation factor in negotiated procurements. A negotiated procurement is one in which the government awards the contract to the contractor whose offer represents the "best value" for the government in light of various factors established by the government and incorporated into the solicitation for the contract. Cost or price must be among these factors, but it need not be the primary factor or carry any specific weight in the overall award. Other factors may include contractors' past performance, compliance with the solicitation requirements, technical excellence, management capability, personnel qualifications, prior experience, and small-business status. Commentators sometimes call contracts that are awarded using firms' size as an evaluation factor "preference contracts" because they allow agencies to prefer various types of small businesses without setting aside a procurement for them. Not all contracts awarded to small businesses under ASPA and FPASA are preference contracts, however. Some contracts are awarded to small businesses using sealed bidding, with awards made solely on the basis of price and without consideration of firms' size. In other cases, agencies use negotiated procurements without evaluation factors focusing on firms' size. Contracts awarded under any authority—ASPA, FPASA, or the Small Business Act—count toward the government-wide and agency-specific goals for contracting with small businesses. The Business Opportunity Development Reform Act (BODRA) of 1988 requires the President to set government-wide goals for the percentage of federal contract and/or subcontract dollars awarded to various categories of small businesses. These goals must be equal to or exceed certain percentages specified in statute, as illustrated in Table 1 . A 1978 amendment to the Small Business Act similarly requires that agency heads, in consultation with the SBA, set agency-specific goals for the percentage of contract dollars awarded to the same categories of small businesses. These goals are to "realistically reflect the potential" of small businesses to perform federal prime contracts and subcontracts and thus vary among agencies. Commentators frequently note the government's failure to meet either government-wide or agency-specific goals, and some Members of Congress have suggested that the current government-wide goals are too low. Limitations on subcontracting have applied to contracts set aside for small businesses under the authority of the Small Business Act since 1986. These limitations result from statutory and regulatory provisions prohibiting agencies from awarding prime contracts to small businesses unless the small business performs a certain percentage of the contract work itself, instead of subcontracting it. The percentage that must be performed by the small business varies depending on the nature of the contract, as Table 2 illustrates. Prior to GAO's decision, no judicial or administrative tribunal appears to have addressed whether these limitations apply to preference contracts as well as set-asides. Certain contracts set-aside for "local firms," of any size, in disaster or emergency areas under the authority of the Stafford Act are also subject to limitations on subcontracting. These limitations require that similar percentages of work be performed by the "local firm," as opposed to subcontracted, on the types of contracts listed in Table 2 . However, these limitations are arguably unaffected by the GAO decision discussed here because they are not related to firm size. In its November 16, 2009, decision, GAO denied Washington-Harris Group's protest alleging that the Army National Guard Bureau improperly awarded a contract for case management and administrative services to Skyline Ultd Inc. The procurement had not been set aside for SDVOSBs. However, the solicitation had included an evaluation factor focusing on firms' SDVOSB status, as well as a statement that the source selection authority would "favorably view an offeror's Small Business status." Under the solicitation, firms' SDVOSB status and understanding of the requirements carried equal weight, and each was more important than any other evaluation factor. Price was the least important factor. For purposes of the solicitation, offers were considered to come from SDVOSBs if either (1) the prime contractor was an SDVOSB or (2) the offeror was a joint venture involving an SDVOSB firm that would perform more than 50% of the work. There was no dispute that Skyline proposed to perform less than 50% of the contract requirements. Washington-Harris Group argued that the solicitation and the Federal Acquisition Regulation (FAR) required SDVOSB contractors to perform at least 50% of the contract requirements in order to be evaluated favorably as an SDVOSB. Washington-Harris Group's reference to the FAR appears to have been to Part 19.14, which requires, among other things, that a clause containing the limitations on subcontracting discussed in Table 2 (Clause 52.219-27) be incorporated in all solicitations. GAO rejected Washington-Harris Group's arguments regarding the solicitation because the solicitation distinguished between SDVOSB prime contractors and SDVOSB joint venturers and required only the latter to perform more than 50% of the work. It also rejected the argument that the FAR clause containing the limitations on subcontracting applied to this procurement. GAO reached this conclusion because the FAR states that Clause 52.219-27 is required only when "[o]ffers are solicited only from service-disabled veteran-owned small business concerns [and] [o]ffers received from concerns that are not service-disabled veteran-owned small business concerns shall not be considered." Given this language, GAO concluded that the clause did not apply to this procurement because the procurement was not set aside for SDVOSBs. Because Clause 52.219-27 did not apply to the procurement, it found that the agency did not improperly evaluate Skyline favorably as an SDVOSB when awarding the contract even though Skyline proposed to subcontract over 50% of the work on the contract. GAO did not directly address the differences between the general contracting authorities and the Small Business Act in its decision. It also did not address contracting with small businesses that are not SDVOSBs. However, because contracts awarded under the general contracting authorities cannot be set aside for SDVOSBs while those awarded under the authority of the Small Business Act can be, and because the same limitations on subcontracting apply to other types of small businesses as apply to SDVOSBs, GAO's decision can arguably be construed to mean that limitations on subcontracting do not apply to any non-disaster and non-emergency "preference contract" awarded to any type of small business under the general contracting authorities. Some commentators have suggested that GAO's decision could result in agencies using more preference contracts and fewer set-asides . Such a shift from set-asides to preference contracts would not necessarily result in the government paying higher prices. While greater subcontracting generally tends to increase costs because each tier of subcontractors imposes additional overhead costs, recent legislation may help ensure that the government is aware of and does not compensate certain costs. For example, Section 866 of the Duncan Hunter National Defense Authorization Act for FY2009 imposed "limitations on tiering of subcontractors" by requiring that the FAR be amended to "minimize the excessive use … of subcontractors, or of tiers of subcontractors, that add no or negligible value" by non-defense agencies. The amendments to the FAR required by Section 866 took effect on October 14, 2009, and require contractors to "provide information on indirect costs and profit/fee and value added with regard to the subcontract work" when over 70% of the total cost of the work to be performed under the contract will be subcontracted. The amendments also bar contractors from receiving indirect costs or profits/fees on work performed by subcontractors when the contractor "add[ed] no, or negligible value." Similar requirements already applied to defense agencies under Section 852 of the John Warner National Defense Authorization Act for FY2007, and in a memorandum dated December 23, 2009, the Director of Defense Procurement and Acquisition Policy announced that the Department of Defense would delete its agency-specific regulations implementing Section 852 and comply with the government-wide regulations implementing Section 866. Ignoring costs, any shift that might occur could potentially have both benefits and drawbacks. On the one hand, increased use of preference contracts could result in increased contracting with small businesses because agencies could award contracts to firms that would have lacked the capacity to perform the required percentage of the work on a set-aside contract. Increased contracting, in turn, could result in the government, as a whole, and individual agencies performing better on their goals for contracting with small businesses. On the other hand, increased use of preference contracts could limit small businesses' development because they would no longer be effectively required by the limitations on subcontracting to develop the in-house resources to perform certain set-aside contracts. This may be a particular concern with 8(a) firms because the 8(a) Program is, in part, intended to help small businesses owned and controlled by socially and economically disadvantaged individuals develop. Agencies could also potentially use preference contracts to steer work to preferred subcontractors, who are not competitively selected.

This report discusses Washington-Harris Group, a protest filed with the Government Accountability Office (GAO) alleging, among other things, that an agency improperly awarded a "preference contract" to a service-disabled veteran-owned small business that proposed to subcontract a greater percentage of work on the contract than allowed under the Small Business Administration's limitations on subcontracting. GAO denied the protest, in part, because it found that limitations on subcontracting apply only to contracts "set aside" for small business, not to preference contracts. A preference contract is one awarded in an unrestricted competition in which firms' small-business status is an evaluation factor, while a set-aside is a procurement in which only small businesses may compete. Limitations on subcontracting are statutory and regulatory provisions that require small businesses to perform certain percentages of the work on federal prime contracts themselves, rather than subcontract it to other firms. GAO's decision appears to be a case of first impression and can arguably be construed to mean that existing limitations on subcontracting are inapplicable to non-disaster and non-emergency contracts awarded to any type of small business under the general contracting authorities. Commentators have suggested that the decision may result in increased use of preference contracts by federal agencies. The federal government awarded $96.8 billion in prime contracts and subcontracts to small businesses in FY2009 through set-asides and other contracting vehicles.

Section 3092 of Title 50, U . S. Code , requires that the congressional intelligence committees be kept "fully and currently informed" of all intelligence activities, other than a covert action, by the Director of National Intelligence (DNI) and the head of any of the component organizations of the intelligence community. Notifications shall be in writing and include the nature of the circumstances and an explanation of their significance. Intelligence Community Directive (ICD) 112, Congressional Notification , specifies that it is the specific component organization that determines which activities are reportable. Some notifications, by their nature, are after the fact, such as a significant intelligence failure "extensive in scope, continuing in nature" impacting U.S. national security. ICD 112 also provides guidance on significant anticipated activities that might qualify as reportable beforehand. They include, for example 1. intelligence activities that entail, with reasonable foreseeability, significant risk of exposure, compromise, and loss of human life; 2. intelligence activities that are expected to have a major impact on important foreign policy or national security interests; or 3. significant activities undertaken pursuant to specific direction of the President or the National Security Council (other than covert action). Typically, intelligence activities that are considered less sensitive are briefed to the membership of each committee in line with statute. In certain circumstances, however, the Section 3092 requirement may be met through notifications to select members of the House and Senate, a group colloquially known as the Gang of Four . Gang of Four intelligence notifications are usually oral briefings provided only to the chairs and ranking members of the two congressional intelligence committees. Gan g of Four notifications are not based in statute or in the rules of either of the two congressional intelligence committees. They are a practice generally accepted by the leadership of the intelligence committees in circumstances when the executive branch believes a non-covert action intelligence activity—often a collection program—to be of such sensitivity that a restricted notification is warranted in order to reduce the risk of disclosure, inadvertent or otherwise. These notifications are provided as briefs without any written record or notetaking. Section 3093 of Title 50, U . S. Code sets out how the congressional intelligence committees are to be informed of covert actions, to include use of cyber capabilities when employed as a covert action. The President may authorize the conduct of a covert action only if he or she determines such an action is "necessary to support identifiable foreign policy objectives of the United States, and is important to the national security of the United States." Such determinations are to be generally set forth in a written finding to be reported to the congressional intelligence committees as soon as possible after the approval of a finding, and before the covert action starts. Findings must be made in writing unless immediate United States action is required. If time constraints prevent the initial preparation of a written finding , a written finding is to be produced as soon as possible but not later than 48 hours after the authorizing decision was made. Findings may not authorize or sanction a covert action, or any aspect of any such action, that already has occurred, and may not authorize any action that would violate the Constitution or any statute of the United States. Findings are to specify each department, agency, or entity of the U.S. government authorized to fund or otherwise participate in any significant way in the activity. They also are to specify whether it is contemplated that any third party not an element of, or a contractor or contract agent of, the U.S. government, or who is not otherwise subject to U.S. government policies and regulations, will be used to fund or otherwise participate in any significant way, or be used to undertake the covert action on behalf of the United States. The DNI and responsible component of the intelligence community must also keep the congressional intelligence committees informed of any significant change to a finding or failure of the covert action. If the President determines that it is "essential" to limit access to a covert action finding in order to "meet extraordinary circumstances affecting vital interests of the United States," he may limit the notification of such a finding to the chairs and ranking minority members of the House and Senate intelligence committees, the Speaker and minority leader of the House of Representatives, and the majority and minority leaders of the Senate. These Members are colloquially known as the Gang of Eight . Whenever such a limited notification is given, the President is further required to "fully inform" the congressional intelligence committees in a "timely fashion" of the relevant finding, and is further required to provide a statement summarizing executive rationale for not providing prior notice of the relevant finding. After 180 days, the President must either provide all Members of the intelligence committees with access to the finding or explain why access must remain limited. Gang of Four and Gang of Eight notifications differ in several ways. A principal difference is that the Gang of Four notifications procedure is not based in statute, and is a more informal process that generally has been accepted by the leadership of the intelligence committees over time. By contrast, the Gang of Eight procedure is provided in statute, and imposes certain statutory obligations on the executive branch. For example, when employing this particular notification procedure, the President must make a determination that vital U.S. interests are at stake if a notification is to be restricted to the Gang of Eight and provide a written statement setting forth the reasons for limiting notification to the Gang of Eight , rather than notifying the full membership of the intelligence committees. Another distinction between the two notification procedures, at least since 1980 when the Gang of Eight procedure was first adopted in statute, is that Gang of Four notifications generally are limited to non-covert action intelligence activities, including principally but not exclusively intelligence collection programs viewed by the intelligence community as being particularly sensitive. In contrast, Gang of Eight notifications are statutorily limited to particularly sensitive covert action programs. Notwithstanding these distinctions, there is no provision in statute that restricts whether and how the chairs and ranking members of the intelligence committees share with committee members information pertaining to the intelligence activities that the executive branch has provided only to the committee leadership, either through Gang of Four or Gang of Eight notifications. Nor, apparently, is there any statutory provision that sets forth any procedures that would govern the access of appropriately cleared committee staff to such classified information. Some critics of restricted intelligence notification of Congress, such as the Gang of Eight procedures, maintain that they do not allow for effective oversight because participating Members "cannot take notes, seek the advice of their counsel, or even discuss the issues raised with their committee colleagues." Other critics contend that restricted notifications such as Gang of Eight and Gang of Four briefings have been "overused." Still others believe Gang of Four notifications are unlawful because they are not statutorily based. Supporters of Gang of Eight notifications assert that such restricted notifications continue to serve their original purpose, which is to protect operational security of particularly sensitive intelligence activities while they are ongoing. Further, they point out that although Members receiving these notifications may be constrained in sharing detailed information about the notifications with other intelligence committee members and staff, these same Members can raise concerns directly with the President and the congressional leadership and thereby seek to have any concerns addressed. Supporters also argue that Members receiving these restricted briefings have at their disposal a number of rarely used legislative remedies if they decide to oppose particular programs, including the capability to use the appropriations process to withhold funding. The four congressional defense committees exercise oversight of sensitive Department of Defense (DOD) activities. These activities, on occasion, may appear similar to clandestine activities or covert action conducted by the intelligence community. However, they differ in that they are conducted under a military chain of command, generally in support of, or in anticipation of a military operation or campaign conducted under Title 10 authority. Insofar as Congress exercises oversight over these activities, DOD's requirements for notifying Congress differ from those of the intelligence community. Greater integration of military and intelligence activities—desired from an operational standpoint—has presented challenges when determining whether they fall primarily under Title 10 or Title 50 authority. Moreover, prior notification, which is generally required for covert action and significant anticipated intelligence activities, is not typical of congressional notifications of sensitive DOD activities conducted in support of a larger military operation. Following are notification requirements for sensitive military activities that, from an operational standpoint, could be confused with covert or clandestine activities of the intelligence community. Traditional military activities are referenced but not defined in statute. They have been described as military activities "under the direction and control of a United States military commander...preceding and related to hostilities which are either anticipated...or ... ongoing, and, where the fact of the U.S. role in the overall operation is apparent or to be acknowledged publicly." Traditional military activities can be conducted covertly (i.e., U.S. sponsorship is secret and unacknowledged) or clandestinely (i.e., the activity itself is secret) in support of the overall military operation. Some have maintained that because these activities can resemble covert action in that they can influence political, military or economic conditions abroad, they warrant greater oversight. In statute, however, traditional military activities and routine support to these activities are exempt from the congressional notification requirements for covert action. Operational Preparation of the Environment (OPE) is defined in DOD doctrine —not in statute—as "activities in likely or potential areas of operations to prepare and shape the operational environment." OPE can be conducted covertly or clandestinely and often involves the employment of U.S. Special Operations Forces (SOF) in counterterrorism operations. Joint Publication 3-05 cites examples of OPE as "close-target reconnaissance…reception, staging, onward movement, and integration…of forces…[and] infrastructure development." Because the military conducts OPE as a category of traditional military activities, these operations are not subject to congressional notification as a covert action or significant anticipated intelligence activity. Congress has been concerned that the military overuses the term OPE resulting in these operations effectively circumventing oversight by the congressional intelligence committees. OPE can also include clandestine intelligence collection, conducted under Title 10 authority, for example, that falls outside the jurisdiction of congressional defense committees, and, as part of a larger military operation, might not be brought to the attention of the congressional intelligence committees. Routine support to traditional military activities might include logistic support to impending or ongoing military operations which involve U.S. Armed Forces unilaterally and in which the U.S. role is generally acknowledged. They can be conducted clandestinely or covertly, however because they have a supporting function to a larger military operation in which the role of the United States is acknowledged, they are not considered covert action and do not require congressional notification separate from the operations they support. Other-than-routine support to traditional military activities includes activities abroad that involve other than unilateral employment of U.S. forces. They may be conducted covertly and clandestinely (i.e., the activity as well as U.S. sponsorship are secret). They include recruitment, training or other assistance to non-U.S. individuals, organizations or populations to conduct activities—wittingly or not—that support U.S. military objectives. Because they may be conducted well in advance of an anticipated military operation and because they can be intended to influence political, economic or military conditions in another country —such as swaying public opinion—other-than-routine support to traditional military activities is subject to congressional notification for covert action under Section 3093, Title 50 of the U. S. Code . Under Title 10, U. S. Code , the Defense Clandestine Service, subordinate to the Defense Intelligence Agency, is designed to provide dedicated clandestine support to DOD to meet unique strategic military intelligence priorities. The Secretary of Defense shall provide to the defense and intelligence committees of the House and Senate quarterly briefings on the deployments and collection activities of personnel of the Defense Clandestine Service. Section 485 of Title 10, U.S. Code requires the Secretary of Defense to provide monthly briefings to the congressional defense committees that describe DOD counterterrorism operations and related activities. Under the statute, each such briefing must include specific elements a global update on activity within each geographic combatant command and how such activity supports the respective theater campaign plan; an overview of authorities and legal issues, including limitations; an overview of interagency activities and initiatives; and any other matters the Secretary considers appropriate. Section 130k of Title 10 of the U . S. Code provides notification requirements for cyber capabilities "intended for use as a weapon" that specifically do not constitute covert action. Section 130k specifies that covert actions are exceptions to these notification requirements. For these operations, the Secretary of Defense must notify the congressional defense committees in writing within 48 hours of the use of a cyber weapon that has been approved for use under international law; on a quarterly basis for any cyber capability developed for use as a weapon; and immediately following the unauthorized disclosure of a cyber weapon capability. Offensive cyberspace operations are defined as operations "intended to project power by the application of force in and through cyberspace." Defensive cyberspace operations are defined as active or passive cyberspace operations "to preserve the ability to utilize friendly cyberspace capabilities and protect data, networks, net-centric capabilities, and other designated systems." Section 484 of Title 10 U . S. Code mandates the Secretary of Defense to provide the congressional defense committees in writing quarterly briefings "on all offensive and significant defensive military operations in cyberspace carried out by the Department of Defense during the immediately preceding quarter." The briefings are to include the command involved and an overview of the legal authorities under which the operations took place. Sensitive Military Operations are defined in Section 130f(d) of Title 10 U. S. Code as (1) kill or capture operations conducted by U.S. Armed Forces outside a declared theater of active armed conflict , or conducted by a foreign partner in coordination with the U.S. Armed Forces that target a specific individual or individuals; or (2) an operation conducted by the U.S. Armed Forces outside a declared theater of active armed conflict in self-defense or in defense of foreign partners, including during a cooperative operation. The Secretary of Defense shall submit notice in writing to the congressional defense committees within 48 hours of the operation (or within 48 hours of providing verbal notice to Congress), to include occasions when DOD provides support to covert actions conducted under Title 50 authority ; immediately following an unauthorized disclosure of an operation; "periodically" in the form of briefs detailing the personnel and equipment assigned. The Secretary of Defense is further required to brief the congressional defense committees periodically on DOD personnel and equipment assigned to sensitive military operations, including DOD support to such operations conducted under Title 50 authorities. Sensitive military cyber operations are a subcategory of sensitive military operations. Section 130j(c) of Title 10 of the U . S. Code defines sensitive military cyber operations as operations carried out by the armed forces of the United States that are intended to cause cyber effects outside a geographic location where the Armed Forces of the United States are involved in hostilities or where hostilities have been declared by the United States. The Secretary of Defense shall provide the congressional defense committees notice within 48 hours of the operation taking place; immediately subsequent to an unauthorized disclosure of a sensitive military cyber operation.

Covert action and clandestine activities of the intelligence community and activities of the military may appear similar, but they involve different notification requirements and usually are conducted under different authorities of the U. S. Code. The requirements for notifying Congress of activities of the intelligence community originated from instances in the 1970s when media disclosure of past intelligence abuses underscored reasons for Congress taking a more active role in oversight. Over time, these requirements were written into statute or became custom. Section 3091 of Title 50, U. S. Code requires the President of the United States to ensure that the congressional intelligence committees are "kept fully and currently informed of the intelligence activities of the United States, including any significant anticipated intelligence activity," significant intelligence failures, illegal intelligence activities, and financial intelligence activities. Intelligence activities also include covert action as outlined under Section 3093(e) of Title 50, U.S. Code. Section 3092 of Title 50, U. S. Code sets out the congressional notification requirements for non-covert action intelligence activities. Section 3093 of Title 50 sets out the congressional notification requirements for covert actions. Both sections 3092 and 3093 explicitly state such notification is to be provided to the "extent consistent with due regard for the protection from unauthorized disclosure of classified information relating to sensitive intelligence sources and methods, or other exceptionally sensitive matters." The President and intelligence committees are responsible for establishing the procedures for notification, which are generally to be done in writing. Partly in deference to this higher standard, such notifications are sometimes limited to specific subgroups of Members of the Senate and the House of Representatives in certain circumstances, as defined by law and custom.

Industry observers have raised concerns about perceived gaps in food import safety over the past few years. One particular area of concern focuses on imported goods that are released into the United States market after the Food and Drug Administration (FDA) detains them under an import alert. Generally, these goods may be released into the market after an importer "provides evidence that the entry is in compliance with federal laws and regulations." The proof can be provided by private laboratories that have tested samples of the detained imported goods, and importers can present results indicating that the goods are FDA-compliant. Currently, the FDA does not have express statutory authority to regulate the private laboratories that sample or test these imported goods, although the FDA regulates the importer and imported products. This report focuses on proposals for FDA regulation of the private laboratories that analyze imported, FDA-regulated goods. It provides background on the relationship between the FDA and the private laboratories, as well as information about agency and Bush Administration proposals and legislative responses in the 110 th Congress (particularly the Dingell Draft, S. 2418 , H.R. 5904 , and H.R. 5827 ) to the current lack of regulation. Administrative responsibility for regulation of certain types of imported food is delegated to the FDA under Chapter VIII of the Federal Food, Drug and Cosmetic Act (FFDCA). Generally, the FFDCA provides that an article must be refused admission into the United States, with some exceptions, on the following bases: [i]f it appears from the examination of [samples of food, drugs, devices, and cosmetics which are being imported or offered for import into the United States] or otherwise that (1) such article has been manufactured, processed, or packed under insanitary conditions ..., or (2) such article is forbidden or restricted in sale in the country in which it was produced or from which it was exported, or (3) such article is adulterated, misbranded, or in violation of section 505. Under the FFDCA, the FDA can automatically detain a product without physically examining it. Automatic detention occurs as a result of the issuance of import alerts, which "identify problem commodities and/or shippers and/or importers and provide guidance for import coverage," such as if "those products or shippers ... have met the criteria for automatic detention." Importers whose products have been detained because of import alerts can petition for the release of their products by presenting testimony from private, or third-party, laboratories that shows that their products are compliant. In order to do this, they submit either their products or samples of their products for testing to the private laboratories. For the products to be released, the private laboratories must then present test results that indicate that the products do not violate the FDA's entry standards. The test results can be returned to the importer, who will give it to the FDA, or the lab can turn in the results directly to the FDA. The FDA may then use this data "to determine whether the imported food complies with the [FFDCA] and can be released into the United States." The FDA has recognized these private laboratories as an integral part of food import safety. According to the FDA, the third-party labs help ensure that the food reaching the market complies with agency standards and allow agency laboratory resources to be devoted to other regulatory matters. However, there has been criticism regarding the autonomy given to the importers and private laboratories. Such criticism varies from the manner in which the samples are collected for testing to the reporting of test results by the importers to the FDA. For example, at a 1998 hearing before a Senate Governmental Affairs subcommittee, a former customs broker testified regarding the abuses of the private laboratory system in relation to the product samples given to the private laboratory. He recounted how some importers selected samples for testing that were from shipments that had not been detained or they submitted multiple samples for testing until a sample was found to be compliant. As the FDA has noted, "[b]oth of these activities permit importers to market adulterated or misbranded foods in the United States, representing a health hazard." Another example occurred early in 2008, when the chairman of a private laboratory that samples and tests FDA-regulated goods testified at a House Energy and Commerce subcommittee hearing. His testimony concerned encounters with importers who deleted information from test results that evidenced FDA violations and then submitted the altered results to the FDA, as well as suggestions for improving the FDA's regulation of imported foods via the use of laboratories and existing FDA programs. Additionally, he stated that the FDA should be able to visit and audit laboratories at their physical location at any time. Currently, the FDA may conduct voluntary, on-site assessments of such laboratories. Recent agency, administration, and legislative proposals address various ways to curb the potential for such abuses by monitoring private laboratories. The FDA Office of Regulatory Affairs publishes a Laboratory Manual with a section on Private Laboratory Guidance. The Guidance "seeks to establish a uniform, systematic, and effective approach to ensuring that private labs performing analyses on FDA-regulated imported commodities submit scientifically sound data." To that end, the Guidance provides recommendations on sampling techniques, information regarding the training and experience of private lab analysts, considerations for reviewing the analytical packages, and suggested criteria for collecting audit samples. In general, a guidance document is a type of policy statement, "issued by an agency to advise the public prospectively of the manner in which the agency proposes to exercise a discretionary power." General statements of policy do not "impose any rights and obligations," nor do they "establish a 'binding norm'" because they are "not finally determinative of the issues or rights to which [they are] addressed." In April 2004, the FDA proposed a rule to regulate imported food product sampling services and private laboratories. It was withdrawn without comment on August 5, 2005. Some of the recommendations from the FDA's Laboratory Guidance were put forth in the proposed rule. The proposed rule would have required "samples to be properly identified, collected and maintained." The proposed sampling requirements outlined specific provisions for identification, collection, and documentation from the time the sample was collected to the time the sample was delivered to a private laboratory. Particularly, the proposed rule placed an emphasis on an "independent" execution of the sampling, to ensure that the sampling and the tests are conducted without the importer's influence. It went further to require "laboratories to use validated or recognized analytical methods, and to submit analytical results directly to FDA." It purposefully omitted a laboratory accreditation requirement. In November 2007, the FDA prepared a report entitled the Food Protection Plan . The FDA's plan is integrated with a separate plan, prepared for President Bush by the Interagency Working Group on Import Safety, called an Action Plan for Import Safety . Both reports highlight how the Bush Administration would like to improve food import safety. The Food Protection Plan recommends legislation that would give the FDA the authority to accredit private laboratories. The Action Plan for Import Safety notes that the FDA plans to issue guidance "that would set standards for the sampling and testing of imported products, including the use of accredited private laboratories submitting data to FDA to assist in evaluating whether an appearance of a violation may be resolved." Several bills introduced in the 110 th Congress addressed the issue of private laboratory regulation. One common theme among these legislative proposals is the accreditation or certification of private laboratories. Representative Dingell of the House Committee on Energy and Commerce began circulating a bill in draft form in April 2008. The draft sought to alter the FFDCA in a variety of ways, including by requiring new sampling and testing protocols for food shipments. The Dingell draft would have added a new section to the FFDCA dedicated to the testing of food shipments. The new section would have addressed three areas of food shipment testing: (1) testing in facilities that manufacture, process, pack, or hold food that would not have been certified under the provisions that the bill would have established (in which case accredited laboratories would conduct sampling and testing of each shipment and simultaneously submit the sampling results electronically to the Health and Human Services (HHS) Secretary and the facility owner); (2) testing in like facilities that would have been certified under the bill's provisions (accredited laboratories would conduct sampling and testing of shipments "on a periodic basis specified by the Secretary" and submit the sampling results electronically to the HHS Secretary and the facility owner); and (3) accreditation of laboratories by the HHS Secretary "for the purpose of conducting sampling and testing." The section would have required the Secretary to establish a standard for accreditation and mandated that all certified and non-certified facilities submit all their samples to accredited labs only. The accredited labs would then return the results simultaneously to the FDA and to the importer. The EAT SAFE Act was introduced by Senator Casey in December 2007. The bill would have required private laboratories that conduct tests on FDA-regulated imports to be certified by the agency under a fee-funded certification and audit process developed by the FDA. Laboratories would have had to submit to the agency the results of all tests conducted. The Safe FEAST Act was introduced in April 2008 by Representative Costa. In particular, it would have allowed the HHS Secretary to recognize "qualified" laboratories to test imported foods, once the laboratories have established, to the recognizing agency's satisfaction, that they maintain internal quality systems and meet other criteria. The Secretary would also have been required to establish a registry of such laboratories. Alternative laboratories would have been allowed to test samples as well, but additional requirements, such as the submission of evidence to the Secretary to establish the laboratory's qualifications and the submission to the FDA of all testing results and data, would have been imposed on such laboratories. This bill was introduced by Representative Roskam in April 2008. Among other things, the bill would have required the addition of a section to the FFDCA that would have required the HHS Secretary to certify all private laboratories and sampling services that test imported FDA-regulated goods. Laboratories would have had to allow audits and submit all test results directly to the FDA. In addition, importers, laboratories, and sampling services would have faced civil penalties for knowingly falsifying test results.

Industry observers have raised concerns about perceived gaps in food import safety over the past few years. One particular area of concern focuses on imported goods that are released into the United States market after the Food and Drug Administration (FDA) detains them under an import alert. Generally, these goods may be released into the market after an importer "provides evidence that the entry is in compliance with federal laws and regulations." Currently, the FDA does not have express statutory authority to regulate the private labs that test these imported goods for compliance, although the FDA has authority over the importer and imported products. This report focuses on obstacles to and legislative proposals for FDA regulation of the private laboratories that analyze imported FDA-regulated goods. It provides background to that relationship, as well as information about agency and Bush Administration proposals and legislative responses from the 110th Congress (particularly the Dingell Draft, S. 2418, H.R. 5904, and H.R. 5827) to the lack of regulation.

Congress has been interested in the use of year-round schools for several decades. In April 1972, the House of Representatives, General Subcommittee on Education of the Committee on Education and Labor held a hearing on the "year-round school concept." Since that time, various bills have been introduced to support the use of year-round schools. This report provides background information about year-round schools, specifically what they are, how prevalent they are today, state policies on year-round schooling, what recent research says about year-round schooling, and the arguments for and against this approach. In general, year-round schools are schools that reorganize a traditional school year without allowing for any extended breaks in instruction (e.g., 10 week summer vacation). Rather, the days usually included in summer break are redistributed to create regular breaks throughout the year. This is sometimes referred to as operating on a "balanced calendar." According to the National Association for Year-Round Education (NAYRE), schools primarily offer year-round education on a single track or multi-track. Schools using a single track approach to year-round education provide a balanced calendar for instruction in which summer vacation is shortened with additional vacation days added throughout the school year to create breaks from instruction, which are sometimes referred to as "intersessions." Intersessions may be used by the school to provide remediation or enrichment activities for students. Schools using a single track approach to year-round education often structure their school calendar in one of three ways: 1. 45-15 calendar: 45 days (9 weeks) of instruction, followed by 15 days (3 weeks) of vacation/intersession; 2. 60-20 calendar: 60 days (12 weeks) of instruction, followed by 20 days (4 weeks) of vacation/intercession; or 3. 45-10 calendar: 45 days (9 weeks) of instruction, followed by 10 days (2 weeks) of vacation/intersession. Multi-track year-round education is often used to assist schools that are dealing with capacity issues. By establishing a multi-track system, a school district may be able to avoid having to build a new school or temporary structures (e.g., portable classrooms). A multi-track system is implemented by dividing teachers and students into tracks or groups of similar sizes that each has its own schedule. Students and teachers in a given track follow the same schedule, are in school at the same time, and are on vacation at the same time. Common multi-track calendars include 4 tracks operating on a 45-15 calendar (45 days of instruction, 15 days of vacation/intersession), 60-20 calendar, or 90-30 calendar. A 60-15 calendar is generally used in schools with 5 tracks. For example, if a school that could accommodate 750 students had 1,000 students enrolled, it could divide the students into tracks or groups of 250 students (i.e., 4 tracks). The school could then have three tracks at school at any given time and one track on vacation or intersession. This could enable the school to meet student demand without necessitating expansion of the school facility. While year-round schools have existed in some form since the early 1900s, there was substantial growth in the number of year-round schools from the mid-1980s to 2000. In 1985, there were 410 year-round public schools, serving about 350,000 students. By 2000, the number of year-round public schools had grown to 3,059 schools, serving almost 2.2 million students in 45 states. The number of year-round public schools dropped to 2,936 public schools, serving 2.1 million students, by the 2006-2007 school year. Based on data available from the National Center for Education Statistics (NCES) for the 2011-2012 school year (most recent data available), over the last several years there has again been growth in the number of public schools operating as year-round schools. During the 2011-2012 school year, there were 3,700 public schools across the nation operating on a year-round calendar cycle. This accounted for 4.1% of all public schools in the country. The highest concentration of schools operating on a year-round calendar cycle was in the South (40.5%), followed by the West (24.3%) with equal proportions of these schools in the Northeast and Midwest (16.2% in each region). The majority of schools operating on a year-round calendar cycle are traditional public schools (3,300 schools) compared with 400 charter schools operating on a year-round calendar cycle. In terms of school level, over half (57%, 2,100 schools) of all schools operating on a year-round calendar cycle are elementary schools, 900 are secondary schools, and 600 are combined elementary and secondary schools. Most schools operating on a year-round calendar schedule enroll 200 or more students. In addition, 47% of all schools operating on a year-round calendar schedule had 75% or more of their students eligible for free or reduced-price lunch. Nearly 60% of schools operating on a year-round calendar schedule had at least 50% of their students eligible for free or reduced-price lunch. In 2011, most states required public schools to provide 180 days of instruction each school year. The average number of instructional days per school year for schools with year-round calendar cycles was 189 days during the 2011-2012 school year. This number varied by region of the country, type of school (traditional or charter), school level, and enrollment. The most recent data on state policies on year-round schools were compiled by the Council of Chief State School Officers (CCSSO) for the 2008 school year. Of the states for which information was available, 17 states had a policy on year-round schools. In addition, 30 states reported that they had school districts in their states with year-round schools. Some states specified the number of districts within the state that had year-round schools operating. Of the states reporting a specific number of districts, most reported that five or fewer school districts had year-round schools. However, in some states, the number of school districts with year-round schools constituted a majority of the school districts in the state (e.g., Delaware). As part of their survey responses, some states provided their definitions of year-round schools. These definitions are varied as illustrated below. Arkansas: A year-round school must meet the state requirement for the minimum number of school days between July 1 and June 30 of each school year and have no vacation, including summer vacation, last more than six weeks. Oklahoma: A year-round school must offer at least 10 months of 4 weeks during which the school is in session and instruction is offered for not less than 180 days. Texas: A year-round school must operate during the "greater part" of 10 months and up to 12 calendar months of the year. The research on the extent to which year-round schools affect student achievement has generally been found to be inconclusive and lacking in methodological rigor. For example, in reviewing the literature on the effects of year-round schooling on student achievement, Cooper et al. concluded that "a truly credible study of modified calendar effects has yet to be conducted." Wu and Stone reached similar conclusions and noted that while "there is a general consensus that [year-round school] has no effect or a small positive effect on student performance, the methodology of many studies had left copious room for more rigorous verification." Their own study of whether year-round schools in California had an effect upon the outcome and growth of schools' Academic Performance Index (API) scores used more sophisticated statistical analyses than prior studies and found that year-round schools failed to affect either measure. Cooper et al. in their meta-analysis of studies on year-round school found that the "cumulative results of past studies is so close to a chance outcome that the argument that poor designs have led to random findings remain plausible." They also note, however, that there is some evidence that suggests that year-round schools may improve academic achievement for economically disadvantaged students. A second aspect of year-round education that researchers have sought to examine is whether year-round schools affect the cost of education. Based on a review of the literature conducted by the Education Commission of the States (ECS), schools operating on multi-tracks experience reduced capital expenditures (i.e., facility costs), but do not tend to achieve savings with respect to operating expenditures (e.g., personnel costs, electricity). However, the savings from capital expenditures outweigh any increases in operating expenditures. It is less clear, however, whether schools operating on a single-track experience cost savings. A more recent study of year-round schools in one setting, Clark County, NV, generally supports the conclusions noted by ECS, finding significant cost savings as a result of the implementation of multitrack year-round schools. The researchers concluded that savings were largest with respect to real estate and operations. Based on reviews of the literature conducted by Cooper et al., Wu and Stone, and ECS, as well as arguments put forth by proponents of year-round education, including NAYRE, and opponents of year-round education, including the Coalition for the Traditional School Year and Summer Matters, this section provides an overview of some of the arguments made in favor of or against year-round education. The use of year-round schools can prevent the loss of learning over the summer, which may be a particular problem for children with special educational needs (e.g., English learners) and addresses the uneven effects of the summer break on students based on socioeconomic status. Using a modified school calendar creates opportunities to provide remediation and enrichment activities to students during the school year rather than waiting to provide these activities during summer school. Proponents of year-round education often argue that the use of a balanced calendar increases student achievement, but as previously discussed, the research in this area is inconclusive. There may be cost savings realized when operating multitrack year-round schools, particularly with respect to capital expenditures. The use of a balanced calendar could help to prevent staff burnout by providing more frequent breaks for staff. In addition, teachers could choose to substitute teach during breaks to earn additional money while providing students with a teacher with greater knowledge of the curriculum than a substitute teacher that did not regularly work at the school. The initial implementation of a year-round school program may be costly due to a variety of factors including preparing a facility to serve students for more months during a calendar year. Opponents of year-round education note that while year-round schools may not have a negative effect on education, the data on its positive effects are inconclusive. Instead of changing school calendars, they argue that the focus should be on issues such as effective teaching and parent involvement. Operating on a year-round schedule may require paying more staff (e.g., administrative staff and maintenance workers) on 12-month contracts instead of 9-month contracts, thereby increasing operational costs. In addition, staff may experience burnout, particularly principals who are managing buildings that are now occupied by students for the entire calendar year. Families may find it difficult to have their children on different schedules if year-round schooling is not offered districtwide or if their children end up on different tracks in a multitrack school. There may be a lack of opportunities for older students to have summer jobs, and there may be complications related to student participation in extracurricular activities over breaks. Concerns are also raised about year-round schooling by organizations (e.g., amusement parks, campgrounds) that could potentially be adversely affected economically by a change in the school calendar. It may be difficult to conduct large maintenance projects and may require doing routine maintenance at night or on the weekends, which may incur overtime costs. Several disadvantages related specifically to multitrack year-round schools are cited, including possible difficulties in offering remediation if space is an issue, lack of convenience for teachers who may not have a regular classroom in which to keep their teaching materials, and disrupted communication and training among staff as a portion of the staff is always out of the school.

In general, year-round schools are schools that reorganize a traditional school year without allowing for any extended breaks in instruction (e.g., 10-week summer vacation). Rather, the days usually included in summer break are redistributed to create regular breaks throughout the year. While year-round schools have existed to some extent since the early 1900s, there was substantial growth in the number of year-round schools from the mid-1980s to 2000. In 1985, there were 410 year-round public schools, serving about 350,000 students. By 2000, the number of year-round public schools had grown to 3,059 schools, serving almost 2.2 million students in 45 states. During the 2011-2012 school year, there were 3,700 public schools across the nation operating on a year-round calendar cycle. The research on the extent to which year-round schools affect student achievement has generally been found to be inconclusive and lacking in methodological rigor. There is some consensus that year-round schooling has no effect or a small positive effect on student performance; however, the quality of the studies that led to these findings has been questioned. There are various pros and cons raised in relation to year-round schools. Among the arguments in favor of this calendar approach are stemming the loss of learning over the summer, creating opportunities during the school year to provide remediation and enrichment activities, and cost savings. Among the arguments against the year-round school approach are the costs associated with the initial implementation of a year-round school, the greater need to focus instead on other aspects of education (e.g., effective teaching and parent involvement), scheduling difficulties for families if year-round schools are not implemented districtwide or if their children end up on different schedules within the same school; the lack of opportunities for older students to have summer jobs; and issues related to student participation in extracurricular activities while on breaks.

Hurricane Katrina struck the Gulf Coast on August 29, 2005, causing significant infrastructure damage to 83 GSA owned and leased federal buildings and courthouses in Louisiana, Alabama, and Mississippi, necessitating the eventual relocation of 2,600 federal employees from 28 federal agencies. Sixteen of the damaged federal buildings owned by GSA provided 1.7 million square feet of office space, and the remaining 67 GSA-leased facilities totaled 1.3 million sq. ft. in rented space. GSA, through its Public Buildings Service (PBS), is the primary federal real property and asset management agency, with 11 regional offices that oversee GSA owned and leased federal buildings and courthouses. GSA is also responsible for the design and construction of federal courthouses within GSA's 11 regional districts. GSA's Southeast Region 4 includes Alabama, Florida, Georgia, Kentucky, South Carolina, North Carolina, Mississippi, and Tennessee. As of September 21, 2007, one leased facility remained closed (see Table 1 ). The states of Arkansas, Louisiana, New Mexico, Oklahoma, and Texas comprise GSA's Greater Southwest Region 7, with one GSA-owned facility remaining closed to the public (see Table 2 ), as of September 21, 2007. GSA field personnel began advanced preparations to secure GSA buildings as soon as weather predictions indicated that Hurricane Katrina would make landfall. Preparations included fueling generators, shutting down electrical systems, placing sand bags, and boarding up the lower levels of multi-storied buildings. Although not all GSA owned and leased facilities suffered major structural damage in the affected areas, there was no supporting critical infrastructure, such as water, electricity, sewage systems, or even accessible roads to reach the federal facilities. There were also related environmental concerns that might affect the health and safety of federal employees in the affected areas. More than 30 GSA technical and building specialists conducted building inspections to assess when federal facilities might be reopened. GSA used trailers and obtained emergency 180-day leases in surrounding areas to provide temporary office space. A related problem was that many federal employees were forced to evacuate to areas located away from federal facilities when their homes were destroyed by Hurricane Katrina. In order to accommodate workers who formerly resided and worked in New Orleans and relocated to Baton Rouge, GSA leased temporary office space in this general area. According to GSA regional specialists, it was a difficult task to find suitable office space for all of its federal tenants, and the administration was forced to use leasing and relocation priorities. In the aftermath of Hurricane Katrina, GSA first leased all available office space in Baton Rouge, which was urgently needed by the Department of Homeland Security's (DHS) Federal Emergency Management Agency (FEMA). Leased office space in Baton Rouge was obtained by GSA for the Social Security Administration, and the Department of Justice's Federal Bureau of Investigation and the Drug Enforcement Administration. GSA signed a lease in the Baton Rouge area to house Department of the Treasury Internal Revenue Service employees formerly located in New Orleans. GSA officials also leased available office space in Lafayette, LA; Shreveport, LA; and Jackson, MS, to accommodate other federal tenants. GSA completed inspections of administration-leased facilities as soon as possible to determine the extent of structural damage. When GSA specialists determined that the leased properties were not fully habitable, the agency notified landlords that existing leases would be terminated within 15 days after notification. GSA officials also stated that, in many instances, it was difficult for the agency to locate landlords who had relocated elsewhere. According to the Administrative Office of the Courts, the U.S. Court of Appeals for the Fifth Circuit returned the court's operations to its New Orleans headquarters at the John Minor Wisdom Court of Appeals on January 9, 2006. Regular panel hearings of the court began in February 2006. In the aftermath of Hurricane Katrina, two GSA-owned federal courthouses, the John Minor Wisdom U.S. Court of Appeals for the Fifth Circuit and the Hale Boggs Federal Building and U.S. Federal Courthouse for the Fifth Circuit, were closed in New Orleans. Both courthouses suffered wind damage, broken windows, and roof leaks, but the buildings' structures are intact. On December 12, 2005, GSA reported that both the Hale Boggs and the John Minor Wisdom courthouses had reopened to the public. The U.S. Court of Appeals for the Fifth Circuit relocated to the U.S. Federal Courthouse in Houston, TX, for a three-month period, with court business resuming on September 21, 2005. Many judges and court employees lost their homes in the New Orleans area, and temporary housing was obtained for them in Gonzalez, LA, centrally located between Baton Rouge and New Orleans. GSA-leased court space in Houma, LA, was also acquired for district court judges and court staff who were formerly located in the Hale Boggs U.S. Federal Courthouse. The Dan M. Russell, Jr. U.S. Federal Courthouse for the Fifth Circuit, Gulfport, MS, was also closed in the aftermath of Hurricane Katrina. Preliminary reports indicated that the building was intact, but had sustained severe water and wind damage. Court operations were initially suspended for 30 days and relocated to Jackson, MS. Housing was sought for judges and staff throughout the district who lost their homes because of Hurricane Katrina. On December 12, 2005, GSA reported that the courthouse had resumed partial operations. A fourth GSA-owned courthouse, the John A. Campbell U.S. Federal Courthouse for the Eleventh Circuit, Mobile, AL, was closed due to damaged mechanical systems; however, both the Southern District of Alabama district and bankruptcy courts resumed operations in the courthouse. Hurricane Katrina was responsible for significant infrastructure damage to 83 GSA owned and leased federal buildings and courthouses. The 109 th Congress authorized $38 million to GSA's Federal Buildings Fund for repairs to the damaged federal facilities. In order to accommodate nearly 2,600 displaced federal tenants from 28 federal agencies, GSA leased temporary office space in Baton Rouge, LA; Lafayette, LA; and Jackson, MS. Current law authorizes the GSA Administrator to enter into an emergency lease agreement during any period declared by the President to require emergency leasing authority. An emergency lease may not be for more than 180 days, without prior congressional approval of a lease prospectus. In the Senate, S. 1708 , the Emergency Lease Requirements Act of 2005, was introduced by Senator James Inhofe and 11 bipartisan cosponsors on September 15, 2005. The proposed legislation would have amended current law to authorize the GSA Administrator to enter into emergency lease agreements during a major disaster or other emergency declared by the President or the head of a federal agency under applicable federal law. The term of an emergency lease could not have exceeded five years without congressional approval of a lease prospectus. The GSA Administrator would have been required to submit an annual report describing any emergency lease to the House Committee on Transportation and Infrastructure and the Senate Committee on Environment and Public Works by April 1 of each year. On September 15, 2005, S. 1708 was referred to the Senate Committee on Environment and Public Works. The bill was reported without amendment on January 26, 2006, and placed on the Senate Legislative Calendar. No further action was taken on S. 1708 in the 109 th Congress. On October 25, 2005, H.R. 4125 was introduced in the House by Representative Bill Shuster and two bipartisan cosponsors. House bill H.R. 4125 would have authorized the GSA Administrator to make repairs on federal buildings that were damaged by Gulf Coast hurricanes without prior congressional approval of a prospectus. The proposed legislation would also have authorized the GSA Administrator to enter into emergency lease agreements for up to five years. The GSA Administrator's emergency authorities would have been valid for one year following enactment of H.R. 4125 . At least five days before making any building repairs, the GSA Administrator would have been required to submit reports to the House Transportation and Infrastructure Committee and the Senate Environment and Public Works Committee detailing costs and completion estimates. No later than 15 days after completion, the GSA Administrator would have been required to submit a final report stating total repair costs. The proposed legislation would also have required the GSA Administrator to submit a detailed report to the House and Senate Committees no later than 10 days after entering into an emergency lease agreement. H.R. 4125 was reported favorably by the House Committee on Transportation and Infrastructure on June 27, 2006, and placed on the Union Calendar. No further action was taken on H.R. 4125 before adjournment of the 109 th Congress. No legislation pertaining to hurricane-damaged federal facilities has been introduced in the 110 th Congress. Table 1 indicates the one federal facility that remained closed in GSA Region 4, as of September 21, 2007. Table 2 indicates the one federal facility that remained closed in GSA Region 7, as of September 21, 2007.

Hurricane Katrina struck the Gulf Coast on August 29, 2005, causing widespread flooding and significant infrastructure damage to 83 federal facilities in Louisiana, Mississippi, and Alabama. The General Services Administration (GSA) is the federal government's primary real property agency, with 11 regional offices that oversee GSA owned and leased federal buildings and courthouses. As of September 21, 2007, one leased building remained closed in the aftermath of Hurricane Katrina in GSA's Southeast Region 4, which includes Alabama and Mississippi. In GSA's Greater Southwest Region 7, one GSA facility remained closed in Louisiana. GSA courthouse facilities in New Orleans, LA, which were temporarily relocated to Houston, TX, reopened in New Orleans on January 9, 2006. The 109th Congress authorized $38 million to GSA's Federal Buildings Fund for repairs to damaged federal facilities (119 Stat. 2782). No legislation pertaining to hurricane-damaged federal facilities has been introduced in the 110th Congress. This report will not be updated.

Recognizing the risk that a standing army could pose to individual civil liberties and the sovereignty retained by the several states, but also cognizant of the need to provide for the defense of the nation against foreign and domestic threats, the framers of the Constitution incorporated a system of checks and balances to divide the control of the military between the President and Congress and to share the control of the militia with the states. This report summarizes the constitutional and statutory authorities and limitations relevant to the employment of the armed forces to provide disaster relief and law enforcement assistance. Congress has the constitutional power to raise, support, organize and regulate the armed forces, art. I, §8, cls. 11-14. These clauses do not expressly limit Congress as to how, when, or where it might employ the armed forces, although presumably such use must be in furtherance of other constitutional powers. Congress is also empowered to provide for calling forth the militia to execute federal law and to suppress insurrections, §8, cl. 15, and to provide for organizing, arming, and disciplining the militia and to govern them when they are employed in the service of the United States, §8, cl. 16. Once the army is raised or the militia called forth, the President serves as their Commander-in-Chief, art. II, §2, cl. 1. And of course, the President is vested with the responsibility to "take Care that the Laws be faithfully executed," art. II, §2, cl. 3. Congress has delegated to the President the authority to use the armed forces to respond to a variety of domestic crises, and Presidents have asserted some inherent authority to use the military even without express statutory authorization. Under the Constitution, states retain the primary responsibility and authority to provide for civil order and the protection of their citizens' lives and property. However, the Constitution provides that the federal government is responsible for protecting the states against invasion and insurrection, and, if the state legislature (or the governor, if the legislature cannot be convened) requests it, protection against "domestic Violence," art. IV, §4. States may not keep their own standing armies, art. I, §10, cl. 3, but they retain the authority to call forth their militias to suppress insurrections or quell civil disturbances, subject to any restraints imposed by the Constitution or by Congress, in the exercise of its constitutional powers. Congress has complete authority over federal lands, military installations, and similar areas, art. I, §8, cl. 17. The Constitution does not explicitly bar the use of military forces in civilian situations or in matters of law enforcement, but the United States has traditionally refrained from employing troops to enforce the law except in cases of necessity. The Posse Comitatus Act (PCA), 18 U.S.C. §1385, punishes those who, "except in cases and under circumstances expressly authorized by the Constitution or Act of Congress, willfully use[] any part of the Army or the Air Force as a posse comitatus or otherwise to execute the laws.... " The act does not apply to the Navy or Marines and does not prohibit activities conducted for a military purpose (base security or enforcement of military discipline) that incidentally benefit civilian law enforcement bodies. The act does not apply to the National Guard unless it is employed in federal service. Questions arise most often in the context of assistance to civilian police. At least in this context, the courts have held that, absent a recognized exception, the PCA is violated (1) when civilian law enforcement officials make "direct active use" of military investigators, (2) when the use of the military "pervades the activities" of the civilian officials, or (3) when the military is used so as to subject citizens to the exercise of military power that is "regulatory, prescriptive, or compulsory in nature." Congress has provided for a number of statutory exceptions to the PCA by explicitly vesting law enforcement authority either directly in a military branch (e.g, the Coast Guard) or indirectly by authorizing the President or another government agency to call for assistance in enforcing certain laws. Congress has delegated authority to the President to call forth the military during an insurrection or civil disturbance, 10 U.S.C. §§331-335. Section 331 authorizes the President to use the military to suppress an insurrection at the request of a state government, which is meant to fulfill the federal government's responsibility to protect states against "domestic violence" (although the term "insurrection" is arguably much narrower than the phrase "domestic violence"). Section 332 delegates Congress's power under the Constitution, art. I, §8, cl. 14, to the President, authorizing him to determine that "unlawful obstructions, combinations, or assemblages, or rebellion against the authority of the United States make it impracticable to enforce the laws of the United States" and to use the armed forces as he considers necessary to enforce the law or to suppress the rebellion. Section 333 permits the President to use the armed forces to suppress any "insurrection, domestic violence, unlawful combination, or conspiracy" if law enforcement is hindered within a state, and local law enforcement is unable to protect individuals, or if the unlawful action "obstructs the execution of the laws of the United States or impedes the course of justice under those laws." This section was enacted to implement the Fourteenth Amendment and does not require the request or even the permission of the governor of the affected state. The Insurrection Act has been used to send the armed forces to quell civil disturbances a number of times during U.S. history, most recently during the 1992 Los Angeles riots and during Hurricane Hugo in 1989, during which widespread looting was reported in St. Croix, Virgin Islands. If the President decides to respond to such a situation, generally upon the recommendation of the Attorney General and, if necessary, the request of the governor, he must first issue a proclamation ordering the insurgents to disperse within a limited time, 10 U.S.C. §334. If the situation does not resolve itself, the President may issue an executive order to send in troops. Congress has also authorized the armed forces to share information and equipment with civilian law enforcement agencies, 10 U.S.C. §§371-382, although prohibiting the use of armed forces personnel to make arrests or conduct searches and seizures. Department of Defense (DOD) regulations assert another exception that does not rest on statutory authority, but is available in very limited circumstances and covers "Actions that are taken under the inherent right of the U.S. Government ... to ensure the preservation of public order and to carry out governmental operations within its territorial limits, or otherwise in accordance with applicable law, by force, if necessary." The emergency power, according to DOD directives, is available to protect federal property and functions, and to authorize prompt and vigorous Federal action, including use of military forces, to prevent loss of life or wanton destruction of property and to restore governmental functioning and public order when sudden and unexpected civil disturbances, disaster, or calamities seriously endanger life and property and disrupt normal governmental functions to such an extent that duly constituted local authorities are unable to control the situation. Ordinarily, the implementation of such operations must be authorized by executive order, but DOD officials and military commanders may take emergency action without prior authorization in cases where "sudden and unexpected civil disturbances (including civil disturbances incident to earthquake, fire, flood, or other such calamity endangering life) occur, if duly constituted local authorities are unable to control the situation and circumstances preclude obtaining prior authorization by the President." The Robert T. Stafford Disaster Relief and Emergency Assistance Act (the Stafford Act, 42 U.S.C. §§5121, et seq.) authorizes the President to make a wide range of federal aid available to states that are stricken by a natural or man-made disaster. It provides statutory authority for employing the U.S. armed forces for domestic disaster relief. Permitted operations include debris removal and road clearance, search and rescue, emergency medical care and shelter, provision of food, water, and other essential needs, dissemination of public information and assistance regarding health and safety measures, and the provision of technical advice to state and local governments on disaster management and control. The authority does not constitute an exception to the PCA. In the event of a disaster that results in the wide-scale deterioration of civil law and order, the authority to employ active duty troops to perform law enforcement functions must be found elsewhere. The Stafford Act does not authorize the use of federal military forces to maintain law and order. Federal forces would have no authority, for example, to act as traffic controllers or provide security for facilities used in the relief efforts, unless such activities serve a valid military purpose. Patrolling in civilian neighborhoods for the purpose of providing security from looting and other activities, would not be permissible, although patrolling for humanitarian relief missions, such as rescue operations and food delivery (which may have the incidental benefit of deterring crime) would not violate the PCA. Military resources may be employed in the following situations. Upon the request of the governor, the President may task DOD to provide any emergency work the President deems essential for the preservation of life and property in the immediate aftermath of an incident that may ultimately qualify for assistance under a declaration. Such assistance is available for up to ten days prior to a presidential declaration of an emergency or a major disaster, 42 U.S.C. §5170b(c). Emergency work can include the clearance and removal of debris and wreckage and the restoration of essential public facilities and services, 42 U.S.C. §5170(c)(6)(B). The provision is designed for instances where communications problems impede the ability to meet the prerequisites for declaring an emergency or major disaster or the ability to coordinate the work through FEMA. Unless the President determines that a disaster implicates preeminently federal interests, the declaration of an emergency under the Stafford Act requires that the governor of the affected state first make a determination that the situation is of such severity and magnitude that the state is unable to respond effectively without federal assistance, which determination must include a detailed definition of the type and amount of federal aid required, 42 U.S.C. §5191. The governor must also implement the state's emergency response plan, for example, by activating the state's National Guard units under state control (in which case the PCA does not apply to them), and provide information regarding the resources that have been committed. The prerequisites for a major disaster declaration are similar to those for an emergency, 42 U.S.C. §5170. The governor must first execute the state's emergency plan and make a determination that state capabilities are insufficient to deal with the circumstances. However, the governor need not specify which forms of assistance are needed. The governor must provide information regarding the resources that have been committed and certify that the state will comply with cost sharing provisions under the Stafford Act. There is no provision for the declaration of a major disaster without the governor's request. If the governor activates Guard units and keeps them under state control, those units are not restricted by the PCA. If the state's National Guard units are called into federal service to respond to an emergency or a major disaster, their role is restricted to the disaster relief operations authorized under the Stafford Act. DOD doctrine allows commanders to provide resources and assistance to civil authorities without or prior to a declaration under the Stafford Act when a disaster overwhelms the capabilities of local authorities and necessitates immediate action "to save lives, prevent human suffering, or mitigate great property damage." Immediate response actions can include the types of activities authorized under the Stafford Act, including, at the request of civil authorities, rescue, evacuation, and emergency medical treatment, restoration of essential public services, debris removal, controlling contaminated areas, safeguarding and distributing food and essential supplies, and supplying interim emergency communications. The controlling directive does not require a request from state or local officials, but states that "DoD Components shall not perform any function of civil government unless absolutely necessary on a temporary basis under conditions of Immediate Response. Any commander who is directed, or undertakes, to perform such functions shall facilitate the reestablishment of civil responsibility at the earliest time possible." The immediate response authority is not provided for in any statute, but is said to have deep historical roots. While the immediate response authority does not constitute an exception to the PCA, in some cases it may appear so. The potential exists for a disaster relief situation, under which DOD invokes the immediate response authority, to rapidly deteriorate into a civil disturbance. Law enforcement activities in connection with a civil disturbance are an exception to the PCA. Therefore, DOD would be able to assist civil authorities with both disaster relief and law enforcement, simultaneously, under separate authorities. The 1906 San Francisco earthquake is a noted example of a simultaneous natural disaster/civil disturbance. The commanding general of the Pacific Division, on his own initiative, deployed troops to assist civil authorities to stop looting and protect federal buildings, while also assisting firefighters in battling the raging fire.

Natural disasters, such as Hurricane Sandy, raise questions concerning the President's legal authority to send active duty military forces into a disaster area and the permissible functions the military can perform to protect life and property and maintain order. The Stafford Act authorizes the use of the military for disaster relief operations at the request of the state governor, but it does not authorize the use of the military to perform law enforcement functions, which is ordinarily prohibited by the Posse Comitatus Act. However, the President may invoke other authorities to use federal troops to aid in the execution of the law, including the Insurrection Act. This report summarizes the possible constitutional and statutory authorities and constraints relevant to the use of armed forces, including National Guard units in federal service, to provide assistance to states when a natural disaster impedes the operation of state and local police.

In April 2013, envelopes sent to President Obama and a U.S. Senator tested positive for ricin, a deadly toxin derived from castor beans. Ricin is often mentioned as a potential bioterror weapon and has been posed a terrorist and criminal threat. For example, in 2010, CBS News reported that the Department of Homeland Security had uncovered a credible threat of attacks using poisons, such as ricin, in salad bars and buffets, and historically unknown individuals have sent letters and packages containing ricin to federal officials. This report provides general information about ricin, identifies historical examples of its use, discusses its potential as a bioterror weapon, and summarizes how its possession is currently regulated. Ricin is a potent plant toxin found in the seeds of the castor plant ( Ricinus communis ). It works by blocking cell protein synthesis, which results in cell death. This cell death can lead to organ failure and death. Several well-known processes describe isolation of ricin from castor beans. Several recipes for extracting ricin from castor beans are available on the Internet, from commercial bookstores, in patents, and in scientific literature. The industrial production of castor oil yields bean mash with approximately 5% ricin content. The quality of these directions varies. Some directions would produce only crude preparations while others would produce nearly pure ricin. Even the crude preparations have been considered deadly. Persons exposed to ricin exhibit different symptoms depending on the route of exposure. Ingestion of ricin causes nausea, vomiting, diarrhea, gastric hemorrhaging, and shock. With a sufficient dose, death occurs within three to five days. Injection of ricin produces severe internal bleeding and tissue death, which can result in the collapse of major organ systems. Death often follows such a collapse. Inhalation of ricin irritates the lung linings and airways, leading to weakness and fever. Lesions may occur in the lungs causing tissue swelling, further damage, and possibly death. The lethal dosage of ricin depends on the route of exposure. Inhaled or injected doses as low as 3 to 5 micrograms per kilogram body weight may be lethal. This dose equals approximately 240 to 400 micrograms for a 175-pound individual. The lethal dosage for ingestion is higher because the gastrointestinal tract absorbs ricin less effectively. Ricin does not poison through contact with intact skin. Several currently available methods can detect the release of ricin. Potential field detectors include automated air samplers that could detect the release of aerosolized ricin and swab-type tests that could signal the presence of ricin on surfaces. Highly sensitive laboratory-based tests can be performed on samples gathered on site. Some locations, such as postal facilities processing congressional mail, have implemented detection systems. Generally though, such detectors are not widely implemented in civilian settings. Health care workers diagnosing ricin poisoning may be a leading signal of a covert ricin attack. When detection systems indicate the presence of ricin, laboratories participating in the Centers for Disease Control and Prevention Laboratory Response Network perform confirmatory testing using a variety of methods. These methods test for the presence of components of the castor bean, the presence of ricin, and the whether any ricin might be toxic. A test showing the presence of castor bean components is preliminary and confirmed through detection of ricin toxin. Tests to identify presence of castor bean components and ricin toxin require six to eight hours to perform, while determining the toxicity of the ricin may take 48 hours or more. No ricin vaccine is currently available for use by the general public. The Department of Defense has investigated vaccines in animal studies and engaged in human safety studies under Investigational New Drug (IND) protocols. Other research continues in the academic and private sectors to develop new vaccines. Additionally, animal studies suggest that passive prophylaxis, (i.e., injecting animals with antibodies obtained from other immunized animals), is effective against injected and ingested ricin. For inhaled ricin, the most effective prophylaxis appears to be through vaccination. No medicine has been approved specifically to treat ricin exposure. The progressive nature of the toxin's effects requires hospitalization and continual supportive care. In cases of ingestion, the recommended treatment of activated charcoal limits the ricin exposure. Stomach pumping may be considered if it can be performed within an hour of ingestion. Researchers continue to attempt to find new, more effective treatments for ricin exposure. Ricin has been considered for use as a weapon since at least 1918, when military programs investigated the feasibility of bomb-dissemination of aerosolized ricin. Such a weapon was reportedly developed by the United States and the United Kingdom, but never used. Iraq reportedly attempted to weaponize ricin in the 1980s. In 1978, ricin was used to assassinate Bulgarian dissident Georgi Markov in London. A novel, umbrella-based weapon was used to inject a pellet containing ricin into Markov. Shortly after this episode, a similar pellet was discovered to be the source of illness of another Bulgarian exile, Vladimir Kostov. Some individuals attempting to possess ricin, generally through its manufacture in makeshift laboratories, have been arrested and subsequently convicted of violations of the Biological Weapons Anti-Terrorism Act ( P.L. 101-298 ). For example, in 2008, a man in Las Vegas poisoned himself manufacturing ricin in a hotel room. He survived the poisoning and was subsequently convicted of possession of a biological toxin. In other cases, unidentified individuals have sent ricin to government officials. In October 2003 a letter containing ricin addressed to the Department of Transportation was intercepted, and in November 2003, the U.S. Secret Service reportedly intercepted an envelope containing ricin addressed to the White House. In February 2004, ricin was detected in the Dirksen Senate Office Building in the mailroom of Senator Frist. Additionally, trace amounts of ricin were reportedly found in various locales in Afghanistan, and an insurgent group in Iraq reportedly attempted to acquire ricin. Many experts believe that ricin would be difficult to use as a weapon of mass destruction. Ricin needs to be injected, ingested, or inhaled by the victim to injure. Biological weapons experts estimate that 8 metric tons would be required to cover a 100 km 2 area with enough toxin to kill 50% of the people. Thus, using ricin to cause mass casualties becomes logistically impractical even for a well-funded terrorist organization. Furthermore, some experts have stated that the required preparatory steps to use ricin as a mass casualty weapon also pose significant technical barriers that may preclude such use by non-state actors. Although causing mass casualties would be difficult, many experts agree that ricin could be a formidable weapon if used in small-scale attacks. The Centers for Disease Control and Prevention have listed ricin as a Category B Agent because it would be moderately easy to disseminate and result in moderate morbidity rates and low mortality rates. Although a string of attacks targeting dozens of victims at a time may not produce mass devastation, they might instill terror in the population, causing local economic disruption. Ricin is considered both a biological and a chemical weapon, and internationally treaties explicitly prohibit its use. The United States is a party to both the Biological Weapons Convention and the Chemical Weapons Convention. The Biological Weapons Convention bans the development, production, and stockpiling of biological agents or toxins for non-peaceful purposes. The Chemical Weapons Convention bans the development, production, stockpiling, transfer, and use of chemical weapons. The United States has entered into multilateral agreements to prevent the development of both chemical and biological weapons by other nations and terrorist groups. Congress has enacted several statutes to prohibit the misuse of ricin. The Antiterrorism and Effective Death Penalty Act of 1996 ( P.L. 104-132 ) directed the Department of Health and Human Services to establish a list of biological agents and toxins that could threaten public health and safety, procedures for governing the transfer of those agents, and training requirements for entities working with these "select agents." The Department of Health and Human Services lists ricin as a select agent (42 C.F.R. 73), and restricts possession, transfer, and use of ricin under the Public Health Security and Bioterrorism Preparedness Act of 2002 ( P.L. 107 - 188 ). The USA PATRIOT Act ( P.L. 107 - 56 ) limits ricin access to select bona fide researchers who must undergo background investigation by the Federal Bureau of Investigation. Also, facilities containing ricin above certain thresholds must register with the Department of Health and Human Services and maintain certain security measures. It is not illegal to possess or transfer castor beans, nor castor bean plants; only the isolated ricin is regulated. Both castor beans and castor bean plants are openly sold within the United States, and castor bean plants grow naturally in the southwest.

In April 2013, envelopes sent to President Obama and a U.S. Senator tested positive for ricin, a deadly toxin derived from castor beans. Ricin has been identified as a potential bioweapon. Ricin is extremely toxic by ingestion, inhalation, and injection. No treatment or prophylaxis currently exists, though research into new therapies and vaccines against ricin exposure continues. Additionally, research to improve ricin detection is ongoing. Although governments have investigated ricin's potential use as a military weapon, individuals have used ricin in small quantities. Most experts believe that ricin would be difficult to use as a weapon of mass destruction, but do not discount its potential as a weapon of terror. Ricin is a select agent, and its possession, transfer, or use is regulated under domestic and international law. This report will not be updated.

Rule of law reform must take place within China’s legal and political system, and any assessment of rule of law development should be judged in the context of Chinese institutions. China’s current legal system is relatively new and is based, to a great extent, on the civil law codes of Germany as adopted by Japan, and, to some extent on the legal institutions of the former Soviet Union and China’s traditional legal system. Two important characteristics of Chinese legal development since 1949 have been the subordination of law to Communist Party policy and the lack of independence of the courts. Another characteristic is the large number of legal measures used to implement a law, including administrative regulations, rules, circulars, guidance, Supreme People’s Court interpretations, and similar local government legal measures. China’s central government laws, regulations, and other measures generally apply throughout China. Although local governments enact laws and regulations, these must be consistent with central government measures. In 1996, a number of China’s top leaders emphasized the principle of administering the country in accordance with law. Several years later, China amended its constitution to incorporate this principle. A substantial number of the many commitments that China has made to the WTO can be characterized as related to developing rule of law practices. In a broad sense, China’s WTO commitments suggest that in its commercial relations China is on the way to becoming a more rules-based society, contingent on the faithful implementation of its WTO accession agreement. This agreement is highly detailed and complicated, running to over 800 pages including annexes and schedules. It is the most comprehensive accession package for any WTO member. As part of this package, China agreed to ensure that its legal measures would be consistent with its WTO obligations. About 10 percent of the more than 600 commitments that we identified in China’s accession package specifically obligate China to enact, repeal, or modify trade-related laws and regulations. These commitments cover such trade policy areas as agricultural tariff-rate quotas, export and import regulation, technical barriers to trade, intellectual property rights, and nondiscrimination. In addition, by becoming a WTO member, China has agreed to abide by the underlying WTO agreements, such as the General Agreement on Tariffs and Trade, the General Agreement on Trade in Services, the Agreement on Trade-Related Aspects of Intellectual Property Rights and the Understanding on the Rules and Procedures Governing the Settlement of Disputes. China also has made a substantial number of important, specific commitments in the rule of law-related areas of transparency, judicial review, uniform enforcement of legal measures, and nondiscrimination in its commercial policy. In the area of transparency, China has agreed to designate an official journal for publishing trade-related laws and regulations and to provide a reasonable period for public comment before implementing them. China has also agreed to designate an enquiry point where individuals, business enterprises, and WTO members can request information relating to these published laws and regulations. Transparency requirements and commitments to report information to the WTO together represent about a quarter of the commitments we identified in China’s accession package. In the area of judicial review, China has agreed to establish or designate tribunals to promptly review trade-related actions of administrative agencies. These tribunals are required to be impartial and independent of the administrative agencies taking these actions. In the area of uniform enforcement, China has agreed that all trade-related laws and regulations shall be applied uniformly throughout China and that China will establish a mechanism by which individuals and enterprises can bring complaints to China’s national authorities about cases of nonuniform application of the trade regime. Finally, in the area of nondiscrimination, China agreed that it would provide the same treatment to foreign enterprises and individuals in China as is provided to Chinese enterprises. China also agreed to eliminate dual pricing practices as well as differences in treatment provided to goods produced for sale in China and those produced for export. (See the appendix for examples of rule of law-related commitments included in China’s WTO accession agreement.) Chinese government officials have stated their commitment to make WTO- related reforms that would strengthen the rule of law. Furthermore, China’s plans for reform go beyond conforming its laws and regulations to China’s WTO commitments and include a broad legal review, as well as reforms of judicial and administrative procedures. Chinese officials with whom we spoke discussed the numerous challenges they face in these areas and said that these reforms will take time to implement. They also stated their need for outside assistance to help them with their reform efforts. First, Chinese government officials are in the midst of a comprehensive, nationwide review of laws, regulations, and practices at both the central and provincial levels. This review is to lead to repeals, changes, or new laws. According to one report, Chinese officials have identified more than 170 national laws and regulations and more than 2,500 ministry regulations as being WTO related. Officials whom we interviewed from the Ministry of Foreign Trade and Economic Cooperation (MOFTEC) contend that generally China has done a good job of implementing its WTO obligations to date. MOFTEC officials said that complete implementation will take time and that part of their role is to teach other ministries how to achieve reform according to WTO commitments. They noted the importance of their efforts to coordinate WTO-related reforms with other ministries because Chinese laws tend not to be very detailed and, as a result, it is difficult to incorporate the language of specific WTO commitments into Chinese laws. Officials said that, consequently, Chinese laws will sometimes use general, open-ended phrases that refer to WTO commitments, such as the services annexes, while the detail is set forth in the implementing regulations . Provincial authorities are still reviewing their laws and regulations to see if they are consistent with national laws. Provincial-level officials told us that in some cases they were still waiting for the national government to finish its legislative and regulatory processes. This process will guide their own review of laws and regulations at their level. Prior to their enforcement, provincial-level laws, regulations, and other regulatory measures that implement the central government’s legal measures are submitted to the central government for review. Chinese officials told us that they have found many provincial regulations that did not conform to national laws and regulations. MOFTEC officials estimated that it would take a year or two to complete this entire reform process, while some provincial officials estimated 2-3 years. Second, China is undertaking reform of its judicial processes to ensure that they are compatible with its WTO commitments. The Supreme People’s Court informed us that since China’s accession it has been revising hundreds of judicial interpretations about laws that do not conform to WTO rules. It has also instructed the judiciary throughout the country to follow the revised interpretations and to undertake similar work at their respective levels. Officials told us that the court is also involved in reforms related to the WTO areas of judicial independence and uniform application of legal measures. For example, with regard to judicial independence, in February of this year the court issued new regulations to improve the adjudication of civil and commercial cases involving foreign parties. Under these regulations, mid-level and high-level courts, in contrast to the basic-level courts, will directly adjudicate cases involving, among other subjects, international trade, commercial contracts, letters of credit, and enforcement of international arbitration awards and foreign judgments. Furthermore, China recently amended its Judges Law to require that new judges pass a qualifying exam before being appointed to a judicial position. Third, China is reforming its administrative procedures and incorporating the rule of law into decision-making. About one third of the commitments we identified in China’s WTO accession agreement relate to guidance about how a particular commitment should be carried out. Officials told us that they are attempting to reduce the number of layers necessary to approve commercial activities and to make these processes more transparent. These actions can help implement rule of law practices at the day-to-day level. These reforms are also still underway at the central and provincial levels. For example, State Economic and Trade Commission (SETC) officials told us that they have identified 122 administrative procedures that must be changed to conform to WTO rules but that 40 percent of these must still be changed. In Shanghai, officials said that they have eliminated 40 percent of government approvals under their jurisdiction and that they are working to make the remaining 60 percent more efficient. Some Chinese officials with whom we spoke acknowledged challenges in completing all these reforms in a timely manner. These challenges include insufficient resources, limited knowledge of WTO requirements, and concerns about the effects on the economy of carrying out particular WTO commitments. For example, Chinese officials said that the effects of the changes needed to conform their tariff-rate quota administration process to WTO requirements were so difficult that they were unable to allocate the quota and issue certificates in time to meet the deadlines set forth in China’s WTO commitments. A number of Chinese officials also indicated that it has been very difficult to fulfill a WTO transparency commitment that requires China to translate all its trade laws, regulations, and other measures into an official WTO language—English, French, or Spanish. This difficulty is due in part to the abundance of the materials to be translated and the highly technical quality of many legal measures. Many Chinese officials we interviewed emphasized the importance of the steps they had taken at both the national and subnational levels to increase the training of government officials about WTO rules. For example, the State Economic and Trade Commission and the General Administration of Customs said they have been holding training sessions for over a year at the national, provincial, and municipal levels on general WTO rules and China’s WTO obligations. In addition, the National Judges College plans to train 1,000 judges from local courts across the country and send others for training abroad. Furthermore, governments in Shanghai, Guangzhou, and Shenzhen have established WTO affairs consultation centers that organize training and international exchange programs for midlevel Chinese officials on implementing WTO reforms. Despite these efforts, Chinese officials acknowledged that their understanding of WTO rules remains limited and that more training is needed. According to several Chinese government officials we interviewed, China continues to lack the expertise and the capacity to provide all the training necessary to implement WTO rules and, therefore, it has asked for technical assistance both multilaterally and bilaterally from outside China. As a result, the WTO secretariat, the European Union, the United States, and other WTO member countries have either given or plan to give training assistance to China in numerous areas, including rule of law-related programs. For its part, the U.S. government has provided limited training on a range of WTO-related topics, including standards, services, antidumping requirements, and intellectual property rights. The U.S. private sector also has provided technical assistance. In our interviews of U.S. businesses in China, almost one third of respondents said that they had given some assistance to China that related to implementation of China’s WTO commitments. Preliminary data from our written survey indicate that China’s WTO commitments related to rule of law reforms are some of the most important for U.S. businesses with a presence in China. For example, more than 90 percent of businesses that have responded to date indicated that the following reform commitments were important or somewhat important to their companies: consistent application of laws, regulations, and practices (within and among national, provincial & local levels); transparency of laws, regulations, and practices; enforcement of contracts and judgments/settlement of disputes; and enforcement of intellectual property rights. When asked to identify the three commitments that were most important to their companies, two WTO rule of law-related areas received the greatest number of responses in our written survey — consistent application of laws, regulations, and practices; and enforcement of intellectual property rights. We will include a more complete analysis of these and other issues considered in our business survey in a report to be released this fall. A majority of businesses answering our survey expected these rule of law commitments to be difficult for China to implement relative to its other WTO commitments. Businesses cited a number of reasons for this relative difficulty, including (1) the cultural “sea change” required to increase transparency; (2) a reluctance to crack down on intellectual property right violations stemming from a fear of destabilizing the labor force; and (3) the challenge of implementing laws, rules, and regulations consistently among provinces and within and among ministries. Similarly, in our interviews, company officials noted the magnitude of WTO-related reforms, including those that would strengthen the rule of law. They said that successful implementation would require long-term effort. Commensurate with the expected difficulty in carrying out reforms, we heard numerous specific individual complaints from U.S. companies, including concerns about vague laws and regulations that create uncertainty for foreign businesses; lack of transparency, which denied foreign companies the ability to comment on particular draft laws or regulations or to respond to administrative decisions; conflicting and inconsistent interpretations of existing laws and regulations from Chinese officials; unfair treatment by, and conflicts of interest, of Chinese regulators; and uneven or ineffective enforcement of court judgments. Nevertheless, U.S. businesses in China believe that the Chinese leadership is strongly committed to reform and that the leadership has communicated this commitment publicly. Several private sector officials noted a more open, receptive, and helpful attitude on the part of the government officials with whom they had contact. Other private sector officials noted more specific positive actions. For example, officials noted improvements in intellectual property right protections including crackdowns against counterfeiters in Shanghai, and a case where a U.S. company won a judgment against a counterfeiter in a Chinese court that included an order to cease the operations of the copycat company. First, it is very clear that China has shown considerable determination in enacting the numerous laws, regulations, and other measures to ensure that its legal system and institutions, on paper, are WTO compatible. Nevertheless, the real test of China’s movement toward a more rule of law- based commercial system is how China actually implements its laws and regulations in fulfilling its WTO commitments. At this point, it is still too early for us to make any definitive judgments about China’s actual implementation. Second, as you know, it has been the hope of U.S. government officials and others that China’s accession to the WTO would constitute a significant step forward in China’s development toward becoming a more rule of law-oriented society. It is worth noting that China’s reform efforts, which have been ongoing for more than 20 years, have included substantial legal developments that could be described as rule of law related. These include the enactment of numerous laws, regulations, and other measures that apply to many aspects of Chinese society beyond the WTO, the recent proliferation of law schools and legal training, and the recognition of the need for judicial reform. It is still too early to know where this process will lead, but there is hope that the many rules-based commitments that China made to become a WTO member will influence legal developments in other areas. Mr. Chairman, this completes my prepared statement. I would be happy to respond to any questions you or other Members of the Commission may have at this time. For future contacts regarding this testimony, please call Susan Westin at (202) 512-4128. Adam Cowles, Richard Seldin, Michelle Sager, Matthew Helm, Simin Ho, Rona Mendelsohn also made key contributions to this testimony.

This testimony describes China's development of rule of law practices related to the commitments China made to the World Trade Organization (WTO), which it joined in November 2001. When China joined the WTO, it agreed that its legal measures would be consistent with its WTO obligations. GAO found 60 commitments that specifically obligate China to enact, repeal, or modify trade-related laws or regulations. In addition, China has made a substantial number of other WTO commitments related to the rule of law in transparency, judicial review, uniform enforcement of laws, and nondiscriminatory treatment. Chinese government officials described how their efforts for reform go beyond China's WTO commitments and include broad reforms of laws and regulations at the national and provincial levels, as well as reforms of judicial and administrative procedures. However, Chinese officials acknowledged the challenges they face in completing the necessary reforms and identified the need for outside training assistance. According to GAO's survey, U.S. businesses in China consider rule of law-related WTO commitments to be important, especially the consistent application of laws, regulations, and practices in China, and enforcement of intellectual property rights. However, a majority of businesses answering the survey anticipated that these rule of law commitments would be difficult for the Chinese to implement, and they identified some concerns over specific implementation issues.

House Rule X, clause 5(c)(2), adopted in 1995 limited committee (and subcommittee) chairs to three terms of consecutive service. Service for less than a full session in a Congress is disregarded. A rules change adopted on January 7, 2003, pursuant to H.Res. 5 , exempted the Intelligence Committee chair from the limit. A rules change adopted on January 4, 2005, pursuant to H.Res. 5 , exempted the Rules Committee chair from the limit. In 2009, the Democratic majority removed term limits from House rules. The rules adopted on January 3, 2013, reinstituted term limits for all committee chairs, but continued the exemption for the Rules Committee chair. Republican Conference rules delineate procedures for the selection of standing committee chairs and ranking minority members. The Speaker, with the Republicans in the majority, has the authority to nominate the chairs of the House Administration Committee and Rules Committee. In the minority, these appointments are made by the minority leader. The Speaker's or minority leader's nominations for these two positions are submitted directly to the full Republican Conference for ratification. If the conference rejects the leader's nominee, the Speaker or minority leader has the authority to submit another name to the conference. All other standing committee chairs or ranking minority members are nominated by the Republican Steering Committee and ratified by the full Republican Conference. Pursuant to conference rules, the Member nominated to be chair or ranking minority member does not need to be the Member with the longest continuous service on the committee. In recent Congresses, the Steering Committee "interviewed" prospective candidates for chair or ranking slots. Some of the new chairs and ranking members have been the most senior members of the committee, others were not. The Steering Committee is composed of party leaders, selected committee leaders, class leaders, and regional representatives. The Steering Committee is reconstituted each Congress. Regions are restructured to reflect as closely as possible an equal number of Republican Members from each region. Each region elects its Steering Committee member. If Steering Committee members are elected from states that have four or more Republican Members, a "small state" group is triggered to also elect a member to the Steering Committee; the small state group is composed of states that have three or fewer Republican Members. On November, 19, 2015, the House Republican Conference adopted a conference resolution redesigning the composition of the Steering Committee. The chairs of the Committees on Appropriations, Budget, Energy and Commerce, Financial Services, Rules, and Ways and Means were removed, except when the Steering Committee is considering members for election to one of those specific committees. If, for example, a member is elected to the Ways and Means Committee, that committee's chair would join the Steering Committee to deliberate and vote on the new member. Six members are to be elected by the conference as at-large members. The Speaker has the authority to appoint one at-large designee. The Speaker, who previously had five votes, will have four votes. The conference resolution stated that elections for the at-large members would be held not later than 30 calendar days after the resolution was adopted. The six members receiving the greatest number of votes would be elected. The Republican Conference elected the six members on December 10, 2015. It is anticipated that the number of regions and the regional allocation will be reviewed in the near future. Table 1 depicts the membership of the reconstituted Republican Steering Committee as of July 1, 2017. Democratic Caucus rules address selecting committee chairs and ranking minority members. The Democratic leader nominates a chair and ranking member for the Committees on Rules and House Administration, who must be approved by the entire Democratic Caucus. The Budget Committee chair and ranking member are selected from among members choosing to run for the position. Other chair and ranking Member nominations are made by the Democratic Steering and Policy Committee and voted on by the entire Democratic Caucus. In making selections, the Steering Committee considers, pursuant to caucus rules, "merit, length of service on the committee and degree of commitment to the Democratic agenda of the nominee, and the diversity of the Caucus." The Steering Committee is reconstituted each Congress, and regions can be restructured to reflect equal Democratic representation among regions. The number of appointments made by the party leader can also change. Table 2 depicts the Democratic Steering and Policy Committee as constituted as of July 1, 2017.

House rules, Republican Conference rules, and Democratic Caucus rules each detail aspects of the procedures followed in selecting standing committee chairs and ranking minority members. The Republican Steering Committee and the Democratic Steering and Policy Committee are constituted during the early organization meetings traditionally held in November and December to determine most committee chairs and ranking minority members and to make committee assignments for most committees. Their recommendations are then forwarded to the full Republican Conference and Democratic Caucus for approval. Although structured slightly differently, both the Republican Steering Committee and the Democratic Steering and Policy Committee are composed of elected party leaders, regional members, class representatives, and other party officials. This report will be updated if rules or procedures change.

On June 15, 2012, the Department of Homeland Security (DHS) announced that certain individuals without a lawful immigration status who were brought to the United States as children and meet other criteria would be considered for relief from removal from the country for two years, subject to renewal. This initiative is known as Deferred Action for Childhood Arrivals, or DACA. DHS's U.S. Citizenship and Immigration Services (USCIS) began accepting requests for consideration of DACA on August 15, 2012, and issued its first approvals in September 2012. Prior to that, from June 15, 2012, to August 15, 2012, DHS's Immigration and Customs Enforcement (ICE) granted deferred action under the DACA process in some cases. More than 580,000 requests for consideration of DACA have been approved through June 2014. Individuals granted deferred action under the DACA process may request renewal of their deferral for another two years, in accordance with USCIS procedures. Answers to frequently asked questions about DACA and the renewal process are provided below. The DACA initiative was announced by former Secretary of Homeland Security Janet Napolitano in a June 15, 2012, DHS memorandum entitled, "Exercising Prosecutorial Discretion with Respect to Individuals Who Came to the United States as Children." The DACA initiative was not established by executive order. The eligibility criteria are under age 16 at time of entry into the United States; under age 31 on June 15, 2012; continuously resident in the United States for at least five years before June 15, 2012 (that is, since June 15, 2007); physically present in the United States on June 15, 2012, and at the time of making the request for consideration of deferred action; not in lawful immigration status on June 15, 2012; not convicted of a felony, a significant misdemeanor, or three or more misdemeanors, and not otherwise a threat to national security or public safety; and in school, graduated from high school or obtained general education development certificate, or honorably discharged from the U.S. Armed Forces or the Coast Guard. No. USCIS's decision on a DACA request is discretionary. The agency makes determinations on a case-by-case basis. According to USCIS: "Even if you satisfy the threshold criteria for consideration of DACA, USCIS may deny your request if it determines, in its unreviewable discretion, that an exercise of prosecutorial discretion is not warranted in your case." Of all the requests for consideration of DACA made to USCIS and decided by June 30, 2014, about 96% were approved and about 4% were denied, terminated, or withdrawn. No. DACA recipients are not granted a lawful immigration status and are not put on a pathway to a lawful immigration status. During the period of deferred action, however, the DACA recipient is in a period of stay authorized by DHS and is considered to be lawfully present for admissibility purposes (and thus, does not accrue unlawful presence for admissibility purposes). Individuals granted deferred action may receive work authorization. According to USCIS: "[I]f your case is deferred, you may obtain employment authorization from USCIS provided you can demonstrate an economic necessity for employment." There is no deadline for making initial requests for consideration of DACA. To be eligible, however, an individual must meet the threshold criteria enumerated above, including continuous residence in the United States since June 15, 2007 (see " What are the eligibility requirements for consideration of DACA? "). An individual must file the following three forms with DHS/USCIS: Form I-821D, Consideration of Deferred Action for Childhood Arrivals Form I-765, Application for Employment Authorization Form I-765WS, Worksheet The forms are available on the USCIS website, http://www.uscis.gov . The individual also should submit evidence that he or she meets the DACA eligibility requirements (see " What are the eligibility requirements for consideration of DACA? "). Yes. The fees total $465 and consist of a Form I-765 filing fee of $380 and biometric services fee of $85. Both DACA and legislation known as the DREAM Act are targeted at the same general population—unauthorized individuals who entered the United States as children. The DACA eligibility requirements are similar to the eligibility requirements in some DREAM Act bills. The DACA initiative and the DREAM Act, however, are different instruments and offer eligible individuals different forms of immigration relief. The DACA initiative is an exercise of prosecutorial discretion by the executive branch. Individuals granted DACA receive temporary protection from removal. They are not given a lawful immigration status. By contrast, DREAM Act bills are pieces of legislation and would establish a process for eligible individuals to obtain lawful permanent resident (LPR) status. DREAM Act provisions have been regularly introduced in Congress, both as stand-alone bills and as parts of larger immigration reform bills. Although DREAM Act legislation has never been enacted, some DREAM Act bills have seen legislative action. For example, in the 111 th Congress, the House approved DREAM Act language as part of an unrelated bill, the Removal Clarification Act of 2010 ( H.R. 5281 ). In the 113 th Congress, the Senate-passed Border Security, Economic Opportunity, and Immigration Modernization Act ( H.R. 744 ) incorporates DREAM Act language in its legalization provisions. No legislation on DACA has been enacted. However, in August 2014, the House of Representatives passed a DACA-related bill ( H.R. 5272 ) that states, in part: No agency or instrumentality of the Federal Government may use Federal funding or resources after July 30, 2014— (1) to consider or adjudicate any new or previously denied application of any alien requesting consideration of deferred action for childhood arrivals, as authorized by Executive memorandum dated June 15, 2012 and effective on August 15, 2012 (or by any other succeeding Executive memorandum or policy authorizing a similar program) .... The DACA recipient must satisfy the following criteria: the individual did not depart from the United States on or after August 15, 2012, without first obtaining advance parole ; the individual has continuously resided in the United States since submitting his or her latest approved DACA request; and the individual has not been convicted of a felony, a significant misdemeanor, or three or more misdemeanors, and is not a threat to national security or public safety. To request a renewal of deferred action under DACA, an individual must file the following three forms with DHS/USCIS (the same forms as required for an initial DACA request): Form I-821D, Consideration of Deferred Action for Childhood Arrivals Form I-765, Application for Employment Authorization Form I-765WS, Worksheet The forms are available on the USCIS website, http://www.uscis.gov . An individual requesting a DACA renewal does not have to submit any documents that he or she previously provided to USCIS in connection with an approved DACA request. The individual does have to submit any new documents related to removal proceedings or criminal history. USCIS will request additional documentation from the individual, if needed. An individual who was granted deferred action under DACA by ICE should file the same three forms to request a renewal as an individual who was initially granted deferred action under DACA by USCIS (see " What forms and other materials does an applicant for DACA renewal have to file? "). Unlike those initially granted deferred action by USCIS, however, individuals who were initially granted deferred action by ICE and are requesting a renewal should submit documentation evidencing that they satisfy the threshold criteria for DACA (see " What are the eligibility requirements for consideration of DACA? "). There is a total fee of $465, consisting of a Form I-765 filing fee of $380 and biometric services fee of $85 (the same as for initial DACA requests). USCIS advises DACA recipients to request a renewal 120 days before the expiration date of their current period of deferred action. Requests submitted more than 150 days before the expiration date may be returned by USCIS for later resubmission. No. The decision on a request to renew DACA, like on an initial DACA request, is discretionary. USCIS makes determinations about renewals on a case-by-case basis. No. An individual granted deferred action (an initial grant or a renewal) is not given a lawful immigration status and is not put on a pathway to a lawful immigration status. Unless the individual was under age 18 at the time of submitting the renewal request, he or she would be considered to be unlawfully present during the intervening period (see " Are DACA recipients granted lawful immigration status? "). However, if the individual filed the renewal request 120 days before the expiration of the period of deferred action and employment authorization, and USCIS was delayed in processing the request, USCIS may provide the individual with deferred action and employment authorization on a short-term basis while it completes processing.

On June 15, 2012, the Department of Homeland Security (DHS) announced that certain individuals who were brought to the United States as children and meet other criteria would be considered for relief from removal for two years, subject to renewal, under an initiative known as Deferred Action for Childhood Arrivals, or DACA. Among the eligibility requirements, an individual must have been under age 16 at the time of his or her entry into the United States; must have been continuously resident in the United States since June 15, 2007; and must not have been in lawful immigration status on June 15, 2012. To request consideration of DACA, an individual must file specified forms with DHS's U.S. Citizenship and Immigration Services (USCIS) and pay associated fees. USCIS's decision on a DACA request is discretionary. The agency makes determinations on a case-by-case basis. Individuals granted DACA may receive employment authorization. DACA recipients are not granted a lawful immigration status and are not put on a pathway to a lawful immigration status. USCIS began accepting DACA requests on August 15, 2012, and issued its first approvals in September 2012. Prior to that, from June 15, 2012, to August 15, 2012, DHS's Immigration and Customs Enforcement (ICE) granted deferred action under the DACA process in some cases. Cumulatively, through June 2014, more than 580,000 DACA requests have been approved. The period of deferred action under the DACA program expires after two years unless it is renewed. Individuals granted deferred action under the DACA initiative may request renewal of their deferral for another two years, in accordance with USCIS procedures. To be considered for a renewal, a DACA recipient must satisfy certain requirements concerning continuous U.S. residence, departures from the country, and criminal history. To request a renewal, an individual must file specified forms with USCIS and pay associated fees. The agency advises individuals to request a DACA renewal 120 days before the expiration date of their current period of deferred action. USCIS's decision on a DACA renewal request, like on an initial DACA request, is discretionary. For a discussion of related legislation, commonly referred to as the DREAM Act, that seeks to enable certain unauthorized aliens who entered the United States as children to obtain legal immigration status, see CRS Report RL33863, Unauthorized Alien Students: Issues and "DREAM Act" Legislation.

On June 2, 2014, the United States Supreme Court overturned Carol Bond's conviction under the Chemical Weapons Convention Implementation Act as a matter of congressional intent rather than Congress's constitutional authority. The Court concluded that Congress could not have intended the Act to reach "run of the mill" local crimes like Mrs. Bond's. It had been anticipated that the Court might take the opportunity to clarify the scope of Congress's legislative authority under the treaty power. It elected instead to emphasize, for purposes of statutory interpretation, the Constitution's structural constraints on federal intrusions into the domain of the states. On numerous occasions, Carol Bond, a microbiologist, coated the car door handles and mailbox of her husband's paramour with a mixture of toxic chemicals. Although Mrs. Bond's efforts were clumsily done, the victim did on one such occasion sustain a minor chemical burn on her thumb. Mrs. Bond was eventually implicated and indicted in federal court for possession and use of a chemical weapon in violation of 18 U.S.C. 229(1)(a). Reserving the right to appeal, she pled guilty and was sentenced to imprisonment for six years. On appeal, Mrs. Bond argued that the implementing statute under which she was convicted was either unconstitutional or inapplicable. The United States Court of Appeals for the Third Circuit initially ruled that she lacked standing to raise the constitutional issue, since the Tenth Amendment exists for the protection of state, not individual, rights. The Supreme Court disagreed and returned the case to the Court of Appeals for a decision on the merits. Mrs. Bond's constitutional claim was grounded on the argument that the legislation is an intrusion upon sovereign prerogatives of the states with respect to local criminal offenses. The government has responded that (1) the authority to negotiate and ratify the Chemical Weapons Convention comes within the President's constitutional treaty making power; (2) enactment of legislation to implement the Convention comes within Congress's authority to make laws necessary and proper to carry into execution the President's treaty making power; and (3) Mrs. Bond's conduct was condemned by a literal reading of the implementing legislation's criminal proscriptions. To prevail on her constitutional challenge, Mrs. Bond needed to reconcile her position with the Supreme Court's decision in Missouri v. Holland. In Missouri v. Holland , state officials sought to enjoin federal enforcement of the Migratory Bird Treaty Act, which they argued constituted an intrusion on state authority in violation of the Tenth Amendment. Prior to ratification of the treaty, lower federal courts had held that the Tenth Amendment limited Congress's constitutional authority to enact a similar measure. The state argued that the treaty could not vest Congress with legislative power that would otherwise rest beyond its constitutional reach. The Supreme Court, speaking through Justice Holmes, began with the observation that it was "not enough to refer to the Tenth Amendment, reserving the powers not delegated to the United States, because by Article II, §2, the power to make treaties is delegated expressly.... If the treaty is valid there can be no dispute about the validity of the statute under Article I, §8, as a necessary and proper means to execute the powers of the Government." The treaty collided with no explicit constitutional prohibition. The only question was whether the treaty was "forbidden by some invisible radiation from the general terms of the Tenth Amendment." Justice Holmes did not suggest that the question might never be answered in a state's favor; only that the state's interest was insufficient in the case before the Court. Missouri claimed exclusive authority over the birds within its domain. The treaty protected birds with international migratory habits, threatened with extinction by virtue of the hunting practices in some of the states they traversed. The federal interest was substantial, and Missouri's interest was not enough to cast doubt on the validity of the treaty or its implementing statute. Although the Court in Holland identified no Tenth Amendment-implicit, contextual limits on Congress's legislative authority, it has done so in other cases. Thus, the Court has held that Congress may not "commandeer the legislative processes of the States by directly compelling them to enact and enforce a federal regulatory program." Moreover, it has been said that legislation cannot be considered Necessary and Proper, if it fails to recognize the contextual limitations that flow from the Constitution's presumption of dual federal-state sovereignty. All of which proved to be of no avail for Mrs. Bond in the Third Circuit. The court concluded that the Convention was a proper subject for the President's treaty making power. Moreover, "with practically no qualifying language in Holland to turn to, [appellate courts] are bound to take at face value the Supreme Court's statement that 'if the treaty is valid there can be no dispute about the validity of the statute ... as a necessary and proper means to execute the powers of the Government,'" federalism concerns notwithstanding. A concurring member of the panel, however, expressed the hope that the Supreme Court would "flesh out the most important sentence in the most important case about the constitutional law of foreign affairs, and in doing so, clarify (indeed curtail) the contours of federal power to enact laws that intrude on matters so local that no drafter of the Convention contemplated their inclusion in it." Mrs. Bond contended that the focus of the Chemical Weapons Convention and its implementing legislation are so distinct that Congress could not have intended them to apply to her conduct. The nature of the statute made her claim creditable; its breadth made it difficult. The United States signed the Convention on the Prohibition of Development, Production, Stockpiling and Use of Chemical Weapons and On Their Destruction (the Convention) in Paris on January 13, 1993. The President supplied a capsulized description of the Convention when he transmitted it to the Senate: The convention will require States Parties to destroy their chemical weapons and chemical weapons production facilities under the observations of international inspectors; subject States Parties' citizens and businesses and other nongovernmental entities to its obligations; subject States Parties' chemical industry to declarations and routine inspection; and subject any facility or location in the State Party to international inspection to address other States Parties' compliance concerns. The Convention requires signatories to condemn within their jurisdictions those activities it has agreed to forego. More specifically, "each State Party is prohibited from ... (b) Using chemical weapons under any circumstances , including retaliatory use (which many countries protected under the Geneva Protocol of 1925).... " Each nation must establish corresponding restrictions upon individuals and entities found within its own jurisdiction. That is, "each State Party must ... (c) Extend its penal legislation enacted under subparagraph (a) above to any activity prohibited to a State Party under the Convention undertaken anywhere by natural persons, possessing its nationality, in conformity with international law." The Senate did not readily give its advice and consent on the Convention. The Senate Foreign Relations Committee held six days of hearings towards the close of the 103 rd Congress. The committee heard further witnesses during the 104 th , and issued a favorable executive report under which the Senate's advice and consent would have been subject to 7 conditions and 11 declarations. Even so, the Convention apparently lacked the votes, for it was never brought to the floor. Pressed by time deadlines within the Convention during the 105 th Congress, the Senate discharged the Foreign Relations Committee from further consideration of the Convention. The Senate only then gave its advice and consent subject to page after page of conditions—none of them addressed to the criminal penalties which the Convention obligated the United States to enact with respect to the use of chemical weapons. Implementing proposals appeared in both the House and Senate shortly thereafter. The Senate held hearings and passed an amended version of its bill. A year later, the proposal that became the Chemical Weapons Convention Implementation Act was tucked in towards the end of the 900-plus-page Omnibus Consolidated and Emergency Supplemental Appropriations measure. Throughout the ratification debate, the principal concerns were the protection of United States businesses subject to international inspection and doubts that the pact would lead to international chemical weapons disarmament. The need to protect American industry during the international inspection process drove the compromises necessary for Senate passage of implementing legislation. There can be little doubt, however, that Mrs. Bond's conduct fell within a literal reading of the implementing legislation. The legislation outlaws knowingly using a chemical weapon. A chemical weapon is any toxic chemical, and a toxic chemical is any chemical that "can cause death, temporary incapacitation or permanent harm to humans or animals." The legislation does establish several exceptions, such as the exceptions for possession by members of the Armed Forces or the exceptions for use for peaceful purposes "related to an industrial, agricultural, research, medical, or pharmaceutical activity or other activity." Neither these nor any of the other exceptions, however, seem to fit Mrs. Bond's conduct. On appeal, the Third Circuit conceded that the implementation legislation's "breadth is certainly striking, seeing as it turns each kitchen cupboard and cleaning cabinet in America into a potential chemical weapons cache." Nor was it impressed with the government's decision to press prosecution. Yet at the end of the day, Mrs. Bond's conduct satisfied the statute's broadly drafted elements. The Third Circuit affirmed her conviction and set the stage for Supreme Court review. The Supreme Court unanimously agreed that Mrs. Bond's conviction must be overturned. For a majority of the Court, the primacy of the states over criminal matters provided a presumption of statutory construction that could not be rebutted in Mrs. Bond's case. For the three concurring Justices—Scalia, Thomas, and Alito—the constitution does not permit the federal government to outlaw Mrs. Bond's conduct based on the treaty power. Chief Justice Roberts, writing for the Court, began his analysis with a reminder that the federal government may exercise only those legislative powers which can be traced to a specific grant in the Constitution, and, more importantly, that the states are the residual domain of criminal law. The Constitution grants the federal government no power to enact and enforce general criminal laws, although it may enact and apply specific prohibitions incidental to the powers which it has been given, such as the power to regulate interstate and foreign commerce or the power to implement treaties. Before considering Mrs. Bond's constitutional challenges, the Court thought it prudent to determine whether the federal government enjoyed statutorily authority to prosecute her. Yet, it interpreted the statute using constitutional principles: These precedents make clear that it is appropriate to refer to basic principles of federalism embodied in the Constitution to resolve ambiguity in a federal statute. In this case, the ambiguity derives from the improbably broad reach of the key statutory definition given the term—"chemical weapon"—being defined; the deeply serious consequences of adopting such a boundless reading; and the lack of any apparent need to do so in light of the context from which the statute arose—a treaty about chemical warfare and terrorism. We conclude that, in this curious case, we can insist on a clear indication that Congress meant to reach purely local crimes, before interpreting the statute's expansive language in a way that intrudes on the police power of the States. The Court felt Congress gave no such indication. In fact, the statute's language and context convey a different message. The statute speaks of chemical weapons, not the household chemicals an expansive reading would encompass. The context reflects an international concern that nations or their agents might develop and maintain the capacity to engage in chemical warfare, not that individuals would use the materials at hand to settle a domestic dispute. "In sum," said the Court, "the global need to prevent chemical warfare does not require the Federal Government to reach into the kitchen cupboard, or to treat a local assault with a chemical irritant as the deployment of a chemical weapon. There is no reason to suppose that Congress—in implementing the Convention on Chemical Weapons—thought otherwise." Justices Scalia, Thomas, and Alito agreed that Mrs. Bond's conviction should be overturned, but on constitutional rather than statutory grounds. Justice Scalia, in an opinion joined by Justices Thomas and Alito, wrote that the statute clearly outlawed Mrs. Bond's conduct. He characterized the majority opinion as rewriting the statute, yet leaving it in a form in which its exact prohibitions cannot be discerned. For Justice Scalia, the treaty making power is the power to make treaties, not to implement them. The authority to implement a treaty must come from one of the other enumerated powers. The government asserted that the treaty-making power authorized the statute under which Mrs. Bond was convicted. In the eyes of the concurring Justices, it did not, and it could not. Justice Thomas offered a separate concurrence to emphasize that in his mind "the Treaty Power can be used to arrange intercourse with other nations, but not to regulate purely domestic affairs." Justice Alito joined much of Justice Thomas's concurrence and expressed the view "that the treaty power is limited to agreements that address matters of legitimate international concern.... But insofar as the Convention may be read to obligate the United States to enact domestic legislation criminalizing conduct of the sort at issue in this case, which typically is the sort of conduct regulated by the States, the Convention exceeds the scope of the treaty power." A majority of the Supreme Court preferred not to use Mrs. Bond's conviction as a vehicle to define the scope of Congress's legislative authority under the treaty power. It may be that there is no majority view of the scope of the treaty power. It may be that a majority would prefer to clarify the scope of treaty power without having to find that the federal government has overstepped its constitutional bounds. It may be that a majority considered the Bond case an aberration, and found the fact pattern of "this curious case" ill-suited to demonstrate the bounds of the treaty power. It may be a majority of the Court finds the Missouri v. Holland declaration a satisfactory statement of the law. It may be a majority preferred to resolve the case on statutory grounds so as not to call in question other treaty implementing legislation. It may be, as Court opinion stated, that a majority would simply prefer to resolve cases using principles of statutory rather than constitutional construction, whenever possible. It may be that several of these factors were in play. The only thing that can be said with certainty is that the Third Circuit's opinion has been reversed, and the case remanded there for disposition consistent with the Supreme Court's opinion.

The Chemical Weapons Convention obligates the United States to outlaw the use, production, and retention of weapons consisting of toxic chemicals. The Chemical Weapons Convention Implementation Act outlaws the possession or use of toxic chemicals, except for peaceful purposes. In Bond v. United States, the Supreme Court concluded that Congress had not intended the Act to reach a "run of the mill" assault case using a skin irritating chemical. Carol Anne Bond, upon discovering that her husband had impregnated another woman, repeatedly dusted the woman's mail box, front door knob, and car door handles with a toxic chemical. Mrs. Bond was indicted in federal court and pled guilty to possessing a chemical weapon in violation of Section 229 of the Act, but reserved the right to appeal. The United States Court of Appeals for the Third Circuit rejected her constitutional challenge. A concurring member of the panel, however, urged the Supreme Court to clarify the nearly century-old pronouncement in Missouri v. Holland, "if the treaty is valid there can be no dispute about the validity of the statute ... as a necessary and proper means to execute the powers of the Government." The concurring judge observed that, "since Holland, Congress has largely resisted testing the outer bounds of its treaty-implementing authority. But if ever there was a statute that did test those limits, it would be Section 229. With its shockingly broad definitions, Section 229 federalizes purely local, run-of-the mill criminal conduct.... Sweeping statutes like Section 229 are in deep tension with an important structural feature of our Government: The States possess primary authority for defining and enforcing the criminal law." The Supreme Court found it unnecessary to decide the treaty power issue. Instead, it ruled Congress did not intend the Act to apply to Mrs. Bond's conduct. The Convention did not require a criminal statute sweeping enough to encompass Mrs. Bond's conduct. If Congress intended to reach that deeply into an area within the primacy of the state authority, the Court said, its intention would have to more apparent. Three concurring members of the Court would have held that the federal government lacked the constitutional authority under the treaty power to punish Mrs. Bond. The question of whether application of the statute might be sustained under the Commerce Clause was not before the Court.

The United States Supreme Court in United States v. Comstock held that Congress possessed the legislative authority under the Constitution's necessary and proper clause to enact 18 U.S.C. 4248. Section 4248, enacted as part of the Adam Walsh Act, authorizes the civil commitment of sexually dangerous individuals whose release from federal custody is pending. The Court assumed, without deciding, "that other provisions of the Constitution—such as the Due Process Clause—do not prohibit civil commitment in these circumstances." The Court's "stepping stone" analysis of Congress's legislative power under the Necessary and Proper Clause appears to further discourage an expansive reading of the Court's Lopez and Morrison Commerce Clause limiting decisions. Among the provisions of the Adam Walsh Act lies a section which purports to permit the civil commitment of "sexually dangerous" individuals. The section, 18 U.S.C. 4248, applies to three classes of sexually dangerous persons: those in the custody of the Bureau of Prisons; those in the custody of the Attorney General and found incompetent to stand trial on criminal charges; and those acquitted or against whom criminal charges were otherwise dismissed based on their mental condition. If it determines by clear and convincing evidence that such an individual, referred by the Attorney General or Bureau of Prisons, is in fact a sexually dangerous person, a federal court may release the person to the Attorney General to be transferred to state authorities for care and treatment. The court may subsequently order the individual's conditional release upon certification of the facility in which he is being treated. Graydon Comstock pled guilty to receipt of child pornography and was sentenced to imprisonment for three years and a month. His release upon service of his sentence, like that of more than 60 others in the Eastern District of North Carolina, was stayed pending proceedings under Section 4248. The District Court granted his motion to dismiss the petition for civil commitment as a sexually dangerous person on the grounds that the statute constituted a violation of due process and exceeded Congress's legislative authority. The Fourth Circuit Court of Appeals affirmed the district court's ruling on the powers of Congress and consequently found it unnecessary to consider the due process issue. On June 22, 2009, the Supreme Court granted certiorari to consider Whether Congress had the constitutional authority to enact 18 U.S.C. 4248, which authorizes court-ordered civil commitment by the federal government of (1) "sexually dangerous" persons who are already in the custody of the Bureau of Prisons, but who are coming to the end of their federal prison sentences, and (2) "sexually dangerous" persons who are in the custody of the Attorney General because they have been found mentally incompetent to stand trial. At the time, one other circuit had rejected the view of the Fourth Circuit in Comstock and the district courts that addressed the issue were divided. The Constitution vests federal legislative powers in Congress. It enumerates the areas of federal legislative power throughout, but particularly in Article I, Section 8. Those legislative powers which it does not mention are reserved to the states and the people. The power to regulate commerce among the states and to do so through the enactment of necessary and proper legislation are perhaps the most commonly exercised of the enumerated powers. Congress's power under the Commerce Clause extends to the channels of interstate commerce; to the instrumentalities, individuals, entities, and goods in interstate commerce; and to the activities that substantially affect interstate commerce. The power is broad but not boundless. Twice in recent memory, the Supreme Court has questioned assertions of the power. In United States v. Lopez , it found beyond the pale a federal statute which purported to outlaw possession of a firearm within a school zone. The government argued that the misconduct had the potential for violence and for a deteriorated learning environment, both of which it contended would have a substantially adverse affect on interstate commerce. The Court reasoned that the power would be boundless, if its reach were so elastic as to extend to such essentially local, noncommercial activity. The Court reached a similar conclusion in United States v. Morrison . It felt that the reach of the Commerce Clause would be boundless, if the proscribed misconduct—violence driven by an animus against women—lay within its grasp. To conclude otherwise, "would permit Congress to 'regulate not only all violent crime, but all activities that might lead to violent crime, regardless of how tenuously they relate to interstate commerce.'" The Court, however, rejected an invitation to read the Commerce Clause still more narrowly in Gonzales v. Raich , where it was suggested that a statute, which prohibited the cultivation or possession of marijuana, exceeded Congress's Commerce Clause power, when applied to the purely within state cultivation and possession for medicinal purposes in compliance with state law . The Court resolved the case under its Commerce Clause precedents which read the Clause to encompass regulation of interstate-impacting intrastate activity. When it framed the issue, however, it eluded the role of the Necessary and Proper Clause: "The question presented in this case is whether the power vested in Congress by Article I, §8, of the Constitution, '[t]o make all Laws which shall be necessary and proper for carrying into Execution' its authority to 'regulate Commerce with Foreign Nations, and among the several States.'" In the lower courts, the Justice Department had relied heavily on Congress's power under the Necessary and Proper Clause in its defense of Section 4248. Legislation enacted in exercise of authority under the Clause need not be absolutely necessary to carry into execution an enumerated power. It is enough that the legislation be "conductive" and "plainly adapted" to carrying to execution the enumerated power. For the word "necessary," "frequently imports no more than that one thing is convenient, or useful ... to another. To employ the means necessary to an end, is generally understood as employing any means calculated to produce the end, and not as being confined to those single means, without which the end would be entirely unattainable." A law is "proper" for purposes of the Necessary and Proper Clause when it is not contrary to the demands, prohibitions, or spirit of the Constitution. For instance, "[w]hen a Law ... for carrying into Execution [one of the enumerated powers] violates the principle of state sovereignty reflected in the various constitution provisions ... it is not a Law ... proper for carrying into Execution [that power]." In the past, the Supreme Court had generally construed the Clause with an eye to carrying into execution one of the other powers granted Congress, the courts, or the executive branch. The Court had rarely construed the Clause except when it was invoked in execution of some other specific enumerated power. It may have done so in Greenwood v. United States when it upheld the legislation permitting commitment of those incompetent to stand trial for the federal crimes of which they were accused. Greenwood was not otherwise scheduled for release from federal custody, but the case turned solely on the Court's construction of the Necessary and Proper Clause. Implicit in the Justice Department's argument before the Court was the contention that Section 4248 presents a similar situation, one in which Necessary and Proper Clause authority works to carry into execution several enumerated powers at once. "Pursuant to its power under the Necessary and Proper Clause, Congress has carried into execution various of its enumerated powers—... U.S. Const. Art. I, § 8, Cls. 1, 3, 7, 14, and 17—by enacting criminal statutes." Section 4248, it contended, "is a rational incident to Congress' Article I powers to enact criminal laws, provide for the operation of a penal system, and assume for the United States custodial responsibilities for its prisoners." The Comstock group responded that the Constitution does not permit enactment of legislation whose sole nexus to an enumerated power is that it is rationally related to an endeavor which is itself valid only because it is necessary and proper for carry into execution an enumerated power: "The government characterizes § 4248 as an exercise of Congress' powers to enact criminal laws and operate a prison system. Those powers are not enumerated anywhere in the constitution. Rather, they are justified as necessary and proper means of carrying out specific enumerated powers." Moreover, the Comstock group contended the distinction is important because after an individual has served his sentence the connection to an enumerated power no longer exists: "Once the power to enforce a federal criminal law has been exhausted, further exercises of federal power are not 'necessary and proper' to effectuating the enumerated power underlying that federal law." The Court in United States v. Comstock adopted the Justice Department's sequential or stepping stone argument, up to a point. The Court agreed that the Necessary and Proper Clause permits Congress to create federal criminal laws to ensure compliance with legislation enacted pursuant to one of its enumerated powers. Having permitted the creation of criminal laws, it permits legislation necessary and proper to punish offenders. Having permitted the punishment of offenders, it permits legislation necessary and proper to punish offenders by imprisonment. Having permitted the punishment of offenders by imprisonment, it permits legislation necessary and proper to create penal institutions in which terms of imprisonment may be served. Having permitted the creation of penal institutions for federal criminal offenders, it permits legislation necessary and proper to safeguard others from those in federal custody both before and after the offenders are release from federal custody. Or in the words of the Court, Section 4248 "is a necessary and proper means of exercising the federal authority that permits Congress to create federal criminal laws, to punish their violation, to imprison violators, to provide appropriately for those imprisoned, and to maintain the security of those who are not imprisoned but who may be affected by the federal imprisonment of others." The Court made it clear, however, that it had applied its method of analysis only after considering factors in the case which both justify the conclusion and limit its application. The considerations include "(1) the breadth of the Necessary and Proper Clause," as understood dating from Chief Justice Marshall's landmark pronouncement in McCulloch v. Maryland , 17 U.S. (4 Wheat.) 316 (1819); "(2) the long history of federal involvement in this area" of civil commitment of those under federal jurisdiction found mentally ill, involvement that dates back to pre-Civil War legislation for the treatment of members of the Armed Forces and residents of the District of Columbia, 10 Stat. 158 (1855); "(3) the sound reasons for the statute's enactment in light of the Government's custodial interest in safeguarding the public from dangers posed by those in federal custody" should they be released when other grounds for federal detention ceased to exist; "(4) the statute's accommodation of state interests" by affording states the option of assuming treatment responsibility for those of its citizens civilly committed under Section 4248; "and (5) the statute's narrow scope," that is, civil commitment of sexually dangerous individuals otherwise scheduled for release from federal custody. The Court majority consisted of three members of the Court who dissented in Lopez and Morrison (Justices Breyer, Stevens, and Ginsburg) and two who joined the Court thereafter (Chief Justice Roberts and Justice Sotomayor). Two other members of the Court (Justices Kennedy and Alito) agreed that Section 4248 constitutes a valid exercise of Congress's legislative authority under the Necessary and Proper Clause, but they declined to endorse the analysis of the majority opinion. Only two Justices dissented. Justice Thomas, in a dissent largely endorsed by Justice Scalia, argued that (1) the Necessary and Proper Clause does not empower Congress "to enact a law authorizing the Federal Government to civilly commit 'sexually dangerous person[s]' beyond the date it lawfully could hold them on a charge or conviction for a federal crime;" (2) the analytical standards that the Court articulated are both at odds with the Court's precedents and lack sufficient precision for future use; and (3) is contrary to the Constitution's perception of the federal government as one of limited enumerated powers. Had the views of Justices Thomas and Scalia prevailed, there might have been some question of the continued validity of federal statutes which permit civil commitment on other mental grounds of federal prisoners scheduled for release or of other statutes which permit imposition of a term of supervised release to be served after federal inmates are released from prison. Had the views of Justice Alito—Section 4248 is the necessary and proper exercise of authority to carry into execution of the powers under which each of the criminal statutes of conviction were enacted—commanded the concurrence of a majority of the Court, no such questions would have arisen. Moreover, the scope of the Congress's power under the Necessary and Proper Clause might have been more easily applied in future cases. Five members of the Court, however, obviously found more appropriate a more nuanced description of the scope of the Clause—sometimes, the Necessary and Proper Clause will support legislation to help carry into execution a power which itself is no more than necessary and proper. The extent to which the Court's five considerations will be found to limit the stepping stone reach of the Clause in the future remains to be seen.

The Adam Walsh Act created 18 U.S.C. 4248, which authorizes civil commitment as sexually dangerous those otherwise about to be released from federal custody. In United States v. Comstock, the United States Supreme Court rejected a suggestion that enactment of Section 4248 lay outside the scope of Congress's legislative powers. It did so without considering whether the section might be vulnerable to constitutional attack on other grounds. The Constitution reserves to the states and the people those powers that it does not vest in the federal government. It vests in Congress the authority to enact laws necessary and proper to carrying into execution the powers it bestows on the federal government. The Justice Department contended that Congress has authority under the Constitution to enact those criminal laws which it finds necessary and proper to carry into execution various of its other powers such as the regulation of interstate and foreign commerce and legislation for the District of Columbia and federal enclaves. It argued further that incident to the power to enact criminal laws is the power to enact laws for the operation of a federal penal system and for responsibility for those assigned to that system, even after the expiration of the initial authority to imprison them. Comstock argued that Congress has no such incidental power. He contended that Congress's constitutional authority to enact legislation with respect to those imprisoned for violation of federal criminal laws ends with their terms of imprisonment. Subject to certain conditions that might lead to a different result under other circumstances, the Court agreed with the Justice Department, up to a point. Had Comstock prevailed, there might have been some question of the continued validity of federal statutes which permit civil commitment on other grounds of federal prisoners scheduled for release or of those statutes which permit imposition of a term of supervised release to be served after federal inmates are released from prison. As is, the opinion appears to support a more expansive view of Congress's legislative authority than was previously the case—sometimes, the Necessary and Proper Clause will support legislation to help carry into execution a power which itself is no more than necessary and proper. The Court's conclusion in Comstock was predicated upon "(1) the breadth of the Necessary and Proper Clause ... , (2) the long history of federal involvement in this area, (3) the sound reasons for the statute's enactment in light of the Government's custodial interest in safeguarding the public from dangers posed by those in federal custody, (4) the statute's accommodation of state interests, and (5) the statute's narrow scope," 130 S.Ct. at 1965. The extent to which absence of such factors will be found to limit the reach of the Clause in the future remains to be seen.

Energy Policy Act of 2005 (EPACT) P.L. 109-58 . The tax provisions are located in Title XIII. Emergency Economic Stabilization Act of 2008 (EESA) P.L. 110-343 . The tax provisions are located in Titles I, II, and III of Division B, the Energy Improvement and Extension Act of 2008. American Recovery and Reinvestment Act of 2009 (ARRA) P.L. 111-5 . Conference Report with full text of the act ( H.R. 1 , as passed, P.L. 111-5 ) and the Joint Explanatory Statement. The tax provisions are located in Division B, Title I. This section lists and describes several resources that contain information about federal incentives available to support energy efficiency and renewable energy. Tax Incentives Assistance Project (TIAP) http://www.energytaxincentives.org/ This website is sponsored by a number of government agencies, nonprofit groups, and other organizations. It focuses solely on information about federal tax incentives. Information is organized into categories for consumers, businesses, and builders/manufacturers. The site includes updates about enacted federal legislation and provides links to Internal Revenue Service (IRS) tax forms. Environmental Protection Agency (EPA) Energy Star http://www.energystar.gov/index.cfm?c=products.pr_tax_credits This website has a page on "Federal Tax Credits for Energy Efficiency." The information on that page is organized into categories for consumers (home improvements, cars, solar energy, fuel cells), home builders, appliance manufacturers, and commercial buildings. The site includes a frequently asked questions (FAQ) section providing answers about energy efficiency tax credits. Department of Energy (DOE) Financial Opportunities http://www1.eere.energy.gov/financing/ This website is focused mainly on information about matching funds, grants, and financing. Information is organized into categories for consumers, business/industry/universities, inventors (small business), federal energy managers, states, and Native American tribes. The site includes a section on energy efficiency and consumer home financing. U.S. Department of Energy Alternative Fuels and Advanced Vehicles Data Center (AFDC) http://www.eere.energy.gov/afdc/ This website presents information about incentives for alternative fuels (renewable fuels and others) and vehicles. A key link provides access to "State and Federal Incentives and Laws." Incentives covered include grants, tax credits, loans, rebates, regulatory exemptions, fuel discounts, and technical assistance. Information on state incentives is made available through a national map and through summary tables organized by type of incentive, regulation, technology/fuel, and user. The information about state incentives is updated after each state legislature's session ends. Information about federal incentives is updated after pertinent legislation is enacted into law. Another link provides access to "Laws and Incentives Enactment History." U.S. Department of Energy (DOE) Clean Cities Financial Opportunities http://www1.eere.energy.gov/cleancities/financial_opps.html This website presents information about incentives for alternative fuels and advanced technologies. A link to "Government Sources" provides information about funding opportunities through federal grant-making agencies (Grants.gov), Metropolitan Planning Organization (MPO), the Congestion Mitigation and Air Quality (CMAQ) Program, and various EPA programs. A link to "Solicitations" provides information about business funding opportunities that cover a variety of changing topics that have included plug-in hybrid vehicles, hydrogen vehicles, and transportation planning. Clean Cities Coordinators are available to help with funding applications. Department of Housing and Urban Development (HUD) Energy Efficient Mortgages Program http://www.hud.gov/offices/hsg/sfh/eem/energy-r.cfm HUD's website provides information on Energy Efficient Mortgages. These mortgages can help homeowners finance the cost of adding energy-efficiency features to new or existing housing as part of their Federal Housing Authority-insured home purchase or refinance. Alliance to Save Energy (ASE) Home and Vehicle Tax Credits http://www.ase.org/content/article/detail/2654 ASE's website organizes information into categories on energy efficiency incentives for home improvements, hybrid vehicles, and solar energy. The site includes details on eligible equipment, credit limits, and credit expiration dates. This section covers websites that list and describe state and local incentives available to support energy efficiency and renewable energy. Database of State Incentives for Renewables and Efficiency (DSIRE) http://www.dsireusa.org/ DSIRE's website is sponsored by the Interstate Renewable Energy Council (IREC). IREC is a nonprofit organization focused on standards, guidelines, and other activities to support renewable energy. This site contains information about various types of energy efficiency and renewable energy financial incentives provided by state and local governments and utility companies. Summary data is accessed through a national map—and several additional special topic maps—that are linked to data on each state. Alternatively, the data can be searched by technology (solar, wind, geothermal), sector (residential, commercial/industrial, government, utility), and incentive type (tax credits, bonds, grants, loans), and eligible and implementing sectors. The site is updated weekly. Also, the homepage includes a map-link to a list of federal incentives. U.S. Department of Energy (DOE) State Activities and Weatherization Assistance http://www.eere.energy.gov/weatherization/ DOE's website on the Weatherization Assistance Program has information about how to apply for weatherization funding assistance. The site also has a "state activities" link, which provides information about state-level energy assistance programs. The following are links to resources by type of renewable energy. Database of State Incentives for Renewables and Energy Efficiency (DSIRE). Incentive for Biomass http://www.dsireusa.org/ Energy Efficiency and Renewable Energy. Alternative Fuels and Advanced Vehicles Data Center. State and Federal Incentives and Laws http://www.eere.energy.gov/afdc/progs/fed_summary.php/afdc/US/0 Environmental Protection Agency. Funding Database Biomass/Biogas http://www.epa.gov/chp/funding/bio.html Database of State Incentives for Renewables and Energy Efficiency (DSIRE). Incentives for Geothermal Heat Pumps and Geothermal Electric http://www.dsireusa.org/ Geothermal Heat Consortium – GeoExchange.org. New Federal Tax Credits for Geothermal Heat Pump Systems http://www.geoexchange.org/component/content/article/90-new-federal-tax-credits-.html Alliance to Save Energy. Energy-Efficiency Home and Vehicle Tax Credits. Solar Energy and Fuel Cell http://www.ase.org/content/article/detail/2654#fuelcells_solar Database of State Incentives for Renewables and Energy Efficiency (DSIRE). Incentives for Solar Technology http://www.dsireusa.org/ Energy Star. Federal Tax Incentives for Renewable Energy. Tax Incentives for Solar Energy Systems http://www.energystar.gov/index.cfm?c=products.pr_tax_credits#s4 Solar Energy Industries Association. Solar Bills/Legislation http://www.seia.org/cs/solar_bills Solar Energy Industries Association. Frequently Asked Questions on the Solar Investment Tax Credit http://www.seia.org/galleries/pdf/ITC_Frequently_Asked_Questions_10_9_08.pdf Tax Incentives Assistance Project. Consumer Tax Incentives. Solar Energy Systems http://www.energytaxincentives.org/consumers/ Tax Incentives Assistance Project. Businesses Tax Incentives. Solar Energy Systems http://www.energytaxincentives.org/business/renewables.php American Wind Energy Association. Legislative Affairs http://www.awea.org/legislative/ Database of State Incentives for Renewables and Energy Efficiency (DSIRE). Incentives for Wind http://www.dsireusa.org A number of CRS reports provide information about federal energy efficiency and/or renewable energy incentives: CRS Report R40412, Energy Provisions in the American Recovery and Reinvestment Act of 2009 (P.L. 111-5) CRS Report RL33831, Energy Efficiency and Renewable Energy Legislation in the 110 th Congress CRS Report RL33578, Energy Tax Policy: History and Current Issues CRS Report RL34162, Renewable Energy: Background and Issues for the 110 th Congress CRS Report RL32979, Alcohol Fuels Tax Incentives CRS Report R40168, Alternative Fuels and Advanced Technology Vehicles: Issues in Congress CRS Report R40110, Biofuels Incentives: A Summary of Federal Programs CRS Report RS22558, Tax Credits for Hybrid Vehicles CRS Report RS22351, Tax Incentives for Alternative Fuel and Advanced Technology Vehicles CRS Report RL33883, Issues Affecting Tidal, Wave, and In-Stream Generation Projects CRS Report RL34546, Wind Power in the United States: Technology, Economic, and Policy Issues Catalog of Federal Domestic Assistance (CFDA) http://www.cfda.gov/ The CFDA is the primary source of federal grants program information, although actual funding depends upon annual congressional budget appropriations. The CFDA is available on the Internet. Many federal grants do not provide funding directly to individuals, but rather to states, local governments, universities, and tribal entities. Check the "applicant eligibility" section in the CFDA program description to see who may apply. Individuals may be eligible to apply for funds after they have been distributed at the state and local level, through their state energy offices or other contact listed in the CFDA program description. Grants.gov http://www.grants.gov Federal grant funding opportunities are also posted on the website Grants.gov. Grants.gov enables grant seekers to electronically find and apply for competitive grants from all federal agencies. CRS Report RL34035, Grants Work in a Congressional Office CRS Report RL32159, How to Develop and Write a Grant Proposal CRS Report RL34012, Resources for Grantseekers

The following list of authoritative resources is designed to assist in responding to a broad range of constituent questions and concerns about renewable energy and energy efficiency tax incentives. Links are provided for the following: the full text of public laws establishing and extending federal renewable energy and energy efficiency incentives; federal, state, and local incentives resources; incentive resources grouped by technology type (solar, wind, geothermal, and biomass); CRS reports on this topic; and federal grants information resources. The last section of this report includes tables displaying popular incentives, the corresponding U.S. Code citations, and current expiration dates of those incentives. This list reflects information that is currently available. It will be updated regularly as other relevant material becomes available.

The Elementary and Secondary Education Act (ESEA) is the primary source of federal aid to elementary and secondary education. Title I-A is the largest program in the ESEA, funded at $14.9 billion for FY2016. Title I-A is designed to provide supplementary educational and related services to low-achieving and other students attending elementary and secondary schools with relatively high concentrations of students from low-income families. The U.S. Department of Education (ED) determines Title I-A grants to local educational agencies (LEAs) based on four separate funding formulas: Basic Grants, Concentration Grants, Targeted Grants, and Education Finance Incentive Grants (EFIG). The ESEA was comprehensively reauthorized by the Every Student Succeeds Act (ESSA; P.L. 114-95 ) on December 10, 2015. The ESSA made few changes to the Title I-A formulas. These changes took effect in FY2017. This report provides final FY2016 state grant amounts under each of the four formulas used to determine Title I-A grants. For a general overview of the Title I-A formulas, see CRS Report R44164, ESEA Title I-A Formulas: In Brief , by [author name scrubbed]. For a more detailed discussion of the Title I-A formulas, see CRS Report R44461, Allocation of Funds Under Title I-A of the Elementary and Secondary Education Act , by [author name scrubbed] and [author name scrubbed]. Under Title I-A, funds are allocated to LEAs via state educational agencies (SEAs) using the four Title I-A formulas. Annual appropriations bills specify portions of each year's Title I-A appropriation to be allocated to LEAs and states under each of the formulas. In FY2016, about 43% of Title I-A appropriations were allocated through the Basic Grants formula, 9% through the Concentration Grants formula, and 24% each through the Targeted Grants and EFIG formulas. Once funds reach LEAs, the amounts allocated under the four formulas are combined and used jointly. For each formula, a maximum grant is calculated by multiplying a "formula child count," consisting primarily of estimated numbers of school-age children in poor families, by an "expenditure factor" based on state average per pupil expenditures for public elementary and secondary education. In some formulas, additional factors are multiplied by the formula child count and expenditure factor. These maximum grants are then reduced to equal the level of available appropriations for each formula, taking into account a variety of state and LEA minimum grant provisions. In general, LEAs must have a minimum number of formula children and/or a minimum formula child rate to be eligible to receive a grant under a specific Title I-A formula. Some LEAs may qualify for a grant under only one formula, while other LEAs may be eligible to receive grants under multiple formulas. Under three of the formulas—Basic, Concentration, and Targeted Grants—funds are initially calculated at the LEA level. State grants are the total of allocations for all LEAs in the state, adjusted for state minimum grant provisions. Under EFIG, grants are first calculated for each state overall and then are subsequently suballocated to LEAs within the state using a different formula. Final FY2016 grants included in this report were calculated by ED. The percentage share of funds allocated under each of the Title I-A formulas was calculated by CRS for each state by dividing the total grant received by the total amount allocated under each respective formula. Table 1 provides each state's grant amount and percentage share of funds allocated under each of the Title I-A formulas for FY2016. Total Title I-A grants, calculated by summing the state level grant for each of the four formulas, are also shown in Table 1 . Overall, California received the largest total Title I-A grant amount ($1.8 billion) and, as a result, the largest percentage share (11.98%) of Title I-A grants. Wyoming received the smallest total Title I-A grant amount ($34.8 million) and, as a result, the smallest percentage share (0.24%) of Title I-A grants. In general, grant amounts for states vary among formulas due to the different allocation amounts for the formulas. For example, the Basic Grant formula receives a greater share of overall Title I-A appropriations than the Concentration Grant formula, so states generally receive higher estimated grant amounts under the Basic Grant formula than under the Concentration Grant formula. Among states, Title I-A grant amounts and the percentage shares of funds vary due to the different characteristics of each state. For example, Texas has a much larger population of children included in the formula calculations than North Carolina and, therefore, received a higher estimated grant amount and larger share of Title I-A funds. Within a state, the percentage share of funds allocated may vary by formula as certain formulas are more favorable to certain types of states (e.g., EFIG is generally more favorable to states with comparatively equal levels of spending per pupil among their LEAs). If a state's share of a given Title I-A formula exceeds its share of overall Title I-A funds, this is generally an indication that this particular formula is more favorable to the state than formulas for which the state's share of funds is below its overall share of Title I-A funds. For example, Florida and Nevada received a substantially higher percentage share of Targeted Grants than of overall Title I-A funds, indicating that the Targeted Grants formula is more favorable to them than other Title I-A formulas may be. At the same time, both states received a smaller percentage share of Basic Grants than of overall Title I-A funds, indicating that the Basic Grants formula is less favorable to them than other Title I-A formulas may be. In states that received a minimum grant under all four formulas (Alaska, North Dakota, South Dakota, Vermont, and Wyoming), the shares under the Targeted Grants and EFIG formulas are greater than under the Basic Grants or Concentration Grants formulas, due to higher state minimums under these formulas. If a state received the minimum grant under a given Title I-A formula, the grant amount is denoted with an asterisk (*) in Table 1 .

The Elementary and Secondary Education Act (ESEA) was comprehensively reauthorized by the Every Student Succeeds Act (ESSA; P.L. 114-95) on December 10, 2015. The Title I-A program is the largest grant program authorized under the ESEA and was funded at $14.9 billion for FY2016. It is designed to provide supplementary educational and related services to low-achieving and other students attending elementary and secondary schools with relatively high concentrations of students from low-income families. Under current law, the U.S. Department of Education (ED) determines Title I-A grants to local educational agencies (LEAs) based on four separate funding formulas: Basic Grants, Concentration Grants, Targeted Grants, and Education Finance Incentive Grants (EFIG). The four Title I-A formulas have somewhat distinct allocation patterns, providing varying shares of allocated funds to different types of states. Thus, for some states, certain formulas are more favorable than others. This report provides final FY2016 state grant amounts under each of the four formulas used to determine Title I-A grants. Overall, California received the largest FY2016 Title I-A grant amount ($1.8 billion or 11.98% of total Title I-A grants). Wyoming received the smallest FY2016 Title I-A grant amount ($34.8 million or 0.24% of total Title I-A grants).

The Food Stamp Program provides a safety net to the millions of low-income individuals and families nationwide who do not otherwise have the means to obtain a healthy diet. Food stamp benefits are calculated to ensure that households have the resources needed to purchase a model diet plan based on the National Academy of Sciences’ Recommended Dietary Allowances. USDA’s Food and Nutrition Service (FNS) administers the program in partnership with the states, funding all of the program’s benefits and about 50 percent of the states’ administrative costs. FNS develops program policy and guidance, such as nationwide criteria for determining who is eligible for assistance and the amount of benefits recipients are entitled to receive, and oversees the states’ activities. The states are responsible for the day-to-day operation of the program, including meeting with applicants and determining their eligibility and benefit levels. Food stamp recipients must use their benefits only to purchase allowable food products from retail food stores that FNS authorizes to participate in the program. Recipients use food stamp coupons or an electronic benefit transfer (EBT) card to pay for these items. EBT systems use the same electronic funds transfer technology that many grocery stores use for their debit card payment systems. The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 mandates that all states implement EBT systems by October 1, 2002, unless USDA waives the requirement. As of March 1998, 16 states had implemented EBT systems statewide, with all other states in some earlier stage of implementation. Collectively, about 40 percent of all food stamp benefits are now delivered through EBT systems. Fraud and abuse in the Food Stamp Program generally occurs in the form of either overpayments to food stamp recipients or trafficking. Overpayments occur when ineligible persons are provided food stamps, as well as when eligible persons are provided more than they are entitled to receive. In 1996, the latest year for which data are available, the states overpaid recipients an estimated $1.5 billion, or 7 percent of the approximately $22 billion in food stamps issued. Approximately 57 percent of the overpayments were caused by recipient errors (36 percent unintentional and 21 percent intentional), and 43 percent were caused by caseworkers’ errors. It should also be noted that recipient and caseworker errors can result in underpayments. According to FNS’ data, food stamp recipients were underpaid by about $518 million in fiscal year 1996. In March 1997, we reported on one specific kind of food stamp overpayment—payments to households that included inmates of correctional institutions. Federal regulations prohibit prisoners from participating in the Food Stamp Program. By matching automated food stamp records and prison records in four states—California, Florida, New York, and Texas—we identified over 12,000 inmates who were included in the households receiving food stamps in calendar year 1995. These households improperly collected an estimated $3.5 million in food stamps in 1995. Subsequently, in August 1997, the Balanced Budget Act of 1997 (P.L. 105-33, Aug. 5, 1997) included a provision directing the states to ensure that individuals who are under federal, state, or local detention for more than 30 days are not participating in the Food Stamp Program. In February 1998, we reported on another type of food stamp overpayment—payments made to households that included deceased individuals as members. By matching automated food stamp records from the four states previously mentioned with death information from the Social Security Administration’s (SSA) Death Master File, we identified nearly 26,000 deceased individuals who were included in households receiving food stamps in 1995 and 1996. These households improperly collected an estimated $8.5 million in food stamp benefits. Subsequently, in March 1998, you, Mr. Chairman, introduced legislation that would require the Commissioner of SSA to use all of SSA’s death information to notify state agencies when an individual receiving food stamp benefits is deceased. At your request, Mr. Chairman, we are currently reviewing the extent to which individuals are included in food stamp households in more than one state during the same time period, referred to as “duplicate participation.” While some states conduct matches of their food stamp rolls with neighboring states, our review is focussed on non-neighboring states. For example, we will determine whether duplicate participation occurs between New York and Florida or between California and Texas. Our preliminary results indicate that such duplicate participation is occurring on a significant scale and that there is no national mechanism in place to identify and eliminate it. Regarding trafficking—the second main area of fraud and abuse in the Food Stamp Program—a 1995 FNS study estimated that up to $815 million,or about 4 percent of the food stamps issued, was exchanged for cash by authorized retailers during fiscal year 1993. The study found that the trafficking rate was highest, 13 percent of food stamps redeemed, among small, privately owned food retailers that generally do not stock a full line of food. In contrast, supermarkets and large grocery stores had an average trafficking rate of less than 2 percent of the benefits redeemed. Data on the extent to which food stamps are exchanged between individuals prior to reaching authorized retailers are unavailable. In our March 1998 report on food stamp trafficking, conducted at your request, Mr. Chairman, we found that retail store owners and retail store clerks share almost equal responsibility for the food stamp trafficking problem. Specifically, in the 432 trafficking cases we reviewed, store owners alone were caught trafficking in about 40 percent of the cases, clerks alone were involved in 47 percent of the cases, and store owners and clerks together were caught in 13 percent of the trafficking cases. FNS took administrative action against all the store owners that were trafficking but took no actions against the store clerks because it lacks the authority to do so. However, some clerks were subject to court-ordered actions, including financial penalties or jail sentences. The Food Stamp Program is inherently susceptible to some level of fraud and abuse because of the sheer number of program participants (about 23 million in fiscal year 1997), the basic approach used to determine a household’s eligibility and benefit amount, and the process used to authorize and monitor a sufficient number of retailers to accept food stamps. In making eligibility decisions, state caseworkers rely on applicants to provide accurate information on, among other things, household composition, and to report subsequent changes, such as the loss of a household member. Only “questionable” cases are investigated. In general, the agencies take this approach in an effort to make the program convenient for clients and simple to administer, and to ensure accurate payments; consequently, controls over determining household composition are not as rigorous as they could be. For example, FNS’ regulations do not require caseworkers to verify client-provided information on household composition, unless such information is deemed “questionable,” as defined by the state agency. Investigators attempt to verify this information through techniques such as visiting the home and/or contacting neighbors and landlords, however, they characterize these efforts as time-consuming, costly, and often unreliable. With respect to trafficking, it is difficult to track the flow of food stamps after they are issued to recipients. Federal and state officials agree that food stamps have essentially become a second currency exchanged by some recipients for cash or non-food items. Trafficked food stamps may change hands several times, but all food stamps must eventually pass through an FNS-authorized retailer because only such a retailer can redeem food stamps for cash from the government. FNS is responsible for monitoring program compliance by the approximately 185,000 stores that currently are authorized to redeem food stamps. Our 1995 report found that, at that time, FNS’ controls and procedures for authorizing and monitoring the retailers that participate in the Food Stamp Program did not deter or prevent retailers from trafficking in food stamps. Since our report, FNS has initiated several actions to reduce trafficking in the program, such as contracting with different companies to make 35,000 to 40,000 store visits by the end of fiscal year 1998. These visits are being made to verify that the stores are bonafide grocery operations. In addition, FNS is improving its Store Tracking and Redemption System by, for example, developing a profile that enables FNS to better identify stores that may be trafficking. USDA’s data show that overpayments in the Food Stamp Program have declined since 1993. According to the data, the overpayment error rate at the national level has decreased from 8.27 percent of the total benefits provided in fiscal year 1993 to 6.92 percent in fiscal year 1996, the lowest error rate ever achieved in the program. With the support of the Congress, FNS has increased its emphasis on achieving payment accuracy and has employed various initiatives to assist the states in reducing the number of errors. For example, FNS sponsored national, regional, and state conferences, provided direct technical assistance to the states, and facilitated the exchange of state information on effective strategies for determining accurate payments. While these efforts have been useful in reducing fraud and abuse, we believe that FNS could achieve even greater success by taking a leading role in promoting the use and sharing of automated information by state agencies. Given the program’s strong reliance on applicants, clients and retailers to comply with program regulations and provide accurate and timely information, state agencies need to have access to information that will allow them to independently and cost effectively verify the information they are provided and identify noncompliance. Our reviews have demonstrated that useful information can be obtained from (1) matching state food stamp rolls against other state databases, such as prisoner rolls, and (2) reconfiguring existing federal databases to provide additional useful information to state agencies, such as death notices. Additional opportunities to use computerized resources to verify information exist, as seen in our ongoing review of duplicate participation in non-neighboring states. Both an FNS study and our own experiences demonstrate that automated data matches by the states using food stamp records provides a cost-effective means of reducing fraud and improving program integrity. The cost of conducting computer matches is relatively low for the return generated, which includes identifying ineligible individuals in the application process before any benefits are issued and preventing additional issuance once an ineligible participant is identified. State agencies have already implemented computerized matches on their own initiative, such as neighboring state matches for duplicate participation. Two state agencies we visited have taken steps to obtain information from credit reporting services to ensure that applicants are eligible for benefits. In addition to recouping overpayments, matching efforts help the program realize savings by identifying erroneous information during the application process, according to states. Furthermore, the states said that these efforts have a deterrent effect on applicants who may be considering fraudulent activities. Relatedly, while EBT will not eliminate all types of fraud, it shows promise as a means to identify redemption patterns that indicate potential trafficking. By eliminating paper coupons that may be lost, stolen, or sold without any record of sale and creating an electronic record of transactions, EBT can help identify and reduce food stamp trafficking. However, because EBT systems are simply another vehicle for distributing benefits, they cannot correct fraud and abuse that occurs during the process of determining eligibility and benefit levels. Also, like any computer system, food stamp EBT systems can be susceptible to security breaches that result in new forms of fraud and abuse. FNS can further expand on its recent successes in reducing overpayments by actively encouraging the states to identify ways to use computerized information to verify information provided by applicants and to encourage states to share their techniques and information with each other. FNS can demonstrate its leadership in this regard by identifying sources of information that would be useful to the states and ensuring that states have access to that information. Thank you again for the opportunity to appear before you today. We would be pleased to answer any questions you may have. The first copy of each GAO report and testimony is free. Additional copies are $2 each. Orders should be sent to the following address, accompanied by a check or money order made out to the Superintendent of Documents, when necessary. VISA and MasterCard credit cards are accepted, also. Orders for 100 or more copies to be mailed to a single address are discounted 25 percent. U.S. General Accounting Office P.O. Box 37050 Washington, DC 20013 Room 1100 700 4th St. NW (corner of 4th and G Sts. NW) U.S. General Accounting Office Washington, DC Orders may also be placed by calling (202) 512-6000 or by using fax number (202) 512-6061, or TDD (202) 512-2537. Each day, GAO issues a list of newly available reports and testimony. To receive facsimile copies of the daily list or any list from the past 30 days, please call (202) 512-6000 using a touchtone phone. A recorded menu will provide information on how to obtain these lists.

GAO discussed fraud and abuse in the Food Stamp Program, focusing on the: (1) nature and extent of the problem; (2) reasons it often goes undetected; and (3) ways computerized information can be used to identify and reduce it. GAO noted that: (1) fraud and abuse in the Food Stamp Program generally occurs in the form of either overpayments to food stamp recipients or trafficking; (2) overpayments occur when ineligible persons are provided food stamps, as well as when eligible persons are provided more than they are entitled to receive; (3) overpayments are caused by inadvertent and intentional errors made by recipients and errors made by state caseworkers; (4) the latest available information indicates that overpayments in 1996 totalled about $1.5 billion, or about 7 percent of the food stamp benefits issued that year; (5) errors also result in underpayments; in fiscal year 1996, such underpayments totalled about $518 million; (6) with regard to trafficking, the Department of Agriculture (USDA) estimated that in 1993 about $815 million in food stamps, approximately 4 percent of the food stamps issued, were traded for cash at retail stores; (7) no one knows the extent of trafficking between individuals before the food stamps are redeemed at authorized retailers; (8) participation in the Food Stamp Program by ineligible recipients occurs, and often goes undetected, because the information used to determine a household's eligibility and benefit amount for the program is not always accurate; (9) state agencies that administer the program determine household membership on the basis of unverified information provided by food stamp applicants; (10) food stamp trafficking takes place when recipients collaborate with unscrupulous retailers to convert food stamp benefits to cash or other non-food items; (11) these retailers make a profit by giving the recipients a discounted cash payment for the stamps, then redeeming the stamps at full face value to the government; (12) while USDA has reduced the overpayment rate in recent years, further reductions could result if food stamp rolls were matched against computerized information held by various sources; (13) computer matching provides a cost-effective mechanism to accurately and independently identify ineligible participants; (14) some states already conduct data matching programs; (15) by taking a leading role in promoting the use and sharing of information among federal and state agencies, USDA can enhance the states' effectiveness in identifying ineligible participants and reducing overpayments; and (16) in addition, the congressionally mandated use of electronic benefit transfers, while not the answer to eliminating all fraud, has the potential to reduce trafficking by providing an electronic trail of transactions.

The space shuttle is the world’s first reusable space transportation system. It consists of a reusable orbiter with three main engines, two partially reusable solid rocket boosters, and an expendable external fuel tank. Since it is the nation’s only launch system capable of carrying people to and from space, the shuttle’s viability is important to NASA’s other space programs, such as the International Space Station. NASA operates four orbiters in the shuttle fleet. Space systems are inherently risky because of the technology involved and the complexity of their activities. For example, thousands of people perform about 1.2 million separate procedures to prepare a shuttle for flight. NASA has emphasized that the top priority for the shuttle program is safety. The space shuttle’s workforce shrank from about 3,000 to about 1,800 full- time equivalent employees from fiscal year 1995 through fiscal year 1999. A major element of this workforce reduction was the transfer of shuttle launch preparation and maintenance responsibilities from the government and multiple contractors to a single private contractor. NASA believed that consolidating shuttle operations under a single contract would allow it to reduce the number of engineers, technicians, and inspectors directly involved in the day-to-day oversight of shuttle processing. However, the agency later concluded that these reductions caused shortages of required personnel to perform in-house activities and maintain adequate oversight of the contractor. Since the shuttle’s first flight in 1981, the space shuttle program has developed and incorporated many modifications to improve performance and safety. These include a super lightweight external tank, cockpit display enhancements, and main engine safety and reliability improvements. In 1994, NASA stopped approving additional upgrades, pending the potential replacement of the shuttle with another reusable launch vehicle. NASA now believes that it will have to maintain the current shuttle fleet until at least 2012, and possibly through 2020. Accordingly, it has established a development office to identify and prioritize upgrades to maintain and improve shuttle operational safety. Last year, we reported that several internal studies showed that the shuttle program’s workforce had been negatively affected by downsizing. These studies concluded that the existing workforce was stretched thin to the point where many areas critical to shuttle safety—such as mechanical engineering, computer systems, and software assurance engineering— were not sufficiently staffed by qualified workers. (Appendix I identifies all of the key areas that were facing staff shortages). Moreover, the workforce was showing signs of overwork and fatigue. For example, indicators on forfeited leave, absences from training courses, and stress- related employee assistance visits were all on the rise. Lastly, the program’s demographic shape had changed dramatically. Throughout the Office of Space Flight, which includes the shuttle program, there were more than twice as many workers over 60 years old than under 30 years old. This condition clearly jeopardized the program’s ability to hand off leadership roles to the next generation. According to NASA’s Associate Administrator for the Office of Space Flight, the agency faced significant safety and mission success risks because of workforce issues. This was reinforced by NASA’s Aerospace Safety Advisory Panel, which concluded that workforce problems could potentially affect flight safety as the shuttle launch rate increased. NASA subsequently recognized the need to revitalize its workforce and began taking actions toward this end. In October 1999, NASA’s Administrator directed the agency’s highest-level managers to consider ways to reduce workplace stress. The Administrator later announced the creation of a new office to increase the agency’s emphasis on health and safety and included improved health monitoring as an objective in its fiscal year 2001 performance plan. Finally, in December 1999, NASA terminated its downsizing plans for the shuttle program and initiated efforts to begin hiring new staff. Following the termination of its downsizing plans, NASA and the Office of Management and Budget conducted an overall workforce review to examine personnel needs, barriers to achieving proper staffing levels and skill mixes, and potential reforms to help address the agency’s long-term requirements. In performing this review, NASA used GAO’s human capital self-assessment checklist. The self-assessment framework provides a systematic approach for identifying and addressing human capital issues and allows agency managers to (1) quickly determine whether their approach to human capital supports their vision of who they are and what they want to accomplish and (2) identify those policies that are in particular need of attention. The checklist follows a five-part framework that includes strategic planning, organizational alignment, leadership, talent, and performance culture. NASA has taken a number of actions this year to regenerate its shuttle program workforce. Significantly, NASA’s current budget request projects an increase of more than 200 full-time equivalent staff for the shuttle program through fiscal year 2002—both new hires and staff transfers. According to NASA, from the beginning of fiscal year 2000 through July 2001, the agency had actually added 191 new hires and 33 transfers to the shuttle program. These new staff are being assigned to areas critical to shuttle safety—such as project engineering, aerospace vehicle design, avionics, and software—according to NASA. As noted earlier, appendix I provides a list of critical skills where NASA is addressing personnel shortages. NASA is also focusing more attention on human capital management in its annual performance plan. The Government Performance and Results Act requires a performance plan that describes how an agency’s goals and objectives are to be achieved. These plans are to include a description of the (1) operational processes, skills, and technology and (2) human, capital and information resources required to meet those goals and objectives. On June 9, 2000, the President directed the heads of all federal executive branch agencies to fully integrate human resources management into agency planning, budget, and mission evaluation processes and to clearly state specific human resources management goals and objectives in their strategic and annual performance plans. In its Fiscal Year 2002 Performance Plan, NASA describes plans to attract and retain a skilled workforce. The specifics include the following: Developing an initiative to enhance NASA’s recruitment capabilities, focusing on college graduates. Cultivating a continued pipeline of talent to meet future science, math, and technology needs. Investing in technical training and career development. Supplementing the workforce with nonpermanent civil servants, where it makes sense. Funding more university-level courses and providing training in other core functional areas. Establishing a mentoring network for project managers. We will provide a more detailed assessment of the agency’s progress in achieving its human capital goals as part of our review of NASA’s Fiscal Year 2002 Performance Plan requested by Senator Fred Thompson. Alongside these initiatives, NASA is in the process of responding to a May 2001 directive from the Office of Management and Budget on workforce planning and restructuring. The directive requires executive agencies to determine (1) what skills are vital to accomplishing their missions, (2) how changes expected in the agency’s work will affect human resources, (3) how skill imbalances are being addressed, (4) what challenges impede the agency’s ability to recruit and retain high-quality staff, and (5) what barriers there are to restructuring the workforce. NASA officials told us that they have already made these assessments. The next step is to develop plans specific to the space flight centers that focus on recruitment, retention, training, and succession and career development. If effectively implemented, the actions that NASA has been taking to strengthen the shuttle workforce should enable the agency to carry out its mission more safely. But there are considerable challenges ahead. For example, as noted by the Aerospace Safety Advisory Panel in its most recent annual report, NASA now has the difficult task of training new employees and integrating them into organizations that are highly pressured by the shuttle’s expanded flight rates associated with the International Space Station. As we stressed in our previous testimony, training alone may take as long as 2 years, while workload demands are higher than ever. The panel also emphasized that (1) stress levels among some employees are still a matter of concern; (2) some critical areas, such as information technology and electrical/electronic engineering, are not yet fully staffed; and (3) NASA is still contending with the retirements of senior employees. Officials at Johnson Space Center also cited critical skill shortages as a continuing problem. Furthermore, NASA headquarters officials stated that the stress-related effects of the downsizing remain in the workforce. Addressing these particular challenges, according to the Aerospace Safety Advisory Panel, will require immediate actions, such as expanded training at the Centers, as well as a long-term workforce plan that will focus on retention, recruitment, training, and succession and career development needs. The workforce problems we identified during our review are not unique to NASA. As our January 2001 Performance and Accountability Series reports made clear, serious federal human capital shortfalls are now eroding the ability of many federal agencies—and threatening the ability of others—to economically, efficiently, and effectively perform their missions. As the Comptroller General recently stated in testimony, the problem lies not with federal employees themselves, but with the lack of effective leadership and management, along with the lack of a strategic approach to marshaling, managing, and maintaining the human capital needed for government to discharge its responsibilities and deliver on its promises.To highlight the urgency of this governmentwide challenge, in January 2001, we added strategic human capital management to our list of federal programs and operations identified as high risk. Our work has found human capital challenges across the federal government in several key areas. First, high-performing organizations establish a clear set of organizational intents—mission, vision, core values, goals and objectives, and strategies—and then integrate their human capital strategies to support these strategic and programmatic goals. However, under downsizing, budgetary, and other pressures, agencies have not consistently taken a strategic, results-oriented approach to human capital planning. Second, agencies do not have the sustained commitment from leaders and managers needed to implement reforms. Achieving this can be difficult to achieve in the face of cultural barriers to change and high levels of turnover among management ranks. Third, agencies have difficulties replacing the loss of skilled and experienced staff, and in some cases, filling certain mission-critical occupations because of increasing competition in the labor market. Fourth, agencies lack a crucial ingredient found in successful organizations: organizational cultures that promote high performance and accountability. At this time last year, NASA planned to develop and begin equipping the shuttle fleet with a variety of safety and supportability upgrades, at an estimated cost of $2.2 billion. These upgrades would affect every aspect of the shuttle system, including the orbiter, external tank, main engine, and solid rocket booster. Last year, we reported that NASA faced a number of programmatic and technical challenges in making these upgrades. First, several upgrade projects had not been fully approved, creating uncertainty within the program. Second, while NASA had begun to establish a dedicated shuttle safety upgrade workforce, it had not fully determined its needs in this area. Third, the shuttle program was subject to considerable scheduling pressure, which introduced the risk of unexpected cost increases, funding problems, and/or project delays. Specifically, the planned safety upgrade program could require developing and integrating at least nine major improvements in 5 years—possibly making it the most aggressive modification effort ever undertaken by the shuttle program. At the same time, technical requirements for the program were not yet fully defined, and upgrades were planned to coincide with the peak assembly period of the International Space Station. Since then, NASA has made some progress but has only partially addressed the challenges we identified last year. Specifically, NASA has started to define and develop some specific shuttle upgrades. For example, requirements for the cockpit avionics upgrade have been defined. Also, Phase I of the main engine advanced health monitoring system is in development, and Friction Stir Welding on the external tank is being implemented. In addition, according to Shuttle Development Office officials, staffing for the upgrade program is adequate. Since our last report, these officials told us that the Johnson Space Center has added about 70 people to the upgrade program, while the Marshall Space Flight Center has added another 50 to 60 people. We did not assess the quality or sufficiency of the added staff, but according to the development office officials, the workforce’s skill level has improved to the point where the program has a “good” skill base. Nevertheless, NASA has not yet fully defined its planned upgrades. The studies on particular projects, such as developing a crew escape system, are not expected to be done for some time. Moreover, our previous concerns with the technical maturity and potential cost growth of particular projects have proven to be warranted. For example, the implementation of the electric auxiliary power unit has been delayed indefinitely because of technical uncertainties and cost growth. Also, the estimated cost of Phase II of the main engine advanced health monitoring system has almost doubled, and NASA has canceled the proposed development of a Block III main engine improvement because of technological, cost, and schedule uncertainties. Compounding the challenges that NASA is facing in making its upgrades is the uncertainty surrounding its shuttle program. NASA is attempting to develop alternatives to the space shuttle, but it is not yet clear what these alternatives will be. We recently testified before the Subcommittee on Space and Aeronautics, House Committee on Science on the agency’s Space Launch Initiative. This is a risk reduction effort aimed at enabling NASA and industry to make a decision in the 2006 time frame on whether the full-scale development of a reusable launch vehicle can be undertaken. However, as illustrated by the difficulties NASA experienced with another reusable launch vehicle demonstrator—the Lockheed Martin X-33—an exact time frame for the space shuttle’s replacement cannot be determined at this time. Consequently, shuttle workforce and upgrade issues will need to be considered without fully knowing how the program will evolve over the long run. In conclusion, NASA has made a start at addressing serious workforce problems that could undermine space shuttle safety. It has also begun undertaking the important task of making needed safety and supportability upgrades. Nevertheless, the challenges ahead are significant—particularly because NASA is operating in an environment of uncertainty and it is still contending with the effects of its downsizing effort. As such, it will be exceedingly important that NASA sustain its attention and commitment to making space shuttle operations as safe as possible. Mr. Chairman, this concludes my statement. I would be happy to answer any questions that you or Members of the Subcommittee may have. For further contact regarding this testimony, please contact Allen Li at (202) 512-4841. Individuals making key contributions to this testimony included Jerry Herley, John Gilchrist, James Beard, Fred Felder, Vijay Barnabas, and Cristina Chaplain.

In August 2000, the National Aeronautics and Space Administration's (NASA) space shuttle program was at a critical juncture. Its workforce had declined significantly since 1995, its flight rate was to double to support the assembly of the International Space Station, and costly safety upgrades were planned to enhance the space shuttle's operation until at least 2012. Workforce reductions were jeopardizing NASA's ability to safely support the shuttle's planned flight rate. Recognizing the need to revitalize the shuttle's workforce, NASA ended its downsizing plans for the shuttle program and began to develop and equip the shuttle fleet with various safety and supportability upgrades. NASA is making progress in revitalizing the shuttle program's workforce. NASA's current budget request projects an increase of more than 200 full-time equivalent staff through fiscal year 2002. NASA has also focused more attention on human capital management in its annual performance plan. However, considerable challenges still lie ahead. Because many of the additional staff are new hires, they will need considerable training and will need to be integrated into the shuttle program. Also, NASA still needs to fully staff areas critical to shuttle safety; deal with critical losses due to retirements in the coming years; and, most of all, sustain management attention to human capital reforms. Although NASA is making strides in revitalizing its workforce, its ability to implement safety upgrades in a timely manner is uncertain.

The Foreign Assistance Act of 1961 (P.L. 87-195; 22 U.S.C. 2151 et seq.), enacted at the behest of President Kennedy, sought to organize and implement U.S. foreign assistance programs with a commitment to long-range economic assistance to the developing world. The President, in a "Special Message to the Congress on Foreign Aid," delivered March 22, 1961, described the U.S. foreign aid programs emerging from World War II as [b]ureaucratically fragmented, awkward and slow, its administration is diffused over a haphazard and irrational structure covering at least four departments and several other agencies. The program is based on a series of legislative measures and administrative procedures conceived at different times and for different purposes, many of them now obsolete, inconsistent and unduly rigid and thus unsuited for our present needs and purposes. Its weaknesses have begun to undermine confidence in our effort both here and abroad. President Kennedy went on to note the declining prestige of the United States' foreign aid apparatus and the negative impact of that decline on administering and staffing programs abroad. The President also cited the uneven and undependable short-term financing of programs and the resulting disincentive for long-term efficient planning. Congress and the executive branch worked together to enact the Foreign Assistance Act of 1961 to address these shortcomings at a time when much of the developing world was emerging as newly independent states, when those new nations were, "without exception ... under Communist pressure," and when "the free industrialized nations" found themselves in a position "to assist the less-developed nations on a long-term basis ... [as they find themselves] on the threshold of achieving sufficient economic, social and political strength and self-sustained growth to stand permanently on their own feet." Though the original Foreign Assistance Act of 1961 lengthened the authorization time frame for funding development assistance to five years, other programs were authorized for shorter periods. The act still required occasional reauthorization legislation to renew programs beyond that original time frame, and Congress retained its role of appropriating funds. The original act authorized the funding levels shown in Table 1 . Through 1985, Congress regularly enacted new authorization legislation or amended the original act to update authorization time frames, and to incorporate newer programs and authorities. From 1986 on, however, Congress turned more frequently to enacting freestanding authorities that did not amend the 1961 act, and included language in annual appropriations measures to waive the requirement to keep authorizations current. Thus, sections in the Foreign Assistance Act of 1961, in many instances, do not refer to authorization beyond fiscal years 1986 and 1987 (unless the program was added to the act by an amendment enacted after that period), but programs are continued through appropriations. A few programs are established outside the statutory framework of the Foreign Assistance Act of 1961, and thus are not included in detail in this report. Reimbursable military exports, for example, are addressed in the Arms Export Control Act and subsequent Security Assistance Acts. Since 1985, the last year Congress passed a comprehensive reauthorization of the Foreign Assistance Act of 1961, both Congress and the President have promoted a variety of specialized authorities in freestanding legislation. And, on rare occasion, Congress has established new authorities or programs in annual appropriations acts. Some freestanding laws that authorize foreign aid or apply new conditions to aid authorized in the Foreign Assistance Act of 1961 are shown in Table 2 . Table 3 presents the authorities enacted in the Foreign Assistance Act of 1961, as amended, and the corresponding appropriations that fund those authorities in the current foreign assistance appropriations act. The left-side column of Table 3 cites sections of the Foreign Assistance Act of 1961, as amended, that authorize programs, and provides the latest year for which authorization is enacted. Sections that establish a need for such a program—in the form of policy or finding statements, for example—are not cited. The Foreign Assistance Act of 1961 is organized in a conventional manner, however, so those sections that state policy, findings, program requirements, or implementing structure can be found in the text of the law in sections proximate to the authorizing section. All of the Foreign Assistance Act of 1961 is stated in the United States Code, beginning at 22 U.S.C. 2151. For each section that states the President's power to authorize funds, the relevant U.S. Code citation and year of enactment is included here. In nearly all cases, these sections have been substantially amended, or rewritten altogether, subsequent to enactment. This table reflects the language as amended. Though the sections generally afford the President the authority to furnish whatever assistance the section establishes, Section 622(a) and (c) (22 U.S.C. 2382(a), (c)) of the act states that Nothing contained in this Act shall be construed to infringe upon the powers or functions of the Secretary of State.... Under the direction of the President, the Secretary of State shall be responsible for the continuous supervision and general direction of economic assistance, military assistance, and military education and training programs, including but not limited to determining where there shall be a military assistance (including civic action) or a military education and training program for a country and the value thereof, to the end that such programs are effectively integrated both at home and abroad and the foreign policy of the United States is best served thereby. In many instances, the President has delegated his authority to the Secretary of State, the Administrator of the United States Agency for International Development, or some other appropriate office holder. Delegations of authority are to be found, either in whole text or as a reference, in the U.S. Code, at sections corresponding to the section of the Foreign Assistance Act of 1961 that states the relevant authority. The right-side column of Table 3 states appropriations levels that correspond to the authorized program, as enacted in the Department of State, Foreign Operations, and Related Programs Appropriations Act, 2012 (division I of the Consolidated Appropriations Act, 2012; P.L. 112-74 ; 125 Stat. 786 at 1164). The General Provisions title in an appropriations act usually states conditions for administering the appropriations. In Table 3 , General Provisions sections that state conditionality and terms that might be applicable to the aid being provided are also listed, and a statute citation is provided to assist the reader who might wish to read in further detail. General Provisions measures that apply to the entire appropriations act are cited only at Chapter 1—Policy, Development Assistance Authorizations; they are numerous and apply to most authorities. Such General Provisions sections prohibit assistance for reasons relating to terrorism, military overthrows, and debt arrearages, to name a few.

The Foreign Assistance Act of 1961 (P.L. 87-195; 22 U.S.C. 2151 et seq.) serves as the cornerstone for the United States' foreign assistance policies and programs. Written, passed, and signed into law at what some consider the height of the Cold War, the act is seen by some today as anachronistic. Ironically, when President Kennedy urged the 87th Congress to enact foreign aid legislation that would exemplify and advance the national interests and security strategies of the United States post-World War II, he described the existing foreign aid mechanisms as bureaucratic, fragmented, awkward, and slow. Some have used the same language today, more than 50 years later, to characterize the legislation he promoted. On several occasions over the past 20 years, Congress has set out to assess the current body of law that comprises foreign aid policy, starting with the Foreign Assistance Act of 1961. The Foreign Affairs and Foreign Relations Committees, in recent past Congresses, have considered legislation to rebuild the United States' capacity to deliver effective foreign aid, and make aid more transparent and responsive to today's quick-changing international challenges. Proposals have ranged from setting up advisory committees to a complete overhaul of foreign aid objectives and programs. This report presents the authorities of the Foreign Assistance Act of 1961, as amended, and correlates those authorities with the operative appropriations measure (division I of the Consolidated Appropriations Act, 2012; P.L. 112-74; 124 Stat. 786 at 1164) that funds those authorities. It replaces an earlier issue of the same report, dated July 29, 2011, to incorporate the current appropriations act. For many years, foreign aid appropriations measures have waived the requirement that funds must be authorized before they are appropriated and expended. Understanding the relation between the authorities in the cornerstone act and appropriations is key to foreign aid reform.

Medicare covers medically necessary ambulance services when no other means of transportation to receive health care services is appropriate, given the beneficiary’s medical condition at the time of transport. Medicare pays for both emergency and nonemergency ambulance transports that meet the established criteria. To receive Medicare reimbursement, providers of ambulance services must also meet vehicle and crew requirements. Transport in any vehicle other than an ambulance—such as a wheelchair or stretcher van—does not qualify for Medicare payment. Medicare pays for different levels of ambulance services, which reflect the staff training and equipment required to meet the patient’s needs. Basic life support (BLS) is provided by emergency medical technicians (EMT). Advanced life support (ALS) is provided by paramedics or EMTs with advanced training. ALS with specialized services is provided by the same staff as standard ALS but involves additional equipment. Currently, Medicare uses different payment methods for hospital-based and freestanding ambulance providers. Hospital-based providers are paid based on their reasonable costs. For freestanding providers, Medicare generally pays a rate based on reasonable charges, subject to an upper limit that essentially establishes a maximum payment amount. Freestanding providers can bill separately for mileage and certain supplies. Between 1987 and 1995, Medicare payments to freestanding ambulance providers more than tripled, from $602 million to almost $2 billion, rising at an average annual rate of 16 percent. Overall Medicare spending during that same time increased 11 percent annually. From 1996 through 1998, payments to freestanding ambulance providers stabilized at about $2.1 billion. BBA stipulated that total payments under the fee schedule for ambulance services in 2000 should not exceed essentially the amount that payments would have been under the old payment system. This requirement is known as a budget neutrality provision. In 1997, 11,135 freestanding and 1,119 hospital-based providers billed Medicare for ground transports. The freestanding providers are a diverse group, including private for-profit, nonprofit, and public entities. They include operations staffed almost entirely by community volunteers, public ventures that include a mix of volunteer and professional staff, and private operations using paid staff operating independently or contracting their services to local governments. In our July 2000 report, we noted that about 34 percent were managed by local fire departments. In several communities a quasi-government agency owned the ambulance equipment and contracted with private companies for staff. The majority of air ambulance transports are provided by hospital-based providers. An estimated 275 freestanding and hospital-based programs provide fixed-wing and rotor-wing air ambulance transports, which represent a small proportion (about 5 percent) of total ambulance payments. In our July 2000 report, we noted that several factors characterizing rural ambulance providers may need consideration in implementing an appropriate payment policy. These include: High per-transport costs in low-volume areas. Compared to their urban and suburban counterparts, rural ambulance providers have fewer transports over which to spread their fixed costs because of the low population density in rural areas. Yet, rural providers must meet many of the same basic requirements as other providers to maintain a responsive ambulance service, such as a fully equipped ambulance that is continually serviced and maintained and sufficient numbers of trained staff. As a result, rural providers that do not rely on volunteers generally have higher per-transport costs than their urban and suburban counterparts. Longer distances traveled. A common characteristic of rural ambulance providers is a large service area, which generally requires longer trips. Longer trips increase direct costs from increased mileage costs and staff travel time. They also raise indirect costs because ambulance providers must have sufficient backup services when vehicles and staff are unavailable for extended periods. Current Medicare payment policy generally allows freestanding providers to receive a payment for mileage. Nevertheless, mileage-related reimbursement issues, such as the amount paid for mileage, represent a greater concern to rural providers because of the longer distances traveled. Lack of alternative transportation services. Rural areas may lack alternative transport services, such as taxis, van services, and public transportation, which are more readily available in urban and suburban areas. This situation is complicated by the fact that some localities require ambulance providers to transport in response to an emergency call, even if the severity of the problem has not been established. Because of this situation, some providers transport a Medicare beneficiary whose need for transport does not meet Medicare coverage criteria and must therefore seek payment from the beneficiary or another source. Reliance on Medicare revenue. Medicare payments account for a substantial share of revenue for rural ambulance providers that bill Medicare. Among rural providers, 44 percent of their annual revenue in 1998, on average, was from Medicare, compared to 37 percent for urban providers, according to Project Hope Center for Health Services, a nonprofit health policy research organization. Additionally, for some rural providers, other revenue sources—such as subsidies from local tax revenues, donations, or other fundraising efforts—have not kept pace with increasing costs of delivering the services. Decreasing availability of volunteer staff. Rural ambulance providers traditionally have relied more heavily on volunteer staff than providers in urban or suburban areas. Some communities having difficulty recruiting and retaining volunteers may have had to hire paid staff, which increases the costs of providing services. Medicare’s proposed fee schedule, published in September 2000, reduces the variation in maximum payment amounts to similar providers for the same type of services. The considerable variation that exists in the current payment system does not necessarily reflect expected differences in provider costs. For example, in 1999, the maximum payments for two types of emergency transport—one requiring no specialized services and the other requiring specialized services—were the same in Montana at $231 for freestanding providers. In North Dakota, the maximum payment was about $350 and also did not differ measurably for the two types of transport services. In contrast, South Dakota’s maximum payment for the less intensive transport was $137, which was $30 lower than the payment for the transport requiring specialized services. Per-mile payments also varied widely. For example, in rural South Dakota, the payment was just over $2 per mile, compared to $6 per mile in rural Wyoming. The shift to the proposed fee schedule would narrow the wide variation in payments to ambulance providers for similar services. The proposed schedule includes one fee for each level of service. This fee is not expected to vary among providers except for two possible adjustments— one for geographic wage and price differences and the other based on the beneficiary’s location, rural or urban. As a result, a national fee schedule is likely to provide increased per-trip payments to those providers that under the current system receive payments considerably below the national average and decreased payments to providers with payments that have been substantially above the national average. As part of its mandate, the negotiated rulemaking committee was directed to consider the issue of providing essential ambulance service in isolated areas. The committee recommended a rural payment adjustment to recognize higher costs associated with low-volume providers to ensure adequate access to ambulance services. Consistent with the committee’s recommendation, the proposed fee schedule includes an additional mileage payment for the first 17 miles for all transports of beneficiaries in rural areas. The mileage payment adjustment, however, treats all providers in rural areas identically and does not specifically target providers that offer the only ambulance service for residents in the most isolated areas. As a result, some providers may receive the payment adjustment when they are not the only available source of ambulance service, so the adjustment may be too low for the truly isolated providers. In addition, the proposed rural adjustment is tied to the mileage payment rather than the base rate and, therefore, may not adequately help low- volume providers. Such providers may not have enough transports to enable them to cover the fixed costs associated with maintaining ambulance service. The per-mile cost would not necessarily be higher with longer trips. It is the base rate, which is designed to pay for general costs such as staff and equipment—and not the mileage rate—that may be insufficient for these providers. For that reason, adjusting the base rate rather than the mileage rate would better account for higher per-transport fixed costs. In response to our 2000 report, HCFA stated that it intends to consider alternative adjustments to more appropriately address payment to isolate, essential, low-volume rural ambulance providers. Whether or not a claim for ambulance transport is approved varies among carriers, and these discrepancies can translate into unequal coverage for beneficiaries. In 1998, between 9 percent and 26 percent of claims for payment of emergency and nonemergency ambulance transports were denied among the nine carriers that processed two-thirds of all ambulance claims. Different practices among carriers, including increased scrutiny due to concerns about fraud, may explain some of the variation in denial rates. Following are other inconsistencies in carrier practices cited in our July 2000 report that may help explain denial rate differences: National coverage policy exists only for some situations. Generally, Medicare coverage policies have been set by individual carriers rather than nationally by HCFA. For example, in 1998, the carrier covering ambulance providers in New Jersey and Pennsylvania reimbursed transports at ALS levels where local ordinances mandated ALS as the minimum standard of care for all transports. In contrast, the carrier for an ambulance provider in Fargo, North Dakota, reduced many of the provider’s ALS claims to BLS payment rates, even though a local ordinance required ALS services in all cases. (The carrier’s policy has since changed.) Some carriers were found to have applied criteria inappropriately, particularly for nonemergency transports. For example, for Medicare coverage of a nonemergency ambulance transport, a beneficiary must be bed-confined. In the course of our 2000 study, we found one carrier that processed claims for 11 states applied bed-confined criteria to emergency transports as well as those that were nonemergency. (The carrier’s policy has since changed.) Providers were concerned that carriers sometimes determined that Medicare will cover an ambulance claim based on the patient’s ultimate diagnosis, rather than the patient’s condition at the time of transport. Medicare officials have stated that the need for ambulance services is to be based on the patient’s medical condition at the time of transport, not the diagnosis made later in the emergency room or hospital. Ambulance providers are required to transport beneficiaries to the nearest hospital that can appropriately treat them. Carriers may have denied payments for certain claims because they relied on inaccurate survey information specifying what services particular hospitals offer when determining whether a hospital could have appropriately served a beneficiary. However, the survey information does not always accurately reflect the situation at the time of transport, such as whether a bed was available or if the hospital was able to provide the necessary type of care. Some providers lacked information about how to fill out electronic claims forms correctly. Volunteer staffs in particular may have had difficulty filing claims, as they often lacked experience with the requirements for Medicare’s claims payment process. An improperly completed claim form increases the possibility of a denial. Claims review difficulties are exacerbated by the lack of a national coding system that easily identifies the beneficiary’s health condition to link it to the appropriate level of service (BLS, ALS,or ALS with specialized services). As a result, the provider may not convey the information the carrier needs to understand the beneficiary’s medical condition at the time of pickup, creating a barrier to appropriate reimbursement. Medicare officials have stated that a standardized, mandated coding system would be helpful and the agency has investigated alternative approaches for implementing such a system. The agency contends that using standardized codes would promote consistency in the processing of claims, reduce the uncertainty for providers regarding claims approval, and help in filing claims properly. Overall, the proposed fee schedule will improve the equity of Medicare’s payment for ambulance providers. Payments will likely increase for providers that now receive payments that are lower than average, whereas payments will likely decline for those now receiving payments above the average. In our July 2000 report, we recommended that HCFA modify the payment adjuster for rural transports to ensure that it is structured to address the high fixed costs of low-volume providers in isolated areas, as these providers’ services are essential to ensuring Medicare beneficiaries’ access to ambulance services. HCFA agreed to work with the ambulance industry to identify and collect relevant data so that appropriate adjustments can be made in the future.

The Balanced Budget Act of 1997 required Medicare to change its payment system for ambulance services. In response, the Health Care Financing Administration (HCFA), now called the Centers for Medicare and Medicaid Services (CMS), proposed a fee schedule to standardize payments across provider types on the basis of national rates for particular services. Under the act, the fee schedule was to have applied to ambulance services furnished on or after January 1, 2000. HCFA published a proposed rule in September 2000 and has received public comment, but it has not yet issued a final rule. This testimony discusses the unique concerns of rural ambulance providers and the likely effects of the proposed fee schedule on these providers. Many rural ambulance providers face a set of unique challenges in implementing an appropriate payment policy. Rural providers--particularly those serving large geographic areas with low population density--tend to have high per-trip costs compared with urban and suburban providers. The proposed Medicare fee schedule does not sufficiently distinguish the providers serving beneficiaries in the most isolated rural areas and may not appropriately account for the higher costs of low-volume providers.

The Troops to Teachers program is a federal program that began operations in 1994 with two goals: (1) to help military personnel affected by downsizing become teachers and (2) to ease the teacher shortage, especially in math and science and in areas with concentrations of children from low-income families. The program offers information on state teacher certification requirements and job referral and job placement assistance to active and former military personnel who are interested in pursuing teaching as a second career after leaving the military. According to TTT program data, military officers represent a major participant group. During 1994 and 1995, the program also offered financial incentives to military personnel and school districts to participate in the program. Participants who received stipends of up to $5,000 and became certified were required to teach for 5 years. School districts could receive grants of up to $50,000 paid over 5 years for each TTT participant they hired. The program stopped awarding new stipends and grants after 1995 when funds were no longer appropriated for this purpose. The program is administered by DoD’s Defense Activity for Non- Traditional Education Support (DANTES). DANTES and 24 state TTT offices carry out the program’s efforts to ease former military personnel into teaching. (See fig. 1.) States voluntarily join the TTT program. States that wish to join submit proposals to DANTES describing the services they plan to provide and the activities in which they plan to engage to achieve the TTT program goals. If the proposal is approved, DANTES signs a memorandum of agreement with the state agency responsible for the TTT program, most often the state’s department of education. DANTES provides funds for state program expenses, although the state TTT representatives are not federal employees. From fiscal year 1994 through 2000, DANTES spent $5.5 million on program administration and provided states with a total of $12.1 million to operate their TTT offices, according to program officials. States that joined the program have had a great deal of flexibility in how they operate the TTT program in their state. State offices determine their own organizational structure, the amount of resources they will devote to the program, and the services they will provide. Sixteen states had joined TTT by 1995 and 8 more joined between 1998 and 2000. DANTES and state TTT offices operate as a network to provide services to military personnel interested in becoming teachers. As part of this network, DANTES serves the following functions: Acting as the central liaison for all the military services and the state education offices and promoting the program at a national level. Approving and monitoring the memorandum of agreements. Working with the states to share recruitment practices. Maintaining the TTT program web site with links to state offices. Facilitating the transition from military life to teaching in the 26 states and the District of Columbia without TTT placement assistance offices. Monitoring the teaching commitments of the people who received stipends and any school districts that received grants on behalf of persons who applied to the TTT program during 1994 and 1995. For their part, most state offices provide a broad range of services, including providing personalized counseling and advice to those who wish to promoting the TTT program to school districts and the military promoting military personnel as potential teachers, maintaining an 800 number and the state link on the TTT web site with information and school district openings, and working to lessen costs and time required for military personnel to obtain certification. The environment in which TTT functions has changed in ways that have implications for the program’s future operations. In 1998, the military downsizing leveled off, essentially removing the first goal of the TTT program. DANTES’ responsibility for monitoring the teaching commitments of those who received stipends and grants between 1994 and 1995 will end in a few years. Thirteen additional states currently have contacted DANTES and are waiting to join the program, either independently or as a consortium. The Congress appropriated $3 million for TTT in fiscal year 2001 under the Eisenhower Professional Development Program, placing TTT within Education’s broader initiative to support teacher recruitment. The Eisenhower Program also provides additional funds in grants to states and/or organizations that wish to develop new avenues for attracting teachers, especially second-career teachers. The President’s 2002 budget proposes to support and expand TTT activities through the Transition to Teaching program. The $30 million budget proposed for Transition to Teaching would assist nonmilitary as well as military professionals with becoming teachers. According to TTT records, 3,821 of the 13,756 people accepted into the program were hired as teachers from fiscal years 1994 through 2000. However, this number probably underrepresents the number of people who have used program services and become teachers. Of those participants hired as teachers, over 90 percent remained in teaching past the first year. TTT program records show that 17,459 people applied to the program from fiscal years 1994 through 2000 and, of these, 13,756 were accepted into the program. Of these participants, 3,821, or 28 percent, became teachers. (See table 1.) More than 85 percent of the TTT teachers were hired in states with TTT offices. While no formal documentation was maintained on reasons for the withdrawals of 8,554 applicants accepted in the program who did not become teachers, the TTT program director provided several reasons why some participants withdrew from the program. For instance, some military personnel said they had found a better paying job, some realized that they would not like teaching, and others thought the cost and time of the alternative certification process was onerous. It is difficult to ascertain the full extent of TTT program participation, because program data are incomplete. When the stipends and incentive grants ended after 1995, it became difficult to track the number of people using the program’s resources because they were less inclined to complete application forms and respond to surveys that tracked program retention. In addition, with the creation of the TTT web site, people could access information they needed to find certification programs and teaching positions and do so without applying to the program. Consequently, the number of people who used the program to become teachers is probably understated. DANTES officials told us that they believe their numbers undercount the total number of teachers hired as a result of the TTT program. Similarly, some state TTT officials said that DANTES records may substantially undercount the number of former military personnel they have placed in teaching positions. Six of the 10 state TTT officials that we contacted said this was the case, but only 4 states—Colorado, Mississippi, South Carolina, and Texas—kept records with additional information on military persons whom they placed in teaching positions whether or not they completed a TTT program application. Table 2 shows the difference between DANTES’ records and state records for the number of teachers hired within these states. Available TTT program data also show that over 90 percent of TTT teachers remained in teaching after their first year. The percent of TTT teachers who remain in teaching for at least 3 years is about the same as that for all teachers nationwide, and the percent of TTT teachers that remain for 5 years is markedly better. (See table 3.) However, these retention rates should be considered in light of the fact that TTT teachers who received stipends had to teach for 5 years to pay off their financial commitment. In addition, these data are based solely on teachers who received funding (2,135) and do not include those who did not. However, a TTT program survey done in 1999 of school districts that hired TTT teachers—including those who completed applications and follow-up surveys but did not receive funding—showed similar results. According to TTT program records and NCEI survey data, a higher percentage of TTT teachers overall taught math, science, special education, and vocational education and taught in inner city schools and high schools than all teachers nationwide. (See table 4.) For example, 20 percent of TTT teachers compared with 5 percent of teachers nationwide taught general special education. Also, a higher percentage of TTT teachers are male (86 percent) and minority (33 percent) than the national percentages (26 percent and 11 percent, respectively). Many states that joined the TTT program said that they did so because the program would enable them to fill positions in subjects or geographic areas in which they had shortages, especially in math, science, special education, and vocational education and in inner city schools. They also cited the program’s potential for increasing the diversity of its teacher workforce, some specifically mentioned male and minority teachers as a factor in their decisions to join the TTT program. Several factors may have affected—both positively and negatively—the number of military personnel applying to the TTT program and the number hired as teachers. The positive factors were (1) the TTT stipends, (2) the TTT incentive grants, (3) the increased demand for teachers, and (4) accomplishments of state TTT offices. The negative factors were (1) increased demands for specialized workers, (2) economic growth, and (3) a reduction in the number of officers leaving the military. The following factors may have increased the number of TTT applicants and/or teachers hired. Stipends. During the first 2 years of the program, stipends lowered the cost of obtaining teacher certification for TTT participants. In a DANTES survey of TTT teachers who had completed their 5-year teaching commitment for receiving the stipend, 59 percent reported that the TTT program was very important in making their decision to become a teacher, and 68 percent reported that the stipend was the most important feature of the TTT program. Incentive grants. During the first 2 years of the program, TTT incentive grants lowered the cost to school districts of hiring TTT teachers relative to other job candidates, thereby increasing the demand for TTT teachers. The increased probability of being hired would have made the program more attractive to applicants. Demand for teachers. Education data show that teacher shortages became more widespread in 1998, thus the demand for teachers expanded and intensified. The increased likelihood of employment for TTT teachers after certification could have increased the number of applicants to the program. Accomplishments of state TTT offices. State TTT offices have experienced some success in decreasing the time and cost of teacher certification for military personnel and in increasing the demand among school districts for TTT hires. Both of these accomplishments probably made the program more attractive to potential applicants. More alternative teacher certification programs are available to persons pursuing second careers as teachers, including military personnel, sometimes as a direct result of the TTT program. For example, the Florida, Wisconsin, and Washington state TTT offices played roles in convincing their state legislatures in 2000 to authorize new alternative teacher certification programs. Some state TTT offices, working with DANTES, created opportunities for military personnel to satisfy some teacher certification requirements while still on active duty. For example, the Texas TTT office, working in conjunction with three Texas universities, implemented a distance learning program in the Fall 2000 offering teacher certification classes at military bases worldwide. Texas also worked with DANTES to make its teacher certification examination available at military bases worldwide. Some states lowered the cost of teacher certification for military personnel in response to the efforts of their state TTT office. For example, California and Washington reduced the fees they charged military personnel to take courses at state universities. Outreach and promotional activities by state TTT offices increased school districts’ demand for TTT hires. For example, the Colorado, Illinois, North Carolina, and Ohio TTT offices increased the number of school districts that posted their teacher vacancies on the TTT data base. The following factors may have decreased the number of TTT applicants and/or teachers hired. Demand for specialized workers. A nationwide increase in demand for workers with math/science backgrounds, especially in information technology and the sciences, which generally pay higher salaries than teaching, may have attracted potential military personnel with these skills away from pursuing a teaching career. Between 1994 and 1999, the number of workers employed in the mathematical and computer sciences increased by almost 56 percent while total employment increased by about 8.5 percent. Economic growth. The general growth in the economy in the 1990s increased the number of alternative job opportunities for those leaving the military. An important indicator of economic growth and the demand for labor is the unemployment rate. The greater the economic growth, the greater the demand for labor and the lower the unemployment rate. Between 1994 and 1999, the unemployment rate declined from 6.1 percent to 4.2 percent. Reduction in supply of applicants. The number of retired commissioned officers, warrant officers, and high-graded noncommissioned officers declined from 34,335 to 26,612 between 1994 and 1999. This group comprised 76 percent of all TTT applicants during this period. The TTT program is currently functioning in an environment that differs greatly from when it began 7 years ago. Its first purpose, to place military persons affected by downsizing initiatives in the classroom, has essentially been eliminated while its second purpose, to address teacher shortages, has become a more critical national issue. Also, the transition to teacher from a different profession has become easier in many states through new or expanded alternative teacher certification programs. With the recent transfer of TTT from DoD to Education, it is too early to determine how TTT will fit into Education’s mission and its broader teacher recruitment and retention initiatives. However, this new environment presents opportunities for Education to explore how best to coordinate the TTT program with other education programs to address the nation’s growing teacher shortage problem. We provided Education and DoD with a draft of this report for review, and both agencies provided comments via e-mail. Education noted that it has other programs to increase the number of qualified teachers, including the Transition to Teacher and Eisenhower Professional Development programs, and that the information in the report will be valuable as the Department continues to explore ways that these programs can collaborate and strengthen services. DoD said that it has reviewed the report and accepted the report’s conclusions. We are sending copies of this report to the Honorable Roderick R. Paige, Secretary of the Department of Education, and other interested parties. We will also make copies available to others on request. If you or your staffs have any questions about this report, please contact me on (202) 512-7215 or Karen Whiten at (202) 512-7291. Key contributors to this report were Mary Roy, Ellen Habenicht, Richard Kelley, Barbara Smith, and Patrick DiBattista.

In response to a shortage of math and science teachers and reductions in U.S. military personnel, Congress created the Troops to Teachers (TTT) program in 1992. Until 1995, the program, which was run by the Defense Department, offered stipends to program participants and incentive grants to school districts to hire TTT teachers. Congress transferred the program from DOD to the Department of Education in 1999. This report reviews the program from its beginning in January 1994 until its transfer to Education. GAO found that 13,756 former military personnel applied to the program and were accepted. Of these, 3,821 were hired as teachers from 1994 through 2000; more than 90 percent of those applicants hired as teachers remained in teaching after the first year. However, these participation figures most likely represent the minimum number of former military personnel who used the program's services and became teachers because the figures include only those persons who formally applied to the TTT program and who completed follow-up surveys. Compared with all teachers nationwide, a higher percentage of TTT teachers overall taught math, science, special education, and vocational education and taught in inner city schools and high schools. Factors such as stipends, incentive grants, economic conditions, and state initiatives may have influenced the number of people who applied to the program and became teachers.

Used by all U.S. military service members and DOD civilians in the area of operations, the IBA consists of an outer tactical vest with ballistic inserts or plates that cover the front, back, and sides. As the ballistic threat has evolved, ballistic requirements have also changed. The vest currently provides protection from 9mm rounds, while the inserts provide protection against 7.62mm armor-piercing rounds. Additional protection can also be provided for the shoulder, throat, and groin areas. Figure 1 details the body armor components. Concerns regarding the level of protection and amount of IBA needed to protect U.S. forces have been raised in recent years, prompted by a number of reports, newspaper articles, and recalls of issued body armor by both the Army and the Marine Corps. In May 2005, the Marine Corps recalled fielded body armor because it concluded that the body armor failed to meet contract specifications, and in November 2005, the Army and Marine Corps recalled 14 lots of body armor that failed original ballistic testing. Additionally, in April 2005, we reported on shortages of critical force protection items, including individual body armor. Specifically, we found that the shortages in body armor were due to material shortages, production limitations, and in-theater distribution problems. In the report, we did not make specific recommendations regarding body armor, but we did make several recommendations to improve the effectiveness of DOD’s supply system in supporting deployed forces for contingencies. DOD agreed with the intent of the recommendations and cited actions it had or was taking to eliminate supply chain deficiencies. Army and Marine Corps body armor currently meets theater ballistic requirements and the required amount needed for personnel in theater, including the amounts needed for the surge of troops into Iraq. Used by all U.S. military service members and DOD civilians in the area of operations, the IBA consists of an outer tactical vest with ballistic inserts or plates that cover the front, back, and sides. The vest and inserts currently meet the theater ballistic requirements. The vest provides protection from 9mm rounds, while the inserts provide protection against 7.62mm armor- piercing rounds. Additional protection can also be provided for the shoulder, throat, and groin areas. The Army and Marine Corps body armor meets the required amounts needed for personnel in theater as well. Table 1 details Army and Marine Corps theater requirements and worldwide inventory quantities of the body armor as of February 2007. CENTCOM requires that all U.S. military forces and all DOD civilians in the area of operations receive the body armor system. Currently, service members receive all service-specific standard components of the body armor system prior to deploying. For example, the Army issues the shoulder protection equipment to all its forces; however, Marine Corps personnel receive this equipment item in theater on an as-needed basis. The Army and the Marine Corps provide the DOD civilians with components of the armor system. However, the time frame for receipt of these items varies as some receive the body armor prior to deploying and others upon arrival in theater. Army unit commanders only reported one body armor issue in their December 2006 to February 2007 classified readiness reports. This one issue did not raise a significant concern regarding the body armor. Moreover, Marine Corps commanders’ comments contained in the December 2006 and January 2007 readiness reports did not identify any body armor issues affecting their units’ readiness. In December 2006 and January 2007, the Army, in its critical equipment list did not identify body armor as a critical equipment item affecting its unit readiness. The Army and Marine Corps have controls in place during manufacturing and after fielding to assure that body armor meets requirements. Both services conduct quality and ballistic testing prior to fielding and lots are rejected if the standards are not met. They both also conduct formal testing on every lot of body armor (vests and protective inserts) prior to acceptance and issuance to troops. During production, which is done at several sites, the lots of body armor are sent to a National Institute of Justice-certified laboratory for ballistic testing and to the Defense Contract Management Agency for quality testing (size, weight, stitching) prior to issuance to troops. Figure 2 illustrates the lot acceptance process. Once approved, the body armor is issued to operating forces. Currently, both Army and Marine Corps personnel are issued body armor prior to deployment. The Army lot failure rate from January 2006 to January 2007 was 3.32 percent for the enhanced small arms inserts, and there were no failures for the outer tactical vests. From February 2006 to February 2007, the Marine Corps lot failure rate was 4.70 percent for the outer tactical vests. Although not required to do so, after the systems have been used in the field, the Army does limited ballistic testing of outer tactical vests and environmental testing of the outer tactical vests and the inserts. The Marine Corps visually inspects the vest and the plates for damage. According to Army officials, there has been no degradation of body armor based on ballistic and environmental testing results. Additionally, to determine future improvements, the Army and the Marine Corps body armor program offices monitor and assess the use of body armor in the field, including the review of medical reports from the Armed Forces Medical Examiner. For example, the Army and Marine Corps added side plates and throat protection based on body armor usage in the field. DOD has a standard methodology for ballistic testing of the hard body armor plates, but not for the soft body armor vest. Currently, DOD’s Director, Operational Test and Evaluation Office is developing a standard methodology for ballistic testing of the soft body armor to eliminate discrepancies in testing methodologies. The new standard is expected to be issued sometime in 2007. The Army and Marine Corps share information regarding ballistic requirements and testing, and the development of future body armor systems, although they are not required to do so. For example, in August 2006, the Marine Corps attended the Army’s test of next generation body armor types at Fort Benning, Georgia. Similarly, the Army sent representatives to attend the Marine Corps’s operational assessment of the new Modular Tactical Vest. DOD officials indicate that there is no requirement to share information. Title 10 of the U.S. Code allows each service to have separate programs, according to Army and Marine Corps officials. Nevertheless, the services are sharing information regarding ongoing research and development for the next generation of body armor. Regarding contractors or non-DOD civilians, DOD Instruction 3020.41 allows DOD to provide body armor to contractors where permitted by applicable DOD instructions and military department regulations and where specified under the terms of the contract. It is CENTCOM’s position that body armor will be provided to contractors if it is part of the terms and conditions of the contract. According to CENTCOM officials, non- DOD government civilians such as State Department civilians are expected to make their own arrangements to obtain this protection. However, the officials said that commanders, at their discretion, can provide body armor to any personnel within their area of operation. In conclusion, Mr. Chairman, the Army and Marine Corps have taken several actions to address concerns, including assuring that the body armor systems meet the current theater requirements and that the amounts needed in theater are available. However, ballistic theater threats can change, and the services will need to continue to monitor and evaluate the theater ballistic threats in order to develop and provide individual body armor that can counter these changing threats. The services also will need to monitor and evaluate new technologies that may counter emerging theater ballistic threats. Moreover, they will need to continue to assure that controls are in place during manufacturing and after fielding to assure that existing and future body armor systems meet theater ballistic requirements. Mr. Chairman, this concludes my statement. I would be pleased to respond to any questions you or other Members of the Committee may have. For more information regarding this testimony, please call me at (202) 512- 8365. Individuals making key contributions to the testimony include: Grace Coleman, Alfonso Garcia, Lonnie McAllister, Lorelei St. James, and Leo Sullivan. This is a work of the U.S. government and is not subject to copyright protection in the United States. It may be reproduced and distributed in its entirety without further permission from GAO. However, because this work may contain copyrighted images or other material, permission from the copyright holder may be necessary if you wish to reproduce this material separately.

In recent years, a number of reports and newspaper articles have cited concerns regarding the level of protection and the available amounts of body armor to protect deployed service members. As part of GAO's efforts to monitor the Department of Defense's (DOD) and the services' action to protect ground forces, GAO reviewed the Army and Marine Corps's actions to address these concerns. On April 26, 2007, GAO issued a report regarding the Army and the Marine Corps's individual body armor systems. Today's testimony summarizes the report's findings regarding the extent to which the Army and Marine Corps (1) have met the theater requirements for body armor, (2) have the controls in place to assure that the manufacturing and fielding of body armor meet requirements, and (3) have shared information regarding their efforts on body armor ballistic requirements and testing. The report also included additional information concerning whether contractors or non-DOD civilians obtain body armor in the same way as U.S. forces and DOD civilians given the number of contractors and non-DOD civilians in Central Command's (CENTCOM) area of operation. GAO did not make recommendations in the report. DOD officials did not provide written comments on the report but technical comments were incorporated as appropriate. Army and Marine Corps body armor currently meets theater ballistic requirements and the required amount needed for personnel in theater, including the amounts needed for the surge of troops into Iraq. The Interceptor Body Armor (IBA) consists of an outer tactical vest with ballistic inserts or plates that cover the front, back, and sides. The vest and inserts currently meet the theater ballistic requirements. The vest provides protection from 9mm rounds, while the inserts provide protection against 7.62mm armor-piercing rounds. CENTCOM requires that all U.S. military forces and all DOD civilians in the area of operations receive the body armor system. Currently, service members receive all service-specific standard components of the body armor system prior to deploying. The Army and the Marine Corps provide the DOD civilians with components of the armor system. The Army and Marine Corps have controls in place during manufacturing and after fielding to assure that body armor meets requirements. Both services conduct quality and ballistic testing prior to fielding, and lots (a grouping of items varying in number) are rejected if the standards are not met. They also conduct formal testing on every lot of body armor (vests and protective inserts) prior to acceptance and issuance to troops. During production, which is done at several sites, the lots of body armor are sent to a National Institute of Justice-certified laboratory for ballistic testing and to the Defense Contract Management Agency for quality testing (size, weight, stitching) prior to issuance to troops. Although not required to do so, after the systems have been used in the field, the Army does limited ballistic and environmental testing to determine future improvements. The Army and Marine Corps share information regarding ballistic requirements and testing although they are not required to do so. Title 10 of the U.S. Code allows each service to have separate programs, according to Army and Marine Corps officials. Nevertheless, the services are sharing information regarding ongoing research and development for the next generation of body armor. DOD Instruction 3020.41 allows DOD to provide body armor to contractors and non-DOD civilians where permitted by applicable DOD instructions and military department regulations and where specified under the terms of the contract. It is CENTCOM's position that body armor will be provided to contractors if it is part of the terms and conditions of the contract. However, the officials indicated that commanders, at their discretion, can provide body armor to any personnel within their area of operation.

On March 16, 2016, President Obama nominated Judge Merrick Garland of the U.S. Court of Appeals for the District of Columbia Circuit (D.C. Circuit) to fill the vacancy on the Supreme Court left by the death of Justice Antonin Scalia on February 13, 2016. Judge Garland was appointed to the D.C. Circuit in April 1997, and since February 2013 has served as the circuit court's Chief Judge, an administrative position that rotates among the active judges on the circuit. During his nearly two decades on the bench, Judge Garland has served on three-judge or en banc D.C. Circuit panels that have made rulings in well over 1,000 cases. He has also served on a few panel decisions at the district court level. Cases considered by Judge Garland have concerned a wide range of legal topics ranging from rulemaking by federal administrative agencies, to criminal law and procedure, to the review of legal challenges arising under the local laws of the District of Columbia. To assist Members and committees of Congress and their staff in their ongoing research into Judge Garland's approach to the law, this report identifies and briefly summarizes each of the more than 350 cases in which Judge Garland has authored a majority, concurring, or dissenting opinion. Arguably, these written opinions provide the greatest insight into Judge Garland's judicial approach, as a judge's vote in a case or decision to join an opinion authored by a colleague may be based upon a number of considerations and may not necessarily represent full agreement with a joined opinion. This report does not address instances when Judge Garland sat on a reviewing judicial panel but did not author an opinion. Accordingly, instances where Judge Garland was part of a panel that issued a per curiam opinion, which did not credit a particular judge as the author, are omitted from this report. The report also does not address subsequent legal proceedings that may have occurred after a cited decision was issued. The opinions listed in this report are categorized into two tables: one table identifying opinions authored by Judge Garland on behalf of the reviewing court, and the other table identifying opinions authored by Judge Garland separate from the majority opinion. Cases are listed in reverse chronological order by date of decision. In each case, the key ruling or rulings of the case are succinctly described. Judicial opinions discussed in this report are categorized using the following 19 legal subject areas: Administrative law Civil liability (e.g., tort preemption, arbitration, class actions, statutory right to sue) Civil rights Criminal law/procedure D.C. local government Election law Environmental law Energy Federalism Federal courts (e.g., standing to sue, civil procedure) First Amendment (e.g., freedom of speech, freedom of the press) Government information (e.g., claims concerning the Freedom of Information Act) Health care (e.g., Medicare or Medicaid reimbursement) International law Labor law National security Separation of powers Tax law Transportation Where appropriate, multiple subject areas are identified as relevant to a particular case. The list above is not an exhaustive accounting of all possible subject areas addressed by the cases below, but focuses on those legal topics that have most frequently arisen in cases adjudicated by Judge Garland. Moreover, the fact that a case is categorized under a particular legal subject area does not necessarily mean that some observers might not deem other categories to be pertinent. For example, several cases concerning the disposition of challenges brought by wartime detainees held at the U.S. Naval Station at Guantanamo Bay, Cuba, are categorized solely under the legal subject area of "National security," though some observers may believe that such cases also could be deemed to fall under the "Separation of powers" category (because they arguably concern judicial review of executive discretion in wartime matters) or the "Administrative law" category (because such cases often involve review of determinations made through an administrative process employed by the U.S. military to assess whether a person is properly detained as an enemy belligerent). Accordingly, while the categorizations employed by this report may provide a helpful guide to readers in locating decisions dealing with particular topics, they do not necessarily reflect the full range of legal issues raised by a judicial opinion. While this report identifies and briefly describes those opinions authored by Judge Garland during his tenure on the federal court, it does not analyze the implications of his judicial opinions or suggest how he might approach legal issues if appointed to the Supreme Court. Those matters are discussed in CRS Report R44479, Judge Merrick Garland: His Jurisprudence and Potential Impact on the Supreme Court , coordinated by [author name scrubbed], [author name scrubbed], and [author name scrubbed]. The cases included in this report were compiled utilizing the following methodology: The majority opinions were found by searching the District of Columbia Circuit—U.S. Court of Appeals database on Lexis for OpinionBy(Garland). The concurring opinions were found by searching the District of Columbia Circuit—U.S. Court of Appeals database on Lexis for ConcurBy(Garland) . The dissenting opinions were found by searching the District of Columbia Circuit—U.S. Court of Appeals database on Lexis for DissentBy(Garland) . Concurring or dissenting opinions issued in cases where Judge Garland wrote the majority opinion were found by searching the District of Columbia Circuit—U.S. Court of Appeals database on Lexis for OpinionBy(Garland ) , and limiting those results by searching for Judges(concur! or dissent!) . District court opinions in which Judge Garland is credited as an author were found by searching the District of Columbia Circuit—U.S. District Court Cases database on Lexis for Judges(Garland) . Not all results from these searches ultimately proved to be relevant, such as when the D.C. Circuit declined a petition for en banc rehearing in a one-sentence decision joined by all of the reviewing judges. That decision and similar rulings are not discussed in this report. Ultimately, this methodology resulted in the identification of 355 instances in which Judge Garland is credited as an author of a judicial opinion in cases either before the D.C. Circuit (354 cases) or the U.S. District Court for the District of Columbia (a single case).

On March 16, 2016, President Obama nominated Judge Merrick Garland of the U.S. Court of Appeals for the District of Columbia Circuit (D.C. Circuit) to fill the vacancy on the Supreme Court left by the death of Justice Antonin Scalia on February 13, 2016. Judge Garland was appointed to the D.C. Circuit in April 1997, and since February 2013 has served as the circuit court's Chief Judge, an administrative position that rotates among the active judges on the circuit. To assist Members and committees of Congress and their staff in their ongoing research into Judge Garland's approach to the law, CRS attorneys have prepared tabular listings of cases in which Judge Garland authored an opinion. These opinions are categorized into two tables: one table identifying opinions authored by Judge Garland on behalf of the reviewing court, and the other table identifying opinions authored by Judge Garland that concur with or dissent from the majority opinion. While this report identifies and briefly describes judicial opinions authored by Judge Garland during his tenure on the federal court, it does not analyze the implications of his judicial opinions or suggest how he might approach legal issues if appointed to the Supreme Court. Those matters are discussed in CRS Report R44479, Judge Merrick Garland: His Jurisprudence and Potential Impact on the Supreme Court, coordinated by [author name scrubbed], [author name scrubbed], and [author name scrubbed].

RS21529 -- Al Qaeda after the Iraq Conflict May 23, 2003 There is a great deal that remains unknown or debatable about the specific nature, size, structure and reach of the organization, despite many years of studyingit. For example, Western experts are not exactly sure how many members it has now or has had in the past. Estimates are often based upon an approximationof how many people trained in Al Qaeda camps in Afghanistan and Sudan. The estimates range as high as60,000 (7) and as low as 20,000. (8) These assessmentsare inexact in part because the total number of camps that operated is not firmly agreed. (9) But even if experts knew the correct total number of camps andtrainees, not all the people who took the training necessarily became (or remained) actual members of theorganization. (10) The State Department estimatesthatAl Qaeda "probably has several thousand members and associates." (11) But since these are all estimates, it is not known what proportion of AlQaeda membersU.S. and allied forces have captured or killed. (12) But do operatives even necessarily need to be members? It is apparent from some of those apprehended in failed plots that it is not essential to be formally "in"Al Qaeda in order to carry out attacks. Operatives seem to vary, from the best-trained, controlled and financedprofessional cadres, such as Mohammed Atta(who led the September 11th attacks), to less-trained and relatively uncontrolled volunteers, such asAhmed Ressam (who intended to blow up Los AngelesInternational Airport) and Richard Reid (who tried to detonate plastic explosives in his shoes aboard an AmericanAirlines transatlantic flight). (13) Al Qaedaeven acts like a foundation at times, reportedly giving grants to existing local terrorist groups who present"promising" plans for attacks that serve theorganization's general goals. (14) Unlike manytraditional terrorist groups, Al Qaeda has no single standard operating procedure, although it does have awell-developed manual for its operations. Benefitting from Osama bin Laden's considerable experience in business,the organization is said to be structuredlike a modern corporation, reflective of management concepts of the early 1990s, including bottom-up and top-downnetworks, a common "mission statement,"and entrepreneurial thinking even at the lowest levels. This makes it extraordinarily flexible and, many believe, ableto survive serious blows. (15) Al Qaeda has also developed strong ties to other terrorist organizations, some new and some long-standing. (16) Osama bin Laden formed an umbrella group inlate 1998, "The International Islamic Front for Jihad Against Jews and Crusaders," which included not only AlQaeda, but also groups from Egypt, Algeria,Pakistan, and Bangladesh. Some argue that Al Qaeda has been something of a hybrid terrorist organization for sometime. (17) A sampling of groups currentlythought to be connected includes the Moro Islamic Liberation Front (Philippines), Jemaah Islamiah (SoutheastAsia), Egyptian Islamic Jihad (merged with AlQaeda in 2001), Al-ansar Mujahidin (Chechnya), al-Gamaa al-Islamiya (Egypt, and has a worldwide presence), AbuSayyaf (Philippines), the IslamicMovement of Uzbekistan, and Harakat ul-Mujahidin (Pakistan/Kashmir). The list is illustrative, not comprehensive. Some experts see increased reliance onconnections to other groups as a sign of Al Qaeda's weakness; others point to enhanced cooperation with othergroups as a worrisome indicator of strength,especially with groups that formerly focused on local issues and now display evidence of convergence on Al Qaeda'sinternational anti-U.S., anti-West agenda. An important question is whether Al Qaeda might be evolving further into a new form, more like a movement thana formal organization, increasingly diffuseinternationally and less reliant upon its own membership. Clearly Al Qaeda is in transition. Whether that transition will lead to something more or less dangerous is a point of contention. On one hand, clear progress inapprehending or killing senior leaders of Al Qaeda has been evident. In recent weeks, President Bush announcedthat the United States has captured about halfthe senior leadership; (18) other sources claim thatabout a third have been captured. (19) Many of theseterrorist leaders have been crucial participants in past AlQaeda attacks; the arrests of September 11 plotter and third-in-command Khalid Shaikh Mohammed and operationschief Abu Zubaydah, for example, arebelieved to have hurt the organization and disrupted its operations. According to U.S. officials, the organization'sprevious communications network hasapparently been crippled, its leaders are on the run, and its Afghanistan base has been largely eliminated. (20) Still, Al Qaeda is not like a state, whose regime you can remove in order to disable it. Counterterrorism officials describe it more as an organic structure thatadapts to changing circumstances, including the loss of some senior leaders. The two most senior leaders, Osamabin Laden and Ayman al-Zawahiri, are widelybelieved to be alive and at large, and terrorism experts argue over the extent to which a succession plan is in effectto replace those who have been captured. (21) During the week before the Riyadh attacks, email interviews conducted by the London-based magazine AlMajalla apparently with Al Qaeda spokesman Thabetbin Qais claimed that Al Qaeda had undertaken a thorough restructuring of its leadership. (22) One of the worrisome aspects of the attack itselfwas the apparentinvolvement of people thought to have been lower-level fighters who may have now stepped into the breach. Forexample, Khaled Jehani, who was previouslyconsidered a low-level operative, seems to have been involved in the Riyadh operation. (23) Also mentioned is Seif al-Adel, one of a number of younger AlQaeda members who seem to have gained influence in the absence of former leaders and who may have played arole. (24) Many worry that this could illustratean evolution within Al Qaeda to a new generation. (25) This, as well as other evidence in the attack itself, seems to demonstrate a level of central direction. Finally, some believe that there has been a spike in recruitment to the network as a result of the U.S. militaryoperations in Iraq, leading to a worry that, despiteits serious recent losses, Al Qaeda could grow stronger in future months. (26) Ultimately, the debate about Al Qaeda's current status centers on the important question of whether it is growing or declining in strength. In the wake of theAfghanistan and Iraq military campaigns, when the predicted terrorist attacks on the United States and its interestsdid not materialize, what is the current levelof threat to the United States? Most believe that the denial of safe havens and arrests of senior leaders have seriously crippled the organization when judged by its earlier form. However, itmay be evolving into something new. For terrorist groups, periods of evolution can be particularly dangerous. Organizations in transition can be especiallyvulnerable to disruption and destruction, but they can also be less predictable and prone to lash out in order to causeadditional damage, rally flaggingsupporters, and/or prove their continuing viability. (27) With respect to Al Qaeda, evidence of new sophisticated operations, a possible succession planin action,central coordination of attacks, and growing international ties, all increasingly converging on a commoninternational agenda hostile to the United States and itsallies, may give U.S. officials new reason for concern. In the short term at least, even successes in counterterroristoperations against a more decentralizedorganization can lead to greater difficulty in collecting reliable intelligence, as the paths of communication areincreasingly unfamiliar, the personalities arechanging, and the locations of operatives are more diffuse. While the long term trajectory is very difficult to assess,for the time being it seems that Al Qaeda(or its successors) has emerged from a period of inactivity and remains a very serious threat, requiring concentratedattention and vigorous countermeasures onthe part of its prospective targets. Congress may face a number of questions in the coming months. These include How does U.S. counterterrorism policy need to adapt to match the changingthreat of Al Qaeda and its associated groups? Is there a need for strategic reassessment of the successes and failuresof U.S. counterterrorism policy in thepost-Iraq strategic environment, not only in the military and intelligence fields but also in foreign policy, lawenforcement, international cooperation, publicdiplomacy, foreign aid, homeland security, and elsewhere? Are there places where U.S. policies in a given area arenow no longer meeting the challenge, arepotentially counterproductive, or where funding is inadequate or misplaced? How will the U.S. occupation of Iraqaffect the changing regional terrorist threat? To what degree will regime change in Iraq alter the overall international terrorist threat to the United States at homeand abroad? Will progress, or the lackthereof, in achieving an Israeli-Palestinian peace agreement and resolving sensitive issues such as the conflicts inKashmir, southern Philippines, Chechnya, andelsewhere affect Al Qaeda's prospects?

The May 12, 2003, suicide bombings of three Western housing compounds in Riyadh,Saudi Arabia reopenedquestions about the strength and viability of Al Qaeda in the post-Iraq conflict environment. The apprehension ofa number of senior Al Qaeda leaders in recentmonths, combined with the absence of major terrorist attacks during the military campaign in Iraq, had led someto believe that Al Qaeda was severely crippledand unable to launch major attacks. Others argued that the organization was in transition to a more decentralizedstructure, had gained new recruits, and mighteven be a growing threat. This report analyzes current viewpoints about the state of Al Qaeda and the threat it posesto the United States. It will be updated asevents warrant.

The Congress passed the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) in 1980 to clean up hazardous waste sites. The act gives EPA the authority to compel the parties responsible for these sites to clean them up. The act also created a $1.6 billion trust fund, known as Superfund, for EPA to implement the program and pay for cleanups. The Superfund program has two basic types of cleanups: (1) remedial cleanups, which are long-term cleanup actions at sites on the National Priorities List (NPL), EPA’s list of the nation’s worst hazardous waste sites, and (2) removal cleanups, which mitigate more immediate threats at both NPL and non-NPL sites. EPA’s removal cleanups include (1) emergency removals for threats requiring immediate action, (2) time-critical removals for threats requiring action within 6 months, and (3) NTC removals for threats where action can be delayed for at least 6 months in order to adequately plan for cleanups. In March 1995, EPA surveyed site managers in the regions to obtain their estimates of the benefits and lessons learned from conducting NTC removals. EPA had initiated 81 such actions by then, and 40 were beyond the study phase. Our testimony today is based on the results of that survey and interviews of EPA headquarters and regional officials in charge of removals, state cleanup managers, private parties that used the NTC process, and representatives of environmental advocacy organizations. We did not independently validate EPA’s survey results. We performed our work from September 1995 through March 1996 in accordance with generally accepted government auditing standards. Compared to traditional remediation, NTC removals significantly accelerate the study and design steps of cleanups at portions of sites, thereby reducing overall cleanup costs and more quickly protecting human health and the environment. However, increasing the use of NTC removals may increase the amount of EPA staff time required to oversee contractors. Also, using these removals could shift a portion of the cleanup costs from the states to EPA. According to the site managers EPA surveyed, using the NTC program instead of the remedial program reduced the overall time spent on cleaning up portions of sites from about 4 years to 2 years, on average. In many cases, site managers reported time savings of more than 3 years. These savings occur primarily because NTC actions take much less time than remedial actions to study the contamination and design a cleanup method. According to EPA technical and regional staff who manage cleanups, they use NTC actions when they are relatively certain about the nature of the contamination that is present and the type of cleanup method they should use. For such cleanups, they do not need to use the extensive study and design steps that the remedial program calls for. Like remedial actions, NTC actions also include steps, although abbreviated, for the public and the state to participate in planning the cleanup. Also, because EPA’s guidance requires that NTC removals generally meet states’ cleanup standards, the level of cleanup achieved with these removals is not expected to be significantly different from the level achieved with remedial cleanups. The streamlined NTC process also results in reduced cleanup costs. According to EPA’s survey, conducting an NTC action costs, on average, about $3.6 million, or about $0.5 million less than a similar remedial action would have cost. In many cases, larger savings have been reported. For example, one private party estimated that conducting the cleanup as an NTC action instead of a remedial action reduced the cleanup costs by about $2 million—at least half of the total cleanup costs. Savings of more than $1 million have also been reported for federally funded cleanups. Faster cleanups through the use of NTC removals also mean better protection of human health and the environment. According to EPA site managers, NTC removals can be used to clean up the portions of Superfund sites where contaminants pose a current risk to human health or could spread further in the environment. For example, EPA used the NTC process to accelerate a cleanup by more than 4 years at a chemical processing plant where contaminants in the soil were migrating toward a schoolyard. In another case, a private party used the NTC process to accelerate a cleanup by more than 4 years, removing contaminants from the soil and shallow groundwater before they could spread to deep groundwater, which is difficult and costly to clean up. While NTC removals demonstrate valuable benefits, they may also present some disadvantages, including the need for more staff time to monitor NTC cleanups, less ability for EPA to enforce cleanup agreements with private parties, and a potential for states to decrease their funding of a portion of the cleanup costs. Opinions vary about the significance of these disadvantages. Under a remedial cleanup contract, EPA pays a contractor to conduct a fixed set of actions that both parties have agreed to at the start of the cleanup. In contrast, under an NTC cleanup contract, EPA pays a contractor for the company’s time and materials, but an EPA site manager directs the contractor’s actions. EPA technical and regional staff involved in NTC removals agree that time and materials contracts require almost daily on-site supervision, whereas remedial cleanup contracts do not. However, EPA site managers argue that close supervision of the contractor offers EPA greater control over the work and more flexibility to make adjustments. Under its NTC removal authority, EPA may have more difficulty enforcing private party cleanup agreements than it would under its remedial authority. For a remedial action, EPA uses a consent decree issued by a court, whereas, for an NTC removal, it uses an administrative order issued by its regional management. EPA headquarters and regional officials involved in both processes are concerned about the potential for a private party to default on an NTC removal because an administrative order does not provide EPA with immediate penalties for enforcing a cleanup agreement. If a party does default, EPA may then have to fund the rest of the cleanup while the matter is being resolved in the courts. Private parties have told us, however, that even with the consent decree for remedial agreements, a default will also likely have to be resolved in the courts. Finally, NTC cleanups may shift some portion of the cleanup costs from the states to the federal government. Under CERCLA and EPA’s regulations, a federally funded remedial action cannot proceed until the state in which the site is located agrees to pay 10 percent of the cleanup costs and to handle most of the follow-on operations and maintenance activities. Because the law generally does not require such state participation in removals, including NTC removals, the federal government may have to bear the costs of NTC removals without state support. However, some states already have voluntarily shared the cost of NTC removals and assumed the responsibility for operations and maintenance in exchange for quicker and less costly cleanups. Also, EPA removal guidance advises regions to obtain such state participation. The variety of sites, media, and actions addressed under the NTC process to date indicate a strong potential for using NTC removals to clean up portions of most Superfund sites, especially the high-risk portions. However, the remaining portions of many of these sites may still require some long-term action, such as groundwater restoration, which is more appropriately conducted under the full remedial process. Like Superfund sites in general, NTC sites include manufacturing sites, landfills, mining sites, and chemical processing sites, among others. NTC removals have been used on relatively small and large areas, some exceeding 20 acres. While these actions have primarily addressed contaminated soil and shallow sources of groundwater, they have also been used to clean up sediment, surface water, and site debris. NTC removals have employed many of the same kinds of permanent cleanup actions as have the remedial program, including extracting contaminants from soil and shallow groundwater and treating contaminants. NTC removals have also relied on engineering controls to contain contamination. NTC removals have been performed at so many different kinds of sites that, according to several site managers, they could be used for portions of almost any Superfund site. Currently, about 1,000 NPL sites await cleanup and about another 1,400 to 2,300 sites are estimated to be contaminated enough to be listed in the future. If we assume that NTC removals could be performed at all of these sites and that cost savings could average $0.5 million per site, the federal government and private parties could save from $1.2 to $1.7 billion over the life of the Superfund program by using NTC removals instead of remedial actions. Site managers expected that for about one-third of the sites in the survey, no further action would be required beyond the NTC removal. The remaining sites most likely have portions that contain more complex contamination. Such sites would warrant a full remedial study and design, according to EPA cleanup managers. For example, contaminated groundwater may require decades of treatment and millions of dollars in cleanup costs. Such an investment would justify more extensive planning. Several factors have constrained the use of NTC removals, including the difficulty regions encounter in funding these actions and the current statutory limits on the time and costs that can be spent on NTC removals. According to regional cleanup managers, funding inflexibility limits the number of NTC removals they can conduct. Although spending for removals has increased gradually since 1992, it has represented only 9 to 17 percent of the total Superfund spending. Of this percentage, most must go to fund the hundreds of emergency and time-critical removals that regions conduct, leaving little for NTC removals. Although regions may have unobligated funds in their remedial budgets, EPA headquarters does not permit the regions to transfer these funds to their removal budgets. According to EPA budget officials in headquarters, the agency must allocate funds among many competing activities within the Superfund program and has an obligation to focus on the longer-term remedial program. Also, since the agency reports quarterly to the Congress on its Superfund expenditures, EPA has to account separately for its remedial and removal activities. CERCLA limits the cost of removal actions financed by the trust fund to $2 million. Furthermore, the law states that a removal action cannot take more than 12 months to complete. EPA can justify a waiver of these limits if it demonstrates either that the situation is an emergency—unlikely for an NTC removal—or that the action is “consistent with the remedial action to be taken.” EPA’s regions have interpreted this latter requirement inconsistently. For example, according to a site manager in San Francisco, the regional counsel advised that an NTC removal be used only if a remedial cleanup plan had been signed. This region had conducted only one of the NTC actions in EPA’s survey. Also, according to the site manager in Boston, the regional counsel advised that an NTC removal be used only at an NPL site. That region had conducted five of the NTC removals. More than half of the NTC removals in EPA’s survey had exceeded either the time or the cost limits. Proposed legislation to reauthorize Superfund, H.R. 2500 and S. 1285, would raise the limits on removals and relax the consistency requirements. Mr. Chairman, this completes our prepared statement. 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GAO discussed the Environmental Protection Agency's (EPA) use of non-time-critical removals for hazardous waste cleanups, focusing on: (1) the advantages and disadvantages of non-time-critical removals; (2) the potential use of non-time-critical removals in Superfund cleanups; and (3) factors that inhibit the use of non-time-critical removals. GAO noted that: (1) on average the use of non-time-critical removals could expedite environmental cleanups by 2 years and reduce costs by about $500,000 over similar cleanup actions using the remedial removal process; (2) non-time-critical removals are successful because they have a streamlined planning process; (3) non-time-critical removals would require EPA to spend more time overseeing cleanup contracts and shift costs from states to EPA; (4) non-time-critical removals are a potentially useful tool in cleaning up portions of most of the 3,000 sites in the EPA Superfund inventory; (5) non-time-critical removals have not been used for a wide variety of cleanups because most Superfund funding has been spent on emergency removals; (6) additional factors that have limited non-time-critical removal use include EPA inability to shift funds between accounts and regions, and statutory limits on the duration and cost of non-time-critical removals; and (7) the proposed Superfund reauthorization legislation would ease the statutory limitations on non-time-critical removals.

Check cashers are nonbank businesses that cash checks for a fee. Check cashing businesses may offer additional fee-based products and services including money orders, processing utility bill payments, pre-paid phone cards, and funds transfers. These enterprises often operate in neighborhoods not well served by banks. Check cashers provide access to financial services for individuals without accounts at conventional banks. To provide these services, a check cashing enterprise establishes a business relationship with a bank to clear checks, transfer funds, and open lines of credit for liquidity purposes. The Bank Secrecy Act regulations define check cashers as money services businesses (MSBs). Both banks and nonbank MSBs must have written anti-money laundering programs, file currency transaction reports (CRTs) and supicious activity reports (SARs), and maintain certain records. MSBs, including check cashers, must register with the Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Treasury. Banks providing services to check cashers are expected to have systems to manage the risks associated with these accounts. The following developments created difficulties to obtaining and maintaining access to banking services. The Office of the Comptroller of Currency (OCC) a federal bank regulatory agency included check cashers and other MSBs in a list of inherently high-risk businesses in its Bank Secrecy Act/ Anti-Money Laundering Manual. The OCC has also stated that the risk profiles of individual businesses can vary widely based on the variety and range of financial services offered. FinCEN strengthened BSA enforcement after the enactment of the USA PATRIOT Act and with the increased focus on terrorism financing after 9/11. Banker's compliance costs were affected by the risks associated with a check cashing business. Substantial fines were levied by bank regulators on banking institutions for BSA non-compliance. The potential price of doing business proved to be prohibitive for a number of banks, resulting in discontinuance of services to check cashers. In April 2005, bank regulators issued interagency guidance in response to concerns over the loss of access to banking services by check cashers and other MSBs. Concern is twofold: (1) widespread termination of account relationships could result in the loss of access to financial services and products by the significant market segment currently served by check cashers and (2) if these businesses are consequently forced "underground" the potential loss of transparency could damage ongoing efforts to safeguard the U.S. financial system. The guidance addressed both the ability of check cashers and other MSBs to obtain services and the caution to be maintained by banks dealing with these businesses. The goal was to clarify the regulatory expectations for banking institutions providing services to domestic businesses. It is generally acknowledged that the trend of individual banks terminating account relationships with check cashers has continued. On June 21, 2006, the Subcommittee on Financial Institutions and Consumer Credit of the House Financial Services Committee held an oversight hearing to assess the impact of the BSA obligations on check cashers and other MSBs. The nonbank check cashing industry can trace its origins back to the 1930's when employers began paying workers by check as opposed to cash. Workers without traditional bank accounts used check cashers, where an account relationship is not required, to convert those paychecks into cash for a fee. Today's check cashing enterprise may offer additional fee-based products and services including money orders, processing utility bill payments, pre-paid phone cards and funds transfers. Money transfers may include foreign worker remittances (money sent back to the workers' home countries). Some also offer credit products such as payday loans, where customers are given cash for a postdated personal check for the amount of cash requested plus the check casher's fee. Check cashing services can be offered as an ancillary component of a business, such as a liquor stores that cashes payroll checks. Items cashed are primarily payroll checks, government checks, personal checks, cashier's checks, money orders, and traveler's checks. The typical value of a cashed item ranges from $300 to $600. Most fees range from 1% to 12% of the check's value. The main financial risk for the check casher is a returned check unpaid by the bank on which it was drawn. Fees vary by type of check. For example, the fee for a personal check is usually greater than for a government check. Many states require a license for check cashing enterprises and/or regulate their fee structures. Some states have additional restrictions for pay day lending. The check cashing industry has experienced a period of significant growth since the early 1990's. One estimate for 1990 indicated that the check cashing industry comprised approximately 4,250 businesses that cashed 128 million checks with a total face value of $38 billion. In 2002, an estimated 11,000 check cashing enterprises cashed approximately 180 million checks with a total face value of $55 billion. Customers are drawn to check cashers for a variety of reasons. Check cashers typically offer convenient hours of service that extend beyond the normal hours of operation found at mainstream banking institutions. The barriers involved with opening an account at a bank such as minimum account balances, specific identification requirements, and credit checks are not encountered. In addition, the check holder is not subject to the variety of fees and services charges typically associated with a bank account. A customer's funds are immediately available while banks may impose check clearing holds. Customers of check cashing businesses tend to be low and moderate income consumers. The so called "unbanked" consumers rely on alternative financial services offered by nonbanks. There are a significant number of unbanked families in the United States; they do not hold a checking or savings account at a federally insured financial institution. Studies vary, but it is generally estimated that about 10 million U.S. households do not own a bank account. The costs associated with maintaining accounts, dislike of banking institutions, and the convenience offered by alternative nonbank service providers are among the more frequently given reasons for their popularity. Conversely, it is estimated that 58% of the check cashing industry's clientele are bank account holders. In 1970, the Bank Secrecy Act was enacted to create a federal anti-money laundering program. In 2001, Title 111 of the USA PATRIOT ACT amended the BSA with provisions to strengthen the existing program and to counter terrorist financing. The Financial Crimes Enforcement Network, a bureau of the U.S. Treasury Department, administers and issues regulations pursuant to the BSA. Check cashing enterprises that meet the definition of a money service business are required to register with FinCEN. Banks providing services to check cashers are expected to have in place systems to manage the risks associated with these accounts. BSA reporting and record keeping requirements apply to both banks and MSBs. Both must establish anti-money laundering programs commensurate with the risks posed by their size, location and financial activities. Both are required to file currency transaction reports (CTRs) for cash transactions over $10,000 and to maintain a log on the sale of financial products such as money orders or travelers checks valued from $3,000 to $10,000. Information must also be maintained on funds transfer of $3,000 or more. Finally, MSBs are required to file suspicious activity reports (SARs). FinCEN has delegated the authority to examine check cashers for BSA compliance to the Internal Revenue Service (IRS). The intent of the interagency guidelines was to clarify the supervisory expectations of banks to remain in compliance with the requirements of the BSA while providing services to check cashers and other MSBs. The guidance was issued to assist banks in developing appropriate BSA risk assessments. Another goal was to help ensure check cashers and other MSBs have reasonable access to banking services. Concurrent with the 2005 guidance, an advisory was issued addressing the BSA obligations of check cashers and outlining the documentation an MSB may be expected to provide when establishing an account relationship at a bank. The advisory was issued as part of an ongoing campaign to inform MSBs about their BSA requirements. FinCEN has recognized that outreach to the MSB industry is essential; they found that many of the businesses, especially the smaller operations, are unfamiliar or unaware of their obligations. The 2005 interagency guidance directed banks opening and maintaining accounts for MSBs to apply the requirements of the BSA on a risk-assessed basis. Five minimum due diligence expectations are presented: (1) apply the bank's Customer Identification Program, (2) confirm FinCEN registration, (3) confirm compliance with state or local licensing requirements, (4) confirm agent status (many MSBs operate through a system of agents), and (5) conduct a basic Bank Secrecy Act/Anti-Money Laundering risk assessment to determine the level of risk associated with the potential account and whether further due diligence is necessary. The guidance outlines further due diligence criteria, beyond the minimum expectations, that may be called for by the risk profile of the individual money service business. Check cashers require specific banking services to operate. These financial services include depository accounts, check collection and clearing operations, funds transfer, and access to lines of credit for liquidity purposes. Banks generate fee income for financial services provided. An individual banking institution's experience with check cashers is often dependent on the proximity between the two. Some banks specialize in servicing check cashers. Consequently, the decision of an individual bank to discontinue services to check cashers could have a significant impact. For example, according to the Financial Services Center of America (FISCA), in New York 12 banks currently provide services to check cashers but 87% of the 640 licensed check cashers do business with only two of these banks. BSA compliance requirements and supervisory expectations are viewed as burdensome and have caused banks to re-evaluate the costs and benefits of opening and maintaining accounts for check cashers. Banking representatives testifying at the June 2006 oversight hearing stated that the level of BSA risk assessment and monitoring required of them by the regulatory agencies remains burdensome and costly despite the 2005 guidance. Of particular concern is determining the delineation between low and high risk profiles and the corresponding due diligence expectations. In addition, bankers suggested that regulators should not expect a bank's monitoring activity to extend beyond the check cashing business to the activity of the check casher's customers. They argue FinCEN should further clarify that banks are not expected to be de facto regulators of check cashers by instituting a system that more clearly defines the responsibility for oversight of the BSA obligations of check cashers and other MSBs. In March 2006, a FinCEN news release acknowledged the ongoing concerns of both the banking industry and money service businesses relating to BSA regulations despite the previous steps taken (including the April 2005 guidance) to address the issues. The difficulties involve how to minimize the resources and costs borne by financial institutions while ensuring the effective administration of the anti-terrorism financing and anti-money laundering programs. The news release announced an Advanced Notice of Proposed Rulemaking seeking input on what additional guidance or regulatory action would be appropriate to address the ongoing concerns about check casher's and other MSB's access to banking services. The news release emphasized the important role of MSBs and the negative effect on the health and safety of the U.S. financial system if these businesses are driven underground. Comments received by FinCEN are under review and potential next steps are being considered. On June 21, 2006, the Subcommittee on Financial Institutions and Consumer Credit of the House Committee on Financial Services held an oversight hearing on the Bank Secrecy Act's impact on money services businesses. There was general agreement that banks were re-evaluating their businesses strategies in light of BSA due diligence costs. There were reports of individual institutions concluding that opening and maintaining accounts for MSBs did not make economic sense. Regulatory and supervisory adjustments were discussed as a means of easing the burden on banks. Stronger state MSB regulatory oversight was encouraged. Joint industry/government training on BSA obligations for banks, bank examiners, and MSBs was suggested. In addition, FiSCA (the trade association, representing 6,000 check cashing operations and nonbank financial service centers), suggested the need for legislation that would remove state regulated check cashers from "high risk" categories. In its view, legislation could also limit administrative enforcement actions against banks that service check cashers in good faith.

A check cashing enterprise is a fee-based business that will cash a customer's check without requiring an account relationship. The U.S. check cashing industry underwent a significant expansion in the 1990s. Customers are attracted by the immediate access to funds, availability of service without a bank account, and convenience of extended hours of operation. In general, the industry is viewed as a provider of valuable financial services to an under served market segment. Check cashers are dependent on access to bank services to operate. Banks provide depository accounts, check collection and clearing operations, funds transfer, and access to lines of credit for liquidity purposes. Banks and check cashers are both subject to Bank Secrecy Act (BSA) regulations. The BSA is an anti-money laundering and anti-terrorism financing statute. Federal regulators have cautioned banks that nonbank money service businesses (an umbrella term that includes check cashing enterprises) can present heightened money laundering risks. Consequently, some banks have discontinued their business relations with check cashers. The discontinuance of services to check cashers brought about complaints to regulators and increased lobbying of Congress. Bank regulators have issued guidance to clarify BSA compliance expectations. Congress held hearings on the concerns of banks and check cashers. This report will be updated as events and legislation warrant.

TSA receives thousands of air passenger screening complaints through five centralized mechanisms but does not have an agencywide policy, consistent processes, or an agency focal point to guide the receipt of these complaints, or “mine” these data to inform management about the nature and extent of the screening complaints to help improve screening operations and customer service. For example, TSA data indicate the following: From October 2009 through June 2012, TSA received more than 39,000 screening complaints through its TSA Contact Center (TCC), including more than 17,000 complaints about pat-down procedures. From October 2009 through June 2012, TSA’s Office of the Executive Secretariat received approximately 4,000 complaints that air passengers submitted by mail. From April 2011 (when it was launched) through June 2012, the agency’s Talk to TSA web-based mechanism received approximately 4,500 air passenger screening complaints, including 1,512 complaints about the professionalism of TSA staff during the screening process. However, the data from the five centralized mechanisms do not reflect the full nature and extent of complaints because local TSA staff have discretion in implementing TSA’s complaint processes, including how they receive and document complaints. For example, comment cards were used in varying ways at 6 airports we contacted. Specifically, customer comment cards were not used at 2 of these airports, were on display at 2 airports, and were available upon request at the remaining 2 airports we contacted. TSA does not have a policy requiring that complaints submitted using the cards be tracked or reported centrally. We concluded that a consistent policy to guide all TSA efforts to receive and document complaints would improve TSA’s oversight of these activities and help ensure consistent implementation. TSA also uses TCC data to inform the public about air passenger screening complaints, monitor operational effectiveness of airport security checkpoints, and make changes as needed. However, TSA does not use data from its other four mechanisms, in part because the complaint categories differ, making data consolidation difficult. A process to systematically collect information from all mechanisms, including standard complaint categories, would better enable TSA to improve operations and customer service. Further, at the time of our review, TSA had not designated a focal point for coordinating agencywide policy and processes related to receiving, tracking, documenting, reporting, and acting on screening complaints. Without a focal point at TSA headquarters, the agency does not have a centralized entity to guide and coordinate these processes, or to suggest any additional refinements to the system. To address these weaknesses, we recommended that TSA establish a consistent policy to guide agencywide efforts for receiving, tracking, and reporting air passenger screening complaints; establish a process to systematically compile and analyze information on air passenger screening complaints from all complaint mechanisms; and designate a focal point to develop and coordinate agencywide policy on screening complaint processes, guide the analysis and use of the agency’s screening complaint data, and inform the public about the nature and extent of screening complaints. The Department of Homeland Security (DHS) concurred with the recommendations and indicated actions that TSA had taken, had underway, and was planning to take in response. For example, DHS stated that TSA would review current intake and processing procedures at headquarters and in the field and develop policy, as appropriate, to better guide the complaint receipt, tracking, and reporting processes. We believe that these are beneficial steps that would address the recommendation, provided that the resulting policy refinements improve the existing processes for receiving, tracking, and reporting all air passenger screening complaints, including the screening complaints that air passengers submit locally at airports through comment cards or in person at security checkpoints. In commenting on a draft of our November 2012 report, TSA also stated that the agency began channeling information from the Talk to TSA database to the TCC in October 2012. However, DHS did not specify in its letter whether TSA will compile and analyze data from the Talk to TSA database and its other centralized mechanisms in its efforts to inform the public about the nature and extent of screening complaints, and whether these efforts will include data on screening complaints submitted locally at airports through customer comment cards or in person at airport security checkpoints. DHS also did not provide sufficient detail for us to assess whether TSA’s planned actions will address the difficulties we identified in collecting standardized screening data across different complaint categories and mechanisms. DHS stated that the Assistant Administrator for the Office of Civil Rights & Liberties, Ombudsman and Traveler Engagement was now the focal point for overseeing the key TSA entities involved with processing passenger screening complaints. It will be important for the Assistant Administrator to work closely with, among others, the office of the Assistant Administrator of Security Operations because this office oversees screening operations at commercial airports and security operations staff in the field who receive screening complaints submitted through customer comment cards or in person at airport security checkpoints. We will continue to monitor TSA’s progress in implementing these recommendations. TSA has several methods to inform passengers about its complaint processes, but does not have an agencywide policy or mechanism to ensure consistent use of these methods among commercial airports. For example, TSA has developed standard signs, stickers, and customer comment cards that can be used at airport checkpoints to inform passengers about how to submit feedback to TSA; however, we found inconsistent use at the 6 airports we contacted. For example, customer comment cards were displayed in the checkpoints at 2 airports, while at 2 others the cards were provided upon request. However, we found that passengers may be reluctant to ask for such cards, according to TSA. TSA officials at 4 of the 6 airports also said that the agency could do more to share best practices for informing passengers about complaint processes. For example, TSA holds periodic conference calls for its Customer Support Managers—TSA staff at certain commercial airports who work in conjunction with other local TSA staff to resolve customer complaints and communicate the status and resolution of complaints to air passengers—to discuss customer service. However, Customer Support Managers have not used this mechanism to discuss best practices for informing air passengers about processes for submitting complaints, according to the officials we interviewed. Policies for informing the public about complaint processes and mechanisms for sharing best practices among local TSA officials could help provide TSA reasonable assurance that these activities are being conducted consistently and help local TSA officials learn from one another about what practices work well. We recommended that TSA establish an agencywide policy to guide its efforts to inform air passengers about the screening complaint processes and establish mechanisms, particularly at the airport level, to share information on best practices for informing air passengers about the screening complaint processes. DHS concurred with the recommendation and stated that TSA would develop a policy to better inform air passengers about the screening complaint processes. We will continue to monitor TSA’s progress in implementing this recommendation. TSA’s complaint resolution processes do not fully conform to standards of independence to ensure that these processes are fair, impartial, and credible, but the agency is taking steps to improve independence. Specifically, TSA airport officials responsible for resolving air passenger complaints are generally in the same chain of command as TSA airport staff who are the subjects of the complaints. While TSA has an Ombudsman Division that could help ensure greater independence in the complaint processes, the division primarily focuses on handling internal personnel matters and is not yet fully equipped to address external complaints from air passengers, according to the head of the division. TSA is developing a new process for referring air passenger complaints directly to the Ombudsman Division from airports and for providing air passengers an independent avenue to make complaints about airport security checkpoint screening. In August 2012, TSA’s Ombudsman Division began addressing a small number of air passenger complaints forwarded from the TCC, according to the head of that division. TSA also began advertising the division’s new role in addressing passenger screening complaints via the TSA website in October 2012. According to the Assistant Administrator of TSA’s Office of Civil Rights & Liberties, Ombudsman and Traveler Engagement, the division will not handle complaints for which there exists an established process that includes an appeals function, such as disability complaints or other civil rights or civil liberties complaints, in order to avoid duplication of currently established processes. According to the Assistant Administrator, the agency also plans to initiate a Passenger Advocate Program by January 2013, in which selected TSA airport staff will be trained to take on a collateral passenger advocate role, respond in real time to identify and resolve traveler-related screening complaints, and assist air passengers with medical conditions or disabilities, among other things. It is too early to assess the extent to which these initiatives will help mitigate possible concerns about independence. TSA officials stated that the agency is undertaking efforts to focus its resources and improve the passenger experience at security checkpoints by applying new intelligence-driven, risk-based screening procedures and enhancing its use of technology. One component of TSA’s risk-based approach to passenger screening is the Pre✓™ program, which was introduced at 32 airports in 2012, and which the agency plans to expand to 3 additional airports by the end of the calendar year. The program allows frequent flyers of five airlines, as well as individuals enrolled in other departmental trusted traveler programs—where passengers are pre-vetted and deemed trusted travelers—to be screened on an expedited basis. This program is intended to allow TSA to focus its resources on high-risk travelers. According to TSA, more than 4 million passengers have been screened through this program to date. Agency officials have reported that with the deployment of this program and other risk-based security initiatives, such as modifying screening procedures for passengers 75 and over and active duty service members, TSA has achieved its stated goal of doubling the number of passengers going through expedited screening. According to TSA, as of the end of fiscal year 2012, over 7 percent of daily passengers were eligible for expedited screening based on low risk. However, the estimated number of passengers that will be screened on an expedited basis is still a relatively small percentage of air passengers subject to TSA screening protocols each year. We plan to begin an assessment of TSA’s progress in implementing the TSA Pre✓™ program in 2013. Chairman Petri, Ranking Member Costello, and Members of the Subcommittee, this concludes my prepared remarks. I look forward to responding to any questions that you may have. For questions about this statement, please contact Steve Lord at (202) 512-4379 or lords@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this statement. Individuals making key contributions to this statement include Jessica Lucas-Judy (Assistant Director), David Alexander, Thomas Lombardi, Anthony Pordes, and Juan Tapia-Videla. This is a work of the U.S. government and is not subject to copyright protection in the United States. The published product may be reproduced and distributed in its entirety without further permission from GAO. However, because this work may contain copyrighted images or other material, permission from the copyright holder may be necessary if you wish to reproduce this material separately.

This testimony discusses the findings of our November 2012 report assessing the Transportation Security Administration's (TSA) efforts to improve the air passenger screening complaints processes. TSA screens or oversees the screening of more than 650 million air passengers per year at 752 security checkpoints in more than 440 commercial airports nationwide, and must attempt to balance its aviation security mission with competing goals of efficiency and respecting the privacy of the traveling public. The agency relies upon multiple layers of security to deter, detect, and disrupt persons posing a potential risk to aviation security. These layers focus on screening millions of passengers and pieces of carry-on and checked baggage, as well as tons of air cargo, on a daily basis. Given TSA's daily interaction with members of the traveling public, air passenger screening complaints reflect a wide range of concerns about, for example, the systems, procedures, and staff that TSA has used for screening air passengers at security checkpoints. This includes concerns related to the use of Advanced Imaging Technology and enhanced pat-down procedures. TSA screens or oversees the screening of more than 650 million air passengers per year at 752 security checkpoints in more than 440 commercial airports nationwide, and must attempt to balance its aviation security mission with competing goals of efficiency and respecting the privacy of the traveling public. The agency relies upon multiple layers of security to deter, detect, and disrupt persons posing a potential risk to aviation security. These layers focus on screening millions of passengers and pieces of carry-on and checked baggage, as well as tons of air cargo, on a daily basis. TSA has processes for addressing complaints about air passengers' screening experience at security checkpoints, but concerns have been raised about these processes. Also, TSA is implementing a Pre✓™ program to expedite screening at security checkpoints. This statement primarily based on our November 2012 report and, like the report, discusses the extent to which TSA has (1) policies and processes to guide the receipt of air passenger screening complaints, and uses this information to monitor or enhance screening operations, (2) a consistent process for informing passengers about how to make complaints, and (3) complaint resolution processes that conform to independence standards to help ensure that these processes are fair and impartial. As requested, the statement also describes TSA's recent efforts to make the screening process more risk-based and selective through use of TSA's Pre✓™ program. In summary, TSA receives thousands of air passenger screening complaints through five central mechanisms, but does not have an agencywide policy, consistent processes, or a focal point to guide receipt and use of such information. Also, while the agency has several methods to inform passengers about its complaint processes, it does not have an agencywide policy or mechanism to ensure consistent use of these methods among commercial airports. In addition, TSA's complaint resolution processes do not fully conform to standards of independence to ensure that these processes are fair, impartial, and credible, but the agency is taking steps to improve independence. To address these issues, we made four recommendations to TSA with which the agency concurred, and it indicated actions it is taking in response. Finally, TSA officials stated that the agency is undertaking efforts to focus its resources and improve the passenger experience at security checkpoints by applying new intelligence-driven, risk-based screening procedures, including expanding its Pre✓™ program. TSA plans to have this program in place at 35 airports by the end of the calendar year and estimates that it has screened more than 4 million passengers to date through this program.

T he Patient Protection and Affordable Care Act (ACA; P.L. 111-148 ) was signed into law on March 23, 2010. On March 30, 2010, the Health Care and Education Reconciliation Act (HCERA; P.L. 111-152 ) was signed into law, which included new provisions and amended several ACA provisions. Collectively, the laws comprise numerous provisions, most of which relate to how health care in the United States is financed, organized, and delivered. Since enactment of the ACA and HCERA, lawmakers have repeatedly debated the laws' implementation and considered bills to repeal, defund, or otherwise amend them. This report summarizes legislative actions taken during the 111 th -115 th Congresses to modify the health care-related provisions of the ACA and HCERA. (From this point forward, all references to the ACA in this report refer collectively to the law and to the changes made by HCERA, unless otherwise noted.) The first part of the report provides a brief overview of the ACA's core provisions and its impact on federal spending and health insurance coverage as context for the other material presented in the report. The second part of the report includes Table 2 , which summarizes laws enacted during the 111 th -115 th Congresses that modified ACA provisions. The third part of the report lists bills passed in the House or the Senate during the 111 th -115 th Congresses that would have modified ACA provisions, had they been enacted. Identifying legislation that modifies the ACA has become increasingly difficult over the years. This is because of the vast number of ACA provisions, their complexity, and the fact that these provisions are codified in many different parts of the U.S. Code . As a result, the legislation presented in this report's tables may not include all enacted legislation that modifies the ACA or all House- or Senate-passed legislation that would have modified the ACA, had it been enacted. Due to the increasing complexity of tracking such legislation and concerns about the ability to do so authoritatively, the Congressional Research Service (CRS) does not intend to update this report. The ACA has 10 titles ( Table 1 ), and each title has many provisions. The provisions in Titles I-VIII largely relate to how health care in the United States is financed, organized, and delivered. Title IX contains revenue provisions. Title X reauthorizes the Indian Health Care Improvement Act, establishes some new programs and requirements, and amends provisions included in the other nine titles of the ACA. A primary goal of the ACA was to increase access to affordable health care for the medically uninsured and underinsured. To that end, the law includes a complex set of interconnected provisions that address the private health insurance market and the Medicaid program. For instance, the law established financial subsidies for eligible individuals purchasing private insurance through health insurance exchanges and expanded eligibility for Medicaid. The costs to the federal government of expanding access to private insurance and Medicaid coverage were projected to be offset by increased taxes and revenues and by reduced spending on Medicare and other federal health programs. The ACA established several new taxes on firms in the health care sector and expanded existing taxes on individuals. The law includes many different provisions affecting the Medicare program, such as provisions concerning payment and program modifications to Medicare's fee-for-service program, the Medicare Advantage program, and the outpatient prescription drug program. In addition, the ACA contains hundreds of other provisions that address health care access, costs, and quality. The ACA includes provisions intended to increase the primary care and public health workforce, promote preventive services, and strengthen quality measurement, among other things. Other ACA provisions include programs to prevent elder abuse, neglect, and exploitation; a new regulatory pathway for licensing biological drugs shown to be biosimilar or interchangeable with a licensed biologic; and new nutrition labeling requirements for chain restaurant menus and vending machines. The Congressional Budget Office (CBO) and the Joint Committee on Taxation (JCT) issued the first cost estimate of the ACA on March 20, 2010. They issued an updated estimate in February 2011. According to the February 2011 estimate, the ACA would reduce federal deficits by $210 billion over the 10-year period FY2012-FY2021, and the number of non-elderly uninsured individuals would be reduced by about 34 million in CY2021. CBO and JCT have not issued an updated cost estimate of the ACA in its entirety since February 2011; however, they have issued many other ACA-related cost estimates and analyses. The estimates have changed over time due to changes in the economy, the effects of enacted legislation, technical changes in the agencies' analyses (e.g., new survey and agency data on enrollment in health care programs), and the effects of administrative and judicial decisions (e.g., the 2012 U.S. Supreme Court decision effectively making state participation in the ACA Medicaid expansion voluntary). Table 2 summarizes legislation amending the ACA that has been enacted since March 30, 2010. Each table entry identifies the Congress in which the law was enacted, provides the public law number and date of enactment, and offers a brief description of the change(s) made to the ACA. The laws are listed in reverse chronological order, beginning with the most recently enacted legislation and extending back to the first measure signed into law following enactment of the ACA and the accompanying package of amendments in the HCERA. During the 111 th Congress, a number of clarifications and technical adjustments to the ACA were enacted. In the 112 th -115 th Congresses, several more substantive ACA amendments were signed into law. For example, Title VIII of the ACA—the Community Living Assistance Services and Supports (CLASS) Act—which would have established a voluntary, long-term care insurance program to pay for community-based services and supports for individuals with functional limitations was repealed. Lawmakers also repealed a tax-filing provision (IRS Form 1099) that had been included in the ACA. In multiple separate legislative actions, lawmakers both appropriated funding for programs established under the ACA (e.g., the Community Health Center Fund) and rescinded funding for other programs established under the ACA (e.g., the Prevention and Public Health Fund). In compiling Table 2 , CRS made decisions about which laws—or which specific provisions in a particular law—to include. CRS elected to include only those provisions that made changes (including funding extensions or rescissions) to new programs and activities first authorized and funded by the ACA. CRS generally excluded provisions addressing established programs and activities that predate the ACA but were extended or amended in a non-substantive way by the law. For example, the ACA extended multiple existing Medicare and Medicaid program payments and activities that since have been further extended and/or modified by provisions in more recently enacted laws. The ACA also extended funding for a number of existing grant programs whose funding has been further extended by provisions in newer laws. None of these types of provisions are included in Table 2 . In addition to considering ACA repeal or amendment in authorizing legislation, lawmakers have used the annual appropriations process to eliminate or provide funding for ACA provisions and to modify provisions of the law. Table 2 includes provisions in appropriations legislation that have the effect of making new law or changing existing law. As an example, the Consolidated Appropriations Act, 2016 ( P.L. 114-113 ), included a temporary moratorium on the ACA's medical device tax and the annual fee on health insurance providers, as well as a two-year delay of the ACA's excise tax on high-cost employer-sponsored health plans (often referred to as the Cadillac tax ). However, Table 2 does not include provisions in appropriations legislation that address administrative spending for covering the costs of ACA implementation (e.g., denial of agency requests for new funding to help support ACA implementation); limit or restrict the use of funds provided under a bill for a specific purpose (e.g., language prohibiting an agency from using any of the funds appropriated to the agency for ACA implementation activities); or establish reporting or other administrative requirements regarding implementation of the ACA (e.g., language instructing an agency to provide an accounting of administrative funding on ACA implementation). As noted, identifying legislation that modifies the ACA has become increasingly difficult over the years. As a result, Table 2 may not provide a comprehensive list of enacted legislation that has modified the ACA. The tables in this section list legislation that passed the House ( Table 3 ) or the Senate ( Table 4 ) in the 111 th -115 th Congresses that would have modified health care-related provisions of the ACA. None of the bills listed in Tables 3 or 4 became law (although provisions included in the bills may have been added to other legislation that became law). Generally, Tables 3 and 4 list only legislation that, if enacted, would have had a direct impact on the ACA and its implementation; measures that would not have had such an effect are not included. Thus, budget resolutions, which are binding only on certain procedural matters before Congress, are not included. The House-passed legislation included stand-alone bills as well as provisions in broader, often unrelated measures. Four of the House-passed bills listed in Table 3 would have repealed the ACA in its entirety: H.R. 596 in the 114 th Congress; H.R. 45 in the 113 th Congress; H.R. 6079 in the 112 th Congress; and H.R. 2 in the 112 th Congress. The other House-passed bills listed in Table 3 would have (1) repealed, restricted, or otherwise limited, specific provisions in the ACA; (2) eliminated appropriations provided by the ACA and rescinded all unobligated funds; (3) replaced the mandatory appropriations for one or more ACA programs with authorizations of (discretionary) appropriations and rescinded all unobligated funds; or (4) blocked or otherwise delayed implementation of specific ACA provisions. The Senate passed considerably fewer bills that would have modified the health care-related provisions of the ACA than did the House in the 111 th -115 th Congresses ( Table 4 ). None of the Senate-passed bills listed in Table 4 would have repealed the ACA in its entirety. Two of the three bills listed in Table 4 would have repealed or amended specific provisions in the ACA, and the third bill would have extended a program that was modified under the ACA. As noted elsewhere in this report, identifying bills that would modify the ACA has become increasingly difficult. As a result, Tables 3 and 4 may not provide comprehensive lists of House-passed and Senate-passed bills that would modify the ACA.

The Patient Protection and Affordable Care Act (ACA; P.L. 111-148) was signed into law on March 23, 2010. The law comprises numerous provisions in 10 titles. The provisions in Titles I-VIII largely relate to how health care in the United States is financed, organized, and delivered. Title IX contains revenue provisions. Title X reauthorizes the Indian Health Care Improvement Act, establishes some new programs and requirements, and amends provisions included in the other nine titles of the ACA. On March 30, 2010, the Health Care and Education Reconciliation Act (HCERA; P.L. 111-152) was signed into law, which included new provisions and amended several ACA provisions. Since enactment of the ACA and HCERA, lawmakers have repeatedly debated the laws' implementation and considered bills to repeal, defund, or otherwise amend them. This report summarizes legislative actions taken during the 111th-115th Congresses to modify the health care-related provisions of the ACA and HCERA. The first part of the report provides a brief overview of the laws' core provisions and their impact on federal spending and health insurance coverage as context for the other material presented in the report. The second part of the report includes Table 2, which summarizes laws enacted during the 111th-115th Congresses that modified ACA or HCERA provisions. The third part of the report lists bills passed in the House or the Senate during the 111th-115th Congresses that would have modified ACA or HCERA provisions, had they been enacted. Identifying legislation that modifies the ACA and HCERA has become increasingly difficult over the years. This is because of the vast number of ACA and HCERA provisions, their complexity, and the fact that these provisions are codified in many different parts of the U.S. Code. As a result, the legislation presented in this report's tables may not include all enacted legislation that modifies the ACA or HCERA, or all House- or Senate-passed legislation that would have modified the ACA or HCERA, had it been enacted. Due to the increasing complexity of tracking such legislation and concerns about the ability to do so authoritatively, the Congressional Research Service (CRS) does not intend to update this report.

EPA is required by the Clean Air Act to conduct reviews of the National Ambient Air Quality Standards (NAAQS) for the six criteria pollutants, including particulate matter, every 5 years to determine whether the current standards are sufficient to protect public health, with an adequate margin of safety. If EPA decides to revise the NAAQS, the agency proposes changes to the standards and estimates the costs and benefits expected from the revisions in an assessment called a regulatory impact analysis. In January 2006, EPA prepared a regulatory impact analysis for one such rule—particulate matter—that presented limited estimates of the costs and benefits expected to result from the proposed particulate matter rule. EPA developed the estimates by, for example, quantifying the changes in the number of deaths and illnesses in five urban areas that are likely to result from the proposed rule. The National Academies’ 2002 report examined how EPA estimates the health benefits of its proposed air regulations and emphasized the need for EPA to account for uncertainties and maintain transparency in the course of conducting benefit analyses. Identifying and accounting for uncertainties in these analyses can help decision makers evaluate the likelihood that certain regulatory decisions will achieve the estimated benefits. Transparency is important because it enables the public and relevant decision makers to see clearly how EPA arrived at its estimates and conclusions. Many of the recommendations include qualifying language indicating that it is reasonable to expect that they can be applied in stages, over time; moreover, a number of the recommendations are interrelated and, in some cases, overlapping. Soon after the National Academies issued its report, EPA roughly approximated the time and resource requirements to respond to the recommendations, identifying those the agency could address within 2 or 3 years and those that would take longer. According to EPA officials, the agency focused primarily on the numerous recommendations related to analyzing uncertainty. As is discussed below, EPA applied some of these recommendations to the particulate matter analysis. EPA applied—either wholly or in part—approximately two-thirds of the Academies’ recommendations in preparing its January 2006 particulate matter regulatory impact analysis and continues to address the recommendations through ongoing research and development. According to EPA, the agency intends to address some of the remaining recommendations in the final rule and has undertaken research and development to address others. The January 2006 regulatory impact analysis on particulate matter represents a snapshot of an ongoing EPA effort to respond to the National Academies’ recommendations on developing estimates of health benefits for air pollution regulations. Specifically, the agency applied, at least in part, approximately two-thirds of the recommendations—8 were applied and 14 were partially applied—by taking steps toward conducting a more rigorous assessment of uncertainty by, for example, evaluating the different assumptions about the link between human exposure to particulate matter and health effects and discussing sources of uncertainty not included in the benefit estimates. According to EPA officials, the agency focused much of its time and resources on the recommendations related to uncertainty. In particular, one overarching recommendation suggests that EPA take steps toward conducting a formal, comprehensive uncertainty analysis—the systematic application of mathematical techniques, such as Monte Carlo simulation—and include the uncertainty analysis in the regulatory impact analysis to provide a “more realistic depiction of the overall uncertainty” in EPA’s estimates of the benefits. Overall, the uncertainty recommendations call for EPA to determine (1) which sources of uncertainties have the greatest effect on benefit estimates and (2) the degree to which the uncertainties affect the estimates by specifying a range of estimates and the likelihood of attaining them. In response, EPA examined a key source of uncertainty—its assumption about the causal link between exposure to particulate matter and premature death—and presented a range of expected reductions in death rates. EPA based these ranges on expert opinion systematically gathered in a multiphased pilot project. The agency did not, however, incorporate these ranges into its benefit estimates as the National Academies had recommended. Moreover, the Academies recommended that EPA’s benefit analysis reflect how the benefit estimates would vary in light of multiple uncertainties. In addition to the uncertainty underlying the causal link between exposure and premature death, other key uncertainties can influence the estimates. For example, there is uncertainty about the effects of the age and health status of people exposed to particulate matter, the varying composition of particulate matter, and the measurements of actual exposure to particulate matter. EPA’s health benefit analysis, however, does not account for these key uncertainties by specifying a range of estimates and the likelihood of attaining them. For these reasons, EPA’s responses reflect a partial application of the Academies’ recommendation. In addition, the Academies recommended that EPA both continue to conduct sensitivity analyses on sources of uncertainty and expand these analyses. In the particulate matter regulatory impact analysis, EPA included a new sensitivity analysis regarding assumptions about thresholds, or levels below which those exposed to particulate matter are not at risk of experiencing harmful effects. EPA has assumed no threshold level exists—that is, any exposure poses potential health risks. Some experts have suggested that different thresholds may exist, and the National Academies recommended that EPA determine how changing its assumption—that no threshold exists—would influence the estimates. The sensitivity analysis EPA provided in the regulatory impact analysis examined how its estimates of expected health benefits would change assuming varying thresholds. In response to another recommendation by the National Academies, EPA identified some of the sources of uncertainty that are not reflected in its benefit estimates. For example, EPA’s regulatory impact analysis disclosed that its benefit estimates do not reflect the uncertainty associated with future year projections of particulate matter emissions. EPA presented a qualitative description about emissions uncertainty, elaborating on technical reasons—such as the limited information about the effectiveness of particulate matter control programs—why the analysis likely underestimates future emissions levels. EPA did not apply the remaining 12 recommendations to the analysis for various reasons. Agency officials viewed most of these recommendations as relevant to its health benefit analyses and, citing the need for additional research and development, emphasized the agency’s commitment to continue to respond to the recommendations. EPA has undertaken research and development to respond to some of these recommendations but, according to agency officials, did not apply them to the analysis because the agency had not made sufficient progress. For example, EPA is in the process of responding to a recommendation involving the relative toxicity of components of particulate matter, an emerging area of research that has the potential to influence EPA’s regulatory decisions in the future. Hypothetically, the agency could refine national air quality standards to address the potentially varying health consequences associated with different components of particulate matter. The National Academies recommended that EPA strengthen its benefit analyses by evaluating a range of alternative assumptions regarding relative toxicity and incorporate these assumptions into sensitivity or uncertainty analyses as more data become available. EPA did not believe the state of scientific knowledge on relative toxicity was sufficiently developed at the time it prepared the draft regulatory impact analysis to include this kind of analysis. In a separate report issued in 2004, the National Academies noted that technical challenges have impeded research progress on relative toxicity but nonetheless identified this issue as a priority research topic. The Clean Air Scientific Advisory Committee also noted the need for more research and concluded in 2005 that not enough data are available to base the particulate matter standards on composition. The Office of Management and Budget, however, encouraged EPA in 2006 to conduct a sensitivity analysis on relative toxicity and referred the agency to a sensitivity analysis on relative toxicity funded by the European Commission. We found that EPA is sponsoring research on the relative toxicity of particulate matter components. For example, EPA is supporting long-term research on this issue through its intramural research program and is also funding research through its five Particulate Matter Research Centers and the Health Effects Institute. In addition, an EPA contractor has begun to investigate methods for conducting a formal analysis that would consider sources of uncertainty, including relative toxicity. To date, the contractor has created a model to assess whether and how much these sources of uncertainty may affect benefit estimates in one urban area. Agency officials told us, however, that this work was not sufficiently developed to include in the final particulate matter analysis, which it says will present benefits on a national scale. Another recommendation that EPA did not apply to the particulate matter analysis focused on assessing the uncertainty of particulate matter emissions. The National Academies recommended that EPA conduct a formal analysis to characterize the uncertainty of its emissions estimates, which serve as the basis for its benefit estimates. While the agency is investigating ways to assess or characterize this uncertainty, EPA did not conduct a formal uncertainty analysis for particulate matter emissions for the draft regulatory impact analysis because of data limitations. These limitations stem largely from the source of emissions data, the National Emissions Inventory—an amalgamation of data from a variety of entities, including state and local air agencies, tribes, and industry. According to EPA, these entities use different methods to collect data, which have different implications for how to characterize the uncertainty. EPA officials stated that the agency needs much more time to address this data limitation and to resolve other technical challenges of such an analysis. While the final particulate matter analysis will not include a formal assessment of uncertainty about emissions levels, EPA officials noted that the final analysis will demonstrate steps toward this recommendation by presenting emissions data according to the level emitted by the different kinds of sources, such as utilities, cars, and trucks. Finally, EPA did not apply a recommendation concerning the transparency of its benefit estimation process to the particulate matter analysis. Specifically, the National Academies recommended that EPA clearly summarize the key elements of the benefit analysis in an executive summary that includes a table that lists and briefly describes the regulatory options for which EPA estimated the benefits, the assumptions that had a substantial impact on the benefit estimates, and the health benefits evaluated. EPA did not, however, present a summary table as called for by the recommendation or summarize the benefits in the executive summary. EPA stated in the regulatory impact analysis that the agency decided not to present the benefit estimates in the executive summary because they were too uncertain. Agency officials told us that the agency could not resolve some significant data limitations before issuing the draft regulatory impact analysis in January 2006 but that EPA has resolved some of these data challenges. For example, EPA officials said they have obtained more robust data on anticipated strategies for reducing emissions, which will affect the estimates of benefits. The officials also said that EPA intends to include in the executive summary of the regulatory impact analysis supporting the final rule a summary table that describes key analytical information. While EPA officials said that the final regulatory impact analysis on particulate matter will reflect further responsiveness to the Academies’ recommendations, continued commitment and dedication of resources will be needed if EPA is to fully implement the improvements recommended by the National Academies. In particular, the agency will need to ensure that it allocates resources to needed research on emerging issues, such as the relative toxicity of particulate matter components, and to assessing which sources of uncertainty have the greatest influence on benefit estimates. The uncertainty of the agency’s estimates of health benefits in the draft regulatory impact analysis for particulate matter underscores the importance of uncertainty analysis that can enable decision makers and the public to better evaluate the basis for EPA’s air regulations. While EPA officials said they expect to reduce the uncertainties associated with the health benefit estimates in the final particulate matter analysis, a robust uncertainty analysis of the remaining uncertainties will nonetheless be important for decision makers and the public to understand the likelihood of attaining the estimated health benefits. Mr. Chairman, this concludes my prepared statement. I would be happy to respond to any questions that you or other Members of the Committee may have. For further information about this testimony, please contact me at (202) 512-3841 or stephensonj@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this statement. Individuals who made key contributions to this statement include Christine Fishkin, Assistant Director; Kate Cardamone; Nancy Crothers; Cindy Gilbert; Tim Guinane; Karen Keegan; Jessica Lemke; and Meaghan K. Marshall. This is a work of the U.S. government and is not subject to copyright protection in the United States. It may be reproduced and distributed in its entirety without further permission from GAO. However, because this work may contain copyrighted images or other material, permission from the copyright holder may be necessary if you wish to reproduce this material separately.

Scientific evidence links exposure to particulate matter--a widespread form of air pollution--to serious health problems, including asthma and premature death. Under the Clean Air Act, the Environmental Protection Agency (EPA) periodically reviews the appropriate air quality level at which to set national standards to protect the public against the health effects of six pollutants, including particulate matter. EPA proposed revisions to the particulate matter standards in January 2006 and issued a regulatory impact analysis of the revisions' expected costs and benefits. The estimated benefits of air pollution regulations have been controversial in the past, and a 2002 National Academies report to EPA made recommendations aimed at improving the estimates for particulate matter and other air pollution regulations. This testimony is based on GAO's July 2006 report Particulate Matter: EPA Has Started to Address the National Academies' Recommendations on Estimating Health Benefits, but More Progress Is Needed (GAO-06-780). GAO determined whether and how EPA applied the National Academies' recommendations in its estimates of the health benefits expected from the January 2006 proposed revisions to the particulate matter standards. While the National Academies' report generally supported EPA's approach to estimating the health benefits of its proposed air pollution regulations, it included 34 recommendations for improvements. EPA has begun to change the way it conducts and presents its analyses of health benefits in response to the National Academies' recommendations. For its particulate matter health benefit analysis, EPA applied, at least in part, about two-thirds of the Academies' recommendations. Specifically, EPA applied 8 and partially applied 14. For example, in response to the Academies' recommendations, EPA evaluated how benefits might change given alternative assumptions and discussed sources of uncertainty not included in the benefit estimates. Although EPA applied an alternative technique for evaluating one key uncertainty--the causal link between exposure to particulate matter and premature death--the health benefit analysis did not assess how the benefit estimates would vary in light of other key uncertainties, as the Academies had recommended. Consequently, EPA's response represents a partial application of the recommendation. Agency officials said that ongoing research and development efforts will allow EPA to gradually make more progress in applying this and other recommendations to future analyses. EPA did not apply the remaining 12 recommendations to the analysis, such as the recommendation to evaluate the impact of using the assumption that the components of particulate matter are equally toxic. EPA officials viewed most of these 12 recommendations as relevant to the health benefit analyses but noted that the agency was not ready to apply specific recommendations because of, among other things, the need to overcome technical challenges stemming from limitations in the state of available science. For example, EPA did not believe that the state of scientific knowledge on the relative toxicity of particulate matter components was sufficiently developed to include it in the January 2006 regulatory impact analysis. The agency is sponsoring research on this issue. We note that continued commitment and dedication of resources will be needed if EPA is to fully implement the improvements recommended by the National Academies. In particular, the agency will need to ensure that it allocates resources to needed research on emerging issues, such as the relative toxicity of particulate matter components, and to assessing which sources of uncertainty have the greatest influence on benefit estimates. While EPA officials said they expect to reduce the uncertainties associated with the health benefit estimates in the final particulate matter analysis, a robust uncertainty analysis of the remaining uncertainties will nonetheless be important for decision makers and the public to understand the likelihood of attaining the estimated health benefits.

Section 36 of the Internal Revenue Code (IRC) provides for a credit for many taxpayers who bought a principal residence in 2008, 2009, or 2010. The amounts of the credit vary depending upon whether the property was purchased in 2008 or was purchased later and, for purchases made after 2008, whether the purchaser qualified for the "long-time resident" exception. Credits based on purchases made in 2008 generally must be repaid over a 15-year period. Those for subsequent years' purchases generally are not subject to repayment. However, Section 36(f)(2) provides for acceleration of the repayment in certain circumstances if the taxpayer ceases to use the property as a principal residence. For credits based on purchases after 2008, acceleration of repayment means that the entire credit must be repaid if taxpayers cease using the purchased properties as their principal residences within the 36 months following the purchase. For credits based on a 2008 purchase, acceleration of repayment means that the outstanding balance of the credit becomes due. In each case, the repayment is calculated and included as tax on the tax return for the tax year in which the property ceased to be the taxpayer's principal residence. There are several exceptions to these repayment provisions. This report addresses the exception for involuntary conversions of the property, as well as the limitation on repayment based on gain (if any) realized on the disposition of the property as it applies to involuntary conversions. Generally, an involuntary conversion will not trigger acceleration of repayment in the tax year in which the involuntary conversion occurs. Under the exception for involuntary conversions, taxpayers who have received the homebuyer tax credit have two years from the date of the involuntary conversion to replace the property and, thereby, avoid acceleration of repayment. For those who purchased their homes in 2008, the involuntary conversion will not suspend their existing duty to repay the credit over a 15-year period. Those who purchased property in 2008 and received the maximum $7,500 credit were required to begin repayment of the credit at $500 per year beginning with their 2010 tax returns. If the property was destroyed or otherwise involuntarily converted in 2011, they still would be required to repay $500 on their 2011 and 2012 tax returns. Only acceleration of repayment is affected by an involuntary conversion. Although the acceleration provision is not triggered in the year of the involuntary conversion, the involuntary conversion must nonetheless be reported to the Internal Revenue Service (IRS) on the tax return for the year in which the involuntary conversion occurs. This is done on Form 5405. The form requires taxpayers to report any disposition or change in the use of the property on which the credit was based. On the 2010 Form 5405, two options apply to involuntary conversions. The first (line 13f) states, "My home was destroyed, condemned, or disposed of under threat of condemnation and I acquired or plan to acquire a new home within 2 years of the event (see instructions)." The second (line 13g) states, "My home was destroyed, condemned, or disposed of under threat of condemnation and I do not plan to acquire a new home within 2 years of the event (see instructions)." Even if the taxpayer does not currently intend to replace the property within two years, accelerated repayment is not due until the tax year for the year in which the two-year replacement period expires. In some cases, a taxpayer may be unable or unwilling to replace a home within the two-year replacement period that provides an exception to the acceleration of repayment. In some of these cases, repayment may not be necessary due to the limitation based on gain. A taxpayer may have gain from an involuntary conversion due to either insurance proceeds (in the case of property that has been damaged or destroyed), condemnation awards, or selling price (in the case of property that has been sold under threat of condemnation). In this case, the taxpayer who does not replace the principal residence within the two years allowed must determine whether there was a gain or loss realized on the property. Section 36(f)(3) limits the repayment of the homebuyer credit to the amount of gain from the disposition of the property. If there is a loss or no gain, no accelerated repayment is required. However, for purposes of determining gain on the disposition, the property's adjusted basis must be reduced by the total amount of the homebuyer credit that was claimed. When there is a gain, that gain would be compared to the outstanding balance of the homebuyer credit. The smaller of the two would be the amount that is added to tax as accelerated repayment of the credit in the year in which the two-year replacement period expires. 1. My principal residence was destroyed by flooding in 2011. Do I have to repay the outstanding balance of my homebuyer credit with my 2011 tax return? No. The destruction of your home is an involuntary conversion. The homebuyer tax credit provisions include an exception to the repayment acceleration requirements when the property is destroyed. •    If, within two years of the date your property was destroyed, you replace your principal residence with another that would have qualified you for the credit if acquired in 2008, repayment of your credit will not be accelerated. •    If you do not replace the residence within this two-year period, your credit will be accelerated, but will be reported on the tax return for the tax year in which the two-year period expires. •    Despite the involuntary conversion, if your residence was purchased in 2008, you must continue to repay the usual amount ($500 per year if the credit was $7,500) with your tax returns. 2. My residence was not completely destroyed by the flooding, but it was severely damaged. I will have to move out of it while it is being repaired. Do I have to repay the outstanding balance of my homebuyer credit with my 2011 tax return? No. Generally, you do not abandon your principal residence due to temporary absences; therefore, it is likely that you would not be considered to have ceased using the property as your principal residence even if you actually move out of it while it is being repaired. Additionally, your property does not need to be completely destroyed for there to be an involuntary conversion; therefore, the involuntary conversion exception (explained above) would also apply. 3. My house was destroyed and was in a federally declared disaster area. Does this mean that repayment of my credit will not be accelerated if I replace my house within four years? No. The involuntary conversion exception for acceleration of repayment of the homebuyer tax credit requires you to replace the property within two years. There currently is no provision to expand that replacement period when the property is within a federally declared disaster area. 4. My house was destroyed or damaged in 2011. Do I have to do anything special when I file my 2011 tax return? Yes. You must file Form 5405 with your tax return. On it, you will enter the date on which the damage or destruction occurred and indicate that your house was damaged or destroyed (rather than sold, converted to business or rental use, or abandoned). You will also need to indicate whether you currently intend to replace your property within two years. 5. If I say that I am not going to replace my house, does it mean that I will owe a lot more in taxes for 2011? No. You are indicating that you currently do not intend to replace the property. If you do not replace the property, the accelerated repayment of the tax credit will not be reported on your tax return until 2013. If you change your mind and do replace the property within two years, there would be no accelerated repayment requirement. 6. I purchased my house in 2008 and it was destroyed in 2011. I started repaying the credit on my 2010 tax return. What do I need to repay in 2011 and subsequent years? •    You will need to continue paying your scheduled repayment amount ($500 if the credit was $7,500) in 2011 and 2012. •    If you replace your home within two years after its destruction, your repayment will not be accelerated. You will continue repaying your scheduled repayment amount each year. •    If you do not replace your house within the two-year replacement period, you generally would need to repay the outstanding balance on your credit ($6,000 if originally $7,500), showing it on your 2013 tax return. However, that repayment may be reduced or eliminated depending on whether there was a gain from the involuntary conversion. •    If there was no gain, you would not have to repay any more of the credit. •    If the gain was less than the outstanding balance on the credit, your repayment would be the amount of the gain. •    For purposes of calculating this gain, you would be required to reduce your cost basis in the house by the original amount of the credit.

Taxpayers who purchased a principal residence in 2008-2010 (and in some cases, 2011) may have qualified for a tax credit under Section 36 of the Internal Revenue Code—the first-time homebuyer credit. This credit was amended several times with changes being made to the amount of the credit, the requirements for qualifying for the credit, and the requirements for repaying the credit. These details are available in CRS Report RL34664, The First-Time Homebuyer Tax Credit, by [author name scrubbed]. Generally, taxpayers claiming the credit based on a 2008 credit are required to repay the credit over a 15-year period beginning with the 2010 tax return. Taxpayers who purchased after 2008 generally are not required to repay the credit. However, repayment of the credit may be accelerated when the taxpayer no longer uses the property as the principal residence. For those who purchased property in 2008, acceleration means that any outstanding credit balance must be repaid with the tax return for the year in which the taxpayer ceased using the property as the principal residence. For those who purchased after 2008, the credit must be repaid in full if the taxpayer ceased using the property as the principal residence within the 36 months immediately following the date of purchase. There are several exceptions to the repayment requirements. This report focuses on the exception due to involuntary conversion and the limitation based on gain. The term "involuntary conversion" includes either the partial or complete destruction of the property due to a casualty such as a fire, flood, or tornado. Alternatively, the term may mean the loss of some or all of the property by theft or condemnation, which would include a sale under threat of condemnation. Generally, an involuntary conversion will not trigger acceleration of repayment in the tax year in which the involuntary conversion occurs. Under the exception for involuntary conversions, taxpayers who have received the homebuyer tax credit have two years from the date of the involuntary conversion to replace the property and, thereby, avoid acceleration of repayment. However, those who purchased in 2008 will need to continue repaying one-fifteenth of their credit annually in the interim. If a taxpayer does not replace the residence within the allowed two-year period, the outstanding credit balance generally would be included in the tax liability for the tax return for the year in which the two-year period expires. However, repayment of the credit could be limited by the gain realized on the involuntary conversion. If the taxpayer realized a loss on the involuntary conversion, there would be no obligation to repay the outstanding credit balance. If the taxpayer realized a gain, but the gain was less than the outstanding credit balance, the credit repayment would be limited to the amount of gain. That lower amount would be added to the taxpayer's tax liability for the year in which the two-year period expired. In either case, the taxpayer would have no obligation to repay any remaining credit balance in future years. This report includes an Appendix with questions that are representative of questions being raised by constituents in areas that have been affected recently by flooding and are applicable to other sorts of involuntary conversions.

Countries provide food aid through either in-kind donations or cash donations. In-kind food aid is food procured and delivered to vulnerable populations, while cash donations are given to implementing organizations to purchase food in local, regional, or global markets. U.S. food aid programs are all in-kind, and no cash donations are allowed under current legislation. However, the administration has recently proposed legislation to allow up to 25 percent of appropriated food aid funds to purchase commodities in locations closer to where they are needed. Other food aid donors have also recently moved from providing primarily in-kind aid to more or all cash donations for local procurement. Despite ongoing debates as to which form of assistance are more effective and efficient, the largest international food aid organization, the United Nations (UN) World Food Program (WFP), continues to accept both. The United States is both the largest overall and in-kind provider of food aid to WFP, supplying about 43 percent of WFP’s total contributions in 2006 and 70 percent of WFP’s in-kind contributions in 2005. Other major donors of in-kind food aid in 2005 included China, the Republic of Korea, Japan, and Canada. In fiscal year 2006, the United States delivered food aid through its largest program to over 50 countries, with about 80 percent of its funding allocations for in-kind food donations going to Africa, 12 percent to Asia and the Near East, 7 percent to Latin America, and 1 percent to Eurasia. Of the 80 percent of the food aid funding going to Africa, 30 percent went to Sudan, 27 percent to the Horn of Africa, 18 percent to southern Africa, 14 percent to West Africa, and 11 percent to Central Africa. Over the last several years, funding for nonemergency U.S. food aid programs has declined. For example, in fiscal year 2001, the United States directed approximately $1.2 billion of funding for international food aid programs to nonemergencies. In contrast, in fiscal year 2006, the United States directed approximately $698 million for international food aid programs to nonemergencies. U.S. food aid is funded under four program authorities and delivered through six programs administered by USAID and USDA; these programs serve a range of objectives, including humanitarian goals, economic assistance, foreign policy, market development, and international trade. (For a summary of the six programs, see app. I.) The largest program, P.L. 480 Title II, is managed by USAID and represents approximately 74 percent of total in-kind food aid allocations over the past 4 years, mostly to fund emergency programs. The Bill Emerson Humanitarian Trust, a reserve of up to 4 million metric tons of grain, can be used to fulfill P.L. 480 food aid commitments to meet unanticipated emergency needs in developing countries or when U.S. domestic supplies are short. U.S. food aid programs also have multiple legislative and regulatory mandates that affect their operations. One mandate that governs U.S. food aid transportation is cargo preference, which is designed to support a U.S.-flag commercial fleet for national defense purposes. Cargo preference requires that 75 percent of the gross tonnage of all government-generated cargo be transported on U.S.-flag vessels. A second transportation mandate, known as the Great Lakes Set-Aside, requires that up to 25 percent of Title II bagged food aid tonnage be allocated to Great Lakes ports each month. Multiple challenges in logistics hinder the efficiency of U.S. food aid programs by reducing the amount, timeliness, and quality of food provided. While in some cases agencies have tried to expedite food aid delivery, most food aid program expenditures are for logistics, and the delivery of food from vendor to village is generally too time-consuming to be responsive in emergencies. Factors that increase logistical costs and lengthen time frames include uncertain funding processes and inadequate planning, ocean transportation contracting practices, legal requirements, and inadequate coordination in tracking and responding to food delivery problems. While U.S. agencies are pursuing initiatives to improve food aid logistics, such as prepositioning food commodities and using a new transportation bid process, their long-term cost-effectiveness has not yet been measured. In addition, the current practice of selling commodities to generate cash resources for development projects—monetization—is an inherently inefficient yet expanding use of food aid. The current practice of selling commodities as a means to generate resources for development projects—monetization—is an inherently inefficient yet expanding use of food aid. Monetization entails not only the costs of procuring, shipping, and handling food, but also the costs of marketing and selling it in recipient countries. Furthermore, the time and expertise needed to market and sell food abroad requires NGOs to divert resources from their core missions. However, the permissible use of revenues generated from this practice and the minimum level of monetization allowed by the law have expanded. The monetization rate for Title II nonemergency food aid has far exceeded the minimum requirement of 15 percent, reaching close to 70 percent in 2001 but declining to about 50 percent in 2005. Despite these inefficiencies, U.S. agencies do not collect or maintain data electronically on monetization revenues, and the lack of such data impedes the agencies’ ability to fully monitor the degree to which revenues can cover the costs related to monetization. USAID used to require that monetization revenues cover at least 80 percent of costs associated with delivering food to recipient countries, but this requirement no longer exists. Neither USDA nor USAID was able to provide us with data on the revenues generated through monetization. These agencies told us that the information should be in the results reports, which are in individual hard copies and not available in any electronic database. Various challenges to implementation, improving nutritional quality, and monitoring reduce the effectiveness of food aid programs in alleviating hunger. Since U.S. food aid assists only about 11 percent of the estimated hungry population worldwide, it is critical that donors and implementers use it effectively by ensuring that it reaches the most vulnerable populations and does not cause negative market impact. However, challenging operating environments and resource constraints limit implementation efforts in terms of developing reliable estimates of food needs and responding to crises in a timely manner with sufficient food and complementary assistance. Furthermore, some impediments to improving the nutritional quality of U.S. food aid, including lack of interagency coordination in updating food aid products and specifications, may prevent the most nutritious or appropriate food from reaching intended recipients. Despite these concerns, USAID and USDA do not sufficiently monitor food aid programs, particularly in recipient countries, as they have limited staff and competing priorities and face legal restrictions on the use of food aid resources. Some impediments to improving nutritional quality further reduce the effectiveness of food aid. Although U.S. agencies have made efforts to improve the nutritional quality of food aid, the appropriate nutritional value of the food and the readiness of U.S. agencies to address nutrition- related quality issues remain uncertain. Further, existing interagency food aid working groups have not resolved coordination problems on nutrition issues. Moreover, USAID and USDA do not have a central interagency mechanism to update food aid products and their specifications. As a result, vulnerable populations may not be receiving the most nutritious or appropriate food from the agencies, and disputes may occur when either agency attempts to update the products. Although USAID and USDA require implementing organizations to regularly monitor and report on the use of food aid, these agencies have undertaken limited field-level monitoring of food aid programs. Agency inspectors general have reported that monitoring has not been regular and systematic, that in some cases intended recipients have not received food aid, or that the number of recipients could not be verified. Our audit work also indicates that monitoring has been insufficient due to various factors including limited staff, competing priorities, and legal restrictions on the use of food aid resources. In fiscal year 2006, although USAID had some non-Title II-funded staff assigned to monitoring, it had only 23 Title II- funded USAID staff assigned to missions and regional offices in 10 countries to monitor programs costing about $1.7 billion in 55 countries. USDA administers a smaller proportion of food aid programs than USAID and its field-level monitoring of food aid programs is more limited. Without adequate monitoring from U.S. agencies, food aid programs may not effectively direct limited food aid resources to those populations most in need. As a result, agencies may not be accomplishing their goal of getting the right food to the right people at the right time. U.S. international food aid programs have helped hundreds of millions of people around the world survive and recover from crises since the Agricultural Trade Development and Assistance Act (P.L. 480) was signed into law in 1954. Nevertheless, in an environment of increasing emergencies, tight budget constraints, and rising transportation and business costs, U.S. agencies must explore ways to optimize the delivery and use of food aid. U.S. agencies have taken some measures to enhance their ability to respond to emergencies and streamline the myriad processes involved in delivering food aid. However, opportunities for further improvement remain to ensure that limited resources for U.S. food aid are not vulnerable to waste, are put to their most effective use, and reach the most vulnerable populations on a timely basis. To improve the efficiency of U.S. food aid—in terms of its amount, timeliness, and quality—we recommended in our previous report that the Administrator of USAID and the Secretaries of Agriculture and Transportation (1) improve food aid logistical planning through cost- benefit analysis of supply-management options; (2) work together and with stakeholders to modernize ocean transportation and contracting practices; (3) seek to minimize the cost impact of cargo preference regulations on food aid transportation expenditures by updating implementation and reimbursement methodologies to account for new supply practices; (4) establish a coordinated system for tracking and resolving food quality complaints; and (5) develop an information collection system to track monetization transactions. To improve the effective use of food aid, we recommended that the Administrator of USAID and the Secretary of Agriculture (1) enhance the reliability and use of needs assessments for new and existing food aid programs through better coordination among implementing organizations, make assessments a priority in informing funding decisions, and more effectively build on lessons from past targeting experiences; (2) determine ways to provide adequate nonfood resources in situations where there is sufficient evidence that such assistance will enhance the effectiveness of food aid; (3) develop a coordinated interagency mechanism to update food aid specifications and products to improve food quality and nutritional standards; and (4) improve monitoring of food aid programs to ensure proper management and implementation. DOT, USAID, and USDA—the three U.S. agencies to whom we direct our recommendations—provided comments on a draft of our report. These agencies—along with the Departments of Defense and State, FAO, and WFP—also provided technical comments and updated information, which we have incorporated throughout the report as appropriate. DOT stated that it strongly supports the transportation initiatives highlighted in our report, which it agrees could reduce ocean transportation costs. USAID stated that we did not adequately recognize its recent efforts to strategically focus resources to reduce food insecurity in highly vulnerable countries. Although food security was not a research objective of this study, we recognize the important linkages between emergencies and development programs and used the new USAID Food Security Strategic Plan for 2006-2010 to provide context, particularly in our discussion on the effective use of food aid. USDA took issue with a number of our findings and conclusions because it believes that hard analysis was lacking to support many of the weaknesses that we identified. We disagree. Each of our report findings and recommendations was based on a rigorous and systematic review of multiple sources of evidence, including procurement and budget data, site visits, previous audits, agency studies, economic literature, and testimonial evidence collected in both structured and unstructured formats. Mr. Chairman and Members of the Subcommittee, this concludes my prepared statement. I would be pleased to answer any questions that you may have. Should you have any questions about this testimony, please contact Thomas Melito, Director, at (202) 512-9601 or MelitoT@gao.gov. Other major contributors to this testimony were Phillip Thomas (Assistant Director), Carol Bray, Ming Chen, Debbie Chung, Martin De Alteriis, Leah DeWolf, Mark Dowling, Etana Finkler, Kristy Kennedy, Joy Labez, Kendall Schaefer, and Mona Sehgal. The United States has principally employed six programs to deliver food aid: Public Law (P.L.) 480 Titles I, II, and III; Food for Progress; the McGovern-Dole Food for Education and Child Nutrition; and Section 416(b). Table 1 provides a summary of these food aid programs.

The United States is the largest global food aid donor, accounting for over half of all food aid supplies to alleviate hunger and support development. Since 2002, Congress has appropriated an average of $2 billion per year for U.S. food aid programs, which delivered an average of 4 million metric tons of food commodities per year. Despite growing demand for food aid, rising business and transportation costs have contributed to a 52 percent decline in average tonnage delivered between 2001 and 2006. These costs represent 65 percent of total emergency food aid, highlighting the need to maximize its efficiency and effectiveness. This testimony is based on a recent GAO report that examined some key challenges to the (1) efficiency of U.S. food aid programs and (2) effective use of U.S. food aid. Multiple challenges hinder the efficiency of U.S. food aid programs by reducing the amount, timeliness, and quality of food provided. Factors that cause inefficiencies include (1) insufficiently planned food and transportation procurement, reflecting uncertain funding processes, that increases delivery costs and time frames; (2) ocean transportation and contracting practices that create high levels of risk for ocean carriers, resulting in increased rates; (3) legal requirements that result in awarding of food aid contracts to more expensive service providers; and (4) inadequate coordination between U.S. agencies and food aid stakeholders in tracking and responding to food and delivery problems. U.S. agencies have taken some steps to address timeliness concerns. USAID has been stocking or prepositioning food domestically and abroad, and USDA has implemented a new transportation bid process, but the long-term cost effectiveness of these initiatives has not yet been measured. The current practice of using food aid to generate cash for development projects--monetization--is also inherently inefficient. Furthermore, since U.S. agencies do not collect monetization revenue data electronically, they are unable to adequately monitor the degree to which revenues cover costs. Numerous challenges limit the effective use of U.S. food aid. Factors contributing to limitations in targeting the most vulnerable populations include (1) challenging operating environments in recipient countries; (2) insufficient coordination among key stakeholders, resulting in disparate estimates of food needs; (3) difficulties in identifying vulnerable groups and causes of their food insecurity; and (4) resource constraints that adversely affect the timing and quality of assessments, as well as the quantity of food and other assistance. Further, some impediments to improving the nutritional quality of U.S. food aid may reduce its benefits to recipients. Finally, U.S. agencies do not adequately monitor food aid programs due to limited staff, competing priorities, and restrictions on the use of food aid resources. As a result, these programs are vulnerable to not getting the right food to the right people at the right time.

Our updates were limited to reviewing certain publically available information, such as the most recent strategic plan released by the IACC. spectrum of adults with autism. Funding autism research on the same topic may be appropriate and necessary—for example, for purposes of replicating or corroborating results—but in some instances, funding similar autism research may lead to unnecessary duplication and inefficient use of funds. Most agency officials we spoke with said that they consider the research funded by their agencies to be different than autism research funded by other agencies; however, we found that each research area included projects funded by at least four agencies. For example, the diagnosis research area included projects funded by seven different agencies. The most commonly funded projects were in the area of biology (423 projects), followed by treatment and interventions (253 projects), and causes (159 projects). NIH funded a majority of the autism research projects in five of the seven research areas. (See fig. 1.) Five agencies that funded non-research autism-related activities from fiscal years 2008 through 2011—Administration for Community Living (ACL), CDC, Department of Defense (DOD), Department of Education (Education), and the Health Resources and Services Administration (HRSA)—funded activities that were not duplicative. HRSA and Education both funded training activities related to autism. HRSA’s activities included training health care professionals, such as pediatric practitioners, residents, and graduate students, to provide evidence- based services to children with autism and other developmental disabilities and their families. The activities also included training specialists to provide comprehensive diagnostic evaluations to address the shortage of professionals who can confirm or rule out an autism diagnosis. Education’s training activities focused on the education setting; for example, to prepare personnel in special education, related services, early intervention, and regular education to work with children with disabilities, including autism. Additionally, DOD and ACL both funded a publicly available website to provide information on services available to individuals with autism. DOD’s website was developed for military families to provide them with information on the educational services that are close to specific military installations in select states, while the ACL website is broader by focusing on all individuals with autism and other developmental disabilities, their families, and other targeted key stakeholders concerned with autism. Finally, we determined that CDC is the only agency funding an awareness campaign on autism and other developmental disabilities. CDC’s Learn the Signs. Act Early. campaign promotes awareness of healthy developmental milestones in early childhood, the importance of tracking each child’s development, and the importance of acting early if there are concerns. We noted in our November 2013 report that the IACC and federal agencies may have missed opportunities to coordinate federal autism activities and reduce the risk of duplication of effort and resources. Although the CAA requires the IACC to coordinate HHS autism activities and monitor federal autism activities, OARC officials stated that the prevention of duplication among individual projects in agency portfolios is not specified in the CAA as one of the IACC’s statutory responsibilities and therefore is not a focus of the IACC. OARC officials stated that it was up to the individual federal agencies to use the information contained in the IACC’s strategic plan and portfolio analysis to prevent duplication. Officials from three federal agencies—CDC, DOD, and NIH—told us that they use the strategic plan and portfolio analysis, which are key documents used by the IACC to coordinate and monitor federal autism activities, when setting priorities for their autism programs and to learn of autism activities conducted by other agencies. OARC officials acknowledged that the IACC could choose to use data from the portfolio analysis as the basis for specific recommendations regarding areas where interagency coordination could be increased, but to date this has not occurred. OARC officials stated that they do not consider it to be their responsibility to review the data that they collect on behalf of the IACC for duplication or for coordination opportunities. Instead, they said that they fulfill their role in assisting the IACC in its cross-agency coordination activities in other ways, such as by facilitating interagency communication and gathering information. In our November 2013 report, we recommended that the Secretary of Health and Human Services direct the IACC and NIH, in support of the IACC, to identify projects through their monitoring of federal autism activities— including OARC’s annual collection of data for the portfolio analysis, and the IACC’s annual process to update the strategic plan—that may result in unnecessary duplication and thus may be candidates for consolidation or elimination; and identify potential coordination opportunities among agencies. HHS did not concur with our recommendation. The agency stated that such an analysis by the IACC to identify duplication would not likely provide the detail needed to determine actual duplication, and that the role of the IACC should not include identification of autism-related projects for elimination. We agree that further analysis would be needed to identify actual duplication. While the strategic plan objectives, which represent broad and complex areas of research, are useful to identify the potential for unnecessary duplication, we believe that such identification is worthwhile as it can effectively lead to further review by the funding agencies to ensure funds are carefully spent. Agencies can review specific project information to confirm whether research projects associated with an objective are, for example, necessary to replicate prior research results. While funding more than one study per objective may often be worthwhile and appropriate, this type of analysis by agencies would help provide assurance that agencies are not wasting federal resources due to unnecessary duplication of effort. Further, such an analysis could help identify research needs—such as research that is needed to complement or follow-up prior research, or research that requires further corroboration—and move autism research forward in a coordinated manner. We also question the purpose of using federal resources to collect data, if the data are not then carefully examined to ensure federal funds are being used appropriately and efficiently. Further, we found that the IACC’s efforts to coordinate HHS autism research and monitor all federal autism activities were hindered due to limitations with the data it collects. For example, the guidance and methodology for determining what projects constitute research, and therefore should be included in the portfolio analysis, has changed over the years. As a result, the projects included in the portfolio analysis have varied. Such inconsistency makes it difficult to accurately determine how much an increase in the funding of autism research was due to an actual increase in research versus the inclusion of more projects in the analysis. Additionally, the portfolio analysis and strategic plan contain limited information on non-research autism-related activities, and the IACC did not have a mechanism to collect information on such activities. In our November 2013 report, we made recommendations that the Secretary of Health and Human Services direct the IACC and NIH, in support of the IACC, to provide consistent guidance to federal agencies when collecting data for the portfolio analysis so that information can be more easily and accurately compared over multiple years; and create a document or database that provides information on non- research autism-related activities funded by the federal government, and make this document or database publicly available. HHS did not concur with these recommendations. HHS emphasized that, when collecting data for the portfolio analysis, it has balanced the need for consistency with the need to be responsive to feedback from the IACC and from those participating in the portfolio analysis. While we agree with HHS that it is important to be responsive to feedback and make adjustments to guidance as necessary to improve data collection, we believe that annual changes of the type we observed are not productive. Guidance should be developed so that accurate, consistent, and meaningful comparisons of changes in federal funding of autism research can be made over time and used to inform future funding decisions. Additionally, HHS commented that information on non-research autism- related activities was publicly accessible through a report to Congress that the CAA, and its reauthorization in 2011, required of HHS. While this document could be a starting point from which the IACC could begin to regularly catalog non-research autism-related activities, we believe that having a document or database that contains current and regularly- updated information on these activities is an important aspect of fulfilling the IACC's responsibility to monitor all federal autism activities, not just research. We also reported in November 2013 that the data used by the IACC was outdated and not tracked over time, and therefore not useful for measuring progress on the strategic plan objectives or identifying gaps in current research needs. Although the IACC did not examine research projects over time, our analysis found that, when looking across multiple years, some agencies funded more autism research projects than were suggested in the associated strategic plan objective, whereas other objectives were not funded by an agency. Recently, in April 2014, the IACC released an update of its strategic plan. This plan included the number of research projects funded from fiscal years 2008 through 2012 under each objective, and the corresponding funding amounts, which may help identify those objectives that have received more funding than others. Although OARC collected specific information on the more recently funded projects—those funded in fiscal years 2011 and 2012— this information was not included in the plan. Detailed project information is needed to effectively coordinate and monitor autism research across the federal government and avoid duplication. Principal investigators are typically individuals designated by the applicant organization, such as a university, to have the appropriate level of authority and responsibility to direct the project or program to be supported by the award. not provide information indicating that NIH has policies requiring program officials to actually search this database before awarding each research grant. Several agency officials also stated that they rely on their peer reviewers, other experts, and project officers to have knowledge of the current autism research environment. As established in our recent duplication work, it is important for agencies that fund research on topics of common interest, such as autism, to monitor each others’ activities. Such monitoring helps maximize effectiveness and efficiency of federal investments, and minimize the potential for the inefficient use of federal resources due to unnecessary duplication. To promote better coordination among federal agencies that fund autism research and avoid the potential for unnecessary duplication before research projects are funded, we recommended that the Secretary of Health and Human Services, the Secretary of Defense, the Secretary of Education, and the Director of the National Science Foundation (NSF) each determine methods for identifying and monitoring the autism research conducted by other agencies, including by taking full advantage of monitoring data the IACC develops and makes available. DOD concurred with our recommendation to improve coordination among federal agencies, and comments from Education, HHS, and NSF suggested that these agencies support improving the coordination of federal autism research activities. However, Education, HHS, and NSF disputed that any duplication occurs. We agree that more information on the specific projects funded within each objective would need to be assessed in order to determine actual duplication. However, the fact that research is categorized to the same objectives suggests that there may be duplicative projects being funded. During the course of our work, Education, HHS, and NSF did not provide any information to show that they had reviewed research projects to ensure that they were not unnecessarily duplicative. Chairman Mica, Ranking Member Connolly, and Members of the Subcommittee, this concludes my prepared statement. I would be pleased to respond to any questions that you may have. For questions about this statement, please contact me at (202) 512-7114 or crossem@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this statement. GAO staff who made key contributions to this statement include Geri Redican-Bigott, Assistant Director; Deirdre Brown; Sandra George; Drew Long; and Sarah Resavy. This is a work of the U.S. government and is not subject to copyright protection in the United States. The published product may be reproduced and distributed in its entirety without further permission from GAO. However, because this work may contain copyrighted images or other material, permission from the copyright holder may be necessary if you wish to reproduce this material separately.

Autism—a developmental disorder involving communication and social impairment—is an important public health concern. From fiscal years 2008 through 2012, 12 federal agencies awarded at least $1.4 billion to support autism research and other autism-related activities. The Combating Autism Act directed the IACC to coordinate HHS autism activities and monitor all federal autism activities. It also required the IACC to develop and annually update a strategic plan for autism research. This plan is organized into 7 research areas that contain specific objectives. This statement is based on GAO's November 2013 report, GAO-14-16 , with selected updates. It discusses federal autism activities, including (1) the extent to which federal agencies fund potentially duplicative autism research, and (2) the extent to which IACC and agencies coordinate and monitor federal autism activities. GAO analyzed agencies' data and documents, and interviewed federal agency officials. Eighty-four percent of the autism research projects funded by federal agencies had the potential to be duplicative. Of the 1,206 autism research projects funded by federal agencies from fiscal years 2008 through 2012, 1,018 projects were potentially duplicative because the projects were categorized to the same objectives in the Interagency Autism Coordinating Committee's (IACC) strategic plan. Funding similar research on the same topic is sometimes appropriate—for example, for purposes of replicating or corroborating results—but in other instances funding similar research may lead to unnecessary duplication. Each agency funded at least 1 autism research project in the same strategic plan objective as another agency and at least 4 agencies funded autism research in the same research area. The IACC and federal agencies may have missed opportunities to coordinate and reduce the risk of duplicating effort and resources. GAO found that the IACC is not focused on the prevention of duplication, and its efforts to coordinate the Department of Health and Human Services' (HHS) autism research and monitor all federal autism activities were hindered by limitations with the data it collects. Apart from federal agencies' participation on the IACC, there were limited instances of agency coordination, and the agencies did not have robust or routine procedures for monitoring federal autism activities. GAO recommended in November 2013 that HHS improve IACC data to enhance coordination and monitoring. HHS disagreed and stated its efforts were already adequate. GAO also recommended that DOD, Education, HHS, and NSF improve coordination. The agencies supported improved coordination, but most disputed that duplication occurs. GAO continues to believe the recommendations are warranted and actions needed.

Considerable congressional attention has been placed on the treatment of consumers within the private health insurance marketplace. Among the many concerns, particular attention has been paid to the value of coverage in terms of out-of-pocket (OOP) costs relative to premiums. One method that lowers the value of coverage is the use of annual limits on the dollar amount of coverage. Private health insurers use annual limits to require the consumer to assume 100% of the cost of coverage after a certain amount of spending for the year has been reached. The spending can be for the total health benefits covered or targeted to specific services, such as hospitalizations. Policyholders and plan members that exceed these coverage caps end up with very high OOP costs. However, market demand for low-premium coverage has led to the proliferation of limited benefit plans ("mini-med plans") that rely on annual limits to keep premiums down. According to the Department of Health and Human Services (HHS) approximately 18 million Americans are subject to annual limits in their health coverage. The Patient Protection and Affordable Care Act ( P.L. 111-148 , PPACA) was enacted on March 23, 2010, and amended by the Health Care and Education Reconciliation Act ( P.L. 111-152 , HCERA), enacted on March 30, 2010 (hereafter collectively referred to as PPACA). PPACA, among other provisions, reorganizes and amends title XXVII of the Public Health Service Act (PHSA) to reform the private health insurance marketplace. The "immediate" reforms in sections 2711 through 2719 of the PHSA become effective for plan years beginning on or after September 23, 2010. The plan year refers to the 12-month period during which a policy or plan benefit is effective. Among the immediate reforms are consumer protections from high OOP costs by placing restrictions on and eventually prohibiting the use of annual limits. This report provides an overview of the waiver available for the restriction on annual limits and will be periodically updated to reflect any legislative or regulatory changes. For plan years beginning on or after six months after enactment, group health plans, grandfathered group health plans, and health insurance issuers offering group or individual plans are restricted, as determined by the Secretary of HHS (hereafter the Secretary), from establishing annual limits on the dollar value of essential health benefits for any participant or beneficiary. Essential health benefits may be further defined by the Secretary, but they must include at least the following types of care: ambulatory patient services, emergency services, hospitalization, maternity and newborn care, mental health and substance use disorder services, prescription drugs, rehabilitative services and devices, laboratory services, and preventive and wellness and chronic disease management and pediatric services, including oral and vision care. Annual limits are permissible for health care expenses that are not considered part of the essential health benefits. PPACA also requires the Secretary to ensure that there is access to needed services with a minimal impact on premiums in the context of defining the restriction on annual limits. This provision is the basis for the Secretary's waiver authority. On June 28, 2010, the Secretary promulgated regulations, with the Secretaries of Labor and the Treasury, defining the restrictions on annual limits. In order to limit the magnitude of the likely premium increases for coverage that previously used annual limits, the regulations have a three-year phase-in period allowing insurers to implement annual limits of $750,000 in the first year culminating in a $2 million allowable annual limit in the final year, as illustrated in Figure 1 . On January 1, 2014, annual limits will be prohibited altogether. There is substantial variability in the marketplace due to different consumer demands, but generally, a limited benefit plan offers coverage with restrictive annual limits on total benefits and/or on specific service categories (e.g., surgeries). Table 1 illustrates an example of grandfathered limited benefits plan called Fundamental Care. In this example, Fundamental Care has a annual deductible of $500 and a policy year maximum or annual limit of $100,000 and service specific benefit maximums. The plan has a drug benefit with a $100 deductible and a $1,000 annual limit. Premiums vary by covered group, but the employer is required to make at least a 50% contribution to the cost of the coverage. HHS estimates that about 17.9 million persons have plans or policies that are subject to annual limits, primarily in the individual (65% of total) and small group (31% of total) markets. Industry groups have argued that limited benefit plans are necessary because more comprehensive coverage would be too costly without the federal subsidies for qualified health plans in the exchanges that are not available until 2014. They say that without the option of limited benefit plans, these workers would likely become uninsured. This assertion has been the basis for requesting and granting waivers from the restriction on annual limits. On the other hand, some consumer groups have argued that limited benefit plans are not deserving of any regulatory leniency. They assert that many consumers enroll in these plans without understanding how little protection they provide against large health expenses, resulting in a lack of access to care and substantive medical debt when they experience a major illness or accident. These concerns prompted a December 1, 2010, hearing by the Senate Commerce Committee. Limited benefit plans do not have a categorical exemption from the reforms of PPACA. However, regulators have found the industry argument for waivers compelling while acknowledging the potential risks to consumers. In the interim final regulations on restricted annual limits, the Secretaries of HHS, Labor, and the Treasury announced that HHS would establish a waiver process for limited benefit plans in order to preserve coverage at similar premiums. In other words, it was assumed that applying the restriction on annual limits to limited benefit plans would result in substantive increases in the premiums charged for those insurance products. HHS, however, expressed concern that consumers might be confused about the value of their coverage in relation to the restriction on annual limits. Accordingly, HHS is requiring plans that are approved for the waiver to prominently display in their materials a "black box type" warning in 14-point bold font explaining that their plan does not meet the standards of the law with respect to annual limits. Organizations may apply for a waiver on an annual basis until January 1, 2014, when annual limits are prohibited. The standards of the waiver apply equally to all applicants, as there are no differential or preferred paths to a waiver by the category of the applicant, such as unions or small businesses. The operational process for applying for a waiver was published as a memorandum on September 3, 2010. The memorandum, and subsequent guidance, establishes the following reporting requirements: the terms of the plan or policy for which a waiver is sought; the number of individuals enrolled in the plan or covered by the policy; the annual limit(s) and rates applicable to the plan or policy; and a brief description of why compliance with the restriction on annual limits standard would result in a significant decrease in access to benefits or a significant increase in premiums paid. As of April 1, 2011, 1,168 waivers have been approved, representing slightly more that 2.9 million enrollees and policyholders. This means the enrollees and policyholders of the accepted waiver applicants represent around 1.5% of the approximately 194.5 million individuals with private health insurance in the United States. HHS did not provide any data on denied waiver applicants, but has reported that 94% of the applicants were granted waivers. As illustrated by Figure 2 , most (94.3%) of the waivers were approved for either self-insured employers (40.6%), health reimbursement arrangements (HRAs, 28.9%), or multiemployer union plans (24.7%). As illustrated by Figure 3 , most (92.5%) of enrollment for the approved waivers was for either health insurance issuers (29.7%), multiemployer union plans (29.4%), non-Taft Hartley union plans (19.1%), or self-insured employers (14.3%). On March 17, 2011, the Health Care Waiver Transparency Act was introduced by Representative Darrell Issa ( H.R. 1184 ) and Senator John Ensign ( S. 650 ). H.R. 1184 / S. 650 would require the Secretary of HHS to publish, on the HHS website, detailed criteria used to determine approval of an application submitted for a waiver, adjustment, or other compliance relief provided for under the authority of PPACA or title I or subtitle B of title II of the Health Care and Education Reconciliation Act ( P.L. 111-152 ). The Secretary of HHS would be further required to publish each application for a waiver, the determination of the Secretary of HHS whether to approve or reject the application, and the reason for such approval or rejection. H.R. 1184 / S. 650 would also expressly prohibit preferential treatment being given to any waiver applicant based on political contributions or association with a labor union, a health plan provided for under a collective bargaining agreement, or another organized labor group. Section 1856(b) of P.L. 112-10 requires the Government Accountability Office (GAO) to submit to Congress a report that includes the results of an audit of requests for waiver of the restricted annual limit not later than June 14, 2011. The report must include an analysis of the number of approvals and denials of such requests and the reasons for such approval or denial. Concern regarding the favoritism toward unions in granting waivers, the frequency of the waivers, and the transparency of the waiver process has prompted oversight and legislative activity. On January 20, 2011, the House Energy and Commerce Committee sent a letter to the director of the Center for Consumer Information and Insurance Oversight (CCIIO) asking for, among other things, documents and information regarding the submission and approval of the waivers for restricted annual limits. Similar letters requesting additional details on the waivers and waiver applicants have been sent by Senator Hatch and by Senator Ensign. On March 22, 2011, the House Committee on Small Business sent a letter to the Secretary of HHS asking a series of questions and for documentation concerning the specific impact of the waivers on small businesses. The waivers have also been a topic of discussion in several hearings on PPACA. For context, it is relevant to note that Congress has not consistently specified the manner in which information concerning health care waivers is to be released to the public. Indeed, the annual limits provision of PPACA does not even have a specific public reporting requirement. As a result of different legal standards, or in some cases the absence of a congressional directive, no standardized practice for releasing information about health care waivers has ever been developed. As illustrated in Table 2 , there is substantial variation in the release of information between different health care waiver types. No obvious bias could be found in the publicly available application materials for the annual limits waivers. The available evidence suggests no favoritism for any particular applicant groups (e.g., unions). The Hill obtained records of waiver denials and reported that as of mid-February, CMS had denied 79 requests for waivers and that unions accounted for roughly 60% of those denials. Moreover, in completing the work required by P.L. 112-10 , the GAO found that CMS granted waivers when an application projected a significant increase in premiums or significant reduction in access to health care benefits rather than organizational factors (e.g., union membership, geographical location, number of employees).

Considerable congressional attention has been placed on the dollar value of health insurance coverage in terms of out-of-pocket (OOP) costs placed on policyholders. One method that lowers the dollar value of coverage is the use of annual limits on the dollar amount of coverage. Private health insurers use annual limits to require the consumer to assume 100% of the cost of coverage after a certain amount of spending for the year has been reached. While annual limits may be a benefit design feature in any type of health insurance, they are used as the primary method of cost control for limited benefit plans, which provide low premium coverage typically to low-income part-time or seasonal workers. Limited benefit plans generally have annual limits on both the total dollar coverage and on specific coverage categories (e.g., hospitalizations and outpatient surgeries). Without the limited benefit plan option, many of these low-income workers would likely be uninsured. On the other hand, these plans have been criticized as providing little value and giving a false sense of security to policyholders. The Patient Protection and Affordable Care Act (P.L. 111-148, PPACA) prohibits the use of annual limits effective 2014 and places certain restrictions on their use effective for plan years starting on or after September 23, 2010. These restrictions would effectively eliminate limited benefit plans. Accordingly, the Secretary of Health and Human Services has implemented a waiver process for limited benefit plans under the authority provided by Section 1001 of PPACA to define restricted annual limits in such a way as to "ensure that access to needed services is made available with a minimal impact on premiums." Considerable attention has been paid to the fairness and transparency of the waiver process. For context, it is relevant to note that Congress has not consistently specified the manner in which information concerning health care waivers is to be released to the public. Indeed, the annual limits provision of PPACA does not even have a specific public reporting requirement. As a result of different legal standards, or in some cases the absence of a congressional directive, no standardized practice for releasing information about health care waivers has ever been developed. With respect to the annual limits waivers, no obvious bias could be found in the publicly available application materials. Moreover, the Government Accountability Office found that the waivers were granted when an application projected a significant increase in premiums or significant reduction in access to health care benefits and not based on organizations factors (e.g., being a union).

In the wake of accounting scandals involving the Federal Home Loan Mortgage Corporation (Freddie Mac) and its sister organization the Federal National Mortgage Association (Fannie Mae) and, more recently, with various housing problems beginning with the subprime mortgage crisis, Congress has launched efforts concerning the oversight of Freddie Mac and Fannie Mae. Legislative efforts to increase the oversight of these two entities are still pending. The Department of the Treasury may assert that it has the power to regulate Fannie and Freddie's debt issuances more strongly than it has in the past. According to these reports, the Treasury Department would trace this authority to language in Fannie's and Freddie's charters. The Fannie Mae charter provides Fannie Mae the authority to issue obligations "upon the approval of the Secretary of the Treasury, and have outstanding at any one time obligations having such maturities and bearing such rate or rates of interest as may be determined by [Fannie Mae] with the approval of the Secretary of the Treasury." The Treasury Secretary has the same authority over Freddie Mac's securities issuances. The Treasury Secretary has traditionally, although not exclusively, exercised the approval authority with regard to Fannie's and Freddie's debt issuances—not to prevent them from issuing such debt but, rather, to time such issuances so that they do not conflict with the Department of the Treasury's own debt issuances. In other words, the Department of the Treasury has traditionally acted as a "traffic cop" with regard to Fannie and Freddie debt issuances as part of an overall effort to coordinate the federal government's debt issuances. As mentioned above, however, reports have circulated that the Treasury Department may seek to exercise its approval authority to regulate the amount of debt that Fannie and Freddie can issue. The Supreme Court held in Chevron, Inc. v. Natural Resources Defense Council that courts should defer to a reasonable agency interpretation of an ambiguous statute that the agency is charged with administering. Later cases have clarified the scope of Chevron . For example, the Chevron deference is available only to interpretations of an agency to which Congress has delegated the authority to make "rules carrying the force of law." Generally, then, Chevron deference is warranted for agency interpretations after formal adjudication or notice-and-comment rulemaking. Actions pursuant to less formal interpretations are "entitled to respect" under an earlier case, Skidmore v. Swift Co. Because it is not clear how, or even if, the Treasury Department will issue an interpretation, this report analyzes the strength of the Treasury Department's reported proposed interpretation under both Chevron and Skidmore. Chevron analysis requires a two-step inquiry. First, the court must ask if the statute is ambiguous. If not, then the court simply rules according to the clear meaning of the statute. However, if the statute is ambiguous, the court must determine whether the agency's interpretation is reasonable. If the interpretation is reasonable, the court must then defer to that interpretation. Here, it would seem that the analysis would end after the first prong. The statute is not ambiguous; it vests approval authority in the Secretary of the Treasury. The language in both statutes clearly gives the Treasury Secretary approval authority over Fannie's and Freddie's debt issuances. There appears to be nothing in the statutory language to suggest that this approval authority is limited to the "traffic cop" role through which the Secretary has traditionally exercised this power. The statutory language in both Fannie Mae's and Freddie Mac's charters conditions the issuance of debt obligations upon the approval of the Secretary of the Treasury. The power to approve seems clearly to imply the concomitant power to disapprove . Indeed, the power to approve would be no power at all if an agency did not have the ability to withhold that approval. There is one notable Supreme Court case where the Court, faced with clear statutory language, used superceding congressional and agency action to find ambiguity under the first Chevron prong. In FDA v. Brown & Williamson Tobacco Corp. , the FDA had interpreted its statutory mandate to regulate "drugs" and "devices" to give the agency the power to regulate tobacco. The Supreme Court, however, looked at the FDA's long history of disclaiming authority over tobacco and the fact that Congress had legislatively addressed tobacco regulation separately six times to find a congressional intent contrary to the agency's proposed interpretation. There appears to be no such history here which would force a reviewing court to look beyond the language of the statute. Congress has passed no legislation evincing a different congressional intent from what the language indicates. Further, Congress has not created a separate regulatory scheme for the regulation of Fannie's and Freddie's debt issuances. Moreover, unlike the FDA in Brown & Williamson , the Treasury Department has never disclaimed or receded from its authority to regulate in this area. Although the department has not generally exercised this authority to stop Fannie and Freddie from issuing debt, the statutory authority to do so remains. Given that the Treasury Department has this authority, there appears to be nothing to prevent the department from exercising it in a different way. As the Supreme Court has held, agencies must be allowed to "adapt their rules and policies to the demands of changing circumstances." Although it seems doubtful that a court using the Chevron analysis would even get to the second prong of that analysis, the Treasury Department's reported proposed exercise of authority would very likely be legal under Chevron ' s second prong. Under this highly deferential prong, a court must accept an agency's interpretation so long as that interpretation is reasonable, whether or not the court agrees with it. For the same reasons discussed above, it appears difficult to imagine bases upon which a court would find the Treasury Department's reported proposed interpretation here to be unreasonable. If Congress had wanted to limit the Treasury Department's approval authority, Congress could have done so. Because Congress chose instead to use broad language in describing Treasury's authority, it follows that a broad interpretation of that authority would likely be judged to be reasonable. Although Chevron requires a court to defer to an agency interpretation of an ambiguous statute, so long as the interpretation is reasonable, an agency interpretation under Skidmore is merely guidance. The weight of the agency's interpretation depends upon a variety of contextual factors, including the thoroughness evident in the agency's consideration of the interpretation, the validity of its reasoning, its consistency with earlier and later pronouncements, "and all those factors which give it power to persuade, if lacking power to control." In essence, under the Skidmore analysis, the court will determine the statute's meaning, merely taking into account the agency's interpretation as one tool among the many statutory interpretation tools used by courts—unless the agency can convince the court that the agency has some special body of knowledge warranting greater deference. One of the most basic premises of statutory construction is that the statutory language itself should be the initial touchstone for analysis. The Supreme Court has consistently stated that "the meaning of the statute must, in the first instance, be sought in the language in which the act is framed, and if that is plain ... the sole function of the courts is to enforce it according to its terms." As mentioned above, the statutory language at issue here unambiguously grants approval power to the Secretary of the Treasury without any qualifying language limiting the exercise of this power in any way. Further, as the Supreme Court has stated, "legislative history is irrelevant to the interpretation of an unambiguous statute." Although the general rule is that extrinsic aids such as legislative history are only to be used when a statute is unclear and ambiguous, there appears to be no rule that forbids a court from examining legislative history of clear language. Courts have on occasion allowed the admission of legislative history to interpret unambiguous statutes if that history clearly expresses a legislative intent contrary to the language. It is important, then, to examine the legislative history and see if it points strongly against the interpretation that the language appears to command. Fannie Mae has been authorized to issue obligations since 1934. However, it was not until 1954, when Congress re-chartered Fannie Mae as a mixed government and private sector entity, that Congress inserted into Fannie Mae's charter the aforementioned language conditioning the issuance of debt obligations on the Secretary of the Treasury's approval. Although the legislative history is silent as to why the Secretary of the Treasury was given this authority or how Congress expected him to use it, the clear language suggests that the power is a broad one. The statutory language indicates a broad authority vested in the Secretary of the Treasury to regulate Fannie Mae's debt issuances. However, the Secretary has generally used this power not to disapprove of proposed issuances but, rather, to coordinate these issuances so as not to conflict with the Treasury Department's debt issuances. One House committee had this in mind in 1989 when Congress gave Freddie Mac powers similar to those held by Fannie Mae to issue debt. Although the House report that accompanied that legislation stated that one of the overarching purposes of the statute was to give Freddie Mac powers and authority parallel to those enjoyed by Fannie Mae, Part III of the House Report, submitted by the Committee on Banking, Housing, and Urban Affairs, also offered a very different picture of how the committee expected the Secretary of the Treasury to exercise the approval authority: The title also grants the Secretary of the Treasury certain approval authorities over [Freddie Mac's] issuance of unsecured debt obligations and mortgage-related securities. Treasury already possesses such powers over [Fannie Mae] ... The Committee intends that the Treasury shall use these powers solely to ensure that [Freddie Mac's] financing activities are conducted in a way that promotes [Freddie Mac's] statutory purpose. In fulfilling this responsibility, and as is the case with [Fannie Mae], the Committee expects that Treasury will function largely as a " traffic cop " to assure that securities issued or guaranteed by [Freddie Mac] are marketed in an orderly way in appropriate coordination with the financing activities of the Treasury and other government-sponsored enterprises (GSEs) [Emphasis added]. At first glance, it appears possible that Congress had a different intent in mind when it granted this approval authority to the Secretary of the Treasury. Put simply, although the statutory language concerning the Treasury Secretary's authority here is clear, one could argue that Congress's understanding of that authority may have changed between the time that it was granted over Fannie Mae and when it was granted to Freddie Mac, because of the way that the Department of the Treasury had traditionally chosen to exercise this authority. For a variety of reasons, however, the above-quoted report language from 1989 would not likely be enough to convince a court that the Secretary of the Treasury's power is limited here. First and foremost, the language represents the opinion of one committee, not the entire Congress. The Supreme Court has made it clear that a committee's direction cannot be equated with a statute passed by Congress. Under the Constitution, federal statutes must pass both Houses of Congress and be signed by the President to have legal effect. As the Supreme Court has stated, "unenacted approvals, beliefs, and desires are not laws." This is not to suggest that committee reports are not important interpretive tools. On the contrary, these reports are among courts' favorite sources of interpretation. Such sources, however, cannot be divorced from the statutory language. "Courts have no authority to enforce [a] principle gleaned solely from legislative history that has no statutory reference point." In this case, Congress could have chosen to enact language explicitly limiting the Treasury Secretary's authority to the "traffic cop" function described above. Congress chose not to do so, however. Even if the report language were to be given greater weight, however, the language itself does not evince an intent completely to constrain the Treasury Secretary's authority. The language describes an expectation that, concerning securities and debt issuances, the department would function " largely as a 'traffic cop.'" This use of the word " largely, " as opposed to " only ," suggests that there are other, unenumerated ways in which Treasury could exercise that authority. Consequently, the legislative history does not provide a clear Congressional intent that courts should depart from the clear statutory language. In addition to the clear language, as mentioned above, a reviewing court using the Skidmore analysis would give weight to the Treasury Department's opinion that the Treasury Secretary possesses the power to regulate debt issuances by Fannie and Freddie. The likely final result under the Skidmore analysis, then, appears to be the same as that under Chevron deference.

The Department of the Treasury is developing a more formalized approach for approving Fannie Mae's and Freddie Mac's debt issuances. Although the Department of the Treasury has traditionally used its approval authority merely to coordinate the timing of debt issuances, the department may seek to regulate the amount of debt that Fannie Mae and Freddie Mac may issue. This report analyzes the Department of the Treasury's legal authority over Fannie Mae and Freddie Mac and concludes that a court would likely hold that the department possesses the power to regulate the amount of debt issued by these two organizations.

The total number of incidents involving incomplete inactivation that occurred from 2003 through 2015 is unknown for three reasons: (1) the inability to easily identify incidents involving incomplete inactivation in incident databases; (2) the absence of reporting requirements for pathogens that are not select agents; and (3) the absence of a clear, consistent definition of inactivation. First, we found that the Select Agent Program and NIH do not have the ability to easily identify incidents involving incomplete inactivation because their incident reporting forms are not structured to specifically identify this type of incident. As a result, neither the Select Agent Program nor NIH (for the oversight of recombinant pathogens) was able to provide us with an accurate number of all incidents involving incomplete inactivation that occurred from 2003 through 2015. We identified additional incidents that the Select Agent Program and NIH did not initially identify. Second, we found that federal incident reporting, in general, is required only for (1) incidents that involve select agents, which are reportable to the Select Agent Program, and (2) incidents that involve recombinant pathogens, which are reportable to NIH. Thus, incidents involving incomplete inactivation of pathogens that are neither select agents nor recombinant pathogens, such as West Nile virus or the bacteria that causes tuberculosis, are generally not required to be reported to any federal agency. Third, we found that there is currently no clear and consistent definition of inactivation in guidance or regulations issued by the Select Agent Program and NIH. As a result, researchers may not consistently define inactivation, which potentially affects how and when they report incidents involving incomplete inactivation. Moreover, experts at our meeting noted that this can make it difficult to understand when an incident occurs. These experts stated that there is a need for a clear, consistent definition of inactivation across key federal guidance documents, and our past work has also shown that the use of standardized definitions is key to ensuring that information is reported consistently. Without the ability to easily identify incidents involving incomplete inactivation on reporting forms, the Select Agent Program and NIH are unable to easily search their respective databases to determine the frequency and causes of incidents related to the pathogens they regulate. In addition, without a clear and consistent definition of inactivation across key federal guidance, researchers may not know when to include incomplete inactivation in an incident report, potentially affecting the number of incidents reported. We concluded that, collectively, these issues prevent the Select Agent Program and NIH from knowing the extent to which incomplete inactivation occurs and whether incidents are properly identified, analyzed, and addressed. Not knowing the magnitude of the problem may inhibit agencies’ ability to achieve program missions of investigating any incidents in which noncompliance may have occurred. In our report, we recommended that the agencies develop clear definitions of inactivation for use within their respective guidance documents. We also recommended that they revise reporting forms to help identify when incidents involving incomplete inactivation occur and analyze the information reported to help identify the causes of incomplete inactivation to mitigate the risk of future incidents. HHS and USDA agreed with our recommendations and noted steps they were taking to address them. For example, CDC and APHIS are proposing revisions to the select agent regulations to include a definition of inactivation and are planning to update their reporting forms. Several challenges affect the implementation of inactivation in high- containment laboratories, including (1) limited scientific information for developing and implementing inactivation protocols, (2) limited federal guidance for developing inactivation protocols, (3) inconsistent implementation of safeguards to help ensure inactivation is properly conducted, and (4) varied documentation requirements for shipping inactivated material. Experts in our meeting stated that such challenges may affect laboratories’ ability to mitigate the risk of incomplete inactivation. First, we found that insufficient scientific information exists for developing and implementing inactivation protocols. This could result in incomplete inactivation, according to peer-reviewed literature and our group of experts. Examples of insufficient scientific information include a lack of understanding about (1) mechanisms of inactivation, (2) the ability of some pathogens to repair themselves after inactivation, and (3) viability testing (a procedure to determine the extent to which viable pathogens remain in a sample after an inactivation process). Second, we found that federal guidance for developing and validating inactivation protocols is limited. Major sources for technical guidance that researchers commonly use—such as NIH guidelines and Select Agent Program guidance—provide little detailed information on development and validation of inactivation protocols. In lieu of guidance, we found that researchers in laboratories we visited often developed inactivation protocols at a laboratory level and that protocols sometimes varied within the same department, agency, or laboratory, which may increase the risk of incomplete inactivation. We concluded that without more comprehensive and consistent federal guidance on the development and validation of inactivation protocols, protocols will vary in their scientific soundness and effectiveness, increasing the risk that inactivation may not be achieved. Third, we found that the high-containment laboratories that we visited did not consistently apply safeguards when conducting inactivation, and there is limited federal guidance on doing so. Examples of safeguards that were inconsistently applied at these laboratories included conducting viability testing following inactivation procedures, implementing verification mechanisms to ensure inactivation protocols are followed, and sharing lessons learned. Fourth, according to experts from our meeting, documenting the shipment of inactivated pathogens provides an important safeguard if the pathogen is determined to be still viable and needs to be destroyed to prevent potential exposures or release. However, we found through our review of agency documents and interviews with agency officials that laboratories vary in their documentation requirements for shipping inactivated pathogens. Without guidance for documenting the shipment of inactivated pathogens, laboratories are at risk of being unable to locate shipped pathogens in a timely manner, which is important if material thought to be inactivated is determined to still be viable. In our report, we recommended that the agencies take several steps to address these findings. First, we recommended that the Secretaries of Health and Human Services and Agriculture coordinate research efforts and take actions to help close gaps in the science of inactivation and viability testing. Second, we recommended that the agencies create comprehensive and consistent guidance for the development, validation, and implementation of inactivation protocols, including the application of safeguards. Third, we recommended that guidance on documenting the shipment of inactivated material be developed. HHS and USDA agreed with these recommendations and described steps they are taking to address them. For example, HHS and USDA stated that they are developing a federally supported program to improve laboratory biological safety that will include examination of gaps related to inactivation. In addition, for the Select Agent Program the agencies said they plan to develop guidance to assist with the development and implementation of inactivation protocols and viability testing. The two agencies that comprise the Select Agent Program—CDC and APHIS—did not consistently refer incidents involving incomplete inactivation for further investigation and enforcement to the HHS Office of Inspector General or APHIS’s Investigative and Enforcement Services. For example, the CDC component of the program referred a number of incidents involving incomplete inactivation that it investigated at high- containment laboratories between 2004 and 2015 to the Office of Inspector General. In contrast, the APHIS component of the program investigated two 2014 incidents at CDC laboratories involving incomplete inactivation that it did not refer to its Investigative and Enforcement Services. We found that it was unclear why some incidents were referred and enforced and not others. According to an interagency memorandum of understanding regarding the Select Agent Program, CDC and APHIS should maintain consistency in the application and enforcement of the select agent and toxin regulations. We found, however, that CDC and APHIS did not use the same set of criteria for referring violations for investigation by the HHS Office of Inspector General or APHIS’s Investigative and Enforcement Services. Moreover, they did not clearly document the bases for referring or not referring violations. In addition, it was unclear why the Select Agent Program took certain administrative actions, such as revoking or suspending an entity’s registration to possess select agents or requiring a corrective action plan, in response to some violations and not others. The Select Agent Program recently took some steps to increase consistency in the application and enforcement of the select agent regulations. However, the extent to which these steps will improve the understanding and transparency of the program’s enforcement is not yet clear. Without consistent criteria and documentation of decisions for referring violations and enforcing regulations related to incidents involving incomplete inactivation, the Select Agent Program will not have reasonable assurance that its regulatory approach to overseeing high-containment laboratories is applied consistently. In our report, we recommended that CDC and APHIS develop and implement consistent criteria and documentation requirements for referring violations to investigative entities and enforcing regulations related to incidents involving incomplete inactivation. HHS and USDA agreed with this recommendation and described steps they recently took, or are planning to take, to increase consistency in the application and enforcement of the select agent regulations. For example, they said that for the Select Agent Program they have developed a draft document that provides guidance on when to refer violations and options for enforcement actions but they did not provide a time frame for finalizing and implementing the draft document. In conclusion, these inconsistencies, in conjunction with our past work, also raise larger questions about the potential limitations of the Select Agent Program as a whole to effectively and independently oversee high- containment laboratories, both within HHS and across other federal agencies. Select Agent Program officials and an expert from our group noted that the Select Agent Program is independent in its oversight of HHS labs since it organizationally exists in a separate part of the department from the HHS agencies that have high-containment laboratories. However, as we have noted in our prior work, existing federal oversight of high-containment laboratories is fragmented and largely self-policing, raising questions about whether the government framework and oversight are adequate. Chairman Murphy, Ranking Member DeGette, and Members of the Subcommittee, this concludes our prepared statement. We would be pleased to respond to any questions that you may have at this time. For further information on this testimony, please contact Timothy M. Persons, Chief Scientist, at (202) 512-6522 or personst@gao.gov or John Neumann, Director, Natural Resources and Environment, at (202) 512-3841 or neumannj@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. Key contributors to this testimony include Mary Denigan- Macauley (Assistant Director), Sushil Sharma (Assistant Director), Amy Bowser, Caitlin Dardenne, Ashley Grant, Lesley Rinner, and Paola Tena. This is a work of the U.S. government and is not subject to copyright protection in the United States. The published product may be reproduced and distributed in its entirety without further permission from GAO. However, because this work may contain copyrighted images or other material, permission from the copyright holder may be necessary if you wish to reproduce this material separately.

This testimony summarizes the information contained in GAO's September 2016 report, entitled ( GAO-16-642 ). or John Neumann at (202) 512-3841 or neumannj@gao.gov . The total number of incidents involving incomplete inactivation--a process to destroy the hazardous effects of pathogens while retaining characteristics for future use--that occurred from 2003 through 2015 is unknown for several reasons. One key reason is that the Select Agent Program--operated by the Departments of Health and Human Services (HHS) and Agriculture (USDA) to oversee certain dangerous pathogens, known as select agents--does not require laboratories to identify such incidents on reporting forms. According to the program, 10 incidents occurred from 2003 through 2015. However, GAO identified an additional 11 incidents that the program did not initially identify. Because the program cannot easily identify incidents involving incomplete inactivation, it does not know the frequency or reason they occur, making it difficult to develop guidance to help mitigate future incidents. The 21 identified incidents involved a variety of pathogens and laboratories, as shown below. Several challenges affect the implementation of inactivation in high-containment laboratories, including gaps in scientific knowledge and limited guidance. For example, there is limited federal guidance for researchers on the development and validation of inactivation protocols. Validation helps ensure protocols are scientifically sound and produce consistent results. Due to limited guidance, laboratories varied in their interpretation of validated methods of inactivation, resulting in researchers applying differing levels of rigor. Without more comprehensive guidance, as called for by experts, protocols will vary in their scientific soundness, increasing the risk of incomplete inactivation. The Select Agent Program did not consistently refer incidents involving incomplete inactivation for further investigation and enforcement for violations of select agent regulations. For example, the program referred incidents involving incomplete inactivation at various laboratories, but did not refer two incidents in 2014 that occurred at HHS. A memorandum of understanding between HHS and USDA states that the program should handle incidents consistently. GAO found, however, that the program does not have a consistent, written set of criteria for handling incidents. Without such criteria, the program risks inconsistent enforcement of select agent regulations. This further highlights GAO's previous finding that existing federal oversight of high-containment laboratories is fragmented and self-policing.

The Veterans Benefits Administration (VBA) within VA administers the disability compensation and pension programs, whereby VA claims processing staff assess veterans’ applications for disability compensation and pension benefits. Aside from benefits for veterans, VBA claims processing staff make eligibility determinations for deceased veterans’ spouses, children, and parents. In short, they are responsible for ensuring that the decisions that lead to paying disability compensation and pension benefits are timely, accurate, and consistent. The VA disability claims process involves multiple steps and usually involves more than one claims processor. When a veteran submits a claim to one of VBA’s 57 regional offices, staff in that office are responsible for obtaining evidence to evaluate the claim, such as medical and military service records; determining whether the claimant is eligible for benefits; and assigning a disability rating specifying the severity of each of the veteran’s impairments. These ratings determine the amount of benefits eligible veterans will receive. VA has faced questions about the timeliness, accuracy, and consistency of its disability decisions. GAO designated federal disability programs, including VA and other programs, as a high-risk area in 2003. In particular, our prior work found VA relied on outmoded criteria for determining program eligibility that did not fully reflect advances in medicine and technology or changes in the labor market. As a result, VA’s disability program may not recognize an individual’s full potential to work. In addition, VA has seen processing times for their disability claims increase over the past several years, and inconsistencies in disability decisions across locations have raised questions about fairness and integrity. Some have suggested that VA needs to address its training and guidance related to claims processing in order to improve consistency and that it should conduct periodic evaluations of decisions to ensure the accuracy of ratings across disability categories and regions. VA has reported that some of the inconsistency in its decisions is due to complex claims, such as those involving post-traumatic stress disorder, but it has also acknowledged that the accuracy and consistency of claims decisions needs further improvement. To prepare newly hired staff to perform the tasks associated with processing disability claims, VBA has developed a highly structured, three- phase program designed to deliver standardized training. The first phase is designed to lay the foundation for future training by introducing new staff to topics such as medical terminology and the computer applications used to process and track claims. The second provides an overview of the technical aspects of claims processing, including records management, how to review medical records, and how to interpret a medical exam. The third includes a combination of classroom, on-the-job, and computer- based trainings. The second and third phases in this program are designed to both introduce new material and reinforce material from the previous phase. To help ensure that claims processing staff continually maintain their knowledge after their initial training and keep up with changing policies and procedures, VBA’s Compensation and Pension Service requires all claims processing staff to complete a minimum of 80 hours of technical training annually. This training requirement can be met through a mix of classroom instruction, electronic-based training from sources such as the Training and Performance Support System (TPSS), or guest lecturers. VBA’s regional offices have some flexibility over what courses they provide to their staff to help them meet the training requirement. These courses can cover such topics as establishing veteran status, asbestos claims development, and eye-vision issues. We found that VBA has taken some steps to strategically plan its training for claims processors in accordance with generally accepted training practices identified in our prior work. For example, VBA has taken steps to align training with the agency’s mission and goals. In 2004, VBA established an Employee Training and Learning Board (board) to, among other things, ensure that the agency’s training decisions support its strategic and business plans, goals, and objectives. Also, VBA has identified the skills and competencies needed by its claims processing staff by developing a decision tree and task analysis of the claims process. In addition, VBA has taken steps to determine the appropriate level of investment in training and to prioritize funding. The board’s responsibilities include developing an annual training budget and recommending training initiatives to the Under Secretary of Benefits. Further, we found that VBA’s training program for new claims processing staff appears well-designed, in that it conforms to adult learning principles by carefully defining all pertinent terms and concepts and providing abundant and realistic examples of claims work. However, while VBA has developed a system to collect feedback from new claims processing staff on their training, the agency does not consistently collect feedback on all of the training it provides. For example, none of the regional offices we visited consistently collected feedback on the training they conduct. Without feedback on regional office training, VBA may not be aware of how effective all of its training tools are. Moreover, both new and experienced claims processing staff we interviewed reported some issues with their training. A number of staff told us the TPSS was difficult to use, often out-of-date, and too theoretical. Some claims processing staff with more experience reported that they struggled to meet the annual training requirement because of workload pressures or that training topics were not always relevant for staff with their level of experience. VBA officials reported that they have reviewed the 80-hour training requirement to determine if it is appropriate, but they could not identify the criteria or any analysis that were used to make this determination. Identifying the right amount of training is crucial. An overly burdensome training requirement may needlessly take staff away from essential claims processing duties, while too little training could contribute to processing and quality errors. In addition to lacking a clear process for assessing the appropriateness of the 80-hour training requirement, VBA also has no policy outlining consequences for individual staff who do not complete the requirement. Because it does not hold staff accountable, VBA is missing an opportunity to clearly convey to staff the importance of managing their time to meet training requirements, as well as production and accuracy goals. In fiscal year 2008, VBA implemented a new learning management system that allows it to track the training hours completed by individual staff. Although VBA now has the capacity to monitor staff’s completion of the training requirement, the agency has not indicated any specific consequences for staff who fail to meet the requirement. VA’s performance management system for claims processors is consistent with a number of accepted practices for effective performance management systems in the public sector. For example, the elements used to evaluate individual claims processors—such as quality, productivity, and workload management—appear to be generally aligned with VBA’s organizational performance measures. Aligning individual and organizational performance measures helps staff see the connection between their daily work activities and their organization’s goals and the importance of their roles and responsibilities in helping to achieve these goals. VA also requires supervisors to provide claims processors with regular feedback on their performance, and it has actively involved its employees and other stakeholders in developing its performance management system. However, VA’s system may not be consistent with a key accepted practice—clear differentiation among staff performance levels. We have previously reported that, in order to provide meaningful distinctions in performance for experienced staff, agencies should preferably use rating systems with four or five performance categories. If staff members’ ratings are concentrated in just one or two of multiple categories, the system may not be making meaningful distinctions in performance. Systems that do not make meaningful distinctions in performance fail to give (1) employees the constructive feedback they need to improve and (2) managers the information they need to reward top performers and address performance issues. VA’s performance appraisal system has the potential to clearly differentiate among staff performance levels. Each fiscal year, regional offices give their staff a rating on each individual performance element: exceptional, fully successful, or less than fully successful. For example, a staff member might be rated exceptional on quality, fully successful on productivity, and so forth. Some elements are considered critical elements, and some are considered noncritical. Staff members are then assigned to one of five overall performance categories, ranging from unsatisfactory to outstanding, based on a formula that converts a staff member’s combination of ratings on the individual performance elements into an overall performance category (see fig. 1). However, there is evidence to suggest that the performance management system for claims processing staff may not clearly or accurately differentiate among staff’s performance. Central office officials and managers in two of the four regional offices we visited said that, under the formula for assigning overall performance categories, it is more difficult to place staff in certain overall performance categories than in others—even if staff’s performance truly does fall within that category. These managers said it is especially difficult for staff to be placed in the excellent category. In fact, at least 90 percent of all claims processors in the regional offices we visited ended up in only two of the five performance categories in fiscal year 2007: fully successful and outstanding (see fig. 2). Some managers told us that there are staff whose performance is better than fully successful but not quite outstanding, but that under VA’s formula, it is difficult for these staff to be placed in the excellent category. To be placed in the excellent category, a staff member must be rated exceptional in all the critical elements and fully successful in at least one noncritical element. However, managers told us that virtually all staff who are exceptional in the critical elements are also exceptional in the noncritical elements, and they are appropriately placed in the outstanding category. On the other hand, if a staff member is rated fully successful on just one critical element, even if all other elements are rated as exceptional, the staff member’s overall performance category falls from outstanding to fully successful. Neither VBA nor VA central office officials have examined the distribution of claims processing staff across the five overall performance categories. However, VA has acknowledged that there may be an issue with its formula, and the agency is considering changes to its performance management system designed to allow for greater differentiation in performance. Absent additional examination of the distribution of claims processors among overall performance categories, VA lacks a clear picture of whether its system is working as intended and whether any adjustments are needed. In conclusion, VA appears to have recognized the importance of developing and maintaining high performing claims processors. It needs to devote more attention, however, to ensuring that its training and performance management systems are better aligned to equip both new and experienced staff to handle a burgeoning workload. Specifically, in our May 2008 report, we recommended that VA should collect feedback from staff on training provided in the regional offices in order to assess issues such as the appropriateness of the 80-hour annual training requirement and the usefulness of TPSS. We also recommended that the agency should use information from its new learning management system to hold staff members accountable for meeting the training requirement. In addition, we recommended that VA should assess whether its performance management system is making meaningful distinctions in performance. In its comments on our May 2008 report, VA concurred with our recommendations, but it has not yet reported making any significant progress in implementing them. While hiring, training, and evaluating the performance of staff is essential, commensurate attention should be focused on reviewing and aligning disability benefits and service outcomes to today’s world. In prior work, we have noted that VA and other federal disability programs must adopt a more modern understanding of how technology and labor market changes determine an individual’s eligibility for benefits, as well as the timing and portfolio of support services they are provided. To the extent progress is made in this area, effective training and performance management systems will be of crucial importance. Moreover, the way VA’s larger workforce is distributed and aligned nationwide can also significantly impact the degree to which it succeeds in meeting the agency’s responsibilities to veterans in the future. In short, VA should seize this opportunity to think more strategically about where to best deploy its new staff and how to develop and maintain their skills. Mr. Chairman, this concludes my remarks. I would be happy to answer any questions that you or other members of the subcommittee may have. For further information, please contact Daniel Bertoni at (202) 512-7215 or bertonid@gao.gov. Also contributing to this statement were Clarita Mrena, Lorin Obler, David Forgosh, and Susan Bernstein. Veterans’ Benefits: Improved Management Would Enhance VA’s Pension Program. GAO-08-112. Washington, D.C.: February 14, 2008. Veterans’ Disability Benefits: Claims Processing Challenges Persist, while VA Continues to Take Steps to Address Them. GAO-08-473T. Washington, D.C.: February 14, 2008. Disabled Veterans’ Employment: Additional Planning, Monitoring, and Data Collection Efforts Would Improve Assistance. GAO-07-1020. Washington, D.C.: September 12, 2007. Veterans’ Benefits: Improvements Needed in the Reporting and Use of Data on the Accuracy of Disability Claims Decisions. GAO-03-1045. Washington, D.C.: September 30, 2003. Human Capital: A Guide for Assessing Strategic Training and Development Efforts in the Federal Government. GAO-03-893G. Washington, D.C.: July 2003. Results-Oriented Cultures: Creating a Clear Linkage between Individual Performance and Organizational Success. GAO-03-488. Washington D.C.: March 14, 2003. Major Management Challenges and Program Risks: Department of Veterans Affairs. GAO-03-110. Washington, D.C.: January 1, 2003. Veterans’ Benefits: Claims Processing Timeliness Performance Measures Could Be Improved. GAO-03-282. Washington, D.C.: December 19, 2002. Veterans’ Benefits: Quality Assurance for Disability Claims and Appeals Processing Can Be Further Improved. GAO-02-806. Washington, D.C.: August 16, 2002. Veterans’ Benefits: Training for Claims Processors Needs Evaluation. GAO-01-601. Washington, D.C.: May 31, 2001. Veterans Benefits Claims: Further Improvements Needed in Claims- Processing Accuracy. GAO/HEHS-99-35. Washington, D.C.: March 1, 1999. This is a work of the U.S. government and is not subject to copyright protection in the United States. The published product may be reproduced and distributed in its entirety without further permission from GAO. However, because this work may contain copyrighted images or other material, permission from the copyright holder may be necessary if you wish to reproduce this material separately.

The Department of Veterans Affairs' (VA) disability claims process has long been a subject of concern because of long waits for decisions and large backlogs of claims pending decisions. To address these issues, VA has hired almost 3,000 new claims processors since January 2007. However, adequate training and performance management are essential to developing highly competent disability claims processors and ensuring that experienced staff maintain the skills needed to issue timely, accurate, and consistent decisions. The Subcommittee on Disability Assistance and Memorial Affairs, House Veterans' Affairs Committee asked GAO to present its views on 1) VA's training for its claims processors and 2) VA's performance management of this staff. This statement is based on a May 2008 report on VA's training and performance management (GAO-08-561) and has been updated as appropriate. Training for VA disability claims processors complies with some accepted training practices, but VA does not adequately evaluate its training and may have opportunities to improve training design and implementation. VA has a highly structured, three-phase training program for new staff and an 80-hour annual training requirement for all staff. GAO found that VA has taken steps to plan this training strategically and that its training program for new staff appears well-designed and conforms to adult learning principles. However, while VA collects some feedback on training for new staff, it does not collect feedback on all the training conducted at its regional offices. Moreover, both new and experienced staff reported problems with their training. Some new staff told us a computer-based learning tool is too theoretical and often out of date. More experienced staff said they struggled to meet the annual 80-hour training requirement because of workload pressures or could not always find courses relevant given their experience level. Finally, the agency does not hold claims processors accountable for meeting the annual training requirement. VA's performance management system for claims processing staff generally conforms to accepted practices. For example, individual performance measures, such as quality and productivity, are aligned with the agency's organizational performance measures, and VA provides staff with regular performance feedback. However, the system may not clearly differentiate among staff performance levels. In each of the regional offices we visited, at least 90 percent of claims processors were placed in just two of five overall performance categories. Broad, overlapping performance categories may deprive managers of the information they need to reward top performers and address performance issues, as well as deprive staff of the feedback they need to improve

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

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

information, raising concern over issues related to privacy and confidentiality. The federal system of protections was developed largely in response to biomedical and behavioral research that caused harm to human subjects. To protect the rights and welfare of human subjects in research, the Common Rule requires organizations conducting federally supported or regulated research to establish and operate IRBs, which are, in turn, responsible for implementing federal requirements for research conducted at or supported by their institutions. IRBs are intended to provide basic protections for people enrolled in federally supported or regulated research. Most of the estimated 3,000 to 5,000 IRBs in the United States are associated with a hospital, university, or other research institution, but IRBs also exist in managed care organizations (MCO), government agencies, and as independent entities employed by the organizations conducting the research. IRBs are made up of both scientists and nonscientists. The organizations that we contacted primarily conduct health research to advance biomedical science, understand health care use, evaluate and improve health care practices, and determine patterns of disease. These organizations use health-related information on hundreds of thousands, and in some cases millions, of individuals in conducting their research. The MCOs and integrated health systems in our study use medical records data, which are generated in the course of treating patients, to conduct epidemiological research and health services research, such as outcomes and quality improvement studies. For example, one MCO, in conducting a quality improvement study, determined from its claims database whether patients with vascular disease were receiving appropriate medications and reported the findings to patients’ physicians to assist in the treatment of their patients. The pharmaceutical and biotechnology companies that we contacted also conduct health services and epidemiological research; but unlike MCOs and integrated health systems, they rely on data from other organizations for this type of research. One pharmaceutical company’s epidemiology department, for example, conducts large-scale studies using data from MCOs and health information organizations to monitor the effectiveness of drugs on certain populations. For pharmacy benefit management (PBM) firms, which administer prescription drug benefits for health insurance plans, a primary source of data is prescription information derived from prescriptions dispensed by mail or claims received from retail pharmacies. PBMs design and evaluate programs that are intended to improve the quality of care for patients who have specific diseases or risk factors while controlling total health care costs. One PBM in our study, for example, develops disease management programs; these programs depend on the ability to identify individuals with conditions, such as diabetes, that require more intensive treatment management. The health information organizations that we contacted rely solely on data from other organizations. Typically, they collect medical claims data from their clients or obtain it from publicly available sources, such as Medicare and Medicaid. They may also acquire data through employer contracts that stipulate that all the employers’ plans provide complete data to a health information organization. Examples of research projects include studies of the effects of low birth weight on costs of medical care and the effectiveness of alternative drug therapies for schizophrenia. Officials at the organizations we contacted believe that many of these studies require personally identifiable information to ensure study validity or to simply answer the study question. For longitudinal studies, researchers may need to track patients’ care over time and link events that occur during the course of treatment with their outcomes. Researchers may also need to link multiple sources of information, such as electronic databases and patient records, to compile sufficient data to answer the research question. For example, officials at one health information organization stated that without patient names or assigned patient codes, it would not have been possible to complete a number of studies, such as the effects of length-of-hospital stay on maternal and child health following delivery and patient care costs of cancer clinical trials. Some of the research conducted by the organizations we contacted must conform to the Common Rule or FDA regulations because it is either supported or regulated by the federal government. Several MCOs obtain grants from various federal agencies, including the Centers for Disease Control and Prevention; one health information organization that we contacted conducts research for federal clients, such as the Agency for Health Care Policy and Research. Some organizations that conduct both federally supported or regulated research and other types of privately funded research choose to apply the requirements uniformly to all studies involving human subjects, regardless of the source of funding. However, some other organizations that carry out both publicly and privately funded research apply the federal rules where required, often relying on IRB review at collaborators’ institutions, but do not apply the rules to their privately funded research. Pharmaceutical and biotechnology companies, for example, rely on the academic medical centers where they sponsor research to have in place procedures for informed consent and IRB review, but they do not maintain their own IRBs. Some organizations conduct certain activities that involve identifiable medical information, but they do not define these activities as research. For example, officials at several MCOs told us that they did not define records-based quality improvement activities as research, so these projects are not submitted for IRB review. But there is disagreement as to how to classify quality improvement reviews, and some organizations do submit these studies for IRB review, where they define the studies as research. Finally, at some organizations, none of the research is covered by the Common Rule or FDA regulations and no research receives IRB review. For example, one PBM in our study, which conducts research for other companies—including developing disease management programs—does not receive federal support and, thus, is not subject to the Common Rule in any of its research. While it does not have an IRB, this PBM uses external advisory boards to review its research proposals. Another type of research that for some companies does not fall under the Common Rule or FDA regulations is research that uses disease or population-related registry data. Pharmaceutical and biotechnology companies maintain such registries to monitor how a particular population responds to drugs and to better understand certain diseases. While many organizations have in place IRB review procedures, recent studies that pointed to weaknesses in the IRB system, as well as the provisions of the Common Rule itself, suggest that IRB reviews do not ensure the confidentiality of medical information used in research. While not focusing specifically on confidentiality, previous studies by GAO and by the Department of Health and Human Services (HHS) Office of Inspector General have found multiple factors that weaken institutional and federal human subjects protection efforts. In 1996, we found that IRBs faced a number of pressures that made oversight of research difficult, including the heavy workloads of and competing professional demands on members who are not paid for their IRB services. Similarly, the Inspector General found IRBs unable to cope with major changes in the research environment, concluding that they review too many studies too quickly and with too little expertise, and recommended a number of actions to improve the flexibility, accountability, training, and resources of IRBs. Under the Common Rule, IRBs are directed to approve research only after they have determined that (1) there are provisions to protect the privacy of subjects and maintain the confidentiality of data, when appropriate, and (2) research subjects are adequately informed of the extent to which their data will be kept confidential. However, according to the Director of the Office for Protection From Research Risks (OPRR), confidentiality protection is not a major thrust of the Common Rule and IRBs tend to give it less attention than other research risks because they have the flexibility to decide when it is appropriate to review confidentiality protection issues. Consistent with federal regulations, the seven IRBs that we contacted told us that they generally waive the informed consent requirements in cases involving medical records-based research. Researchers at the organizations we visited contend that it is often difficult, if not impossible, to obtain the permission of every subject whose medical records are used. As an example, the director of research at one integrated health system described a study that tracked about 30,000 patients over several years to determine hospitalization rates for asthmatic patients treated with inhaled steroids. The IRBs that we contacted told us that they routinely examine all research plans using individually identifiable medical information to determine whether the research is exempt from further review, can receive an expedited review, or requires a full review. Further, in reviewing research using individually identifiable genetic data, two of the IRBs had policies to consider additional confidentiality provisions in approving such research. The actual number of instances in which patient privacy is breached is not fully known. While there are few documented cases of privacy breaches, other reports provide evidence that such problems occur. For example, in an NIH-sponsored study, IRB chairs reported that lack of privacy and lack of confidentiality were among the most common complaints made by research subjects. Over the past 8 years, OPRR’s compliance staff has investigated several allegations involving human subjects protection violations resulting from a breach of confidentiality. In the 10 cases provided to us, complaints related both to research subject to IRB review and to research outside federal protection. In certain cases involving a breach in confidentiality, OPRR has authority to restrict an institution’s authority to conduct research that involves human subjects or to require corrective action. For example, in one investigation, a university inadvertently released the names of participants who tested HIV positive to parties outside the research project, including a local television station. In this case, OPRR required the university to take corrective measures to ensure appropriate confidentiality protections for human subjects. In response, the university revised internal systems to prevent the release of private information in the future. However, in other cases, OPRR determined that it could not take action because the research was not subject to the Common Rule and, thus, it lacked jurisdiction. For example, in a case reported in the media, OPRR staff learned of an experiment that plastic surgeons had performed on 21 patients using two different facelift operations—one on each half of the face—to see which came out better. OPRR staff learned that the study was not approved by an IRB and that the patients’ consent forms did not explain the procedures and risks associated with the experiment. In addition, the surgeons published a journal article describing their research that included before and after photographs of the patients. Because the research was performed in physician practices and was not federally supported, it fell outside the Common Rule and OPRR could take no action. Each organization that we contacted reported that it has taken one or more steps to limit access to personally identifiable information in their research. Many have limited the number of individuals who are afforded access to personally identifiable information or limited the span of time they are given access to the information, or both. Some have used encrypted or encoded identifiers to enhance the protection of research and survey subjects. Most, but not all, of the organizations have additional management practices to protect medical information, including written policies governing confidentiality. Some organizations have also instituted a number of technical measures and physical safeguards to protect the confidentiality of information. Officials from two of the companies that we contacted told us that they did not have written policies to share with us, and two other companies were unable to provide us with such documentation, although officials described several practices related to confidentiality. The organizations that did provide us with documentation appear to use similar management practices and technical measures to protect health information used in their health research, whether they generate patient records or receive them from other organizations. relevant to their studies. In addition to limiting access to certain individuals for specific purposes, some organizations have encrypted or encoded patient information. Researchers at one integrated health system, for example, work with information that has been encoded by computer programmers on the research team—the only individuals who have access to the fully identifiable data. In conducting collaborative research, the organizations that we contacted tend to use special data sets and contracting processes to protect medical information. For example, one MCO, which conducts over half of its research with government agencies and academic and research institutions, transfers data in either encrypted or anonymized form and provides detailed specifications in its contracts that limit use of the data to the specific research project and prohibit collaborators from re-identifying or transferring the data. Generally, company policies define the circumstances under which personally identifiable information may be disclosed and the penalties for unauthorized release of confidential information. Most company policies permit access only to the information that is needed to perform one’s job; 8 of the 12 organizations also require their employees to sign agreements stating that they will maintain the privacy of protected health information. Each organization that we contacted said it uses disciplinary sanctions to address employee violations of confidentiality or failure to protect medical information from accidental or unauthorized access, and an intentional breach of confidentiality could result in employee termination—which may be immediate. But they also pointed out that few employees have been terminated, and when they have, the incidents were not related to the conduct of research. The organizations that we contacted said they use a number of electronic measures to safeguard their electronic health data. Most reported using individual user authentication or personal passwords to ensure users access only the information that they need; some also use computer systems that maintain an electronic record of each employee who accesses medical data. These organizations may also use other technical information system mechanisms, including firewalls, to prevent external access to computer systems. In addition to electronic security, officials at some of the organizations told us they use various security measures to prevent unauthorized physical access to medical records-based information, including computer workstations and servers. Personally identifiable information is often an important component of research using medical records, and the companies we met with furnished many examples of useful research that could not have been conducted without it. Because our study focused on only a limited number of companies—in particular, those that were willing to share information about corporate practices—it is difficult to judge the extent to which their policies may be typical, nor do we know the extent to which their policies are followed. Nevertheless, most of the organizations we surveyed do have policies to limit and control access to medical information that identifies individuals, and many of them have adopted techniques, such as encryption and encoding, to further safeguard individual privacy. However, while reasonable safeguards may be in place in these companies, external oversight of their research is limited. Not all research is subject to outside review, and even in those cases where IRBs are involved, they are not required to give substantial attention to privacy protection. Further, in light of the problems that IRBs have had in meeting current workloads—one of the key findings of our earlier work as well as the work of HHS’ Office of Inspector General—it is not clear that the current IRB-based system could accommodate more extensive review responsibilities. In weighing the desirability of additional oversight of medical records-based research, it will be important to take account of existing constraints on the IRB system and the recommendations that have already been made for changes to that system. This concludes my prepared statement. I will be happy to respond to any questions that you or Members of the Committee may have. The first copy of each GAO report and testimony is free. Additional copies are $2 each. Orders should be sent to the following address, accompanied by a check or money order made out to the Superintendent of Documents, when necessary. VISA and MasterCard credit cards are accepted, also. Orders for 100 or more copies to be mailed to a single address are discounted 25 percent. U.S. General Accounting Office P.O. Box 37050 Washington, DC 20013 Room 1100 700 4th St. NW (corner of 4th and G Sts. NW) U.S. General Accounting Office Washington, DC Orders may also be placed by calling (202) 512-6000 or by using fax number (202) 512-6061, or TDD (202) 512-2537. Each day, GAO issues a list of newly available reports and testimony. To receive facsimile copies of the daily list or any list from the past 30 days, please call (202) 512-6000 using a touchtone phone. A recorded menu will provide information on how to obtain these lists.

Pursuant to a congressional request, GAO discussed the privacy of medical records used for health research, focusing on: (1) to what extent medical information used for research depends on personally identifiable information; (2) research that is and is not subject to current federal oversight requirements; (3) how the institutional review board (IRB) ensures the confidentiality of health information used in research; and (4) what steps organizations have taken to safeguard information. GAO noted that: (1) the survey revealed that a considerable amount of health research relies on personally identifiable information; (2) while some of this research is subject to IRB review--either because it is federally supported or regulated research or because the organization voluntarily applies federal rules to all of its research--some of the organizations conduct records-based research that is not reviewed by an IRB; (3) the process of IRB review does not ensure the confidentiality of medical information used in research--primarily because the provisions of the Common Rule related to confidentiality are limited; (4) according to recent studies, the IRB system on the whole is strained; and (5) nevertheless, although external review of their research is limited, most of the organizations in GAO's study told GAO that they have various security safeguards in place to limit internal and external access to paper and electronic databases, and many say they have taken measures to ensure the anonymity of research and survey subjects.

With the National and Community Service Trust Act of 1993 (P.L. 103-82), the Congress created the largest national and community service program since the Civilian Conservation Corps of the 1930s. AmeriCorps*USA allows participants to earn education awards to help pay for postsecondary education in exchange for performing community service that matches priorities established by the Corporation. Participants earn an education award of $4,725 for full-time service or half of that amount for part-time service. A minimum of 1,700 hours of service within a year is required to earn the full $4,725 award. The Corporation requires that programs devote some portion, but no more than 20 percent, of participants’ service hours to nondirect service activities, such as training or studying for the equivalent of a high school diploma. To earn a part-time award, a participant must perform 900 hours of community service within 2 years (or within 3 years in the case of participants who are full-time college students). Individuals can serve more than two terms; however, they can only receive two education awards. The awards, which are held in trust by the U.S. Treasury, are paid directly to qualified postsecondary institutions or student loan lenders and must be used within 7 years after service is completed. In addition to the education award, AmeriCorps*USA participants receive a living allowance stipend that is at least equal to, but no more than double, the average annual living allowance received by Volunteers in Service to America (VISTA) participants—about $7,640 for full-time participants in fiscal year 1994. Additional benefits include health insurance and child care assistance for participants who need them. Individuals can join a national service program before, during, or after postsecondary education. A participant must be a citizen, a national, or a lawful permanent resident of the United States. A participant must also be a high school graduate, agree to earn the equivalent of a high school diploma before receiving an education award, or be granted a waiver by the program. Selection of participants is not based on financial need. Corporation used about $149 million of its fiscal year 1994 appropriations to make about 300 grants to nonprofit organizations and federal, state, and local government agencies to operate AmeriCorps*USA programs. Grant recipients use grant funds to pay up to 85 percent of the cost of participants’ living allowances and benefits (up to 100 percent of child care expenses) and up to 75 percent of other program costs, including participant training, education, and uniforms; staff salaries, travel, transportation, supplies, and equipment; and program evaluation and administrative costs. Grants are based in part on the number of participants the program estimates it will enroll during the year. If participants leave the program during the year, the Corporation may either allow the program to redirect participant stipend and benefit funds to other program expenses or take back any unused portion of the grant. To ensure that federal Corporation dollars are used to leverage other resources for program support, grantees must also obtain support from non-Corporation sources to help pay for the program. This support, which can be cash or in-kind contributions, may come from other federal sources as well as state and local governments, and private sources. In-kind contributions include personnel to manage AmeriCorps*USA programs as well as to supervise and train participants; office facilities and supplies; and materials and equipment needed in the course of conducting national service projects. Consistent with AmeriCorps’s enacting legislation, some federal agencies received grants during the initial 2 program years to support AmeriCorps*USA participants who performed work furthering the agencies’ missions. Federal agency grantees could use their own resources in addition to the Corporation grant to integrate national service more fully into their mission work. the smallest share of resources, amounting to about 12 percent (or about $41 million). Most of the Corporation’s funding for AmeriCorps*USA projects went to providing operating grants and education awards. Of the Corporation’s funding, 61 percent financed operating grants. Slightly over one-quarter supported participants’ education awards, while the remainder went toward Corporation program management and administration. Most of the matching contributions AmeriCorps*USA programs received came from public as opposed to private sources. About 69 percent of all matching resources came from either a federal or a state or local government source, with the split between cash and in-kind contributions being about 43 percent (about $57 million) and 26 percent (about $34 million), respectively. The remaining 31 percent of matching resources were from private sources, with cash and in-kind contributions accounting for 17 percent (about $23 million) and 14 percent (about $18 million), respectively. In calculating resources available on a per-participant and per-service-hour basis (see table 1), we found that the average from all sources per AmeriCorps*USA participant was about $26,654 (excluding in-kind contributions from private sources). This amounted to about $16 per service hour or about $20 per direct service hour, assuming 20 percent of the 1,700 hours of total service was nondirect service time. These figures represent resources available for all program expenses and are not the equivalent of annual salaries or hourly wages for participants. National Service Programs: AmeriCorps*USA—First-Year Experience and Recent Program Initiatives Corporation for National and Community Service We calculated available resources per participant on a full-time-equivalent (FTE) basis. It is important not to equate our funding information with cost data. Because most AmeriCorps*USA programs were still implementing their first year of operations, actual cost could not be determined. Funding and in-kind contributions from sources other than the Corporation were reported to us in May 1995 as resources already received or those that program directors were certain of receiving by the end of their current operating year. Therefore, actual resource and expenditure levels could be higher or lower than indicated by the estimates reported to us. federal agency grantees had about $15,500 in cash and in-kind contributions available per participant from federal sources other than the Corporation. Non-Corporation federal funds accounted for about 50 percent of total resources available to federal grantees. Nonfederal AmeriCorps*USA grantees received resources of less than $800 per participant from non-Corporation federal sources, or about 3 percent of their total resources. The appendix contains more detailed program resource information by sponsoring agency. In its mission statement, the Corporation had identified several objectives that spanned a wide range of accomplishments, from very tangible results to those much harder to quantify. During our site visits, we observed local programs helping communities. AmeriCorps*USA has also sponsored an evaluation of its own that summarized results at a sample of programs during their first 5 months of operation and identified diverse achievements related to each service area. participants renovating inner-city housing, assisting teachers in elementary schools, maintaining and reestablishing native vegetation in a flood control area, analyzing neighborhood crime statistics to better target prevention measures, and developing a program in a community food bank for people with special dietary needs. AmeriCorps’s legislation identified renewing the spirit of community as an objective, and the program’s mission includes “strengthening the ties that bind us together as a people.” We observed several projects focused on rebuilding communities. For example, a multifamily house being renovated was formerly a congregating spot for drug dealers. Program officials believe that after completion, it will encourage other neighborhood improvements. Another team built a community farm market and renovated a municipal stadium, both of which a town official said will continue to provide economic and social benefits to the community. Another way to meet this objective was to have participants with diverse backgrounds working together. Participants of several programs we visited spanned a wide age range, from teenagers to retirees. Teams also showed diversity in educational, economic, and ethnic backgrounds. Participants said that a valuable aspect of the program was working with others with different backgrounds and benefiting from their strengths. Another of AmeriCorps*USA’s program objectives was to foster civic responsibility. We saw evidence of this at programs such as one where participants devoted half of each Friday to working on community service projects they devised and carried out independently. Participants at another program, in which they organized meetings to establish relationships between at-risk youth and elderly people, commented that this work had taught them how to organize programs, experience they believed would be helpful as they took on roles in their communities. Training periods included conflict resolution techniques and team-building skills. education or job training. At the sites we visited, participants indicated that the education award was an important part of their decision to participate in AmeriCorps*USA. Programs also supported participants in obtaining high school diplomas or the equivalent. According to Corporation regulations, a full-time participant who does not have a high school diploma or its equivalent generally must agree to earn one or the other before using the education award. In one program, a general equivalency diploma (GED) candidate was receiving classroom instruction and individual tutoring. She had recently passed the preliminary GED test after failing the GED test five times. After doing some extra preparation for the math portion, she will take the actual GED test again. A larger program that recruited at-risk youth, most of whom do not have high school diplomas, provided classroom instruction related to the service that participants performed, such as a construction-based math curriculum. Program officials said most of the participants are enrolled in high school equivalency courses and that at least five have already passed the GED test. We also saw programs that offer participants the chance to get postsecondary academic credit. One such program, affiliated with a private college, offered participants the option of pursuing an environmental studies curriculum through which they can earn up to six upper-level credits at a reduced tuition. Half of the participants have chosen to do so. A second program allowed participants to earn 36 credit hours toward an associate’s degree in the natural sciences through their service, which can lead to state certification as an environmental restoration technician. Since we reported on the program last October, both the Congress and the Corporation have implemented measures aimed at lowering AmeriCorps’s cost. On the legislative side, the Congress mandated new funding restrictions for the Corporation. On the programmatic side, the Corporation, after consulting with Members of Congress, has revised its grant guidelines. These new measures will only affect programs receiving grants for the upcoming 1996-97 program year. federal agencies ineligible to receive AmeriCorps grants. The law also requires that to the maximum extent possible, the Corporation (1) increase the amount of matching contributions provided by the private sector and (2) reduce the total federal cost per participant in AmeriCorps programs. As part of the fiscal year 1996 appropriations act, the Congress also mandated that GAO further study the Corporation’s operations. We expect to complete our study by the end of this fiscal year. In recent months, the Corporation has worked with Members of Congress to identify ways to reduce AmeriCorps’s program costs. Subsequently, the Corporation has revised its grant application guidelines for programs receiving funding in the upcoming 1996-97 program year. For example, in response to congressional concerns over the cost of mandating the purchase and use of uniforms, the AmeriCorps*USA uniform package (t-shirt, sweatshirt, button, and so on) is no longer a program requirement. The Corporation also has directed grantees exceeding a program year 1995-96 cost per participant of $13,800 to reduce their proposed program year 1996-97 per-participant costs by an overall average of 10 percent. The Corporation has also increased the grantee’s share of total program operating costs from 25 to 33 percent for grants awarded for the 1996-97 program year. The Corporation’s revised grant guidelines also seek to reduce costs by encouraging a program requesting increased funding to add additional participants, thereby reducing its cost per participant. The guidelines also encourage programs to seek additional funding only for education awards. Corporation’s words—“get things done.” Total resources available means many things. It means cash and in-kind contributions that pay participants’ living allowances, social security taxes, health insurance, child care, and the education awards they earn in exchange for their service. It means resources available to pay local program staff who manage operations and supervise staff; to pay rent for office space and purchase supplies; to pay for travel and transportation for program staff and participants; and to pay for materials needed to conduct national service projects. It means resources available to pay for planning grants used to design and formalize future national service programs. And it means resources available to pay for the staff and operations of the Corporation for National and Community Service. Our objective was not to draw conclusions about whether AmeriCorps*USA was cost-effective. Rather, it was to gather information on the total amount of resources available to AmeriCorps*USA programs nationwide and to provide this information by resource stream—that is, by federal, state, and local government and private sources. Though not precise cost data, this information illustrated the funding levels that may be needed to support new program endeavors of similar scale in the future. It also indicated the degree of partnership between the public and private sectors. Since we completed our review, the Congress and the Corporation have undertaken a number of measures that are intended to reduce the costs of AmeriCorps. Because many of these initiatives will not take effect until the upcoming 1996-97 program year, it is too early to determine their impact. Madam Chairman, that concludes my statement for the record. For more information about this testimony, please call Wayne B. Upshaw at (202) 512-7006 or Carol L. Patey at (617) 565-7575. Other major contributors to this testimony included C. Jeff Appel, Nancy K. Kintner-Meyer, and James W. Spaulding. Corporation award (adjusted) $12,071,004 $31,881,332 $3,470,008 $2,333,452 (Table notes on next page) The first copy of each GAO report and testimony is free. Additional copies are $2 each. Orders should be sent to the following address, accompanied by a check or money order made out to the Superintendent of Documents, when necessary. VISA and MasterCard credit cards are accepted, also. Orders for 100 or more copies to be mailed to a single address are discounted 25 percent. U.S. General Accounting Office P.O. Box 6015 Gaithersburg, MD 20884-6015 Room 1100 700 4th St. NW (corner of 4th and G Sts. NW) U.S. General Accounting Office Washington, DC Orders may also be placed by calling (202) 512-6000 or by using fax number (301) 258-4066, or TDD (301) 413-0006. Each day, GAO issues a list of newly available reports and testimony. To receive facsimile copies of the daily list or any list from the past 30 days, please call (202) 512-6000 using a touchtone phone. A recorded menu will provide information on how to obtain these lists.

GAO discussed the Corporation for National and Community Service's AmeriCorps*USA service program. GAO noted that: (1) for program year 1994 to 1995, the Corporation provided almost $149 million for grantee projects; (2) about 69 percent of matching project contributions came from public sources; (3) total resources available per participant, exclusive of private in-kind contributions, averaged $26,654, of which federal sources provided 74 percent, state and local governments 14 percent, and the private sector 12 percent; (4) cost data could not be determined because most AmeriCorps programs are too new; (5) total available resources for AmeriCorps*USA grantees averaged about $16 per service hour; (6) grantees' projects are designed to meet unmet human, educational, environmental, and public safety needs, strengthen communities, develop civic responsibility, and expand educational opportunities for program participants and others; and (7) to reduce government costs in the 1996-1997 program year, Congress has reduced program appropriations and prohibited federal agencies from receiving AmeriCorps grants, and the Corporation has required certain grantees to reduce proposed costs by 10 percent and all grantees to pay a higher share of program operating costs.

A health insurance exchange has been established in every state, as required by the Patient Protection and Affordable Care Act (ACA). Each exchange has two parts, a marketplace where individuals can shop for and enroll in health insurance coverage, and a small business health options program (SHOP) exchange for small employers. Some individuals are eligible to receive financial assistance for their coverage obtained through an exchange, and some small employers can obtain tax credits toward coverage purchased through a SHOP. Exchanges are not intended to supplant the private market outside of exchanges, and the ACA does not require that individuals and small businesses obtain coverage through an exchange. A state can choose to establish its own state-based exchange (SBE). If a state opts not to, or if the Department of Health and Human Services (HHS) determines that the state is not in a position to administer its own exchange, then HHS will establish and administer the exchange in the state as a federally facilitated exchange (FFE). Fourteen states and DC established SBEs in 2014, while the remaining 36 states have FFEs. There are varying levels of state involvement in FFEs. In some cases, a state has partnered with HHS to establish and administer the exchange, and in other cases HHS is administering the individual exchange while the state administers the SHOP exchange. In many states with FFEs, the exchange is wholly operated and administered by HHS. To fund the establishment of exchanges, the ACA authorizes the HHS Secretary to award grants to states through 2014. Each exchange is expected to generate its own funds to sustain its operations beginning January 1, 2015. This report provides a state-by-state breakdown of the grants awarded to date. It then briefly describes the requirement for exchanges to be self-sustaining, and concludes with a discussion of the sources and amounts of funding that HHS has used and plans to use to support FFE operations. Section 1311 of the ACA appropriated indefinite (i.e., unspecified) amounts for planning and establishment grants for health insurance exchanges. For each fiscal year, the HHS Secretary is to determine the total amount that will be made available to each state for exchange grants. Any state that intends to do exchange establishment work can apply for and receive a Section 1311 grant; for instance, a state that is not establishing an SBE may receive a grant provided the state uses the funds for activities related to exchange establishment and implementation. States have had multiple opportunities to apply for Section 1311 grants. One deadline remains for submitting an application this year (i.e., November 14). No grants will be awarded after December 31, 2014. HHS has awarded three different types of exchange grants, which are described below. Figure 1 shows the total amount of funding each state has received from the grants as well as the type of exchange (SBE or FFE) each state has in 2014. Table 1 shows the amount each state has received from the various types of grants. Exchange planning grants were given to 49 states and DC. These grants of about $1 million each were used by states to conduct the research and planning needed to determine how their exchanges would be administered and operated. Three states returned all (Florida and Louisiana) or a portion (New Hampshire) of their exchange planning grants. There are two levels of exchange establishment grants. Level one establishment grants provide up to one year of funding to states that have made some progress under their exchange planning grants. States may seek additional years of level one funding in order to meet the criteria necessary to apply for level two funds. Level two establishment grants are designed to provide funding through December 31, 2014, to states that are farther along in the establishment of an exchange. States applying for level two establishment grants must meet specific eligibility criteria regarding the structure and governance of the exchange they are developing. HHS has announced several rounds of exchange establishment grant awards, the most recent of which was on October 14, 2014. To date, 37 states and DC have received a total of approximately $4.7 billion in exchange establishment grant funding. Within that group, 14 states—California, Colorado, Connecticut, Hawaii, Kentucky, Maryland, Massachusetts, Minnesota, Nevada, New York, Oregon, Rhode Island, Vermont, and Washington—and DC have received both level one and level two funds. On February 16, 2011, HHS announced that it was awarding seven grants to help a group of "early innovator" states design and implement the information technology (IT) infrastructure needed to operate health insurance exchanges. The goal is for these states to develop exchange IT models that can be adopted and implemented by other states. Six states and a consortium of New England states received a total of $249 million in early innovator grant funding. Three states—Kansas, Oklahoma, and Wisconsin—have since returned their early innovator grants. Beginning January 1, 2015, the ACA requires that each exchange is self-sustaining. The ACA provides that an exchange may charge an assessment or user fee to participating issuers, but also allows an exchange to find other ways to generate funds to sustain its operations. A description of how each SBE intends to generate funding is currently beyond the scope of this report; however, HHS has described how it intends to generate funding for the 36 FFEs it administers. Beginning in 2014, HHS will charge a monthly user fee to all issuers that sell plans through an FFE. The fee for an issuer is equal to the product of the billable members enrolled in the plan through an FFE and a monthly user fee rate. For benefit years 2014 and 2015, the monthly user fee rate is 3.5% of the plan's monthly premium. CMS is incurring significant administrative costs supporting exchange operations. CMS operates a number of IT systems that control various FFE functions including eligibility and appeals, certification and oversight of qualified health plans, and payment and financial management. It also operates the data services hub, which routes information about exchange applicants to and from trusted data sources at other federal agencies (e.g., Internal Revenue Service) in order to verify eligibility. In addition, CMS provides consumer assistance through a call center and website for the FFEs, and it funds navigators who offer in-person support. Finally, CMS provides technical assistance to states operating SBEs. Table 2 summarizes the sources and amounts of administrative funding for exchange operations to date. This information was included in CMS's FY2015 budget submission. During the period FY2010 through FY2012, a total of $456 million was used to support exchange operations. Of that amount, $331 million came from annual discretionary appropriations that cover the routine costs of running federal agencies, including salaries and expenses: $307 million from CMS's Program Management account, and an additional $24 million from the HHS Departmental Management account. The remaining $125 million came from the Health Insurance Reform and Implementation Fund (HIRIF), a $1 billion fund within HHS that was established and funded to help pay for the administrative costs of ACA implementation. CMS's administrative costs to support exchange operations totaled $1,545 million in FY2013. In the FY2013 budget, CMS requested an increase of $1,001 million for its Program Management account for ACA implementation and other activities. However, Congress did not provide any additional discretionary funds for ACA implementation in FY2013. CMS instead used funds from other sources to help pay for ongoing administrative costs associated with exchange operations. Those funds included (1) discretionary funds transferred from other HHS accounts under the Secretary's transfer authority; (2) expired discretionary funds from the Nonrecurring Expenses Fund (NEF); (3) mandatory funds from the HIRIF; and (4) mandatory funds from the Prevention and Public Health Fund (see Table 2 ). CMS estimated that its FY2014 administrative costs for exchange operations would total $1,390 million. The agency requested an increase of $1,397 million for its Program Management account in the FY2014 budget for ACA implementation and other activities. But, as in FY2013, Congress chose not to give CMS any additional funding. Once again, the agency relied on transferred departmental funds as well as NEF and HIRIF funding to help support exchange operations in FY2014. In addition, CMS projected that it would collect an estimated $200 million in FFE user fees in FY2014 (see Table 2 ). The President's FY2015 budget includes a total of $1,788 for exchange operations. Of that amount, $629 million is from CMS's Program Management account, and the remaining $1,159 million is projected to come from FFE user fees. The FY2015 budget does not identify any other sources of funding to support exchange operations (see Table 2 ). CMS has requested an increase of $227 million for its Program Management account in FY2015 for ACA implementation and other activities. The Center for Consumer Information and Insurance Oversight (CCIIO) at CMS is responsible for implementing ACA's private health insurance reforms and administering the grant programs discussed above. Detailed information on the grants, including funding opportunity announcements, guidance, news releases, and amounts awarded, is available on CCIIO's website.

Pursuant to the Patient Protection and Affordable Care Act (ACA, P.L. 111-148, as amended), a health insurance exchange has been established in each state and the District of Columbia (DC). Exchanges are marketplaces where individuals and small businesses can "shop" for health insurance coverage. The ACA instructed each state to establish its own state-based exchange (SBE). If a state elected not to create an exchange or if the Secretary of Health and Human Services (HHS) determined a state was not prepared to operate an exchange, the law directed HHS to establish a federally facilitated exchange (FFE) in the state. Fourteen states and DC established SBEs in 2014, while the remaining 36 states have FFEs. In some states that have FFEs, the states carry out certain functions of the exchange; in other states, the exchange is wholly operated and administered by HHS. The ACA provided an indefinite appropriation for HHS grants to states to support the planning and establishment of exchanges. For each fiscal year, the HHS Secretary is to determine the total amount that will be made available to each state for exchange grants. No grant may be awarded after January 1, 2015. There are three different types of exchange grants. First, planning grants were awarded to 49 states and DC. These grants of about $1 million each were intended to provide resources to states to help them plan their health insurance exchanges. Second, there have been multiple rounds of exchange establishment grants. There are two levels of exchange establishment grants: level one establishment grants are awarded to states that have made some progress using their planning funds, and level two establishment grants are designed to provide funding to states that are farther along in the establishment of an exchange. Finally, HHS awarded seven early innovator grants to states (including one award to a consortium of New England states) to support the design and implementation of the information technology systems needed to operate the exchanges. To date, HHS has awarded a total of more than $4.8 billion to states and DC in planning, establishment, and early innovator grants. Under the ACA, each exchange is expected to be self-sustaining beginning January 1, 2015. The law authorizes exchanges to generate funding to sustain their operations, including by assessing fees on participating health insurance issuers. To raise funds for each of the FFEs, beginning in 2014, HHS is assessing a monthly fee on each health insurance issuer that offers plans through an FFE. The Centers for Medicare & Medicaid Services (CMS) is incurring significant administrative costs to support FFE operations. According to CMS, a total of $456 million was used to support exchange operations over the period FY2010-FY2012. CMS spent $1,545 million on exchange operations in FY2013 and an estimated $1,390 million in FY2014. The agency has relied on a mix of annual discretionary appropriations and funding from other sources for these expenditures. Those sources include expired discretionary funds from the Nonrecurring Expenses Fund, mandatory funding from the Health Insurance Reform Implementation Fund and the Prevention and Public Health Fund, and FFE user fees. CMS has budgeted $1.8 billion for exchange operations in FY2015. Most of that funding is projected to come from FFE user fees.

On January 14, 2004, the President articulated a new vision for space exploration for NASA. Part of the Vision includes the goal of retiring the space shuttle following completion of the International Space Station (ISS), planned for the end of the decade. In addition, NASA plans to begin developing a new manned exploration vehicle, or CEV, to replace the space shuttle and return humans to the moon as early as 2015, but no later than 2020, in preparation for more ambitious future missions. As this Subcommittee is aware, NASA’s Administrator has recently expressed his desire to accelerate the CEV development to eliminate the gap between the end of the Space Shuttle Program, currently scheduled for 2010, and the first manned operational flight of the CEV, currently scheduled for 2014. If the CEV development cannot be accelerated, NASA will not be able to launch astronauts into space for several years and will likely have to rely on Russia for transportation to and from the ISS. A 1996 “Balance Agreement” between NASA and the Russian space agency, obligated Russia to provide 11 Soyuz spacecraft for crew rotation of U.S. and Russia crews. After April 2006, this agreement will be fulfilled and Russia no longer must allocate any of the seats on its Soyuzes for U.S. astronauts. Russian officials have indicated that they will no longer provide crew return services to NASA at no cost at that time. However, NASA may face challenges to compensating Russia for seats on its Soyuzes after the agreement is fulfilled due to restrictions in the Iran Nonproliferation Act. The space shuttle, NASA’s largest individual program, is an essential element of NASA’s ability to implement the Vision because it is the only launch system presently capable of transporting the remaining components necessary to complete assembly of the ISS. NASA projects that it will need to conduct an estimated 28 flights over the next 5 to 6 years to complete assembly of and provide logistical support to the ISS. However, NASA is currently examining alternative ISS configurations to meet the goals of the Vision and satisfy NASA’s international partners, while requiring as few space shuttle flights as possible to complete assembly. Prior to retiring the space shuttle, NASA will need to first return the space shuttle safely to flight and execute whatever number of remaining missions are needed to complete assembly of and provide support for the ISS. At the same time, NASA will begin the process of closing out or transitioning its space shuttle assets that are no longer needed to support the program —such as its workforce, hardware, and facilities—to other NASA programs. The process of closing out or transitioning the program’s assets will extend well beyond the space shuttle’s final flight (see fig. 1). The planning window for the first flight is July 13 through July 31, 2005. Retiring the space shuttle and, in the larger context, implementing the Vision, will require that the Space Shuttle Program rely on its most important asset—its workforce. The space shuttle workforce consists of about 2,000 civil service and 15,600 contractor personnel, including a large number of engineers and scientists. While each of the NASA centers support the Space Shuttle Program to some degree, the vast majority of this workforce is located at three of NASA’s Space Operations Centers: Johnson Space Center, Kennedy Space Center, and Marshall Space Flight Center. Data provided by NASA shows that approximately one quarter of the workforce at its Space Operations centers is 51 years or older and about 33 percent will be eligible for retirement by fiscal year 2012. The space shuttle workforce and NASA’s human capital management have been the subject of many GAO and other reviews in the past that have highlighted various challenges to maintaining NASA’s science and engineering workforce. In addition, over the past few years, GAO and others in the federal government have underscored the importance of human capital management and strategic workforce planning. In response to an increased governmentwide focus on strategic human capital management, NASA has taken several steps to improve its human capital management. These include steps such as devising an agencywide strategic human capital plan, developing workforce analysis tools to assist in identifying critical skills needs, and requesting and receiving additional human capital flexibilities. NASA has made only limited progress toward developing a detailed long- term strategy for sustaining its workforce through the space shuttle’s retirement. While NASA recognizes the importance of having in place a strategy for sustaining a critically skilled workforce to support space shuttle operations, it has only taken preliminary steps to do so. For example, the program identified lessons-learned from the retirement of programs comparable to the space shuttle, such as the Air Force Titan IV Rocket Program. Among other things, the lessons learned reports highlight the practices used by other programs when making personnel decisions, such as the importance of developing transition strategies and early retention planning. Other efforts have been initiated or are planned; examples include the following: contracted with the National Academy of Public Administration to assist it in planning for the space shuttle’s retirement and transitioning to future programs and began devising an acquisition strategy for updating propulsion system prime contracts at MSFC to take into account the Vision’s goal of retiring the space shuttle following completion of the ISS. NASA’s prime contractor for space shuttle operations, USA, has also taken some preliminary steps, but its progress with these efforts depends on NASA making decisions that impact contractor requirements through the remainder of the program. For example, USA has begun to define its critical skills needs to continue supporting the Space Shuttle Program, devised a communication plan, contracted with a human capital consulting firm to conduct a comprehensive study of its workforce; and continued to monitor indicators of employee morale and workforce stability. Contractor officials said that further efforts to prepare for the space shuttle’s retirement and its impact on their workforce are on hold until NASA first makes decisions that impact the space shuttle’s remaining number of flights and thus the time frames for retiring the program and transitioning its assets. Making progress toward developing a detailed strategy for sustaining a critically skilled space shuttle workforce through the program’s retirement is important given the impact that workforce problems could have on NASA-wide goals. According to NASA officials, if the Space Shuttle Program faces difficulties in sustaining the necessary workforce, NASA- wide goals, such as implementing the Vision and proceeding with space exploration activities, could be impacted. For example, workforce problems could lead to a delay in flight certification for the space shuttle, which could result in a delay to the program’s overall flight schedule, thus compromising the goal of completing assembly of the ISS by 2010. In addition, officials said that space exploration activities could slip as much as 1 year for each year that the space shuttle’s operations are extended because NASA’s progress with these activities relies on funding and assets that are expected to be transferred from the Space Shuttle Program to other NASA programs. NASA officials told us they expect to face various challenges in sustaining the critically skilled space shuttle workforce. These challenges include the following: Retaining the current workforce. Because many in the current workforce will want to participate in or will be needed to support future phases of implementing the Vision, it may be difficult to retain them in the Space Shuttle Program. In addition, it may be difficult to provide certain employees with a transition path from the Space Shuttle Program to future programs following retirement. Impact on the prime contractor for space shuttle operations. Because USA was established specifically to perform ground and flight operations for the Space Shuttle Program, its future following the space shuttle’s retirement is uncertain. Contractor officials stated that a lack of long-term job security would cause difficulties in recruiting and retaining employees to continue supporting the space shuttle as it nears retirement. In addition, steps that the contractor may have to take to retain its workforce, such as paying retention bonuses, are likely to require funding above normal levels. Governmentwide budgetary constraints. Throughout the process of retiring the space shuttle, NASA, like other federal agencies, will have to contend with urgent challenges facing the federal budget that will put pressure on discretionary spending—such as investments in space programs—and require NASA to do more with fewer resources. While the Space Shuttle Program is still in the early stages of planning for the program’s retirement, its development of a detailed long-term strategy to sustain its future workforce is being hampered by several factors: Near-term focus on returning the space shuttle to flight. Since the Space Shuttle Columbia accident, the program has been focused on its near-term goal of returning the space shuttle safely to flight. While this focus is understandable given the importance of the space shuttle’s role in completing assembly of the ISS, it has led to the delay of efforts to determine future workforce needs. Uncertainties with respect to implementing the Vision. While the Vision has provided the Space Shuttle Program with the goal of retiring the program by 2010 upon completion of the ISS, the program lacks well-defined objectives or goals on which to base its workforce planning efforts. For example, NASA has not yet determined the final configuration of the ISS, the final number of flights for the space shuttle, how ISS operations will be supported after the space shuttle is retired, or the type of vehicle that will be used for space exploration. These determinations are important because they impact decisions about the transition of space shuttle assets. Lacking this information, NASA officials have said that their ability to progress with detailed long-term workforce planning is limited. Despite these uncertainties, the Space Shuttle Program could follow a strategic human capital management approach to plan for sustaining its critically skilled workforce. Studies by several organizations, including GAO, have shown that successful organizations in both the public and private sectors follow a strategic human capital management approach, even when faced with an uncertain future environment. In our March 2005 report, we made recommendations aimed at better positioning NASA to sustain a critically skilled space shuttle workforce through retirement. In particular, we recommended that the agency begin identifying the Space Shuttle Program’s future workforce needs based upon various future scenarios the program could face. Scenario planning can allow the agency to progress with workforce planning, even when faced with uncertainties such as those surrounding the final number of space shuttle flights, the final configuration of the ISS and the vehicle that will be developed for exploration. The program can use the information provided by scenario planning to develop strategies for meeting the needs of its potential future scenarios. NASA concurred with our recommendation, and NASA’s Assistant Associate Administrator for the Space Shuttle program is leading an effort to address the recommendation. Since we issued our report and made our recommendation, NASA has taken action and publicly recognized that human capital management and critical skills retention will be a major challenge for the agency as it moves toward retiring the space shuttle. This recognition was most apparent at NASA’s Integrated Space Operations Summit held in March 2005. As part of the Summit process, NASA instituted panel teams to examine the Space Shuttle Program’s mission execution and transition needs from various perspectives and make recommendations aimed at ensuring that the program will execute its remaining missions safely as it transitions to supporting emerging exploration mission needs. The reports that resulted from these examinations are closely linked by a common theme—the importance of human capital management and critical skills retention to ensure success. In their reports, the panel teams highlighted similar challenges to those that we highlighted in our report. The panels made various recommendations to the Space Flight Leadership Council on steps that the program should take now to address human capital concerns. These recommendations included developing and implementing a critical skills retention plan, developing a communication plan to ensure the workforce is informed, and developing a detailed budget that includes funding for human capital retention and reductions, as well as establishing an agencywide team to integrate human capital planning efforts. There is no question that NASA faces a challenging time ahead. Key decisions have to be made regarding final configuration and support of the ISS, the number of shuttle flights needed for those tasks, and the timing for development of future programs, such as the CEV—all in a constrained funding environment. In addition, any schedule slip in the completion of the construction of the ISS or in the CEV falling short of its accelerated initial availability (as soon as possible after space shuttle retirement) may extend the time the space shuttle is needed. But whatever decisions are made and courses of action taken, the need for sustaining a critically skilled workforce is paramount to the success of these programs. Despite a limited focus on human capital management in the past, NASA now acknowledges that it faces significant challenges in sustaining a critically skilled workforce and has taken steps to address these issues. We are encouraged by these actions and the fact that human capital management and critical skills retention was given such prominent attention throughout the recent Integrated Space Operations Summit process. The fact that our findings and conclusions were echoed by the panel teams established to support the Integrated Space Operations Summit is a persuasive reason for NASA leadership to begin addressing these human capital issues early and aggressively. Madam Chairman, this concludes my prepared statement. I would be pleased to respond to any questions that you or other Members of the Subcommittee may have. For further information regarding this testimony, please contact Allen Li at (202) 512-4841 or lia@gao.gov. Individuals making key contributions to this testimony included Alison Heafitz, Jim Morrison, Shelby S. Oakley, Karen Sloan, and T.J Thomson. This is a work of the U.S. government and is not subject to copyright protection in the United States. It may be reproduced and distributed in its entirety without further permission from GAO. However, because this work may contain copyrighted images or other material, permission from the copyright holder may be necessary if you wish to reproduce this material separately.

The National Aeronautics and Space Administration's (NASA) space shuttle program is key to implementing the President's vision for space exploration, which calls for completing the assembly of the International Space Station (ISS) by the end of the decade. Currently, the space shuttle, which is to be retired after ISS assembly is completed, is the only launch system capable of transporting ISS components. To meet the goals of the President's vision and satisfy ISS's international partners, NASA is examining alternative launch vehicles and ISS configurations. Retiring the space shuttle and, in the larger context, implementing the President's vision, will require NASA to rely on its most important asset--its workforce. Because maintaining a skilled workforce through retirement will be challenging, GAO was asked to discuss the actions NASA has taken to sustain a skilled space shuttle workforce and the challenges it faces in doing so--findings reported on in March 2005 (see GAO, Space Shuttle: Actions Needed to Better Position NASA to Sustain Its Workforce through Retirement, GAO-05-230). While NASA recognizes the importance of sustaining a critically skilled workforce to support space shuttle operations, it has made limited progress toward developing a detailed long-term strategy to do so. At the time of our March 2005 review, the Space Shuttle Program had identified lessons learned from the retirement of comparable programs, and United Space Alliance--NASA's prime contractor for space shuttle operations--had begun to prepare for the impact of the space shuttle's retirement on its workforce. However, timely action to address workforce issues is critical given their potential impact on NASA-wide goals. Significant delays in implementing a strategy to sustain the space shuttle workforce would likely lead to larger problems, such as overstretched funding and failure to meet NASA program schedules. NASA and United Space Alliance acknowledge that sustaining their workforces will be difficult, particularly if a career path beyond the space shuttle's retirement is not apparent. Fiscal challenges facing the federal government also make it unclear whether funding for retention tools, such as bonuses, will be available. Our March 2005 report identified several factors that have hampered the Space Shuttle Program's workforce planning efforts. For example, the program's near-term focus on returning the space shuttle safely to flight has delayed other efforts that will help the program determine its workforce requirements, such as assessing hardware and facility needs. Program officials also noted that due to uncertainties in implementing the President's vision for space exploration, requirements on which to base workforce planning efforts have yet to be defined. Despite these factors, our work on strategic workforce planning has shown that even when faced with uncertainty, successful organizations take steps, such as scenario planning, to better position themselves to meet future workforce requirements. Since we issued our report and made our recommendation, NASA has publicly recognized, at its Integrated Space Operations Summit, that human capital management and critical skills retention will be a major challenge for the agency as it progresses toward retirement of the space shuttle.

Justice Stevens has been a key figure in the Supreme Court's recent decisions interpreting the scope of two "companion rights": the due process right to a "beyond a reasonable doubt" determination and the right to trial by jury. The right to a jury trial in criminal prosecutions is explicitly protected in the Sixth Amendment to the U.S. Constitution. The "proof beyond a reasonable doubt" standard is guaranteed by the Due Process Clauses of the Fifth Amendment (federal proceedings) and the Fourteenth Amendment (state proceedings). Together, those constitutional provisions require that a criminal conviction follow a jury determination of "proof beyond a reasonable doubt of every fact necessary to constitute the crime." Those rights have a strong legal and historical foundation. However, a question emerged regarding their application to sentencing determinations, particularly as "sentence enhancements" became a popular legislative tool: to what extent do facts taken into account during sentencing require a "beyond a reasonable doubt" determination by a jury? Justice Stevens has had a critical role in the Supreme Court's resolution of that question, in several respects. First, he asserted that the constitutional question should be addressed, describing the constitutional guarantees at issue as being of "surpassing importance." Second, along with Justice Scalia, in early cases reviewing sentencing enhancements, he indicated his broad interpretation of the jury trial and due process rights. In a concurring opinion, for example, he wrote, "I am convinced that it is unconstitutional for a legislature to remove from the jury the assessment of facts that increase the prescribed range of penalties to which a criminal defendant is exposed." He added that "[i]t is equally clear that such facts must be established by proof beyond a reasonable doubt." Third, having persuaded five of the Court's nine justices of his views, he authored the opinion for the Court in a Apprendi v. New Jersey , the leading case in which the Court announced a broad reading of the constitutional rights at issue. Finally, he wrote for the Court in United States v. Booker , a decision applying the Apprendi holding to the Federal Sentencing Guidelines. Although this line of cases has resulted in closely divided opinions, the justices were not divided along typical lines. Justice Scalia has been the other justice arguing in agreement with Justice Stevens in many of the cases addressing a jury's role in criminal sentencing. In Apprendi , Justices Scalia, Thomas, Souter, and Ginsburg joined Justice Stevens's majority opinion. Justice Stevens's opinion in Apprendi was foreshadowed in several dissenting and concurring opinions in cases decided during the 1980s and 1990s. The first such case was McMillan v. Pennsylvania , decided in 1986. McMillan involved a Pennsylvania statute establishing a mandatory five-year minimum prison sentence in cases in which a judge finds, by a preponderance of the evidence (a lower standard than "beyond a reasonable doubt"), that the defendant visibly possessed a firearm during the commission of the offense. The statute expressly stated that the firearm possession "shall not be an element of the crime." Instead, it stated that it "shall be determined at sentencing," indicating that it was to be removed from typical jury trial and "beyond a reasonable doubt" requirements. The U.S. Supreme Court upheld the statute. Writing for the Court, Chief Justice Rehnquist emphasized that the state legislature expressly designated firearm possession as a "sentencing factor," rather than "an element of the crime." The Court concluded that the state legislature had intended to create a sentencing factor which "operates solely to limit the sentencing court's discretion in selecting a penalty within the range already available to it." Justice Stevens wrote a dissenting opinion, not joined by any other justice, in which he first articulated his view of the constitutional implications of sentencing statutes of this kind. "In my view," he wrote, "a state legislature may not dispense with the requirement of proof beyond a reasonable doubt for conduct that it targets for severe criminal penalties." His disagreement with the Court stemmed in part from his interpretation of prior precedents. He agreed with the statement from a prior case, also quoted by the majority, that "[the] applicability of the reasonable-doubt standard … has always been dependent on how a State defines the offense that is charged." However, he interpreted that holding to ensure that states have discretion regarding what conduct to criminalize, not over which conduct will be treated as a "criminal element" versus a "sentencing factor." "In my opinion," he concluded, "the constitutional significance of the special sanction cannot be avoided by the cavalier observation that it merely 'ups the ante' for the defendant." A 1998 case, Almendarez-Torres v. United States , involved a federal statute that makes it a crime to, among other things, return to the United States (without express consent of the Attorney General) after having been deported. A general provision authorizes criminal penalties of up to two years imprisonment. A second provision authorizes greater penalties in cases in which the alien was removed after a conviction for one of several specified crimes. In Almendarez-Torres , the defendant had been deported subsequent to three convictions for aggravated felonies, for which the statute increased the maximum prison sentence for reentry to 20 years. Prosecutors did not introduce the fact of the aggravated felonies at the indictment or trial phase. Nevertheless, at sentencing, the U.S. district court relied on those aggravated felony convictions to enhance the sentence. A five-justice majority on the Supreme Court framed the question on appeal as "whether [the aggravated felony provision] defines a separate crime or simply authorizes an enhanced penalty." Noting that the provision's concern is recidivism—a factor commonly weighed in sentencing decisions, it held that it is "reasonably clear" that Congress intended to "set forth a sentencing factor" rather than a "separate crime." Thus, it concluded that the statute "simply authorizes a court to increase the sentence," and thus does not require a determination by a jury. Justice Stevens and two other justices joined a dissent written by Justice Scalia. Justice Scalia asserted that the Court's prior decisions made it "genuinely doubtful whether the Constitution permits a judge (rather than a jury) to determine by a mere preponderance of the evidence (rather than beyond a reasonable doubt) a fact that increases the maximum penalty to which a criminal defendant is subject." Justice Stevens wrote an opinion reiterating his view on the constitutional question the following year, in Jones v. United States . The defendant in Jones was convicted for violation of a federal carjacking statute, 18 U.S.C. § 2119. That statute generally caps imprisonment for violations at 15 years, but a subsection increased the maximum prison term in cases in which "serious bodily injury … results." The defendant, Nathaniel Jones, was charged with carjacking, but the specific allegation that the carjacking resulted in serious bodily injury was not raised until the sentencing phase. At that time, the court found that serious bodily injury had occurred and increased Jones's sentence accordingly. No jury determinations were made on that question. The Court resolved the case on statutory grounds. In an opinion by Justice Souter, it held that the "serious bodily injury" prong, as written in the existing statute, constituted a separate criminal offense, and thus needed to be determined by a jury "beyond a reasonable doubt." It indicated that a different reading of the statute might "raise serious constitutional questions," but avoided resolving such issues because the case could be resolved on statutory grounds. In brief concurring opinions in Jones , Justices Stevens made clear that he would have reached the constitutional issues lurking in the case. Furthermore, he expressed the view that "it is unconstitutional to remove from the jury the assessment of facts that increase the prescribed range of penalties to which a criminal defendant is exposed." Justice Stevens expressed that view on behalf of the Court in Apprendi v. New Jersey . In Apprendi , the Court reviewed a New Jersey statute that authorized 10- to 20-year increases in prison sentences if a defendant's actions were found by a judge, by a preponderance of the evidence, to have been committed with a purpose to intimidate the victim because of the victim's race or other specified characteristics. The defendant, Charles Apprendi, was found to have fired a gun into the home of an African American family. The morning of his arrest, he was alleged to have stated that "because [the family is] black in color he does not want them in the neighborhood." He later argued that his statements had been mischaracterized. In the state prosecution, Apprendi pleaded guilty to three weapon possession charges. In the plea agreement, the state reserved the right to request a sentencing enhancement based on the state's "hate crimes" statute. At sentencing, evidence was presented to support and refute Apprendi's alleged racial motivation in firing into the victims' home. Applying a preponderance of the evidence standard as directed by the state statute, the state trial judge concluded that Apprendi had acted with racial prejudice and accordingly enhanced his sentence on that basis. On appeal, Apprendi argued that the Fifth and Fourteenth Amendment Due Process Clauses require that the facts justifying the sentence enhancement (i.e., a motivation of prejudice) to be found by a jury using the "beyond a reasonable doubt" standard. Both a state appellate court and the New Jersey Supreme Court rejected Apprendi's argument. Relying in part on the U.S. Supreme Court's rulings in Almendarez-Torres and McMillan v. Pennsylvania , they held that the "biased purpose" determination was not an element of the underlying offense and thus did not require a jury finding of proof beyond a reasonable doubt. The U.S. Supreme Court reversed. Writing for the Court, Justice Stevens asserted that the constitutional question was "starkly presented" by the facts in the case. He examined the history of the constitutional rights involved, noting that statutory sentence enhancements are a relatively new development in a landscape of constitutional rights with centuries-old foundations. He acknowledged that the history supports judges' ability to exercise discretion in sentencing. However, he argued that such discretion has generally been limited to determinations regarding an appropriate sentence within a given range; it has not historically been extended to authorize additional penalties on the basis of a new factual determination. After reviewing the history and relevant precedents, he articulated the Court's major holding: "Other than the fact of a prior conviction, any fact that increases the penalty for a crime beyond the prescribed statutory maximum must be submitted to a jury, and proved beyond a reasonable doubt." Key cases decided after Apprendi have addressed the decision's application to sentencing guidelines. In a 2004 case, Blakely v. Washington , the defendant challenged a sentence imposed pursuant to Washington State's sentencing guidelines. He was convicted of a crime for which the guidelines designated a maximum sentence of 53 months imprisonment, but was sentenced to 90 months after the sentencing judge found that he had acted with "deliberate cruelty"—a factor for which the guidelines authorized judges to increase a sentence. In an opinion written by Justice Scalia and joined by Justice Stevens and three other justices, the Supreme Court applied Apprendi to strike down the sentencing scheme. It held that the "statutory maximum" for Apprendi purposes is the maximum sentence a judge may impose solely on the basis of the facts reflected in the jury verdict or admitted by the defendant. One year later, Justice Stevens wrote one of two majority opinions for the Court in United States v. Booker , in which the Court addressed the question whether the Blakely holding applied to the Federal Sentencing Guidelines. The case involved a conviction for possession with intent to distribute crack cocaine. At sentencing, the judge found, by a preponderance of the evidence, that the defendant had distributed additional drugs and obstructed justice, and increased the sentence on that basis. Applying Apprendi and Blakely , the Court held that "[a]ny fact (other than a prior conviction) which is necessary to support a sentence exceeding the maximum authorized by the facts established by a plea of guilty or a jury verdict must be admitted by the defendant or proved to a jury beyond a reasonable doubt." Justice Stevens characterized the holding as a reaffirmation of the Apprendi holding. His opinion again emphasized the historical importance of the constitutional rights at issue. A different majority of justices joined an opinion written by Justice Breyer. In that opinion, the Court interpreted the constitutional holding (announced in the opinion by Justice Stevens) as requiring the Court to strike down two provisions of the Federal Sentencing Act, including one which made the guidelines mandatory. That holding was based on the Court's determination of what Congress might have intended in light of the Court's constitutional holding. It concluded that Congress would not have intended the guidelines to be made mandatory in situations where a judge is constitutionally required to receive jury determinations regarding facts relevant to sentencing. Justice Stevens dissented from that opinion. He characterized the Court's invalidation of the Sentencing Act provisions as judicial overstepping, arguing that the constitutional holding in the case "does not authorize the Court's creative remedy" with regard to the Federal Sentencing Act. He asserted that "[b]ecause the Guidelines as written possess the virtue of combining a mandatory determination of sentencing ranges and discretionary decisions within those ranges, they allow ample latitude for judicial factfinding that does not even arguably raise any Sixth Amendment issue." The impact of Justice Stevens's role, and of the Apprendi case in particular, has been to limit the extent to which criminal penalties can be increased based on facts found by a judge rather than a jury. Although it remains permissible for judges to take relevant facts into consideration when rendering criminal sentences, they now may not increase sentences beyond the prescribed statutory maximum unless the facts supporting such an increase are found by a jury beyond a reasonable doubt. As can be seen in the cases applying that holding to sentencing guidelines, Justice Stevens's interpretation of the constitutional trial-by-jury and due process rights has had practical and lasting effects on criminal sentencing.

Justice Stevens has played a critical role in the Supreme Court's interpretation of a jury's role in criminal sentencing. In 2000, he wrote the majority opinion for the Court in Apprendi v. New Jersey, a landmark case in which the Court held that a judge typically may not increase a sentence beyond the range prescribed by statute unless the increase is based on facts determined by a jury "beyond a reasonable doubt." In 2005, he wrote one of two majority opinions in United States v. Booker, in which the Court applied the Apprendi rule to the Federal Sentencing Guidelines. In those two cases and in several other cases on this issue during the past few decades, Justice Stevens has been a leading voice, articulating a broad interpretation of the jury trial and due process rights at issue.

Since the Social Security Act became law in 1935, workers have had the right to review their earnings records on file at SSA to ensure that they are correct. In 1988, SSA introduced the PEBES to better enable workers who requested such information to review their earnings records and obtain benefit estimates. According to SSA, less than 2 percent of workers who pay Social Security taxes request these statements each year. plans to have mailed statements automatically to more than 70 million workers. By providing these statements, SSA’s goals are to (1) better inform the public of benefits available under SSA’s programs, (2) assist workers in planning for their financial future, and (3) better ensure that Social Security earnings records are complete and accurate. Correcting earnings records benefits both SSA and the public because early identification and correction of errors in earnings records can reduce the time and cost required to correct them years later when an individual files for retirement benefits. Issuing the PEBES is a significant initiative for SSA. The projected cost of more than $80 million in fiscal year 2000 includes $56 million for production costs, such as printing and mailing the statement, and $24 million for personnel costs. SSA estimates that 608 staff-years will be required to handle the PEBES workload in fiscal year 2000: SSA staff are needed to prepare the statements, investigate discrepancies in workers’ earnings records, and respond to public inquiries. Since the PEBES was first developed, SSA has conducted several small-scale and national surveys to assess the general public’s reaction to receiving an unsolicited PEBES. In addition, SSA has conducted a series of focus groups to elicit the public’s and SSA employees’ opinion of the statement and what parts of it they did and did not understand. retirement at age 70. When SSA learned that many people were interested in the effect of early retirement on their benefits, SSA added an estimate for retirement at age 62. Overall public reaction to receiving an unsolicited PEBES has been consistently favorable. In a nationally representative survey conducted during a 1994 pilot test, the majority of respondents indicated they were glad to receive their statements. In addition, 95 percent of the respondents said the information provided was helpful to their families. Overall, older individuals reacted more favorably to receiving a PEBES than did younger individuals. In addition, SSA representatives who answer the toll-free telephone calls from the public have stated that most callers are pleased that they received a PEBES and say that the information is useful for financial planning. Although SSA has taken steps to improve the PEBES, we found that the current statement still provides too much information, which may overwhelm the reader, and presents the information in a way that undermines its usefulness. These weaknesses are attributable, in part, to the process SSA used to develop the PEBES. Additional information and expanded explanations have made the statement longer, but some explanations still confuse readers. Moreover, SSA has not tested for reader comprehension and has not collected detailed information from its front-line workers on the public’s response to the PEBES. explanations to understand complex information, the explanations should appear with the information. Easy-to-understand explanations: Readers need explanations of complex programs and benefits in the simplest and most straightforward language possible. In the 1996 PEBES, the message from the Commissioner of Social Security does not clearly explain why SSA is providing the statement. Although the message does include information on the statement’s contents and the need for individuals to review the earnings recorded by SSA, its presentation is uninviting, according to the design expert we consulted. More specifically, the type is too dense; the lines are too long; white space is lacking; and the key points are not highlighted. If the PEBES’ recipients do not read the Commissioner’s message, they may not understand why reviewing the statement is important. The message also attempts to reassure people that the Social Security program will be there when they need it with the following reference (from the 1996 PEBES) to the system’s solvency: The Social Security Board of Trustees projects that the system will continue to have adequate resources to pay benefits in full for more than 30 years. This means that there is time for the Congress to make changes needed to safeguard the program’s financial future. I am confident these actions will result in the continuation of the American public’s widespread support for Social Security. Some participants in SSA focus groups, however, thought the message suggested that the resources would not necessarily be there after 30 years. For example, one participant in a 1994 focus group reviewing a similar Commissioner’s message said, “. . . first thing I think about when I read the message is, is not going to be there for me.” current statement, some focus group participants and benefit experts suggested that SSA add an index or a table of contents to help readers navigate the statement. SSA has not used the best layout and design to help the reader identify the most important points and move easily from one section to the next. The organization of the statement is not clear at a glance. Readers cannot immediately grasp what the sections of the statement are, and in which order they should read them, according to the design expert with whom we consulted. The statement lacks effective use of features such as bulleting and highlighting that would make it more user friendly. In addition, the PEBES is disorganized: information does not appear where needed. The statement has a patchwork of explanations scattered throughout, causing readers to flip repeatedly from one page to another to find needed information. For example, page two begins by referring the reader to page four, and page three contains six references to information on other pages. Furthermore, to understand how the benefit estimates were developed and any limitations to these estimates, a PEBES recipient must read explanations spread over five pages. The statement’s spreading of benefit estimate explanations over several pages may result in individuals missing important information. This is especially true for people whose benefits are affected by special circumstances, which SSA does not take into consideration in developing PEBES benefit estimates. For example, the PEBES estimate is overstated for federal workers who are eligible for both the Civil Service Retirement System and Social Security benefits. For these workers, the law requires a reduction in their Social Security retirement or disability benefits according to a specific formula. In 1996, this reduction may be as much as $219 per month; however, PEBES’ benefit estimates do not reflect this reduction. The benefit estimate appears on page three; the explanation of the possible reduction does not appear until the bottom of page five. Without fully reviewing this additional information, a reader may not realize that the PEBES benefit estimate could be overstated. Because PEBES addresses complex programs and issues, explaining these points in simple, straightforward language is challenging. Although SSA made changes to improve the explanation of work credits, for example, many people still do not understand what these credits are, the relevance of the credits to their benefits, and how they are accumulated. The public also frequently asks questions about the PEBES’ explanation of family benefits. Family benefits are difficult to calculate and explain because the amount depends on several different factors, such as the age of the spouse and the spouse’s eligibility for benefits on his or her own work record. Informing the public about family benefits, however, is especially important: a 1995 SSA survey revealed that as much as 40 percent of the public is not aware of these benefits. A team of representatives from a cross section of SSA offices governed SSA’s decisions on the PEBES’ development, testing, and implementation. The team revised and expanded the statement in response to feedback on individual problems. The design expert we consulted observed that the current statement “appears to have been the result of too many authors, without a designated person to review the entire piece from the eyes of the readers. It seems to have developed over time, piecemeal . . . .” information collected does not provide sufficient detail for SSA to understand the problems people are having with the PEBES. Although the public and benefit experts agree that the current statement contains too much information, neither a standard benefit statement model exists in the public or private sector nor does a clear consensus on how best to present benefit information. The Canadian government chose to use a two-part document when it began sending out unsolicited benefit statements in 1985. The Canada Pension Plan’s one-page statement provides specific individual information, including the earnings record and benefit estimates. A separate brochure details the program explanations. The first time the Plan mails the statement, it sends both the one-page individual information and the detailed brochure; subsequent mailings contain only the single page with the individual information. Although some focus group participants and benefit experts prefer a two-part format, others believe that all information should remain in a single document, fearing that statement recipients will lose or might not read the separate explanations. SSA has twice tested the public’s reaction to receiving two separate documents. On the basis of a 1987 focus group test, SSA concluded that it needed to either redesign the explanatory brochure or incorporate the information into one document. SSA chose the latter approach. In a 1994 test, people indicated that they preferred receiving one document; however, the single document SSA used in the test had less information and a more readable format than the current PEBES. SSA, through the Government Printing Office, has awarded a 2-year contract for printing the fiscal years 1997 and 1998 statements. These statements will have the same format as the current PEBES with only a few wording changes. SSA is planning a more extensive redesign of the PEBES for the fiscal year 1999 mailings but only if it will save money on printing costs. By focusing on reduced printing costs as the main reason for redesigning the PEBES, SSA is overlooking the hidden costs of the statement’s existing weaknesses. For example, if people do not understand why they got the statement or have questions about information provided in the statement, they may call or visit SSA, creating more work for SSA staff. Furthermore, if the PEBES frustrates or confuses people, it could undermine public confidence in SSA and its programs. Our work suggests, and experts agree, that the PEBES’ value could be enhanced by several changes. Yet SSA’s redesign team is focusing on reducing printing costs without considering all of the factors that would ensure that PEBES is a cost-effective document. The PEBES initiative is an important step in better informing the public about SSA’s programs and benefits. To improve the statement, SSA can quickly make some basic changes. For example, SSA officials told us that, on the basis of our findings, they have revised the Commissioner’s message for the 1997 PEBES to make it shorter and less complex. More extensive revisions are needed, however, to ensure that the statement communicates effectively. SSA will need to start now to complete these changes before its 1999 redesign target date. The changes include improving the layout and design and simplifying certain explanations. These revisions will require time to collect data and to develop and test alternatives. SSA can help ensure that the changes target the most significant weaknesses by systematically obtaining more detailed feedback from front-line workers. SSA could also ensure that the changes clarify the statement by conducting formal comprehension tests with a sample of future PEBES recipients. In addition, we believe SSA should evaluate alternative formats for communicating the information presented in PEBES. For example, SSA could present the Commissioner’s message in a separate cover letter accompanying the statement, or SSA could consider a two-part option, similar to the approach of the Canada Pension Plan. To select the most cost-effective option, SSA needs to collect and assess additional cost information on options available and test different PEBES formats. Our work suggests that improving PEBES will demand attention from SSA’s senior leadership. For example, how best to balance the public’s need for information with the problems resulting from providing too much information are too difficult and complex to resolve without senior-level SSA involvement. Mr. Chairman, this concludes my formal remarks. I would be happy to answer any questions from you and other members of the Subcommittee. Thank you. For more information on this testimony, please call Diana S. Eisenstat, Associate Director, Income Security Issues, at (202) 512-5562 or Cynthia M. Fagnoni, Assistant Director, at (202) 512-7202. Other major contributors include Evaluators Kay Brown, Nora Perry, and Elizabeth Jones. The first copy of each GAO report and testimony is free. Additional copies are $2 each. Orders should be sent to the following address, accompanied by a check or money order made out to the Superintendent of Documents, when necessary. VISA and MasterCard credit cards are accepted, also. Orders for 100 or more copies to be mailed to a single address are discounted 25 percent. U.S. General Accounting Office P.O. Box 6015 Gaithersburg, MD 20884-6015 Room 1100 700 4th St. NW (corner of 4th and G Sts. NW) U.S. General Accounting Office Washington, DC Orders may also be placed by calling (202) 512-6000 or by using fax number (301) 258-4066, or TDD (301) 413-0006. Each day, GAO issues a list of newly available reports and testimony. 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GAO discussed the Social Security Administration's (SSA) Personal Earnings and Benefit Estimate Statement (PEBES). GAO noted that: (1) the public has reacted favorably to unsolicited PEBES, and SSA has improved the statement in response to public feedback; (2) the public generally feels that the statement is a valuable tool for retirement planning, but the statement does not clearly convey its purpose and related information on SSA programs and benefits; (3) PEBES weaknesses have resulted from its piecemeal development and the lack of testing for comprehension; (4) there is no consensus on the best model for PEBES; (5) SSA plans to redesign PEBES only if the redesign results in lower printing costs; (6) this approach fails to recognize the hidden costs arising from the need to answer public inquiries about statement information and the undermining of public confidence in SSA programs by the statement's poor design; (7) SSA needs to improve PEBES layout and design and simplify certain explanations, obtain more detailed feedback from its frontline workers, conduct comprehension tests, and consider alternative statement formats; and (8) SSA senior management attention is needed to ensure the success of the statement initiative by redesigning PEBES to present benefits information more effectively.

The Corporation for National and Community Service (CNCS) was established by the National and Community Service Trust Act of 1993 ( P.L. 103-82 ). Operating as an independent federal agency, the CNCS oversees all national and community service programs authorized by the National and Community Service Act of 1990 (NCSA) and the Domestic Volunteer Service Act of 1973 (DVSA). The NCSA and DVSA were last reauthorized by the Edward M. Kennedy Serve America Act ( P.L. 111-13 ). Although authorization of appropriations under the Serve America Act expired in FY2014, NCSA and DVSA programs have continued to receive funding through the Departments of Labor, Health and Human Services, and Education and Related Agencies Appropriations Act (Labor-HHS-ED). CNCS programs are funded through the end of FY2018 under the Consolidated Appropriations Act, 2018 ( P.L. 115-141 ). The final enacted appropriations law for FY2018 included $1.064 billion for CNCS. The overall FY2018 funding level for CNCS is 3% above the FY2017 level of $1.030 billion. This report provides a summary of each NCSA and DVSA program and compares funding under Labor-HHS-ED in the Consolidated and Further Continuing Appropriations Act, 2015 ( P.L. 113-235 ); the Consolidated Appropriations Act, 2016 ( P.L. 114-113 ); the Consolidated Appropriations Act, 2017 ( P.L. 115-31 ); and the Consolidated Appropriations Act, 2018 ( P.L. 115-141 ). The purpose of the NCSA is to address unmet human, educational, environmental, and public safety needs and to renew an ethic of civil responsibility and community spirit in the United States by encouraging citizens to participate in national service programs. The NCSA was enacted in 1990 as P.L. 101-610 and last reauthorized in 2011 by the Edward M. Kennedy Serve America Act ( P.L. 111-13 ). NCSA programs include AmeriCorps State and National Grants, the National Service Trust, the National Civilian Community Corps (NCCC), and Learn and Serve America (LSA). See Table A-1 for NCSA funding information. Program Focus : Created in 1993, programs under AmeriCorps State and National Grants identify and address critical community needs, including tutoring and mentoring disadvantaged youth, managing or operating after-school programs, helping communities respond to disasters, improving health services, building affordable housing, and cleaning parks and streams. Grants include formula grants to states and territories, and competitive grants to states, territories, Indian tribes, and national nonprofit organizations. Volunteer Eligibility : Individuals aged 17 and older. Amount of Volunteer Service : Full-time or part-time for a 9- to 12-month period. Volunteer Benefits : Some full-time AmeriCorps members receive a living allowance, health coverage, and child care for those who qualify. Participants in AmeriCorps may receive educational awards for their service through the National Service Trust (see the following section of this report). AmeriCorps members can also obtain loan forbearance (i.e., postponement) in the repayment of their qualified student loans while participating in these programs and have the interest on their accrued loans paid from the trust once they earn an educational award. Administrative Entity : Each state and territory governor appoints members of a service commission to manage, monitor, and administer annual grant applications for the state. CNCS reviews the state commission formula package and makes the awards. For multistate or national awards, grantees are selected competitively by the CNCS headquarters office. The National Service Trust, a special account in the U.S. Treasury, provides educational awards for participants in AmeriCorps Grants, NCCC, and Volunteers in Service to America (VISTA). An individual may not receive more than an amount equal to the aggregate value of two awards for full-time service. The educational award for full-time service is equal to the maximum amount of a Pell Grant in effect at the beginning of the federal fiscal year in which the Corporation approves the national service position. AmeriCorps members serving in programs funded in FY2018 will receive an education award of up to $5,920, which is the Pell Grant maximum in the year the positions were approved. Prorated awards are also made for other terms of service, such as half-time (see Table 1 ). AmeriCorps members aged 55 or older at the beginning of a term of service may transfer the education award to a child, grandchild, or foster child. AmeriCorps State and National participants can serve a maximum of four terms of service. Full-time, half-time, reduced half-time, quarter time, and minimum time terms of service each count as one term of service. In addition to education awards, the National Service Trust provides interest payments on qualified student loans to recipients of AmeriCorps Grants and participants in NCCC or VISTA who have obtained forbearance (postponement of loan repayment). Program Focus : NCCC is a full-time residential program that focuses on short-term projects that meet national and community needs related to disaster relief, infrastructure improvement, environment and energy conservation, environmental stewardship, and urban and rural development. Volunteer Eligibility : Individuals aged 18 to 24. By statute (42 U.S.C.S. §12613(c)), the Corporation is required to take steps to increase the percentage of program participants who are disadvantaged to 50% of all participants. Amount of Volunteer Service : Participants can serve up to two years full time. Full-time service is defined as 10 months each year. Volunteer Benefits : NCCC participants may receive a living allowance, room and board, limited medical benefits, and an educational award through the National Service Trust. Administrative Entity : NCCC programs are administered by the CNCS. CNCS continues to have broad authority to fund a range of activities as authorized by Subtitle I-H, Investment for Quality and Innovation. The Serve America Act established the following programs. Social Innovation Fund (SIF). The Social Innovation Fund leverages federal investments to increase state, local, business, and philanthropic resources to replicate and expand proven solutions and invest in the support of innovation for community challenges. P.L. 115-141 does not include funding for the Social Innovation Fund. Volunteer Generation Fund. The Volunteer Generation Fund awards competitive grants to state commissions and nonprofit organizations to develop and support community-based entities that recruit, manage, or support volunteers. Innovation, Demonstration, and Call to Service. The corporation supports innovative initiatives and demonstration programs, such as the Call To Service, which would engage Americans in community needs, such as the Martin Luther King Jr. National Day of Service and the September 11 th National Day of Service and Remembrance. Since 1990, NCSA has authorized community service programs benefitting students and communities through "service-learning," which integrates community service projects with classroom learning. This program was last funded in FY2010 by the Consolidated Appropriations Act, 2010 ( P.L. 111-117 ). The DVSA was enacted in 1973 as P.L. 93-113 . Like the NCSA, it was last reauthorized in 2011 by the Edward M. Kennedy Serve America Act ( P.L. 111-13 ). The purpose of DVSA is to foster and expand voluntary citizen service throughout the nation. DVSA programs are designed to help the poor, the disadvantaged, the vulnerable, and the elderly. Administered by the CNCS, DVSA programs include VISTA and the National Senior Volunteer Corps. See Table A-1 for DVSA funding information. Program Focus : The VISTA program encourages Americans to participate in community service in an effort to eliminate poverty. Volunteer Eligibility : Individuals aged 18 and older. Amount of Volunteer Service : VISTA members serve full time for up to five years. Volunteer Benefits: VISTA members may receive a living allowance, student-loan forbearance, health coverage, relocation costs, training, and child care assistance. VISTA members have the option of receiving an educational award, which is equivalent to the educational awards earned by AmeriCorps or NCCC members, or they may choose to receive an end-of-service lump sum stipend of $1,500 instead. Like NCCC members, VISTA members receive an educational award based on the Pell Grant. Full-time, half-time, reduced half-time, quarter time, and minimum time terms of service each count as one term of service. Administrative Entity : CNCS state offices. The National Senior Service Corps consists of three programs, summarized below: the Retired Senior Volunteer Program (RSVP), the Foster Grandparent Program (FGP), and the Senior Companion Program (SCP). Program Focus : Volunteers in RSVP may play community service roles in education, health and nutrition services, community and economic development, and other areas of human need. Volunteer Eligibility : Individuals aged 55 and older. Amount of Volunteer Service : Participants can contribute up to 40 hours each week. Volunteer Benefits : The RSVP offers no direct benefits (e.g., stipends or educational awards), with the exception of mileage reimbursement and insurance coverage during assignments. Administrative Entity : CNCS state offices. Program Focus : FGP participants support children with exceptional needs by providing aid and services. FGP participants mentor children and teenagers, teach model parenting skills, and help care for premature infants and children with disabilities. Volunteer Eligibility : Individuals must be 55 or older to participate in FGP and meet income eligibility requirements to receive a stipend. Amount of Volunteer Service : Volunteer schedules, which range from 15 to 40 hours each week, average 20 hours per week. Volunteer Benefits : Income eligible participants may receive a tax-free hourly stipend. Participants may also receive mileage reimbursements and accident, liability, and automobile insurance coverage during assignments. Administrative Entity : CNCS state offices. Program Focus : SCP gives older adults the opportunity to assist homebound elderly individuals to remain in their own homes and to enable institutionalized elderly individuals to return to home care settings. Volunteer Eligibility : Individuals must be 55 or older to participate in SCP and meet income eligibility requirements to receive a stipend. Amount of Volunteer Service : Volunteer schedules, which range from 15 to 40 hours each week, average 20 hours per week. Volunteer Benefits : Participants may receive a stipend. Participants may also receive mileage reimbursements and accident, liability, and automobile insurance coverage during assignments. Administrative Entity : CNCS state offices.

The Corporation for National and Community Service (CNCS) is an independent federal agency that administers the programs authorized by two statutes: the National and Community Service Act of 1990 (NCSA; P.L. 101-610), as amended, and the Domestic Volunteer Service Act of 1973 (DVSA; P.L. 93-113), as amended. NCSA and DVSA programs were most recently reauthorized by the Edward M. Kennedy Serve America Act (P.L. 111-13). This report describes programs authorized by these laws and compares CNCS funding for FY2015, FY2016, FY2017, and FY2018. The NCSA is designed to meet unmet human, educational, environmental, and public safety needs and to renew an ethic of civic responsibility by encouraging citizens to participate in national service programs. The major programs authorized by NCSA include AmeriCorps State and National Grants and the National Civilian Community Corps (NCCC). The NCSA also authorizes the National Service Trust, which funds educational awards for community service participants. A central purpose of the DVSA, which authorizes the Volunteers in Service to America (VISTA) program and the National Senior Volunteer Corps, is to foster and expand voluntary service in communities while helping the vulnerable, the disadvantaged, the elderly, and the poor. The DVSA also authorizes the National Senior Volunteer Corps, which includes three programs for senior citizens: the Foster Grandparent Program, the Senior Companion Program, and the Retired and Senior Volunteer Program (RSVP). Appropriations for the DVSA and the NCSA programs are made annually through the Departments of Labor, Health and Human Services, and Education, and Related Agencies Appropriations Act (Labor-HHS-ED). CNCS programs are funded through FY2018 under the Consolidated Appropriations Act, 2018 ( P.L. 115-141). The FY2018 appropriations amount for CNCS is $1.064 billion, which is $34 million more than the FY2017 amount of $1.030 billion. This report will be updated as warranted by legislative developments.

Title II of the Social Security Act provides that certain individuals may be entitled to Social Security Disability Insurance (SSDI) benefits under the federal Old Age, Survivors, and Disability Insurance (OASDI) program if they meet the following statutory requirements: The individual's medical condition meets the definition of disability as specified in Section 216 of the act; The individual has filed a claim for disability benefits; The individual is insured, generally requiring either a work history or the work history of a parent or spouse, as specified in Section 214 of the act; The individual has not reached normal retirement age as provided in Section 216 of the act; and The individual has completed a five-month waiting period. The waiting period for SSDI benefits consists of five consecutive calendar months beginning with the first full calendar month in which a covered individual satisfied the test of disability. If an individual's disabling condition began before he or she met the insurance requirements, the waiting period would begin with the first full calendar month after insured status was gained. During this waiting period, SSDI benefits cannot be paid. It is important to note that this waiting period begins at the onset of the disabling condition and is not affected by the date a worker applies for SSDI benefits. Workers are encouraged by the Social Security Administration (SSA) to apply for benefits at the onset of their disability. The first month counted as part of the waiting period can be no more than 17 months before the month of application and thus, retroactive benefits are limited to 12 months from the date of application. SSA provides retroactive SSDI benefits when the onset of disability occurred before an application for benefits was filed. In such cases, a beneficiary is entitled to benefits retroactive to five months after the date of disability onset provided that this date is within one year of the date of application. Section 223 of the act provides one exception to the five-month waiting period. A person who, in the five years immediately preceding the onset of a current disability, had either received SSDI benefits or had a disabling condition that met the requirements set forth in Section 216 of the act (42 U.S.C. §416), is entitled to immediate benefits paid from the onset of disability. A waiting period from the onset of disability to eligibility for benefits has been part of the SSDI program from its inception. In 1954, Congress made the first provisions for loss of work due to disability and included language that exempted a period of disability from being counted when determining retirement benefits. Two years later, Congress authorized the payment of SSDI benefits to persons over the age of 50 after a six-month waiting period. The age requirement was removed in 1960. In recent years, Congress has introduced a variety of legislative initiatives to reduce or eliminate the five-month waiting period. In 1955, the House Ways and Means Committee recommended passage of the proposed Social Security Amendments and discussed the rationale for a six-month waiting period between the onset of disability and eligibility for federal benefits. A committee report cited the unique nature of the federal definition of disability and called its requirement that a disabling condition be expected to result in either death or long duration "more exacting" than the disability definitions commonly used by commercial insurance carriers at the time, many of which had their own six-month waiting periods. In addition, the Ways and Means Committee expressed that the six-month waiting period was "long enough to permit most temporary conditions to be corrected or to show definite signs of probable recovery" and would be of sufficient length to make it "unprofitable for a person who can work not to do so." Two significant changes to the original six-month waiting period have been passed as part of the creation of the SSDI program. The first change eliminated the waiting period for disabled workers who were previous SSDI recipients or who had a previous disabling condition in the five years prior to the onset of their current disability. To be exempted from the waiting period, the previous disabling condition must have met the statutory definition of disability as provided in Title II of the act. In their reports to the House and Senate on the 1960 Amendments, the Ways and Means and Finance Committees affirmed that the six-month waiting period for those with previous disabilities as a possible barrier to return to work efforts, stating that Most disability insurance beneficiaries who return to work do so despite severe impairments. Where a disabled person becomes employed without any improvement of his condition, a more or less slight change in his situation can result in the loss of his job and make him once again eligible for disability insurance benefits. Other disabled persons, whose medical conditions may improve sufficiently to require termination of benefits, may subsequently grow worse again and become reentitled to benefits. A new six-month qualifying period during which they receive neither earnings nor benefits imposes a hardship on them and their families, and may be a real bar to any further work attempts. The second change to the SSDI waiting period reduced the waiting period from six to five months. The intent of this change was to reduce the financial burden on applicants, and the Ways and Means Committee reported that "reducing the waiting period from six months to five months would diminish the financial hardships faced by those workers who have little or no savings or other resources to fall back on during the early months of long-term disability." The Senate Finance Committee went further than the House and recommended reducing the waiting period to four months. Title XVI of the act authorizes Supplemental Security Income (SSI) benefits for individuals who meet the statutory test of disability or are over the age of 65 and who fall below specific income and asset thresholds. SSI beneficiaries need not have any prior work history or meet the insurance requirements of SSDI, and there is no waiting period between the onset of a disability and eligibility for SSI benefits. In December 2012, of the 8.4 million disabled-worker beneficiaries aged 18-64 receiving SSDI benefits, 1.1 million or 13.1% also received federally administered SSI benefits. Thus, SSI can be used by some disabled workers to lessen the economic hardship faced by the lack of earnings and benefits during the SSDI waiting period. SSI benefits are not available to residents of Puerto Rico, Guam, or the U.S. Virgin Islands. The maximum federal SSI payment, referred to as the federal benefit rate, is $721 per month for an individual living independently and $1,082 for a couple living independently in 2014. Forty-four states and the District of Columbia add a supplement to this benefit for their residents. The amount of the federal benefit, plus any state supplement, may be reduced or offset by some earned and unearned income. Since most SSI recipients have other income, the average monthly SSI payment is less than the federal benefit rate. In December 2013, the average federally administered SSI payment was $546.38 for adults aged 18 to 64. Thirty-nine states, the District of Columbia, and the Commonwealth of the Northern Mariana Islands grant Medicaid eligibility to all SSI recipients or have Medicaid eligibility rules that are the same as those of the SSI program. California, Hawaii, New Jersey, New York, Puerto Rico, and Rhode Island currently administer Temporary Disability Insurance (TDI) programs that provide either state or private benefits to workers with disabilities who are not receiving SSDI benefits. The six TDI programs provide temporary benefits, with maximum durations of between 26 and 52 weeks, for those with an earnings history who are unable to work because of a disability and who are not receiving workers' compensation or SSDI benefits. In addition to state TDI, employees of the railroad industry in all states are eligible for TDI benefits administered by the federal Railroad Retirement Board in accordance with provisions of the Railroad Unemployment Insurance Act. Workers' compensation systems in each state provide wage replacement and medical benefits to workers unable to work because of an employment-related illness or injury and may be able to pay benefits during the SSDI waiting period. The federal government administers workers' compensation for its employees under the Federal Employees' Compensation Act. The federal government also administers workers' compensation systems for some private sector employees in the maritime, mining, and railroad industries through the Longshore and Harbor Workers Compensation Program, the Black Lung Benefits Program, and the Energy Employees' Occupational Illness Compensation Program. In each state, workers covered by state unemployment insurance (UI) systems may be eligible to receive partial wage replacement in the event of a job separation. The states, however, require that those receiving unemployment compensation be able and willing to work, a condition that may exclude many waiting for SSDI eligibility (especially an individual who would earn in excess of the substantial gainful activity), since it is assumed that the individual is unable to work. Unemployment benefits are administered by the states within federal guidelines under Title III of the act, and unemployment compensation provisions for individuals who are ill or disabled vary by state. The Government Accountability Office (GAO) found that 117,000 individuals (less than 1.0% of all SSDI beneficiaries) received concurrent SSDI and UI cash benefits in fiscal year (FY) 2010. SSA's Office of the Chief Actuary estimated that 0.4% of disabled-worker beneficiaries would be in receipt of both SSDI and UI benefits in 2014. Private disability insurance programs offered by employers can be used to provide wage replacement benefits during the five-month waiting period for SSDI benefits. In March 2013, 39% of private-sector workers participated in some form of short-term disability insurance plan while 32% of private-sector workers were covered by long-term disability insurance. It has been estimated that up to 20% of SSDI beneficiaries have received payments from private disability insurance policies before being eligible for federal benefits. The five-month waiting period between the onset of disability and eligibility for SSDI may have a negative impact on the income of those seeking to enter the program. During this waiting period, persons with disabilities are either not working or earning less than the substantial gainful activity (SGA) threshold. In addition, claimants are either not receiving monthly benefits to replace lost wages or are receiving only SSI benefits, which are usually lower than SSDI benefits. A July 2012 analysis by the Congressional Budget Office (CBO) estimated that the elimination of the five-month waiting period would increase outlays to SSDI by approximately $8.0 billion dollars in 2022 (about 4% of program outlays). One impact that may not be as clear, however, is the role that the waiting period plays in discouraging possible beneficiaries from applying for benefits. This waiting period, and its accompanying loss of income, lessen the overall generosity of the SSDI benefit.

Social Security Disability Insurance (SSDI) is authorized by Title II of the Social Security Act and provides income replacement for eligible individuals who are unable to work due to a long-term injury or illness that is expected to last at least one year or result in death. Current eligibility requirements include (1) verification of an applicant's disability, (2) filing a claim, (3) a "recent work" and "duration of work" test, (4) verification that an individual has not reached normal retirement age, and (5) a five-month waiting period from disability-onset. In implementing the five-month waiting period for SSDI benefits, Congress sought to set a time frame that would be long enough for a short-term injury or illness to be corrected, but would also deter individuals who can work from applying for benefits. The first month counted as part of the waiting period can be no more than 17 months before the month of application, and benefits can be applied retroactively for up to 12 months. The Social Security Administration (SSA) encourages eligible individuals to apply for benefits as soon as possible after the onset of a disabling condition. The waiting period does not apply to individuals who have been previous recipients of SSDI in the five years prior to any current disability. Several other programs, such as Supplemental Security Income (SSI), temporary disability insurance, workers' compensation, unemployment compensation, and private disability insurance, can provide funds for eligible SSDI applicants facing financial hardship during the five-month wait period.

T he farm bill provides an opportunity for Congress to address agricultural and food issues comprehensively about every five years. Over time, farm bills have tended to become more complicated and politically sensitive. This has made the timeline for reauthorization less certain. Recent farm bills have been subject to developments that have delayed enactment, such as insufficient votes to pass the House floor, presidential vetoes, and short-term extensions. The Agriculture Improvement Act of 2018 ( P.L. 115-334 ), often called the "2018 farm bill," was enacted on December 20, 2018. In the House, the Agriculture Committee reported the bill on April 18, 2018. An initial floor vote on May 18 failed by 198-213, but procedures allowed that vote to be reconsidered ( H.Res. 905 ). The House passed H.R. 2 in a second vote of 213-211 on June 21. In the Senate, the Agriculture Committee reported its bill ( S. 3042 ) on June 13, 2018, by a vote of 20-1. The Senate passed its bill as an amendment to H.R. 2 by a vote of 86-11 on June 28. Conference proceedings officially began September 5 and concluded on December 10. The 1973 farm bill was enacted less than 3 months after being introduced. In contrast, the 2014 farm bill took more than 21 months from introduction to enactment, spanning two Congresses. The House rejected a bill in 2013 and then passed separate farm and nutrition assistance components—the first time a chamber-passed farm bill did not include a nutrition title since 1973. The House later procedurally recombined them for conference with the Senate. Both the 2002 and 2008 farm bills had expired for about three months (from October through December in 2007 and 2012) before extensions were enacted. In each case, the fiscal year began under a continuing resolution for appropriations. The extensions of the 2002 farm bill were for relatively short periods totaling about five months during final House-Senate negotiations. However, the extension of the 2008 farm bill in 2013 was for a full year. This report examines the major legislative milestones for the last 12 farm bills over 54 years, a period representing modern farm bills with growing complexity. Table 1 contains a history of major legislative action on farm bills since 1965. Figure 1 shows the major dates on a timeline. Different parts of a farm bill are authorized for different periods of time. Fiscal years, calendar years, and crop years can be important to different programs. Programs authorized by the 2018 farm bill (the Agriculture Improvement Act of 2018) would generally expire either at the end of FY2023 (September 30, 2023) or after the 2023 crop year, which varies among crops. Enacting farm bills after the end of the final fiscal year for which programs have been authorized has been a common occurrence. In the past 42 years covering the nine farm bills since 1976—when the federal government began using a fiscal year that began on October 1 —only the 1977 and 2002 farm bills were enacted before the September 30 expiration date for programs that would have been affected by the fiscal year. The 1981, 1985, 1990, and 2018 farm bills were enacted within three months after the final fiscal year for which programs were authorized ended. The 1996 farm bill was enacted in April 1996 following the September 30, 1995, expiration of some of the authorizations in the 1990 farm bill. The 2008 and 2014 farm bills were enacted well after their original September 30 expirations and following the enactment of extensions. Expiration at the end of a fiscal year (September 30) matters for programs with fiscal year authorizations. These programs include certain nutrition, conservation, and trade programs; various agricultural programs, excluding the Title I commodity programs; and many authorizations for discretionary appropriations. The consequences of expiration of a farm bill are discussed in other CRS reports. All farm bills since 1965—except the 2008 and 2014 farm bills—have been enacted before December 31 in the year of their expirations . Therefore, only the 2008 and 2014 farm bills have required extensions (see " Short-Term Extensions " below). From another perspective, the 1990 farm bill was the last farm bill prior to the 2018 farm bill that was enacted by December 31—within three months from the start of fiscal-year expiration but before the spring-planted crops covered by the new law were planted. The 1996, 2002, 2008, and 2014 farm bills were enacted in a calendar year after their introduction—in April (1996), May (2002), June (2008), and February (2014)—but still prior to the first crop covered by the farm bill being harvested. Expiration at the end of a calendar year matters mostly for the dairy program, one of the farm commodity programs in Title I of recent farm bills. The farm commodity programs are tied to crop years—that is, the year in which a crop is harvested—and dairy is the first commodity that would be affected by reverting to "permanent law," since its crop year begins on January 1 after the year of expiration. Since 1965, 8 out of 12 enacted farm bills were introduced in the first session of a two-year Congress (the odd-numbered year). The other four (1970, 1990, 2014, and 2018) were introduced in the second session of a two-year Congress (the even-numbered year). The 2018 farm bill was the first time since before 1965 that both chambers completed floor action before the end of June. Of the four bills introduced in a second session, the 1970, 1990, and 2018 farm bills were enacted during a lame duck Congress (after an election) in November and December of the same year. The 2014 farm bill, which was introduced in 2012, was the first farm bill to start in one Congress, remain unfinished, and require reintroduction in a subsequent Congress. The House and Senate have taken turns in initiating action on a farm bill. Since 1965, the Senate was first to mark up farm bills in 1973, 1977, 1981, 2012, and 2013. The House was first to mark up bills in 1965, 1970, 1985, 1990, 1995 (and 1996), 2001, 2007, and 2018. Extensions of a prior farm bill while its successor is being written have been atypical. Only the 2002 and 2008 farm bills have required extensions in 2007-2008 and 2013, respectively, as their successors were being written. When the 2002 farm bill expired, portions of it were extended six times for less than a year total beginning in December 2007. When the 2008 farm bill expired, the entire farm bill was extended in January 2013 for all of FY2013 and the 2013 crop year. While the 2014 farm bill was expired from October 1 until the 2018 farm bill was enacted, the continuing resolution for appropriations continued many operations, though some new program activity ceased. Presidential vetoes of farm bills are not common. Since 1965, only the 2008 farm bill has been vetoed as stand-alone measure; it was vetoed twice. A 1995 farm bill was vetoed as part of a larger budget reconciliation package. President George W. Bush vetoed the 2008 farm bill ( H.R. 2419 ). When Congress overrode the veto to enact P.L. 110-234 , it accidentally enrolled the law without Title III (the trade title). Congress immediately reintroduced the same bill with the trade title ( H.R. 6124 ). President Bush vetoed this version as well, and Congress again overrode the veto to enact P.L. 110-246 , a complete 2008 farm bill that included the trade title. The overrides in 2008 were the only time that a farm bill was enacted as a result of a veto override. President Clinton vetoed a 1995 budget reconciliation package that included the first version of what became the 1996 farm bill, but the veto was not due to the farm bill itself but rather the controversial nature of the reconciliation bill in which the farm bill was embedded. Prior to 1965, the first veto of a farm bill was in 1956, when President Eisenhower vetoed H.R. 12 (84 th Congress), the first version of the Agricultural Act of 1956. As farm bill reauthorization has tended to become more complex and engender greater political sensitivity, the process of enacting a new farm bill prior to the expiration of the existing law has become more difficult. As stakeholders in the farm bill have become more diverse, more people are affected by the legislative uncertainty around this process. This lack of certainty may translate into questions about the availability of future program benefits, some of which may affect agricultural production decisions or market uncertainty for agricultural commodities.

The farm bill provides an opportunity for Congress to address agricultural and food issues comprehensively about every five years. Over time, farm bills have tended to become more complicated and politically sensitive. As a result, the timeline for reauthorization has become less certain. With the exception of the 2018 farm bill, recent farm bills have taken longer to enact than in previous decades. Beginning in 2008, farm bills have been subject to various developments that have delayed enactment, such as insufficient votes to pass the House floor, presidential vetoes, or short-term extensions. The Agriculture Improvement Act of 2018 (P.L. 115-334), often called the "2018 farm bill," was enacted on December 20, 2018. In the House, the Agriculture Committee reported the bill on April 18, 2018. An initial floor vote on May 18 failed in the House 198-213, but floor procedures allowed that vote to be reconsidered (H.Res. 905). The House passed H.R. 2 in a second vote of 213-211 on June 21. In the Senate, the Agriculture Committee reported its bill (S. 3042) on June 13, 2018, by a vote of 20-1. The Senate passed its bill as an amendment to H.R. 2 by a vote of 86-11 on June 28. Conference proceedings officially began on September 5, 2018, and concluded in December with a Senate vote of 87-13 and a House vote of 369-47 (H.Rept. 115-1072). The 2018 farm bill took 8 months from introduction to passage. By comparison, the 2014 farm bill took more than 21 months from introduction to enactment, and spanned the 112th and 113th Congresses. The 2008 farm bill took more than a year to enact and was complicated by revenue provisions from another committee of jurisdiction, temporary extensions, and vetoes. Most farm bills have been introduced in the first session of a two-year Congress (the odd-numbered year). Three of the farm bills that were introduced in the second session—the 1970, 1990, and 2018 farm bills—were enacted during a lame duck Congress of the same year. The 2014 farm bill was the first farm bill to start in one Congress (2012), remain unfinished, and require reintroduction in a subsequent Congress. This report examines the major legislative milestones for the last 12 farm bills covering 54 years.

The U.S. Congress is contemplating a $700 billion government assistance package to arrest the financial crisis in the United States. President Bush argued that failure to enact legislation quickly could result in a wholesale failure of the U.S. financial sector. As discussion of the Administration's plan unfolded, however, questions in Congress arose over issues of magnitude and management of the "bailout," the need for oversight, and the possibility that less costly and perhaps more effective alternatives might be available. In this light, Chile's response to its 1981-84 systemic banking crisis has been held up as one example. The cost was comparable relative to the size of its economy to that facing the U.S. Government today. In 1985, Central Bank losses to rescue financially distressed financial institutions were estimated to be 7.8% of GDP (equivalent to approximately $1 trillion in the United States today). The policy options Chile chose had similarities as well as differences from those contemplated in the United States today. Their relevance is debatable, but they do highlight an approach that succeeded in eventually stabilizing and returning the Chilean banking sector to health, while keeping the credit markets functioning throughout the crisis. The seeds of the Chilean financial crisis were much different than those in the United States. Nonetheless, in both cases, the financial sector became the primary problem, with policy makers concerned over the prospect of a system-wide collapse. Chile's problems originated from large macroeconomic imbalances, deepening balance of payments problems, dubious domestic policies, and the 1981-82 global recession that ultimately led to financial sector distress. Although most of these are not elements of the U.S. crisis, there are a number of similar threads woven throughout both cases. Broadly speaking, both countries had adopted a strong laissez-faire orientation to their economies and had gone through a period of financial sector deregulation in the years immediately prior to the crisis. A group of scholars characterized Chile's orientation toward the financial sector as the "radical liberalization of the domestic financial markets" and "the belief in the 'automatic adjustment' mechanism, by which the market was expected to produce a quick adjustment to new recessionary conditions without interference by the authorities." In both cases, given the backdrop of financial sector deregulation, a number of similar economic events occurred that ultimately led to a financial crisis. First, real interest rates were very low, giving rise to a large expansion of short-term domestic credit. With credit expansion came the rise in debt service, all resting on a shaky assumption that short-term rates would not change. In both cases, but for different reasons, rates did rise, causing households and firms to fall behind in payments and, in many cases, to default on the loans. The provision for loan losses was inadequate causing financial institutions to restrict credit. Soon, many found themselves in financial trouble or insolvent, resulting in the financial crisis. Chile's response may prove useful as policy makers evaluate options. Following the coup against socialist President Salvador Allende in 1973, General Augusto Pinochet immediately re-privatized the banking system. Banking regulation and supervision were liberalized. Macroeconomic conditions and loose credit gave way to the economic "euphoria of 1980-81." The exuberance included substantial increases in asset prices (reminiscent of a bubble) and strong wealth effects that led to vastly increased borrowing. The banking system readily encouraged such borrowing, using foreign capital, that because of exchange rate controls and other reasons, provided a negative real interest rate. From 1979 to 1981, the stock of bank credit to businesses and households nearly doubled to 45% of GDP. This trend came to a sudden halt with the 1981-82 global recession. The financial sector found itself suddenly in a highly compromised position. Weak bank regulations had allowed the financial sector to take on tremendous amounts of debt without adequate capitalization. Debt was not evaluated by risk characteristics. Most debt was commercial loans, but banks also carried some portion of consumer and mortgage debt. As firms and households became increasingly financially stressed, and as asset prices plummeted, the solvency of national banks became questionable. Two issues would later be identified: the ability of borrowers to make debt payments, and more importantly, the reluctance of borrowers to do so given there was a broadly-held assumption that the government would intervene. By November 1981, the first national banks and financial institutions that were subsidiaries of conglomerates failed and had to be taken over by regulatory authorities. Most debt was short term and banks were in no position to restructure because they had no access to long-term funds. Instead, they rolled over short-term loans, capitalized the interest due, and raised interest rates. This plan was described by one economist as an unsustainable "Ponzi" scheme, and indeed was a critical factor in bringing down many banks as their balance sheets rapidly deteriorated. From 1980 to 1983, past-due loans rose from 1.1% to 8.4% of total loans outstanding. The sense of crisis further deepened because many of the financial institutions were subsidiaries of conglomerates that also had control over large pension funds, which were heavily invested in bank time deposits and bank mortgage bonds. In the end, although the roots of the banking crisis were different than those in the United States, the Chilean government faced the possibility of a complete failure of the financial sector as credit markets contracted. The Central Bank of Chile took control of the crisis by enacting three major policies intended to maintain liquidity in the financial system, assist borrowers, and strengthen lender balance sheets. These were: 1) debt restructuring for commercial and household borrowers; 2) purchases of nonperforming loans from financial institutions; and 3) the expeditious sale, merger, or liquidation of distressed institutions. From the outset of the rescue plan, the Chilean Central Bank considered providing relief to both debtors and lenders. There were two rationales. First, as a matter of equity, there was a sense that households as well as firms should be helped. Second, to maintain a functioning credit market, both borrowers and lenders needed to be involved. The Central Bank decided to restructure commercial, consumer, and mortgage loans. The goal was to extend the loan maturities at a "reasonable" interest rate. The debtor was not forgiven the loan, rather banks were given the means to extend the maturities of the loans to keep the debtor repaying and the credit system functioning. Restrictions were in place. Eligible firms had to produce either a good or service, eliminating investment banks that held stock in such firms. Only viable businesses were eligible, forcing the bankruptcy procedures into play where unavoidable. To keep the program going, the loan conditions of each subsequent iteration of the program became easier: longer maturities; lower interest rates; and limited grace periods. The program allowed Central Banks to lend firms up to 30% of their outstanding debt to the banking system, with the financing arrangement working in one of two ways. At first, the Central Bank issued money, lent it to debtors, which used it to pay back the bank loans. Later, the Central bank issued money to buy long term bonds from the banks, which used the proceeds to restructure the commercial loans. Variations of this process were applied to consumer and mortgage debtors. In cases where loans were made directly from the Central Bank to the debtor, repayment was expected usually beginning 48 months after the loan was made. The fiscal cost was significant, approximating 1% of GDP in 1984 and 1985. This program was more controversial and had to be adjusted over time to be effective. The key idea was to postpone recognition of loan losses, not forgive them. It relied on identifying nonperforming loans and giving banks time to provision against them, without risking insolvency. The process has been variously characterized as the Central Bank taking on bad debt through loans, purchases, or swaps. All three concepts play some part of this complex, largely accounting-driven arrangement. Initially, this program was described as a sale, although there was no exchange of assets. The Central Bank technically offered to "buy" nonperforming loans with non-interest bearing, 10-year promissory notes. Banks were required to use future income to provision against these loans and "buy" them back with the repurchase of the promissory notes. In fact, they were prohibited from making dividend payments until they repaid the Central Bank in full. The banks, though, actually kept the loans and administered them, but did not have to account for them on their balance sheets. This arrangement was intended to encourage banks to stop rolling over non-performing loans, recognize the truly bad ones, and eventually retire them from their portfolios. The banks benefitted by remaining solvent and gaining time to rebuild their loan loss reserves so to address nonperforming loans. The credit market was served by banks being able to continue operating with increased funds from released loan-loss reserves. This program did not work as hoped at first and had to be adjusted. The Central Bank allowed more time for banks to sell nonperforming loans and also permitted a greater portion of their loan portfolios to qualify. It also began to purchase these loans with an interest-bearing promissory note. The banks, however, actually repaid the interest-bearing note at a rate 2 percentage points below that paid by the Central Bank to the banks. This added differential was sufficient incentive for the banks to sell all their bad loans to the Central Bank, beginning a process of identifying good loans and allowing for the eventual retirement of bad loans from the balance sheets (and the banking system). The cost to the Central Bank increased, but by 1985, the portfolio of non-performing loans at the Central Bank began to decline and was eventually eliminated. A major goal of government actions was to ensure that bank owners and creditors were not absolved of responsibility to help resolve the crisis, including using their own resources to absorb some of the costs. The government worked closely with all financial institutions to impose new risk-adjusted loan classifications, capital requirements, and provisioning for loan losses, which would be used to repurchase loans sold to the Central Bank. The banks, through the Central Bank purchase of substandard loans, were given time to return to profitability as the primary way to recapitalize, and became part of the systemic solution by continuing to function as part of the credit market. A number of banks had liabilities that exceeded assets, were undercapitalized, and unprofitable. Their fate was determined based on new standards and they were either allowed to be acquired by other institutions, including foreign banks, or liquidated. The "too big to fail" rule was apparently a consideration in helping keep some institutions solvent. A total of 14 financial institutions were liquidated, 12 during the 1981-83 period. In most cases, bank creditors were made whole by the government on their deposits with liquidated banks. For three financial institutions that were closed in 1983, depositors had to accept a 30% loss on their assets. The overriding goal of a strategy to correct systemic crisis in the financial sector is to ensure the continued functioning of credit markets. Chile succeeded in accomplishing this goal and restoring a crisis-ridden banking system to health within four years. The single most important lesson of the Chilean experience was that the Central Bank was able to restore faith in the credit markets by maintaining liquidity and bank capital structures through the extension of household and consumer loan maturities, the temporary purchase of substandard loans from the banks, and the prompt sale and liquidation of insolvent institutions. Substandard loans remained off bank balance sheets until the viable institutions could provision for their loss from future profits. Other losses were covered by the government. In addition, a number of other insights emerged from the Chilean crisis: The market could not resolve a system-wide failure, particularly in the case where there was a high expectation of a government bailout. The expectation of a bailout became self-fulfilling and increased the cost. Appropriate prudential supervision and regulation were critical for restoring health and confidence to the financial system. Observers lamented the a priori lack of attention to proper regulation. Private institutions that survived shared in the cost and responsibility to resolve the crisis to the apparent long-term benefit of the financial sector. The fiscal cost of the three policies discussed above was high. Liquidating insolvent institutions had the highest cost followed by the purchase of non-performing loans and rescheduling of domestic debts. The strategy, however, is widely recognized as having allowed the financial system and economy to return to a path of stability and long-term growth.

Chile experienced a banking crisis from 1981-84 that in relative terms had a cost comparable in size to that perhaps facing the United States today. The Chilean Central Bank acted quickly and decisively in three ways to restore faith in the credit markets. It restructured firm and household loans, purchased nonperforming loans temporarily, and facilitated the sale or liquidation of insolvent financial institutions. These three measures increased liquidity in the credit markets and restored the balance sheets of the viable financial institutions. The Central Bank required banks to repurchase the nonperforming loans when provision for their loss could be made and prohibited distribution of profits until they had all been retired. Although the private sector remained engaged throughout the resolution of this crisis, the fiscal costs were, nonetheless, very high.

The International Military Education and Training program (IMET) was formally established in 1976 as part of a restructuring of the United States Foreign Military Sales (FMS) program. It had its antecedents in legislation passed in 1949 that created the grant Military Assistance Program (MAP). IMET, as currently constituted, is intended to be a low-cost policy program to provide training in U.S. Defense Department schools to predominantly military students from allied and friendly nations on a grant basis. The foreign students must speak English and train to U.S. standards, alongside American military personnel and other foreign students. They are offered courses in military skills and doctrine, exposed to the U.S. professional military establishment and the American way of life, including democratic values, respect for internationally recognized human rights, and the belief in the rule of law. Students are also exposed to U.S. military procedures and the manner in which the military functions under civilian control. Through the IMET program, the United States seeks to influence students who may rise to positions of prominence in foreign governments, expose foreign students to a professional military in a democratic society, and professionalize foreign armed forces. It also seeks to strengthen regional relationships while enhancing the self-defense capabilities of U.S. friends and allies, as well as enhancing the ability of the U.S. and participant nations to conduct military operations and peacekeeping activities together. Many nations come to participate in IMET, in part, to enhance their capabilities to utilize effectively the defense articles and services they obtain from the United States. The United States in recent years has annually trained, on average, over 10,000 students from approximately 130 countries through IMET. Formal instruction involves over 2,000 courses, nearly all of which are taught in the United States at approximately 150 military schools and installations. Other activities utilized to achieve IMET goals include orientation tours for key senior military and civilian officials, observer training, and on-the-job training. The United States Coast Guard also provides education and training in maritime search and rescue, operation and maintenance of aids to navigation, port security, at-sea law enforcement, international maritime law, and general maritime skills. Senior Service Schools . The Service War Colleges and the National Defense University's (NDU) National War College programs are attended by U.S. and foreign senior military and civilian equivalents. These programs focus on service/national security policy and the politico-military aspects of Service/Defense policies and programs. The Services and the Joint Staff (for the NDU) annually provide invitations to the governments of foreign friends and allies, for foreign student participation. The senior service schools remain a significant element of IMET sponsored training. The specific schools and their locations are as follows: NDU, Fort McNair, Washington DC; Army War College, Carlisle Barracks, PA; Navy War College, Newport, RI; Air War College, Maxwell Air Force Base, AL. Professional Military Education (PME) Program s. The United States military services offer numerous programs and courses categorized as professional training. These include Service Command and Staff College programs, basic and advanced officer training in specialized areas such as finance, ordnance, artillery and medicine. PME programs and the senior service school programs combined account for approximately 50% of the annual IMET appropriation. A representative listing of the schools involved include Army Command and Staff College, Fort Leavenworth, KA; Army Logistics Management College, Fort Lee, VA; U.S. Army Infantry School, Fort Benning, GA; Air Force Institute of Technology, Wright-Patterson Air Force Base, OH. English Language Training. The majority of IMET sponsored training is conducted in the United States at Defense Department and U.S. military Service schools, with U.S. military personnel. Therefore, English language proficiency is required. The U.S. Defense Department has assigned the English language training mission to the Defense Language Institute English Language Center (DLIELC), located at Lackland Air Force Base, TX. DLIELC provides resident English language training in state-of-the art facilities. Additionally, DLIELC conducts English language training surveys to evaluate foreign government programs and will assign instructors as a "detachment" to the host country to personally assist in the establishment and maintenance of their English language training program. In 1990, the House and Senate Appropriations Committees initiated a statutory change based on their view that changing world political-military circumstances warranted a new direction for the traditional IMET program, one that would bring an increased emphasis on enhancing the skills and professionalism of both civilian and military leaders and managers of foreign military establishments. The Foreign Operations Appropriations Act for FY1991 ( H.R. 5114 , P.L. 101-513 , signed November 5, 1990) directed the Defense Department to establish a program within IMET focused, in particular, on training foreign civilian and military officials in managing and administering military establishments and budgets; creating and maintaining effective military judicial systems and military codes of conduct, including observance of internationally recognized human rights; and fostering greater respect for the principle of civilian control of the military. Congress earmarked $1 million of the FY1991 IMET Appropriation to be used to establish this program. This initiative is called Expanded IMET, or E-IMET, and each year the Defense Department has broadened the program. Although Congress did not earmark IMET funds to support this program after FY1991, it has in report language noted an expectation that the financial investment in E-IMET be increased. Congress further broadened the program to include participation by members of national legislatures who are responsible for oversight and management of the military, and "individuals who are not members of a government." Because E-IMET is a sub-element of the overall IMET program, it is funded as part of the annual IMET appropriation. The E-IMET initiative is accomplished through educational programs in the United States offered by U.S Defense Department and U.S. military Service schools, by Mobile Education Teams visiting host countries, and by funding military participation in overseas conferences, such as the African American Institutes' seminar on "The Role of the Military in a Democracy" (a joint USAID, World Bank and IMET funded initiative). Although IMET funding can be used for such an initiative (overseas seminars) under the auspices of the E-IMET program when such activities are deemed appropriate, the emphasis and preference is for a longer training experience in the United States that maximizes the students' exposure to the American way of life. Beginning in FY1991, the Defense Department launched E-IMET by refining some existing programs and initiating new courses through the military departments. Further, new educational programs were established to address the topics of military justice, human rights and civil-military relations. The bulk of this effort is accomplished through three schools: Defense Resource Management Institute, Naval Postgraduate School (NPS), Monterey, CA; Center for Civil-Military Relations, Naval Postgraduate School, Monterey, CA; and the Naval Justice School, Newport, RI. Defense Reso urce Management Institute (DRMI). The Defense Resource Management Institute at the Naval Postgraduate School at Monterey, CA, was tasked with meeting the E-IMET criteria to assist recipients establish processes for more effective defense resources management. DRMI reactivated a two week Mobile Education Team, which takes the curriculum to the host country, and developed two resident programs within the U.S.—the 11-week, mid-level International Defense Management Course, and the four-week Senior International Defense Management Course established for flag-rank military and civilian equivalents. The Naval Justice School . Under Defense Department assistance and guidance, the Naval Justice School established a program to address the topics of military justice and human rights. They developed a multi-phased program, comprised of seminars and resident programs, designed to culminate in the passage of a rewritten military code by their national legislature. Albania was the first nation to legislate into effect its rewritten military code in October 1995. The Center for Civil-Military Re lations (CCMR) . The Center for Civil-Military Relations, located at the Naval Postgraduate School in Monterey CA, was established by DOD's Defense Security Assistance Agency to provide a broad range of innovative graduate level educational programs and research to address the issue of civil-military relations in a democratic society. This program is first conducted as a one week seminar, held in the host country, which is attended by ministers, key parliamentarians, ranking military representatives, and the U.S. Ambassador. It is followed with resident programs within the United States, to include a one year accelerated graduate degree program—the first class of which began in January 1996. Other E-IMET Programs . All E-IMET approved programs are published in an annual E-IMET Handbook. The handbook reflects the various programs described above and others covering such topics as equal opportunity, financial management, and maritime law. In addition, the E-IMET effort was recently broadened to include environmental military law and resource management issues. As worldwide U.S. military assistance funding levels have declined in the post-Cold War era, the IMET program is viewed by its supporters as a valuable tool in support of American foreign policy. IMET, and within it, E-IMET, are seen as a low-cost means of maintaining access to and influencing the military and civilian leaderships of nations with political traditions less democratic in nature than most Western democracies. By making professional military training available to U.S. friends and allies, IMET also enhances the ability of participating countries to make the most of U.S. weaponry they have obtained from the United States, thereby increasing the self-defense capabilities of these nations—and lessening the need for U.S. military forces to be utilized to protect such nations. Advocates of a strong IMET program believe it should be afforded increased funding to build on the programs' successes in the past, and to enable IMET to be extended to more of the emerging nations of the former Soviet Union, while continuing to provide assistance to traditional clients. Critics of IMET argue that it is a relic of the high Cold War era and has been, at best, only marginally successful in advancing United States foreign policy interests. Indeed, IMET opponents believe that much of the training related to human rights issues and exposure to American democratic institutions is conducted in a pro forma fashion, and is, in any event, not taken seriously by many foreign participants. IMET critics argue that a number of the program's notably effective military elements should be drastically curtailed, if not totally eliminated, because they enhance the capabilities of anti-democratic military establishments and associate the United States with their practices. Should IMET focus almost exclusively on training foreign military and civilian participants in U.S. democratic values, institutions, and principles of human rights, they might be prepared to support carefully targeted funding of the program. But in the absence of a substantial re-direction of the program toward these ends, these opponents would support a termination of the program. The level of funding for IMET has increased significantly since FY1995 from $26.35 million to an estimated $91.7 million for FY2004, while overall foreign assistance program funding has continued to decline. The recent funding levels represent a restoration of IMET funding to levels more consistent with those that existed in the late 1980s and early 1990s. It also reflects support for efforts to meet training requirements generated by 29 newly emerging democracies globally. The Defense Department expects the costs associated with the IMET program to increase due to inflation, to growing requirements of Central Europe and the Newly Independent States (NIS), to the increasing popularity of Expanded IMET, and efforts to maintain existing programs in Africa and Latin America. In addition, since FY1994, the United States has placed a strict limitation on the amount of technical and high-cost training in response to an earlier large reduction in IMET funding. Instead emphasis has been placed on the U.S. military services' senior service school programs, professional military educational efforts, Expanded IMET and English language training. As a result, there has been a notable reduction in the proportion of technical training. In FY1995, for example, technical training represented about 17% of the overall IMET appropriation, while professional military education programs constituted over 50% of the appropriation. These facts raise the current issue of whether or not more resources, and possibly more funds, should be made available for technical training. This issue may become more acute as the United States attempts to advance its policy goals in NATO enlargement (which might well require training on NATO interoperable systems), and in seeking to help IMET participants enhance their ability to assume greater roles in international peacekeeping operations. However, any decision to provide additional funding for IMET would mean that those funds could come at the expense of other programs, given current budgetary constraints. In recent years, American concerns with human rights practices of certain nations that were recipients of United States foreign aid has led to restrictions or conditions being placed on their participation in the IMET program. In the case of Indonesia, for example, Congress has required that the President make a number of certifications about the actions of the Indonesian government before funds can be provided under the Expanded IMET program. In some cases, the IMET program represents the major current vehicle for contact between the United States military and its counterparts in countries with a record of human rights violations or a tradition of authoritarian or undemocratic governments. As reductions in the United States Foreign Military Financing program (FMF) continue, IMET is increasingly the remaining military assistance program that Congress can use to sanction nations it finds to be abusing the human rights of its people. At the same time, IMET may also be the only instrument available that might assist in changing the attitudes of military-dominated governments and lead to a reduction in human rights abuses and greater levels of democratic government. A current issue, then, is whether using IMET restrictions to sanction nations with poor human rights records can be an effective means for modifying the behavior of their governments.

This report provides background on the International Military Education and Training Program (IMET). It discusses the program's main features and purposes, perspectives of the IMET's supporters and critics, and recent issues surrounding the program and its implementation. The United States in recent years has trained annually, on average, over 10,000 students from approximately 130 countries. Formal instruction under IMET involves over 2,000 courses, nearly all of which are taught in the United States at approximately 150 military schools and installations. As the size of the United States foreign assistance program has declined, the IMET program has attracted greater attention as an instrument for serving broad U.S. foreign policy and national security interests. At the same time the program, and placement of restrictions on its participants, has also been an instrument for expressing concerns about the human rights practices of certain nations that have been IMET program participants. This report will be revised should major changes occur in the IMET program.

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

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

In the 21st century the nation faces a growing fiscal imbalance. A demographic shift will begin to affect the federal budget in 2008 as the first baby boomers become eligible for Social Security benefits. This shift will increase as spending for federal health and retirement programs swells. Long-term commitments for these and other federal programs will drive a massive imbalance between spending and revenues that cannot be eliminated without tough choices and significant policy changes. Over the past several years, GAO has called attention to this problem. Long-term budget simulations by GAO, the Congressional Budget Office (CBO), and others illustrate the growing fiscal imbalance. (See fig. 1.) Continued economic growth is critical to addressing this challenge and will help to ease the burden, but the projected fiscal gap is so great that it is unrealistic to expect that the United States will grow its way out of the problem. Early action to change existing programs and policies would yield the highest fiscal dividends and provide a longer period for prospective beneficiaries to make adjustments in their own planning. One of the potential policy changes that could address both the demographic shift and the need for robust economic growth is assisting older workers who want to stay in the workforce past retirement age. These demographic problems are not unique to the United States. Other countries are also confronting the economic and labor force consequences of aging populations. In fact, the challenges arising from these demographic shifts alone will be less pronounced in the United States than in several other high-income nations. In prior work that we conducted for this committee, we found that Sweden, Japan, and the United Kingdom had enacted retirement policy reforms that included incentives for older workers to extend their working lives. At the same time, these countries were also seeking policies that would reduce barriers to employment for older workers. In the 21st century, older Americans are expected to represent a growing share of the population, have a longer life expectancy than previous generations and spend more years in retirement. The baby boom generation is fast approaching retirement age; the oldest baby boomers will start to turn 65 in 2011, just 6 years from now. In addition, life expectancy is increasing. The average life expectancy at age 65 for men has increased from just over 13 years in 1970 to 16 years in 2005, and is projected to increase to 17 years by 2020. Women have experienced a similar rise--from 17 years in 1970 to over 19 years in 2005. Women’s life expectancy at age 65 is projected to be 20 years by 2020. (See fig. 2.) As a consequence of life expectancy increases, individuals are generally spending more years in retirement. The average male worker spent 18 years in retirement in 2003, up from less than 12 years in 1950. A lower fertility rate is the other principal factor underlying the growth in the elderly’s share of the population. In the 1960s, the fertility rate was an average of three children per woman. Since the 1970s, the fertility rate has hovered around two children per woman. This decline in the fertility rate is a major factor in the slowing growth of the labor force over the last decade, a trend that is expected to continue. By 2025 labor force growth is expected to be less than a fifth of what it is today, as shown in figure 3. As a result of these trends, the share of the population aged 65 and older is projected to increase from 12 percent in 2000 to almost 20 percent in 2030. These developments will lead to significant changes in the elderly dependency ratio--the estimated proportion of people aged 65 and over to those of working age. In 1950, there was one elderly person for every 7 workers. The ratio increased to 1 to 5 in 2000 and is projected to rise to 1 to 3 by 2050. (See fig. 4.) These demographic developments have real implications for the nation’s economy. If labor force growth continues to decline as projected, relatively fewer workers will be available to produce goods and services. Without a major increase in productivity or higher than projected immigration, low labor force growth will lead to slower growth in the economy and to slower growth of federal revenues. This in turn will accentuate the overall pressure on the federal budget. Another concern is the possible loss of many experienced workers as the baby boomers retire. This could create gaps in skilled worker and managerial occupations, leading to further adverse effects on productivity and economic growth. Though long-term trends in labor force growth present significant challenges, there is some reason for optimism. In recent years, the labor force participation rate of men over age 55 has increased, and it is projected to continue to increase in the future. After hitting a low point of approximately 65 percent in 1994, the rate for this group rose to more than 69 percent in 2002, and the Bureau of Labor Statistics (BLS) projects it will be almost 70 percent in 2012. For men 65 and older, the rate also increased, to about 19 percent, and is projected to rise to nearly 21 percent by 2012. Similarly, the labor force participation rate of women over 55 has continued to increase. For women 55 to 64, the rate rose to more than 56 percent by 2004 and is projected to grow to over 60 percent by 2012. (See fig. 5.) These recent increases in labor force participation by older workers are encouraging. If Americans increase the number of years they work it could ease pressure on government retirement programs by increasing revenues to the Social Security and Medicare trust funds. In addition, individuals can significantly improve their standard of living in retirement. By remaining in the labor force, workers continue to earn income and delay drawing down assets such as pensions and personal savings, resulting in a shorter period over which they have to budget their resources. Some researchers have found that delaying retirement can substantially increase annual income in retirement. For example, they found that postponing retirement from age 55 to age 65 could nearly double real annual income at age 75. Although some people can benefit by remaining in the labor force at later ages, others may be unable or unwilling to do so. For those who are able, there are many factors that influence their choices. These include the eligibility rules of both employer pension plans and Social Security, an individual’s health status, the need for health insurance, personal preference, and the employment status of a spouse. The availability of suitable employment, including part-time work or flexible work arrangements, may also affect the retirement and employment choices of older workers. Depending on the eligibility rules and schedule of benefits, it can sometimes be more advantageous for workers to retire than to continue employment. The eligibility age for full Social Security benefits is currently 65 years and 6 months and rising, with reduced benefits available at age 62. Data from 2002 show that a majority of people (56.1 percent) elect to start benefits at age 62. Another important retirement incentive is eligibility for employer-provided pension benefits. In the United States, less than half of the labor force has some type of employer-provided pension coverage. In some cases the rules governing these plans create incentives to retire, even for those who may prefer to continue working. Health status and occupation are other key factors that influence the decision to work at older ages. As people age, they tend to encounter more health problems that make it more difficult to continue working or to work full-time. Thus, jobs that are physically demanding, usually found in the blue-collar and service sectors of the economy, can be difficult for many people to perform at older ages. Moreover, health status and occupation are often interrelated since health can be affected by work environment. Although blue-collar and service sector workers may continue to face significant health problems, there is evidence that the health of older persons generally is improving. Research has shown that the majority of workers aged 62 to 67 do not appear to have health limitations that would prevent them from extending their careers, although some could face severe challenges in attempting to remain in the workforce. In general, however, today’s older population may have an increased capacity to work compared with that of previous generations. Rising health care costs have made the availability of health insurance and anticipated medical expenditures important factors in the decision to retire. As health care costs continue to rise, many employers have decided to discontinue their retiree health benefits. A recent study estimated that the percentage of after-tax income spent on health care will approximately double for older married couples and singles by 2030. People at the lower end of the income distribution will be the most adversely affected. The study projected that by 2030 those in the bottom 20 percent of the income distribution would spend more than 50 percent of their after-tax income on insurance premiums and health care expenses, an increase of 30 percentage points from 2000. Continued employment could provide older workers with more income to help finance health care and in some cases could provide them with employer-sponsored health insurance. However, those least able to work at older ages may also be those with higher health care expenses. Researchers have also found that some older workers choose to remain in the labor force for reasons of physical and mental well-being. In recent surveys by AARP, Watson Wyatt, and the Employee Benefit Research Institute (EBRI), older workers and retirees indicated that, in addition to financial considerations, enjoyment of work and a desire to stay active were important reasons to decide to work in retirement. For example, in the 2004 Retirement Confidence Survey done by EBRI, retirees most often said they worked for pay because they enjoyed working and wanted to stay involved (66 percent); yet a large majority also identify at least one financial reason for having worked (81 percent). In addition, the labor force status of a spouse affects the retirement decision of an older worker. A recent study found that older married couples tend to retire at the same time. Another study which analyzed the retirement behavior of married men and women separately found that men were more likely to retire if their wife was also retired, but women were not significantly affected by the labor force status of their husbands. The labor force decisions of older persons are also influenced by the availability of alternatives to full-time employment. In the United States, there has been interest among older workers who wish to work longer in seeking employment arrangements that allow them to work part-time in retirement. We define partial retirement as a reduction in hours from full-time to part-time work. A partial retiree may have transitioned directly from full- to part-time work at either a current or a new job, or may have returned to work after full retirement. Although surveys indicate that many older workers would like to partially retire, prior GAO work found that offering such options is not a widespread practice among private employers and does not involve large numbers of workers at individual firms. Labor force participation is not solely the workers’ decision—there must also be an effective demand for their labor. Employers’ perceptions or biases against older workers may form potential barriers to older workers’ retaining their current jobs, finding new jobs, or reentering the work force after retiring. For example, employers may feel that it is more difficult to recoup the costs of hiring and training older workers. All other things being equal, older workers can also raise an employer’s cost of providing health insurance. Older workers may also face an obstacle because of a negative perception among employers about their productivity. Although the Age Discrimination in Employment Act protects those age 40 and over from age-based discrimination in the workplace, complaints to the Equal Employment Opportunity Commission suggest that such discrimination does still occur. To the extent that people choose to work longer as they live longer, the increase in the amount of time spent in retirement could be diminished. By staying in the workforce, older workers could ease financial pressures on Social Security and Medicare, as well as mitigate the expected slowdown in labor force growth. The additional income from earnings also could provide older Americans with greater resources in retirement and improve their financial security. Many older Americans are both willing and able to continue working at older ages. As described above, increased labor force participation of older workers would benefit both the economy and individuals. Thus, it is important to (1) encourage more widespread availability of flexible employment arrangements, such as partial retirement, which would make it easier for older workers to continue working, and (2) remove incentives that may induce older workers, who would otherwise choose to continue working, to retire. For those older Americans who are able to work, policies, programs, and alternative employment arrangements that help to extend their working life can enhance future supplies of skilled workers, bolster economic growth, and help many people secure adequate retirement income. We at GAO look forward to continuing to work with this Committee and the Congress in addressing this and other important issues facing our nation. Mr. Chairman, Mr. Kohl, members of the Committee, that concludes my statement. I’d be happy to answer any questions you may have. For further information regarding this testimony, please contact Barbara D. Bovbjerg, Director,or Alicia Puente Cackley, Assistant Director, at (202) 512-7215. Other individuals making key contributions to this testimony included Mindy Bowman, Sharon Hermes, and Kristy Kennedy. This is a work of the U.S. government and is not subject to copyright protection in the United States. It may be reproduced and distributed in its entirety without further permission from GAO. However, because this work may contain copyrighted images or other material, permission from the copyright holder may be necessary if you wish to reproduce this material separately.

In the 21st century our nation faces a growing fiscal imbalance. A demographic shift will begin to affect the federal budget in 2008 as the first baby boomers become eligible for Social Security benefits. This shift will increase as spending for federal health and retirement programs swells. Long-term commitments for these and other federal programs will drive a massive imbalance between spending and revenues that cannot be eliminated without tough choices and significant policy changes. Continued economic growth is critical and will help to ease the burden, but the projected fiscal gap is so great that it is unrealistic to expect that we will grow our way out of the problem. Early action to change existing programs and policies would yield the highest fiscal dividends and provide a longer period for prospective beneficiaries to make adjustments in their own planning. One of the potential policy changes is assisting older workers who want to stay in the workforce past retirement age. The Chairman and Ranking Member of the Senate Special Committee on Aging asked GAO to discuss demographic and labor force trends and the economic and fiscal need to increase labor force participation among older workers. This testimony will address those factors making it important to encourage those who want to work to continue doing so, as well as factors affecting older Americans' employment decisions. The aging of the baby boom generation (those born between 1946 and 1964), increased life expectancy, and falling fertility rates pose serious challenges for our nation. These trends will affect the size and productivity of the U.S. labor force and its output and will have real and important impacts on employers and the economy. With the impending retirement of the baby boom generation, employers face the loss of many experienced workers and possibly skill gaps in certain occupations. This could have adverse effects on productivity and economic growth. Furthermore, the expected increasing ratio of the elderly to those of working ages will place added pressure on Social Security and Medicare, both of which face long-term financial problems. Increasing the labor force by encouraging Americans to work longer may be one part of solutions to these problems. Although some people can benefit by remaining in the labor force at later ages, others may be unable or unwilling to do so. For those who are able, there are many factors that influence their choices. These include the eligibility rules of both employer pension plans and Social Security, an individual's health status, the need for health insurance, personal preference, and the employment status of a spouse. The availability of suitable employment, including part-time work or flexible work arrangements, may also affect the retirement and employment choices of older workers.

The use of computer technology in schools has grown dramatically in the past several years. Surveys conducted by one marketing research firmestimated that in 1983 schools had 1 computer for every 125 students; in 1997, the ratio had increased to 1 computer for every 9 students. Meanwhile, many education technology experts believe that current levels of school technology do not give students enough access to realize technology’s full potential. For example, schools should have a ratio of four to five students for every computer or five students for every multimedia computer, many studies suggest. In addition, concern has been expressed that aging school computers may not be able to run newer computer programs, use multimedia technology, and access the Internet. A computer-based education technology program has many components, as figure 1 shows, which range from the computer hardware and software to the maintenance and technical support needed to keep the system running. Although technology programs may define the components differently, they generally cover the same combination of equipment and support elements. Computer-based technology can be used to augment learning in a number of ways. These include drill-and-practice programs to improve basic skills; programs providing students with the tools to write and produce multimedia projects that combine text, sound, graphics, and video; programs providing access to information resources, such as on the Internet; and networks that support collaborative and active learning. Research on school technology has not, however, provided clear and comprehensive conclusions about its impact on student achievement. Although some studies have shown measurable improvements in some areas, less research data exist on the impact of the more complex uses of technology. Our work focused on funding for school technology. We did not evaluate district goals or accomplishments or assess the value of technology in education. Each of the districts we visited used a combination of funding sources to support technology in its schools (see table 1). At the local level, districts allocated funds from their district operating budgets, levied special taxes, or both. Districts also obtained funds from federal and state programs specifically designated to support school technology or from federal and state programs that could be used for this and other purposes. Finally, districts obtained private grants and solicited contributions from businesses. Although some individual schools in the districts we visited raised some funds, obtaining technology funding was more a district-level function than a school-level function, according to our study. Although districts tapped many sources, nearly all of them obtained the majority of their funding from one main source. The source, however, varied by district. For example, in Seattle, a 1991 local capital levy has provided the majority of the district’s education technology funding to date. In Gahanna, the district operating budget has provided the majority of technology funding. All five districts chose to allocate funds for technology from their operating budgets. The portions allocated ranged widely from 16 to 77 percent of their total technology funding. Two districts—Seattle and Roswell—also raised significant portions of their technology funding using local bonds or special levies. Manchester and Seattle won highly competitive 5-year Technology Innovation Challenge Grants for $2.8 million and $7 million, respectively. The grant provided the major source of funding for Manchester’s technology program—about 66 percent of the funding. The $1.5 million in grant funding Seattle has received so far accounted for about 4 percent of the district’s technology funding. All five districts reported using federal and state program funding that was not specifically designated for technology but could be used for this purpose if it fulfilled program goals. For example, four districts reported using federal title I funds for technology. In Manchester, a schoolwide program at a title I elementary school we visited had funded many of its 27 computers as part of its title I program. Three districts used state program funds, such as textbook or instructional materials funds, to support their technology programs. In Davidson County, for example, the district has directed about $2 million in such funds, including those for exceptional and at-risk children as well as vocational education, to education technology. All districts received assistance, such as grants and monetary and in-kind donations, from businesses, foundations, and individuals. Such funding constituted about 3 percent or less of their technology funding. It is important to note, however, that our selection criteria excluded districts that had benefited from extraordinary assistance such as those receiving the majority of their funding from a company or individual. Officials we spoke with attributed the limited business contributions in their districts to a variety of reasons, including businesses not fully understanding the extent of the schools’ needs and businesses feeling overburdened by the large number of requests from the community for assistance. Some said their district simply had few businesses from which to solicit help. Nonetheless, all five districts noted the importance of business’ contribution and were cultivating their ties with business. teacher organization activities and other school fund-raisers. Such supplemental funding amounted to generally less than $7,000 annually but did range as high as $84,000 over 4 years at one school. Staff at two schools reported that teachers and other staff used their personal funds to support technology in amounts ranging from $100 to over $1,000. Officials in the districts we visited identified a variety of barriers to obtaining technology funding. Four types of barriers were common to most districts and considered by some to be especially significant. (See table 2.) Officials in all of the districts we visited reported that district-level funding was difficult to obtain for technology because it was just one of many important needs that competed for limited district resources. For example, a Gahanna official reported that his district’s student population had grown, and the district needed to hire more teachers. A Seattle official reported that his district had $275 million in deferred maintenance needs. Some districts had mandates to meet certain needs before making funding available for other expenditures like technology. Manchester officials noted, for example, that required special education spending constituted 26 percent of their 1997 district operating budget, a figure expected to rise to 27.5 percent in fiscal year 1998. Officials from all districts said that resistance to higher taxes affected their ability to increase district operating revenue to help meet their technology goals. For example, in Davidson County, the local property tax rate is among the lowest in the state, and officials reported that many county residents were attracted to the area because of the tax rates. In addition, two districts—Roswell and Seattle—did not have the ability to increase the local portion of their operating budgets because of state school finance systems that—to improve equity—limited the amount of funds districts could raise locally. Officials in three districts reported that the antitax sentiment also affected their ability to pass special technology levies and bond measures. Although all districts identified an environment of tax resistance in their communities, most said they believed the community generally supported education. Many officials reported that they did not have the time to search for technology funding in addition to performing their other job responsibilities. They said that they need considerable time to develop funding proposals or apply for grants. For example, one technology director with previous grant-writing experience said she would need an uninterrupted month to submit a good application for a Department of Commerce telecommunications infrastructure grant. As a result, she did not apply for this grant. The technology director in Manchester said that when the district applied for a Technology Innovation Challenge Grant, two district staff had to drop all other duties to complete the application within the 4-week time frame available. corporations and foundations typically like to give funds to schools where they can make a dramatic difference. Districts have employed general strategies to overcome funding barriers rather than address specific barriers. The strategies have involved two main approaches—efforts to inform decisionmakers about the importance of and need for technology and leadership efforts to secure support for technology initiatives. In their information efforts, district officials have addressed a broad range of audiences about the importance of and need for technology. These audiences have included school board members, city council representatives, service group members, parents, community taxpayers, and state officials. These presentations have included technology demonstrations, parent information nights, lobbying efforts with state officials, and grassroots efforts to encourage voter participation in levy or bond elections. Roswell, for example, set up a model technology school and used it to demonstrate the use of technology in school classrooms. In the districts we visited, both district officials and the business community provided leadership to support school technology. In all districts, district technology directors played a central leadership role in envisioning, funding, and implementing their respective technology programs over multiyear periods and continued to be consulted for expertise and guidance. In some districts, the superintendent also assumed a role in garnering support and funding for the technology program. Beyond the district office, business community members sometimes assumed leadership roles to support technology by entering into partnerships with the districts to help in technology development efforts as well as in obtaining funding. All five districts we visited had developed such partnerships with local businesses. In Roswell and Seattle, education foundations comprising business community leaders had helped their school districts’ efforts to plan and implement technology, providing both leadership and funding for technology. Other districts we visited continued to cultivate their ties with the business community through organizations such as a business advisory council and a community consortium. Nearly all districts reported maintenance, technical support, and training— components often dependent on staff—as more difficult to fund than other components. Officials we interviewed cited several limitations associated with funding sources that affected their use for staff costs. First, some sources simply could not be used to pay for staff. Officials in Roswell and Seattle noted that special levy and bond monies, their main sources of technology funds, could not be used to support staff because the funds were restricted to capital expenditures. Second, some funding sources do not suit the ongoing nature of staff costs. Officials noted, for example, that grants and other sources provided for a limited time or that fluctuate from year to year are not suited to supporting staff. Most districts funded technology staff primarily from district operating budgets. Several officials noted that competing needs and the limited size of district budgets make it difficult to increase technology staff positions. Officials in all five districts reported having fewer staff than needed. Some technology directors and trainers reported performing maintenance or technical support at the expense of their other duties because of a lack of sufficient support staff. One result was lengthy periods—up to 2 weeks in some cases—when computers and other equipment were unavailable. Several officials observed that this can be frustrating to teachers and discourage them from using the equipment. Teacher training was also affected by limited funding for staff costs, according to officials. In one district, for example, an official said that the number of district trainers was insufficient to provide the desired in-depth training to all teachers. Most district officials expressed a desire for more technology training capability, noting that teacher training promoted the most effective use of the equipment. A number of districts had developed mitigating approaches to a lack of technology support staff. These included purchasing extended warranties on new equipment, training students to provide technical support in their schools, and designating teachers to help with technical support and training. and (2) periodic costs of upgrading and replacing hardware, software, and infrastructure to sustain programs. Most districts planned to continue funding ongoing maintenance, technical support, training, and telecommunications costs primarily from their operating budgets and to sustain at least current levels of support. Nonetheless, most districts believed that current levels of maintenance and technical support were not adequate and that demand for staff would likely grow. Some officials talked about hiring staff in small increments but were unsure to what extent future district budgets would support this growing need. The periodic costs to upgrade and replace hardware, software, or infrastructure can be substantial, and most districts faced uncertainty in continuing to fund them with current sources. For example, Davidson County and Gahanna funded significant portions of their hardware with state technology funding. However, officials told us that in the past, the level of state technology funding had been significantly reduced due to the changing priorities of their state legislatures. In Seattle, special levies are the district’s primary funding source, but passing these initiatives is unpredictable. Officials in all districts underscored the need for stable funding sources and for technology to be considered a basic education expenditure rather than an added expense. They also suggested ways to accomplish this. Some proposed including a line item in the district operating budget to demonstrate district commitment to technology as well as provide a more stable funding source. One official said that technology is increasingly considered part of basic education and as such should be included in the state’s formula funding. Without such funding, he said districts would be divided into those that could “sell” technology to voters and those that could not. technology supporters in the districts we studied not only had to garner support at the start for the district’s technology, but they also had to continue making that case year after year. To develop support for technology, leaders in these five school districts used a broad informational approach to educate the community, and they formed local partnerships with business. Each district has developed some ties with business. Nonetheless, funding from private sources, including business, for each district, constituted no more than about 3 percent of what the district has spent on its technology program. Other districts like these may need to continue depending mainly on special local bonds and levies, state assistance, and federal grants for initially buying and replacing equipment and on their operating budgets for other technology needs. Lack of staff for seeking and applying for funding and the difficulty of funding technology support staff were major concerns of officials in all the districts we studied. Too few staff to maintain equipment and support technology users in the schools could lead to extensive computer downtime, teacher frustration, and, ultimately, to reduced use of a significant technology investment. The technology program in each of the five districts we visited had not yet secured a clearly defined and relatively stable funding source, such as a line item in the operating budget or a part of the state’s education funding formula. As a result, district officials for the foreseeable future will continue trying to piece together funding from various sources to maintain their technology programs and keep them viable. Mr. Chairman, this concludes my prepared statement. I would be pleased to respond to any questions you or members of the Task Force may have. The first copy of each GAO report and testimony is free. Additional copies are $2 each. Orders should be sent to the following address, accompanied by a check or money order made out to the Superintendent of Documents, when necessary. VISA and MasterCard credit cards are accepted, also. Orders for 100 or more copies to be mailed to a single address are discounted 25 percent. U.S. General Accounting Office P.O. Box 37050 Washington, DC 20013 Room 1100 700 4th St. NW (corner of 4th and G Sts. NW) U.S. General Accounting Office Washington, DC Orders may also be placed by calling (202) 512-6000 or by using fax number (202) 512-6061, or TDD (202) 512-2537. 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GAO discussed how school districts obtain funds for the acquisition of education technology, focusing on: (1) sources of funding school districts have used to develop and fund their technology programs; (2) barriers districts have faced in funding the technology goals they set, and how they attempted to deal with these barriers; (3) components of districts' technology programs that have been the most difficult to fund, and what the consequences have been; and (4) districts' plans to deal with the ongoing costs of the technology they have acquired. GAO noted that: (1) the five districts it studied used a variety of ways to fund their technology programs; (2) four types of barriers seemed to be common to several districts: (a) technology was just one of a number of competing needs and priorities, such as upkeep of school buildings; (b) local community resistance to higher taxes limited districts' ability to raise more revenue; (c) officials said they did not have enough staff for fund-raising efforts and therefore had difficulty obtaining grants and funding from other sources such as business; and (d) some funding sources had restrictive conditions or requirements that made funding difficult to obtain; (3) to overcome these barriers, officials reported that their districts used a variety of methods to educate and inform the school board and the community about the value of technology; (4) these ranged from presentations to parent groups to the establishment of a model program at one school to showcase the value of technology; (5) the parts of the technology program that were hardest to fund, according to those GAO interviewed, were components such as maintenance, training, and technical support, which depend heavily on staff positions; (6) for example, in two locations special levy and bond funding could be used only for capital expenditures--not for staff; (7) in several districts GAO visited, officials said that staffing shortfalls in maintenance and technical support had resulted in large workloads for existing staff and in maintenance backlogs; (8) most said this resulted in reduced computer use because computers were out of service; and (9) as these districts looked to the future to support the ongoing and periodic costs of their technology programs, they typically planned to continue using a variety of funding sources despite uncertainties associated with many of these sources.

The U.S. Post Office Department, the predecessor to the U.S. Postal Service, did not officially address the naming of post offices until 1891. Until then, the names of post offices were derived from a number of sources, including the name of the town or township in which the post office was located, certain neighborhoods, crossroads, local landmarks, and even the postmaster's name or place of residence. On February 18, 1891, Postmaster Miscellaneous Order 87 instructed the clerks of post offices nationwide to utilize the post office names published in the bulletins of the United States Board on Geographic Names when naming post offices. The next year, Postmaster Miscellaneous Order 48 instructed the fourth assistant Postmaster General not to "establish any post office whose proposed name differed from that of the town or village in which it was to be located." The goal of this policy was to facilitate the expeditious and efficient delivery of mail by avoiding confusion over the location of a post office. Congress first honored an individual by naming a post office through freestanding legislation in 1967. It named a combined post office and federal office building in Bronx, NY, as the "Charles A. Buckley Post Office and Federal Office Building" in honor of the late Representative Charles A. Buckley (P.L. 90-232; 81 Stat. 751). Courthouses and federal buildings, some no doubt containing postal facilities, had been named before that. The United States Postal Service (USPS) came into being in 1971 with its own separate real estate authority (39 U.S.C. 401(5)). All legislation to name USPS facilities then was referred to the House and Senate Post Office and Civil Service Committees, and when these committees were abolished, to the House Oversight and Government Reform and Senate Homeland Security and Governmental Affairs Committees. As Table 1 indicates, the number of post office naming bills made law rose and fell between the 108 th and 112 th Congresses. During this period, post office naming acts were a very common form of legislation, comprising almost 20% of all statutes enacted. Many of the persons honored by post office naming acts were individuals of local renown. For example, the 110 th Congress named a Kansas City, MO, post office for the Reverend Earl Abel ( P.L. 110-353 ; 122 Stat. 3983). Other honorees, though, were nationally recognized persons, such as Gerald R. Ford, Jr. (twice), Ronald Reagan (three times), Bob Hope, Cesar Chavez, Nat King Cole, Mickey Mantle, and Buck Owens. During the recent Congresses, many post offices have been named for U.S. soldiers killed in the wars in Iraq and Afghanistan. Usually, these bills honor individual soldiers. Congress also has named at least one post office for all of a locality's fallen soldiers. The first step normally considered in preparing a post office naming bill is the selection of an appropriate post office. Most congressional districts contain many postal facilities. A few factors might be examined in selecting a post office, such as the proposed honoree's ties to the area served by the post office and the condition of the building to ensure that it is aesthetically adequate. Another factor is whether the facility is owned by the USPS or is leased from a private owner. In the latter case, the building's owner might be consulted. Finally, a search might be done to determine whether a proposed post office already has been named for someone. The USPS has compiled a comprehensive list of all the statutes enacted since 1967 to name post offices, including the addresses, name of the honoree, and reason(s) for the post office dedication. During this process, it can be helpful to work with the USPS's designated government relations person for a Member's home state. Once a post office has been selected, two pieces of information are needed to draft the legislation. One is the precise address of the facility, and a second is the precise form and spelling of the name of the person who is to be honored. Wording of post office naming legislation shows little variation. A statute ( P.L. 108-17 ; 117 Stat. 623) signed by then President George W. Bush on April 23, 2003, is typical: Most post office naming acts originate in the House. In the past, the House Oversight and Government Reform Committee had a policy (though not a formal rule) that a post office naming bill would not be approved unless and until all Members from the state where the post office is located have signed on as cosponsors of the bill. In the 113 th Congress, the committee adopted a rule which states: "The consideration of bills designating facilities of the United States Postal Service shall be conducted so as to minimize the time spent on such matters by the committee and the House of Representatives." At the time of the publication of this report, no additional committee guidance had been issued. In recent years, the committee has generally not marked up or otherwise formally approved naming bills in a committee meeting. Rather, committee staff keep a list of naming bills and other measures appropriate for consideration under suspension of the rules, or by unanimous consent, to be taken up when opportunities appear. Negotiations between the majority and minority leaders determine when and how the bills are to be considered on the floor. Passage by the House has almost always been routine, commonly by voice vote or on a roll call vote that is unanimous. An exception occurred on the House floor on September 27, 2005, when the motion to suspend the rules and pass H.R. 438 was defeated on a 190 to 215 roll call vote. The bill, which would have designated a post office in Berkeley, CA, as the Maudelle Shirek Post Office Building, was intended to recognize a community activist and long-time member of the Berkeley City Council. During the debate, opposition was expressed based on her attributed espousal of "principles that would be running contrary to American values." Under both Democratic and Republican leadership in the 107 th , 108 th , and 109 th Congresses, the committee of jurisdiction—the Committee on Governmental Affairs, later the Committee on Homeland Security and Government Affairs—required both Senators from a state to agree to a naming bill, though formal co-sponsorship was not required. After the first session of the 109 th Congress, the committee adopted a policy (not a formal rule) that it would no longer consider post office naming bills that honor living persons. In the 111 th Congress, the committee adopted the rule stating that it— will not consider any legislation that would name a postal facility for a living person with the exception of bills naming facilities after former Presidents and Vice Presidents of the United States, former Members of Congress over 70 years of age, former state or local elected officials over 70 years of age, former judges over 70 years of age, or wounded veterans. The committee re-adopted this policy in the 112 th Congress and the 113 th Congress. It is not uncommon for post office naming bills that have passed the House to wait several months for action by the Senate Homeland Security and Governmental Affairs Committee and the full Senate. To clear this backlog of legislation, the Senate sometimes considers these bills en bloc, passing them all by unanimous consent without debate. As in the House, postal naming bills tend to be uncontroversial in the Senate. However, in 2008 there was some concern over H.R. 4774 , which proposed to name a post office after a lobbyist. The House passed the bill; the Senate did not. The practical effect of legislation renaming a post office is less than might be imagined. For operational reasons, post offices retain their geographical designations in the USPS addressing system, and there is no change in the way renamed post offices are identified in the USPS's listings of post offices. The tangible effect of naming a post office is the installation of a dedicatory plaque in "a prominent place in the facility's lobby, preferably above the post office boxes." The plaque, which is purchased locally at USPS expense running from $250 to $500, measures about 11 inches by 14 inches and contains the following inscription: USPS, working with the sponsor of the legislation, may take responsibility for organizing a dedication ceremony. The protocol includes inviting the honored individual and his or her family, an honor guard, a religious figure for an invocation, media notification, and light refreshments such as cake and punch. Costs for these expenses may be borne by USPS from its contingency funds or shared with local community interests. During the 111 th Congress, Representative Darrell E. Issa, the Committee on Oversight and Government Reform's ranking minority Member, introduced H.R. 3137 on July 9, 2009. This bill would require the USPS to provide for a suitable plaque ... no later than 120 days after the date as of which—(1) a law has been enacted providing for the designation of the postal facility involved; and (2) sufficient amounts have been received ... to provide for such plaque. Federal law authorizes the USPS "to accept gifts or donations of services or property, real or personal, as it deems, necessary or convenient in the transaction of its business" (39 U.S.C. 401(7)). H.R. 3137 also would amend 39 U.S.C. 404(7) to read, [The USPS shall have the power to] accept gifts or donations of services or property, real or personal, as it deems, necessary or convenient in the transaction of its business including monetary donations made (in such manner as the Postal Service may prescribe) for the funding of plaques in connection with the commemorative designation of postal facilities. The House Oversight and Government Reform Committee reported the bill on July 10, 2009. No further action was taken on the bill.

Legislation naming post offices for persons has become a very common practice. During the 108th through 112th Congresses, almost 20% of all statutes enacted were post office naming acts. This report describes how the practice of naming post offices through public law originated and how it is commonly done today. It also details the House and Senate committee policies for considering such legislation and the U.S. Postal Service's procedures for implementing post office naming acts. Unanimity of a state's congressional delegation is required for the movement of naming bills to the floor of the House or Senate. Additionally, the Senate committee of jurisdiction has adopted the rule that it "will not consider any legislation that would name a postal facility for a living person with the exception of bills naming facilities after former Presidents and Vice Presidents of the United States, former Members of Congress over 70 years of age, former state or local elected officials over 70 years of age, former judges over 70 years of age, or wounded veterans." The cost of dedicating a post office in the name of an individual is modest. Renaming a post office through legislation does not change either the U.S. Postal Service's or the public's identification of the facility by its geographic location. Rather, a small plaque is installed within the post office. In the 111th Congress, H.R. 3137 was introduced to amend current postal law to clarify that the U.S. Postal Service may accept financial donations toward the cost of providing a commemorative plaque. This bill did not become law. This report will be updated early in the 114th Congress or in the event of significant legislative action in the 113th Congress.

At the beginning of a Congress, or at the early organization meetings prior to the new Congress, committees organize. Members are assigned to full committees, committee chairs and ranking minority Members are determined, subcommittees are created and Members are assigned, and committee rules are adopted. Once panels are organized they can begin the work of holding hearings and considering legislative proposals. Committee assignments often determine the character of a Member's career. They are also important to the party leaders who organize the chamber and shape the composition of the committees. House rules identify some procedures for making committee assignments; Republican Conference and Democratic Caucus rules supplement these House rules and provide more specific criteria for committee assignments. In general, pursuant to House rules, Representatives cannot serve on more than two standing committees. In addition, both parties identify exclusive committees and generally limit service on them; other panels are identified as nonexclusive or exempt committees. House and party rules also restrict Members' service on the Budget, Select Intelligence, and Standards of Official Conduct Committees to a limited number of terms. Committee jurisdiction is determined by a variety of factors. Paramount is House Rule X, which designates the subject matter within the purview of each standing committee. The formal provisions of the rule are supplemented by an intricate series of precedents and informal agreements. The rule and precedents govern the referral of legislation. Bills can be referred to as many committees as can exhibit responsibility for the subject matter of the legislation. However, the Speaker, who makes referrals with the advice of the parliamentarian, generally designates a "primary" committee, and other committees may then receive a referral in a sequential order. The Speaker also has authority to impose time limitations on any committee receiving a referral. Subcommittees are entities created by full committees to assist them in managing their work. Subcommittees are subject to the authority and direction of their parent committee. Subcommittee jurisdictions are not enumerated in House rules, but instead are determined by each committee. By practice, most legislation is referred to a subcommittee prior to its consideration by a full committee. Committees are generally prohibited from having more than five subcommittees, although there are some exceptions, such as the Appropriations Committee, which has 12 subcommittees. Some committees create no subcommittees. Under House rules, Members are limited to service on four subcommittees, although there are some exceptions. Subcommittee assignments are governed, in addition, by respective party rules and practices. House Rule XI provides that the rules of the House "are the rules of its committees and subcommittees so far as applicable." The rule directs each standing committee to adopt written rules governing its procedures that "may not be inconsistent with the Rules of the House or with those provisions of law having the force and effect of Rules of the House.... " Adoption of committee rules is one of the first orders of business a committee undertakes after committees are organized at the convening of a Congress. Committees, for example, must select a regular meeting day, which may not be less frequently than monthly; determine appropriate quorums for various activities within the limits of House rules; identify the role of the chair and his or her relationship with the ranking minority member; and clarify the authority of the majority of the committee, especially vis-á-vis, the committee chair. These committee rules generally dictate the formal procedures a committee follows in conducting its business. All hearings, whether legislative or oversight, have a similar, formal purpose and follow similar procedures: to gather information for use by a committee in its activities. Further, each committee has authority to hold hearings whether the House is in session, has recessed, or has adjourned. Hearings can be held in Washington or elsewhere. However, House rules require that all committee chairs, except the chair of the Rules Committee, must give at least one week's notice to the public of the date, place, and subject of hearings, although a hearing may be held with less notice if either the chair, with the concurrence of the ranking minority member, or the committee by majority vote, determines a need to hold the hearing sooner. Hearings are open to the public unless the committee votes in open session to close a hearing. Although the chair determines the agenda and selects witnesses, the minority is entitled to one day of related hearings to call its own witnesses, if a majority of minority members so notify the chair. Witnesses before House committees generally must file with the committee an advance copy of their written testimony, and then limit their oral testimony to a brief summary. A question-and-answer period, with rules generally allowing each committee member five minutes to question each witness, usually follows a witness's opening statement. Under House rules, a committee may adopt a rule, or agree by motion, to allow an equal number of its majority and minority party members to question a witness for up to 30 minutes, and may also adopt a rule or motion allowing its staff to question a witness, with time divided equally between majority and minority staff. The essential purpose of a committee markup is to determine whether a measure pending before a committee should be amended in any substantive way. Of course, committees do not actually amend measures; instead, a committee votes on which amendments, if any, it wishes to recommend to the House. How a panel conducts a markup for the most part reflects procedures used in the House's Committee of the Whole (parliamentary device to consider amendments), as possibly modified by an individual committee's rules. There is also a widespread feeling that the level of formality in markup often reflects the level of contention over the measure being marked up. A markup begins with a chair calling up a particular measure for consideration by the committee. The next action depends on the nature of the "markup vehicle" (i.e., the text that a chair intends for the committee to amend and report), which may be different from the measure laid before the panel for consideration. A vehicle can come before a committee in several different forms, each of which has its own procedural and political consequences. A chair may lay before a committee either a bill that has been previously introduced and referred, or the text of a draft measure that has not been formally introduced, such as a subcommittee-reported version or a chairman ' s mark . In each case, the text laid before the committee is itself the markup vehicle, but, in the second case, at the end of the markup process, the text must be incorporated or converted into a measure for reporting to the House. Alternatively, the markup vehicle may be placed before the committee as an amendment in the nature of a substitute for the bill or text initially called up. At the end of a markup, a chair normally entertains a motion to report a measure favorably to the House. By House rule, a majority of the committee must be physically present. The committee can report the measure as introduced, with a series of amendments, with a single amendment in the nature of a substitute , or as a so-called clean bill. A clean bill would be introduced in the House and referred back to the committee. Such a measure would also have a number different from that of the measure as introduced. Once agreed to, a measure is "ordered reported;" it is actually "reported" when the committee report is filed in the House. A committee report is the committee's work product that accompanies a measure that is reported. When a committee orders a bill reported, it is incumbent upon the chair, pursuant to House rule, to report it "promptly" and take all other steps necessary to secure its consideration by the full House. House rules and statutes detail several substantive requirements of items to be included in reports accompanying measures reported from committees. For example, most reports explain a measure's purpose and the need for the legislation, its cost, committee votes on amendments and the measure itself, the position of the executive branch, and the specific changes the bill would make in existing law. As well, all committee members may file, within two calendar days, supplemental, minority, or additional views, which are then included in the committee report. Committees periodically conduct reviews of agency performance in the implementation of legislation, called oversight, or conduct investigations into perceived wrongdoing, referred to as investigations. Conducting oversight or an investigation is traditionally done initially by staff, followed by committee hearings. Legislation may result from a committee's work. House committees publish a variety of documents dealing with legislative issues, investigations, and internal committee matters. Usually these publications are available on-line or from the issuing committee. Printed hearings contain the edited transcripts of testimony. They often are not published for months after the hearing, but are usually available for inspection in committee offices; witness testimony is often available on-line. Committee reports accompany legislation provide an explanation of a measure, the committee's action in considering it, and certain cost and other findings. Activity reports published at the end of a Congress provide a description of a committee's actions over the course of that Congress. Committee calendars are a comprehensive record of a committee's actions, including committee rules, membership, a brief legislative history of each measure referred to it, a list of hearings and markups held, and often a list of other committee publications. Finally, committees also publish other information as "committee prints." A committee print might include committee rules or a report on a policy issue that the panel wants to distribute widely.

Committees are integral to the work of Congress in determining the policy needs of the nation and acting on them. This report provides a brief overview of six features of the committee system in the House: organization, hearings, markup, reporting, oversight, and publications. Committees in the House have four primary powers: to conduct hearings and investigations, to consider bills and resolutions and amendments to them, to report legislation to the House for its possible consideration, and to monitor executive branch performance, that is, to conduct oversight. The report will be updated as events warrant.

The National Cemeteries Act of 1973 (P.L. 93-43) authorized NCS to bury eligible veterans and their family members in national cemeteries. Before 1973, all national cemeteries were operated under the authority of the Department of the Army. However, P.L. 93-43 shifted authority to VA for all national cemeteries except Arlington National Cemetery and the U.S. Soldiers’ and Airmen’s Home National Cemetery. NCS operates and maintains 115 national cemeteries located in 39 states and Puerto Rico. NCS offers veterans and their eligible family members the options of casket interment and interment of cremated remains in the ground (at most cemeteries) or in columbaria niches (at nine cemeteries). NCS determines the number and type of interment options available at each of its national cemeteries. The standard size of casket grave sites, the most common burial choice, is 5 feet by 10 feet, and the grave sites are prepared to accommodate two caskets stacked one on top of the other. A standard in-ground cremains site is 3 feet by 3 feet and can generally accommodate one or two urns. The standard columbarium niche used in national cemeteries is 10 inches wide, 15 inches high, and 20 inches deep. Niches are generally arrayed side by side, four units high, and can hold two or more urns, depending on urn size. In addition to burying eligible veterans and their families, NCS manages the State Cemetery Grants Program, which provides aid to states in establishing, expanding, or improving state veterans’ cemeteries. State veterans’ cemeteries supplement the burial service provided by NCS. The cemeteries are operated and permanently maintained by the states. A State Cemetery grant may not exceed 50 percent of the total value of the land and the cost of improvements. The remaining amount must be contributed by the state. The State Cemetery Grants Program funded the establishment of 28 veterans’ cemeteries, including 3 cemeteries currently under development, located in 21 states, Saipan, and Guam. The program has also provided grants to state veterans’ cemeteries for expansion and improvement efforts. As the veteran population ages, NCS projects the demand for burial benefits to increase. NCS has a strategic plan for addressing the demand for veterans’ burials up to fiscal year 2003, but the plan does not address longer term burial needs—that is, the demand for benefits during the expected peak years of veteran deaths, when pressure on the system will be greatest. Beyond the year 2003, NCS officials said they will continue using the basic strategies contained in the current 5-year plan. According to its 5-year strategic plan (1998-2003), one of NCS’ primary goals is to ensure that burial in an open national or state veterans’ cemetery is an available option for all eligible veterans and their family members. The plan sets forth three specific strategies for achieving this goal. First, NCS plans to build, when feasible, new national cemeteries. NCS is in various stages of establishing four new national cemeteries and projects that all will be operational by the year 2000. A second strategy for addressing the demand for veteran burials is through expansion of existing cemeteries. NCS plans to complete construction in order to make additional grave sites or columbaria available for burials at 24 national cemeteries. NCS also plans to acquire land needed for cemeteries to continue to provide service at 10 cemeteries. Third, NCS plans to encourage states to provide additional grave sites for veterans through participation in the State Cemetery Grants Program. According to the plan, NCS plans to increase the number of veterans served by a state veterans’ cemetery by 35,000 per year beginning in fiscal year 1998. Also, NCS is in the early stages of developing information designed to assist states in the establishment of a state veterans’ cemetery. veterans who will have access to a veterans’ cemetery stop at the year 2003. Although NCS has a 5-year strategic plan for addressing the demand for veterans’ burials during fiscal years 1998 through 2003, plans to address the demand beyond 2003 are unclear. For example, NCS’ strategic plan does not articulate how NCS will mitigate the effects of the increasing demand for burial services. According to NCS’ Chief of Planning, although its strategic plan does not address long-term burial needs, NCS is always looking for opportunities to acquire land to extend the service period of national cemeteries. Also, to help address long-range issues, NCS compiles key information, such as mortality rates, number of projected interments and cemetery closures, locations most in need of veterans’ cemeteries, and cemetery-specific burial layout plans. In addition, NCS officials pointed out that the Government Performance and Results Act of 1993 (the Results Act) requires a strategic plan to cover a 5-year period. However, the Results Act requires that an agency prepare a strategic plan that covers at least a 5-year period and allows an agency to articulate how it plans to address future goals. For example, the National Aeronautics and Space Administration’s plan articulates a “strategic roadmap” that outlines agencywide goals. This roadmap lists separate goals for near-, mid-, and long-term time periods over the next 25 years and beyond. The Environmental Protection Agency’s plan also articulates goals that are not bound by the 5-year time period. For example, it includes an objective to reduce toxic air emissions by 75 percent in 2010 from 1993 levels. Although NCS projects annual interments to increase about 42 percent from 73,000 in 1995 to 104,000 in 2010, peaking at 107,000 in 2008, its strategic plan does not indicate how the agency will begin to position itself to handle this increase in demand for burial benefits. We believe that, given the magnitude of the projected increase in demand for burial benefits, NCS’ strategic plan should discuss how its current strategies will be adjusted to address the demand during the peak years of veterans’ deaths. through the State Cemetery Grants Program. According to NCS’ Chief of Planning, NCS will encourage states to locate cemeteries in areas where it does not plan to operate and maintain national cemeteries. Since the State Cemetery Grants Program’s inception in 1978, fewer than half of the states have established veterans’ cemeteries, primarily because, according to NCS officials, states must provide up to half of the funds needed to establish, expand, or improve a cemetery as well as pay for all equipment and annual operating costs. Furthermore, the Director of the State Cemetery Grants Program told us that few states, especially those with large veteran populations, have shown interest in legislation that VA proposed in its 1998 and 1999 budget submission in order to increase state participation. This proposed legislation would increase the federal share of construction costs from 50 to 100 percent and permit federal funding for up to 100 percent of initial equipment costs. In fact, according to the Director, state veterans’ affairs officials said they would rather have funding for operating costs than for construction. NCS officials told us they will continue to evaluate locations for additional national cemeteries in the future, based on demographic needs. However, according to NCS officials, VA currently has no plans to request construction funds for more than the four new cemeteries, which will be completed by the year 2000. Officials said that even with the new cemeteries, interment in a national or state veterans’ cemetery will not be “readily accessible” to all eligible veterans and their family members. According to NCS officials, the majority of areas not served will be major metropolitan areas with high concentrations of veterans, such as Atlanta, Georgia; Detroit, Michigan; and Miami, Florida. the average columbarium interment cost would be about $280, compared with about $345 for in-ground cremains burial and about $655 for casket burial. Our analysis also showed that the service delivery period would be extended the most using columbarium interment. For example, using columbarium interment in a total of 1 acre of land could extend the service delivery period by about 50 years, while in-ground cremains interment would extend the service period about 3 years and casket burials about half a year. While historical data imply that the majority of veterans and eligible dependents prefer a casket burial, NCS national data show that the demand for cremation at national cemeteries is increasing. For example, veterans choosing cremation increased about 50 percent between 1990 and 1996, and NCS officials expect demand for cremation to continue to increase in the future. The incidence of cremation also continues to increase in the general population. The Cremation Association of North America projects that cremation will account for about 40 percent of all burials by 2010. designed to increase state participation by increasing the share of federal funding. Therefore, NCS needs to rely more on extending the service periods of its existing cemeteries. Columbaria can more efficiently utilize available cemetery land at a lower average interment cost than the other interment options and can also extend the service period of existing national cemeteries. Using columbaria also adds to veterans’ choice of services and recognizes current burial trends. While we recognize that cremation may not be the preferred interment option for many veterans, identifying veterans’ burial preferences, as NCS plans to do, would enable it to better manage limited cemetery resources and more efficiently meet veterans’ burial needs. Mr. Chairman, this concludes my prepared statement. I will be glad to answer any questions you or Members of the Subcommittee may have. The first copy of each GAO report and testimony is free. Additional copies are $2 each. 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GAO discussed the National Cemetery System's (NCS) plans to accommodate the increasing demand for burial benefits and what it can do to extend the service period of existing cemeteries. GAO noted that: (1) NCS has adopted a 5-year strategic plan for fiscal years 1998 through 2003 with the goal of ensuring that burial in a national or state veterans' cemetery is an available option for all veterans and their eligible family members; (2) strategies outlined in NCS' plan include: (a) building new national cemeteries; (b) expanding existing cemeteries; and (c) encouraging states to provide additional burial sites through participation in the State Cemetery Grants Program; (3) however, it is unclear how NCS will address the veterans' burial demand during the peak years, when pressure on it will be greatest, since NCS' strategic plan does not indicate how it will begin to position itself to handle the increasing demand for burial benefits; (4) NCS officials stated that beyond 2003, NCS will continue using the basic strategies contained in its current 5-year plan; (5) for example, NCS plans to encourage states to establish veterans' cemeteries in areas where it does not plan to operate national cemeteries; (6) however, since the grant program's inception in 1978, fewer than half of the states have established veterans' cemeteries; (7) states have also shown limited interest in a legislative proposal designed to increase state participation by increasing the share of federal funding; (8) given the magnitude of the projected increase in demand for burial benefits, GAO continues to believe that it is important for NCS to articulate to Congress and other stakeholders how it plans to address the increasing demand; (9) as annual interments increase, cemeteries reach their burial capacity, thus increasing the importance of making the most efficient use of available cemetery space; (10) to identify feasible approaches to extending the service period of existing cemeteries, GAO analyzed the impact of adding burial sites to an acre of land in an existing cemetery; (11) GAO's analysis of three interment options showed that columbaria offered the most efficient option because they would involve the lowest average interment cost and would significantly extend a cemetery's service period; and (12) morever, while the majority of veterans and eligible family members prefer a casket burial, cremation is an acceptable interment option for many, and the demand for cremation, which varies by region, continues to increase.

The Committee of the Whole has been an accepted practice in the United States Congress since the First Congress convened in 1789. It was used earlier in many of the colonial legislatures, as well as in the Continental Congress. The custom has its antecedents in English parliamentary practice. De Alva Stanwood Alexander, an historian of the House of Representatives and a former Representative himself, wrote: This Committee has a long history. It originated in the time of the Stuarts, when taxation arrayed the Crown against the [House of] Commons, and suspicion made the Speaker a tale-bearer to the King. To avoid the Chair's espionage the Commons met in secret, elected a chairman in whom it had confidence, and without fear of the King freely exchanged its views respecting supplies. The informality of its procedure survived the occasion for secrecy, but to this day the House of Commons keeps up the fiction of concealment, the Speaker withdrawing from the hall when the Committee convenes, and the chairman occupying the clerk's desk. Use of the Committee of the Whole in the current practice of the House of Representatives has changed considerably from the form first used in 1789. Until the early 1800s, the House used committees of the whole to work out the broad outlines of major legislation. A select committee would then be appointed to draft a bill. When the select committee reported the bill to the House, the House would then refer the measure to a Committee of the Whole for debate and amendment before itself considering the question of passage. Historian Ralph Volney Harlow commended on the committee of the whole as a forum in which the broad outline of legislation could be discussed: The committee of the whole is really a compromise between a regular session, and an adjournment for purposes of discussion. The latter method could not be used to advantage in any large assembly, because some restraining influence would be necessary. But the primitive form of the committee of the whole was probably a short adjournment, during which members could move about from one to another, and freely discuss the merits of the matter under consideration. Gradually, the standing committee system grew up in the House of Representatives, replacing the temporary select committees of the earlier era. Standing committees assumed the overview and drafting functions previously divided between a committee of the whole and a select committee. As a result, the purpose for convening in Committee of the Whole began to change. The concept found in current practice is that of the principal forum for discussion and amendment of legislation. Contemporary Committee of the Whole procedures are not without some restriction, but they are more flexible than those employed in the formal sessions of the House of Representatives. For a comparison of characteristics of the House and the Committee of the Whole in contemporary practice, please see Table 1 at the end of this report. When the House of Representatives resolves itself into the Committee of the Whole, two simple rituals mark the transformation. First, the mace—a column of ebony rods which sits on a green marble pedestal to the right of the Speaker on the podium—is moved to a white marble pedestal positioned lower on the podium. The mace represents the authority of the sergeant of arms to maintain order in the House. When it is removed from the higher position on the podium, it signals the House is no longer meeting as the House of Representatives in regular session, but in the Committee of the Whole. Second, the Speaker descends the podium, and designates a majority party colleague to take his place and assume the duties of the presiding officer during the deliberations of the Committee of the Whole. The Member designated by the Speaker thus becomes the chairman of the Committee of the Whole and is responsible for recognizing Members, maintaining order, and ruling on points of order. During meetings of the Committee of the Whole, Members address the chair not as "Mr. Speaker" but as "Mr. Chairman" or "Madam Chairman." Under the Standing Rules of the House, a measure that raises revenue, directly or indirectly appropriates money, or authorizes the expenditure of money must be considered in the Committee of the Whole. Other types of measures may be considered in the Committee of the Whole, if the House so decides, or if a rule-making statute so requires. In either case, the House of Representatives must first agree to resolve itself into the Committee of the Whole. It does so in three ways: by unanimous consent, by adopting a motion to resolve into the Committee of the Whole, or by adopting a "special rule" that authorizes the Speaker to declare the House resolved into the Committee of the Whole for the purpose of considering a specified measure. In addition to making the consideration of a specific measure in order in the Committee of the Whole, each of these three approaches will most likely limit general debate time and assign its control. They may also specify the number and types of amendments which may be offered, may designate debate time on amendments, and may waive points of order against House rules, if a provision in the measure could otherwise be held in violation of them. Once the House resolves itself into the Committee, the measure before the Committee is debated and amended. In general, the Committee of the Whole observes the rules of procedure of the House of Representatives insofar as they are applicable. There are several important differences between proceedings in the House of Representatives and proceedings in the Committee of the Whole that make legislative deliberation in the Committee an attractive alternative. In the House, a majority of the membership is required to constitute a quorum to conduct business. If all 435 seats are filled, a majority is 218 members. In the Committee of the Whole, however, only 100 members are required to constitute a quorum. The chairman may vacate further proceedings under a quorum call as soon as 100 members have answered the call, and the minimum 15-minute period allowed for a quorum call need not be used in its entirety, as is the case in the House. In addition, the chairman of the Committee is generally allowed the discretion of whether or not to permit a quorum call during general debate. Furthermore, if the presence of a quorum has been established once during any day's deliberations in the Committee, the chairman need not entertain a quorum call unless a pending question has been put to a vote during the amendment process. The basic rule governing debate in the House is the "one-hour" rule. In theory, this means any Member receives one hour to debate when recognized on any question. By custom, this hour is divided between the majority and minority, with each side receiving 30 minutes. Members often yield time to one another, but normally only for the purpose of debate, and not for the offering of amendments or procedural motions. It is unusual for the House to proceed to a second hour of debate under the "one-hour" rule. In the Committee of the Whole, however, the basic rule governing debate of amendments is the "five-minute" rule. Supporters of amendments offered in Committee receive five minutes of debate time and opponents of the proposition receive five minutes. Thus, more Members are likely to participate in debate under the "five-minute" rule in Committee than is possible under the "one-hour" rule in the House. To gain five minutes of debate time on a pending amendment, a Member may offer a nonsubstantive amendment, also called a "pro forma amendment," to "strike the last word" or "strike the requisite number of words." Thus, a Member overcomes the rule applicable in the Committee of allowing only five minutes for a Member to speak in support of an amendment and five minutes for a Member to speak in opposition to an amendment. A Member may also seek unanimous consent to continue for a short, specified period of time. In the House, debate can be ended by moving the previous question. However, the previous question not only ends debate, it also brings the matter before the House to an immediate vote. This precludes the possibility of any further amendments or discussion. Neither debate nor amendments to the motion for the previous question are in order. The previous question is not in order in the Committee of the Whole. However, additional and more flexible choices exist. A motion either to close debate or to limit the time for further debate (e.g., to 20 minutes, to 4:00 p.m.) may be offered in the Committee of the Whole. Either motion is debatable and can be further refined through amendment. In practice, the floor manager of a bill will more often ask unanimous consent that debate be either closed or limited and offer a motion only if unanimous consent cannot be obtained. In addition, even if a motion to close debate is agreed to in the Committee of the Whole, Members may still offer amendments they have filed at the desk. These will be considered, but without debate. However, if Members had their amendments printed in the Congressional Record in advance of floor proceedings, they are guaranteed 10 minutes of debate on those amendments. In practice, this protection can be overturned by a "special rule" adopted by the House prior to the commencement of proceedings in the Committee if the special rule provides other amendment procedures. A smaller number of Members are required to support a call for a recorded vote in the Committee than are required in the House. In the House, one-fifth of those present and supporting a recorded vote constitutes a sufficient number to trigger a recorded vote. If the minimum 218 Members necessary to constitute a quorum in the House are present, the number needed to call for a recorded vote would be 44. In Committee, 25 Members are needed under any circumstances to support the call for a recorded vote. The Committee of the Whole dissolves itself by "rising." If the Committee has not completed consideration of the measure before it, the floor manager may offer a simple motion to rise. At a later time, the House may choose to resolve itself again into the Committee of the Whole to resume consideration of the same measure. If the Committee has completed its deliberations, Members may agree to a motion to rise and report to the House of Representatives the actions and recommendations of the Committee. Once the decision to rise has been made, the chairman of the Committee descends the podium and the Speaker ascends to take his place as presiding officer of the House of Representatives. The mace is returned to its original location. The chairman then reports to the House those amendments that were adopted in the Committee and the Committee's recommendation on the question of final passage of the measure. (Neither second-degree amendments nor substitutes that were adopted nor any first or second-degree amendments that were defeated in the Committee are reported to the House.) The House must then formally agree to any amendments reported by the Committee. Therefore, it is possible that amendments that were adopted by the Committee of the Whole could be defeated by the House of Representatives. The House may agree to all the amendments reported to it by the Committee of the Whole through one vote ("en gros"), or separate votes may be demanded on any amendments agreed to in the Committee. The votes on amendments could also be structured pursuant to the provisions of a "special rule" adopted earlier. Votes are put on such amendments in the order in which they appear in the bill, not in the order by which the request was made. The House then considers, with the possibility of several intervening motions such as a motion to recommit, the question of final passage of the measure.

The Committee of the Whole House on the State of the Union, more often referred to as the "Committee of the Whole," is the House of Representatives operating as a committee on which every Member of the House serves. The House of Representatives uses this parliamentary device to take procedural advantage of a somewhat different set of rules governing proceedings in the Committee than those governing proceedings in the House. The purpose is to expedite legislative consideration. This report briefly reviews the history of the Committee of the Whole, describes the current procedure associated with it, and identifies its procedural advantages. It will be updated if the rules and procedures change.

Section 1. Short Title. The act may be cited asthe "Class Action Fairness Act of 2005." This section also states that it amends title 28 of the UnitedStates Code. Section 2. Findings and Purposes of the Act. Theact sets out Congress' findings describing in essentially these words the: (1) circumstances in whichclass actions are valuable to our legal system; (2) abuses of the class action process that have harmedclass members with legitimate claims and defendants that have acted responsibly, adversely affectedinterstate commerce, and undermined public respect for our judicial system; (3) the manner by whichclass members have been harmed by a number of actions taken by plaintiffs' lawyers, which providelittle or no benefit to class members as a whole, including (i) plaintiffs' lawyers receiving large fees,while class members are left with coupons or other awards of little or no value, (ii) unjustifiedrewards made to certain plaintiffs at the expense of other class members, and (iii) confusingpublished notices that prevent class members from being able to fully understand and effectivelyexercise their rights; (4) abuses in class actions which undermine the national judicial system, thefree flow of interstate commerce, and the concept of diversity jurisdiction as intended by the framersof the United States Constitution, in that State and local courts are (i) keeping cases of nationalimportance out of federal court, (ii) sometimes acting in ways that demonstrate bias againstout-of-state defendants, and (iii) making judgments that impose their view of the law on other statesand bind the rights of the residents of those states. The act's stated purposes are to (1) ensure prompt and fair recovery of legitimate class actionclaims; (2) reflect the purpose behind the Constitution's diversity jurisdiction clause; and (3) toencourage commercial innovation and consumer-friendly prices. Section 3. Consumer Class Action Bill of Rights and ImprovedProcedures for Interstate Class Actions. S. 5 would add five newsections to 28 U.S.C. which are intended to provide greater protections for class members. Inparticular, section 3 would add the following: Section 1711-Class action definitions (1) Class Action-The term is defined to include any civil action filed in federal district courtunder Rule 23 of the Federal Rules of Civil Procedure, as well as actions filed under similar rulesin state court that have been removed to federal court. (2) Class Counsel-The term is defined as "the persons who serve as the attorneys for the classmembers in a proposed or certified class action." (3) Class Members-The term is defined as "the persons (named or unnamed) who fall withinthe definition of the proposed or certified class in a class action." (4) Plaintiff Class Action-The term is defined as "a class action in which class members areplaintiffs." (5) Proposed Settlement-The term is defined as "an agreement regarding a class action thatis subject to court approval and that, if approved, would be binding on some or all class members." Section 1712-Judicial scrutiny of coupon and other noncashsettlements This provision is aimed at certain proposed settlements of class actions, in which theplaintiffs' lawyer and the defendant work out a settlement that provides class members withessentially valueless coupons while rewarding the lawyers with substantial attorneys' fees. Toaddress this problem, this section provides that a judge may approve a proposed settlement underwhich the class would receive noncash benefits or would otherwise be required to expend funds inorder to obtain part or all of the proposed benefits only after a hearing to determine whether, andmaking a written finding that, the settlement is fair, reasonable, and adequate for class members. In doing so, the judge on the motion of any party may receive expert testimony as to the coupons'value. It would require that attorneys fees be based either (a) on the value of the coupons actuallyredeemed by class members in contingent fee cases; (b) on the hours reasonably billed in presentingthe class action; or (c) on the value of the coupons redeemed and, to the extent a settlement provides,for equitable relief on a reasonable hourly rate and total. Attorneys fees coupon calculations couldnot be based on unredeemed coupons, although with court approval the value of unredeemedcoupons could be distributed for charitable purposes specified in the settlement agreement. Section 1713-Protection against loss by classmembers This provision provides that a judge may not approve a class action settlement in which theclass member will be required to pay attorney's fees that would result in a net loss to a class memberunless the court determines in a writing finding that the benefits to the class member substantiallyoutweigh the monetary loss. Section 1714-Protection against discrimination based on geographic location This provision provides that a settlement may not award some class members a largerrecovery than others solely because the favored members of the class are located closer to thecourthouse in which the settlement is filed. Section 1715. Notifications to appropriate federal and stateofficials This provision requires defendants to notify the appropriate state and federal official of theparticulars of any class action settlement and delays the effective date of the settlement until 90 daysafter they have done so. The appropriate federal officials include the Attorney General and in thecase of financial institutions the federal regulatory authorities. State officials entitled to noticeinclude the authorities with regulatory jurisdiction over a defendant in any state in which anymember of the class resides. Should a defendant fail to comply with the notification requirements,any individual class member would be free to walk away from his obligations under the settlementagreement. Section 4. Federal District Court Jurisdictionof Interstate Class Actions. Article III of the Constitution protects out-of-statelitigants against the prejudice of local courts by allowing for federal diversity jurisdiction when theplaintiffs and defendants are citizens of different states. However, under current law, federaldiversity jurisdiction for a class action does not exist unless every member of the class is a citizenof a different state from every defendant, and every member of the class is seeking damages inexcess of $75,000. (9) Thissection would change the law by providing additional protection for out-of-state litigants by creatinga minimal diversity rule for class actions and by determining satisfaction of theamount-in-controversy requirement by looking at the total amount of damages at stake. Under the proposal, federal district courts receive original jurisdiction over any class actionin which the amount in controversy, exclusive of interest and costs, exceeds $5,000,000 and in which(A) "any member of a class of plaintiffs is a citizen of a State different from any defendant;" (B)"anymember of a class of plaintiffs is a foreign state or a citizen or subject of a foreign state and anydefendant is a citizen of a State;" or (C) "any member of a class of plaintiffs is a citizen of a Stateand any defendant is a foreign state or a citizen or subject of a foreign state." This rule holds trueif less than one-third of the plaintiffs and the primary defendants come from the state where the suitis filed; has no application if two-thirds or more of the plaintiffs and a primary defendant come fromthe state where the suit is filed; and applies at the discretion of the federal court if more thanone-third but less than two-thirds of the plaintiffs and the primary defendants come from the statewhere the suit is filed. (10) In the exercise of their discretion, the federal courts must consider: -- "Whether the claims asserted involve matters of national or interstate interest" -- "Whether the claims asserted will be governed by laws of the State in which theaction was originally filed" -- In the case of a class action originally filed in a State court, "whether the class actionhas been pleaded in a manner that seeks to avoid Federal jurisdiction" -- "Whether the action was brought in a forum with a distinct nexus with the classmembers, the alleged harm, or the defendants" -- "Whether the number of citizens of the State in which the action was originally filedin all proposed plaintiff classes in the aggregate is substantially larger than thenumber of citizens from any other State, and the citizenship of the other members ofthe proposed class is dispersed among a substantial number of States" -- "Whether ...1 or more class actions asserting the same or similar claims on behalf ofthe same or other persons have been filed." This section contains a similar class action definition as section 3, defining a class action as(A) any civil action filed pursuant to rule 23 of the Federal Rules of Civil Procedure or a similar statestatute or rule. It also deems to be class actions certain other types of civil actions: (1) an action thatasserts claims seeking monetary relief on behalf of 100 or more persons, in which the claims involvecommon questions of law or fact and are to be jointly tried; but not (2) an action on behalf of thegeneral public pursuant to state statute. (11) Again, in order that actions lacking national implications remain in state court, the minimaldiversity rule does not apply in any action where "(A) two-thirds or more of the members of allproposed plaintiff classes in the aggregate and the primary defendants are citizens of the State inwhich the action was originally filed; (B) the primary defendants are States, State officials, or othergovernmental entities against whom the district court may be foreclosed from ordering relief; or (C)the number of members of all proposed plaintiff classes in the aggregate is less than 100." (12) Section 5. Removal of Interstate Class Actions to Federal DistrictCourt. Under existing federal law, civil actions filed in state court, which mighthave been filed in federal court, can be removed to federal court under some circumstances, see 28U.S.C. 1441 et. seq. Section 5 would permit removal from state court of minimum diversity casesthat section 4 would permit to have been filed originally in federal court. It would allow class actionlawsuits to be removed from state court to federal court by any defendant without the consent of anyof the other defendants. (13) Section 6. Report on Class Action Settlements. This provision directs the Judicial Conference of the United States with the assistance of the Directorof the Federal Judicial Center and the Director of the Administrative Officer of the United StatesCourts to report to the Judiciary Committees of the Senate and House of Representatives within 12months of the enactment with recommendations on the best practices to further ensure fairness inclass action settlements with regard to class members and attorneys' fees which should appropriatelyreflect the extent and success of the attorneys' efforts. Section 7. Enactment of Judicial ConferenceRecommendations. This section, which perhaps survives through a scrivener'serror, first appeared in bills introduced early in 2003 and was designed to accelerate the effectivedate of class action reform amendments to Rule 23 of the Federal Rules of Civil Procedure, see H.Rept. 108-144 , at 45 (2003). Those amendments, then scheduled to become effective onDecember 1, 2003, did in fact become effective on that date. In its current form the section appearssimply redundant, for it provides that those amendments to Rule 23 shall become effective onDecember 1, 2003, or upon enactment of S. 5 , whichever comes first. Section 8. Rulemaking Authority of Supreme Court andJudicial Conference. This section provides that nothing in this act shall restrict theauthority for the Judicial Conference and the Supreme Court to propose and prescribe the generalrules of practice and procedure for the federal courts. Section 9. Effective Date. This section providesthat the legislation applies to any civil action commenced on or after the date of enactment. Although balanced by the enhanced class member protection features, the jurisdictional andremoval components of S. 5 are much like its antecedents in the 106th, 107th, and 108thCongresses. Proponents argue: Class action process has been manipulated in recent years; (14) U.S. companies have been flooded with labor and employment litigation, muchof which has been entirely without merit; (15) Proposed changes in the law will increase sanctions against lawyers who bringfrivolous claims to court. (16) Opponents object that they: Would clog an already overburdened federal court system and slow the paceof certifying class action cases; (17) Are inconsistent with the principles of federalism; (18) Would make consumer and public interest litigation more difficult to bring,more expensive, and more burdensome. (19)

S. 5 , the Class Action Fairness Act of 2005 has three main sections: (1) anamendment to the federal diversity statute; (2) a provision regarding removal; and (3) a consumerclass action "bill of rights." It would control and restrict class action lawsuits by shifting some ofthe suits from state to federal courts. This would be achieved by creating federal jurisdiction overclass action suits when the total amount in dispute exceeds $5,000,000 and when any plaintiff livesin a state different from that of any defendant. The bill would treat certain "mass actions" with morethan 100 plaintiffs as class actions for purposes of jurisdiction. S. 5 would requirejudges to review all settlements based on the issuance of coupons to plaintiffs and limit attorney'sfees to the value of the coupon settlements actually received by class members. It would also requirecareful scrutiny of "net loss" settlements in which class members ultimately lose money. Thelegislation would ban settlements that award some class members a larger recovery because they livecloser to the court. It would allow federal courts to maximize the benefits of class actionsettlements. Among other things, S. 5 would also require that a notice of proposedsettlements be provided to the appropriate state and federal officials such as the state attorneysgeneral. It was reported out of the Senate Judiciary Committee without amendment. On February10, 2005, the Senate passed S. 5 (72-26) without amendment. On February 17, 2005,the House also passed S. 5 without amendment, 279-149 and it is expected to be signedby the President.

Article I, Section 8, clause 5 of the U.S. Constitution gives Congress the power to enact "uniform Laws on the subject of Bankruptcies throughout the United States." Generally, these laws are codified in Title 11 of the U.S. Code (Bankruptcy Code). Bankruptcy is a method through which financially troubled debtors can receive relief from financial pressures by discharging some or all of their debts under procedures designed to provide some protection to both debtors and creditors. Bankruptcy is often said to provide debtors with a "fresh start," eliminating their debts and allowing them to move forward. However, some debts cannot be discharged in bankruptcy. To the extent that debts cannot be discharged, debtors may be hindered in their quest for a fresh start. Although Section 523 of the Bankruptcy Code provides an extensive list of debts that cannot be discharged in bankruptcy, there are other debts whose discharge in bankruptcy is either limited or prohibited under legislation not codified in Title 11 of the United States Code. Some concern has been expressed that confusion may result from these exceptions to discharge being found only outside of the Bankruptcy Code. It would seem that bankruptcy attorneys and judges, as well as Members of Congress, might reasonably expect to find all limitations on discharge in bankruptcy in the Bankruptcy Code. This report may provide some assistance by identifying those debts whose discharge in bankruptcy is limited but for which no limitation is specified in the Bankruptcy Code. Two bills introduced in the 111 th Congress that do not propose to amend the Bankruptcy Code but would limit the dischargeability of certain debts in bankruptcy. The first, H.R. 3962 , the Affordable Health Care for America Act, would amend the Indian Health Care Improvement Act (25 U.S.C. § 1601 et seq.). In so doing, it would leave unchanged the limitations on discharge in bankruptcy that already exist under that act and would not amend the Bankruptcy Code to include those limitations. The limitations pertain to obligations to repay Indian Health Scholarships and obligations to pay damages under the Indian Health Service Loan Repayment Program. H.R. 4364 , the Citizen Participation Act of 2009, would make certain court-awarded fees or costs ineligible for discharge in bankruptcy under both Sections 523 and 1328 of the Bankruptcy Code. Among the fees and costs excluded from discharge would be those awarded as the result of prosecution of any claim that was finally dismissed pursuant to the act. Additionally, where subpoenas or discovery requests were quashed pursuant to the act, any resultant award of fees or costs could not be discharged. The bill includes no specific provision to amend the Bankruptcy Code. Debts owed to the United States are the subject of nearly all of the limitations and outright prohibitions on discharge in bankruptcy found outside of the Bankruptcy Code. One exception to this general rule is support obligations that have been assigned to a state or municipality. Prohibiting discharge within a five-year period is a common, though not universal, provision in these extra-Title 11 limitations on discharge in bankruptcy. However, two provisions for the Public Health Service (Title 42), which originally prohibited discharge in bankruptcy within a five-year period, have been changed to extend the prohibition for two additional years. While allowing discharge after the prescribed time has passed, the time-related provisions frequently limit such subsequent discharge to cases in which the court has found that nondischarge of the debt would be unconscionable. Most of the extra-Title 11 provisions limit rather than prohibit discharge in bankruptcy. However, four of the provisions completely prohibit discharge in bankruptcy. These are 20 U.S.C. § 6674(f)(1)(C)(3), which pertains to the Troops-to-Teachers Program; 42 U.S.C. § 656(b), which pertains to support obligations that have been assigned to a state or municipality; 47 U.S.C. § 1104(p), which pertains to debt owed to the United States as a result of loan guarantees for local television through the Rural Utilities Service; and 50 U.S.C. app. § 547(b)(3), which pertains to debts owed to the United States as a result of life insurance premiums and interest guaranteed by the United States. In 2006, a number of the identified provisions that relate to military pay were changed to reference the repayment provisions of 37 U.S.C. § 303a(e). This subsection reads as follows: An obligation to repay United States under this subsection is, for all purposes, a debt owed the United States. A discharge in bankruptcy under title 11 does not discharge a person from such debt if the discharge order is entered less than five years after (A) the date of the termination of the agreement or contract on which the debt is based; or (B) in the absence of such an agreement or contract, the date of the termination of the service on which the debt is based. Table 1 lists provisions that are not codified in the Bankruptcy Code but that nonetheless limit or prohibit discharge of debts in bankruptcy. The table was compiled through a series of searches using both Lexis-Nexis and Westlaw. The initial search was broad, using "bankruptcy or 'title 11'" as the search parameters in the Lexis-Nexis version of the U.S. Code. This search produced 2,235 results, the majority of which were within Title 11. Initially, it appeared that all provisions outside the Bankruptcy Code were related to either the military or intelligence communities. Titles 10 (Armed Forces), 14 (Coast Guard), 32 (National Guard), 37 (Pay and Allowances of the Uniformed Services), 38 (Veterans' Benefits), 42 (The Public Health and Welfare) and 50 (War and National Defense) were identified as the titles most likely to include such provisions; therefore the initial results were focused to search only those titles. Reviewing those results identified specific language pertaining to the effect of bankruptcy on particular types of indebtedness. Three more focused searches were performed and revealed ten additional provisions outside the Bankruptcy Code. Five were found using "bankruptcy or 'title 11' and discharge w/s 'not release'"; four were found using "bankruptcy or 'title 11' w/s nondischarge"; one was found using "bankruptcy or 'title 11' w/s released w/s 'no obligation.'" These searches produced results in three additional titles of the U.S. Code: Titles 20 (Education), 25 (Indians), and 47 (Telegraphs, Telephones, and Radiotelegraphs). These search strategies revealed 53 instances outside of title 11 in which the U.S. Code limits the effect of bankruptcy on discharge of indebtedness. Each of these is identified in Table 1 . There may be other provisions that use different terms and, therefore, were not found by the searches. Generally, the provisions are listed in the numerical order of the title and section in which the provision is currently found. If a section was later redesignated as a different section number, the entry in the "code section" column includes both the original section number and the redesignated section number. The first two columns of the table list the original title and code section for each provision. These are followed by the public law in which the provision was enacted and the enactment date. In some cases, the discharge limitation was included in legislation that added an entire code section. In others, the subsection limiting discharge was added at a later date. The "Date of Enactment" column indicates the date when the discharge limitation was added to the code. The "Comments" column shows the date when the code section itself was added. The existence of previous, unrelated code sections that bore the same number is noted in the "Comments" column as well. The original language limiting discharge in bankruptcy is provided in the "Specific Language" column, even when that language has been changed by later legislation. Those changes are noted in the "Comments" column. The subject of the relevant code section is noted at the beginning of each entry in the "Specific Language" column. Generally these notations are in brackets and are taken from either the United States Code Service or the United States Code Annotated—capitalization used is as provided in the online versions of those publications. Descriptions that do not come directly from those publications are enclosed in braces—{ }.

Article I, Section 8, clause 5 of the U.S. Constitution gives Congress the power to enact "uniform Laws on the subject of Bankruptcies throughout the United States." Bankruptcy is a method through which financially troubled debtors can receive relief from financial pressures by discharging some or all of their debts under procedures designed to provide some protection to both debtors and creditors. Bankruptcy is often said to provide debtors with a "fresh start," eliminating their debts and allowing them to move forward. However, some debts cannot be discharged in bankruptcy. To the extent that debts cannot be discharged, debtors may be hindered in their quest for a fresh start. Although Section 523 of the United States Bankruptcy Code (Title 11 of the U.S. Code) provides an extensive list of debts that cannot be discharged in bankruptcy, there are other debts whose discharge in bankruptcy is either limited or prohibited under legislation not codified in Title 11 of the United States Code. This report provides a table of statutory limitations on discharge in bankruptcy that are not included in the Bankruptcy Code. Many of the limitations prohibit discharge of the obligation when the bankruptcy discharge order is entered into within a particular time period (frequently five years) after an event that triggered the repayment obligation, with many of them including the further condition that the court must also find that it would be unconscionable to not discharge the debt. However, four provisions prohibit discharge in bankruptcy at any time. Although most limitations and outright prohibitions on discharge in bankruptcy involve debts owed to the United States, support obligations that have been assigned to a state or municipality are debts whose discharge is completely prohibited. In the 111th Congress, at least two bills have been introduced that include limitations on discharge of debts in bankruptcy but do not amend the Bankruptcy Code to include those limits. H.R. 3962, the Affordable Health Care for America Act, proposed amending the Indian Health Care Improvement Act (25 U.S.C. 1601 et seq.). H.R. 4364, the Citizen Participation Act of 2009, would prohibit discharge in bankruptcy for certain court-awarded fees or costs. Although the bill refers to both Section 523 and Section 1328, it does not provide that either be amended.

As congressional policymakers continue to debate telecommunications reform, a major point of contention is the question of whether action is needed to ensure unfettered access to the Internet. The move to place restrictions on the owners of the networks that compose and provide access to the Internet, to ensure equal access and non-discriminatory treatment, is referred to as "net neutrality." There is no single accepted definition of "net neutrality." However, most agree that any such definition should include the general principles that owners of the networks that compose and provide access to the Internet should not control how consumers lawfully use that network; and should not be able to discriminate against content provider access to that network. What, if any, action should be taken to ensure "net neutrality" has become a major focal point in the debate over broadband, or high-speed Internet access, regulation. As the marketplace for broadband continues to evolve, some contend that no new regulations are needed, and if enacted will slow deployment of and access to the Internet, as well as limit innovation. Others, however, contend that the consolidation and diversification of broadband providers into content providers has the potential to lead to discriminatory behaviors which conflict with net neutrality principles. The two potential behaviors most often cited are the network providers' ability to control access to and the pricing of broadband facilities, and the incentive to favor network-owned content, thereby placing unaffiliated content providers at a competitive disadvantage. In 2005 two major actions dramatically changed the regulatory landscape as it applied to broadband services, further fueling the net neutrality debate. In both cases these actions led to the classification of broadband Internet access services as Title I information services, thereby subjecting them to a less rigorous regulatory framework than those services classified as telecommunications services. In the first action, the U.S. Supreme Court, in a June 2005 decision ( National Cable & Telecommunications Association v. Brand X Internet Services ), upheld the Federal Communications Commission's (FCC) 2002 ruling that the provision of cable modem service (i.e., cable television broadband Internet) is an interstate information service and is therefore subject to the less stringent regulatory regime under Title I of the Communications Act of 1934. In a second action, the FCC in an August 5, 2005 decision, extended the same regulatory relief to telephone company Internet access services (i.e., wireline broadband Internet access, or DSL), thereby also defining such services as information services subject to Title I regulation. As a result neither telephone companies nor cable companies, when providing broadband services, are required to adhere to the more stringent regulatory regime for telecommunications services found under Title II (common carrier) of the 1934 Act. However, classification as an information service does not free the service from regulation. The FCC continues to have regulatory authority over information services under its Title I, ancillary jurisdiction. Simultaneous to the issuing of its August 2005 information services classification order, the FCC also adopted a policy statement outlining the following four principles to "encourage broadband deployment and preserve and promote the open and interconnected nature of [the] public Internet:" (1) consumers are entitled to access the lawful Internet content of their choice; (2) consumers are entitled to run applications and services of their choice (subject to the needs of law enforcement); (3) consumers are entitled to connect their choice of legal devices that do not harm the network; and (4) consumers are entitled to competition among network providers, application and service providers, and content providers. Then FCC Chairman Martin did not call for their codification. However, he stated that they will be incorporated into the policymaking activities of the Commission. For example, one of the agreed upon conditions for the October 2005 approval of both the Verizon/MCI and the SBC/AT&T mergers was an agreement made by the involved parties to commit, for two years, "... to conduct business in a way that comports with the Commission's (September 2005) Internet policy statement.... " In a further action AT&T included in its concessions to gain FCC approval of its merger to BellSouth to adhering, for two years, to significant net neutrality requirements. Under terms of the merger agreement, which was approved on December 29, 2006, AT&T agreed to not only uphold, for 30 months, the FCC's Internet policy statement principles, but also committed, for two years (expired December 2008), to stringent requirements to "... maintain a neutral network and neutral routing in its wireline broadband Internet access service." In perhaps one of its most significant actions relating to its Internet policy statement to date, the FCC, on August 1, 2008, ruled that Comcast Corp., a provider of Internet access over cable lines, violated the FCC's policy statement, when it selectively blocked peer-to-peer connections in an attempt to manage its traffic. This practice, the FCC concluded, "... unduly interfered with Internet users' rights to access the lawful Internet content and to use the applications of their choice." While no monetary penalties were imposed, Comcast is required to stop these practices by the end of 2008. Comcast stated that it will comply with the order, but it has filed an appeal in the U.S. DC Court of Appeals. Separately, in an April 2007 action, the FCC released a notice of inquiry (WC Docket No. 07-52), which is still pending, on broadband industry practices seeking comment on a wide range of issues including whether the August 2005 Internet policy statement should be amended to incorporate a new principle of nondiscrimination and if so, what form it should take. On January 14, 2008 the FCC issued three public notices seeking comment on issues related to network management (including the now-completed Comcast ruling) and held two (February 25 and April 17, 2008) public hearings specific to broadband network management practices. As consumers expand their use of the Internet and new multimedia and voice services become more commonplace, control over network quality also becomes an issue. In the past, Internet traffic has been delivered on a "best efforts" basis. The quality of service needed for the delivery of the most popular uses, such as email or surfing the Web, is not as dependent on guaranteed quality. However, as Internet use expands to include video, online gaming, and voice service, the need for uninterrupted streams of data becomes important. As the demand for such services continues to expand, network broadband operators are moving to prioritize network traffic to ensure the quality of these services. Prioritization may benefit consumers by ensuring faster delivery and quality of service and may be necessary to ensure the proper functioning of expanded service options. However, the move on the part of network operators to establish prioritized networks, while embraced by some, has led to a number of policy concerns. There is concern that the ability of network providers to prioritize traffic may give them too much power over the operation of and access to the Internet. If a multi-tiered Internet develops where content providers pay for different service levels, the potential to limit competition exists, if smaller, less financially secure content providers are unable to afford to pay for a higher level of access. Also, if network providers have control over who is given priority access, the ability to discriminate among who gets such access is also present. If such a scenario were to develop, the potential benefits to consumers of a prioritized network would be lessened by a decrease in consumer choice and/or increased costs, if the fees charged for premium access are passed on to the consumer. The potential for these abuses, however, is significantly decreased in a marketplace where multiple, competing broadband providers exist. If a network broadband provider blocks access to content or charges unreasonable fees, in a competitive market, content providers and consumers could obtain their access from other network providers. As consumers and content providers migrate to competitors, market share and profits of the offending network provider will decrease leading to corrective action or failure. However, this scenario assumes that every market will have a number of equally competitive broadband options from which to choose, and all competitors will have equal access to, if not identical, at least comparable content. Despite the FCC's ability to regulate broadband services under its Title I ancillary authority and the issuing of its broadband principles, some policymakers feel that more specific regulatory guidelines may be necessary to protect the marketplace from potential abuses; a consensus on what these should specifically entail, however, has yet to form. Others feel that existing laws and FCC policies regarding competitive behavior are sufficient to deal with potential anti-competitive behavior and that no action is needed and if enacted at this time, could result in harm. The issue of net neutrality, and whether legislation is needed to ensure access to broadband networks and services, has become a major focal point in the debate over telecommunications reform. Those opposed to the enactment of legislation to impose specific Internet network access or "net neutrality" mandates claim that such action goes against the long standing policy to keep the Internet as free as possible from regulation. The imposition of such requirements, they state, is not only unnecessary, but would have negative consequences for the deployment and advancement of broadband facilities. For example, further expansion of networks by existing providers and the entrance of new network providers, would be discouraged, they claim, as investors would be less willing to finance networks that may be operating under mandatory build-out and/or access requirements. Application innovation could also be discouraged, they contend, if, for example, network providers are restricted in the way they manage their networks or are limited in their ability to offer new service packages or formats. Such legislation is not needed, they claim, as major Internet access providers have stated publicly that they are committed to upholding the FCC's four policy principles. Opponents also state that advocates of regulation cannot point to any widespread behavior that justifies the need to establish such regulations and note that competition between telephone and cable system providers, as well as the growing presence of new technologies (e.g., satellite, wireless, and power lines) will serve to counteract any potential anti-discriminatory behavior. Furthermore, opponents claim, even if such a violation should occur, the FCC already has the needed authority to pursue violators. They note that the FCC has not requested further authority and has successfully used its existing authority, in the August 1, 2008, Comcast decision (see above) as well as in a March 3, 2005, action against Madison River Communications. In the latter case, the FCC intervened and resolved, through a consent decree, an alleged case of port blocking by Madison River Communications, a local exchange (telephone) company. The full force of antitrust law is also available, they claim, in cases of discriminatory behavior. Proponents of net neutrality legislation, however, feel that absent some regulation, Internet access providers will become gatekeepers and use their market power to the disadvantage of Internet users and competing content and application providers. They cite concerns that the Internet could develop into a two-tiered system favoring large, established businesses or those with ties to broadband network providers. While market forces should be a deterrent to such anti-competitive behavior, they point out that today's market for residential broadband delivery is largely dominated by only two providers, the telephone and cable television companies, and that, at a minimum, a strong third player is needed to ensure that the benefits of competition will prevail. The need to formulate a national policy to clarify expectations and ensure the "openness" of the Internet is important to protect the benefits and promote the further expansion of broadband, they claim. The adoption of a single, coherent, regulatory framework to prevent discrimination, supporters claim, would be a positive step for further development of the Internet, by providing the marketplace stability needed to encourage investment and foster the growth of new services and applications. Furthermore, relying on current laws and case-by-case anti-trust-like enforcement, they claim, is too cumbersome, slow, and expensive, particularly for small start-up enterprises. The 110 th Congress addressed the debate over net neutrality largely within the broader issue of telecommunications reform. Then House Telecommunications and the Internet Subcommittee Chairman Markey, a strong advocate of net neutrality legislation, introduced legislation ( H.R. 5353 ) to address this issue and held a May 6, 2008 hearing on the measure. House Judiciary Chairman Conyers introduced H.R. 5994 , a bill which establishes an antitrust approach to address anticompetitive and discriminatory practices by broadband providers as a follow-up to a March 11, 2008 hearing on net neutrality held by the House Judiciary Antitrust Task Force. A stand-alone net neutrality measure ( S. 215 ) was introduced and referred to the Senate Commerce, Science, and Transportation Committee where an April 22, 2008 hearing on the "Future of the Internet" was held. No further activity was undertaken in the 110 th Congress. A consensus on this issue has not yet formed, and no stand-alone measures addressing net neutrality have been introduced in the 111 th Congress, to date. House Communications, Technology, and the Internet Subcommittee Chairman Boucher has stated that he continues to work with broadband providers and content providers to seek common ground on network management practices, and at this time, is pursuing this approach. However, the net neutrality issue has been narrowly addressed within the context of the economic stimulus package. H.R. 1 ( P.L. 111-5 ) contains provisions that require the National Telecommunications and Information Administration (NTIA), in consultation with the FCC, to establish "... nondiscrimination and network interconnection obligations" as a requirement for grant participants in the Broadband Technology Opportunities Program (BTOP). The law further directs that the FCC's four broadband policy principles, issued in August 2005, are the minimum obligations to be imposed. The NTIA has not, as of yet, issued these requirements.

As congressional policymakers continue to debate telecommunications reform, a major point of contention is the question of whether action is needed to ensure unfettered access to the Internet. The move to place restrictions on the owners of the networks that compose and provide access to the Internet, to ensure equal access and non-discriminatory treatment, is referred to as "net neutrality." There is no single accepted definition of "net neutrality." However, most agree that any such definition should include the general principles that owners of the networks that compose and provide access to the Internet should not control how consumers lawfully use that network; and should not be able to discriminate against content provider access to that network. Concern over whether it is necessary to take steps to ensure access to the Internet for content, services, and applications providers, as well as consumers, and if so, what these should be, is a major focus in the debate over telecommunications reform. Some policymakers contend that more specific regulatory guidelines may be necessary to protect the marketplace from potential abuses which could threaten the net neutrality concept. Others contend that existing laws and Federal Communications Commission (FCC) policies are sufficient to deal with potential anti-competitive behavior and that such regulations would have negative effects on the expansion and future development of the Internet. A consensus on this issue has not yet formed, and the 111th Congress, to date, has not introduced stand-alone legislation to address this issue. However, the net neutrality issue has been narrowly addressed within the context of the economic stimulus package (P.L. 111-5). Provisions in that law require the National Telecommunications and Information Administration (NTIA), in consultation with the FCC, to establish " ... nondiscrimination and network interconnection obligations" as a requirement for grant participants in the Broadband Technology Opportunities Program (BTOP). This report will be updated as events warrant.

Qualifications for, and the amount of, the earned income tax credit (EITC) depend on the amount of earned income, adjusted gross income (AGI), and whether the tax filer has a qualified child. For the EITC, a qualified child is determined by the definition of a qualified child for the personal exemption. In general, for the personal exemption for a dependent, an individual is either a qualifying relative or a qualifying child. A qualified child for the EITC must meet the following three criteria for the personal exemption: relationship—the child must be a son, daughter, stepson, stepdaughter, or descendent of such a relative; a brother, sister, stepbrother, stepsister, or descendent of such a relative; an adopted child; or a foster child placed with the taxpayer; residence—the child must live with the tax filer for more than half the year; and age—the child must be under the age of 19 (or age 24, if a full-time student) or be permanently and totally disabled. For the EITC, a qualified child cannot be married and must have a principal place of abode (where the child lives with the tax filer) within the United States (an exception exists for military personnel stationed overseas). A custodial parent may have a qualified child for the EITC without using other tax benefits associated with the child (such as the personal exemption) because the EITC disregards a waiver of the personal exemption and the child tax credit to a noncustodial parent. In general, the EITC amount increases with earnings up to a point (the maximum earned income amount), then remains unchanged (at the maximum credit) for a certain bracket of income, and then, beginning at the phase-out income level, gradually decreases to zero as earnings continue to increase. A family will be disqualified from receiving the earned income credit if investment income exceeds a specified level. The maximum earned income amount, the phase-out income level, and the disqualifying investment income amount are indexed for inflation. For married couples filing a joint tax return, in tax years 2002 through 2004, the phase-out level was $1,000 higher than for other filers. In tax years 2005 through 2007, the phase-out level was $2,000 higher, and beginning in tax year 2008, the phase-out level was $3,000 higher. The American Recovery and Reinvestment Act of 2009 (ARRA; P.L. 111-5 ) increased this differential to $5,000 for tax year 2009, and adjusted for inflation in 2010. The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 ( P.L. 111-312 ) extended the ARRA provisions for marriage penalty relief through tax year 2012. The American Taxpayer Relief Act of 2012 (ATRA; P.L. 112-240 ) extends the ARRA provisions for five years (through tax year 2017). The phase-out level for married couples filing a joint tax return was $5,210 higher than for other tax filers in tax year 2012, and will be $5,340 higher than for other tax filers in tax year 2013. To make it easier for tax filers to determine the correct amount of the credit, a table for the earned income credit is included in the income tax booklet based on $50 increments of income. Table 1 shows the parameters for the EITC (credit rates, phase-out rates, maximum earned income amount, maximum credit, phase-out income level, and disqualifying investment income level) for tax years 2010, 2011, and 2012. As shown in Table 1 , between tax years 2011 and 2013, there are increases in the maximum earned income, maximum credit, and phase-out income levels associated with indexing for inflation. The effect of the indexing is that the largest percentage increases in EITC between 2011 and 2013 will be for higher-income EITC-eligible tax filers. A limited number of taxpayers not eligible for the EITC in tax year 2011 will, because of indexing, be eligible for a small EITC in tax years 2012 and 2013. P.L. 111-5 (ARRA) created a new credit category, for families with three or more children, for tax years 2009 and 2010 only. For families with three or more children, the credit rate in tax years 2009 and 2010 was 45%. The ARRA also increased the phase-in amount for married couples filing joint tax returns so that it was $5,000 higher than for unmarried taxpayers in tax year 2009. In tax year 2010, the differential was adjusted for inflation. P.L. 111-226 , the FAA Air Transportation Modernization and Safety Improvement Act, eliminated the option to receive the credit during the tax year (the Advance Earned Income Credit), for tax years beginning after December 31, 2010. P.L. 111-312 extended the ARRA provisions for marriage penalty relief and the category for three or more children through tax year 2012. P.L. 111-312 also extended through tax year 2012, the changes to the credit made by the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA; P.L. 107-16 ) that were scheduled to expire after December 31, 2010. The EGTRRA changes that were extended through tax year 2012 include (1) changing the definition of earned income for the EITC so that it does not include nontaxable employee compensation; (2) eliminating the reduction in the EITC for the alternative minimum tax; (3) simplifying the calculation of the credit through use of AGI rather than modified adjusted gross income; and (4) providing marriage penalty relief through a higher phase-out income level for taxpayers filing married joint tax returns. P.L. 112-240 (ATRA) made the EGTRRA changes permanent and extended the ARRA provisions for families with three or more children and marriage penalty relief for five years (through tax year 2017).

The earned income tax credit (EITC), established in the tax code in 1975, provides cash assistance to lower income working parents and individuals through the tax system. The EITC will be higher in 2012 and 2013 than it was in 2011. An increase in the size of the EITC will occur because the maximum amount of earned income used to calculate the credit and the phase-out income level are indexed for inflation. The increases reflect the inflation adjustment. For tax year 2012, the maximum EITC for tax filers without children was $475, and it will increase to $487 in 2013. For families with one child, the maximum credit was $3,169 in tax year 2012, and it will increase to $3,250 in 2013. For families with two children, in tax year 2012 the maximum was $5,236, and it will increase to $5,372 in 2013. The American Recovery and Reinvestment Act of 2009 (ARRA; P.L. 111-5) created a new credit category, for families with three or more children for tax years 2009 and 2010. The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (P.L. 111-312) extended the new category for three or more children to tax years 2011 and 2012. The American Taxpayer Relief Act of 2012 (ATRA; P.L. 112-240) extended the ARRA provisions for families with three or more children and marriage penalty relief for five years (through tax year 2017). For families with three or more children, the maximum credit was $5,751 in tax year 2011, $5,891 in tax year 2012, and will be $6,044 in tax year 2013. Beginning in tax year 2008, the phase-out level for married couples filing a joint tax return was $3,000 higher than the level for other filers. ARRA increased the $3,000 differential for married couples to $5,000 for tax year 2009, and inflation adjusted the amount for tax year 2010. P.L. 111-312 extended the higher phase-out level to tax years 2011 and 2012. In tax year 2011, the phase-out level for married couples was $5,080 higher than for unmarried taxpayers, $5,210 higher in tax year 2012, and in tax year 2013, it will be $5,340 higher than for unmarried taxpayers. This report will be updated when new information becomes available.